The not-so-private health and education

Terry Snow’s well-intentioned and generous gift of $20 million to Canberra Grammar School nonetheless highlights the major anomalies of education funding in Australia.

The Coalition Howard Abbott Turnbull and Morrison Governments’ blinkered ideology and Labor being hopelessly wedged has meant that far too much education funding is going to private schools which already educate their children very well, while public and the non-elite Catholic schools struggle for money that would greatly improve the education of their students.

As Sherryn Groch reported in The Canberra Times this week, Canberra Grammar is already very well-funded. It receives about $7 million a year in Commonwealth and ACT government funding, more than $34 million a year in parent fees and another $2 million a year from other private sources.

It also received an $8 million gift from Snow in 2014.

Of course, Snow is entitled to give his money to whomever he wants and he may feel well-disposed to the school that gave him the education that helped him become such a successful businessman and generous philanthropist.

Lots of others, too, give generously to private schools.

But bear in mind this. The sort of people who can afford such gifts are usually high-wealth people on the top marginal rate of income tax and that they usually have good tax advice to ensure that their gifts to private schools are tax deductible.

And no doubt the donors, quite reasonably, would want to maximise the amount they can give to their school of choice. If tax deductibility means they can afford to be disposed to double the amount that they would otherwise give to the school, it means, in effect, half of all the money donated to private schools comes indirectly from the Federal Government in the form of forgone tax revenues.

If people want private education, or private health for that matter, that is fine. Let them pay for it, but do not expect a public subsidy.

Usually the Coalition opposes government spending and promotes itself as vigorously pro-private enterprise, unless, however, it is for its supporters among big business and wealthy individuals.

A more rigorously private-enterprise approach would carry a lot more respect.

The very wealthy school Reddam House, which has campuses in Bondi and Woollahra in Sydney’s eastern suburbs, recently decided to become a for-profit school. That debarred it from receiving about $5 million a year in federal and state funding.

It decided that the benefits of joining the for-profit Inspired Group with 53 high-performing schools around the world were greater than the state funding.

Well, good on them. That is free enterprise, liberty and freedom.

But it is not free enterprise and the exercise of liberty for a private school to put its hand out for a great big government subsidy so it can keep fees at a low enough rate to attract enough students to keep its head above water.

Surely, if it cannot survive on its own with fees and gifts (which should be non-deductible) it should go under.

Government subsidies should be restricted to temporary help and start-ups. You know, just like the Scott Morrison approach to Newstart. They should not be a permanent fixture for businesses (including private schools) that cannot make it on their own.

And the same goes for private health insurance. If people want to provide health privately for a fee, fine. But if they cannot do it without a permanent government subsidy, like the car industry, they should go under.

It is fine for government to support start-up industries, like renewables, electric cars, or other new technologies, but if after a time they do not make it, it is no business of government to continue support because they have failed. Private health insurance has demonstrably failed in Australia. Without the tax concessions for premiums and without the Medicare penalty levy for people without insurance, they would go under.

The government subsidies of private education and private health also have a high incidental cost. They have has resulted in a swathe of articulate, engaged, middle-class, middle-income people leaving the public systems.

When that happens governments can get away with poor service. There are fewer articulate people to voice demands for better service at the cost of votes.

Further, when the articulate, middle-income people are engaged, they improve the public system. In wealthier suburbs, for example, the public primary schools thrive. Parents are engaged in school activities, parent-teacher sessions and in support generally. These middle-class parents can see the education is good in their area and see they can save on private fees.

Of course, come secondary schooling, they opt for private because they know the importance of connections and the old school tie.

But what if the whole of the Australian education system could be like those public primary schools in wealthy suburbs. Well, it could be. Just axe the government subsidies for private schools so only a tiny proportion of people could afford genuine free-enterprise education.

Same with health. Strip away the subsidies and only a very few would be able to afford genuine free-enterprise health.

It would mean a great proportion of articulate middle-income people would come back to the public sector and no government would get away with long waiting lists for elective surgery or starved public schools. They would be thrown out of office.

The 1960s flooding argument about health and education no longer washes. In the 1960s, private schools and private health argued that if the private systems were not supported and all the students and patients were thrown into the public systems the public systems would collapse. Wrong. 

If that happened now, the public systems would thrive. This is because of the power of middle-income people to insist they get good service. Whingeing well-off baby boomers are a powerful electoral force – witness the electoral consequences of threatening to take away their precious negative gearing or capital-gain tax concessions.

Also, socially, society is worse off and less emphathetic when people do not mix with the full spectrum of society but stay within the group of families who can afford to send their children to private schools.  If everyone goes to the same school they mix and understand each other more.

Further, the government support now given to private education and health is so high that per capita it is almost as much per capita as to public education and health anyway. So nothing lost. For every private student or patient who jumps ship, it will not cost government much more.

And money would not be wasted on non-core education and health – swimming pools and orchestra pits in education and five-star food and unnecessary procedures in health.

But how can change come about? 

Federally, the Coalition is ideological bound to the status quo and Labor is wedged into dong nothing. We saw Labor Prime Minister Julia Gillard attempt financial reform under the very sensible Gonski I reforms, only to cave in to the private schools.

So it will require the states and territories to act. They should just end all financial aid to all private schools and divert it to public schools. Take the ACT, for example. Surely it could end all funding to schools like Canberra Grammar without too much electoral backlash. It could argue that with friends like Terry Snow who needs friends like the ACT Government.

And similarly for other states and territories.

CRISPIN HULL

This article was first published in The Canberra Times and other Australian media on 19 October 2019.