Schools.

One of the interesting points about Australian politics, as somebody who also observes a fair bit of the US variety, is that our major parties are all pretty similar. I don't even really mean that as a criticism. Labor, the Liberals and the Greens all agree on public provision of healthcare, quite significant welfare benefits and firm regulation in the context of a mostly free market.

This is almost always true of the parliamentary parties, except for when Joe Hockey or Doug Cameron go momentarily rogue. It's less universally but still mostly true of the parties more broadly, though the youth movements (particularly the Young Liberals) are sometimes more radical. I guess if you're a full-on libertarian that might annoy you, but for most people the political spectrum's broadly settled social-democratic nature is good and reassuring.


The effect of it is that there's not much reason to be a rusted-on voter for either side, outside of perceived inherent incompetence - a lot of people seem to think the ALP just can't manage the economy, which.. seems totally at odds with history to me - or a kind of solidarity in attitude, which means people steer clear of the party they perceive as being servant of the wealthy or the unions respectively. Neither of those substantively alter the fact that the philosophical basis of the government and the fundamental nature of its policy (as opposed to technical details) are not drastically affected by a change in the ruling party.


The upshot of all this for me is that, although most political spectrum tests would put me solidly left of centre (those tests are all pretty stupid), I don't think I have a general reason which means I wouldn't support the Liberal Party. That is very different to having specific reasons to not support the Liberal Party right now, of which I have several, of varying importance. The dealbreaker came this week.


All this has been a very long-winded way of working up to education funding, which is that dealbreaker. I don't much like what Julia Gillard's said this week. I hate what Tony Abbott has said and I will not vote for him.



Let's go to the Prime Minister first. She said that she's never looked at a private school and thought "that's not fair", but rather, "that's a great example". This is almost certainly untrue. Her maiden speech in Parliament was about educational inequality, and it's not a stretch to figure that that inequality struck Gillard as unfair. But given that this is not really much more than a slightly different way of presenting the classic "we want to achieve educational equality by raising the lowest standards, not pulling down the highest", it's probably silly to object too strenuously. The specific funding promises that came with it are more annoying, but I'll get to that.

Tony Abbott is the real bad guy here. Here he is:

Overall, the 66 per cent of Australian school students who attend public schools get 79 per cent of government funding. The 34 per cent of Australians who attend independent schools get just 21 per cent of government funding,so there is no question of injustice to public schools here. If anything, the injustice is the other way.
When I first heard this comment, it was briefly on the radio and then paraphrased by a reporter on Twitter. So I wasn't sure what to make of it. I wasn't sure whether he was talking about "injustice" or "inequality", or more specifically inequality-of-standards or inequality-of-funding.

This is actually quite important. If Abbott had said that "there is no question of funding inequality to public schools ... the inequality is the other way", that would basically be a mathematical point. It'd be an easy-to-misinterpret and thoroughly unnecessary point, but he'd be right: the funding is unequal. Public schools get proportionally more.


But it turned out he said injustice, not inequality, and that makes the comments as outrageous as all the commentary around them would suggest. There is no way you can reasonably slice the reality of Australian education and figure that private schools are getting a raw deal. There are absolutely some private schools which are under-resourced and which struggle to meet the needs of their students. But for the most part, private schools are vastly richer than state schools and they would remain that way even without government funding.


I wouldn't support ripping all public money out of private schools, if only for conservative reasons about the pace of change. But I do think that, divorced from the status quo and a desire for changes not to be scarily huge, the case for public funding of private schools is pretty weak.


Pillar one: choice. Tony Abbott has explicitly said this is one of the main elements of his intended schools policy. I don't remember particularly well, but it was part of John Howard's approach as well. The idea is that public funding to private schools pushes fees down, and thus makes the choice of a private education available to more people.


There are a bunch of problems here. Firstly, the rationale for the choice agenda is unclear. This is very clearly an example of a positive right: this is not about being allowed to make a choice, it's about being enabled to make it. This does not sit particularly comfortably with a belief in "a lean government that minimises interference in our daily lives; and maximises individual and private sector initiative", at least as you'd normally understand it. But given that, as I said at the beginning, Australian politics is generally less virulently libertarian, that part is okay.


The second problem is that if you're pursuing this positive right agenda, you're not doing it very well. Consider: with this motivation, the problem with a no-funding-for-private-schools world is that people who want to go to a private school are deterred or left unable to do so, because fees are too high. But in the status quo that still happensIf you really wanted people to be able to choose schools and not be dissuaded by fees, you would pay their fees. Short of that, the Coalition is still happy for people to be denied choice on the basis of means. So whither funding?


The third problem, related to the previous one, is that if the fear is of choice-diminishing fee rises, you have to contend with the fact that fees continue to rise anyway. Between 2000 and 2009 those fees increased by 85%, as outlined here. And as those authors say:

Any level of private fee excludes significant numbers of students from the lowest income families. If the exclusionary effect of continuing fee increases weighs so heavily on the consciences of Pyne and the Coalition, it is a wonder they would want to have anything to do with private schooling.
And this makes perfect sense. Let's talk economics for a second, which involves considering private schools as typical firms rather than fancy educational institutions - not true, but not really misleading for this purpose. There are, simplistically, two ways a school could approach its finances and determines its fees:
  1. Determine what services and facilities it wants to provide, and how much they will cost, and then set about acquiring that much money from public funding and private fees. In this model, a school will figure out its expenses (E), assess its public funding (P), and then set its fees (F) straightforwardly: F = E - P
  2. Acquire as much money as possible from public funding and private fees, then determine what services and facilities it can provide (or how much money it can stow away). Assume for simplicity that P is not affected by the schools, though obviously in a lobbying world this is not true.  The school maximises its total capacity by maximising F - this doesn't mean setting individual fees at infinity, obviously, but is a profit-point/Laffer-curve type calculation where it determines what fee level will bring in the most money.
So in Model 1, E and P are constants and determine the variable F. In Model 2, F and P are independent variables which then together determine E.

Now look at what varying the funding does in each case. Under Model 1, lowering P causes a corresponding rise in F. Under Model 2, lowering P doesn't change anything. The school is gathering as much money from fees as it can, and the profit-point calculation isn't affected by the value of P[1]. Schools charge as much in fees as they can get away with without driving away so many students that it's not worth it.

If Model 2, or something approximating it, is true, then removing public funding from most private schools wouldn't change the fee level, or the choice that supposedly goes along with it. What it would do is reduce standards at those schools. That at least makes the tradeoff clear: I'd probably go for it, and I think most people in the ALP would too. 

(Actually, it would reduce E, the school's total spending. That means reduced standards iff we assume that more spending on a school means better standards. That assumption, applied to the public system, is routinely rejected by many of the same people who argue most vigorously for funding private schools. So we're in murky waters.)


These are supremely back-of-envelope models, and I strongly dislike it when people use these kinds of calculations as if they're incontrovertible proofs. So let it be said: these are not. Those paragraphs assume that schools behave as maximising firms, and that's probably not the case. I will say with very little hesitation that neither of my models is actually true and the truth lies somewhere in between, that removal of public funding would result in some mix of fee rises and lowering of standards which is not captured or even really approximated by either of the two proposals I suggested. I suspect that if you removed all public funding at a stroke, it'd more likely track along these lines: a one-time spike in fees, because expenses are somewhat fixed in the short term, followed by long-term fee growth at more or less the same rate, and slower expense growth. But I don't really know.

But the takeaway is this: the argument for funding depends strongly on the idea that it keeps fees down. That requires something like Model 1 to be the case. It has to be true that private schools in the current system could increase their fees in a way that does nothing but benefit them - it increases their revenue, it doesn't drive people away in any significant numbers - but that they don't. They're leaving money on the table. I think this is a strange enough idea that the burden should rest with supporters of the argument to provide a reason why they don't.[2] The best empirical test I can think of here would be to look at how private school fees have been affected by significant changes in public funding. I don't have that data, but the article I linked above suggests that the big funding increases of the 2000s were not accompanied by slower-growing or decreasing fees.

But the biggest flaw with the 'choice' notion is what it secretly stands for. On its face, it's about being allowed to choose what kind of education your child gets. This is what it means in the US, where voucher programs allow parents to send their children to schools which are actually different in kind - they don't do sex education in the same way, they teach religious classes, they teach intelligent design instead of or alongside evolution. Whether this is a good thing, or something public money actually should be used on, is of course another debate - but that is actually choice.

I don't know this for sure and I'm not sure any data exists that could swing it one way or the other, but I think it's generally accepted that most parents don't send their children to private schools because the education is different in kind. (I think that happens more for Catholic schools). They do it because private schools are better, or at least perceived as better. At that point the choice argument comes unstuck. If you want public funding to go towards enabling parents to choose a different kind of education from the state system, then you can only do that by directing some funding to private schools. But that's not the nature of the choice being made. If you want public funding to go towards enabling parents to send their children to schools which are really good but not different in kind, you achieve that by using your public funding to make really good state schools.

The choice argument fundamentally rests on the idea that the government should direct money towards children's education, and it shouldn't withdraw that money just because their parents happen to think a different way about the best education. That is absolutely not what's happening here. Parents who send their children to private schools don't think differently: they want a really good education for their children, the same as almost all parents. The government doesn't have a responsibility to subsidise them if they decide to take up a fee-paying education. That's what 'choice' boils down to in a context where the actual nature of education isn't really different - the choice of better-off parents to buy better education. It's not quite the noble, liberal idea advocates of private school funding pretend it is.

Pillar two: it saves money! This is a dirty accounting trick. It's true that the government spends less on a student in a private school than one in a state school. But it would, obviously, spend even less if it didn't spend anything on the kid in private school. Private school funding advocates happily toss about really huge figures about the amount government 'saves' by funding students in private institutions.

Those savings only meaningfully exist if the withdrawal of funding would cause every student in a private school to move to a state school and thus require the government to spend the larger amount. Likely? I don't think so. These 'savings' are a fiscally compelling reason not to ban private schools, or a reason not to vilify parents who send their children to those schools (if you need a reason for that). They don't strike me as particularly important in the funding debate.


How important could they be? Pretend that all funding for private schools was cut. The only way we start losing our savings is if students start moving from the private system back into the state system. Presumably the reason they would do this is that fees rise and exclude them. As I noted above, there's reason to doubt that cutting public funding really would cause big fee rises. If it did, that wouldn't mean all students dropped out. Many parents would go on paying fees no matter how high they were, or at least would have an upper limit above the point their fees would rise to. So only some students would move back into the state system. I don't have the figures, or the knowledge, or the know-how, to have a guess at how many, so I won't - but the cost would be significantly less than if everybody moved back into the state system, which is the tacit assumption underlying the savings quoted.


Moreover, it's a pretty bizarre conception of the role of government that says it should aim to deliver education at the lowest possible cost, even where that's achieved by segregating students in a way which systemically disadvantages people who are less well-off. That's essentially the argument being made when people tout the lower cost you bear by funding private education.

I went to a private school. I can't justify it getting government funding. And it certainly did not need it. I'd like to think that with less money the school would have pared back the massive new libraries and underground carparks and kept the good quality education. Meanwhile those funds could have gone somewhere they were much, much more needed. There is real injustice in Australia's education system, and it's not where Tony Abbott sees it.
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[1] I can even come up with a kind of plausible reason why lowering P would lower F! If the savings from lowering P went to funding public education, rather than just back into general revenue, and public education improves as a result, then the gap between public and private is narrowed. Since that gap is presumably the main determinant of fees, the premium people are willing to pay for private schools is reduced and fees fall in line with it. Maybe.


[2] Not to say there isn't one. Possible explanations: alumni networks pressuring fees to be set at a level which accommodates their children rather than a maximising level; some charitable impulse; PR concerns. None are immediately satisfying to me.

Comments

  1. The point about American private schools isn't really true. The wacky creationist schools you reference do exist but private schools operate in the same way they do here for non-crazies. The school Mitt Romney went to is a good example.

    In terms of the actual piece, it all seems fairly reasonable. I highly doubt that any of the prestigious private schools which seem to have plenty of people missing out would feel the need to drop their fees with an increase in funding. If they did it would then create a market for those with more money who want an even better education.

    There's an argument to be made that the government should provide a base level of education funding to everyone and then it is up to the parents to supplement it if they like. That is very idealistic though and the ideals themselves are difficult to defend.

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  2. Well written! I'd like to think that the underground carpark and libraries gave me invaluable knowledge about construction and design, but maybe I was the only one standing by the fence at lunch figuring out how they would fit the roof on...

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