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Apr 15, 2013

‘Class warfare’ as govt tries to pay for Gonski

The government has mixed its messages on education funding, but ultimately the real benefits of Gonski may not lie in the extra money, which is just a means to an end.

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

The government’s education funding announcements over the weekend significantly clarify the Gonski process but still leave some major questions unanswered. And that’s before we get to what the states will do between now and June 30.

First, the spending cuts. Yesterday Prime Minister Julia Gillard was asked whether higher education funding cuts announced by Craig Emerson (and Wayne Swan) on Saturday were all the budget cuts needed to fund the Gonski funding model reforms. The Prime Minister offered a tortuous response, the clearest response being “but yes, we do believe that those changes announced are appropriate to have the resources necessary for this new work in schools, which is so pivotal to our nation”.

When Craig Emerson had been asked the same question on Saturday, he declined to say that would be the end of savings measures aimed at Gonski.

Emerson is more likely to be correct than the PM. Of the four cuts announced on the weekend, the second-biggest, the “efficiency dividend” imposed on universities, worth $900 million, is a one-off (or, more accurately, two-off). The ongoing cuts — capping self-education expenses for tax purposes at $2000, the conversion of student start-up scholarships into loans and the removal of the discount for paying HECS fees upfront — will total less than $2 billion over forward estimates. Even when combined with the superannuation tax concession cuts and education cuts last November, it won’t be enough to fund the Gonski increases proposed by the government on an ongoing basis. More cuts will be needed in the budget.

Capping education expenses at $2000 isn’t going to inflict too much pain, although The AFR insists today we should feel sorry for people planning to do MBAs, so presumably it fits within the now vast parameters of “class warfare”, which seem to include merely requiring high-income earners to pay the same tax as people on lower incomes. Ending the upfront HECS discount also removes a mechanism that favoured higher-income earners (I speak as one who paid upfront for a postgrad degree, thousands of years ago). Changing scholarships to loans will presumably have some deterrent effect on participation, and the “efficiency dividend” — or as it’s more correctly known, budget cuts — will translate into poorer education outcomes, although they are occurring in the context of overall increasing funding.

“… the real benefits may well lie not in the extra dollars but in the changes to performance information and allocation of decision-making within large systems.”

More broadly, to the extent that the cuts do partly feed into the Gosnki funding model, they’re a resource transfer from the tertiary sector to the primary and secondary sectors, and from those on higher incomes (who disproportionately go on to tertiary study) to those on lower incomes and those with educational disadvantage. It’s presumably only because they haven’t yet worked this out that the government’s critics have yet to also label this “class warfare”.

But by drawing on the tertiary education sector as a source for Gonski-related funding, Labor is both confusing its message on one of its key strengths — its support for education — and punishing the tertiary sector, which has lost money when other sectors continue to enjoy handouts, tax breaks and government largesse. Around $600 million a year, for example, goes to propping up 40,000-odd jobs in car manufacturing.

The $9.4 billion in additional funding offered by the government, based on an additional $4.5 billion from the states, is also well short of the total quantum of funding identified by the Gonski report, of up to $39 billion. It is, however, a significant increase on current funding, which critics like Andrew Wilkie seem to miss. Moreover, it is tied to a series of reforms. Like the government’s health and hospitals reforms, the real benefits may well lie not in the extra dollars but in the changes to performance information and allocation of decision-making within large systems. In effect, for that extra $9.4 billion, Gillard wants the state to sign up to more rigorous entry and assessment standards for teachers, more power for school principals and greater performance information for parents.

For the “it’s not about extra money” crowd, who mainly reside in the Coalition, even if we accept their argument that our education system doesn’t need extra money, they need to explain exactly how the Commonwealth can drive these sorts of improvements in performance information, performance management and decision-making by state governments without bribing the states to do so.

And all this has to be thrashed out in the shadows of an election that the Coalition is heavily favoured to win. Conservative states won’t be in any hurry to sign up to something that will improve Gillard’s slender re-election chances. But they also know that they’ll get precisely zero new money from the Coalition. Friday’s Council of Australian Governments meeting will be fascinating.

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24 thoughts on “‘Class warfare’ as govt tries to pay for Gonski

  1. Simon Mansfield

    Can I have pop corn with my deck chair?

  2. Superdry

    Mr Keane
    A big issue I have with two aspects of these reforms (which you seem to brush over) is the fact that the deductibility of self-education expenses and the discount for early hecs payment are either reduced or gone completely.
    Firstly, being able to deduct your education costs is a big deal, especially considering you’re forking out over $50K for some postgrad degrees. This is not a class warfare thing, its more a case of a lot of young professionals trying to pay their own way who will now think twice about doing a postgrad degree. While I agree there won’t be an exodus necessarily, I do note that there has now been lost another good reason to progress your career through further education. This reform may therefore result in a less competitive workforce and reduced enrolments generally.
    Separately, the whole point about providing a discount for early payment is that the Govt will gain from using the funds received early in other areas. It’s pretty simple economics given the low interest rate the govt is giving on HELP loans.
    This govt needs to think less on its feet and consider the results of its decisions down the line before acting quickly like this. I understand the virtues of improving the public system, but don’t do it at the expense of universities.

  3. Harry Rogers

    It’s internimable government response to all problems. Throw money at it!

    The Gonski report is no different and its terms of reference and content a based on presumptions that more and more money given to larger and larger organisations provides better outcomes.

    A number of older teachers commented on the report and educational outcomes over the past ten years and basically stated that its the quality of the techers and the teaching system. Now we all know that there are dud teachers but also good ones who aren’t supported. Perhaps if a pipe dream of better management of the educational system became a reality we might see some improvement …never mind lets throw another billion at the problem.

  4. mikehilliard

    Alas Bernard I fear the states will cut of their noses to spite their collective liberal faces. And what has the shadow minister for education offered on this issue? Nothing. If the people of this country can’t be bothered to vote for a better education for as many children as possible what hope is there. One way of funding better education, get rid of state government.

  5. brodsta

    Re: the scholarship being turned into a loan. This isn’t actually a voluntary program which you apply for, the scholarship referred to is the $1,000 or so approved students on Youth Allowance, Austudy and ABSTUDY get paid automatically per study semester in addition to their normal payments.

  6. Achmed

    Funding through the C’Weath Grants Commission showed a downward trend between the years 1997 – 2005.

    After 2006 the trend has been upwards

  7. freddy mac

    here’s what will happen:
    the cuts to the uni’s will go through unchallenged
    the gonski funding will be blocked/hampered by states and the coalition,
    government will put the uni money on the budget and pat themselves on the back for “bringing the budget back in the black”

    there will be no extra funding to schools in gillards remaining term, only cuts to unis

  8. Mike Flanagan

    Read the accompanying article freddy mac in Crikey. Uni’s have done very well under Labour, particularly if you care to compare the growth in allocation experienced in the Howard/ Cosrello period.


    During the sixties Menzies toyed with buying Catholic votes by building secondary school science blocks using federal capital grants.
    Under the ruse of needs based funding Whitlam sacrificed the critical cornerstone of public education, to its now permanent clapped out second class system status, by providing recurrent funding to so called battlers in order to purchase Catholic votes.
    Howard, with his middleclass welfare SES sluice gate opening, provided the over 100 year Catholic war on public schools with a decisive victory.
    Australian Catholicism owes a great debt to Whitlam.
    Gonski is I fear is too little too late.

  10. freddy mac

    my point remains. there will be no gonski funding, only cuts to uni’s.