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Last modified:3/5/07
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John Quiggin

Let's commit to the young

John Quiggin Australian Financial Review

31 August 2006

A number of recent news stories have revealed different features of the continuing failure of Australian education policy. This failure did not begin with the Howard government, and responsibility must be shared between state and federal governments. Still, the policies of the current federal government over the past decade have done little to help. So, with the failures of the past on clear display, and a new education minister, perhaps a review of the problems might encourage a change in direction.

First, there have been a string of stories about the increased costs associated with shortages of skilled workers in a variety of trades, technical and professional fields. Then, a study by Andrew Leigh and Chris Ryan of the Australian National University found that the literacy and numeracy skills of new teachers have declined relative to their age cohort as a whole. Finally, the decline in the number of domestic students undertaking university, which has been going ever since the Kemp-Vanstone cuts of 1996, has accelerated. There are now 50 000 less domestic students than in 2002 (Local student numbers fall as fees rise, AFR, 28/8/06).

There are many different factors at work here. But the most important is that the central economic and social objective of increasing investment in human capital has been disregarded in favour of ideological dogmatism, fiscal policies driven by accounting cosmetics rather than economic reality, feel-good initiatives designed to appeal to focus groups, federal-state rivalry and irrelevant trivialities.

As an example of trivia, it’s hard to go past the so-called Voluntary Student Unionism legislation banning fees for student services, which was the highest-profile education policy debate for 2005. The VSU policy had little to do with improving education, It was mostly about former student politicians now in the Cabinet settling scores dating back to the 1970s and 1980s.

Universities everywhere in the world provide campus amenities as part of the package of services they provide, and most allow student bodies to manage the delivery of those services. In the end, most universities will divert part of their general charge to the provision of amenities, partially undoing another government initiative which allowed an increase in the same charges aimed at increasing the funds available for teaching.

The tendency to indulge in feel-good initiatives is unfortunately characteristic of of a system of vertical fiscal imbalance, where the federal government puts in enough money to exercise power, without taking responsibility for the service as a whole. So the federal government can impose whatever mandates seem appealing on any given day (back to basics one year, compulsory history or languages in another, more student choice in another) while leaving the states to worry about keeping the schools running.

These problems are minor, though, compared to the lack of willingness to put more public money into education, due, in part at least, to the fact that it is still viewed, in the budget accounts, as an item of consumption rather than as the most productive component of investment. School retention rates have never recovered from the drastic cuts in spending made in the early 1990s, justified, ironically, by the need to promote national savings and investment. Similarly, as Leigh and Ryan observed, teacher’s salaries have not kept pace with those of the professional workforce as a whole, with obvious implications for the attractiveness of the field.

The TAFE sector, which is crucial to meeting shortages of technical skills, is bedevilled by similar problems, overlaid by worse than usual federal-state problems. While any additional investment is welcome, the decision at the last election to create a rival federal network of Australian Technical Colleges seems likely to make fragmentation worse.

All of these problems and more are being reflected in the decline in university participation. Commonwealth funding of higher education has been cut radically relative to GDP. At the same time as HECS charges have been increased, the number of places has been virtually frozen for a decade. This freeze originated under David Kemp with the ideological drive to push universities into offering full fee places. This has now happened, but it’s clear that the lemon of increased student payments has been squeezed too hard. And if we can’t offer a first-class education to domestic students, we will eventually lose the overseas student market that has kept universities afloat for the past decade or more.

What is needed is a commitment to educate all young people in Australia at least to Year 12, whether the focus is academic or technical, and to give every student guaranteed access to tertiary education in universities or TAFE, with no requirement for up-front fees. A substantial increase in public expenditure is a necessary, though not a sufficient, requirement, if this goal is to be achieved.

John Quiggin is an Australian Research Council Federation Fellow in Economics and Political Science at the University of Queensland.

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