Gonski loses final two year's funding
The Turnbull government is accused of making short sighted decisions after revealing it won't be funding the final two years of the Gonski education plan.
PT1M48S 620 349It's fair to say Malcolm Turnbull knows a thing or two about making a buck.
Which is why it's sad to see him turn his back on one of the most successful investment strategies of all time when it comes to investing taxpayer money.
Prime Minister Malcolm Turnbull should rethink his decision to turn his back on the last two years of Gonski funding. Photo: Daniel Munoz
It's called value investing. Warren Buffett is an expert.
The idea is to pick stocks with high intrinsic worth which are, for whatever reason, currently undervalued by other investors.
Buy low, sell high; realise a gain.
Economists call it picking the low-hanging fruit: the strategic policy choices that deliver the biggest social return for lowest cost.
In truth, much of Australia's low-hanging fruit has been picked when it comes to economic reform.
We've floated the dollar, privatised the banks, deregulated the labour market. There's less obvious work for government to do to reform the economy.
But if I had to nominate the remaining lowest-hanging fruit, it's spending money to help disadvantaged students get the best out of their education.
Kids from low socioeconomic backgrounds are our greatest untapped source of potential growth. They are our most undervalued stock.
Forget the minerals under foot, school kids are this country's most valuable resource.
Spare me your fuzzy feelings, your bleeding hearts, your middle class guilt. Investing in public education for disadvantaged students makes solid economic sense.
Of course, a better quality education leads to higher private incomes for individuals. But diverting kids from a path of poverty also saves costs for society, in jobless payments, family support, mental health resourcing, and law and order.
A new report by Red Cross released on Thursday highlights the inefficiency and waste of spending $3.4 billion a year on prisons, when the money would be better spent on early interventions in highly vulnerable communities to limit crime in the first place.
There's no great mystery here. Disadvantage doesn't hide. We know where it lives.
It lives in communities with little access to jobs, dilapidated housing stock and high rates of drug abuse, family breakdown and youth crime.
High crime rates in Australia are highly concentrated in small geographical areas of structural disadvantage. "Chronic offenders are not randomly distributed geographically but rather ... chronic offenders are likely to live in specific postcodes," the report finds.
Those postcodes are more likely to be remote, have low socio-economic status, high poverty and high concentrations of ethnic minorities.
Our pockets of disadvantage are hidden in plain sight.
Red Cross is calling for a proportion of the money that would otherwise have been spent on prisons to be spent on preventative community measures to address the root causes of crime – an idea called "justice reinvestment".
You can lock up the inhabitants. Or you can change the communities.
And a large part of the change comes by investing in high quality free education.
Which, of course, was the major finding of the Gonski report: that education dollars should be better targeted at those in need.
It doesn't mean spending taxpayer funds on kids who will do fine anyway. We don't need to spend money on overvalued stocks going to Cranbrook. Those kids will be fine. They are not at high risk of living lives of poverty, disadvantage, crime and misery.
Gonski recommended a new schooling resource standard, based on a minimum per student amount, plus percentage loadings for school size and location, low socio-economic status, low English proficiency and number of indigenous students or students with disability.
The Gillard and Rudd governments adopted the policy findings and promised the money. Abbott and Turnbull have turned their backs on delivering the last two years of funding.
In doing so, and in his new-found desire to have the federal government exit schools funding, Turnbull looks set to abandon the one area of policy that could fix all his other problems. Want to innovate? Educate. Want to create the jobs of the future? Educate. Want more tax revenue? Educate.
Investments in our human capital offer the best returns around.
Quite why Turnbull would choose to vacate this most powerful space for microeconomic reform is unclear. Perhaps he believes it's a policy area best handled by the states. But that displays a lack of confidence in his own level of government and a faith in state governments' abilities not matched by his recent rhetoric.
Investing in our most vulnerable kids remains the best social investment strategy around. Only a foolish investor would turn his back on it.
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