1. INTRODUCTION: COMMONWEALTH
INVOLVEMENT IN EDUCATION
The Commonwealth has no constitutional responsibility for education except in the Territories. Nevertheless it is intimately involved in education policy and funding at all levels.
Visible Commonwealth expenditure on schools consists of a bewildering array of "recurrent" and "capital" grants to both government and private schools, amounting to an estimated $1.8 billion in 1985. Half this goes to non-government schools, although three quarters of students attend government schools: teacher unions and other opponents of private education claim that this is grossly unfair. Invisible Commonwealth expenditure on schools is much greater than this: although the States are responsible for their government school systems, on which they spent well over $5 billion in 1985, most State income comes from Commonwealth tax-sharing and other general purpose grants. Roughly 95 per cent of total State spending on schools goes on government schools. This more than outweighs the imbalance the other way in visible Commonwealth expenditure: over 85 per cent of total government spending on schools goes to government schools. The Commonwealth is advised on school policy by the Commonwealth Schools Commission.
Since the early 1970s the Commonwealth has assumed total responsibility for funding universities and colleges of advanced education (CAEs). As these bodies are established (except in the Territories) under State legislation and, universities especially, have traditions of considerable autonomy, there are awkward separations of moral, legal and financial responsibility. The Commonwealth Tertiary Education Commission advises the Commonwealth on policies for universities, CAEs and technical and further education (TAFE).
State governments provide most of the funds for the many TAFE institutions, although the Commonwealth provides supplementary funds to the States on the basis of recommendations from the Tertiary Education Commission.
Besides direct and indirect funding of educational institutions, the Commonwealth provides financial assistance to various categories of students. Most of the schemes that existed prior to 1986 are now consolidated into the AUSTUDY programme.
2. OBJECTIVES OF COMMONWEALTH EDUCATION POLICY
2.1 TRADITIONAL POLICY OBJECTIVES
The formal objectives of Commonwealth education policy are expressed in Ministerial statements, in legislation and guidelines for the Schools Commission and Tertiary Education Commission, and so on. They relate to matters such as improving "public confidence in government schools in Australia", "the need for improving primary and secondary educational facilities in Australia and of [sic] providing increased and equal opportunities for education in government and non-government schools in Australia", and so on. (1)
The informal objectives are not expressed and relate to balancing the conflicting demands of State governments, non-government schools and school systems, the Roman Catholic Church, teacher unions, educational administrators, educational theorists, and voters. The actual business of ensuring that no child leaves school uneducated often seems to go by default.
2.2 PRIVATE AND PUBLIC RETURNS ON EDUCATIONAL INVESTMENT
Educationists and teachers often speak as though education, or rather government expenditure on the education system, were something of which the community cannot have too much. Although perhaps legitimate rhetoric in the competition with defence, health, welfare and the other claimants on the revenue, this is an exaggeration. Not all educational expenditure is worthwhile:
Educational efforts may be regarded as either consumption, investment, waste or drag. Education is consumption to the extent that it gives present satisfaction to the student or to others, investment to the extent that it promotes either future non-pecuniary satisfaction or future gains in productivity, waste to the extent that it creates neither pleasure nor productivity, and a drag (or a hindrance) to the extent that it renders incompatible individuals' preferences and their employment opportunities. (2)
Careful categorisation like this is regrettably resisted by well-intentioned people who are offended by the application of economics to something as "special" as education. It also meets cynical opposition from teachers' union leaders and some teachers and educationists who fear the consequences of objective assessment of the effectiveness and efficiency of the education system. But concepts such as these are useful tools when the task is to achieve an effective allocation of limited resources, especially when the resource is taxpayers' money.
We can distinguish between "private" and "public" returns on educational investment. Private returns include any increment in earning capacity that results from more education (unskilled worker/tradesman/professional) and also any increment in personal satisfaction. Public returns include any benefit to the community in terms of increased economic growth, general peacefulness, civility and humaneness of society, and so on.
Classical economic theory tells us that if (1) the public returns on educational investment were insignificant compared with the private ones, and (2) people could accurately assess the value of their, or their children's, education, then optimal educational investment would take place in a free market without government intervention. Non-fulfilment of these conditions among the working classes played a part in the introduction of compulsory education in the 19th century.
To look at the two conditions more closely, non-fulfilment of the first tends to justify government subsidy of (some or all) education, to reduce the direct cost to the "investor" to a point at which it is low enough in relation to the private return for the "investment" to be attractive; while non-fulfilment of the second tends to justify intervention to make potential "investors" (parents and children) better informed as to the costs and benefits, or, if this is impracticable, legislation for compulsory education. In practice, of course, we have schools which are largely "free" and also compulsory: this might suggest that the private returns on schooling are negligibly small, but in fact demonstrates the influence of politics and ideology in the development of the education system.
2.3 TEACHERS, UNIONS, IDEOLOGIES
Probably the gravest objection to the government school systems which have an effective monopoly of "free" education is the way in which, in these as in so many other "public service" organisations, the interests of the "consumers" (parents and children) have become secondary to those of the systems' employees. Although there are many honourable exceptions, the image of school-teachers presented by their union leaders is far from the selfless, dedicated and respected professionals of a generation ago, and is indistinguishable from the self-interested white-collar unionist now much in evidence throughout Commonwealth and State bureaucracies.
Evidence of this comes from many sides. For example:
- Teacher resistance to objective assessment of educational outcomes, including external examinations and system-wide research into standards of literacy and numeracy over time.
- Apparent refusal by some groups of teachers to accept that schools have any duty to prepare school-leavers for higher education or the workforce.
- Emphasis on "self-expression", "self-discovery" and "creativity", without imparting the linguistic and other skills needed for effective expression of complex concepts.
- A cultural relativism which insists on the equal "validity" of working-class, "ethnic", and other social and linguistic modes with those of the dominant Anglomorph middle class. What matters about this is that mastery of "establishment" modes is essential for social mobility, tertiary education, professional and business careers, and most other forms of advancement in our society. Children who do not gain this mastery are handicapped for life, and if working-class and migrant children do not acquire it at school they are unlikely to acquire it at all. This is true whether or not one believes other modes are equally "valid". Children are perfectly capable of learning more than one language or dialect and switching between them as appropriate.
- A general downgrading of the importance or relevance of "traditional", "academic" subjects such as mathematics, English language and literature, history and geography, and indeed of formal learning per se. This is accompanied by an increase in the stress placed on courses in social studies, peace studies, sex education, and so on, the content of which often appears designed to radicalise and politicise young people and to destroy their confidence in the values and traditions of family life and Western democracy. Much of the trend towards soft subjects may be due to lazy and ill-educated teachers; some is deliberate pursuit of the left-wing agenda espoused by many teacher union activists.
It is true that the traditional school subjects have often been presented in a way that suggests they are relevant only to those who will proceed to higher education, but this is justification rather for changing the presentation than for their abandonment. Competence in spoken and written English and basic arithmetic should not be considered educational attainments in themselves, but essential basic tools. They are the heritage of the professional and clerical classes, but are less easily acquired in working-class homes. Without them, working class and migrant children are condemned to an unskilled, alienated underclass; with them, given time and ability, virtually no doors are closed.
It would be wrong to limit schooling to the narrow objective of turning out competent young citizens ready to take their place in the workforce or higher education; but a school system which does not accept this objective as the absolute minimum is failing in its duty to the nation's children. If schools do not prepare children for life after school then their educational efforts consist mainly of waste and drag, and it is intolerable that this should be financed by the taxpayer.
2.4 NEW POLICY OBJECTIVES
The Government should adopt the new education policy objectives |
3. EDUCATIONAL STANDARDS IN SCHOOLS
In recent years more and more people, including some teachers, have become concerned at what appear to be declining standards of attainment among school-leavers. Their concern is increased by the resistance of many educationists and most teacher union leaders to common external examinations and to research into school-leaving standards -- indeed to anything that would permit an objective assessment. Little hard evidence is available. Some has been suppressed. But the weight of anecdotal evidence is strong. There is also indirect evidence from the increasing need for remedial classes for university entrants. In short, there is reason to suspect that our schools are failing our children. A great deal of taxpayers' money is spent on education and the Government has a duty to be sure it is spent well.
The Government should institute a system of universal literacy and |
The purpose of the tests is both to gather information and, by publishing the results, to put pressure on schools to perform some of their basic functions better.
The tests should probably be along the lines of those used by the Australian Council for Educational Research in the late 1970s. Children should be tested two or three times during their school years: towards the end of primary school, soon before the minimum school-leaving age, and in the last year of secondary school. There should be no pass or fail mark. Marks should be presented without scaling or adjustment. Parents, teachers and principals should know their children's marks, but individual marks should not be published. Detailed statistics must be published: mean, median, and quartile marks and standard deviations for each age group for each individual school and preferably for each class. Tests should be administered and results published for all primary and secondary schools, government and private. Schools or school systems that do not cooperate in the tests should not receive further Commonwealth funding.
Education Policy Objectives
|
4. SCHOOL FUNDING: TOWARDS
EQUITY AND FREEDOM OF CHOICE
The present approach to school funding generates complaints of injustice both from opponents of private schools and from their supporters. The former argue that taxpayers' money should not be spent on schools which select pupils on factors such as religion, academic potential, family wealth, and quality of behaviour, and which allegedly cause or perpetuate undesirable "divisions" in society. The latter point out that if private schools did not exist, taxpayers would have to bear the full cost of providing places in government schools for the 25 per cent of children now privately educated, and that this cost would be much greater than that of present subsidies to private schools.
There is no compelling reason to vary the amount of taxpayers' money spent on a child's schooling on the basis of whether a government or a private school is involved. More useful distinctions can be made on bases such as parental income and the many factors that affect a child's readiness or ability to take advantage of educational opportunities.
4.1 VOUCHERS
A conceptually straightforward way of relating government expenditure on schooling to the pupil, rather than to the school or school system, involves what are commonly called "education vouchers". The principle is simple. Every year, or every term, the Commonwealth would issue a voucher to parents (or guardians) on account of each child; the parents would give the voucher to the school attended by the child, government or private; the school would pass the voucher back to government and in return receive money. To be precise, the money would go to the State or Territory education department in the case of a government school, to the Catholic education system in the case of a Roman Catholic school, and to the school in the case of an independent school.
The cash value of the voucher can equal the total cost of education in a government school, or some fraction of the average subsidy per student to private schools, or anything in between. It can be the same for all children, or reduced by a means test of family wealth. Disabled or retarded children can be given higher-valued vouchers, as can Aborigines and children from non-English-speaking families: if these compensate for the higher cost of adequately educating disadvantaged children, ordinary schools will be encouraged to accept them.
The purpose of a voucher is to increase the power of poorer parents relative to teachers and administrators in government school systems. The rich, and middle-income parents prepared to make the necessary sacrifices, have the option of withdrawing from the government school system and sending their children to private schools where they are (with more or less good reason) confident that the academic standards and moral values will better prepare them for life. This expensive option is denied to the poor, and the cheaper Roman Catholic school system is not a comprehensive alternative to government schools. A well-designed voucher system will assist in two ways. First, it directly increases poor parents' ability to pay private school fees. Second, it puts pressure on government schools to satisfy parents or to lose pupils and with them funds.
Opponents of education vouchers usually cite an experiment run in the early 1970s in the Alum Rock School District in California. This experiment is usually described as a failure; since, however, private schools were effectively excluded and the vouchers could only be used at government schools whose bureaucratic procedures had not been significantly eased, the element of market discipline that is the raison d'être of vouchers was absent and neither success nor failure could have meant much.
A better example is the many towns in the state of Vermont which for over a century have been ensuring the education of their children not by operating "free" schools of their own but by paying for them to attend fee-paying schools. Parents are free to pay more out of their own pocket to send their children to a more expensive school, so the result is in effect a voucher system. Government subsidy to private schools in British Columbia also has elements of a voucher system. (3)
As a first step towards the education policy objectives listed in section |
An ideal voucher system would not discriminate between government and non-government schools in the amount of direct and indirect government funding per student. To achieve this and to continue the availability of "free" schooling to all would, however, necessitate a massive increase in Commonwealth expenditure on education as subsidies to the 25 per cent of children in private schools increased to the cost of government schooling. Such an increase is at present out of the question. Nevertheless it is possible to introduce a voucher system with negligible extra expenditure.
A Practical Voucher Scheme The value of the basic voucher should initially be equal to the average annual per capita subsidy to private schools for recurrent expenditure. Vouchers should be issued annually to all parents (or guardians) in respect of all children under the compulsory school-leaving age and all those who are over the age but still at school. (The progressive tax system means that better-off parents will pay more for the "free" vouchers than poor parents.) Vouchers should be redeemable by any school or school system approved by the relevant education department, in respect of children attending the school. The Commonwealth should reserve the right to approve schools, including new schools, in States or Territories whether or not they are approved by the State or Territory authorities, and to visit schools and/or inspect attendance registers. Vouchers should be redeemed not by an annual lump sum but by monthly or termly payments as administratively convenient. Grants to each State and Territory for education should be reduced by the value of the voucher times the number of pupils in government schools in the State or Territory. This first stage of education vouchers should be introduced as soon as possible. If the Government takes office before May 1987 vouchers should be used for the 1988 school year; a later election date will probably necessitate the introduction being postponed to 1989. Grants for capital spending should for the time being continue much as at present. Later, they should be phased out and all Commonwealth funding of primary and secondary education put into the voucher scheme. |
4.2 ASSISTANCE FOR THE DISADVANTAGED
The basic voucher scheme outlined above permits flexible supplementary assistance for disadvantaged children.
Replace direct expenditure on special schools for disadvantaged |
Disadvantages which might reasonably be recognised in this way include mental or physical disability, and non-English-speaking parents. A higher-value voucher may also be appropriate for some Aboriginal children.
The higher-value vouchers should be introduced at the beginning of the 1989 school year, to allow time for the detailed mechanism and rates to be worked out. There will have to be a compromise between detailed categories and finely-tuned values on the one hand, and cheap and simple administration on the other. Probably two or three rates above the basic voucher will suffice.
We do not expect that there will be many instances of parents failing to get higher-valued vouchers to which their children may be entitled: schools will have a financial incentive to ensure that they do so.
4.3 FURTHER STAGES
Full implementation of the Commonwealth education voucher scheme must be phased in over several years. The key elements are:
- Progressive increase in voucher value and corresponding reduction and eventual elimination of State grants for recurrent school expenditure.
- Reduction and eventual elimination of Commonwealth capital grants for schools (government or private) with some compensatory increase in voucher value.
- Development of a system that ensures that schools or school systems that are subsidised by Commonwealth vouchers provide an education conformable with the policy objectives listed in section 2.5. This will probably require a system of external examination or assessment provided either by government or by the private sector, and some kind of an inspectorate of schools.
- Eventually, the value of the basic voucher should cover the cost of providing a place at a well-managed, adequately-equipped day school. If private schools can achieve lower costs than equivalent government schools (perhaps by more efficient management), then the voucher should cover these costs only, so that State and Territory governments will have to choose between reducing the costs of their schools and raising taxes to subsidise them. Conversely, if government schools achieve lower costs (perhaps there are economies of scale to be reaped), the voucher should reflect these.
- The preceding point may offer a problem to government schools, whose supporters make the valid point that they usually have to accept any child from their catchment area almost regardless of behavioural or other problems and therefore inevitably face higher costs. There are many market-oriented ways of avoiding this problem, including extension of higher-value vouchers (section 4.3) to disruptive children and redeeming vouchers at slightly differing values according to schools' admission policies (the more exclusive the school, the lower the redemption rate). There is a good deal to be said for making parents of a disruptive child responsible for part of the extra cost to the school, thus giving them a stronger incentive to assist his or her socialisation; the Commonwealth can encourage this by appropriate setting of voucher values.
- If necessary, voucher redemption values can also be varied from area to area, making it possible for country schools to offer higher salaries to attract good teachers who might otherwise prefer city life.
- The Commonwealth Education Department would have much less to do and could be greatly reduced in size.
4.4 EFFECTS OF THE VOUCHER SYSTEM
Introduction of education vouchers will not result in any dramatic short-term changes. There are many signs at present of parental dissatisfaction with government schools, and this is already exerting pressure for improvement through the political process. Vouchers will provide a direct link between parents' choice of school and funding to government schools and thus increase parents' ability to exert pressure on government school systems. They will probably also require some revision of government school systems' accounting procedures, which should make it easier for the systems to respond to parental pressure.
There are not enough empty places in independent schools to allow any substantial immediate swing from government to independent, and it should be possible for government school systems to improve themselves in less time than it would take to set up a significant number of privately-financed independent schools. At least in the early years (see section 4.4), the value of the voucher will be substantially less than the average cost of a government school, and most, perhaps all, new independent schools will have to charge fees to meet expenses while government schools will remain "free": in other words government schools will retain their price advantage for some time.
Other advantages possessed by Government school systems include their experience, the range of skills of their teachers, the enormous investment in buildings and equipment. Parents are usually reluctant to disrupt their children's education by changing schools. For all these reasons, government schools will cater for most Australian children for the foreseeable future; but the teachers and administrators will be conscious that an ever-growing proportion of their pupils are theirs by choice and not by necessity.
4.5 STATE GOVERNMENTS AND FURTHER REFORM
As the value of the voucher is increased and other school funding is reduced, the extra cost to parents of sending children to independent schools will fall too, meaning that eventually all parents will become able to choose independent schools for their children -- if there are enough places at such schools. Free-market-oriented State governments will then be able to decentralise or privatise part or the whole of their school systems, basically by allowing schools, or districts, or parts of the system, discretion to spend the voucher money from their pupils as they see fit. At a minimum, governments will retain power to ensure that every child will be admitted to a school not too far from home at no cost over the voucher, and to monitor the curriculum and educational outcomes of all schools.
State governments will, however, come under pressure from teacher unions and education bureaucracies to maintain the status quo and to restrict the provision of new independent school places, thus protecting government schools from competition. This is the reason for the proviso in section 4.2 that the Commonwealth should have the right to approve an independent school for voucher funding even if the State in which the school is sited does not. Despite this, States can by means of town planning or other legislation effectively prevent new independent schools from starting and existing ones from expanding. One factor that will militate against such action is the expense and inefficiency that always tend to characterise monopoly government provision of services. As described in section 4.4, the value of the voucher should reflect the cost of government or independent schools, whichever is less: this means that a State that chose to operate an inefficient school system would have to raise taxes to cover the subsidies. This might be politically more painful than allowing a shift of schooling from public to private sector.
5. UNIVERSITIES AND COLLEGES OF ADVANCED EDUCATION
5.1 INTRODUCTION
The universities and colleges have in recent years suffered the consequences of their having, under the Whitlam Government, become almost entirely dependent on the Commonwealth for their funding. The rapid expansion and generous funding of the early seventies followed by the stringency of the last decade brought many problems. In particular, there simply has not been enough spent on higher education in recent years; inefficiencies and distortions resulting from bureaucratic controls have made things worse. One serious problem, itself a cause of others, is the separation of legal control of tertiary institutions (in the hands of the States) from financial control (Commonwealth). This is complicated by the inevitable tension between any external control and the institutions', especially universities', traditional academic autonomy. Commonwealth control of the purse-strings has been accompanied by:
a shift in loyalties and identification [of academics] from the university to professions or disciplines; a stress on participatory and consensual methods of administration; and a strengthening of trade union attitudes which tend to regard academic staff as "employees" and university administration as "management"; and which stress general, negotiated and detailed conditions of pay and service, and separate distinctions based on scholarly reputation from ones based on administrative or decision-making function. (4)
As pointed out, it should come as no surprise that such shifts "emphasise the conduct of university government by reference to the existing preferences of tenured staff". This is one of the factors that has reduced public respect for tertiary education and public support for spending on it. The measures proposed below will:
- Reunite financial and legal accountability for the institutions in the hands of the States;
- Encourage the institutions to become more responsive to community needs and aspirations, and reduce their dependence on government for funds;
- Increase the equity of assistance for tertiary students and make it easier for people from low-income families to gain a tertiary education;
- Increase cooperation between industry and tertiary institutions in research and development.
5.2 FUNDING TERTIARY INSTITUTIONS
At present, virtually all funding for tertiary institutions is provided by the Commonwealth, an estimated $2.6 billion in 1986-87. No tuition fees are paid by students, although there is a means-tested $250 administration fee and a compulsory "amenities fee" or student guild subscription of up to $150 (depending on the institution and course).
5.2.1 The Case for Fees
The argument for fees is simple: (a) a tertiary education gives the graduate enhanced income for life, both in terms of increased earning power and in terms of the psychic income from increased social status and the joy of a well-stocked mind; (b) the average taxpayer, who finances the tertiary education system, does not have these advantages; therefore (c) "free" tertiary education constitutes income redistribution from poorer to richer, which is undesirable.
The principal arguments against fees are: (1) the nation as a whole benefits from the skills of graduates and therefore should pay for their education; (2) if graduates earn more, they pay more income tax which makes up for the cost of their education; and (3) they discriminate against the poor.
It is true that a well-educated population is a national asset, but there are private gains as well as public ones from tertiary education. (1) is a valid argument for subsidising tertiary education from taxes, but not one that justifies the taxpayer bearing the whole cost. The second objection is beside the point: it is true that people with higher taxable incomes pay more tax, but they do so regardless of whether they have tertiary educations. The third objection, that fees make it harder for people from poor backgrounds to gain tertiary education, might be a grave one: but it is vitiated by the fact that after more than a decade without fees, there has not been a dramatic increase of the proportion of such people in tertiary education, especially not in the upper-middle-class strongholds of law and medicine. Equity will be better served by the reintroduction of fees coupled with an effective support system for students.
Fees for ordinary students should not equal the full cost, but economics and common sense suggest they should be at least loosely linked to the cost of the particular course and that it should be possible for fees to vary between institutions and between States. At first, fees for ordinary first-degree courses should probably be between 10 and 15 per cent of the cost of providing the course. This would entail fees of between about $400 and $2000 per year for most courses.
5.2.2 "Full-Fee" Students
Reliance on government funding inevitably means student numbers are in effect determined by government, and more by what government is prepared to pay than by what the nation needs. Institutions should be encouraged to increase their numbers by taking in additional students, Australian or foreign, who pay fees equal to the average cost of the course they undertake. Course costs are already being worked out by institutions in order to accept overseas students paying full fees. Setting fees equal to the average cost (i.e. direct costs attributable to the course plus an appropriate share in institutional overheads, divided by the number of students) means that they exceed the marginal cost for the extra students and thus ensures that full-fee students more than pay their way.
5.2.3 Transfer of Responsibility to the States
The Commonwealth now funds tertiary institutions through specific-purpose grants to the States (except of course for institutions in the Territories).
The 12.5 per cent gap should be made up by fees, but it is up to the institutions and the States to decide on the details. They should be encouraged but not required to adopt systems similar to that proposed for the ANU (see section 6). One condition that should be imposed with the grants is that tuition fees should not discriminate between local and interstate students.
Grants to the States specifically for tertiary education should be ended General purpose grants to the States should be increased to |
Over time, as the States gain increased financial self-sufficiency, Commonwealth grants for funding of tertiary institutions should be reduced and eventually eliminated except for residual equalisation via the Grants Commission.
5.2.4 Professional Qualifications
"First" professional qualifications such as Diplomas of Education and Baccalaureates of Laws are best considered as part of first degree courses and should be treated as such for all purposes of fees, living allowances, etc.
5.2.5 Continuing Education
Technology is changing faster than ever before, and with it, to some extent, society. Few people now entering the workforce will be using the same base of skills and knowledge when they retire. In-service training, refresher courses, and other forms of continuing vocational education will be more important than ever in future.
Continuing vocational education in tertiary institutions should be Capital expenditure should be taken into account in setting grants to Running costs should be covered by fees, of which government should |
This can be achieved by various combinations of subsidy (to institution or student), tax deductibility (in hands of student or employer) and refundable tax credits (simple rebates would discriminate against low-income students whose tax bill would be less than the fees they paid). The scheme should encourage employers to send staff on courses, without disadvantaging the self-employed. This can probably be achieved by allowing full tax deductibility of fees paid by employers, a refundable tax credit equal to 55 or 60 per cent of fees paid by students, and no direct subsidy. If a direct subsidy is paid, tax treatment should be less generous.
6. HIGHER DEGREES
The number and quality of postgraduate students should be a matter of serious national concern, and this area should receive continuing direct Commonwealth support. The Government should do all it can to give long notice of changes in funding.
6.1 INDUSTRY-SPONSORED RESEARCH
The Government should encourage "joint ventures" in which the cost of |
One principal mechanism for this encouragement should be eligibility of such students for the postgraduate living allowance (see 8.3 below); another should be treating the company's contribution to the cost of the course as research and development expenditure for tax purposes.
7. FEES AT THE AUSTRALIAN NATIONAL UNIVERSITY
The Commonwealth can control the ANU fee structure, and should encourage the States to use it as a model.
Fees for bachelor's degrees at the ANU should be approximately as Ordinary students are charged 12.5 per cent of the average cost of the If a student fails a year through illness or other factors beyond his or Students reading for second or subsequent bachelor's degrees pay |
8. ASSISTANCE TO STUDENTS
The Hawke Government's rationalisation of student assistance schemes and the relationship between the incomes they provide and unemployment benefit was announced in 1985, and intended to be implemented in stages ending in 1989.
With availability of loans to students (see 8.3 below) and the more flexible labour market that will develop as other policies in this volume are implemented, it becomes less important to maintain or increase the value of student assistance payments: other sources of finance will be available. It is more important to make the scheme equitable and administratively simple.
As far as is consistent with the measures proposed in the Welfare and |
8.1 SCHOLARSHIPS
Tuition fees should not be introduced without the accompaniment of scholarships to assist the poor but able.
The Government should establish Commonwealth Scholarships. |
A scholarship should pay for ordinary (not full-cost) tuition fees and provide cash in hand for the purchase of books etc. Criteria for eligibility should be set in consultation with State and Territory education departments and the institutions, but should be based on academic ability and parental income. Students paying full-cost fees, whether at government or private institutions, should be eligible for Commonwealth Scholarships if they meet the academic and parental income criteria; the scholarships should pay 10 per cent of the full-cost fees and provide the usual book allowance. Some of the money budgeted for Commonwealth Scholarships should be set aside for students whose academic record after one or two years of a degree course deserves recognition, although they did not meet the academic criteria for a scholarship at the time of entry.
8.2 POSTGRADUATE LIVING ALLOWANCE
The average postgraduate student is in a quite different position from the average undergraduate. His or her age is one at which independence from parents is taken for granted; the study is usually an alternative to a not badly paid job; and the results are much more likely (or much less unlikely) to benefit the community.
A postgraduate living allowance should be available as a matter of |
8.3 LOANS
The final necessary part of a student support system to accompany the reintroduction of tuition fees is equitable access to loans for tertiary students. Loans should be available for purposes such as paying fees, buying textbooks, and supplementing the student living allowance.
Implementation of other Mandate to Govern policies will in time result in much lower interest rates. Students from moderately well-off families should have little difficulty in getting personal loans from banks, guaranteed by a family member. Banks are usually glad to get young prospective high earners as customers. Problems may arise, especially for students from poor families, because of family opposition to the idea of incurring debt for purposes of education, or if guarantors cannot be found.
The first problem is a matter of attitudes which do not change in a moment. Nevertheless, to people who readily incur debt to buy (depreciating) consumer goods, it is not a big step to the idea of borrowing to invest in an education.
Loan guarantees are a more substantial problem, but one amenable to Commonwealth action. The availability of a guarantee will make financial institutions much more willing to make a long-term loan to a student who will not have a significant income for several years: but the mechanism of the guarantee should maintain the incentive for the lender to satisfy itself of the borrower's good faith, and minimise the incentive for the borrower to default by absconding or by going bankrupt.
The Government should legislate for the Commonwealth to provide a |
This should be done by buying bad debts from eligible lenders, who should include banks and most other financial institutions, and tertiary institutions. To keep the lenders careful, the debts should be bought at a substantial discount. It may be politically necessary to put a ceiling on the interest rate on eligible loans; any ceiling will tend to reduce the availability, but the least objectionable is one defined in terms of prevailing interest rates (e.g. x per cent above the banks' prime rate). A debt having been acquired, the legislation should provide for its recovery by garnishee. If a debtor petitions for bankruptcy the education loan should have the same priority as other moneys owing the Commonwealth.
ENDNOTES
1. Schools Commission 1984 Guidelines; Commonwealth Schools Commission Act 1973.
2. I.J. Gottman, The Concept of Education as an Investment, Report for Presidential Commission on School Finance, Washington, 1971.
3. J. McClaughry, "Who Says Vouchers Wouldn't Work", Reason, January 1984, pp 24-32. See also A.T. Peacock & J. Wiseman, Education for Democrats, London, Institute of Economic Affairs, 1964.
4. R.J. Wood, The Universities: Current Problems and Future Options, Policy Issues No. 4, Toowoomba, 1986.
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