Our treasurer Joe Hockey is looking to cut the budget and where possible create a user-pays approach to spending.
Universities and their graduates are an obvious target. In Australia we have the quite novel Higher Education Contribution Scheme (HECS). Students who gain a degree incur a debt that they eventually repay, if and only if their annual earnings exceed the median salary of their compatriots. Once this occurs the student pays an additional percentage of their income as a tax until the debt is repayed.
I kind of like it, although in some ways I’d prefer to just have better high-end tax scales or a higher Goods and Services Tax rate, as I believe that major disincentives to becoming more educated are ultimately to your country’s detriment.
As I was lucky enough to enter our higher education system in the early 1980s my education was “free” but 30 years later my children are incurring debts of > A$50K for their degrees. HECS contributes to high effective marginal tax rates that hurt graduates just when they are trying to enter the housing market and contemplating starting families. It is also an incentive to go and live overseas because then you never pay back a cent!
Opponents of HECS would point out that although my wife and I were educated for nothing, we are now paying extremely large amounts of tax at a stage of our lives when we can afford it, not when we were starting our family and buying our first home.
There’s a push from the Group of 8 universities to be able to raise fees/HECS and it is likely that the conservative government will acquiesce to their demands.
This will almost certainly mean higher HECS debts for our graduates, and create a more “free-market” approach to higher education, more akin to the US system.
Vice Chancellors such as ANU’s Ian Young have argued that the talented from lower socioeconomic backgrounds will have scholarships made available to them to ensure that the system remains fair and equitable.
The market will then sort itself out. Sure there will be winners and losers, but what better way to shake those pesky academics out of their ivory towers, right Mr Pyne?
Introducing ‘SSECS’
But why stop at increasing HECS? I’d like to propose the introduction of “SSECS”. For one thing it has an awesome acronym, and for another what magical thing makes tertiary but not secondary education taxable?
SSECS, in case you hadn’t twigged already, will be the Secondary School Education Charge Scheme. Students who go to any high school that receives taxpayer money (i.e. all of them!) will incur a “SSECS debt” that they won’t have to pay back unless they ever get a job.
No longer will the taxpayer be subsidising people to attend high school and learn how to read, write and do mathematics that are ultimately a licence to print money! Instead the user will pay.
There’s some powerful arguments for the introduction of SSECS. For one thing, universities run all sorts of bridging courses to teach students what they should have learnt in school anyway. At university they incur a HECS debt, whereas the kids that were smart enough to do the right subjects at school get their education for free! What’s fair about that?
The introduction of SSECS will stop this anomaly!
As part of the reform, government secondary schools will be liberated to set their own “SSECS” fees and market forces will help dictate which schools offer the best value for money. Subjects that require specialist teachers, or labs will soon attract a higher SSECS debt than others.
The best teachers will be head-hunted by schools that can afford to pay them what they deserve, competition will flourish and they’ll be more money in the system.
Soon Australia will have the best secondary education scheme in the world and our Education minister Christopher Pyne will smile even more ever!
Primary schools next
Once the bugs in SSECS are ironed out we’ll move on the primary school sector and introduce “PECS”. Won’t this be a disincentive to some lower SE groups to attend school I hear you cry?
Fear not! Scholarships will be offered to talented students identified at the age of four or five to ensure those with ability will still have the opportunity to enter primary education without any disincentive. The rest will incur their PECS debt during everything from “Mickey Mouse” subjects like grade one finger-painting art classes to music and English. PECS will ensure that they ultimately they put back into society what they are taking out - but only once they start earning.
So in the future when your barista gives you change for your morning latte you’ll know that the taxpayer funded mathematics they learnt in primary school in order to make this possible will no longer be subsidised by the taxpayers!
One day our kids might be lucky enough to pay back US-magnitude fees not just because they went to university, but because they were educated at all. Alternatively the Treasurer might want to have the courage to investigate genuine tax reform, not just twiddling the percentages of existing taxes.
Acknowledgements
This article was inspired by a clever talk by Conor King which speculated about why we do not have an Australian Secondary Academic Ranking guiding entry to secondary schooling.