Home > Economic policy > Overblown rhetoric on education (crosspost from Crikey)

Overblown rhetoric on education (crosspost from Crikey)

May 9th, 2012

On the whole, this Budget is free of smoke and mirrors trick. Most of the savings that have been announced are real cuts in the deficit rather than accounting gimmicks. There is, however, one big exception. It’s hard to square ‘Labor values’ with a budget that does virtually nothing for education. Rather than face the reality, the government has resorted to some disgraceful spin.


The education section of the Budget outlook sounds good. In fact, taken at face value, it might be called an education revolution. The headlines state

The Government’s education reforms are delivering real benefits to students from early childhood through to university.

The government is almost doubling the Commonwealth investment in schooling between 2009 and 2013, uncapping Commonwealth funding of undergraduate university places and providing an early childhood education place for every child in Australia.

Unfortunately, all of this requires the kind of close parsing that’s needed in dealing with contractual fine print. While all of these claims can be interpreted in way that makes them more or less true, the implication that the budget contains large new initiatives that will benefit education is entirely false.

Starting with the ‘real benefits’, an economist would assume that this entailed, at a minimum, an increase in real (that is, inflation-adjusted) expenditure per student.

This is hardly the case at the university level. As the Budget papers note, the uncapping of university places has increased the number of domestic undergraduates by 150 000 since 2007, when expenditure under the Commonwealth Grants Funding scheme was around $4 billion a year. Projected expenditure at the end of the Forward Estimates period in 2015 is just over $6 billion.

Allowing for inflation at an average rate of 20 per cent, that’s a real expenditure increase of 25 per cent, rather less than the growth in the number of students. And most of this increase occurred in the Rudd government’s first two years in office, when the idea of an education revolution was a genuine hope, rather than a tired joke.

Another dubious claim is that of the ‘$5.2 billion in extra Commonwealth funding between 2010 and 2015 to fund extra places’. That sounds impressive until you look at the baseline, which allows for no increases at all, even to offset inflation. Over the four years of the forward estimates, real higher education expenditure is projected to increase by a grand total of 3 per cent, or 0.75 per cent per year. With substantial growth in student numbers, that implies a real cut in funding per student.

The story is much the same with child care and early childhood education. There were some big increases in expenditure in the first year of the Rudd government, but since then expenditure has barely been maintained in real terms. When population growth and the inevitable cost increases in a labour-intensive activity are taken into account, service provision will be going backwards.

The really blatant piece of spin is the claim that the government is almost doubling the Commonwealth investment in schooling. On the face of it, this claim is directly contradicted by the Budget papers Schools expenditure was $10.7 billion in 2008-09 and is projected to be $12.9 billion in 2012-13, rising to $14.5 billion in 2014-15. That’s a real increase of around 20 per cent over six years, which would be just about enough to cover growth in student numbers and modest increases in real wages for teachers and other school staff.

It turns out that the claim has been justified by comparing schools spending for the four years from 2009 to 2013 with the four years from 2005 to 2008, and including the stimulus spending under the Building Education Revolution for the later period. Using the same basis of calculation, the government is actually cutting schools spending from a peak of $25 billion in 2009-10 to $15 billion in 2014-15.

In summary, as far as education is concerned, the 2011-12 Budget is claiming (indeed, overclaiming) credit for the past, but offering less than nothing for the future.

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  1. fmark
    May 9th, 2012 at 17:28 | #1

    Just a quick question John, when you write “allowing for inflation at an average rate of 20 per cent, that’s a real expenditure increase of 25 per cent, rather less than the growth in the number of students” what are you inflating at 20%? Student numbers or CPI? And is that 20% annually?

  2. Peter Rickwood
    May 11th, 2012 at 08:37 | #2

    fmark: I think JQ means 20% over the 8 years 2007-2015, or ~2.3% p.a. This would take $4 billion to $4.8 billion. An extra 25% on that takes you to $6 billion.

  3. John Quiggin
    May 11th, 2012 at 14:00 | #3

    @Peter Rickwood
    Exactly right

  4. Qu Yuan
    May 12th, 2012 at 11:26 | #4

    Speaking of “Labor values”, I’ve been wondering what education would look like in your Utopia. What should we be aiming for, in other words? And how much would it cost…?

  5. John Quiggin
  6. sdfc
    May 13th, 2012 at 15:29 | #6

    On the whole, this Budget is free of smoke and mirrors trick.

    Come on John they shoved spending forward to 2011-12 to bring the budget into “surplus”in 12-13. All because they had nailed their undies to the mast.

    The Treasurer andhis opposition counterpart are an Australian remake of Dumb and Dumber.

  7. BilB
    May 13th, 2012 at 16:12 | #7

    Of course they have, sdfc, that is what you do if you want to balance a budget. You defer expenditure or cancel it. That is the honest approach.

    The dishonest approach is the Howard and Abbott approach of announcing massive expenditure to gain political credibility but state it over a period of years where the expenditure mostly occurs in the last years of the period, or not at all where it can be cancelled quietly in midperiod minibudgets. But announcements of the real expenditure, handouts to industry, subsidies, and corporate bungling bailouts get shoved under the rug.

  8. sdfc
    May 13th, 2012 at 17:01 | #8

    Who cares about Howard and Costello? They’ve been gone for years.

    Producing a 12/13 budget surplus by pumping up the 11/12 deficit is not much of an achievement. The rush to a budget surplus is politically, not economically, driven.

  9. BilB
    May 13th, 2012 at 19:06 | #9

    Yes, sdfc, the other two stooges are gone but third one is still with us, and it is for that very reason that this budget IS politically driven. The negative megaphone politics of the Abbott Coalition, amplified by an aggressively biased press, has been a disaster for Australia and will continue to be so from here forward for the next 1000 years.

    Why 1000 years? Well it is pretty obvious that unless there is some political miracle in the wind Abbott is likely to be the next prime minister. This will mean the abolishion of the Carbon “tax” and expansion of Australian resources extraction to the absolute maximum along with cancellation of the super profits resources tax. Abbott cannot avoid taking these actions without being the LIAR that he claims everyone else is. So given that it will mean nil Global Warming action, at least on Australia’s part until 2020. Way too late for any hope of avoiding 3 degrees C warming or more. Between Howard achieving nothing on Climate Change for 11 years, Abbott crippling initiatives through Rudd and Gillard’s years, then another 8 years at least of the next Coalition terms this accrues to 23 years of lost time to mitigate the causes of Climate Change. The overflow of these failures are certain to carry forward for at least a thousand years.

    The conseqences of Abbotts manic quest for power are horrendous, education expenditure is no exception

  10. Qu Yan
    May 13th, 2012 at 19:44 | #10

    @John Quiggin
    Thanks for that. In the future utopia, commenters will ask Google first…

  11. sdfc
    May 13th, 2012 at 20:05 | #11

    BilB

    I don’t know why you think my comment about Swan’s expenditure shuffling shenanigans are a defence of Abbott.

  12. BilB
    May 13th, 2012 at 20:31 | #12

    Well, sdfc, in that you lambast the actions that Swan has elected to take without considering his options is,…well…negative. That puts you squarely into Abbotts paddock.

    Swan had no option but to put up a balanced budget simply because “one theme Abbott” with the aid of the Press would have been able to carry forward his pathetic “liar liar pants on fire” campagne for another year.

    So if you are saying that you are not an Abbott apologiser then you might discuss the budgetry options facing Swan and put up some credible argument for how he might have better funded education while still putting up a credit budget.

  13. sdfc
    May 13th, 2012 at 20:42 | #13

    Swan’s need to produce a 12/13 surplus was the result of his own stupid commitment. Your defence of Swan appears to be that they are weak as p*** and therefore had no choice.

    Hardly a ringing endorsement.

    Just to be clear. Other than politics there was no pressing need to produce a surplus in 12/13. Swan and Gillard’s comments that it was an economic imperative are laughable.

  14. BilB
    May 13th, 2012 at 21:16 | #14

    You don’t make any sense, sdfc.

    Just to be totally clear back, there is no pressing need for the government spend money hand over fist to support the economy for the 12/13 year. Producing a surplus is just good management in a year that might very well be followed by another global recession. A surplus obtained in a year that should be economically and environmentally less eventfull gives the government more options should Europe’s economy trigger market uncertainty, or should Climate Change deliver more disasters in the following years. Swan’s budget was both politically solid and economically safe, even if some of the internals could have been improved.

    Laughable? I think not, Applaudable, most definitely.

  15. sdfc
    May 13th, 2012 at 22:08 | #15

    I don’t know how I’m not making any sense. That the government has shoveled spending into 11/12 to produce a surpus in 12/13 is hardly a secret.

    Whether there is a skinny surplus or deficit in 12/13 will make no difference to our ability to fight a future recession. Who says 12/13 is likely to be less eventful?

  16. John Quiggin
    May 14th, 2012 at 05:56 | #16

    To clarify my position, I agree with sdfc that the shift of outlays back into 11-12 was a piece of smoke and mirrors, but also with BilB that the deferrals were genuine cuts, at least for the entire period of the forward estimates.

    Since the latter, along with a squeeze on current spending were the primary source of the surplus, I judge that “On the whole, this Budget is free of smoke and mirrors tricks. ” (emphasis added)

    I also agree with sdfc that the projected surplus is about politics, not economics

  17. fmark
    May 14th, 2012 at 06:23 | #17

    Stoushing about the transparency of the current Budget aside, the question of whether or not it is a good Budget remains.

    And while BilB may argue that “Swan had no option but to put up a balanced budget,” this ignores the many, very real choices the government had to use counter-cyclical fiscal policy as a battleground against a largely policy-free opposition taking an ideological position disliked by the majority of Australians. Governments always have choices, otherwise why would we bother electing them?

  18. BilB
    May 14th, 2012 at 10:09 | #18

    fmark,

    You cannot ignore the fact that the Coalition, despite their “largely policy-free opposition taking an ideological position disliked by the majority of Australians” has been able to maintain the bulk of public support. It seems that this government has elected to exercise their choice to not fuel the Coalitions negativity campaign particularly given the problems arising from several embattled members.

    sdfc,

    “Who says 12/13 is likely to be less eventful?” …..I do!

    Europe’s washing, clean and dirty, is all on the line and being managed one way or the other. The US economy is either stagnate or improving. Shina is virging on a major property value collapse but their government has more direct control over their economy and collapse their is less likely than would be in the Western world. Climate wise look here

    http://www.bom.gov.au/climate/current/soi2.shtml

    This graph goes back 60 years. On this you can see the oscillation that the deniers live by, but also you can see the trend which Climate Scientists know is the evidence of our troubled future. The history of the oscillation suggests that we are enetering an at least 4 year drying period. So for the next year an el nino period, with all of the rivers and creeks either full or flowing means a good warm year with plenty of mosquitos. There is the possibility of bush fires, but that is more likely to begin in the following year along with the dramatic increase in flies. The Australian dollar has dropped back as predicted by most agencies so small business and manufacturing exporters will be a little more comfortable. Agriculture is likely to have a very good production period for the next few years.

    So yes, I am prepared to predict a 12 month “steady as she goes” period.

    Have you, sdfc, got any thoughts…on the subject?

  19. JB Cairns
    May 14th, 2012 at 13:09 | #19

    I suspect all SDFC is doing is emphasising the difference between fiscal consolidation and fiscal impact.

    The budget is detracting from GDP and so contractionary. fiscal consolidation can use all sorts of accounting tricks.

  20. BilB
    May 14th, 2012 at 15:57 | #20

    JBC,

    Looking up definitions for both, from the OECD on fiscal consolidation

    “Given the currently high level of taxation in many OECD countries, which adversely affects economic performance, and the future spending pressures due to population ageing, a large part of consolidation should probably focus on cutting public spending and addressing the drivers of future spending pressures. In countries where spending is low, greater emphasis may have to be put on revenue measures.

    Countries can reap sizeable budgetary benefits – both directly and indirectly, through growth-generated fiscal gains – by adopting “best practices” for health and education spending and pursuing pension reforms. Governments can also reform transfer programmes, to rein in spending on often poorly-targeted social benefits and to sharpen incentives to work and save.

    On the revenue side, governments should concentrate on limiting tax-induced distortions that are detrimental to growth, notably by broadening tax bases. Governments should also emphasize less-harmful taxes, such as those on immobile property, and corrective taxes, such as pollution charges”

    So the budget would seem to be a mixed bag there, but in sofar as fiscal impact considers ballot measures I would call the budget a success. Swan managed to pinch off Abbott’s main element for attack while wooing voters with the disability funding programme. Education is an arena that has had significant attention in the public mind and can afford be held over till another budget for further funding. The reality may be that the budget reduces tertiary education flexibility, I don’t know, but the public perception will not see this.

    If what you say is really what sdfc was talking about, then I think that he failed to convey his point.

    As far as GDP is concerned, government spending is only part of that calculation. Swan went to some lengths to externalise the impact of spending cuts by applying it to foreign purchases and shortening external conflict involvement. In a period where the Aus$ is fluctuating wildly it would be difficult to pin down exactly what will influence GDP the most. But as I said above, this is not a year in which the Australian government needs to be stimulating the economy by maintaining excessive levels of spending.

    One very important thing to consider is that it is indeed vital that we increase the output of science and engineering qualified young people from our universities in the face of the threat from Climate Change. But if the public and the probable next governemnt do not believe that there is any real threat, then should we really be spending public money in that way?

  21. sdfc
    May 14th, 2012 at 20:43 | #21

    How is what I have said unclear BilB? Without the shovelling of expenditure into 11/12 the government wouldn’t have produced a budget surplus for 12/13. The government doesn’t have a spending problem. It has a revenue problem.

    As for 12/13 being less eventful than 11/12. Europe is on the road to hell. The PIIGS are already struggling under the weight of fiscal consolidation and thanks to the euro they lack the means to stimulate their economies through monetary policy. With unemployment high and growth stagnant at best, the situation is only likely to get worse.

    The US recovery is sluggish even with the policy leavers full steam ahead and without a policy reversal they are facing a large fiscal consolidation at the end of this year.

    As for Australia, the economy continues to struggle under the weight of the huge amount of household debt outstanding. Absent fresh stimulus out of China, unemployment is likely to rise. All while the government is rushing to put the budget into surplus for no apparent reason other than politics. Thankfully the RBA has room to move rates lower.

  22. JB Cairns
    May 15th, 2012 at 08:19 | #22

    Bilb,

    SDFC is pretty clear in his statements.
    The assumptions behind the budget for O/S economies is pretty conservative so I am not as pessimistic as he.

    However the RBA has plenty of room to move if they need to and unlike in the GFC credit markets are not frozen so monetary policy is fully functional here.

    the fiscal impact of what SDFC has said is negligible but the fiscal consolidations is not hence his charge of politics over economics is correct.

  23. BilB
    May 15th, 2012 at 09:18 | #23

    JBC,

    I am not challenging the political nature of the budget.

    Quite the opposite.

    I am pointing out WHY the budget HAD to be political.

    sdfc is trying to say that the budget should have ignored the politics. That is completely wrong under the circumstances.

    The budget gave an Abbott nothing to criticise, did no real harm, and improved options for the future.

    Outcome? Abbott is back to harping on about “repealing the carbon “tax”", while beating the crap out of Peter Slipper.

  24. BilB
    May 15th, 2012 at 16:56 | #24

    Talking about overblown rhetoric on education, the only thing that I can agree on with Tony Abbott is the concept of accelerated language education in Pre School and Primary Schools.

    The UK has an accute problem in this area being on the edge of Europe where most people speak several languages, particularly English as well as their native tongue.

    The most innovative approach to this came from a Scottish primary school which employed teachers to speak in their native tongue only in the classes that they taught. So kids in first and second class got saturation access to a different language for one or two full years. The outcome was a huge increase in multilingual competency in that area at in the sixth grade.

    I am 100 percent in favour of that approach and wish that that was how my education had developed. Of course to do that in Australia would bring a howl of protest from the “we complain about everything” brigade.

    I’m also passionate about Lynne Hinton’s “philosophy for primary schools” initiative which helps kids appreciate the world around them through the ability to ask questions and examine life with a more comprehensive understanding, while also building self esteme

  25. Jim Rose
    May 16th, 2012 at 07:55 | #25

    language is a network good. like telecom, is more than one network required?

  26. BilB
    May 16th, 2012 at 09:41 | #26

    Multi language learning, I believe Jim, improves maths learning ability. Being multilingual also improves ones status in a broad cultural business world, and adds to ones range of employment options. Multilingual ability also improves social and possibly marital options. To bring up that old wound, how would Bob Carr have faired if his then new wife had not been able to speak English?

    It is all positive.

  27. JB Cairns
    May 16th, 2012 at 09:58 | #27

    Bilb,

    Totally agree but it takes a lot of time and is very labour intensive.

    Putting it up as a HSC subject is ridiculous.

    Making it compulsory but away from HSC requirements is much more sensible.

  28. Jim Rose
    May 16th, 2012 at 10:50 | #28

    Common culture and common language facilitate trade between individuals.

    Individuals have incentives to learn the other languages and cultures so that they have a larger pool of potential trading partners.

    the likelihood that an immigrant, for example, will learn English is inversely related to the proportion of the local population that speaks his or her native language.

    are language departments at univerisities growing in size?

  29. BilB
    May 16th, 2012 at 11:19 | #29

    JBC,

    Well there I am not exactly clear on the details of what he is proposing. I see it as being more important at the preschool and primary school level when language learning is relatively automatic. If Abbott is sugesting forcing multi lingual compliance as an HSC requirement, then I agree with you. From the interview I heard it is Abbott’s wife who is driving this and she takes the preschool approach. With that approach there should be a greater desire to follow through at high school but by choice rather than compulsion.

    Jim Rose’s tertiary education point is completely to the point considering the subject of this thread. Is Abbott prepared to follow up his off the cuff plan with the resources for High Schools? I doubt it, and certainly there is noting in the pot from this budget should Labour take to his plan.

    That was what I liked about the Scottish solution, it cost the school no more to achieve a major shift in the multi lingual skills of their kids. I was watching a programme about Arnheim Land communities an what came up was that the Northern Territory actively prevented their primary school students from using their native language and forced the learning of English only. There is a major debate that needs to occur here.

  30. Tom
    May 16th, 2012 at 13:42 | #30

    Although I will not support foreign language being compulsory in HSC. Multi-language provide quite some possible benefits especially to a muti-cultural country such as our’s. Students will not only learn another language through this process, but parts of the cultures as well. This can improve their understanding of people’s thoughts and behaviours from a culture different to their’s and thus reducing racial discrimination views on people from a certain background (unless through parental influence). This can be especially effective if the learning process is in pre-school and primary school. Just my two cents worth.

  31. Ernestine Gross
    May 16th, 2012 at 17:23 | #31

    Re languages. For at least the past 20 years the Danes taught children rhymes in foreign languages to children in Kindergartens. The children did not understand. But this was considered unimportant. The idea was to get children to be able to learn to pronounce language specific sounds. I noticed this idea has been copied in Germany – for at least the past 10 years – and my neighbour’s children in Sydney are being taught foreign language words and hence sounds (French in this case).

  32. BilB
    May 16th, 2012 at 17:49 | #32

    What a great technique, EG. I am going to research that. It is the simple things. Friar Jack is the only one that I learnt, but now that you point it out it is the only full French sentence that I can pronounce. A few rhymes about buying food and taking train trips would have been very useful.

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