PREFACE
Project Victoria originated from a concern among business organisations in Victoria to address the major economic and budgetary issues facing the State, without increasing the burden of taxation, with a view to re-assessing the role of government in Victoria. Its signatory document, Victoria -- An Agenda for Change, was published in May 1991. It recommended major changes in the role of government as a means of improving the competitiveness and role of business.
The project is now well into the second stage of detailing inefficiencies and bringing forward policy proposals for improving efficiency and productivity in key areas of Government activity. These proposals would involve a significant increase in the role of the business sector in a competitive environment that would benefit the consumer. The first two reports dealt, respectively, with the Electric Supply Industry and Ports.
The third report examined Victoria's public health services and the role of government in financing and delivering those services. The fourth report proposed a strategy for replacing Workcare.
This report undertakes a similar examination of government school education services and proposes reforms involving a major reduction in the role of government in delivering those services.
The business organisations supporting Project Victoria are listed on the following page.
While commissioning this study, the supporting business organisations do not necessarily accept all its detailed recommendations, which remain our responsibility.
Richard J. Wood
FOREWORD
This report has been completed using publicly available information on government school services in Victoria and throughout Australia. The Victorian Department of School Education did not respond to our request for access to documentation and senior administrative personnel, despite prior assurances from the Premier, Mrs Kirner, and the then Treasurer, Mr Roper, that such access would be granted. Indeed the head of the Ministry of Education (as it then was) did not even acknowledge our request. Our analysis has therefore focused on those activities of the Department where data could be obtained elsewhere. (For a more detailed note on Sources of Data, see Appendix A.) Nevertheless, our interpretation of the data has benefited from our being able to discuss our findings informally with departmental staff who have direct experience of the services we analysed.
Where the data permit, the analysis of trends in this report extends back to 1981-82. However, consistent, detailed statistics dating back to this year were not always available. 1981-82 was selected as the base year for the analysis of trends both because of constraints on the availability of earlier data, and because this was the last year in which there was a Liberal Party Government in Victoria. The Labor Party has been in office since the State election of 3 April 1982.
EXECUTIVE SUMMARY
This Report examines the provision by the Victorian Government of education services in government schools and concludes that there is scope to achieve substantial improvements in the efficiency with which these services are delivered without reducing the quality of education provided. Victoria's government schools are probably the costliest in Australia whether compared with other State school systems or with non-government schools in Victoria. However, there is no evidence that these higher levels of expenditures have resulted in the provision of better quality education. Indeed, there appears to be increasing levels of dissatisfaction and falling support for the State system by the Victorian community.
The government school system in Victoria faces, therefore, a critical challenge over the next decade to regain and retain community support. It can only do this through changes to the overall philosophy and approach to delivering education services through the State system by:
- allocating resources in line with educational objectives and priorities;
- allowing for diversity and choice through much greater local control of and involvement in staffing and financial issues;
- ensuring that industrial relations processes are responsive to the needs of schools and allow for flexibility and responsibility at the local level;
- supporting the role of principals in providing leadership and direction for the local school community; and
- providing for accountability to the community for resources allocated through performance agreements which focus on quality and price of outputs.
The essential argument of this Report is that, if an efficient and quality education is to be provided in government schools, there needs to be a major reduction in the role of government in delivering educational services.
By drawing on evidence from Commonwealth Grants Commission analysis, pupil/teacher ratios, and average expenditure per student, this Report demonstrates that Victoria has a costly State education system when compared with either other States or with the non-government school system in Victoria.
There are three main areas where efficiency gains are currently obtainable by lifting productivity to levels in other States, viz:
| $ million per annum | |
| 241 |
| 40 (+100) |
| 45 |
| 326 (+100) |
A reduction in teacher numbers would involve some initial offsetting costs in redundancy payments, which, however, constitutes a good "investment" for taxpayers. Such costs aside, the above savings should be achievable over the next two or three years. If the reforms proposed are implemented, they should be supplemented by savings in areas such as WorkCare, where the rate of claims by government school teachers is currently about three times higher than by non-government school teachers, and in interest on lower government debt (assuming the sale of property is used to reduce debt).
There is no evidence that an increase in pupil-teacher ratios of the order that would be involved would, to the extent that it actually led to bigger classes, affect quality. Various studies and surveys suggest that, within the range of class sizes that can be regarded as economically feasible, students' results are unaffected by variations in class size. This is supported by the fact that non-government schools, which have significantly higher pupil-teacher ratios, continue to draw pupils away from government schools.
Current inefficiencies have developed mainly because the Government failed to respond to the ten per cent decline in government school enrolments during the 1980's by commensurately reducing the number of teachers (which fell by only three per cent) and schools (which fell by 5.5 per cent). This has resulted in Victoria having the lowest pupil/ teacher ratio in government schools and the smallest average school size (except for the Northern Territory).
Based on assessments by the Commonwealth Grants Commission, Victoria has consistently "over-spent" on government schools education in the past ten years. Shortly after Labor took office in 1982, the degree of "over-spending" on government schools, compared to the rest of Australia, increased by 50 per cent. This reflected agreements between the Government and the teacher unions in early 1982, to both award large pay rises and at the same time reduce productivity by agreeing to hold teacher numbers constant at a time of major decline in enrolments.
The Commission's latest assessment (for 1990-91) indicates that "over-spending" is running at around $270 million per annum or about $60 per head.
The Government's failure to respond to changes in Victoria's demographic and budgetary situations reflects the fact that, to a considerable extent, teacher unions have "captured" the operation of education services in regard to staffing and working conditions so that the education system has become unduly teacher-driven. Yet teachers appear to have relatively low levels of morale and job satisfaction, as reflected in the high rate of WorkCare claims and absenteeism. Government funded groups purporting (incorrectly) to represent parents' interests have also unduly influenced education policy. Government policy also reflects an apparent belief that high spending equates to high standards.
The extent of union influence is reflected in the detailed and management-inhibiting industrial agreements which the Government has concluded with teacher unions and which effectively pre-determine about 68 per cent of the schools budget. These agreements have enshrined excessive staffing levels and entrenched inefficient working practices, and created a "culture" that is concerned more with educational "inputs" than with outcomes. That recent attempts by the Government to start reducing teacher numbers have been completely frustrated is reflected in the increase in teachers between February 1990 and February 1992.
Notwithstanding that the government school system provides services at little or no direct cost to parents, and even though average pupil-teacher ratios are smaller in government schools, there has been a continuing drift to fee-charging private schools and a continuing erosion in public confidence in and support for the system. This drift has occurred in the face of Government grants to non-government schools that are below the level in other States. The proportion of school pupils attending non-government schools increased from 27 per cent in 1981 to 32.4 per cent in 1991 and Victoria has the second highest proportion (after the ACT) of school pupils at non-government schools.
The drift to non-government schools is not simply a matter of parental concerns about the Victorian Certificate of Education, important as they are. The drift is also occurring in other States and appears to reflect concerns about the standards of work, teachers and student behaviour at government schools. This, in turn, suggests that there are fundamental problems with the basis on which government school education services are presently provided.
Two major problems are:
- the lack of management autonomy, reflected in particular in the limited powers of principals and the failure to give principals primary responsibility for the management of the staff and finances of schools. Schools in the State system have been denied the capacity to respond to community needs and interests at the very time they have been given greater responsibility for educational policy, curriculum and school based assessment;
- the lack of competitive pressures, reflected in the downgrading of external assessment and the absence of comparisons of students' results as between schools.
The clearest and most urgent need is to reduce the Government's role to one of being a funder of education services and not a deliverer of such services. However, a move to a voucher system, while desirable in the longer term, is unlikely to be politically acceptable in the immediate future.
The best practical approach to reform, therefore, would be to give individual government schools the maximum degree of autonomy consistent with the need for the Minister of Education to be accountable to Parliament and the taxpayer for the efficiency and quality of education services. Moves to increase management autonomy have already been implemented in the Victorian TAPE system, which now appears to be operating more efficiently than in other States.
An essential element in such a reform for government schools would be to formalise the decentralisation of industrial relations in the government schools system by giving school principals power to make staff appointments, and to negotiate terms and conditions of employment, within the budgets provided for their schools. Staffing levels and conditions of employment need to reflect and be driven by educational objectives and budget parameters, not the other way around. Performance and funding agreements need to be established for each school, encapsulating both educational and resource targets for the school.
It is also important to establish a more competitive environment by setting performance standards and requiring the publication of performance outcomes of individual schools and of the collective results of student assessments and tests.
A change of management philosophy for the school system along these lines will:
- allow schools to develop a teaching staff which is responsive to the needs of the local community;
- increase teacher morale and job satisfaction;
- give flexibility to schools in the way they spend their budget;
- place resources where decisions are made and programs delivered;
- simplify and clarify the mission of central and regional bureaucracies;
- provide for improved productivity and efficiency through locally negotiated work practices which meet individual school needs; and
- restore public confidence in, and support for, the public education system by ensuring that, in the context of a State-wide curriculum, schools are responsive to the needs of their local community.
INTRODUCTION AND OVERVIEW
There are few services provided by government at the State level more vitally important than education. Providing children and young people with the opportunity to lay the intellectual and vocational foundations for life and work is perhaps the most significant role any society can perform. As such there is a natural and inevitable concern on the part of parents -- and the community generally -- to ensure that the provision of educational services is administered efficiently, and that it provides the opportunity to achieve quality outcomes for students.
While there is a broad consensus in the community about the value and priority that governments must accord education, there is frequently divergence about the means to achieve a quality education system. Commonly, too, the perception takes hold that higher levels of spending equate to higher standards, or conversely, that achieving greater efficiencies means a reduction in standards. This Report examines school education spending in Victoria and concludes that there is considerable scope for efficiency gains -- without reducing quality standards. (1)
Achieving higher levels of efficiency in education is not an attempt to single out education for "special treatment" and erode the stability and viability of the system. It is, rather, an attempt to subject the system to the same kinds of scrutiny that governments at all levels are demanding of services across the board. As the largest item of State government spending, education cannot be exempted from scrutiny and change. It, too, must operate as cost-efficiently as possible, particularly in a context where the Victorian Government has a major debt problem and is running an underlying Budget deficit likely to exceed $2 billion in 1992-93.
In those circumstances, the imperative for all government departments and agencies is to make service delivery more efficient and effective, and to eliminate work practices which have contributed to the growth of departmental budgets beyond prudent levels, and in excess of the capacity of Government to pay.
The primary focus of this study is the Victorian School Education program, and within that program, the efficiency and effectiveness of recurrent expenditure on primary and secondary education services provided in government schools. In 1991-92, expenditure by the Department of School Education (DSE) amounted to $3.1 billion, or about 20 per cent of total budget sector outlays, (2) which was the largest single Departmental vote in the State Budget. Of the total expenditure, about $2.7 billion was allocated to School Education from the State's own resources (including general purpose grants from the Commonwealth), and a further $400 million represented the on-passing of specific (tied) Commonwealth grants for non-government schools.
The DSE only became a separate department in January 1992, following machinery of government changes, which saw the former Ministry of Education and Training divided into the Department of School Education, and the Department of Employment, Post Secondary Education and Training. The DSE then assumed responsibility for the provision of primary, secondary and special education schooling and support services for Government schools as well as administering the grants to non-government schools.
Table 1: Expenditure on School Education (1991-92), $m
| Planning & Co-ordination Services | School Support | Non-govt. Schools | Primary Educaton | Secondary Educaton | TOTAL | |
| CURRENT OUTLAYS Other (a) C'wealth grants onpassed TOTAL CURRENT OUTLAYS | 121.2 121.8 | 121.2 121.9 | 193.4 378.8 572.2 | 999.5 999.5 | 1.018.7 1,018.7 | 2,454.7 378.8 2,833.5 |
| CAPITAL OUTLAYS Other (b) C'wealth grants onpassed TOTAL CAPITAL OUTLAYS | 2.9 29.9 | 1.4 1.4 | 0.1 25.7 25.8 | 76.5 76.5 | 118.7 118.7 | 199.7 25.7 225.3 |
| TOTAL OUTLAYS | 124.0 | 123.3 | 597.9 | 1,076.0 | 1,137.4 | 3,058.7 |
| Total C'wealth grants onpassed | 404.5 | 404.5 | ||||
| Total outlays from State resources | 124.0 | 123.3 | 193.5 | 1,076.0 | 1,137.4 | 2,654.2 |
| Per cent of State outlays | 4.7 | 4.6 | 7.3 | 40.5 | 42.9 | 100.0 |
(a) Other includes superannuation payment, salaries. purchases of goods & services, interest payments, subsidies, persona) benefit payments, less charges and reimbursements.
(b) Other includes gross fixed capital expenditure, capital grants and transfer payments.
Source: Budget Paper No 5 1992-93.
The Report concentrates on the period 1981-82 to 1990-91 -- this being the period for which comparative statistics are most readily available. This period also broadly coincides with the main period in office of the Labor Government, and thus the review provides an assessment of that Government's performance in education.
For analytical purposes the most comprehensive data on total education expenditure is provided by the Commonwealth Grants Commission (CGC), and the Bureau of Statistics (ABS), both of which publish data that is comparable as between States and over time. The ABS figures show that total recurrent budget expenditure on education by the State Government from its own resources (i.e. excluding Commonwealth grants for on-passing) has occurred for a decreasing proportion of total recurrent expenditure from the State's own resources since 1981-82. However, between that year and 1990-91, recurrent expenditure on education from State resources increased at an average annual rate of 8.4 per cent or about two per cent per annum in real terms. At a time when enrolments at Government schools were falling, this indicates that education has fared better than suggested by its declining proportion of the total Budget.
Table 2: Recurrent Expenditure ($m) on Education, Victoria (selected years)
| 1981-82 | 1982-83 | 1985-86 | 1986-87 | 1980-90 | 1990-91 | |
| Education recurrent outlays less Commonwealth recurrent grants on-passed (a) Recurrent expenditure on education from State sources | 2,091 591 1,500 | 2,369 670 1,699 | 3,092 880 2,212 | 3,281 918 2,363 | 4,123 1,035 3,088 | 4,229 1,126 3,103 |
| Total State budget recurrent outlays less Commonwealth recurrent grants on-passed Recurrent expenditure from State sources | 5,127 710 4,417 | 6,076 798 5,278 | 8,481 1,037 7,444 | 9,422 1,086 8,336 | 12,238 1,236 11,002 | 12,991 1,335 11,656 |
| Proportion of recurrent expenditure from State sources going to education Per capita expenditure on education Per capita expenditure on education (constant $ 1981/82) | 34% $378 %378 | 32% $421 $380 | 30% $534 $402 | 28% $565 $398 | 28% $710 $429 | 27% $704 $406 |
| 1981-82 to 1990-91 | 1985-86 to 1990-91 | |||||
| Average nominal compound growth on education {c} Average real compound growth on education {b} {c} | 8.41% 1.97% | 7.00% 1.41% | ||||
| Aveage nominal compound growth (per capita) {c} Average real compound growth (per capita) {b} {c} | 7.15% 0.78% | 5.68% 0.16% | ||||
{a} Includes Commonwealth grants tor non-govornment schools, universities and colleges of advanced education, a small program for schools and a small amount for TAFE.
(b) Using Government consumption deflator.
(c) From State resources.
Source: Data on total education recurrent outlays supplied by ABS from unpublished information. Data on Commonwealth grants on-passod supplied by Victorian Treasury. ABS Catalogue No. 3101
The CGC data provides independent evidence that Victoria is significantly over-spending in education. The Commission, the authoritative body responsible for recommending the distribution of federal general revenue grants among the States, produces analyses to show what it should cost to provide services at the same level as in the other States. Based on the CGC's analysis Victoria has consistently "over-spent" on government schools education in the past ten years -- and this over-spending amounted to $274 million in 1990-91. This means that Victorians were paying over $60 per head of population more than needed to provide a level of service comparable with other States and Territories.
Figure 1: Percentage "Over Spending" on Government School Education
1981-82 to 1990-91
Source: Commonwealth Grants Commission
The analysis in this Report suggests, however, that at least in the initial stages of reform, the level of savings achievable is considerably higher still. Principally on the basis that elements of the various components of government educational services were brought into line with the average for the rest of Australia, higher levels of annual savings should be realisable -- over $320 million -- as well as a one-off saving of around $100 million.
The questions that need to be posed are: why are Victorians paying so much more for their educational services? What is driving the higher cost, and what can be done about it? Are Victorians getting good value for money from their education dollar? On the basis of the analyses in this Report, the conclusions we have reached are:
- "over-spending" in the education sector has occurred over the last ten years under a Government committed, as a matter of philosophy and policy, to higher levels of spending in the apparent belief that higher spending equates to higher standards. Shortly after Labor took office, the degree of over-spending on government schools, compared to the standardised figure for the rest of Australia, increased by 50 per cent;
- despite significantly higher levels of spending on government schools, the "market reaction" has been negative, with Victorian parents continuing to send their children to non-government schools in increasing numbers;
- industrial agreements between teachers and the Ministry of Education over the past ten years have enshrined excessive staffing levels and entrenched inefficient work practices. These agreements effectively pre-determine a large proportion of expenditures, and the character of the expenditure, on education and are struck as a consequence of industrial negotiation between the education administration and teachers' unions. These agreements severely limit the capacity to manage the system cost-effectively;
- while Victoria's government school pupil enrolments have been steadily declining, the reduction in teaching staff numbers has been considerably less. This also reflects the force of the industrial agreements cited above. In 1982, for example, an agreement between the Victorian Teachers Union (VTU) and the incoming Labor Government ensured that primary teacher numbers would be held at 1982 levels notwithstanding a projected major decline in overall student numbers;
- despite some efforts to decentralise decision-making in education, key decisions are still made at the centre and there is little opportunity for decision-making about resource usage at the local level. Over the past five years, there have been significant reductions in staff in central administration, but without commensurate changes to the management philosophy and approach (i.e. greater devolution), the effect of these changes has been to further weaken the system. Furthermore, given that more than 90 per cent of the expenditure occurs at school level, the staff reductions have not addressed the fundamental issues of budget management and control;
- Victoria has a teacher-intensive system in which more highly paid teachers frequently do work done elsewhere by lesser paid teachers' aides;
- WorkCare claims and absentee rates by staff in Victorian government education are relatively high compared to those in non-government schools. (Between 1986-87 and 1990-91 WorkCare claims among teachers in the government primary school sector were 2.9 times those in the non-government primary school sector. In the secondary sector over the same period, the ratio was 2.3 claims in the government sector for every one in the non-government schools sector);
- despite the decline in pupil enrolments, rendering some schools uneconomic, school closures have not kept pace with the dwindling enrolments;
- achieving productivity gains by teachers (through larger class sizes and increased contact hours) has not been a priority in the way in which education has been administered. The ratio of pupils to teachers has continued to fall and has been held at the lowest levels in the nation, entrenching higher costs in the system. Similarly, there appears to have been a reduction in class contact hours by teachers as a consequence of industrial agreements.
* * *
The review of the financial and operational performance of the provision of school education services shows that:
- based on the Commonwealth Grants Commission's analysis, in 1990-91 Victoria spent about $274 million more on government schools education than was necessary to provide a level of service comparable with the average for other States. By contrast with this over-spending on government schools, grants to non-government schools were $38 million less than the average for the rest of Australia. Thus, part of the above-average spending on government schools is being funded, in effect, by keeping grants to non-government schools below levels in other States;
- in Victoria, government schools are the most generously staffed with teachers in the country. At 13.5, the average pupil/teacher ratio (PTR) in government schools in Victoria in 1991 was the lowest in Australia; for the rest of Australia the ratio is 15.8. If pupil/teacher ratios were raised to the average for the rest of Australia, that would reduce the number of teachers by 5,500 full-time equivalent teachers (FTEs) or 14 per cent. By contrast with government schools, the average PTR in non-government schools in Victoria is 15.6, only slightly lower than the average for the rest of Australia -- but well above that for government schools;
Figure 2: Pupil/Teacher Ratio, Government Schools
(selected years)
Source: ABS Catalogue No. 4221.0 (1987, 1991), ABS Catalogue No. 4202.0 - surveys of the effect of class sizes on the "output" of students show that, within the range of class size that it is economically feasible to consider, smaller class sizes do not result in a better output. In any event, it is not clear to what extent the reduction in pupil/teacher ratios has been translated into smaller class sizes on average; (3)
- Victorian government schools have the lowest ratio of non-teaching school-based staff to teachers. This partly reflects the fact that less use is made of lower cost teacher aides than most of the other States (resulting in over-use of higher cost teachers for more administrative jobs). However, the need for non-teaching school-based staff is reduced because, by contrast with some other States, more building and maintenance is carried out by staff employed by other Ministries;
- following a significant downsizing of the central administration and non-school staffing over the past five years, Victoria appears to have a more economical educational administration, with the lowest ratio of non-school based staff to school based staff at government schools and easily the lowest proportion of Executive staff to total non-school based staff. However, any "savings" in staffing in this area provide only a partial offset to the excess numbers of teachers. Moreover, the reductions in support to schools has not been replaced by giving principals increased responsibility for managing staff and financial resources;
- Victorian government schools have the smallest average school size of any State, with an average of 263 pupils per school, compared to the 309.5 for the rest of Australia, and 358 for Victorian non-government schools. If Victorian government schools were to achieve similar student/school ratios to the rest of Australia, 230 government schools could be closed. Achieving the same size as non-government schools would enable the closure of about 530 schools;
Figure 3: Government School Size, Average Number of Students
(selected years)
Source: ABS Catalogue No. 4221.0, (1987, 1991), ABS Catalogue No. 4202.0 - despite higher levels of staffing in government schools, Victorian parents are continuing to send their children to non-government schools in increasing numbers. In fact, between 1981 and 1991, government school enrolments actually fell by 10 per cent (or 62,000 students), considerably more than the one per cent reduction in government school enrolments in the rest of Australia. In consequence, the proportion of school pupils attending non-government schools increased from 27 per cent in 1981 to 32.4 per cent in 1991. Victoria has the second highest proportion (after the ACT) of school pupils at non-government schools;
- in 1990-91, average expenditure per student at government schools was $4,146 -- which amounts to $433, or ten per cent, more than the average for the rest of Australia. However, there appears to have been some closing of this gap. Over the period 1985-86 to 1990-91, the rate of growth of expenditure per government school student has been less than the average for the rest of Australia, and Victoria had negative expenditure growth over this period in real terms of one per cent per annum;
- industrial agreements between the Ministry of Education and teacher unions effectively pre-determine a large proportion of the Victorian education budget. About 90 per cent of the Budget for salaries and associated costs for schools (currently almost $2 billion) is covered by these industrial agreements. In fact, around 68 per cent of the total schools budget is mandated by such agreements. For the past ten years the education system has largely been run by unions and education bureaucrats (including ex-union activists) on the basis of negotiated industrial agreements which severely limit the capacity to make discretionary budget decisions and which have been negotiated on a basis that gives educational and/or budgetary objectives a lower priority than union objectives. These arrangements also limit management flexibility and erode the responsibilities and accountability of principals and managers. They entrench in the system an industrial culture which inhibits initiatives for better cost performance;
- on average, government school employees are three times more likely to submit a standard WorkCare claim than their non-government school counterparts;
- in the non-teaching areas, as well, union "capture" of the system has led to failures to introduce efficiencies. For example, union resistance is preventing potential savings that could amount to $45 million per annum from contracting-out cleaning;
- large pay rises granted, particularly to teaching staff, in the early period of the Labor Government had serious effects on subsequent Budgets, as did agreements to hold teacher numbers at 1982 levels in the face of a projected major decline in overall student numbers due to demographic reasons;
- controls over expenditure appear inadequate as the Ministry has exceeded its budget by an average of more than $70 million each year. The continued use of the Treasurer's Advance to finance such over-runs is not consistent with its purpose.
The foregoing, and other evidence, suggests that teacher unions have to a large extent "captured" the system and have thus been able to substantially determine staffing levels and work practices.
Our review of Victorian school education services suggests that, despite real reductions in recurrent expenditure per student since 1985-86, (4) there are still significant savings to be achieved, mainly by bringing the delivery of Victoria's education services into line with the average for the other States. Based on 1990-91 figures, some possible avenues of saving are as follows.
Such savings would take time to achieve and, in the initial stages, there would be an additional cost arising from redundancy payments to teachers. There could also be some on-going additional costs for school transport as a result of closures of government schools in more remote areas. However, given that the pay-back period for redundancy payments is relatively short, the aim should be to achieve such savings by the end of 1993-94 including, where necessary, by a program of compulsory redundancies. If the reforms proposed in Chapter VI are implemented, there should be additional savings from a reduction in WorkCare claims. To the extent that proceeds from the sale of government schools are used to reduce government debt, there would also be an additional saving from the reduced interest costs.
What is done with any savings as a result of such changes is a separate issue. They could be used to improve the quality of education services at government schools or at TAPE Colleges. In present circumstances, however, the top priority would be to reduce the budget deficit, and hence the growth in Victoria's debt.
Possible Areas for Saving in Education Spending
| $ million | |
| 241 |
| 8-18 9-22 100 |
| 45-46 |
VICTORIAN SCHOOL EDUCATION IN PERSPECTIVE
2.1 SCHOOL EDUCATION PROGRAMS
As previously stated, in January 1992, machinery of government changes were effected which saw the former Ministry of Education and Training divided into the Department of School Education (DSE) and the portfolio of Employment, Post Secondary Education and Training. The DSE administers its activities through five program areas which are described below:
- Planning and Co-ordination Services -- responsible for planning, monitoring, policy co-ordination and management support services in support of the DSE. Major activities include resource co-ordination, human resource planning, industrial relations, education programs and projects planning, and information technology. This area also covers VCE development, the State Board of Education, and the Victorian Curriculum and Assessment Board. In 1991-92 State expenditure for this program was $124 million or five per cent of the Department budget (and this is estimated to increase to $136 million for this financial year);
- Schools Support -- provides maintenance and operation of support services for schools and operates a decentralised network of school support centres within a regional framework to provide curriculum, professional development and other services to schools. These services include: regional resources and administration; regional planning and support services; school support centre services; specific service co-ordination and benefits to students. In 1991-92, expenditure for this program was $123 million, or five per cent of the Department budget. This expenditure is estimated to increase by three per cent in the current financial year to $127 million;
- Non-government schools -- responsible for the distribution of the State Government Recurrent Grant and the Commonwealth Recurrent Grant. Services are also provided to administer the registration of non-government schools and the teachers who work in them. In 1991-92, expenditure by the State on this program was $193 million, or seven per cent, and this level of expenditure is estimated to be maintained for 1992-93;
- Primary Education -- responsible for the provision and operation of government primary schools, including the teaching and learning programs they offer, school administration and student services. The Program provides for the salaries of teachers including specialist and replacement teachers and integration and ancillary staff, for the capital and maintenance costs associated with the provision of school accommodation, and for the various grants and operating funds made available to schools. In 1991-92, expenditure for this program was $1.1 billion or 41 per cent of the Ministry budget. These proportions are maintained in the 1992-93 estimates of expenditure;
- Secondary Education -- responsible for the provision, operation and school based costs of government secondary colleges. It provides for the salaries of teachers including specialist and replacement teachers as well as of integration and ancillary staff; for the capital and maintenance costs associated with the provision of school accommodation; and for the various grants and other funds available to colleges. In 1991-92, expenditure on this program was $1.1 billion, or 43 per cent of expenditure, and this is expected to increase by 2.2 per cent for this financial year.
Expenditure in 1991-92 on salary costs (5) for the School Education program represented $1.97 billion (or 74 per cent of the State's total expenditure from its own resources of $2.7 billion). Only six per cent of these salary costs were for programs other than Primary and Secondary Education. Therefore controlling salary costs within the DSE (and in particular within the Primary and Secondary Education programs) is critical in managing expenditure in the education portfolio.
By contrast, capital expenditure by the State (excluding Commonwealth grants on-passed for non-government schools) for the School Education program was $199 million in 1991-92, or less than 10 per cent of the State's total outlay.
2.2 SIZE AND STRUCTURE OF VICTORIAN SCHOOL EDUCATION
Victoria has the second largest government education system in Australia. In 1992 over 539,000 school students attended 2,016 schools; and over 41,000 teachers (FTE) were employed by the Department of School Education. (6)
The DSE administers and delivers its education services through eight regions. The largest of these regions is the Eastern Metropolitan region with 124,796 students (FTE), while the smallest is the Central Highlands with 25,451 (FTE) students. (7)
Each of Victoria's metropolitan regions is more than double the size of Tasmania's whole school education system (in terms of student numbers), and all but one of the remaining regions are approximately the size of the ACT system.
The table below provides comparisons between the eight regions in Victoria.
Victoria's education system is primarily urban based. In 1992, 66 percent of government students were based in metropolitan regions and, for the non-government sector, between 73 per cent per cent (Catholic), and 85 per cent (Independent) students were in metropolitan regions.
The table below compares the sizes of government school systems throughout Australia (8) using three measures -- number of students, schools, and teaching staff in 1991. The table shows some key differences between Victoria's government school system and those of the other States:
- Victoria's average school size is the lowest in Australia (with the exception of the Northern Territory) with 263 students per school compared to 309.5 for the average for the rest of Australia. Victoria has more schools per head of population (one school for every 1,512 people) than the average for the rest of Australia (one school for every 2,372 people);
- the average school size in Victoria is similar to that in Tasmania despite the fact that the density of population (9) in Victoria is more than double that in Tasmania;
- the pupil/teacher ratio is the lowest in Australia with 13.5 pupils per teacher compared to 15.8 for the rest of Australia;
- the Victorian system is approximately equal in terms of number of students, schools and teaching staff, to the combined school education systems of Queensland and South Australia. By contrast, in terms of square kilometres, Victoria is 12 times smaller than the combined area of these States;
- NSW has 40 per cent more students than Victoria and a population density half that of Victoria's, but only seven per cent more schools.
Table 3: Comparison of Education Regions -- Government Students, Schools and Staff (1992)
| Western Metro | Southern Metro | Eastern Metro | Barwon South Western | Central Highlands Wimmera | Loddon Campaspe Mallee | Goulburn North Eastern | Gippsland | Total All Regions | |
| Students (FTE) Primary Secondary Special Language Total (a) % of Total | 64,486 54,924 1,248 682 121,320 22% | 63,865 44,499 1,154 434 109,952 20% | 69,813 53,643 1,215 125 124,796 23% | 25,257 19,328 334 44,919 8% | 14,129 11,070 252 25,451 5% | 21,823 17,108 259 39,190 7% | 21,898 16,006 134 38,938 7% | 20,345 14,170 152 34,667 6% | 301,616 231,648 4,748 1,221 539,231 100% |
| Schools Primary Secondary Special Language Total (b) % of Total | 246 87 24 1 358 18% | 215 62 18 1 296 15% | 256 71 21 1 351 17% | 172 35 8 215 11% | 148 24 7 179 9% | 169 34 9 212 11% | 177 31 7 215 11% | 162 24 4 190 9% | 1,547 368 98 3 2,016 100% |
| Teachers Primary Secondary Special Total | 4,409 5,184 323 9,918 | 3,882 3,942 282 8,088 | 4,158 4,657 324 9,139 | 1,875 1,743 84 3,502 | 1,035 1,023 64 2,122 | 1,469 1,594 66 3,129 | 1,447 1,529 38 3,012 | 1,344 1,257 39 2,640 | 19,399 20,929 1,218 41,546 |
| Students per school Primary Secondary Special Language School size per region | 262 631 52 662 339 | 297 718 64 434 371 | 271 756 58 125 356 | 147 552 42 209 | 95 481 36 142 | 129 500 29 185 | 124 545 19 181 | 126 590 38 182 | 195 629 48 407 267 |
| PTR Primary Secondary Special Average | 14.63 10.59 3.86 12.23 | 16.54 11.29 4.00 13.60 | 16.79 11.52 3.75 13.66 | 15.06 11.09 3.98 12.83 | 13.65 10.82 3.94 11.99 | 14.88 10.73 3.92 12.52 | 15.13 11.06 3.72 12.93 | 15.14 11.27 3.90 13.13 | 15.55 11.07 3.90 12.98 |
(a) Totals may not add due to rounding
(b) Primary-secondary schools have been split 50:50 between primary and secondary categories. Where only one school of this type in the region exists, it has been included in the secondary school numbers.
Source: "Facts and Figures about Victorian Schools",
Department of School Education, February, 1992.
On the basis of Victoria's apparent advantages in terms of size and relative compactness (and other factors), the Commonwealth Grants Commission assessed Victoria in 1990-91 as being able to spend about six per cent less per head than the average for the other States in order to provide a comparable level of services. In fact, however, total current expenditure per head on Victorian government school education exceeded the Commonwealth Grants Commission standardised amount by 14 per cent or $274 million.
Table 4: Government Schools, Teaching Staff (Australia) 1991
| Schools | Students | Teaching staff (FTE) | Ave no. of students per school | Pupil/teacher ratio | |
| VIC | 2,029 | 533,386 | 39,447 | 262.9 | 13.5 |
| Rest of Australia NSW QLD SA WA TAS NT ACT | 5,441 2,176 1,319 696 761 247 148 94 | 1,683,840 746,417 398,025 186,814 218,871 65,662 27,161 40,890 | 106,448 45,631 25,185 13,031 13,755 4,171 1,984 2,691 | 309.5 343.0 301.8 268.4 287.6 265.8 183.5 435.0 | 15.8 16.4 15.8 14.3 15.9 15.7 13.7 15.2 |
| Australia | 7,470 | 2,217,226 | 145,895 | 296.8 | 15.2 |
Source: ABS Catalogue No. 422l.O (1991)
The Victorian education system is thus being run on a relatively more expensive basis than its counterparts in other States. This is despite the fact that, over the last ten years (and in particular, over the last five), Victoria's share of total enrolments has fallen by two per cent, and the government school system in particular has experienced a reduced share of the total national and Victorian enrolments. This is in contrast to most other States, where government school enrolments have remained steady or increased slightly.
This suggests that, despite much lower pupil/teacher ratios than the non-Government sector, the Government school system has not managed to provide an education system which is attractive to parents, and has failed to implement the necessary adjustments to improve its cost of operations.
2.3 INDUSTRIAL RELATIONS
A particular feature of the government school system is the dominant role played by the industrial agreements negotiated between the Government and the teacher unions. Details of the current agreement between the Victorian Secondary Teachers' Association (VSTA) and the DSE in June 1991 are set out in Appendix B. Agreements have also been negotiated with the Federated Teachers' Union of Victoria (FTUV) covering primary and secondary schools, special schools and special development schools. These agreements are negotiated in a context where budgetary or educational objectives are given little priority. Therefore, any budget savings/targets set in the budget context are virtually unachievable once they are set as there are no mechanisms to link budget targets to school expenditures.
These agreements also extend beyond the key conditions of employment for teachers and provide a straight jacket for the education system. Some examples of these are:
- prescriptions of school management arrangements;
- prescriptions of procedures to be followed and agreed to be reached on the reorganisation or closure of schools; and
- procedures for the allocation of special needs teachers which effectively give the teacher unions a power of veto.
The agreements thus provide an institutional framework which gives teacher unions the capacity to exercise effective control over the Victorian school system at two levels:
- at the individual school level, through effective control over management decisions by Local Administrative Committees and by other committees; and
- at the system-wide level, through the pre-determination in the Agreements of major decisions in regard to staffing and teaching duties and through effective union control of major decisions such as the allocation of the special needs pool, allocation of support staff in schools, and physical facilities in schools.
The character of the Industrial Agreements -- and the manner in which they constrain proper management responsibilities -- is evident in their provisions. The Agreements set out in detail:
- organisation at the school level (e.g. Section 11.6.1 of the current Ministry of Education/VSTA Agreement sets out that "staffing is based upon the provision of teachers to schools as outlined within this Agreement. Each school is therefore expected to organise programs, class sizes, and teachers' duties according to the terms of this Agreement");
- conditions of work and duties of teachers (e.g. Section 13 of the above Agreement sets out the hours of work for teachers, but also sets out the instructional component of teachers' duties (18 hours per week), and defines the time-frame within which schools shall organise such teaching (22 teaching periods within the 18 hours in 1992, and 21 periods in 1993). Student supervision, according to the Agreement, "shall not exceed 45 minutes");
- the formula entitlement of schools to teachers (e.g. Section 14.2.1 of the current Ministry of Education/FTU Agreement sets the entitlement for primary schools at "one teacher for the first 18 pupils enrolled (or part thereof) and one teacher for each 21 pupils enrolled (or part thereof) thereafter"). This essentially sets the productivity level for teachers; another effect is to entrench small uneconomic schools;
- the increase in teacher resources for various special needs (e.g. Section 14.4.5 of the same Agreement sets the number of English as a Second Language Teachers as follows: 1990 -- 349; 1991 -- 379; 1992 -- 409; 1993 -- 409.) These settings entrench increases in teaching resources regardless of pupil numbers and hence irrespective of need;
- study leave entitlements for teachers (e.g. Section 14.10 sets out that there shall be 150 equivalent full-time study leave awards for staff covered by this Agreement in 1991, rising to 190 in 1993 awards);
- curriculum and parent report days (e.g. Section 18.1 sets out that all work locations shall be entitled to conduct three curriculum/planning days and one parent report day each year);
- physical standards for teachers in schools (e.g Appendix A to the current Ministry/ FTU Agreement sets out a schedule for staff room furniture as "6 six-seat dining tables, 36 cafeteria chairs, 2 occasional tables, 12 easy chairs, a refrigerator, stovette and 15 litre boiling water unit").
From the foregoing it can be seen that Industrial agreements between the Ministry and the teacher unions represent a quite dramatic abnegation of management responsibility by the Ministry. To repeat the point made earlier, about 90 per cent of the Budget for salaries and associated costs for schools (currently almost $2 billion) is covered by these industrial agreements. This amounts to around 68 per cent of the total schools budget. Furthermore, when grants to schools (both government and non-government) are included, it is obvious that there is little room left for discretionary budget decisions. This was evident recently when the Schools Education budget for 1992-93 was being framed; a Government report stated that, as a result of the Government promising to "honour all agreements ... it cannot make cuts in the number of teachers, despite an oversupply". (10)
While the Agreements do not specifically provide for union control at the school level, the capacity of school principals to manage is very heavily constrained both by the terms of the Agreements and by the knowledge that an attempt to exercise authority in opposition to union policy on a particular issue would lead to an industrial conflict in which the principal would not receive the support of the Ministry.
The dominant role of the unions in setting work practices in the Industrial agreements has resulted in the creation of a system which provides inadequate support, recognition and reward to teachers for the application of their professional pedagogical skills. Teachers therefore find teaching unsatisfying and this is reflected in union demands for less contact hours. The unions' role also makes it difficult for individual teachers to refuse to become union members and to speak publicly in opposition to government/union policy. It is also relevant that the Department's advice and procedures guide for promotion to the newly created Advanced Skills Teacher (AST) category lists amongst the criteria that must be met "knowledge of and commitment to the development and implementation of equal opportunity/social justice strategies" (emphasis added). The existence of such criteria inevitably inhibit criticism by teachers of current education policy.
The organisational culture exemplified in these Agreements is one in which resources are seen as ever-expanding, regardless of pupil numbers and requirements for greater productivity. Certainly, there is reference to "Ongoing Efficiencies" in the Agreements. However, typically, they specify that savings achieved through "agreed efficiencies" shall be "used to provide additional resources for schools in areas such as professional development and VCE implementation". In other words, yet again the capacity of the system to reduce costs is severely circumscribed. It is noteworthy, too, that the direct beneficiaries of any savings are not students but teachers.
EXPENDITURE ON EDUCATION
3.1 COMMONWEALTH GRANTS COMMISSION ASSESSMENTS
The Commonwealth Grants Commission is widely recognised as the most authoritative source of comparisons of relative recurrent expenditures of States and the factors accounting for the differences in per capita expenditure. The assessments by the Commission are used by it for the purpose of framing its recommendations on the distribution of general purpose revenue assistance among the States. The Commission is thus recognised as the "umpire" in determining each State's share of such assistance.
CGC assessments are made by comparing two sets of data. First, actual recurrent expenditure on education by each of the States is compiled on a consistent basis as between States for each major component of expenditure. Second, the Commission calculates a standardised expenditure for each State which is the amount of spending per head required by a State to provide a level of services not appreciably different from the level provided by other States. The standardised expenditure reflects adjustments to take account of cost differences between States in providing government school education services of the same standard (such differences arise because of differences in dispersion of population, social composition of the population, proportions of the population that are of school age, and the proportion of the school age population that are attending government schools). For example, if a State has a relatively low proportion of its school age population attending government schools, it clearly needs to spend less per head of its total population in providing government school education services than a State with a relatively high proportion. Similarly, a State with a relatively dispersed population will need to spend more per head either on transporting children to government schools or in providing smaller, less economic schools in areas of low population density.
The Commission's assessments are made on a "policy" neutral basis, that is, if a State's policy results in expenditure per head on education services being higher than its standardised level, there is no penalty in terms of loss of share of general revenue grants. The effect of the Commission's procedures is simply that the State will have to finance the difference by having higher than average taxes or lower than average expenditure on other services.
States are thus free to pursue high or low expenditure policies in particular areas without affecting their share of general revenue grants. The Commission's assessments do no more than ensure that (if implemented) each State is able to function at the average standardised level if it chooses to pursue the necessary policies that would allow it to do so. In Victoria's case, the CGC's assessment indicates that the State has a natural comparative cost advantage over the other States and should be able to provide comparable education services while spending the least amount per head (about six per cent less than the average for the other States).
On a per capita basis, in 1990-91 Victoria's actual expenditure on government schools education exceeded its standardised expenditure by 14.3 per cent and exceeded actual expenditure of New South Wales by 8.4 per cent and of Queensland by 14.1 per cent.
However, it is important to recognise that policies involving above-standardised expenditure do not necessarily mean the State is providing a better than average quality service; such "policy" differences may simply reflect inefficiency in service delivery resulting in higher costs. Equally, lower expenditure per head than the standardised amount does not necessarily mean that a lower than average quality service is being provided. While it is not possible to quantify how much of "policy" differences reflect differences in the quality of services and how much they are a function of differences in efficiency, identification of factors causing the differences between States provides a basis for reaching a broad judgement on State expenditures.
Table 5: Recurrent expenditure on Government education per capita, 1990-91
| Actual $ | Standardised $ | Difference % | Excess Spending $m | |
| Vic | 493 | 431 | 14 | 274 |
| Rest of Australia NSW Qld SA WA Tas NT ACT | 482 455 432 565 491 572 1,051 623 | 493 458 546 483 557 547 945 n/a | -2 -1 -21 17 -12 5 11 | -137 -18 -340 121 -111 12 17 |
Source: Commonwealth Grants Commission, ABS Catalogue No. 3101.0
The conclusion reached in this Report is that the considerable above-standardised spending by Victoria cannot be explained by education policies that provide a higher quality government education service than in other States, but is chiefly a function of the less efficient provision of such services. This conclusion derives from the analysis elsewhere in the Report of the factors contributing to the above-standardised expenditures and an assessment of their likely contribution to quality.
A comparison of actual recurrent expenditure over the nine years to 1990-91 on government school education with CGC assessed standardised levels shows that recurrent expenditure by Victoria on government school education exceeded the standardised amount by between 11 per cent in 1981-82 and 22 per cent in 1988-89. By comparison, the rest of Australia, for most of this period, spent less than the standardised level. The graph in Figure 1 of this report shows that Victoria exceeded the standardised level for each year and it was only in 1989-90 that the extent of the "over-spending" began to be cut back from the very high levels reached in the 1980s. It will be noted that there was a big increase in the extent of the above-standardised expenditure in 1982-83, following the election of the Labor Government, and this was maintained throughout the 1980s.
Some of the factors which the CGC has assessed as contributing to the "over-spending" are that, compared to the other States, Victoria has:
- a teacher intensive system;
- higher average staff salary expenditure; and
- a greater number of small primary schools than the other States. (11)
The following table shows that, while total education expenditure assessed by the Commission for 1990-91 exceeded the standardised level by $233 million, that for government schools alone exceeded the CGC standardised level by 14.3 per cent or $274 million, of which 84 per cent (or $208 million) was for Government secondary schooling. That the "all education" excess is smaller than the "government education" excess indicates that expenditure on the government sector was being subsidised by "savings" in pre-school, TAFE, transport of school children, and the non-government sector. The major areas of "savings" were in fact in grants for non-government education ($38 million), and transport ($5.5 million).
Table 6: Education -- Comparison of standardised and actual recurrent expenditure
(Victoria) 1990-91
| Actual $'000 | Standardised $'000 | Difference % | |
| Primary Government Non-Government Total | 1,009 245 1,254 | 944 263 1,207 | 6.9 -6.8 |
| Secondary Government Non-Government Total | 1,174 252 1,426 | 966 272 1,236 | 21.6 -7.3 |
| Other (a) Total Government Total Non-Government | 520 2,183 497 | 523 1,910 535 | -0.5 14.3 -7.1 |
| Education | 3,200 | 2,967 | 7.9 |
(a) Includes pre-school, TAFE, transport of school children
Source: Commonwealth Grants Commission, Report
on General Revenue Grant Relativities, 1992 Update
The excess of government secondary education expenditure over the standardised amount increased from a "low" of 16 per cent in 1981-82 to a peak of 28 per cent in 1988-89 and then went down to about 22 per cent in 1990-91. For the government primary schools sector, the excess varied from a low of six per cent in 1981-82 to 15 per cent in 1988-89. The brunt of the reduction in above-standardised expenditure since 1988-89 has been borne by primary education, where the above-standardised ratio has about halved, no doubt partly in recognition of the decline in primary school enrolments.
3.2 EXPENDITURE PER STUDENT
The following table shows that in 1990-91 Victoria's average expenditure per student was $433 higher than the average for the "Rest of Australia" and $534 more than in NSW. Had Victoria spent the same amount per student as NSW, its expenditure would have been $281 million less. For secondary education, expenditure per student was $705, or nearly 16 per cent, higher than the average for the rest of Australia.
Comparing these results with a similar analysis of per student expenditure on Government schools for 1989-90 derived from Australian Education Council figures (12) (which include expenditure of Commonwealth Grants from the Department of Aboriginal Affairs and the Department of Employment, Education and Training), shows that the Northern Territory, ACT, and Tasmania spent more per student in 1989-90 than Victoria. However, Victoria spent 14.2 per cent or $536 more per student than the average for the Rest of Australia, equivalent to excess spending of $282 million.
Table 7: Comparison of Government School Expenditure by State per student
(1990-91) ($)
| Primary | Secondary | Total | |
| VIC | 3,372 | 5,165 | 4,146 |
| Rest of Australia NSW QLD WA SA TAS NT ACT | 3,244 3,070 3,227 3,044 3,635 3,258 5,723 3,897 | 4,460 4,385 3,377 5,214 5,445 5,092 7,930 5,258 | 3,713 3,612 3,282 3,796 4,275 4,029 6,354 4,510 |
| Vic Excess | 128 | 705 | 433 |
Source: Commonwealth Grants Commission, Report
on General Revenue Grant Relativities, 1992 Update
3.3 SUMMARY
The CGC assessments suggest that Victoria has a cost advantage compared with the other States that should allow it to provide education at the lowest cost per head. In particular, as Victoria has the second largest student population, and is more compact in size, this should provide it with significant economies of scale and enable it to achieve a lower cost of service than the other States while still providing the same standard.
Based on CGC assessments, however, Victorian per head expenditure on government education services under the Labor Government consistently exceeded standardised expenditure with the excess ranging from 17 to 22 percent between 1982-82 to 1988-89. By 1990-91 the above-standardised expenditure had been reduced to some extent (to 14.3 per cent), but even then the expenditure was above standard by $274 million. Total recurrent expenditure per head on education services is less above-standardised levels ($233 million) primarily because Victoria is providing below-standardised levels of grants to non-government schools.
It should be noted that this assessment is based on what Victoria needs to spend per head in order to provide levels of education services comparable with the average for the States. The theoretical scope for Victoria to reduce spending is, however, greater than this. At one end of the spectrum, if in 1990-91, Victoria were to have reduced its spending on government school education services per head to around 20 per cent below its standardised level, as Queensland has done, its spending would have been about $150 per head, or around $660 million, lower.
Less radically, a reduction in expenditure to, say, five per cent below its standardised levels would have produced savings of around $370 million.
COST DRIVERS IN EDUCATION
To understand why over-expenditure has occurred, the underlying forces affecting education spending need to be examined. The following analysis shows that, while there have been reductions in one of the cost drivers in education (student numbers), this has not been matched by reductions in two of the others (schools and staff).
4.1 STUDENTS
4.1.1 Enrolments
Over the past thirty years, as the children of the post-War "baby-boom" moved progressively through, and out of, school age, and smaller families became "fashionable", the proportion of compulsory school aged persons (those aged between five and 15 years) (13) within the Australian population has gradually declined, with the greatest decline occurring over the last ten years. Partially offsetting the decline in enrolments has been the increase in retention rates as older students have increasingly stayed longer at school (see below). Notwithstanding this increased retention, however, for Australia as a whole total school enrolments (government and non-government) over this period grew by only three per cent while the total population increased by 15 per cent. There has thus been a decline in per capita demand for education services which, after allowance for productivity improvement, should have enabled real per capita expenditure to have been reduced without significantly affecting quality.
Significant changes in the pattern of enrolments have also occurred between States and between the government and non-government sectors, with the proportion of pupils going to non-government schools continuing to increase. Between 1981 and 1991 the proportion of Australia-wide enrolments going to non-government schools increased from 23 to 28 per cent. This represented an overall increase in student enrolments to the non-government sector of 20 per cent. In view of the static or low level of growth in enrolments nationwide, and the increasing cost of private school fees (which range between $2,000 and $7,000 per annum), this increase in non-government school enrolments is remarkable. Private school enrolments grew most rapidly in Western Australia and the Northern Territory.
Part of the rise in enrolments in non-government schools across Australia can be accounted for by the trend towards "other" non-government schools (the so-called "fundamentalist" Christian schools). This trend has been less marked in Victoria compared to the rest of Australia, which is the main reason for the narrowing of the difference between the percentages of students at non-government schools in Victoria and the percentage for the rest of Australia in the last two years. However, Victoria continued to have the highest proportion of non-government school enrolments (32%) in 1991 apart from the ACT (34%).
Overall, in 1991, there were 27,000 less school students in Victoria than in 1981. This involved a fall of three per cent in Victoria's total enrolments compared with an increase of over five per cent for the rest of Australia, with enrolments in Queensland and Western Australia showing the greatest increase.
Victoria's government school enrolments, however, fell by ten per cent, or 62,000 students over this period compared with a fall of only one per cent in government school enrolments for the rest of Australia. Over the same period the non-government sector in Victoria grew by 16 per cent (34,000 students) purely as a result of gaining "market share" from the government sector. In 1992, however, Victorian government school enrolments increased by 5,854 students (one per cent) to 539,231 and non-government school enrolments fell by 1,078 (one per cent) to 255,049 students. This break in the trend is probably due to the severe recession in the Victorian economy.
Table 8: School enrolments in Victoria by sector 1981-1991
| Government | Non-Government | Total Enrolments | |||
| Enrolments | % Total | Enrolments | % Total | ||
| 1981 Victoria Rest of Australia Total | 595,042 1,704,361 2,299,403 | 72.9 78.5 77.0 | 221,611 466,385 687,996 | 27.1 21.5 23.0 | 816,653 2,170,746 2,987,399 |
| 1985 Victoria Rest of Australia Total | 558,764 1,672,069 2,230,833 | 69.5 75.9 74.2 | 245,176 530,160 775,336 | 30.5 24.1 25.8 | 803,940 2,202,229 3,006,169 |
| 1991 Victoria Rest of Australia Total | 533,386 1,683,840 2,217,226 | 67.6 73.7 72.1 | 256,127 601,784 857,911 | 32.4 26.3 27.9 | 789,513 2,285,624 3,075,137 |
| ∆ in Enrolments from 1981/91 Victoria Rest of Australia Total | -61,656 -20,521 -82,177 | 34,516 135,399 169,915 | -27,140 114,878 87,738 | ||
| % ∆ between 1981/91 Victoria Rest of Australia Total | -10 -1 -4 | 16 29 25 | -3 5 3 | ||
| Enrolments for Vlctoria: - Maintain share at '81 levels - Change due to market size - Change due to market share Total change | 575,555 -19,775 -41,881 -61,656 | 213,958 -7,365 41,881 34,516 | |||
Source: ABS Catalogue No. 4221.0 (1987, 1991), Ministry of Education & Training Annual Report (1980-81)
Victoria's government school system has therefore been affected by two trends -- Victoria's declining share of the proportion of the school aged population (reduction in market size) and the persistent retreat prior to 1992 from the government sector in favour of the non-government sector (loss of market share), which has resulted in a decline in government school enrolments at a much greater rate than for the rest of Australia.
4.1.2 Retention rates
The decline, or low level of enrolment growth across Australia, has occurred notwithstanding an increase in retention rates of secondary school students to Year 12, which have risen over the past ten years (14) from 34.8 per cent in 1981 (all school national average) to 71.3 per cent in 1991. Most States more than doubled their retention rates during the 1980s. Those for government schools have risen at a faster rate (from a much lower base) than in the non-government sector.
In Victoria, the retention rate (15) to year 12 in Government schools in 1981 was 23.8 per cent. By February 1991, this had risen to 75.5 per cent, and by February 1992, the rate had increased to 84.6 per cent -- a dramatic increase from the 62.8 per cent in February 1990, no doubt greatly influenced by the steep deterioration in employment prospects in the recession. The retention rate for Catholic schools and Independent schools also rose but the changes were less dramatic during these years.
In 1991, Victorian government schools had a slightly higher retention rate (71.1 per cent using mid-year data) than the average rate for Australian government schools (66.9 per cent using mid-year data). Thus, the rise in retention rates is not unique to Victoria and does not account for the State's above-standardised spending. In any event the methodology of the CGC takes account of differences between States in the proportion of the school population attending government schools.
Table 9: Apparent Retention rates (a) of Secondary School
students to Year 12 by sector (selected yeara) (per cent)
| Government | Non- Government | Catholic | Othar Non- Government | All Schools | |
| 1981 Victoria Australia | 23.8 28.5 | 60.2 56.9 | 46.8 45.6 | 89.9 89.2 | 33.1 34.8 |
| 1986 Victoria Australia | 37.5 42.3 | 69.5 67.4 | 57.7 57.4 | 92.6 91.2 | 46.8 48.7 |
| 1989 Victoria Australia | 52.7 54.3 | 78.4 76.3 | 66.0 66.0 | 99.9 97.9 | 60.5 60.3 |
| 1990 Victoria Australia | 58.0 58.3 | 81.1 78.4 | 67.9 68.1 | 104.7 99.8 | 65.4 64.0 |
| 1981 Victoria Australia | 71.1 66.9 | 84.4 81.6 | (b) (b) | (b) (b) | 75.7 71.3 |
(a) Mid-year data is usually between 3 to 5 percentage points lower than February data
(b) Not reported
Source: AEC National Report on Schooling: Statistical
Annexe 1990, ABS Catalogue No. 4221.0, 1991
4.2 SCHOOLS
Changes to the infrastructure of an education system (schools and associated facilities) generally lag behind changes in demand. Schools tend either not to be opened soon enough in areas where the school aged population is increasing, for example in outer urban or fringe metropolitan areas, or not to be closed soon enough where population is declining, for example, in rural or inner urban areas. Closing small "uneconomic" schools can be a difficult and contentious community issue, requiring political courage.
The number of government schools in Victoria fell by 5.5 per cent (118 schools) between 1981 and 1991, as did the average school size -- from 277 students per school in 1981 to 263 students per school in 1991. Therefore, the pace of school closures has not matched the more rapid decline (ten per cent) in government school enrolments. Victoria now has the lowest student/school ratio in Australia (with the exception of the Northern Territory).
If Victoria were to have a similar student/school ratio for government schools as the rest of Australia, 230 schools could be closed (which would reduce the number of government schools in the State by 11 per cent).
Table 10: School Size by State by Sector
(selected years) (average number of students)
| 1981 | 1985 | 1991 | ||||
| Government | Non- Government | Government | Non- Government | Government | Non- Government | |
| Vic | 277.2 | 350.1 | 263.8 | 334.0 | 262.9 | 358.0 |
| Rest of Aust. NSW Qld SA WA Tas NT ACT | 320.1 353.5 284.3 333.9 298.0 271.8 179.0 412.4 | 312.2 295.8 288.0 265.7 235.5 244.5 324.2 517.5 | 307.2 339.9 292.1 277.2 286.8 261.2 189.4 410.8 | 299.9 314.3 284.1 292.8 257.5 243.6 296.7 549.1 | 309.5 343.0 301.8 268.4 287.6 265.8 183.5 435.0 | 321.3 331.4 320.9 308.0 280.1 278.7 241.0 556.5 |
Source: ABS Catalogue No. 4221.0, 1987, 1991, ABS Catalogue No. 4202.0.
By contrast, the size of Victorian non-government schools increased by 2.3 per cent over the past ten years, from 350 students per school in 1981 (the second largest after the ACT) to 358 students per school in 1991. Thus, the average non-government school now takes nearly 100 more students than the average government school. If average government school sizes were increased to the non-government school average, up to 530 schools could be closed (which would reduce the number of government schools in the state by 26 per cent).
Within Victoria, comparisons on school size by levels (primary, primary/secondary, and secondary) show that the greatest difference between the government and non-government sector is in primary/secondary schools where the median school size for government schools is 171 students, while for non-government schools the median size is between 600 students (Independent) and 850 students (Catholic schools). (16)
Therefore there are potential savings to be achieved through the closure of between 230 to 530 schools. These savings are estimated to be between $8 million and $18 million per annum on maintenance expenditure, (17) and between around $9 million to $22 million in cleaning costs. (18) Considerable revenue could also be generated from the sale of vacated school buildings and associated land. Without access to the Department's asset register, the likely revenue from this source is difficult to assess. However, if the sale of 230 schools and associated land averaged $435,000 each, the Government would receive $100 million.
Within both the government and non-government school sectors, changes have been occurring in the schools mix. Pupils attending mixed primary/secondary schools have been falling in both sectors, while "special" schools have increased in both. These changes reflect an educational philosophy which has promoted the development of specialised secondary colleges, as well as increased the level of support for educational opportunities for the disabled.
Overall, it is evident that, even allowing for the inevitable lag in response, the Victorian Government has taken very little action to adjust infrastructure in the light of the reduction in government school enrolments.
4.3 STAFF
4.3.1 Teaching staff
While change to infrastructure levels is typically a delayed response, changes to staff numbers to meet changes in demand (readily able to be forecast through lower growth in the school aged population, and the trend toward non-government schools) could be expected to be more immediate. The availability of part-time and emergency teachers provides a capacity for educational institutions to respond quickly to any temporary departures from trend. In fact, while the number of teachers employed in Victorian government schools has fallen by three per cent since 1982, (19) this reduction has been considerably less than the 10 per cent fall in enrolments at government schools.
As a result, Victoria's pupil/teacher ratios (PTRs) for the government sector fell from 14.7 in 1981 (the lowest after Tasmania) to 13.5 in 1991. That is, there are now more teachers per student than in 1981. (The data presented in Table 3 of this report shows that using DSE figures the PTR in February 1992 was even lower again at 13.0). Pupil/teacher ratios in government schools also fell in other States at about the same rate, lowering the rest of Australia average from 17 to 15.8. However, this leaves Victoria still well below the Rest of Australia average. Indeed, the Victorian ratio is significantly lower than in every other State, except for the Northern Territory.
Pupil/teacher ratios for the Victorian non-government sector have also fallen over the same period, but continue to remain well above those in the government sector. In Victoria, the "gap" between government and non-government sectors is easily the largest for any State (again except for the Northern Territory). By contrast, in the Victorian non-government sector the PTR is only slightly below the average for the rest of Australia.
Table 11: Pupil/Teacher Ratios by State by Sector (selected years)
| 1981 | 1985 | 1991 | ||||
| Government | Non- Government | Government | Non- Government | Government | Non- Government | |
| Vic | 14.7 | 17.9 | 13.1 | 15.8 | 13.5 | 15.7 |
| Rest of Aust. NSW Qld SA WA Tas NT ACT | 17.0 17.5 18.3 14.7 17.7 14.3 15.7 15.7 | 17.4 18.8 20.3 17.1 17.8 17.5 19.0 19.5 | 15.8 16.2 16.5 13.8 16.5 13.3 14.1 14.0 | 17.0 17.0 17.7 16.0 16.7 15.9 15.0 17.6 | 15.8 16.4 15.8 14.3 15.9 15.7 13.7 15.2 | 16.5 16.5 17.2 15.9 16.0 15.6 15.3 17.0 |
Source: ABS Catalogue No. 4221.0, 1987, 1991, ABS Catalogue No. 4202.0
It is clear from this analysis that, whereas Victoria's government schools have PTRs well below the average for the rest of Australia, the non-government schools have ratios similar to the rest of Australia. This indicates that, not only does the productivity of the Victorian non-government sector appear to be higher, but the productivity of other States' government schools is also higher than their Victorian equivalents.
Another way of looking at staffing levels is to compare teacher numbers per 1000 students in the government sector across Australia. In 1991, Victoria had 74 teachers (FTEs) per 1000 students, while the Rest of Australia average was 63 teachers (FTEs) per 1000 students. On this basis, Victoria employed eleven extra teachers (FTEs) to perform the same tasks as its counterparts in other government school systems, a "prima facie" indication of lower productivity by Victorian teachers. Moreover, this lower productivity is evident in both the primary and secondary school sectors.
Table 12: Pupil/Teacher Ratio by Level by Sector (Australia) 1991
| Vic | Rest of Aust. | NSW | Qld | SA | WA | Tas | NT | ACT | |
| Government Primary Secondary Total | 16.3 11.1 13.5 | 18.6 12.8 15.8 | 19.7 13.2 16.4 | 18.3 12.8 15.8 | 16.9 11.1 14.3 | 18.3 12.8 15.9 | 18.1 13.4 15.7 | 15.3 10.9 13.7 | 19.0 12.2 15.2 |
| Non-Government Primary Secondary Total | 19.3 13.0 15.6 | 20.1 13.3 16.2 | 20.4 13.0 16.1 | 20.5 14.0 16.7 | 19.0 13.1 15.9 | 19.1 13.1 15.7 | 19.8 12.8 15.9 | 17.9 11.8 15.2 | 19.2 13.1 14.2 |
| Total Primary Secondary Total | 17.1 11.7 14.1 | 18.9 12.9 15.9 | 19.9 13.1 16.3 | 18.7 13.1 16.0 | 17.3 11.6 14.7 | 18.5 12.9 15.9 | 18.5 13.3 15.8 | 15.7 11.1 14.0 | 21.8 13.9 16.9 |
Source: ABS Catalogue No. 4221.0, 1991
If the Victorian government sector were to achieve similar levels of teacher productivity as either the government sector in the rest of Australia or the non-government sector in Victoria this would enable a reduction in teacher numbers of around 5,500 FTEs. Based on an average teacher salary of $35,000 per annum, plus on-costs of 25 per cent for superannuation, WorkCare, and leave liabilities (20) (based on the Ministry's estimates), this increase in PTRs would reduce expenditure by $241 million.
The nation-wide trend to lower pupil/teacher ratios in both government and non-government schools over the past ten years indicates that teacher unions have been able to take advantage of falling or slowing enrolments to maintain employment by pressing for smaller class sizes. Other factors, such as an increase in the number and complexity of subjects being taught, would also have had an influence.
A paper provided by the Ministry to an Estimates Sub-Committee review (21) cites the following factors which affect teacher numbers: falling student numbers; more special needs teachers; new integration and language services; career teachers; welfare co-ordinators; industrial agreements covering increased administrative time; reduced classroom time for first year teachers; and special provisions for smaller schools. Industrial agreements also set targets for reduced class sizes, and teacher numbers.
In addition to these factors, the
"ranks of teachers are swelling because in the current economic climate, lew are resigning or retiring ... Compounding the problem, teachers who took the generous seven-year family leave when it was first provided for eight years ago are returning to the system in droves. The department is desperately trying to persuade them to extend their leave, but 1000 came back this year and a similar number is expected in 1993." (22)
These factors confirm the central role played by industrial agreements in determining PTRs and therefore overall levels of education expenditure. This is supported by a report on the framing of the Schools Education budget for 1992-93, which stated that, as a result of the Government promising to "honour all agreements ... it cannot make cuts in the number of teachers, despite an oversupply." (23)
A question that may be raised is the extent to which smaller class sizes may add to the quality of education. Issues of this kind will inevitably be, in some degree, judgemental. However, the following points are relevant.
First, it is not clear to what extent the reduction in PTRs has been translated into smaller class sizes on average. Increases in the employment of "specialist" teachers, in the use of teachers for administrative tasks, in study and other leave "entitlements", and in teachers on WorkCare, may mean that measured reductions in average PTRs have not necessarily been reflected in smaller classes.
Second, there is no convincing evidence that the higher teaching staff/student ratios in Victoria have produced any parallel improvement in the quality of educational output. To the extent that the relative pace of "drift" from the government school system to the non-government school system, as between the States, offers any indication in that regard, it is noteworthy that Victoria over the past decade has recorded one of the fastest rates of such "drift", and that it has the highest ratio of pupils at non-government schools (except for the ACT).
Third, there seems now to be a considerable body of opinion on the effect of differences in class sizes (pupil/teacher ratios). For example, a report on the subject published in March 1988 by the US Department of Education, entitled Class Size and Public Policy: Politics and Panaceas, summarised the results of studies undertaken in the US in the previous 25 years to determine the effects of significant reductions in class size. Its most striking conclusion is that, except in groups of 15 or under, these reductions have made little difference to pupil performance.
The author of this report points out that pupil achievement in such reduced classes, measured by standardised tests, has not risen. Indeed, in key areas (e.g. Scholastic Aptitude Test English and Mathematics) it has declined. Yet in Japan, where classes are larger than in the US, test scores have risen.
Nearer to home, Professor Ross Parish, writing in 1987 on education in "Spending and Taxing: Australian Reform Options" (National Economic Priorities 1987) quotes the 1973 Report of the Interim Committee for Australian Schools Commission as recommending funds to reduce the size of classes, but adding that "there is no evidence to show that small classes generally facilitate learning". After surveying the evidence, Parish himself concludes that "low student/teacher ratios should no longer be regarded as evidence of high quality education, but rather as indicative of low teacher productivity".
Two years later, the Report of the Committee of Review of NSW Schools (the Carrick Committee) expressed a similar opinion, as follows:
- "The research evidence suggests that to get real benefit, class sizes would have to be reduced so drastically as to be financially unrealisable. Using available resources including funding to provide, for example, on-going professional development programs may be a more effective means of promoting student achievement";
- "Available evidence suggests that test scores and other measures of success in certain learning areas are not related to class size; that there is a relationship between class size and particular teaching practices, student activities and student-teacher interaction; that there are factors which over-ride class size in the development of desirable learning outcomes and student attitudes". (Carrick Committee, September 1989, page 130).
A more recent US survey than that referred to earlier also comes to the same conclusion. The survey, in a paper by Eric Hanushek published in "Educational Researcher" (May 1989) under the title, "The Impact of Differential Expenditures in School Performance", records the result of examining 152 previous studies of the relationship between increases in the teacher/ pupil ratio and student achievement. Some 14 of these studies found an increase in student achievement, and 13 a reduction; the overwhelming majority (125) found, however, that increasing the teacher/pupil ratio made no difference (i.e., to the pupils -- it presumably made life easier for the teachers).
Fourth, a quite separate strand of evidence pointing to similar conclusions about costs of educational inputs relative to outputs in the governmental systems generally is provided by figures relating to the relative costs of providing education in government versus non-government schools. On this (among other aspects of the Tasmanian education scene), the Premier of Tasmania issued a paper prepared by the Tasmanian Department of Treasury and Finance (15 May, 1990). The Treasury, basing itself upon Grants Commission data for 1985-86, quotes the Commission as saying that, for primary schools, "it was also evident that the relatively high staff : student ratios in the government sectors of Victoria, South Australia and Tasmania were not reflected in correspondingly high staff : student ratios in the non-government sectors in those States".
In summary, the higher pupil-teacher ratios in Victorian government schools, which account for a large proportion of Victoria's above-standardised recurrent expenditure on government schools education, seem most unlikely to be providing any higher quality educational output. Rather, they reflect union "capture" of the system.
4.3.2 School based staff
Comparisons between the government and non-government sectors in Victoria show that the ratio of school based teaching to non-teaching staff is significantly lower in the non-government sector. This reflects the fact that educational administration is overwhelmingly based in the school in the non-government sector -- unlike the government education system which has, in addition to school based administration, a regional structure as well as a centralised bureaucracy outside the school. Non-government schools thus have a ratio of 79 per cent teachers to total school staff, whereas government schools have 86 per cent teachers to total school staff.
However, a comparison of government schools throughout Australia for 1991 shows that Victoria has the highest ratio of school based teaching to non-teaching staff. One reason for this is that Victoria has a relatively low number of building operations and other general maintenance staff employed in schools. In 1991, there were only 206 FTE staff employed in this category in all 2000-plus Victorian government schools -- compared to 1,028 in NSW and 962 in Queensland, or less than half of one per cent of school staff compared to two or three per cent in other States. This difference is due to the fact that, in Victoria, the Ministry of Housing and Construction provides maintenance services for all government school buildings in addition to its role of providing advice on minor works, and the construction of new schools and extensions to existing schools. This therefore reduces Victoria's need for such school based staff compared with (at least) N.S.W and Queensland and is not necessarily an indication of a more economical approach by Victoria.
Another reason for Victoria's relatively low proportion of non-teaching school based staff appears to be a relatively low use of teacher aides and assistants. This suggests that higher paid teachers are being used where lower cost teacher aides and assistants could be used to a greater extent. Queensland, for example, employs a relatively high proportion of staff classified as "administration and clerical staff" -- a ratio of about one of such staff to five teachers compared to Victoria's 1:7. There may, therefore, be potential for Victoria to reduce average salary costs by employing more teacher aides and assistants and fewer teachers.
Table 13: School Based (FTE) Staff (Australia) 1991
| Vic | Rest of Aust. | NSW | Qld | SA | WA | Tas | NT | ACT | |
| Teaching staff | 39,447 | 106,448 | 45,631 | 25,186 | 13,031 | 13,755 | 4,171 | 1,985 | 2,692 |
| Specialist support staff Admin. & clerical Building & maintenance Total non-teaching staff | 775 5,268 206 6,249 | 3,161 20,134 3,498 26,793 | 1,020 7,964 1,028 10,012 | 996 5,459 962 7,417 | 392 2,583 401 3,376 | 451 2,487 756 3,694 | 98 813 145 1,056 | 111 330 109 550 | 93 499 97 689 |
| Total school based staff | 45,696 | 133,241 | 55,643 | 32,603 | 16,407 | l7,449 | 5,227 | 2,535 | 3,381 |
| Teachers per school non-teaching based staff | 6 | 4 | 5 | 3 | 4 | 4 | 4 | 4 | 4 |
Source: ABS Catalogue No. 4221.0, 1991
Some moves in this direction may already have commenced as the Annual Report of the Office of Schools Administration (OSA) (which presents different figures from the ABS) shows that school based teacher numbers fell by one per cent between July 1990 to June 1991, whereas support and administration staff in schools rose by six per cent (although the proportion between the two staff groups changed by only one per cent and the overall number of school based staff remained the same).
Table 14: School Based Staff (FTE) Victoria 1990-1991
| 1980 | 1991 | |
| Teachers | 41,624 | 41,205 |
| School Support | 4,760 | 5,052 |
| Total | 46,384 | 46,257 |
Source: Office of Schools Aaministration Annual Report 1990-91.
4.3.3 Non-School Staff Numbers (Government Schools)
Analysis of school based staff relative to non-school based staff (24) provides a measure of the relationship between service delivery staff and overhead staff, and may provide an indication of the degree of devolution of service delivery and decision-making generally. In larger States there should be economies of scale in centralised administration and in other out-of-school staff. That is, as the numbers of school based staff increase, we would expect a proportionally smaller increase in out-of-school staff to support them.
Comparisons between States of the break-down of non-school based staff shows that Victoria has the lowest proportion of non-school based staff to school based staff and, within the non-school based staff, the lowest proportion (5.4 per cent) of Executive Staff (with the exception of the ACT) to non-school staff. Victoria also has one of the lowest proportions of Building and Maintenance staff, which is consistent with the fact, already noted, that such services are provided from outside the DSE.
These 1991 figures for 1,657 FTEs of non-school based staff represented a reduction of 728 from the 2,385 FTEs in 1990, with the major reductions occurring in executive staff, (25) and specialist staff. However, although the reduction is still of the same magnitude (around 30 per cent) the figures reported in the 1990-91 OSA Annual Report are at odds with these ABS figures. That Report's figures show that the number of non-school based staff (public servants and teachers) dropped from 3,467 FTEs in July 1990, to 2,442 FTEs in June 1991.
Table 15: Non-School Based (FTE) Staff (Australia) 1991
| Vic | Rest of Aust. | NSW | Qld | SA | WA | Tas | NT | ACT | |
| Major Function Executive Staff (a) Specialist support staff Admin. and clerical Building, maintenance and other Total % of School Based Staff | 89 173 1,390 5 1,657 3.6 | 540 1,368 4,827 150 6,885 5.2 | 210 218 1,743 55 2,226 4.0 | 100 337 1,118 3 1,558 4.8 | 86 196 674 22 978 6.0 | 75 318 559 51 1,003 5.7 | 27 111 235 8 381 7.3 | 30 124 288 5 447 17.6 | 12 64 212 6 294 8.7 |
| Major Function % Total Executive Staff Specialist support staff Admin. and clerical Building, maintenance and other Total | 5.4 10.4 83.9 0.3 100.0 | 7.8 19.9 70.1 2.2 100.0 | 9.4 9.8 78.3 2.5 100.0 | 6.4 21.6 71.8 0.2 100.0 | 8.8 20.0 68.9 2.2 100.0 | 7.5 31.7 55.7 5.1 100.0 | 7.1 29.1 61.7 1.1 100.0 | 6.7 27.7 64.4 1.1 100.0 | 4.1 21.8 72.1 2.0 100.0 |
(a) Includes Directors-General, Directors and their deputies, inspectors/superintendents. Excludes principals and their deputies.
Source: ABS Catalogue No. 4221.0, 1991.
Table 16: Non-School Based (FTE) Victoria 1990-1991
| 1990 | 1991 | |
| Public servants | 1,914 | 1,271 |
| Teachers | 1,553 | 1,171 |
| Total | 3,467 | 2,442 |
Source: Office of Schools Administration Annual Report 1990-91.
Regardless of which set of figures is correct, it appears that the Government has been more successful in containing and reducing staff in this area than it has with staff (in particular teachers) based at schools. This may reflect the relatively greater influence of teacher unions compared to administrative staff unions. However, while Victoria thus appears to be operating its educational administration on a more economical basis, that does not provide more than a partial offset to the excess number of teachers. Victoria's lower ratio of non-school based staff implies a "saving", compared to the rest of Australia, of around 700 FTEs, some of which would reflect the different arrangements for building and maintenance.
4.3.4 Cleaning Staff
Cleaning FTE numbers have generally not been identified in Annual Reports until the 1990-91 OSA Annual Report. According to that report, there were 4,146 cleaning staff FTEs on the DSE payroll in July 1990 and 3,885 in June 1991. Cleaning staff numbers had actually dropped by about 1,000 between July and December 1990, but, in March 1991, 912 cleaners in former technical schools in the TAFE system were transferred to the central DSE payroll.
Given that there are just over 2,000 schools in Victoria, this staffing level represents about 0.5 FTE effort to clean each school per year. Remembering that schools are only used by students 40 weeks a year, this increases the effective FTE cleaning staff to about 0.65 per school year.
In 1982, it was estimated that the saving from changing to contract cleaning in schools would have been $18 million a year. In 1992, the saving was estimated to be $51.5 million a year. (26) Every year, according to Ministry sources, it has been proposed in budget round discussions that there either be productivity gains or contracting out of school cleaning. Each year, apparently, this proposal has not proceeded due to opposition from the Miscellaneous Workers Union. However, in an industrial agreement ratified in January 1991 annual savings through productivity improvement of $6 million are claimed. This implies that scope remains for further savings of around $45-46 million per annum by contracting out cleaning.
4.4 SALARIES
According to the Budget Papers total salary (27) expenditure on the School Education Program in 1991-92 was $2.0 billion, an increase of 11 per cent over the previous year's expenditure of $1.8 billion. The table below provides details of the major components of this salary expenditure for 1990-91.
Table 17: Salary Appropriations by Category of Staff, 1990-91 ($'OOO)
| Teachers | School Support & Admin. | Cleaners | Total | |
| School Based Primary Post primary Special Total | 659,982 738,961 51,590 1,450,533 | 45,454 42,768 7,833 96,055 | 42,216 39,813 2,438 84,467 | 747,652 821,542 61,861 1,631,055 |
| Public Servants | Non-School Teachers | Other Admin. Support | Total | |
| Non-School Based | 49,078 | 53,000 | 6,994 | 109,072 |
| Total teacher (in-school and non-school) salary | 1,503,533 | |||
| Total non-teacher salary | 236,594 | |||
| Total salary | 1,740,127 | |||
Source: OSA Annual Report (1990-91)
This salary bill reflects the fact that not only do Victorian government schools have relatively more teachers but that staff are paid more than the Australian average. Calculations of average salary levels for 1988-89 showed that Victorian salaries for all categories of staff, both teachers and non-teaching staff, were well above the Australian average. (28) For non-teaching staff, Victoria had the highest average salary level of all States, being between 11.3 per cent (for non-teaching staff at secondary schools) and 17 per cent (support staff in special schools) above the average. The above-average salary levels are in large part due to a 24 per cent increase in salaries awarded in 1982-83. Victorian teacher salaries are also above the all-State average, although recent efforts to make teachers' salaries more uniform throughout Australia by the introduction of a national salary for a particular grade may have reduced some of the differences between Victoria and other States.
Strategies which the Ministry has sought to pursue to economise on salary expenditure by reducing numbers or by increasing productivity have so far been ineffective, due to industrial action by the teacher unions which forced the Government to abandon plans for cuts in teaching jobs in recent years. (29) These proposed strategies included:
- in 1990-91 a reduction of 3,628 education jobs (or 5.5 per cent) was targeted. These were to comprise 1,600 secondary school teachers, 1,150 administrative and curriculum positions, and 400 cleaners and School Support Centre staff;
- The teacher reductions were to be achieved through an increment in school class size from 25 to 26 in years 7 to 10. Staff reductions in School Support Centres were to be achieved through redirecting teachers to schools to provide support services;
- in the 1991-92 budget a reduction of 2,103 teaching positions was announced as a consequence of the Government's planned reduction of the education budget by $100.8 million.
In fact, between February 1990 and February 1992, the number of teachers actually increased slightly (by 152) according to figures published by the DSE. The DSE's February 1992 figure of 41,547 is, in fact, 845 higher than the February 1989 figure.
Therefore, the capacity of the Department to improve performance and bring expenditure into line with that assessed by the Commonwealth Grants Commission has been seriously hampered by union actions. Indeed, as indicated earlier, of the total expenditure for DSE in 1991-92 of $2.6 billion, around 70 per cent is mandated by industrial agreements.
4.5 SUMMARY
In summary, the review of the major cost drivers in education -- students, schools, staff, and salaries -- shows that in the last decade Victoria has exhibited:
- a decline in total school enrolments and a decline in the share of enrolments relative to the rest of Australia;
- a much sharper decline in government school enrolments than in total enrolments as the government sector has continued to lose its share of enrolments to the non-government sector. Victoria continues to have the largest proportion of students in non-government schools (except for the ACT);
- the lowest pupil/school ratio amongst government schools;
- the lowest pupil/teacher ratios in government schools on average while non-government schools have PTRs similar to the rest of Australia;
- the highest teacher/other school based staff ratio in government schools;
- the lowest ratio of non-school based staff to school based staff among government schools;
- staff salaries, which are at higher levels, on average, than the other States.
Victoria's low pupil/teacher and high teacher/non-teacher and all-staff ratios purport to represent a deliberate policy to maintain a high quality (but also a high cost) system. However, over the last decade the proportion of the school aged population enrolled at non-government schools continued to increase, and there is considerable anecdotal evidence of parental dissatisfaction with the government school system. A survey conducted in South Australia showed that parents are choosing non-government schools due to their concerns about standards of work; quality and commitment of teachers; and student behaviour in non-government schools. (30)
This suggests that there is a considerable need for the Government to reform the structure and delivery of education services to improve parents' confidence in the government system. This is considered in Chapter VI below.
EXPENDITURE CONTROL
5.1 PERFORMANCE
The extent to which the Ministry of Education and Training is able to keep within its budget allocation provides one indication of the extent to which it, rather than unions, is able to control expenditure.
Our analysis shows that, in every year from 1982-83, recurrent expenditure of the Ministry has exceeded its original budget. In 1988-89, the worst year, recurrent expenditure was over budget by more than $103 million (or nearly four per cent). On average, annual recurrent expenditure has exceeded budget by 2.3 per cent. Although this is a relatively small proportion of the total budget, in constant 1990-91 dollar terms it represents an average of nearly $123 million each year.
Figure 4: Victorian Recurrent Expenditure on Education,
Difference (%) between Budget and Actual
1982-83 to 1990-91
Source: Financial Statements, Ministry of Education Annual Reports.
5.2 EXPENDITURE ON SALARIES FOR SCHOOL EDUCATION
The majority of this overspending results from over-runs on salaries -- which is not surprising considering that in 1991-92 salaries accounted for 80 per cent of the DSE's recurrent expenditure from State sources.
Given the significance of the salary item ($2.0 billion in 1991-92) in particular, it is surprising that the Ministry of Education and Training Annual Reports have not revealed more information on this critical area. So little has been provided that it is impossible to evaluate the appropriateness of the over-expenditure, or the causes, and the performance of the Department in managing its resources. This concern was recently raised by an Estimates Sub-Committee Report into Education, (31) and has been the subject of many findings in the Auditor-General's reports. In light of these concerns, the Annual Report for the Office of School Administration for 1990-91 included information on salary appropriations by staff category for the first time, and the State Budget papers for 1992-93 also provide a breakdown of salaries for Primary and Secondary Education for the first time.
In 1987-88, following a budget over-run of $38.3 million for salaries and associated costs in the School Education program, the Auditor General reported (32) that some $13.1 million was "controllable by management". The following year (1988-89), however, was notable for an even more significant budget over-run of $88 million, of which $30.5 million was a result of over-runs in salaries and associated costs for school cleaning, short-term and emergency teachers and long term replacement teachers, and general salaries, all of which were deemed to be within management's control. (33)
Salary overruns have largely been a result of the overruns for teachers salaries, and in particular those of "emergency teachers". The costs of emergency teachers rose from $38.3 million in 1984-85 to $61.8 million in 1988-89, an increase of $23.5 million. These costs are likely to continue due to a Ministry strategy to employ a relatively higher proportion of emergency teachers to cover teacher shortfalls in schools. (34)
In 1989-90, budget over-runs in salaries and associated costs for School Education exceeded allocations by $51.7 million. (35) Factors identified as contributing to this over-run included:
- unforeseen National Wage award increases (for example, some $57.6 million of the 1988-89 budget over-run of $103 million was due to such an increase);
- failure to accurately plan the number of casual and emergency teachers required to replace permanent staff ($26.4 million from the Treasurers Advance for 1989-90 was used to meet additional payments for salaries and overtime);
- under-estimation of the impact of new policies;
- less than expected cost reductions. (36)
In 1990-91 there was an over-run in salaries and associated costs of $17.5 million in School Education, the significant items being school cleaning and emergency teacher salaries at $6.7 million and $8.6 million respectively. (37)
In 1991-92, "according to the Government ... the reason the 1991-92 budget blew out by about $15 million (was because) few teachers are resigning or retiring in the current economic climate." (38)
5.3 WORKCARE CLAIMS IN EDUCATION
Another area where control of expenditure has been perceived to be deficient, according to the Auditor-General, has been in the management of WorkCare claims. It has been estimated that the Ministry could recoup $4.7 million from the Accident Compensation Commission (ACC) if the Ministry forwarded all currently held medical certificates to the ACC. A further $4.5 million could be recouped if certificates were forwarded to the ACC regarding other claims. (39)
In addition to the apparent deficiencies in administrative management of WorkCare claims, the volume of claims is higher than the number of claims from non-government employees. For example, over the period 1986 and 1989 the average number of standard WorkCare claims submitted by DSE staff per annum was 2,547. On average, government school employees are three times more likely to submit a standard WorkCare claim than their non-government school counterparts. As a result, the cost of WorkCare claims per $ million of remuneration for the Government sector is $31,711, which is three times higher than for the non-government sector. (40) The WorkCare claim rate is particularly high among school cleaners. In each of the three years 1989 to 1991, more than one thousand school cleaners (more than ten per cent of FTE cleaning staff) made WorkCare claims. (41) Naturally the higher incidence of claims is then reflected in higher WorkCare premiums.
Of the claims submitted over the period of WorkCare's operation, 21 per cent are for stress-related illnesses, which are more costly than a direct standard WorkCare claim due to the long-term nature of the illness. Stress related claims are estimated to cost 40-50 per cent more than other claims. Delays in initiating rehabilitation processes also increase claim costs -- service providers acknowledge that the sooner the rehabilitation process is commenced, the more likely it is that employees will return to work earlier.
The high incidence of WorkCare claims indicates a high level of dissatisfaction and low sense of morale amongst employees in the Government school system, despite more generous PTRs and award conditions. The vastly different experience of government school employees compared to non-government employees also suggests that restructuring the system to give more responsibility for staffing and school budgets should help to reduce such claims.
5.4 USE OF THE TREASURER'S ADVANCE
Expenditure over budget is financed out of the Treasurer's Advance -- an allocation made in the Budget to the Treasurer for use at his discretion on "unforeseen" expenditure in any area. However, as Education has consistently absorbed between 10 and 30 per cent of the total Treasurer's Advance in the last decade, it is doubtful that this can be regarded as "unforeseen". It is questionable, therefore, whether the Advance was intended to be used regularly in this way.
In contrast to recurrent expenditure, the Ministry has almost always underspent its Works and Services budget. Since 1984-85, when Works and Services were first explicitly identified in the Budget papers, the Ministry of Education has underspent its budget by an average of 1.5 per cent and it overspent in only two out of the seven years. However, as the works and services budget is typically only about one tenth of the recurrent budget, "savings" have not had much effect in offsetting recurrent budget overspending. Part of this variance can be attributed to Commonwealth Government grants which were budgeted for but did not materialise.
Figure 5: Treasurer's Advance to Education
1981-82 to 1989-90
Source: The Consolidated Fund, Budget Papers, 1979/80 to 1989/90
In summary, the Ministry has consistently overspent its total budget appropriations, which suggests that it either has not been able to forecast its expenditure requirements accurately, or that its control mechanisms are inadequate.
RESTRUCTURING THE SCHOOL EDUCATION SYSTEM
6.1 PROBLEMS OF THE EXISTING SYSTEM
It is evident from the foregoing that the existing provision of education services through the government school system is not cost efficient from the taxpayer's viewpoint. Of course, economic efficiency is not the only criterion that needs to be considered in this area. However, there are grounds for believing that the quality of education delivered in government schools is generally inferior to that delivered in non-government schools. Thus, even though the government system provides services at little or no direct cost to parents, and even though average pupil-teacher ratios are smaller in government schools, there has been a continuing drift to private schools, most of which charge substantial fees. That there is considerable "consumer" dissatisfaction with the service provided by government schools (42) is also apparent from Dr Geoffrey Partington's survey referred to below and anecdotal reports. All this suggests that, prima facie, there would be a better "output", in terms of educational quality, if the responsibility for delivering education services were to be placed on the private sector, (43) which also appears to be able to deliver services at a cost that is no greater than the cost of government schooling, and may well be less. (44)
It is ironic that an avowed attempt to provide government education services on a basis that treats all students as "equal" has had the effect, by creating the perception (and the reality) that government schools are delivering a lower quality product, of actually enhancing divisions within the community. Students with greater intellectual capacities are encouraged to avoid government schools and the government system is generally discredited. "Free" goods are not always what they seem to be and, recognising that investment in a better quality education has the potential to yield large returns, parents have increasingly been prepared to "invest" in the fees charged by non-government schools on behalf of their children.
In a sense, therefore, we already have a market for educational services at work. Even though the two main competing forces start from apparently very unequal positions, there is a sufficient perceived quality "gap" between the services produced by the two systems to allow some competition to occur. (45) Moreover, within the private school system itself there is, of course, considerable competition, albeit constrained by the Commonwealth Government policy of restricting new entrants. Putting aside the short run effects of the recession on enrolments at non-government schools, it seems very likely that, as real incomes rise over the medium term, the drift to private schools will continue unless something is done to improve the government system. (46)
It is not the purpose of this report to undertake an in-depth examination into why the government education system has not worked effectively and continues not to do so. It is important, however, to identify some of the major influences.
We argue, firstly, that it is not simply a matter of the inadequacies of curricula, methods of assessment, etc. in the Victorian Certificate of Education because all Victorian students (except those doing the International Baccalaureate) undertake the VCE at Year 12. Important as those VCE inadequacies are, (47) the problem goes deeper than the issue of what should be taught and how it should be assessed. Even a major change in the VCE would not overcome the underlying problem, which (as the drift to non-government schools in other States shows) is not confined to Victoria.
Some indication of the underlying factors causing dissatisfaction in government schools was given in the results of a survey by Dr Geoffrey Partington into why parents in South Australia move their children from government to non-government schools. According to this survey, (48) "concern about class size and facilities" was of little importance, and nor was "concern about sporting and cultural life" or "concern about social standing or prestige". By contrast, "concerns about standards of work", "concern about quality and commitment of teachers" and "concern about student behaviour" were regarded as important. It would be surprising if a similar situation were not to exist in Victoria.
Dr. Gerard Johnston, of the Centre for Education at the University of Tasmania, in a letter to the Hobart Mercury of 30 July 1990, also made some relevant points in commenting on the continuing drift in enrolments from public to private schools. Dr. Johnston pointed out that:
- "There is research evidence to show that the average ability of students transferring from the public to the private sectors in Tasmania is significantly higher than that of their peers remaining in the public schools";
- "Authoritative studies in both the United States and the United Kingdom have shown that probably the strongest in-school influence on a student's achievement is the potential of their peers";
- although "parental motives for preferring public to private schooling are no doubt diverse and mixed ... a principal reason is that the private schools offer a more traditional curriculum in a more traditionally operated school environment";
- "Students who attend such schools do better on test scores, examination results and retention";
- the government schools' "greater commitment to elective, welfare, personal development and vocational studies, than is evident in their private school counterparts can be seen as inimical to optimum achievement either in the narrow terms of examination success or the broader terms of understanding the world".
Again, it seems very likely that these points are highly relevant to the Victorian situation.
But, if standards of work, teachers and student behaviour are generally poorer in government schools than in non-government schools, the next question to ask is why, and whether changes in education policies, as distinct from reforms to the basic structure of the system, are likely to remedy the problem. We argue that the problems arise principally because the delivery of government school education services is controlled through a centralised/ regionalised bureaucracy which is subjected to political influence and interference in response to pressure groups, including (most importantly) unions and government funded groups that purport to represent parents. The continued support of such groups of, for instance, the VCE runs counter to evident dissatisfaction of parents as reflected in the survey referred to in footnote 47. The non-government school system, by contrast, has no such bureaucracy and, to the extent that "external" influences play a role in determining schools policy, those influences are determined in a competitive market environment where the focus is on producing results consistent with the capacities of students. The comparative success of the private school system thus seems to indicate that schools which are operated independently of government on an individual basis, or as part of a religious or other grouping, offer a better basis for delivering education services.
As one recent American study has put it
"except under special conditions, we believe the existing institutions of democratic control are simply inconsistent with the autonomous operation and effective organisation of schools. ... Autonomy has the strongest influence on the overall quality of school organisation of any factor that we examined. Bureaucracy is unambiguously bad for school organisation. But bureaucracy is not the most fundamental impediment to more effective schools. That distinction belongs to direct democratic control.
Autonomy turns out to be heavily dependent on the institutional structure of school control. In the private sector, where schools are controlled by markets -- indirectly and from the bottom up -- autonomy is generally high. In the public sector, where schools are controlled by politics -- directly and from the top down -- autonomy is generally low. Under special circumstances -- in non urban systems with good students and able parents -- autonomy can be high in the public sector too. But the fact remains, institutions of democratic control work systematically and powerfully to discourage school autonomy, and, in turn, school effectiveness. If public schools are ever to become substantially more effective, the institutions that control them must first be changed." (49)
The comparative failure of the government school system thus derives importantly from the lack of management autonomy at the level of individual schools. School principals have far too little power and responsibility for the services they are supposed to deliver. This not only means that a combination of bureaucracy and teacher unions largely takes the running of schools and the staffing thereof out of the hands of principals; it also removes the incentive for principals to use staffing and other resources efficiently and to exercise effective supervision over staff and students. The very existence of an external authority which has substantive potential to undermine the authority of the principal is not conducive to staff and students having the disciplined approach needed to produce a quality product. Nor is it, in the end, conducive to the most talented teachers seeking promotion to the level of principal.
The power of teacher unions to exercise a significant measure of control over the operation of the school education system derives from the now well-recognised ability of organised interest groups to "capture" the operation of government services. Because such groups can focus public attention and sympathy on the apparent needs and virtues of such services, and because political parties often lack the resolve to resist sectional interests, those interests have the capacity to influence unduly the resources and working conditions in those services. This has led to an astonishing concentration on measuring achievement in education by reference to inputs rather than outcomes i.e. by how much has been expended, or how small class sizes are, rather than on how many students have actually been performing. Indeed, teacher unions have been instrumental in preventing the development of regular surveys of students' performance, let alone assessments of the performance of teachers themselves (unions were in fact instrumental in having the inspectorate abolished). There seems to be little doubt that the extent of union influence in Victoria, as reflected in particular in the detailed management-inhibiting industrial agreements concluded by the Government with the teacher unions, is very considerable and probably greater even than in other States.
The government schools system also suffers from a lack of exposure to competitive pressures. True, as noted, there is a degree of competition from non-government schools. But, given the disparity in the cost to parents of having their children attending government and non-government schools, such competition is necessarily of a relatively limited and general nature. In any event, there is little sense in government schools (although there are exceptions) that a failure to perform will lead to a loss of reputation and enrolments; demographic changes aside, government schools do not close and the results of their students are not published. Indeed, the de-emphasising of external assessment, and the absence of comparisons of results as between schools and individual students necessarily give limited emphasis to relative performance of both schools and students. This leads, in turn, to undue concentration on the process of learning rather than the substance. Yet, competitive pressures are a part of life and if principals, teachers and students are not exposed to such pressures, educational standards are likely to slip and there will be inevitable adverse flow-through effects into the economic and social performance of the broader community.
6.2 POSSIBLE REFORMS
We argue that, if there is to be an efficient and quality education provided to government school students, the clearest and most urgent need is to reduce government involvement in the operation and/or regulation of the school system to the maximum extent possible. The preferable course of action would be to limit the involvement of government solely to the funding of education services, leaving the delivery of such services entirely to the private sector. This would recognise that, while there may be a need for government intervention in the education market to try to "capture" the likely benefits from having a more educated population than would likely occur if the population were left to buy education services at the price that would be charged in a "free market" situation, governments are not well suited to be the actual deliverer of education services. That this is so is, we believe, strongly supported by the Australian experience of recent years. But we are not alone, as indicated by the American study referred to above.
The difficulty that arises in separating the functions of funding and delivery is the unfavourable perception that exists of systems based on the provision of a grant for each student which can then be spent at any school chosen by the parents. A major objection raised against such "voucher" systems is that they would lead to the development of greater differentiation between schools, resulting in the creation of schools that would be graded according to the capacity of students rather than schools where students have a range of capacities. This is perceived by many to be likely to create social inequalities and disharmony. A further objection to voucher systems is that many parents would be unable to obtain sufficient information about the range of available schools in order to make a rational decision.
It is not the purpose of this Report to examine in depth the pros and cons of voucher systems. While we believe that the objections to such systems are largely misplaced and reflect a failure to understand that there already exists a quasi-voucher system, (50) we accept that it is unlikely to be politically acceptable to move straight to a fully fledged voucher system. The political difficulties of such a move are magnified by the fact that, in order to keep the cost within present levels of expenditure on education, it would be necessary to means test the vouchers. If that were not done, those parents who at present send their children to non-government schools would be able to obtain a voucher equal to (or not far short of) the full cost of education at the average non-government school. This would add considerably to total government outlays on education and, hence, to budgetary problems.
Given therefore the political unacceptability of a voucher system at the present time, the next best approach would be to give individual government schools the maximum degree of autonomy consistent with the fact that, as long as education services are delivered through government schools, the Minister for Education (and, more broadly, the Government) has to account to Parliament and the taxpayer for the efficiency with which those services are delivered and for their quality. The most effective mechanism for achieving this difficult balance between delegation of managerial responsibility and Ministerial accountability may be to establish a contractual relationship by which individual schools (which would be established as corporations) agree to provide education services at a specified level and of a specified range in return for a block grant that would be determined annually on a per student basis, with provision for different weightings according (inter alia) to types of students. Annual funding would anticipate productivity improvements.
A move towards such an arrangement has already been made in the State Training System, where the providers of vocational educational services (TAFE Colleges) have been negotiating performance agreements with the Department of Employment and Training that, by contrast with the school education system, have produced productivity gains. Thus, according to the National TAFE Statistical Collection, the cost of each hour of student contact in Victoria fell by 16.4% between 1987 and 1991. By contrast, the cost grew by 7.6% nationally and it appears that Victorian costs are now significantly below the national average. The Victorian TAFE system has thus moved a good way down the track of delegating to individual colleges responsibility for the delivery of services -- but on the basis of agreements that require the colleges to perform according to specified criteria.
Details of a move along these lines for the government school system would need to be worked out by a process of negotiation and, inevitably, trial and error. It would be important, however, that school principals be given power to make staff appointments and to negotiate terms and conditions of employment, subject only to budgetary constraints. Indeed, the relevant legislation should be amended to specifically provide for this so that the Minister and/or the Department would cease to have any responsibility for employment conditions, which would then be determined on the basis of "enterprise" and individual agreements negotiated at the level of independent schools.
It cannot be too strongly emphasised that the formal decentralisation of industrial relations in the government school system is the reform that should be given top priority in restructuring that system. Associated with such a reform, the principal should also be given formal responsibility for preparing and managing the school budget. (51)
It would also be important to establish a more competitive environment by setting performance standards and requiring the publication of performance outcomes (such as the cost per student contact hour) on an individual school basis, including the results of student assessments and tests. These need not involve, however, the publication of results of individual students: results could be grouped. It goes almost without saying that there is also a need to return to a testing system for students that involves more external assessment.
Reforms along these lines would involve a form of contracting out by the government of the supply of education services. However, as the schools would remain government owned and as the principals and teachers would remain government employees, it would not involve a true privatisation of the delivery of education services. That should be the longer term objective in order to overcome the inherent contradiction between trying to delivery quality education services efficiently and giving the responsibility for doing so to a bureaucracy that is susceptible to political direction and influence.
APPENDIX A
CLASSIFICATIONS OF EXPENDITURE USED IN PUBLISHED SOURCES
It should be noted that the definition of expenditure on education differs according to the document used. For example, State Budget Paper No. 5 now presents expenditures on a program budget basis which include expenditures from Trust Funds as well as from the Consolidated Fund, details of which are set out in Budget Paper No. 3. However, earlier State Budget papers do not present the figures on the same basis and comparisons over time based on these papers are misleading. National accounts statistics compiled by the ABS on public sector expenditures provide data compiled on a consistent basis as between States and over time. Recurrent expenditures analysed by the CGC also allow consistent comparisons between States, although comparisons of expenditure levels over time are not necessarily consistent. Also, there are differences between the ABS and the CGC as regards the definition of recurrent expenditures. In particular, the CGC excludes Commonwealth grants to the States which are on-passed to non-government schools and to tertiary institutions.
The table on page 72 compares the various definitions of recurrent expenditure on education over the past ten years.
Comparison of Education Expenditure (Selected Years) ($m)
| 1981-82 | 1985-86 | 1990-91 | |
| ABS (a) | 1,500 | 2,212 | 3,103 |
| % of total State recurrent budget outlays (b) | 34 | 30 | 27 |
| CGC (c) | 1,671.3 | 2,510.4 | 3,200.2 |
| % of total State recurrent budget | 45 | 38 | 33 |
| State Education Budget (d) | 1,484 | 2,517 | 4,204.8 |
| % of State budget (e) | 65 | 47 | 33 |
(a) Current outlays (less Commonwealth grants on-passed) on education from unpublished data provided by ABS and Victorian Treasury.
(b) Proportion of General Government sector (excludes Public Trading Enterprises), excluding Commonwealth grants on-passed (provided by Victorian Treasury).
(c) Recurrent expenditure on education which includes expenditure on TAFE and Pre-schools including Commonwealth grants to non-government schools on-passed. (CGC Report on General Revenue Grant Relativities).
(d) Total outlays on education {including capital and Commonwealth grants on-passed) as published in Budget Papers (Budget Paper No. 2 1982-83, Budget Paper No. 5 1986-87, 1991-92.
(e) Proportion of total outlays (including capital outlays and Commonwealth grants on-passed as published in Budget Papers (Budget Paper No. 2 1982-83, Budget Paper No. 5 1986-87, 1991-92).
In the ABS publications, Government outlays on education are classified according to national accounting conventions -- the Economic Transactions Framework (ETF), which shows the macro-economic effect of government activity on the economy, and the Government Purpose Classification (GPC), which is used to show the general categories of public sector spending.
The ABS provides information in GPC tables in the following categories: Primary and Secondary education; Tertiary education; Pre-school and other special education; Transportation of students; and Education "not elsewhere classified".
The CGC compiles data on State government recurrent outlays (which most closely relate to State government appropriations) and provides information on two bases. First, actual expenditure on education by the various States is compiled on a consistent basis between States for each major component of expenditure. Second, the Commission calculates a standardised expenditure for each State which reflects the amount of spending per head required by a State to provide a level of service comparable to that provided by other States. The standardised expenditure includes adjustments to take account of cost differences between States in providing services of the same standard (such differences arise because of differences in economies of scale, dispersion of population, social composition of the population, etc.). This information is used to frame CGC recommendations on the distribution of general purpose revenue assistance among the States.
The CGC also calculates the standard expenditure, or the Australian average actual expenditure, by weighting each States' actual expenditure by the State's population.
The categories of education expenditure which are assessed by the CGC reports are: Pre-school education; Primary Education -- Government and non-government; Secondary education -- Government and non-government; Technical and Further Education; and transport of school children.
APPENDIX B
STATE GOVERNMENT/V.S.T.A. INDUSTRIAL AGREEMENT
In June and July 1991 the Victorian teachers' unions (Victorian Secondary Teachers' Association (VSTA) and the Federated Teachers' Union of Victoria (FTUV) and the Ministry of Education entered into Industrial Agreements which purport to apply for the whole of 1991, 1992 and 1993 school years and which provides that the Agreements may be varied only by the mutual consent of the parties or by determination by the Industrial Relations Commission of Victoria. If maintained, these agreements would effectively pre-determine to a considerable extent the amount to be expended on primary, secondary and special education by the Victorian Government for the years specified.
The Ministry/VSTA agreement, which runs to 14 pages plus an Appendix, deals with secondary schools. Similar agreements between the Ministry and the FTU cover Victoria's primary and special schools.
An analysis of expenditure by the then Office of Schools Administration in 1988-89 (see attached table) indicated that costs incurred under the Industrial Agreement then applying accounted for over 90 per cent of total salary costs or 68.3 per cent of total expenditure by the Office (including grants to non-government schools).
Major aspects of the education budget and of the operation of schools that are pre-determined by the June 1991 Agreement between the Ministry and the VSTA include:
- staffing establishment of various types of secondary schools;
- the size of the "special needs" pool of teachers;
- teachers' conditions of work, including class sizes, hours of work, etc;
- additional resources for implementing the VCE;
- facilities in schools;
- industrial democracy and grievance resolution.
In the following, numbers in brackets refer to sections of the Agreement.
STAFFING IN THE SECONDARY SCHOOL SYSTEM
The minimum staffing establishment to which each type and size of secondary school is "entitled" is set down by rigid, pre-determined formulae in the Agreement. Provision is also made for a "special needs pool", and a "joint Ministry/VSTA working party" sets numbers of support staff such as teacher aides, laboratory assistants and first aid staff (11.5).
The "special needs pool" is intended to provide a discretionary element in the teacher allocation process, with a view to assisting schools that are judged to be inadequately catered for under the basic formulae. The Agreement provides for this pool to increase progressively from 1654 at February 1991 to 2434 at July 1993. Under the agreement teachers are allocated between schools in a breakdown "agreed between the Ministry of Education and the union each year" (11.3.1). This clause gives the union officials of the day a capacity to exercise a very considerable influence over the allocation of the key discretionary element of the school staffing process.
The Agreement also sets out the procedures to be followed in respect of:
- predicting each year the enrolments for each school and determining the staffing establishment for each school on the basis of "entitlement" factors (21.2);
- filling a vacancy, including the type of teacher to receive priority (21.3);
- recruitment, with composition of intake into teacher training determined by negotiations "conducted with the union prior to recruitment" (21.3.9);
- teacher transfers (21.4);
- excess staff, and the rights of teachers nominated as excess (21.5).
TEACHERS' CONDITIONS OF WORK
Teachers' attendance hours are set down at 7 hours per day plus no more than 3 hours of meetings per week (13.1). However, student instruction "shall not exceed 18 hours per week" and 22 teaching periods. In 1993 there will be 21 teaching periods (13.2.1).
Class sizes are set at a maximum of 25 (13.3.1) except that some lecture-type arrangements are allowable at years 11 and 12 -- although "Such arrangements must have the support of the Local Administrative Committee (LAC), the VSTA branch and the teacher concerned" (13.3.1).
Guidelines for the distribution of organisational duties and their time allowance are included. For example, it is suggested that school organisation tasks be allocated 50-300 minutes, curriculum development 25-250 minutes, equal opportunity co-ordination up to 200 minutes and implementation of the Agreement up to 200 minutes per week (13.9.1). In the allocation of administrative duties "the need to give women administrative experience in accordance with the Action Plan for Women in the Teaching Service must be taken into account".
The operation of other school services is prescribed in detail. For example, the staffing and operation of libraries is set down, including requirements for schools to "determine the appropriate numbers of students allowed in the library" (16.2.6).
The effect of these provisions is to give schools a "clock on, clock off" workplace mentality, where teachers' work time is prescribed almost minute by minute and where there is very limited scope for principals to develop work practices (let alone anything resembling an enterprise level agreement). This Agreement thus ties productivity to levels effectively set down by the union.
V.C.E. IMPLEMENTATION
Mechanics of implementation of the VCE are set out. In particular, staff are allocated "pupil free days" for professional development, VCE course development, and verification (11.4).
Many non-staff related issues are also covered in the industrial agreement, including once-off funding to each school for VCE course establishment and increases in curriculum grants (11.4.3).
The level of funding required to be allocated for implementing the VCE under this agreement would be relatively small compared with staffing costs. However, the inclusion of these "requirements" indicates the extent to which the VSTA has been able to use the implementation of VCE to obtain concessions and impose additional costs on the education vote.
FACILITIES IN SCHOOLS
In the case of new schools, and schools undergoing extension, the standard of their physical facilities is laid down, including such requirements as staff centres, office accommodation, conference rooms, resource centres and so on (12.2). These requirements are highly detailed. For example, staff centres will have "2 occasional tables", and "teaching staff are allocated 4.5m2 of work space per teacher" (Appendix A).
SCHOOL LEVEL INDUSTRIAL DEMOCRACY
"To enhance the principle of industrial democracy and to facilitate implementation of this agreement, the parties acknowledge the need for satisfactory consultative procedures ... As part of these procedures, schools shall establish representative committees with structures agreed upon between the principal and the union branch ... One of these committees shall be a local administrative committee of which the principal shall be a member. This committee shall assist the principal in determining allotments, staffing allocations, class sizes, the length of periods, the allocation of organisational duties allowances and school responsibility positions and allocation of HDA's, the tagging of positions to be advertised and other administrative matters ..." (20.2.1).
Provision is also made for a selection committee and a committee with a curriculum function.
Membership of each LAC must be agreed in writing by the principal and the union, and include at least the principal, a principal's nominee and at least two union representatives. "The principal or the principal's nominee shall be a woman".
The LAC thus has the right to be involved in virtually every major organisational decision. However "the principal shall have ultimate administrative and operational responsibility for the school and this responsibility shall be exercised in consultation with the union branch and staff. The principal shall have the right to reject the conclusions" of committees, provided detailed reasons are given (20.3).
Finally, the Agreement sets out procedures in the event of "grievances". Involvement of a union representative is required.
The LAC system shows the limited role of principals in managing Victorian schools. While the principal has a residual veto power, the fact that the LAC "shall assist", and the capacity of the VSTA to cause industrial disruption with apparent impunity, severely limits management capacity.
CONCLUSIONS
This agreement, together with the similar agreement covering primary schools, provides an institutional framework which gives teacher unions the capacity to exercise effective control over the Victorian school system at two levels:
- at the individual school level, through effective control over management decisions by Local Administrative Committees and by other committees;
- at the system-wide level, through the pre-determination in the Agreement of major decisions in regard to staffing and teaching duties and through effective union control of major decisions such as the allocation of the special needs pool, allocation of support staff in schools, and physical facilities in schools.
Of course, the Agreements do not specifically provide for union control at the school level but, rather, for union involvement in all major decisions. However, the capacity of the principal to manage is very heavily constrained both by the terms of the Agreements and by the knowledge that an attempt to exercise authority in opposition to union policy on a particular issue would lead to an industrial conflict in which the principal would not receive the support of the Ministry. The dominant role of the unions provided for in the Industrial Agreements also leaves individual teachers with little choice but to become union members.
OFFICE OF SCHOOLS ADMINISTRATION
ANALYSIS OF 1988-89 RECURRENT BUDGET FOR SCHOOLS
| BREAKUP OF COSTS -- SUMMARY | NUMBERS (EFT) | COST $ ('000) | PER CENT |
| Salary Costs Tied to Agreement Primary Post Primary Special Excess Staff Other Agreements and Leave Salary Associated Costs (Agreement) | 18,144.5 21,200.5 1,651.0 380.0 4,395.0 | 564,294 640,258 49,860 11,780 123,478 124,000 | |
| Sub-Total -- Agreement (a) | 45,771.0 | 1,513,670 | |
| Outside Agreements Salary Associated Costs (Non-Agreement) Total Salary Costs (Agreement and non-agreement related) | 6,199.0 51,970.1 | 157,244 15,200 1,686,114 | 76.1 |
| Other Costs Grants and Allowances Transport School Grants Non-Government Schools Operating Block Miscellaneous | 57,300 84,182 167,801 152,720 31,975 35,075 | ||
| Sub Total -- Other Costs | 0.0 | 529,853 | 23.9 |
| GRAND TOTAL (Salary and Other Costs) | 51,970.1 | 2,215,967 | 100.0 |
(a) The cost of the Agreement constitutes 68.3 per cent of the Grand Total.
GLOSSARY
Apparent Retention Rate to Year 12 -- apparent retention rate refers to the number of year 12 students expressed as a proportion of the year 7 enrolment five years earlier. For example, the apparent retention rate for 1991 was calculated by using the following formula:
Apparent Retention Rate to Year 12 = No. of Year 12 students in 1991 x 100
No. of Year 7 students in 1986 1
The term "apparent" retention rate reflects the fact that retention rates are influenced by factors not taken into account by this measure such as:
- students repeating year levels;
- interstate and overseas migration;
- transfer of students between education sectors or schools; and
- students who have left school previously returning to continue their school education.
CGC -- Commonwealth Grants Commission
DSE -- Department of School Education. Previously the Office of Schools Administration within the Ministry of Education and Training.
Full Time Equivalent (FTE) -- part time staff are converted to Full-Time Equivalent units by expressing the hours paid to a part time staff member as a proportion of the hours paid to an equivalent full time staff member. See also Teaching staff.
PTR -- Pupil/Teacher ratio. The ratio is calculated by dividing the number of full-time students by the FTE of teaching staff. It should be noted that Pupil/teacher ratios are not a measure of class size.
School -- the main activity of a school is the provision of full-time day primary or secondary education, which may be provided by correspondence. It has a principal or equivalent. It must be possible for students to enrol and participate in a course of study for not less than four weeks. There are a number of distinctive schools which require definition:
Language School -- a language school offers short-term, full-time intensive English language programs for newly arrived migrants and refugees from non-English speaking countries.
Government School -- a Government school is administered by the DSE and governed by a school council.
Independent School -- A school not administered by the Department of School Education or the Catholic Education Office is classified as an Independent school, that is; Non-Government, Non-Catholic. The Association of Independent Schools Victoria (AISV) provides administrative support for Independent schools.
Non-Government School -- a non-Government school is registered with the Registered School Board.
Primary School -- a primary school has students enrolled from the preparatory year to year 6. Children first enrolled in a primary school are around five years old.
Primary-Secondary School -- a primary-secondary school has enrolments in both primary and secondary years.
Secondary School -- a secondary school (also called college) has students enrolled in year 7 to year 12. Children first enrolled from a secondary school are around twelve years old.
Special School -- a special school enrols students who have a mental or physical disability, social or emotional problems, or were in custody or in hospital before being enrolled.
School Staff -- the functional categories for school staff are as follows:
Teaching staff -- are defined as staff who spend the majority of their time in contact with students, i.e. support students either by direct class contact or on an individual basis, and have teaching duties, that is are engaged to impart the school curriculum. For the calculation of PTRs by the ABS, teaching staff include principals, deputy principals, and senior teachers who may be involved in administrative duties.
Specialist support staff -- are staff who perform functions that are of special benefit to students or teaching staff in the development of the school curriculum.
Administrative and clerical staff (including Teacher aides and assistants) -- are staff whose main duties are generally of a clerical/administrative nature.
Building operations, general maintenance and other staff -- are staff involved in the maintenance of buildings, grounds etc. Also included are staff providing associated technical services and janitorial staff.
Standard Expenditure -- this is calculated by the Commonwealth Grants Commission using the actual expenditure for each State/Territory, weighted by population.
Standardised Expenditure -- this is calculated by the Commonwealth Grants Commission as the level of expenditure required by a State to provide the average level of services across all States. The standardised expenditure takes account of those factors which affect the cost differentials between States.
ENDNOTES
1. The major information sources used in this review are Commonwealth Grants Commission (CGC) reports, State and Ministry budget and program expenditure reports, Australian Bureau of Statistics (ABS) publications, Ministry of Education and Training Annual Reports, reports from the office of the Auditor-General, Victoria, and other relevant publications. Material from general publications such as the Australian Education Council has also been used. Information on, and the differences between, the relevant sources are contained in Appendix A.
2. Budget Paper No. 5, 1992-93. This paper details all outlays on a program basis including Trust Fund transactions representing expenditure of grants from the Commonwealth. The Budget papers do not give a figure for total expenditure on education per se. However, the combined expenditures of the Departments of School Education and Employment, Education and Training were $4.5 billion in 1991-92, of which $3.2 billion was expenditure from the State's own resources. This represented 24.1% of total State budget sector outlays excluding Commonwealth grants for on-passing.
3. The extent to which changes in average pupil/teacher ratios are reflected in changes in class sizes depends on, inter alia, the use of "specialist" teachers and the use of teachers for administration, the numbers of teachers on study and other leave entitlements, and on WorkCare.
4. Source: CGC. Between 1985-86 and 1990-91, there has been a real reduction of recurrent expenditure (government primary and secondary education) per student of one per cent per annum.
5. "Salary costs" includes salaries, wages, allowances, overtime and penalty rates and the subsidiary expenses associated with the employment of personnel.
6. Facts and Figures about Victorian Schools February, 1992. It should be noted that student numbers are higher in February than mid year figures. For example in February 1991, government school enrolments reported were 536,754; in August 1991 the numbers reported were 533,386.
7. Facts and Figures about Victorian Schools February, 1992. It should be noted that the number of students reported in February is usually higher than the mid-year student number.
8. Although not affecting the size of the respective school systems it should be noted that the structure of the primary and secondary schooling in Australia varies between the different States and Territories. In South Australia and the Northern Territory the primary system comprises Reception or Transition followed by Years 1 to 7. The secondary system comprises Years 8 to 12. In New South Wales, Victoria, Tasmania and the ACT, the primary system comprises a Kindergarten or Preparatory grade followed by Years 1 to 6. The secondary system comprise Years 7 to 12. In Queensland and Western Australia, the primary system comprises Years 1 to 7 and the secondary system Years 8 to 12.
9. Population divided by square kilometres per State.
10. The Age, 4 August, 1992, p. 20.
11. Commonwealth Grants Commission, Report on General Revenue Grant Relativities, Working Papers, Vol III, 1988.
12. Australian Education Council, National Report on Schooling in Australia: 1990, Statistical Annex, p32. Expenditure excludes expenditure by the Commonwealth and State government school systems on non-government schools.
13. Although there are differences between States on the school leaving age -- e.g. Victoria's school leaving age is 15 years, the increasing retention rate demonstrates that more and more secondary school students are remaining at school to complete their years of schooling, rather than leaving when they are legally able. This suggests that the years 5 to 17 are perhaps a better measure of "compulsory school age".
14. ibid, p 18.
15. Retention rates vary depending on the period of the year from which the figures are taken. Retention rates using February student numbers are typically about three to five percentage points higher than figures using mid-year numbers.
16. Facts and Figures about Victorian Schools Department of School Education, 1991.
17. Maintenance costs identified in the Office of School Administration Annual Report 1990-91 are $19,8 million (1991-92 estimate) for maintenance allowances (recurrent expenditure), and $52 million (1991-92 estimate) for maintenance (Works and Services expenditure) for the entire OSA of which the Schools program constitutes the major part.
18. Based on cleaning salaries identified in the Office of School Administration Annual Report 1990-91.
19. Ministry of Education and Training Annual Report 1981-82, and Facts and Figures about Victorian Schools, Department of School Education, 1991. Primary and secondary teacher numbers as at 31/3/1982 were 41,307; in 1991, the number of primary and secondary teachers in schools was 39,968 FTEs.
20. Auditor-General's Second Report for the Year 1984-85
21. Economic & Budget Review Committee, Estimates Sub-committee 28th Report to Parliament, November 1990.
22. The Age, 4 August 1992, p. 20.
23. ibid.
24. Non-school staff includes Executive staff, Specialist support staff, Administrative and clerical staff and Building, maintenance and other staff.
25. Executive staff includes Directors-General, Directors and their deputies, and Inspectors/superintendents.
26. Auditor-General Report on Ministerial Portfolios, May 1992.
27. Wages, salaries and supplements (excludes superannuation payments and contributions) Budget Paper No. 5 1992-93.
28. Efficiency of States Spending Background Paper No. 7, EPAC, December 1990.
29. The Age, 4 August 1992, p. 20.
30. Partington, G., Education Monitor Autumn 1990.
31. Economic & Budget Review Committee, Estimates Sub-committee 28th Report to Parliament, November 1990.
32. Auditor-General Second Report of the Year 1987/88.
33. Auditor General Report on Ministerial Portfolios, May 1990.
34. ibid.
35. Auditor-General Report on Ministerial Portfolios, May 1992.
36. Economic & Budget Review Committee, Estimates Sub-committee 28th Report to Parliament, November 1990.
37. Auditor-General Report on Ministerial Portfolios, May 1992.
38. The Age, 4 August 1992, p. 20.
39. Auditor-General Report on Ministerial Portfolios, May 1992.
40. Accident Compensation Commission, Annual Report 1991.
41. Table 8.3, DSE WorkCare Report, December 1991.
42. A Morgan Gallup Poll of 13 August 1987 showed that private schools were clearly seen as providing the best quality of education with 60 per cent rating the quality of education at private schools at "7-out-of-10" or higher. This 7+ rating was given to Catholic schools by only 49 per cent and to Government schools by 43 per cent. Parents of children attending Government schools generally rated their children's school lower than did the parents of children attending either private or Catholic schools.
43. This needs to be qualified to the extent that the greater value put on education by existing private school parents would not necessarily be carried through to the same degree if all schools became private.
44. It is difficult to make accurate cost assessments because of the difficulty of obtaining comparable data. The data published in the Statistical Annex -- National Report on Schooling in Australia: 1990 shows that average per student expenditure is about the same. However, the data for government schools does not include anything for debt-servicing or superannuation. Also, there are wide differences in per student expenditure as between Catholic and other non-government schools.
45. Of course, non-government schools are assisted by grants by both the Commonwealth and State governments. However, such grants cover, on average, only a proportion of the per student cost of such schools compared with the full cost borne by taxpayers in the case of government schools. For example, in 1992 in Victoria, Commonwealth and State total grants ranged from $656 to $2041 and $1,010 to $3062 for primary and secondary student respectively, compared with the average per student expenditure for non-government schools in Victoria (1990) of $2708 primary and $4574 secondary.
46. This assumes continuation of the bi-partisan policy of providing government assistance to non-government schools.
47. At the end of 1991, for example, the Government commissioned a survey to find out what parents felt about the VCE. The results of that survey, only released following a Freedom of Information request, showed that 93% of parents thought the VCE was not working well and, of those with children doing the VCE, a clear majority was dissatisfied. Many parents felt the VCE reduced all students to the lowest common denominator and that the course was not of a high enough standard.
48. Dr Geoffrey Partington in Education Monitor, Autumn 1990, "Why Parents are Choosing Independent Schools."
49. Chubb and Moe Politics, Markets and America's Schools (Washington: The Brookings Institution, 1990).
50. Under the present arrangements of government grants to non-government schools, parents who send their child to a government school have available the option of taking up a grant equal to the value of the per student grant to whichever non-government school they wish to choose, subject to places being available. Of course, they would also have to pay fees.
51. Of course, the principal would in most cases require the assistance of a bursar (who might be employed by more than one school) or of private accounting services in drawing up and managing the school's budget. The principal might also need on occasion need to employ the services of an industrial relations consultant in negotiating the employment contracts with staff either individually or on an enterprise basis.
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