Gonski investment gets returns

Smiling_teacher.jpgBy Adam Rorris

Education economist

How do we put a dollar value on the Gonski reforms?

Well, how about we ask what is the economic value of every child in the country completing 12 years of schooling? What would it mean for our economic future if every Australian child got the support they needed to meet minimum standards of literacy and numeracy by the time they were fifteen?

Spoiler alert for politicians who don’t see the value of funding our schools properly: it is worth tens of billions of dollars. It is worth tens of billions every year. For a very long time. 

In my report Australian Schooling – The Price of Failure and Reward for Success I make it clear that Australian governments are faced with a stark choice.

They can either position Australia to reap the benefits of a high performing and equitable education system, or they can allow the country to continue to bear the cost of failure.

Failure is the operative word – because that is exactly what too many disadvantaged students have been left with in their engagement with Australian schools.

This is what the Gonski Review recognised when it called for extra investment in schools to be focused on the most disadvantaged students.

NAPLAN results show disadvantage

My research draws on 2015 NAPLAN results and the most recent international standardised PISA tests. It finds that inequities in outcomes are stacked against the children of the unemployed, the Indigenous and blue-collar workers (as well as clerks, sales and service staff).

The children of the unemployed are ten times more likely to not meet the minimum standards for numeracy and reading than the children of senior managers and professionals.

Of the children of the unemployed, 13% do not meet minimum standards in Year 9 numeracy. Ten percent of all children of ‘tradespeople, clerks, skilled office, sales and service staff’ do not meet minimum standards for reading in Year 9.

Results from the international PISA tests make clear there is nothing normal (or inevitable) about the degree of inequity in Australian learning outcomes.

For example, the Australian problem with inequity in learning is relatively high when compared with the OECD average and a demographically similar country like Canada.

In Australia, a gross inequity in learning corresponds with an inequity in resources distributed across schools. Children from disadvantaged backgrounds are more likely to arrive at school not ready to learn, yet are also more likely to attend under-resourced schools.

In sharp contrast to Australia, the top 10 PISA performing countries/cities have a significantly smaller resource gap between socially advantaged and disadvantaged schools. Indeed, only four OECD countries have a greater inequity in the allocation of education resources across schools. Only ten out of 65 countries participating in PISA have greater inequity in the allocation of educational resources across schools than Australia.

Social and Economic Costs

This is deeply concerning for anyone who believes that the education system should give all children a chance to achieve their potential.

But it is also a major concern for our economic future because failing to invest in the reinvigoration of the Australian school system will impose long run financial costs spanning the entire working life of today’s school students.

These students will be more likely to spend long periods on welfare payments, less likely to provide for themselves in retirement and less likely to contribute to the tax system.

My research finds a failure to retain all students to the end of year 12 schooling will generate direct financial costs in excess of $72 billion (in current prices) by 2070.

These are conservative estimates that capture an additional $60 billion in unemployment benefits by 2070 (2016 constant prices) and lost income tax revenues in excess of $12.2 billion by 2070 as a result of a greater number of people not being employed and therefore not paying income tax

On the other hand, a recent OECD study that by investing in schools, Australia stands to do much better than just avoid these direct financial costs. The economic benefits of a more able and effective labour force could actually be greater than the current value of Australian GDP.

If every student acquired the basic skills specified for 15 year olds (PISA Level 1, Mathematics) then the improved skills will deliver an average $27.5 billion in economic benefits each and every year until 2095.

This investment in education will spread dividends far and wide across Australia. The nation stands to gain massive long term economic benefits through effective and targeted interventions to address the needs of the most needy.

Best of all, the benefits will also reach the pockets of some of the poorest and most disadvantaged individuals and communities. Lifting our spending on education, and directing resources to disadvantaged students, is not a cost, it is an investment.

Investing in schools is something which can deliver both economic growth and greater fairness but it needs the commitment of the Australian government to make it happen. 



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