January 09, 2023

Horse 3128 - Why Are We Subsidising Private Schools?

https://www.smh.com.au/national/nsw/sydney-private-school-fees-eclipse-45-000-after-parents-hit-by-hikes-20221222-p5c8bc.html

Fees for some of Sydney’s top private schools have broken through the $45,000 mark, with all-girls institutions Kambala and SCEGGS Darlinghurst among the most expensive after lifting prices by at least five per cent.

Independent schools across the city are hiking fees for 2023, with seven set to charge parents more than $40,000 for year 12, when including tuition costs plus extra technology levies.

Kambala will charge $43,650 for year 12 tuition, but a consolidated fixed levy charge – for items such as laptops and IT infrastructure – will tip the total final-year fees at the Rose Bay school to $46,300. It is a seven per cent increase on last year’s charges.

SCEGGS Darlinghurst will charge $45,044 for year 12, including tuition and an additional technology levy. All-boys school The Scots College in Bellevue Hill will lift fees by 4.7 per cent to a total of $44,600 for final year students.

The King’s School in North Parramatta has hiked fees by 3.6 per cent to $42,936 for year 12, which includes a daily lunch levy, and Moriah College in the eastern suburbs increased fees by 3.25 per cent to $39,700. Stanmore’s Newington College raised fees by 5.7 per cent for senior school students to $38,884 for year 12 boys.

- Sydney Morning Herald, 8th Jan 2023.

The Sydney Morning Herald in its almost annual outrage/jealousy/gossip cycle, ran this story while most people were on holidays and didn't care. I do not know what the actual point of running this story every year is, because the readership of the Sydney Morning Herald now mostly falls into three parts: firstly, the people who want it for the economic and business news as a newspaper of record; secondly, the people who want to read long form journalism; thirdly, the upper echelon of society who like the newspaper but who hate the murdochracy. Practically all of these people are in the upper 20% of incomes of society; hence the likely outcomes of outrage, jealousy, or schadenfreude due to gossip. 

25 years ago I would have read the Sydney Morning Herald as part of the second group but as it pivots more to the stance of becoming a clone of the Australian in both tone and subject, I find myself reading The Saturday Paper more and the only reason that I would read the Sydney Morning Herald now is because I work in an accountancy firm and we fall into the first group.

Presumably the parents who send their sprogs to private schools which cost tens of thousands of dollars every year, like the school and think that they get value for money. If you have two sprogs and it costs you more in school fees than it costs an average wage on AWOTE, then there is no either in a month of Sundays or in Hades, that you are not very well off.

Presumably the parents who send their sprogs to private schools which cost merely single digit thousands of dollars every year, are either inclined to feel a sense of smugness that they are not spending that much money, or perhaps a sense of disappointment upon seeing empirically, the aspirational level of money that they need to achieve.

For the third group of people who read a story like this as though it was a gossip column (which it partly is), then there's a host of mixed emotions surrounding the sometimes knavery, sexual misconduct, violence, and general hubris which only the very rich can afford to get away with. Very bad behaviour is the domain of the very poor and the very rich; with the very poor having their problems compounded by a host of societal problems, and the very rich for whom fines are mere taxes to be paid so that they can continue to do whatever the heck they feel like. It is only the trudging lower and middle classes who need to do real work to either chase the mortgage ball or not get run down by the rent ball, that have to worry about behaving properly and treating people with manners.

What does any of this have to do with the article in question here? Quite apart from the many tens of thousands of dollars which those parents pay to send their children to school, there is a glorious absence of context with the rest of society. This is reinforced and reflected by the following:

In a letter to parents, Kambala school council president Ainslie van Onselen said inflationary pressure had affected the school’s running costs, and it remained conscious of the impact the fee increases may have on families.

“Fees are set to a level to meet operating expenses and contribute towards enhancing the experiences and facilities for students and staff. We will continue to make a priority the attraction, retention and development of the best staff possible,” van Onselen wrote.

- Sydney Morning Herald,  8th Jan 2023.

Take note of what is missing throughout this whole piece. Not once does either the Sydney Morning Herald or a private school acknowledge the fact that we out here in the Commonwealth of Australia, subsidise all of this. The unwritten story which neither the Sydney Morning Herald nor any private school dare to admit, is that the public subsidy of private supply of goods and services, is always going to be in some way inflationary. 

Furthermore, the public subsidy of private supply of goods and services, distorts the market for those goods and services. We have an equivalent with the First Home Buyers Grant which sounds like a good idea until you realise that the only net effect that these systems and schemes had in the real world was to increase the market price of housing, until the First Home Buyers Grant was exactly absorbed in the price. 

The only way that the public subsidy of private supply of goods and services is not going to be inflationary and not distort the market price, is if the government imposes some kind of cap on the fees that private schools can charge. Of course the private schools would jump up and down and accuse the government of blue murder, despite and in spite of the fact that they are receiving public monies but never let that fact disturb you. 

The very obvious solution to reducing the inflationary pressure on school fees (and house prices), is the removal of government subsidies and/or the direct provision of public schools (and housing). Removing any and all government subsidies would mean that if private schools wanted to attract more students, then they had better lower their prices. Then again the fact that private school fees are so high in the first place, is less about wanting to charge a fee for service but about deliberately keeping out the riff-raff. Fees for service are by definition a barrier to entry, however small, and are exclusionary by nature. 

I very much question how just the system is. As someone who does real work for a living and who pays tax, I expect the government to provide public education. What I find to be intolerable and downright insulting, is that the parents who send their children to private schools, who voluntarily reject public education, then turn around and demand that we in Commonwealth subsidise their private exclusionary choices.

I do not think it is fair to apportion public monies in Commonwealth according to the Matthew Principle - to those whom have, even more will be given; but to those who have not, even what little they have will be taken away.

Of course the parents who send their children to private schools, who voluntarily reject public education, will argue that as taxpayers that they have some kind of claimed right to be able to say what happens to their taxation. The problem with this line of argument is that it simply isn't true when applied to taxation law. Nowhere in the Income Tax Assessment Acts 1936 or 1997, does any taxpayer have any claim at all to direct the Crown to apply their taxation to anything. 

To be fair, as someone who likes the idea of public education, I would rather that education budgets are spent according to need and to expand the opportunities for people to go to further education, such as university and trade schools. I find it abhorrent that we have any skills shortage, when dollars which could have been applied at technical and training colleges, are instead sent to subsidise private school children at private schools.

Education is one of the few places where we fund the building of the kind of nation that we have tomorrow. If we are funding people who spend 12 years in an environment which is funded by private exclusionary choices and subsidised by public monies which perpetuate those private exclusionary choices then what kind of people who we build that creates the kind of nation that we have tomorrow? We've been running that experiment for at least 50 years now. 

As someone who has been in and around the world of finance and law for more than 20 years, I have seen the kinds of people produced by private schools. These are the people whose parents bought economic signals for them and who on many many occasions, look down on everyone else with an active sense of contempt. If this is what we chose to spend public monies on, then as far as I am concerned, it very much looks like a hideous waste of public monies.

Aside:

Psst. Here's a little reminder to parents. You can send your kids to public schools for free. As they are bound by the curriculae and the same qualification requirements for teachers, then the end result is pretty good. It will also be good for your children to spend time with other children who look different to them, who come from different faith backgrounds, who come from vastly different historical circumstances because those practical lessons of compassion, tolerance, maybe even accepting difference, only come by meeting and speaking to different people. 

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