Prudent education funding gone-ski

I am sure I am not the only observer to be somewhat flummoxed by the new-direction 'Turn-bill' budget. My first reaction was rather stronger, but 'flummoxed' will do for now. I guess it will take some time to see where it leads, but for me it represents total capitulation on many long standing liberal values. While I appreciate the senate problem that has been used as justification for the illiberal measures, it does not explain the narratives used to justify these. Even if you wish to raise a levy on some banks, why the bank bashing? Liberals were once very proud of our world class banking system, so what has suddenly changed? Similarly the narrative surrounding the revised education policy is a total reversal of  what the LNP has been saying for some time.

Let's just look at education spending, now endearingly termed Gonski 2.0. While there is a potential political advantage in removing, or partially removing, a point of difference between ALP and LNP, it trashes the valid long standing LNP argument that increased education spending does not improve educational outcomes.

Across the world educational spending does not correlate with educational outcomes. (see Figure 1 below and the earlier post Education Spending scores an "F" giving some background.)

Figure 1: Educational Outcome vs Spending

At the same time despite significant increases in Education spending over the past decade Australia's education outcomes have deteriorated (see Inconvenient truths on Education spending ).

Given these inconvenient facts, how can any government justify increasing spending? Indeed, even if Australia had zero debt, and had money to burn, it would be a reckless politician who simply threw more money at a problem that has undoubtedly become worse despite more money.

What are the consequences?

By advocating the new Gonski 2.0 policy Turnbull and Scomo have; -

• conceded that ALP has been right all along to argue for Gonski and more spending
• trashed their own argument that more spending is not the way to improve outcomes
• contributed to increased spending when the country is running continuous deficits
• damaged LNP arguments for fiscal responsibility
• damaged their own credentials as responsible economic managers

At the same time the proposed 'adjustments' have already been labelled unfair and have ignited a war with the Catholic education sector.

This is a lose, lose, lose strategy.

What could they have done? 

Here are a few ideas for a start; - 

• Stick with the argument, and make the case that increased spending is NOT necessary for improved outcomes
• Focus on teacher education standards, that have been falling as rapidly as outcomes. Cause and effect?
• Focus on curricula that seem to dumb down the technical subjects to make them more inclusive. Perhaps a focus on the three R's would raise standards
• Look at encouraging some competitiveness between schools by allowing Principals to hire /fire and allocated salaries
• Ensure that payments to the states are contingent on each state's willingness to undertake the above reforms

The core principle underlying "Gonski" is that each child deserves the same level of contribution by State and Federal governments. This is hard to argue. Yet contrary to Labour, and now the Libs', interpretations this does not require additional spending, it just requires that current spending be adjusted to achieve that outcome. Of course it cannot be done at once, as any school suddenly losing spending would cry blue murder. It could however be a achieved by a series of incremental adjustments over some years. Over time the annual increases received by some schools would be lower than those of others. It would allow schools to gradually adjust to the 'fairer' distribution of public funding. No sudden changes, just incremental adjustments, and no cuts in absolute terms.

But even this incremental re-distribution is somewhat nuanced for today's "in" or "out" mentality, so for political reasons I would have avoided it, for now at least.

I guess this is one opportunity foregone for this year.  Given Turnbull and his team's unexpected abandonment of heretofore core LNP values, it seems sensible policy has been deferred for some time.

So we can all go and cry into our beers.

Spending or Revenue?

The recurrent argument about whether we have a spending or a revenue problem brings to mind my own experience back so many years ago. As a 10 year old I was given an allowance of but 2 shillings per week. Yes it was shillings and yes it was a long time ago.

 With such a well defined sum I was most scrupulous about my spending. My weekly 'treat' was the Saturday movie matinee at the local cinema, the Coronet in Bondi Junction. Armed with my 2 bob, I set off by tram, 3 pence each way, paid my 1 shilling admission and settled in for a full three hours of entertainment. In those days going to the movies was an outing to be relished, with cartoons, the odd serial, "The Lone Ranger" or "Rocket Man", and after intermission the featured movie. On my way home I indulged myself with 3 pence of chips, wrapped in newspaper, and a potato scallop. A full afternoon for two bob. I still remember this much loved ritual after all these years.

I knew exactly where my money was being spent and I made sure it was spent on what I wanted. I also know I had a serious revenue problem, as I did not have enough money for chocolate freckles or cobbers or indeed the cream-bun that I also desired. I explained this to my mum in a vain attempt to justify a raise. She disagreed suggesting I really had a spending problem. That I should make do with what I had and perhaps should miss out on the movies one week and indulge in the other vices I felt were entitlements. She even suggested I could walk instead of catching a tram.

Of course I coped without those extra 'necessities ' and learned to live within my means.

All in all a good early lesson on many levels.

Firstly living within a budget requires giving up some things, things you may really want.
Secondly there are some things you may really want but you can do without.
And, finally, people will have different perspectives on the same problem.

These very same lessons seem to apply to our government 'deficit' problem today.
Our politicians have a different perspective on this problem because they come at it from different sides.

The ALP see it as a Revenue problem. They have a long list of must have programs like Gonski, Healthcare, Disability Insurance and so on, that require increased expenditure and complain the government is not raising sufficient funds for these essential programs. By defining it as a revenue problem they are providing 'justification' for increasing taxes to raise revenue. 

The LNP however are motivated primarily by the need to ensure the budget is balanced. They do not want to raise taxes especially since government expenditure as a proportion of GDP is already at historical highs. So they look critically at the ALP wish list and identify what we may want but can do without. Hence the case against funding of Gonski among other things.

There are of course compelling arguments for all the ALP must-haves, and I don't pretend to have properly addressed these arguments. I too had compelling arguments for my wish list of must-haves with my Mum, but in the end a responsible adult took control.

We too sorely need a responsible adult to take control of our budget deficit.