Banking on Education

Published in Sydney's Child, August 2006

I was driving in New Zealand last summer in a car I had borrowed from a friend. Not surprisingly for the Shaky Isles, it was raining. It rained a lot that “summer”. If fact, it rained just about every day we were there. One of the windscreen wiper blades on the car was somewhat worn and it didn’t clear all the water from the glass as it passed back and forth before my eyes which continually searched the sky for a glimpse of the azure blue I had been told lay hidden beyond the canopy of thick grey cloud which blanketed the sky, so I decide to replace it. The first service station we came to was in the middle of nowhere. Right bang smack in the middle. Waiouru is the official name of the place but it’s known affectionately to the locals as “Waiberia”.

I needed a leg stretch so without really thinking there was any hope they would have the necessary part I stopped and told the proprietor about our predicament. Miraculously, he had the very windscreen wiper blade we needed, and for a few dollars, it was ours. As I drove out of the service station and onto the desert road which ran straight as the falling rain which was now being wiped highly efficiently from the windscreen by our newly acquired blade, I started to think of the miracle we had just witnessed. There we were, in the middle of a volcanic plateau in a small country in the South Pacific driving a relatively obscure brand of Japanese car and requiring a wiper blade, and without any centralised planning or Bureau of Production and Supply, it was, available to us at a reasonable price and in excellent condition.

Driving through the pine plantations of the central North Island of New Zealand gives one plenty of time to think and I began to ponder what effect this “unseen hand of the market” as Adam Smith described it, which had so efficiently provided us with the much needed wiper bade, would have on one of the last surviving Government monopolies, K-12 education.

Recently in a number of Australian states, companies have dipped their toes into the K-12 education marketplace. Such toe dipping by corporations has been met with an outcry by the teachers’ unions and by state Labor governments.

In Queensland, Springfield Land Corporation and ABC Learning Centres Ltd, Australia’s largest private sector childcare provider, floated the idea of working in partnership with the not-for-profit company, Independent Colleges Australia Ltd to open a new school in Springfield in the south-west of Brisbane. These plans were thwarted when the State Government rushed through laws which denied state funding to for-profit schools.

In New South Wales, Independent Colleges Australia announced plans to apply to build a $25 million child-care centre, primary and secondary school at Kurri Kurri in the Hunter Valley and have also released plans to build another school campus at Casey outside Melbourne.

Mirroring the Queensland response to these moves, the NSW Education Minister, Carmel Tebbutt, announced that she would introduce laws early this year to prevent profit-making companies from operating schools.

However, we must ask ourselves, is Australia putting itself at a disadvantage with respect to its international competitors by banning for-profit education? Countries all around the world allow such education and the results are encouraging. For example in South Africa, the private education corporation Education Investment Corporation Limited (Educor) educates over 300,000 students through primary, secondary and tertiary education, to post-graduate and corporate training. It has an annual turnover of US$26 million and, is about to be listed on the NASDAQ.

When the possibility of for-profit education is raised we hear our politicians proudly announce the steps they will take to oppose it but we don’t hear the reasons it is such a bad thing. Just as the proprietor of the small garage in New Zealand was able to provide a product needed by his customer, it is feasible that for-profit educators could provided the education needed by Australian parents more efficiently and more responsively that a government monopoly. This is not some extreme free market ideological position. A recent survey conducted by the Maxim Institute in New Zealand found that less than one third of parents believe the Ministry of Education should decide what their children learn in school. This indicates a deep dissatisfaction with centralised government schooling and a desire to see more flexibility in education provision and the ability for schools to tailor their wares to the needs of the local community. For-profit schools would be motivated to do exactly this as the catchment area of a school is made up of the parents within easy driving distance.

I believe the key word here is “diversity”. Once the power of the market is unleased on education the range of educational opportunities would blossom in a manner quite inconceivable in a world of centralised government control. To really get a handle on the possibilities we need to think right outside the square, and the circle for that matter, outside every single two dimensional closed curve! Among this diversity of educational possibilities, some will work wonderfully well and others will be dismal. But the point is that those which do work well will expand and flourish and become available to many students, while those educational approaches which are not effective will die a quick and natural death. No longer will the parent body be burdened by a monolithic state run educational system which is resistant to change and liable to become a vehicle for the latest education fad.

Let’s explore some of the possibilities which may emerge if educational entrepreneurs (or “edupreneurs” as they are sometimes known) were allowed to exercise their creative energies in the sphere of education.

Parents who want a tightly controlled, very strictly run school with school uniforms, tight discipline, rote learning, traditional subjects such as Greek and Latin, phonics in reading and direct instruction in many subjects will be able to find such a school.

Those who want no uniform for the students and no dress code for the teachers, a curriculum designed by the students, whole language in reading and child centred learning experiences rather than teacher centred lessons will also be able to find what they are looking for.

Those who want a school which only teaches academic subjects and provide no education in sport, art or music will also be able to find such a school, while those who want a dramatic, artistic, musical or sporting college will be able to send their children there. We may find trade based schools which combine training in the trades with a relevant academic curriculum operating alongside liberal arts colleges which teach the classical literature of the Western cannon. There will be schools which lead the way in the use of technology and those which minimise its use. In short, parents will be able to choose an education which suits their aspirations and the needs of the children, and school will be motivated to hone their efficiently and teaching excellence as they compete for business.

For our generation which knows nothing but the state controlled provision of education it is difficult to trust market forces to provide an adequate education for all. Is it therefore informative to look back in history to a time when the state was not involved in education to see how communities educated their children. Take England as one example. Compulsory schooling was introduced there in 1870 with the passing of the Forster Act. Yet there is much evidence to indicate that prior to that date the vast majority of children were already receiving significant education. Literacy rates can be estimated by an examination of the number of people who were able to sign their marriage certificates.
It should come as no surprise that there is little innovation in a monolithic bureaucracy such as a state run education system. Innovators have certain basic personality traits such as a strong need for achievement and a need to have control over the organisations they direct. They are predisposed to succeed or fail on their wits. They have an inherent drive to shake things up and to try to modify and improve the status quo. They have a sense of urgency about reform and need to see results in the short term and to gauge the benefits of their reforms based on customer satisfaction and the response of the market. In short, entrepreneurs are action-oriented and have an internal imperative to create new ways of doing business. None of these traits are compatible with an educational system in which decisions are made at head office and then handed down to schools to be implemented but not changed.

If Australia wants to compete on a global scale and to allow its students to have every chance of succeeding in a global information environment, its best course of action is to allow the entrepreneurial spirit of Australia’s best minds to come to bear on our education system. Without such reforms, we will forever tinker at the edges of a substandard centralised educational bureaucracy in which the welfare for those who run the system come before the needs of students and parents.


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