May 8th 1993

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SCHOOL VOUCHERS: Introducing choice for parents - Ten questions and answers about school vouchers

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Introducing choice for parents - Ten questions and answers about school vouchers

by John Ballantyne

News Weekly, May 8, 1993
John Ballantyne argues for the removal of discrimination against parents who send their children to non-government schools.

The option of educating a child at an independent (non-government) school these days is usually a privilege available only to parents who are prepared to make substantial financial sacrifices.

Typically such parents have to pay twice for their child's education — once in taxes for the state education they are not using, and again in fees for private schools.

A way to remove this financial penalty, which severely limits parents' freedom of choice, would be for the government to give equal education funding for every child of school age, irrespective of the school attended.

One proposal along these lines, which has attracted a lot of interest over the years, is for school funding to take the form of education vouchers.

Under this system, the parents of each child of school age would get an annual book of vouchers, one for each term. The voucher would be equivalent in value to the current cost of educating a child in the same year at a government school.

Parents would be free to spend their vouchers at any school of their choice, state or private, religious or non-religious.

The voucher could only be exchangeable for the purposes of a child's education at a school which was passed as fit by inspectors; it could not be spent on anything else.

Vouchers would tremendously revitalise primary and secondary education. In order to get funding, schools would be forced to compete with each other to attract student enrolments.

Schools would also enjoy far greater autonomy, with school principals or governing boards free to hire or fire staff as they saw fit.

Good schools would flourish; inferior schools which could not attract applicants would be faced with financial difficulties, possible closure, or take-over by more efficient management prepared to cater for the preferences of parents. Educational standards would improve dramatically.

Attractive though the voucher proposal sounds, it has often aroused passionate opposition from bureaucrats, teacher unions and powerful vested interests, besides raising questions about how the system would work in practice.

Here are 10 of the most frequently asked questions about school vouchers:

1) What's wrong with the present system of "needs-based" funding for private schools?

The present method of targeting "needy" schools is probably the clumsiest and least effective way of assisting poor families to purchase private education for their children.

It meets only a fraction of education costs and does so in a particularly haphazard way.

Commonwealth grants to private schools currently fall into 12 categories, governed by a multitude of changing rules and regulations.

This can lead to the absurd situation where principals or governing boards are afraid of upgrading school facilities or of raising private funds, for fear that their school could be put into a lower category of government funding for that year. And none of them can afford to take that risk!

Private schools which have their government funding cut, of course, usually have to raise their fees, thus pushing the price of private education beyond the reach of less advantaged families.

If the government really wants to means-test education to ensure that financial assistance is targeted to the needy, a far better way would be for it to apply the means test to the incomes of the families involved, not to the schools which their children happen to attend.

2) Won't voucher funding for private schools promote privilege and inequality and be socially very divisive?

It is a common misconception that education vouchers can only be of one type. In fact there are several models on offer. Alan Maynard, in his 1975 study Experiment with Choice in Education, lists eight of them.

There is nothing to stop the government from devising an "egalitarian voucher" whose distributional effects could be much more favourable to the children of low-income families than is the present method of education funding in Australia.

Where there were particularly stubborn pockets of disadvantage (e.g., deprived inner-city slums, remote country areas, children with learning difficulties or disabilities, etc.), the government could easily target extra assistance to needy families either by "topping up" vouchers or by way of tax rebates.

3) If education vouchers are issued for both state and privately educated children, won't this involve vastly increased government outlays (and consequently higher taxation) at a time when we should be seeking to reduce these?

There is no particular reason why vouchers need necessarily cost more than the present system of funding. It is even possible to devise a voucher scheme in such a way as to reduce total government spending on education.

There are three options available:

One is to means-test the voucher and restrict its availability to low-income families. All other families would then get tax cuts which would enable them to meet the cost of school fees out of their own incomes.

A second option is to leave the current total education budget (Commonwealth and state) as it is, but to divide it equally among all children of school age (whether educated in state or private schools). This would mean that each child would receive a voucher equivalent to approximately 85 per cent of the present standard cost of a state school place of the appropriate year.

A third option is to give all students a voucher equivalent to 100 per cent of the standard cost of a state school place, but to add this sum to the parents' income for the purposes of tax assessment.

This last option would ensure that every child received adequate government education funding, irrespective of school attended, but that better-off families would return, via tax, a greater proportion of money received than the poor (who would enjoy the voucher tax-free).

The taxable voucher would have the additional advantage of raising a major additional source of revenue for education currently beyond the reach of taxation.

4) Shouldn't the government give priority to funding state schools before it starts dishing out money to private schools?

The government's duty is to ensure that every child should be educated to a certain standard, not to discriminate against one type of school and in favour of another.

Article 26 of the United Nations Charter of Human Rights proclaims the prior right of parents, not church or state, to choose children's education. The UN Declaration of the Rights of the Child, Principle 7, states unambiguously that "the best interests of the child shall be the guiding principle of those responsible for his education and guidance; that responsibility lies in the first place with his parents".

The only way to ensure that parents are in a position to exercise the freedom of choice to which they are entitled is to ensure equal expenditure from the public revenue on every child irrespective of the school attended.

5) If better-off families — or even ordinary families who value education above the average — are allowed to spend money on superior schools, won't this give some children an unfair advantage over others, and thus be incompatible with equality of opportunity?

This is a curious argument. What this is virtually saying is that while parents may be permitted to do almost anything they like with their income and wealth — such as buy a yacht, acquire a luxury car, dissipate their money on riotous living — there is only one thing they may not do, namely, give their children the best and most careful education.

Taken to its extreme this argument could be used to justify the government's intrusion into almost any area of family life and upbringing which may be deemed to give some children an advantage over others. The list of forbidden items could end up including not only discretionary expenditures on music lessons or private tuition, but even the possession of good books, foreign travel, or the provision of a good home.

6) Isn't there a danger under the voucher system of the education system being dislocated by a mass exodus of children from state schools?

If this outcome is believed to be likely, then this is a tacit acknowledgement that the public are dissatisfied with the present system. This is tantamount to an admission by critics of the voucher that state schools have failed and are incapable of reforming themselves — ironically, an unanswerable argument for the voucher!

If state schools are inferior, it is hard to see how children's best interests can be served by forcing families to remain captive customers of a government-run monopoly by throwing good money after bad.

The London Economist's Norman Macrae advises: "When you find a place where education is awful, throw more competition (not money) at it."

Only when state schools are granted full autonomy and know that dissatisfied parents can exercise the option of taking their child to another school, will their performance improve. Schools will no longer be able ask, "What funding can we get out of the government?", but rather, "How can we improve our standards to attract more student enrolments?"

As a matter of fact, overseas experiments with vouchers have tended to allay fears that the scheme would cause student numbers to change too drastically.

Generally, it has been found that parents change their child's school only as a last resort after every other option has failed.

Rather than take this drastic step, parents usually prefer to discuss any problems they have with the teachers.

Certainly this was found to be the case in a famous US experiment with vouchers at Alum Rock near San Francisco in the 1970s. Originally, teachers had been up in arms about the notion of parental choice in education. But after two years, those involved became highly supportive of the scheme and were asking that voucher financing be written into their contracts.

They found that on the whole vouchers enhanced teacher control and community relations, and brought good students chasing better teachers rather than more opulent buildings.

7) What will happen to parents who miss out on securing their first choice of school for their child?

Some critics of the voucher believe that if once it can be shown that not all parents under the scheme will be able to enrol their children in their first choice of school, then the whole proposal is demonstrated to be irredeemably flawed.

This argument is a little too hasty.

Although freedom of choice under the voucher scheme will not be perfect, it will still be a vast improvement on the present system of government monopoly where there is hardly any choice at all.

State and private schools under the voucher system will be allowed to charge whatever fees they wish; but it is entirely feasible to require schools to provide sufficient scholarships to enable families of modest means to be able to purchase an education with the voucher without private supplementation in at least two or three schools in the district.

8) How will popular schools be able to cope with a sudden influx of applicants?

Basically there are only two things a school need concern itself with: the supply of labour (e.g., teachers) and the supply of capital (e.g., classrooms).

Both can easily be dealt with. As regards labour, there is a huge surplus of unemployed teachers looking for work. As regards capital, premises can often be rented quickly, redundant school buildings can be leased, and mobile classrooms can be acquired at short notice.

9) The voucher scheme could involve considerable paperwork — first, the government issuing vouchers, then the families exchanging them at the school of their choice, then the schools having to return the vouchers to government to get their funding. Wouldn't it be easier to let schools bulk-bill the authorities for the number of children enrolled?

Perhaps this would be better from a purely administrative point of view, but it misses one important point.

The great political advantage of the voucher is that, like the vote, it puts power literally in the hands of the people.

The voucher will mobilise irresistible popular support behind the principle that it is the parent — not the politician, the teacher or the (alleged) educational "expert" — who should exercise the final choice of school for his own child.

Once in place, the voucher scheme will be extremely difficult to repeal. It would be sheer suicide for any political party to contemplate depriving parents of the right to choose their child's education. It would be like threatening free speech.

10) How would financial responsibility for financing education vouchers be divided between the Commonwealth and state governments?

Instead of continuing its present practice of giving special purpose grants to the states for them to spend on schools, the Commonwealth would by-pass the states by giving education grants directly to parents of children of school-age in the form of vouchers, and would then cut back grants to the state governments by an equivalent amount.


Samuel Brittan, Participation without Politics, Hobart Paper 62 (London: Institute of Economic Affairs, 2nd ed., 1979), pp.34-37: "Voting with one's feet".

Fr John W. Doyle, SJ, "School funding: power for parents", Bulletin of Christian Affairs, October 1980, reprinted as: Australian Festival of Light Resource Paper (Family Voice Australia), August 1982.

Milton & Rose Friedman, Free to Choose (Harmondsworth, UK: Penguin, 1980), Ch.6: "What's wrong with our schools?".

Institute of Economic Affairs (IEA): "Symposium on education vouchers", in: Economic Affairs (London), August- September 1986, pp.45-51.

Jonathan Lynn & Antony Jay (eds.), Yes Prime Minister: The Diaries of the Right Hon. James Hacker (2 vols., London: BBC Books, 1987), Vol.2, Ch.8: "The National Education Service".

Norman Macrae, "The most important choice so few can make", The Economist (London), September 20, 1986, pp.25-30.

Alan Maynard, Experiment with Choice in Education, Hobart Paper 64 (London: Institute of Economic Affairs, 1975).

B.A. Santamaria, The Price of Freedom (Melbourne: Hawthorn Press, 1966), Ch.13: "Equality in education".

Arthur Seldon, The Riddle of the Voucher: An inquiry into the obstacles to introducing choice and competition in state schools, Hobart Paperback 21 (London: Institute of Economic Affairs, 1986).

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