No easy cure for 'cost disease' in Australian schools


The prospect of applying the economists' notion of 'productivity' to schooling was more inspiriting than the resulting Productivity Commission Schools Workforce report has proven to be.

One problem for the report is that it has been shaded by three other big reports of recent months, Gonski's review of funding, an excellent study by the Nous group commissioned by Gonski, and a report by the Grattan Institute that compares schools' performance with that of our Asian neighbours. Most of what the Commission has to say has already been said or implied by one or other of these three, usually in a more compelling way.

And that is the Commission's second problem. It is the opposite of trenchant. Even Sir Humphrey would be hard pressed to discern from this report that the productivity of Australian schooling has been falling for decades — that is, spending keeps rising much faster than student attainments — and no-one knows what to do about it.

The problem was detected almost half a century ago by the American economist William Baumol, who pointed out that teachers' salaries rise not because teachers are becoming more productive but because their employers are forced to compete in the labour market with industries in which workers are becoming more productive.

This 'cost disease' as Baumol called it, is widespread in the 'human services', but is compounded in schooling by the near-halving since the 1960s of class sizes, chiefly via industrial agreements.


No easy cure for 'cost disease' in Australian schools (Eureka Street)

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