Interaction between government and private outlays : education in Australia, 1949-50 to 1981-82 / Ross A. Williams.

Abstract

In the last thirty years marked shifts have occurred in the composition of educational funding in Australia. In 1950-51, 20 percent of final expenditure on education was private. By 1981-82 the private share had fallen to 5 percent. Government expenditure on private schools, however, has risen rapidly from token levels in the mid-1960's so that by 1981-82 it was 40 percent greater than total private expenditure on education. This paper seeks to explain the movements in the composition of educational funding. Attention is paid both to the usual factors thought to influence expenditure on education, such as the level of GDP, cost and demographic factors, and to the interrelationships between public and private sectors. The analysis departs from the conventional "arithmetic of education" by recognising that participation rates in education depend, in part, upon the variable to be explained, that is, on the level of service provided as measured by real expenditure on education. The main findings may be summarised as follows: . Growth in government expenditure on education can largely be explained by increases in GDP and demographic factors, although there was a once-for-all upward shift in the period 1973-74. . Government expenditure is shown to be negatively related to private expenditure. . There appears to have been some substitution of government for private expenditure in non-government schools but the effect is not large. The point estimate implies that a dollar increase in government transfers results in a net increase of around 80 cents in total real expenditure on private education. There is external evidence, however, that substitution is much greater for current expenditure than for capital expenditure. . Governments tend to target total final expenditure on education rather than its components (consumption expenditure and investment). . Increases in government provision of educational services exert upward pressure on the costs of providing education (mainly salaries). Show more