Victoria’s teachers have just been granted a substantial pay rise. But is there a different way to approach the payment of teachers? Andrew Leigh weighs in.

I popped into the ABC studios on my ride to work today to do a pre-record with Life Matters this morning on why the Baby Bonus is bad policy and should be scrapped.

Cycling into work afterwards, a thought occurred to me. There are approximately a quarter of a million babies born in Australia each year, and approximately a quarter of a million teachers. If we accept that the Baby Bonus should be scrapped, and that teacher salaries have declined in recent decades (some of my own evidence here), then scrapping the Baby Bonus would give us about $5000 per teacher per year to spend on teacher pay (I’m ignoring complications like the mooted policy change, and the fact that one-third of teachers are employed in private schools).

So in theory, we could:

(a) Raise all teachers’ salaries by $5000

(b) Raise salaries for the best 20% of teachers by $25,000

(c) Raise salaries for the best 10% of teachers by $50,000

In other words, option (c) would give us a substantial group teachers on six-figure salaries. Good public policy would of course ensure that those teachers taught in the most disadvantaged schools.

My own preference would be a small-scale randomised trial of (a), (b) and (c), putting the claims of the critics and proponents of merit pay to the test. (For a discussion on how you might determine “best”, type “fair merit pay” into the search box on the right.)

In my view, any of the three options would be an improvement on the status quo.

This post originally appeared at andrewleigh.com.

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