Tuesday, July 21, 2009

Voucher system would be a real education revolution

There has been so much talk about an education revolution from the federal government, one could be forgiven for thinking that we are back to the heady days of a crumbling Berlin Wall.

The big education talk started before the 2007 federal election.

The opposition, led by Kevin Rudd, said in a discussion paper:  "Australia needs nothing less than a revolution in education".  This required "a substantial and sustained increase in the quantity of our investment, and the quality of our education".

There is no doubt that since its election in November 2007 the Rudd government has thrown more taxpayer resources into school education.  Some of the big-ticket items have included student laptops, school trade-training centres, teacher quality and a national curriculum.  Last year the government costed these measures at more than $6.5 billion.

Far from being a revolution, however, these measures basically amount to a continuation of policies pursued by previous federal and state governments.  This year a $14.7bn Building the Education Revolution scheme was tacked on to the government's main education plans.

Under the program, any of Australia's 9540 schools are eligible for funds to build infrastructure on campus.  Building plaqued school monuments such as new halls, gyms and libraries may make for good politics.  The government is undoubtedly hoping for a big tick from school sector representative organisations, principals, teachers and parents for the many construction sites laid open with federally borrowed money.

Instead, what we are seeing is a litany of problems caused by the government's eagerness to shower money on government and non-government schools.  As has been reported during the past month, there are instances of duplicated infrastructure under a "use it or lose it" funding approach.

Some of this infrastructure is being developed for schools earmarked for closure or for remote schools already struggling to fill capacity.

Unsurprisingly, building costs are being inflated by a combination of state government project management protocols, a lack of competition for alternative building contractors and a price premium on account of urgently needed works.

With reports of governments paying double the industry rate for school halls, the school stimulus fiasco seems to confirm American economist Gordon Tullock's hypothesis that the private sector on average pays half the cost of providing comparable government services.

The underlying problem is that the Rudd education revolution rests on continuing the already heavy degree of centralised government control over education.

While the additional spending may give the appearance that the government is doing something on education, it comes at the greater risk of waste, inefficiency and perverse incentives often associated with micromanaged government funding.

There is a need to break down the walls of central controls if school education is to be systemically improved.  Parents need to be empowered in their choice of schools, and schools and teachers need greater incentives to become more responsive to the educational needs of students.

For a real education revolution, governments can look no further than voucher funding that seamlessly follows the student to a government or non-government school of choice.

With students receiving sufficient funds to cover their education costs, a voucher removes in one fell swoop the grab-bag of archaic and often discriminatory existing school funding programs.

One of the other aspects of vouchers that are increasingly hard to ignore is that it can be a most powerful tool to overcome educational disadvantage.

If a voucher system is weighted with more funds for students from low-income families, indigenous students or students with disabilities, then parents of children from these groups can take their children out of failing schools and place them in high-achievement schools.

Far from being in the realm of theoretical fantasy, vouchers are mainstream policy in more than 30 countries.  There is also sufficient evidence from these countries that voucher schemes work.

Vouchers, together with supply-side reforms, have greatly expanded choices for students in a wide variety of places such as Sweden and the American cities of Cleveland, Milwaukee and Washington, DC.

Developing countries such as Bangladesh, Cote d'Ivoire, Colombia and Guatemala are also using vouchers in an effort to improve educational outcomes for the disadvantaged.

They also have been shown to improve the academic performance of students.  Students receiving a voucher have recorded improvements in literacy, numeracy and science test scores in the US.

Importantly, students who remain in their original schools also have registered test score gains.  This is because all schools have a greater incentive to improve their educational packages to maintain their enrolments.  In the words of American education researcher Caroline Minter Hoxby, vouchers are like a beneficial tide lifting all boats.

Studies have shown that vouchers effectively have serviced disproportionate numbers of disadvantaged students in the US.  These have included children from African-American and Latin-American backgrounds, and from low-income and single-parent families.

With students observed to register academic improvements in a voucherised environment, this funding reform promises to redress educational disadvantage in ways that previous efforts have failed to do.

There is also little doubt that vouchers come with a big tick of approval from parents, as evidenced by surveys in several countries.

Accepting that vouchers can make a difference, the next question to ask is how much would it cost?  I estimate that a national school voucher could initially cost at least $700 million a year, depending on voucher design.

For example, an effective approach that groups targeted vouchers for indigenous students and students with disabilities together could cost governments an initial $2bn.

This funding commitment is based on present enrolments and the removal of the funding discrimination between government and non-government schools.

However, vouchers have the prospect of delivering cost savings in the long run as schools discover new ways to deliver education more efficiently.

So, for less than the Rudd government's education revolution, a voucher could be introduced to spur excellence in schooling.

To improve our education system even further, governments need to think outside the existing funding paradigms.  For Australia to introduce a school voucher would represent nothing short of a revolution in how we fund students.


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