The AEU tax premium

Recently I attended a Melbourne Institute forum concerning the future outlook for school funding, against the background of the current commonwealth government review of school funding methodologies. One of the speakers at the forum was president of the Victorian branch of the Australian Education Union (AEU), Mary Bluett, a known advocate for the expansion of the government schooling sector.

Her presentation (see powerpoint summary here) was, I found, a curious missive railing against the growth of not?for?profit Catholic and independent schools – which she claimed was some part of a ‘neo?liberal’ conspiracy to bring down the government schooling system – and extolling the supposed virtues of ‘universal public education’ (whatever that might mean; more on that in a moment).

Sprinkle in some statistical spin that risks misleading an audience (e.g., why only have the commonwealth share of non?government school funding in one chart, but then growth in state and commonwealth non?government school funding the next?) and – voila! – served is a half?baked narrative as to how governments schools which already enjoy the lion’s share of resourcing are allegedly going without.

Bluett did not provide a definition of what universal public education might entail, but it might be plausible to assume that what she and the AEU have in mind are a suite of policies designed to manufacture a reversal of the twenty years?plus enrolment drift of the total student share to Catholic and independent schools.

In a table presented in her slides, Bluett showed that the share of students in government schools nationally had fallen from 78 per cent to 66 per cent from 1980 to 2009. For ease of comparison with financial figures publicly available, in 2008 there were 2.3 million government school students (66 per cent share) and 1.2 million non?government school students (34 per cent share) (both FTE basis).

Given that it costs the taxpayer less on average to educate a child in a non?government school (2007?08: c’wealth $4,767 recurrent funding per FTE student; state $1,840) than in a government school (2007-08: c’wealth $1,092; state $11,546), a drift back to government schools will impose net additional fiscal burdens upon the long?suffering taxpayer (in other words you, dear reader, and me).

Putting aside interjurisdictional differences in school demographics and funding models, as well as the question of private funding sources, it is possible to provide a rough estimate of the additional strains that might be imposed on taxpayers due to a student share for government schools that was found when The Clash were at the peak of their powers.

Assume that the education system was shocked by policy or other changes that effected an instantaneous increase in government school enrolments, based on 2008 enrolments, to a 78 per cent share. That would’ve meant a jump in government school enrolments to 2.7 million students, while non?government school enrolments fell to about 740,000.

Essentially, taxpayers would be relieved of recurrent funding for non?government schools to the tune of $2.8 billion. However, the significant increase in government school enrolments would have led to an increase in commonwealth and state funding of about $5.4 billion.

The net AEU ‘tax?price’ tag under this scenario would have been $2.6 billion. In other words, an extra two?thousand, six?hundred?million dollars would need to be forked from the nation’s taxpayers – during a period of increasing cost of living pressures – to finance the further consolidation of heavily unionised, taxpayer financed government schools.

This analysis excludes the fiscal costs associated with new capital works requirements as more classrooms are needed to house additional government school students. Also bear in mind the fact that most capital works in the non?governmental schooling system are financed directly by parents.

Of course, one could work on the basis of a longer transition towards a government school share of 78 per cent of students against the background of projected future growth in the numbers of young people.

When I undertook some back?of?the?envelope calculations using ABS population projections, and assuming that the increase in per student capita funding by governments would track the observed annual increase in the primary Australian Government School Recurrent Cost (AGSRC) index in recent years, my eyes glazed over as I observed the massive implicit increase in future tax liabilities needed to satisfy the AEU’s objective.

Of course, by the same token we would anticipate to have a much larger economy into the future. Certainly if Australia is able to reduce the size of government and encourage the greater use of market forces in resource allocation this would be guaranteed. However, the prospect for ever?rising tax burdens to bankroll a rising relative share of government school students would be a real and painful one for future average Australians.

The AEU and their friends essentially have a two?pronged strategy to dilute the cost effective, educationally valuable proposition that is non?government schooling.

The first is to lobby governments to chip away at the distinguishing features of non?government schools that provide them with a competitive advantage over the more inflexible government schools – the clamour towards a national curriculum is just the thin edge of the wedge here, with many public education advocates also recommending European-style systems whereby non?government schools must widely mimic the regulatory standards for government schools.

The second is to agitate for ‘resources standard’ style funding (such as that propounded formerly by the ALP under Mark Latham, and presently by Melbourne?based education academic Jack Keating). This form of funding risks ripping funds out of schools that already meet a politically?determined level of fee and other income, acting also as a potential deterrent to additional parental human capital investment in their children.

Of course, some of the more ‘innovative’ within the public education lobby like to combine the two strategies into one plan to completely residualise alternatives to government schooling.

There is no question that the AEU is a highly organised lobby that has the sympathetic ear of the Gillard government in the context of the current funding review. Developments in this policy space should be at least scrutinised very closely if taxpayers are to have any hope of avoiding the union’s higher?tax agenda.

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10 Responses to The AEU tax premium

  1. PSC

    I’ve got some strong views on this.

    What we need is competition *between* curriculum setting bodies. I.e. 3-5 different curriculum bodies, each with their own exam. Schools elect which curriculum they want to use. There’s some very basic minimum standards the curriculum bodies must adhere to (e.g. setting some kind of assessment, at least a few schools or a few thousand students must sign up for a curriculum, etc.)

    Presumably a body like the IB would end up as one of the curriculum setting bodies. The Catholic Education office would probably end up as a second.

    Pretty soon people will work out which are the mickey-mouse curricula and which are the good ones.

  2. Entropy

    I am constantly amazed whenever I see an AEU representative prattling on withe basically deceitful claims on government school spending, that the media asking the questions never pull them up. It is pretty obvious.

  3. Actually, the cost in the NSW state system is much higher than $11,546.

    Current NSW DET budget for state schools – $11.839 billion (includes state and commonwealth funding)

    Number of kiddies – 736,000.

    Average cost per kid – $16,086.

    Actually, it’s worse for high schools. It costs 25% more to educate a high school kid than a primary school kid, so the annual cost for a kid in a NSW state high school is $18,431. Primary school – $14,657 per year.

    Which is well above what a lot of catholic and independent schools require, and not far short of what the 30 odd “elite” schools charge in fees.

    Cost for 13 years of state schooling – $213,185. Total fees at Kincoppal – $225,440 (although you have to bung in another $50k on top of that for state and federal contributions).

  4. Peter Patton

    Also, in NSW, after Year 9 50% of students attend private schools.

  5. Julie Kirsten Novak

    Hi boy and Peter, yes that is right. My quick analysis, which use national average figures, do abstract away from the interjurisdictional differences, as important as they may be.

    Hi PSC – you may be interested in previous posts by Judith Sloan, myself and others here on Catallaxy concerning curriculum differentiation and competition.

  6. boy on a bike

    Julie

    A big problem with the national average figures is how they are calculated. In NSW for instance, we know that the schools budget is $11.839 billion. However, if you use the average number thrown around by the DET, and multiply it by 736,000 kids, you end up with a shortfall of at least $3 billion. No one knows where that $3 billion goes – I think they simply burn it in the basement of DET HQ to keep the bureaucrats warm in winter.

    The AEU, the DET and all the other state school boosters want to keep that average cost figure as low as possible – that way, they can constantly scream for more money. The money is there – the DET is awash with it. How it’s spent is the crucial element, and on that question, the AEU and other hangers-on are silent.

  7. Peter Patton

    BOAB

    Does that 11.839 figure include both capital (building and construction, for example) as well as ongoing recurring costs? Also, the States do provide [minor] amount of funding to private schools, are those figures included in the 11.839/

  8. Peter Patton

    On the AEU. They are best understood, by always keeping in mind they are Australia’s most deceitful and ill-educated political force. Every single public statement and press release they utter is filled with sheer lies. I don’t know how they get away with it. I suppose the fact of the mass fleeing from the public system answers that. They don’t get away with it.

  9. boy on a bike

    Peter

    That $11.839 includes capital and current costs. It does not include funding of private schools or the TAFE budget, or the direct cost of running the bureaucracy (which amounts to about $300 million I think).

    Most private schools include some financial information in their annual reports, and their fees are listed on their web sites. The income that private and catholic schools report each year includes all capital grants, school fees and grants for recurrent spending from the feds and state government. I figure that since that is what the independents are judged on, then we should apply the same methodology to state school funding.

  10. .

    Peter – the NSW Teacher’s Federation is more powerful than the CFMEU, AWU or AMWU, or than they ever were.

    The pain in the arse factor and being a sacred cow to some extent helps them along. Teachers also have more personal contact with parents than a Government MP, which can soften the mind.

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