When Kevin Rudd walked into an overflowing lecture theatre at Melbourne University today the crowd broke into spontaneous applause. The true believers are desperate for Labor to win. The basic theme of Rudd’s speech was that Australia can do better on education, which the Labor leader argues is crucial to improving Australia’s productivity performance (the audience may not have been so impressed with the focus on economics; many academics like to think they are above mere money-making).
The speech itself was just rhetoric, but the ALP has also released a more substantial discussion paper (pdf). The first half discusses the long-term foundations of prosperity and the importance of productivity, and the second half focuses on human capital.
The tensions between the two halves are what Labor needs to overcome if it is going to be credible on education. They note that one way of increasing productivity is improving the way firms and industries are organised:
That requires the right market incentives for resources to flow to the more efficient areas of the economy, and for businesses to organise themselves in the most productive way … this means businesses working in competitive product markets …
And that another way is to:
improve the quality of production inputs themselves. This in particular means raising the quality of human capital by investing in the workforce…
But if we are to improve our human capital it is not just a matter of increasing inputs, as the second section with all its comparisons with other OECD countries implies, but improving the productivity (broadly defined) of the education industry.
Australia has been increasing its spending on non-tertiary spending. The OECD Education at a Glance publication shows that on non-tertiary education Australia has increased its spending by more than the international average since the mid-1990s. Though productivity is very hard to measure in education, I doubt many people believe there have been significant improvements in school level educational outcomes in that time – certainly not the increasing number of parents shifting their kids to private schools.
Just throwing more money at schools isn’t going to work without sound curricula and good teaching, and in those areas we run straight into the heavily-entrenched centralised education bureaucracies running the public school system and the teacher unions that have obstructed many previous attempts at reform. Without even direct constitutional control over schools, federal Labor will struggle to make the necessary reforms, even if it supports them in principle (which at this stage is far from clear).
In universities, they complain that public spending has been cut. Yet it is very – indeed, surprisingly – hard to show that this has had negative effects on educational outcomes. The number of people completing courses is up, student satisfaction with their courses overall and with teaching is up, and graduate salaries relative to other 20-24 year olds are maintaining a healthy premium (though it bounces around a bit from year to year). The slight decrease in the overall premium from a bachelor degree, as I argued last year, is probably due to qualifications upgrading, as postgraduate numbers and the postgraduate salary premium are both up.
Though the public core of the university system is in student choice even more paralysed by bureaucracy than the schools, financial reliance on full-fee paying international students has started to correct the historic institutional indifference to the interests of coursework students. Most staff now get at least some teacher training, need to do ok in student surveys to be promoted, and many use the web to improve their teaching. Email has helped students get around the problem of academics being in their office for one or two consultation hours a week. Labor needs to create added competitive pressures for universities to keep improving the student experience. Perhaps they will reveal plans for this in the promised future detailed policies.
I agree with Labor that we need to invest more in education. But this makes their promise to further restrict what students can spend on their university education anomalous. If we want resources to flow to where they can best be used, who is better to decide how much a student should invest in his or her human capital? The student or a politician setting a one-size-fits-all maximum? Here the two parts of Labor’s agenda come into direct contradiction.
Education probably does need more money, but it needs micro reform as well. The former without the latter might make us look better in OECD spreadsheets, but it won’t deliver value for the extra money.
Andrew Norton 
The part where Rudd says “…more efficient areas of the economy…” is a pretty telling statement on their intentions towards manufacturing.
So much for that idea…
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Rudd is a snob – ‘you’re only productive if you’ve been to uni’. All those hard-working non-uni qualified Australians have nothing to look forward to under a Rudd-government but going back to school.
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Does anyone have the figures on TOTAL investment in higher education, both public and private?
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‘Rudd is a snob’
Thats better than being anti-intellectual. Its hard to imagine him being worse for the sector than the Liberal party was (and indeed Labor before it). But you never know.
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Is it? I’m not sure what ‘anti-intellectual’ actually means. There is no evidence that I can see that shows that Howard has been too different from the previous governments in their approach to higher ed. The big stumbling block was compulsory unionism. The government would not compromise on that and if uni’s had been smart and played ball they could have gotten heaps of cash from the government.
I would have thought that Rudd would be terrible for education. He would use it has a form of social engineering with the all the state control that goes into that (for some comparson, let me say the current government practices malign neglect). He would also tip money into higher-ed. This would be a disaster – the biggest problem with uni’s IMHO is that they have too much money and too easy free cash flow. Firms with too much FCF and weak governance mechanisms (such as universities) are plaguedby all sorts of waste and inefficiency.
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Too right Andrew. More money spent for no good reason.
The other tension with the first pssage is of course Labor’s IR stance. It’s a bit hard for “businesses to organise themselves in the most efficient way” if they are obliged to keep on people they don’t want.
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Leopold – Most higher education income and expenditure is recorded in DEST finance information. However, we know relatively little about the private higher education sector. I’d add 3 or 4% at least to these figures.
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“There is no evidence that I can see that shows that Howard has been too different from the previous governments in their approach to higher ed.”
I completely agree with this, which is one of the reasons that universities are so cruddy in Australia. Also, free cash flow and poor governance are different issues. You can easily have one without the other, and it seems to work fine (like many of the big US universities — where the flow of cash is far freer than Australia). I also fail see how restricting that flow will lead to good governance (particularily given that all the government restrictions), it just means there will be bankrupt universities.
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Sorry, these are two issues that combine to lead to poor outcomes.
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Rudd is a snob –
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Rudd’s been talking about university education since his appointment.
About ten years ago I had a masters student who crunched the numbers for Australia, Singapore and Malaysia. In those days the best bang for buck from education in Australia can from post-secondary, pre-uni education. For Singapore and Malaysia the bfb came from secondary education. The great irony was that this student did not ever actually complete his degree. That doesn’t detract from what Des found, afterall you can’t have post-secondary eduation without the foundation. However, having said all that, it is not clear to me what government can do to improve educational outcomes, in particular, the ALP has its education union friends to deal with, who are IMHO the cause of poor educational outcomes.
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sinkers so that is a general statement.
reading it fron this topic it looked liked it was something you either got straight from the document or inferred from it.
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It is a general comment, but I have read the Exec Summary of the ALP paper and page 10 of the AFR and page 6 of the Australian. Nothing I have read as lead me to revise my view of Rudd as a snob. (I formed this view after reading his December op-ed’s in the Australian). But I’d be happy for you to point me to the evidence that suggest otherwise.
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Andrew, your response to Gerard Noonan’s piece in today’s SMH?
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Andrew E – See previous comments on VCs. I think there are certainly elements of tactical failure, such as making weak arguments unsupported by evidence and not using the power they have to refuse to enrol Commonwealth-supported students until they get a better deal. So I agree with the thrust of Noonan’s argument in that regard.
But I think there was a high degree of ideological folly as well, which Noonan shares. Even if there was a good case for more government funding (which I don’t think there is, in general) until 2001 they put all their eggs in that basket, rather than also seeking the right to charge fees to domestic students. Many of the problems they have faced could have been avoided had they sought fee deregulation. And I think the government has rightly taken the view that they should be reluctant to help people who won’t help themselves.
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sinkers, with respect unless the teacher’s unions control the curriculum, which they don’t, then your statement is a lot of cobblers.
the main problem of the unions ironically enough was to allow teachers pay to languish so instead of the best and brightest going into teaching we now get the reverse.
It seems to me before ANY increase in money is allowed there has to be agreement on what the outputs which are most important are and after doing that which inputs are the most important at boosting those outputs.
This seems to be missing
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Sinkers go and go some work on whether that happens.
interesting that there a large battles between the teacher’s unions and ‘leftwing’ ministers.
You may just find that a lot of these battles are over changes in the curriculum, indeed too many, that the Minister wants for any amount of reasons and the Unions quite rightly don’t want.
If the Unions had been doing their job they wouldn’t have let teacher’s salaries fall so much in relative terms and so the best and the brightest would still be entering the profession
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Actually I think there is a 3rd possibility to (a) the unions cause all the problems by stuffing everything up; and (b) the unions cause problems by not getting high wages. This is that there multiple factors involved in educational achivement, and lots of them conspire against getting good outcomes in Australia. Some of these are thanks to the teachers/managment/government, but others arn’t.
You could compare Australia to lots of places in East Asia and Northern Europe, for instance, where you could have absolutely aweful teachers and schools and still get reasonable outcomes, thanks to the parents. Whats relevant here are cultural factors relating to parenting and parental expectations. The average moron in Singapore, for instance, still wants their children to get a university degree, whereas the average moron in Australia probably thinks it is fine if their children want to dig holes. You could also compare outcomes in schools where all the East Asians go in Australia versus those that they don’t. Same curriculum, same teachers, better outcome.
Things like the demographics of the parents make a huge difference, and given this it is no real surprise that places where parents have higher expectations get better outcomes than Australia.
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Sorry, Homer – you’ll have to link to some news stories. I can only recall disputes over pay and conditions and how to make reports even less transparent.
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well I am in the fortunate position of reading the journal of the teachers union in NSW ( irony alert) so I can tell you that in NSW this is the case and reading from their stories over time it appears to be the case in other states.
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Sorry, Homer the union rag is not credible.
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