Pyramids of life and death
Pyramid of Deaths in Australia, by sex and age, 2014
To put it in context:
Death Pyramid on the popular Population Pyramid, Australia 2014.
Helping all – UK’s distribution of public funding
Redistribution of funds through tax can happen in one of two main ways:
- you collect more from the rich than the poor and give everyone an equal share, or
- you collect the same amount from everyone and distribute more to those in most need.
But how much is the UK doing of either?
In short, relatively nothing on the first type of distribution, and not a lot on the second.
I say relatively nothing as households across the UK pay roughly the same percentage of their income on tax, no matter what their income. Obviously, those with higher incomes pay larger amounts, but as a proportion, it is not greater than what the poor pay.
On the second type, while the Government does provide greater benefits to the poorer sections of the community, the difference between benefits to the poor and rich is not way near as large as many would have you believe.
Collecting more from the rich
As discussed in a previous post, the amount of tax paid across the community is pretty much the same, relative to their income. So, while the rich contribute the most, they contribute the same percentage of their income that the poor do (when including income tax and indirect taxes).
Are we distributing more to the poor?
According to the latest UK Budget papers, the UK Government will spend roughly “£772 billion in 2016-17”[1].
The budget gets spent as follows:
- £517 (67%) on services consumed by individuals, e.g. health, education, social security
- £168 (22%) on untargeted national stuff, e.g. defence, paying debts, public order
- £87 (11%) on services which may or may not support some over others, but it’s harder to ascertain its distribution, e.g. agriculture, industry, employment, transport
For the purposes of this post, I will ignore the 11%, as I can’t find reasonable distribution analysis, and what’s 11% anyway.
So, how do targeted services get dispersed across the income groups?
Health
Health accounts for 19% of all UK Government expenditure, with the average household in 2013/14 consuming around £4,200 in services. While obviously not every household consumes the same amount, the difference across income groups is surprisingly small.
That’s to say, households from across the various income groups in the UK consume just over £4,000 worth of health services. Those with the lowest and highest incomes appear to consume slightly smaller amounts.
Education
Consumption of education services does vary. In 2013/14, the poorest 3 deciles consumed just over double what the richest 10% of households did. This difference, however, appears to be largely driven by the number of students in the house, rather than their income. Students (from primary school to university) are twice more likely to live in the poorest 30% of households than in the richest 10%. After adjusting for number of students per household, education expenditure is remarkably similar across the income ranges.
(As student estimates are rounded to 1 decimal place, the estimates graphed include an unrounded range, e.g.: the poorest households have 0.7 students per house, but are graphed from 0.65 to 0.75)
Social Protection & Personal social services
Unlike health and education, social protection and personal services are targeted based on income. But even these payments are possibly less lopsided than is expected.
The poorest half of the community receives 80% more than the bottom half. While the average household receives £6,000, the 2nd and 3rd poorest received the most, at £9,000. The richest and second richest deciles, on the other hand, received £2,400 and £3,500 per year respectively.
When you add it all up
Other than social security, which is mostly targeted at the lower middle class, the majority of government spending is spread out quite evenly across the income groups. The end product, being one that while leaning towards supporting the lower middle class, provides a relatively equal distribution.
*not including 11% spent on Agriculture, Transport, Industries, etc.
Sources
[1] https://www.gov.uk/government/publications/budget-2016-documents/budget-2016
http://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/datalist?filter=datasets
Parliament photo by : luxstorm – https://pixabay.com/en/users/luxstorm-1216826/
Equality: what progressive income taxes giveth, consumption taxes taketh away
There are two broad types of taxes: direct and indirect.
Direct taxes are charged directly by governments, usually on income. This facilitates progressive targeting, taking more from high earners and alleviating the burden on the poor.
Indirect taxes (e.g. VAT, GST, fuel and tobacco levies) are charged by anyone providing a good or service upon consumption. And the 7–Eleven down the street doesn’t know whether you are rich or poor. So a chocolate bar will incur a 20% tax, whether you earn £10,000 or £100,000.
How much does this matter?
The impact of indirect taxes depends on how much you earn. Unfortunately, the less you have the more it impacts. While income tax progressively increases as your income increases, consumption taxes are regressive. As a result the poorest 10% of UK’s households spend a third of their income on indirect taxes. The richest 10% on the other hand only spend £1 of every £10 they earn in indirect taxes¹.
The impact of these regressive indirect taxes are such that they cancel out the progressiveness of the income taxes. That is, once both sets of taxes are considered; households across the UK’s income spectrum contribute the same amount relative to their income. In fact, the poorest 10% of households contribute 10 percentage points more than any other income group.
This trend grew drastically from the late 70s till 2002, and appears to have plateaued since. But it does not appear to be disappearing.
But, what if…
… the UK got rid of indirect taxes. What if it raised the same revenue as it does today entirely through income taxes, using its current progressive pattern?
Using this ‘what if’ scenario, some measures of inequality would be almost halved:
To put the Gini value in perspective, the estimated 0.26 value would put the UK among the most equal countries, alongside Norway, Finland (based on UNDP figures²).
Removing the VAT by itself would make a significant impact, as it accounts for almost half of all indirect taxes.
Reality check
Granted, moving to an entirely direct revenue raising system is neither likely nor simple. But this ridiculous scenario does highlight just how unequal the indirect taxing system is, and what impact it has on equality.
It also suggests that every new or increased indirect tax implemented continues to drive a wedge between the haves and the have-less. This includes the increases in VAT from 15% to 17.5% to 20% over the past 25 years, and any additional levy.
Similarly, if a key aim over the coming years is to decrease inequality, then there may be worse places to start than by lowering VAT, and compensating where necessary with increased income taxes.
Sources:
[1] http://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/datasets/averageincomestaxesandbenefitsbydecilegroupsofallhouseholds
[2] http://hdr.undp.org/en/content/income-gini-coefficient
UK auto disqualified after poor lifting
In the aftermath of Brexit, the pointy finger of blame has fallen squarely on the rise of conservative patriotism, racism and the stench of economic stagnation among the working poor.
But when analysing the economic situation of UK’s households over the last few decades, it’s hard to see what Brexiters are complaining about.
While American working class wages got stuck in the 1970s, the UK’s have been rising steadily, especially since 1990. In fact since Thatcher lost office, the poorest 40% of households have seen their disposable income increase at twice the rate of the rest of the country.
(I use disposable income as it’s a more complete measure of a household’s situation than wages. It includes all income (private and government cash benefits) and removes direct taxes (income tax). It’s the money which lands in people’s pockets.)
After adjusting for inflation, household disposable income grew by 71% for the poorest 20% of households, and 59% for the 2nd poorest since 1990. The rest of the UK only grew by 34%.
The poor are not only getting richer in absolute terms, but also in relative terms.
Firstly, absolute growth
The poorest quintile has seen their disposable income increase from £7,200 in 1990 to £12,300 in 2014/15 (after inflation). The second poorest quintile increased from £12,400 to £19,800. No matter how hard life is today for poor households, it would be a lot worse with £6,000 less a year.
To put this growth in perspective, we can compare today’s poor households to that of people in the past. Today’s 2nd poorest quintile earns the same as the middle quintile earned in 1990. And going back a bit further, they earn the same that the 2nd richest quintile did in 1977, just before Thatcher took office. So, the economic situation of the working class today is similar to that of the upper middle classes when the (Royal variety) Queen celebrated her Silver Jubilee, and Queen (of the Freddy Mercury variety) released “We are the champions”.
Secondly, relative growth
As the poor households’ earnings grew faster than the rich ones, the relative gap has decreases considerably. The disposable income ratio of richest to poorest was 7 at the end of the Iron Lady’s regime. Today that figure is 5.4. Likewise, the ratio between the 2nd richest and 2nd poorest quintiles dropped from 2.4 times to 2.0. Of course, the ratio is still too large, but a 23% drop is worth noting.
Since GFC
The figures above look at the UK since the departure of Lady Thatcher in 1990, but what about a more recent focus?
Well, the picture is even rosier (relatively speaking) for the lowest quintile over the past 7 years. While the richest 2 quintiles dipped between 5-10% around 2011-12, and have only just returned to pre-crisis levels, the poorest quintile now earns 11% more than they did in 2007/08, and never went behind pre-crisis levels over the period. The 2nd lowest earners hovered steadily, but over the past 2 years increased to a small increase over pre-crisis levels.
A historical lens
A longer search shows that this was not always the case. The last dark age for the lower classes was clearly under Thatcher. During Margaret’s 11 year regime, the disparity between rich and poor climbed steeply. While the richest households in the UK experienced a 46% increase in real disposable income, the poorest 2 quintiles only increased by 11 and 13%. This resulted in the income ratio of richest to poorest to rise from 4.9 to 7 in an 11 year period.
It’s taken the following 25 years to bring this disparity back to pre-Thatcher levels for 2nd richest to 2nd poorest, but the Richest to poorest ratio is still much higher than it was in the late 70s.
Show me the money
Here’s where it gets super interesting. It would be easy to assume that seeing as the end of Thatcherism marked the turning point for income distribution; government handouts would be somewhat responsible for the change. But that is far from the truth. The income growth for the poorest has been largely driven by increases in private income. Since 1990, private income for the poorest has increased by 168%, while Government support only increased 22%! The opposite was surprisingly true under Thatcher, when the bulk of the poor’s income increases came from government benefits.
Since 1990, Government support has increased the least for the poorest quintile, in relative AND absolute terms. While the government now gives the poorest quintile £1,400 more than they did in 1990 (after inflation), they also give middle income earners an extra £3,400, and the richest quintile an extra £1,700 per year, after inflation.
Brexit due to a lack of jobs available
Yeah, nah. Unemployment has not been lower than current rates since the mid-70s. Sure there was a momentary blip from the 2008 crisis, but not only did that not reach the unemployment levels seen in the 80s and 90s, it also finished a year ago. People should be high on finding employment at the moment.
It’s not you, it’s tax
Even income tax hasn’t been lower in the last 40 years. The poorest households now pay 5 percentage points less in tax than they did 25 years ago, and the middle and upper middle classes have dropped around 3 percentage points. The only section of the community paying more tax (per household) are the richest 20%, and even they only pay less than 1 percentage point more than they used to.
So, what the heck are Brexiters complaining about?
Overall the economic situation in the UK has been favourable across the community, and in particular the poorest sections.
- Income is considerably up
- Inequality is slightly down
- Unemployment is at its lowest point in the last 40 years, and
- Brits have not paid less in taxes in at least 40 years.
Furthermore, the government is increasingly supporting the middle and upper classes through direct cash benefits, so they can hardly complain about the support being handed out to those (arguably) more deserving.
What’s that leave us with
If Brexit was a vote of discontent at the current economic situation, it was a result of perception more than reality. More likely, it was a vote from fear. A xenophobic reaction to the constant hysteria bombarded at the populous, misleading on the current situation. The world is not getting worse. Neither from within, economically, nor from outside evils.
Time for more reasoned responses, from a better informed community.
Sources
All data is sourced from the Office of National Statistics (ONS) UK.
http://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyearending2015
http://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/timeseries/mgsx/lms
The death of dying
Life is getting longer.
Life expectancy in Australia grew from 50 years in the late 1800s, to 70 in the 1960s, to 82 or so today. And we’re nowhere near finished. But while many are aware of this, not many appreciate the magnitude of this achievement, nor its continuous impacts.
Perhaps there’s a lack of newspaper headline moments claiming “1,000 people did not die yesterday”. Or perhaps it’s because people think lives are merely being elongated when we’re at our worst, forcing us into a dependent cycle of medical attention from which the doctors gain more than the patients.
Yet, neither of these is entirely true.
Making headlines every day
While 154,000 Australians died in 2014 (latest data available), the figure would have been closer to 176,000 (22,000 more deaths) had the mortality rate not improved in the last 10 years. (And 10 years is hardly a long time. In today’s currency, it’s barely 5 Prime Minsters ago.) Improvements since 2004 are saving an extra 2,200 people each year, on average. To put it in perspective, around 230 people are murdered in Australia each year. So mortality improvements, which rarely rate a mention, are saving 10 times the number murdered more every year than the last!
Seeing as murders are front page material, mortality improvements should have their own weekend section.
Saving lives at all stages
Unlike popular opinion, extending life expectancy is not about delaying death while holding people to ransom, feeding them mashed cauliflower through transparent tubes. Death rates for teenagers and kids under 5 year-olds have both decreased by a third. Basically, we’ve saved 1 in 3 of the teenagers (and babies) who would have died had the improvements not occurred.
Had we saved a third of the price of electricity Josh Frydenberg would have declared it a national holiday.
These decreases were not a once off, nor were they specific to one group. Improvements across the younger years have been pretty steady over the past decade.
Improvements in mortality rates translate into less people dying than would have under the previous rates.
As expected, the majority the decrease in deaths occurs at the latter stages of life. Though surprisingly, the only cohort with an increasing mortality rate are those over 95 years of age. And yet, the improvements are so large that even though the younger cohorts make up smaller percentages, they are still newsworthy. Without the improvements of the last 10 years, 2014 would have seen the death of around:
- 376 more kids under 5
- 124 more teenagers
- 426 more people in their 20s
- around 3000 more working aged folk (15-65 year-olds)
Instead, our attention is focused on gruesome anecdotes of villains and victims. A hero cowardly king-hit, a young family destroyed by a murder-suicide, three teenagers overdosing on ice behind the local servo, or a joy ride gone awfully wrong. Without balancing these out with the constant excitement of decreasing mortality and longer lives, we fall into a pessimistic spiral of despair. We fail to recognise the huge progress made and foster a sense of nostalgia for times which were in fact significantly worse.
Shit’s never been this good. We’re just too busy reading the headlines to realise it.
Source:
Death figures sourced from : ABS Deaths Publication, 2014 http://www.abs.gov.au/ausstats/abs@.nsf/mf/3302.0
Converted to rates using ERP by age
More charity at home, less in Parliament House
While Australians are increasing their personal donations, as a country they’ve been giving less and less to foreign aid.
Is this suggesting a misalignment of sentiments between the community and its leadership? Is there a growing desire to support those closest to us, donating to support local causes, while diminishing our desire to help those abroad?
The period graphed included 9.2 different Prime Ministers so it’s hard to pin point the blame the Australian Government’s diminishing willingness to fund foreign aid. And while the coloured timeline suggests that upon winning office Labour increases and Liberal decreases Australia’s Official Development Assistance, the overall picture is clearly trending south. So much so, that Foreign Aid didn’t even rate a mention during the 2016 election campaign.
Australia’s generosity, as individuals and as a country however, leaves much to be desired. Australians donate around 34 cents for every $100 earned, and the country spends $1.30 in foreign aid for every $100 spent in the federal budget.
But if charity is starting to take off at home, there’s hope it may influence the political agenda.
ODA vs Budget not ODA vs GNI
The graph shows foreign aid expenditure as a percentage of the total federal budget. Most analysis compares foreign aid to Gross National Income (GNI), with governments stating they’re aiming to reach 0.5%. However, as suggested by Angus Barnes[1] the federal budget, which is within the government’s control, is “a more appropriate denominator”.
Either way the line is almost identical, with the only difference being magnitude – 1% of budget is roughly 0.4% of GNI.
Sources:
[1] http://devpolicy.org/the-odagni-ratio-does-it-truly-reflect-a-governments-commitment-to-aid-20130521/
http://dfat.gov.au/about-us/publications/Documents/statistical-summary-2013-14.pdf
http://www.budget.gov.au/2009-10/content/ministerial_statements/ausaid/html/ms_ausaid-10.htm
Australian philanthropy improving, yet miles behind
Australians are donating more money than ever. Based on ATO data, tax deductible donations have increased from as $58 million in 1979 to a $2.6 billion in 2014[1]. This equates to an almost 4-fold increase in donations as a percentage of income. That been said, donations still amount to a tiny percentage of income. On average, Australians only donate 0.34% of their income. That’s 34 cents for every $100 earned. Also, while the percentage contributed increased steadily from 0.1% in the late 1970s, it seems to have plateaued over the last decade.
These figures make Australia look like the scrooge of the Anglo-world. America’s philanthropic culture sees them donating 10 times as much as Australians do as a percentage of their income. The UK donates 8 times more, Canada 2.5 times, and NZ donates 50% more[2].
(I compared Anglo countries as it was easier to find data online, and also due to the strong cultural aspects of philanthropy.)
According to analysis by the Fondation de France[3], British donors are the most generous in Europe. But based on their measures of comparable concepts, other wealthy Europeans donate around half what the Brits do, which makes it around 4 times what Australians donate. “Philanthropy in Europe” also suggests that countries with high taxes have lower individual contributions. High taxes suggest the government is looking after the needy, and thus individuals don’t have to. It further highlights countries where tax revenue amounts to over 40% of GDP (such as France, Belgium and Italy) having lower donor participation. Yet, Australia’s tax burden is around 25% of GDP[4] and Australians donations are so miserly they round down to 0%.
No matter how many kilometres people run, bike or walk, nor how white, black or pink their ribbons are – Australians donate less than a deconstructed latte a week in $ terms.
Let’s hope they at least donate to the right causes.
Who are the givers?
While donations came from across the community, the super-rich gave the lion’s share. Those with a taxable income over $1m (the top 0.1% of earners) gave 13% of all donations[5]. Those over $250k (the top 1.3%) gave 26% of all donations, and overall, half of all donations came from the top 15% of earners, those with a taxable income over $90k.
On the other hand, while the lowest earners (under $6,000) donated small amounts, they gave by far the most as a percentage of their income, donating almost 5% of their income. This seems to be somewhat driven by retirees who may have low incomes but potentially amounted large wealth.
The middle and upper middle classes ($40k to $150k) contributed the least as a percentage of their income (0.25%).
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Reply to 1st comment:
Sources:
[1] Table 1: https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Tax-statistics/Taxation-statistics-2013-14/?page=4#Individuals_detailed_tables
[2] USA: Table 2.1https://www.irs.gov/uac/soi-tax-stats-individual-statistical-tables-by-size-of-adjusted-gross-income
UK: Table 2.6 – https://www.gov.uk/government/collections/charitable-donations-and-tax-reliefs-statistics
Canada: http://www.cra-arc.gc.ca/gncy/stts/t1fnl-eng.html
New Zealand: http://www.ird.govt.nz/aboutir/external-stats/revenue-refunds/donation-rebates/
[3]https://www.fondationdefrance.org/sites/default/files/atoms/files/philanthropy_in_europe_2015_0.pdf (section D)
[4]https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP
[5] Table 3: https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Tax-statistics/Taxation-statistics-2013-14/?page=4#Individuals_detailed_tables
What India doesn’t have fills the world
There are more people living without safe drinking water at home in India than the entire population of Europe… about 100 million more.
There are some fundamental things a home needs: clean drinking water, hygienic toilet, bathing facilities, a kitchen and electricity. And while we’re aware that not everyone has all these things, it’s easy to underestimate the magnitude of the issue.
India has the second largest population in the world, estimated at 1,210,854,977 through the 2011 Census. The percentage of this population without the fundamental facilities is enough to paint substantial sections of the rest of the world.
For example:
- There are as many people living without an inside toilet in India as the entire population of Europe;
- More live without electricity than the population of the USA and Canada combined;
- More lack a kitchen inside the house than the population of Latin America;
- More lack bathing facilities than the rest of Southern and West Asia; and
- 4 times more people cook with cowdung than all of Australia…
Beyond the fundamentals, another 215 million lived without a radio, TV, phones, computers, vehicles or even a bicycle.
Sources:
http://www.censusindia.gov.in/2011census/hlo/Houselisting-housing-PCA.html
http://esa.un.org/peps/index.htm”,”http://esa.un.org/peps/index.htm
Picture taken in Jaipur, India.
They may take away our lives, but they’ll never take our freedom to drive!
Petrol today costs around 40% more than it did 12 years ago, after adjusting for inflation, but Australians still drive like it’s going out of fashion. Australians have defied the petrol bowser again and again since the 90s, bringing into question what impact some government policies may have in curving our enthusiasm for the wheel. Seems there is no pricing Australians out of their cars.
One of the ways in which governments hope to influence people’s activities and consumption is by affecting prices. All things being equal, increasing costs is meant to decrease consumption. And decreasing consumption should decrease environmental impact.
Yet, Australians are unwilling to let go of their car keys, despite the cost blow out. Petrol prices increased 51% from 1998 to 2008, and while they’ve dropped slightly from the peak, they are still 35% higher than in the late 90s. Beyond the whinging and media focus on the topic, Australians’ driving habits appear unfazed. Passenger vehicles travel between 7,200km and 7,700km per person every year since the late 90s, with only minor variations each year.
But not only are Australians not driving less, they’re also moving towards less fuel efficient SUVs over sedans.
So, are Australians too wealthy to be easily manipulated by monetary pressures?
An AC Nielsen survey in 2006[1] suggested 60% of Australians were decreasing their car use to deal with the price increases. But it seems people overestimate their willingness or ability to update their behaviours according to their environment. Increased petrol prices definitely led to increased snarling at the local servo. But people kept find themselves sucking on the bowser’s tit, much like the electorate with the major parties: they don’t like it, but are too lazy to search for other options.
Unless there’s a party willing to go beyond a 50% tax increase to test how elastic the petrol guzzlers are, what chance do governments have to guide behaviour through tariffs.
Sources
http://www.aaa.asn.au/aaa-agenda/affordability/latest-fuel-prices/
http://atrf.info/papers/2010/2010_gargett.pdf
http://stat.abs.gov.au/OECDStat_Metadata/ShowMetadata.ashx?Dataset=ERP_QUARTERLY&ShowOnWeb=true&Lang=en
ABS : 6401.0 Consumer Price Index, Australia, TABLES 1 and 2. CPI: All Groups, Index Numbers and Percentage Changes
[1] http://www.smh.com.au/news/business/aussies-changing-driving-habits-to-cope-with-fuel-prices/2006/03/07/1141493652510.html
Rental struggles
Australian renters spend 23% more of their budget on rent than mortgagors on loan repayments.
Following from a recent post, this further shows that renting stings more than home-loans, and Australian Governments need to focus more on rental affordability than on those trying to enter the housing markets. Yet the conversation hardly mentions them.
The average Australian renting household spends 22% of their weekly expenditure on rent, while those repaying a home-loan only spend 18% of their weekly bucket. The analysis, based on the latest (but slightly outdated) ABS figures from 2009-10, shows the difference is more pronounced in the higher income brackets.
The difference is even greater among households whose main source of income is Government pensions and allowances. Aged Pensioners who rent spend 4 times more on rent than mortgagors do on repayments. Renters relying on unemployment benefits spend 30% of their weekly expenditure on rent, while mortgagors spend half that amount (16%) on repayments.
So, it’s pretty clear that households struggling with housing costs need help to pay their rent, not to continue to amass wealth while chasing the “Australian dream”.
For all the support, subsidies, and attention paid to first home-owners, Australia is in a great place to ensure no one goes without housing. And renters appear to be at the heart of it all.
Sources:
6530.0 Household Expenditure Survey, Australia: Detailed Expenditure Items, 2009-10
65300DO001_200910 Household Expenditure Survey, Australia: Summary of Results, 2009-10
Too many cookies in the education jar
Much is being said of the government’s support of private over public education of late. Last week was accentuated by the Private school, public cost report suggesting private funding will soon overtake public, with other opinion pieces echoing its sentiments.
According to the research based on MySchool data, Government support for private school is growing at twice the rate of public schools’ support. This, however, is only true if you focus on the last 6 years. The complete opposite trend was true for the 5 years prior. While MySchool data is only available since 2009, the Productivity Commission’s Report on Government Services goes further back and shows a different trend over an extended timeline¹.
The report’s major strength is that it compares a finer slice of the community, focusing on schools with similar socio-economic backgrounds. This removes the effect of funding allocations based on need, which the government currently follows. Seeing as public schools disproportionately service poorer areas, using PC’s rough average (as I did) overestimates the difference in funding as the population serviced by private schools is generally cheaper to support. Unfortunately, the complete MySchool data is not easily available online, so my analysis is restricted to aggregate data and misses this finer level investigation.
However, while I suspect the difference is smaller than that suggested by the PC analysis above, the trend over the 11 years is likely to be the same.
Surprisingly, it’s not only Federal Governments whose support increased faster for private schools over the past 6 years. State Governments increased private schools funding at 2.6 times the public schools’ rate between 2009 and 2014, with all but NSW and SA increasing support for private faster than for public over that period. Northern Territory’s private school support grew at almost twice the rate of their public school support.
Growth in Federal Government’s support has been relatively even over the same period, with private schools funding growing 18% faster than public.
(N.B.: All analysis is conducted on figures adjusted for inflation.)
The main reason for private schools outpacing public schools is that Federal Govs have increased school funding faster than State Govs. Over the 6 years in question, State Government funding on average increased by a miserly 4%, while Federal Governments increased education support by 25%. As Federal support private education more than they do public (as a base rule), their increase ends up largely in private coffers. Even if Federal grants increased equally across both sectors of education, private schools would win.
This does not excuse the recent growing support for private school funding, but suggests that perhaps our current funding models are too complex and compartmentalised to understand how each lever impacts individuals and/or the entire system. We have too many jars, and too many types of cookies in them. Whether on purpose or misfortune, this often leads to undesired results, like the examples mentioned in the Private school, public cost report, where some private schools receive more funding than their neighbouring public educators.
As long as private schooling is legal, governments need to ensure they are adequately funded and this means continue funding for private education. However, the upper echelons of private education should not be taking resources away from those who need it most.
Education policies should be about more than funding, i.e. how the funding will be used, but perhaps there is room for one overarching policy, not about how much funding will be allocated, but how the cookie factory will be better and more equitably managed
[1] Following “Private school, public cost” methodology, public funding is multiplied by 0.85 to remove User Cost of Capital.
It’s not the size of your budget, but how you use it that counts.
Education policy discussions focus almost exclusively on funding, and this election carries the stench of a pissing competition. However, based on OECD PISA findings there is no link between spending and outcomes, and more so, increased funding over the past 10 years has not shown improvements in student achievements¹.
Even if this weren’t the case, Australia is already among the top spenders in the world, with continuous funding growth going back decades.
School funding appears to only improve achievement up to the point where US $50,000 (ppp) is spent per student over the course of their schooling. Beyond this amount, spending does not seem to improve outcomes. Australia already spends double this amount, and is only surpassed by six countries. Of these six, only Switzerland performed better in PISA 2012.
(The following graphs are sourced from the OECD’s PISA:
What Makes Schools Successful? Resources, Policies and Practices – Volume IV Publication)
Much like Australia, most OECD countries increased expenditure in education in the period 2003 to 2012, yet the majority did not find improvements in student outcomes, with many (including Australia) going backwards.
So perhaps it’s time we elevate the conversation from “my education budget is bigger than yours” to “this is how we’ll improve education outcomes, and here is all the research which makes us confident it’s the best way to invest the public purse”.
The current discourse gives the impression that education is under constant attack. However, school funding is ever increasing. Public schools receive around 15% more per student now than they did 10 years ago (adjusted for inflation). Taking a historical view, public schools are now funded at twice the rate they were in the mid-90s and four times the rate of the mid-70s².
This is not to say that funding doesn’t need fixing, but I doubt it’s a case of needing more, rather better investment and distribution; for decisions to be made based on evidence, not political persuasion.
“What do we want?”
“Evidence based policies!!!”
“When do want them?”
“When they are good and ready, and the research is robust.”
[1] https://www.oecd.org/pisa/keyfindings/pisa-2012-results-volume-IV.pdf
[2] http://www.abs.gov.au/Ausstats/abs@.nsf/0/A75909A2108CECAACA2569DE002539FB?Open & http://www.pc.gov.au/research/ongoing/report-on-government-services/2016/childcare-education-and-training/school-education & http://www.abs.gov.au/ausstats/abs@.nsf/mf/6401.0