On the whole, this budget is free of smoke and mirrors tricks. Most of the savings that have been announced are real cuts in the deficit rather than accounting gimmicks. There is, however, one big exception: it’s hard to square “Labor values” with a budget that does virtually nothing for education. Rather than face the reality, the government has resorted to some disgraceful spin.

The education section of the budget outlook sounds good. In fact, taken at face value, it might be called an education revolution. The headlines state:

“The government’s education reforms are delivering real benefits to students from early childhood through to university.

“The government is almost doubling the Commonwealth investment in schooling between 2009 and 2013, uncapping Commonwealth funding of undergraduate university places and providing an early childhood education place for every child in Australia.

Unfortunately, all of this requires the kind of close parsing that’s needed in dealing with contractual fine print. While all of these claims can be interpreted in way that makes them more or less true, the implication that the budget contains large new initiatives that will benefit education is entirely false.

Starting with the “real benefits”, an economist would assume that this entailed, at a minimum, an increase in real (that is, inflation-adjusted) expenditure per student.

This is hardly the case at the university level. As the budget papers note, the uncapping of university places has increased the number of domestic undergraduates by 150,000 since 2007, when expenditure under the Commonwealth Grants Funding scheme was around $4 billion a year. Projected expenditure at the end of the Forward Estimates period in 2015 is just over $6 billion.

Allowing for inflation at an average rate of 20%, that’s a real expenditure increase of 25%, rather less than the growth in the number of students. And most of this increase occurred in the Rudd government’s first two years in office, when the idea of an education revolution was a genuine hope, rather than a tired joke.

Another dubious claim is that of the “$5.2 billion in extra Commonwealth funding between 2010 and 2015 to fund extra places”. That sounds impressive until you look at the baseline, which allows for no increases at all, even to offset inflation. Over the four years of the Forward Estimates, real higher education expenditure is projected to increase by a grand total of 3%, or 0.75% per year. With substantial growth in student numbers, that implies a real cut in funding per student.

The story is much the same with child care and early childhood education. There were some big increases in expenditure in the first year of the Rudd government, but since then expenditure has barely been maintained in real terms. When population growth and the inevitable cost increases in a labour-intensive activity are taken into account, service provision will be going backwards.

The really blatant piece of spin is the claim that the government is almost doubling the Commonwealth investment in schooling. On the face of it, this claim is directly contradicted by the budget papers. Schools expenditure was $10.7 billion in 2008-09 and is projected to be $12.9 billion in 2012-13, rising to $14.5 billion in 2014-15. That’s a real increase of around 20% over six years, which would be just about enough to cover growth in student numbers and modest increases in real wages for teachers and other school staff.

It turns out that the claim has been justified by comparing schools’ spending for the four years from 2009 to 2013 with the four years from 2005 to 2008, and including the stimulus spending under the Building Education Revolution for the later period. Using the same basis of calculation, the government is actually cutting schools spending from a peak of $25 billion in 2009-10 to $15 billion in 2014-15.

In summary, as far as education is concerned, the 2011-12 budget is claiming (indeed, overclaiming) credit for the past, but offering less than nothing for the future.

*Professor John Quiggin is a Federation Fellow in economics and political science at the University of Queensland and the author of Zombie Economics: How dead ideas still walk among us

Peter Fray

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Peter Fray
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