11 June 2016
by Michael Pascoe

The policy failure that costs us most

The election circus rolls on, now firmly in the marginal seat pork barrel phase, while both parties carefully avoid the policy failure that ends up costing Australia most and that will become an ever-greater drag on the nation's future.

That's entirely understandable. Fixing the problem would be very difficult and costly, with no guarantees of spectacular success. It would take many years and thus have negligible immediate political reward while quickly offending key supporters on both sides of politics. In part, it involves running through the childcare minefield in very large boots.

The childcare minefield
If you don't talk about it, it doesn't exist. That seems to the election mantra of both parties when it comes to the dreaded childcare debate. Besides, much of it is primarily a state government responsibility anyway. So instead, let's splash a few million on some netball courts here, a football stadium there and community radio stations everywhere else.

Yet if politicians are supposed to seek office to secure the nation's future and to be people of integrity in their public service, you would expect them to make the hardest stuff their first priority. That's not happening.

The policy failure in question is primary and pre-school education. Oh, Labor sticks up its hand and cries: "We're the full Gonski! We're onto it!"

And both mobs are promising to spend money on childcare, sort of. But neither side is really serious about the problem.

Gonski, for all the fine work of the inquiry, is only a step. And, in the nature of policy issues, the bigger, flashier, more expensive parts get more attention. Secondary schools chew up more money and that's where politicians tend to focus. But unless primary and pre-school education are first class, secondary schools barely matter.

As for the tertiary education businesses - with their rankings-focussed vice-chancellors, high-profile donors and sensitive student debt issues – they are important, of course, but actually don't matter nearly as much as their PR departments and lobbying power would have you believe.

The quality of the cattle going into them matters much more in the long run than the piece of parchment they might come out with.

Looking at the big picture
That current policy is failing is easy enough to demonstrate. Roughly one in four children aren't ready for school and, not surprisingly, about the same proportion subsequently remain behind the game throughout their education – or lack thereof.

Some 10 per cent of student teachers are deficient in literacy and/or numeracy. They're university students, for heaven's sake, supposed graduates of our primary and secondary systems.

The absolutely crucial literary and numeracy skills of the first couple of years of education are what the big picture is eventually about. If those skills are missed early, the chances of capturing them later aren't good.

Belatedly saving a fortunate few is much more expensive than early intervention, never mind the personal humiliation of those left behind.

But that recovery cost is only a small part of the total bill. We didn't know 20 years ago what the jobs of today would be and, despite the best efforts of futurologists to sell books, we don't know today what the jobs will be 20 years hence. We only know that they will require greater skills as the jobs with few skills continue to be automated.

We already have an underclass of unemployable and semi-employable people. "Full employment" possibly means an unemployment rate now of about five per cent. Once upon a time, that was closer to one per cent.

There are myriad reasons for that, some of them social, some of them attitudinal, some of them the result of policy, but much is to do with the work available for those with few skills.

Without solid numeracy and literacy, the job market will increasingly be closed. The unemployment rate of "full employment" will continue to rise. And with that, so will the direct and indirect social costs, never mind the massive opportunity cost of losing a larger proportion of working age people in an aging population.

So early childhood education should be our first priority with everything else following. How?

There is some merit in the self-serving arguments of those who would prefer not to fund Gonski – just throwing money at education doesn't result in better outcomes – but solving the problem will nonetheless cost more.

Better-paid teachers
Primary and pre-school teachers will need to be better and, therefore, better paid. The teachers' unions will be offended by ending the job protection of those not good enough for the job. That's a particular problem for Labor.

By and large, the children of the upper classes don't need taxpayer money thrown at them. They are already blessed with homes that value reading and provide adequate support. Given the fiscal realities, loading up genuinely needs-based education should come at the cost of subsidising those without such needs. Some schools and students do need small class sizes and one-on-one time – some don't.

The same applies to childcare, where policy clarity is rarer and more politically difficult. There was a mishmash of policy before the last federal election and there still is, albeit with different ingredients.

Before there are any confected allegations of sexism, let's be honest and admit that at this stage of our society's evolution, it's mainly seen as a women's issue, it's about a woman's ability to take part in the paid workforce.

And that's half the problem because that's only half of the issue. The other half is what's the best use of the Commonwealth's money being spent on children.

The children who most need professional childcare generally are not the offspring of nurturing working mothers, or at least the offspring of upper and middle class mothers, the children who will go on quite adequately to school anyway.

Yet these are the children that the political childcare issue concentrates on. Both sides are proposing to spend an extra $3 billion. If elected, Labor promises to increase its rebate cap to $10,000 – and it's not means tested.

Ignoring longer-term outcomes
The government's main criticism of Labor's policy seems to be "where is the money coming from", rather than what it does, while the coalition's own extra funding is dependent on the new Senate agreeing to family tax benefit reductions. The government proposes an extra subsidy for disadvantaged families, but also a work-or-learn activity test on mothers – a theoretically nice incentive for social improvement, again focussing on the mothers rather than the children.

Neither side wants the political pain of accepting the full Productivity Commission recommendations that make much more sense than their own.

If you think any of this is harsh, try an editorial:

"Childcare subsidies are middle class welfare dressed up as fairness". It quite reasonably goes in hard on one aspect of Labor's policy – the tendency of extra funds just to push up costs, leaving families no better off. But the AFR spray pulls up short of nailing both sides for their shortcomings and suffers a dose of the Lathams in going over the top on the over-professionalisation of the industry:
"As soon as there is government cash on offer for parents, childcare services can charge more money for the same service or often unnecessary add-ons and continue to fuel the rampant credentialism in the industry. Early childhood teachers now need university degrees for a job that once consisted (and probably still does) of wiping noses, consoling cuddles and supervising afternoon nap time."

There remains the tendency to concentrate on the immediate politics and costs and ignore the longer-term outcomes.

Middle-class mothers vote in marginal electorates. Children with a substandard future don't. It's those children who end up costing the nation more.