Funding Public Schools is a Win for the Economy

The impact of increased funding for public schools has been hinted at but the real effects have now been pinned down.

The total economic benefits arising from adequate public school resourcing would be two to four times larger than the cost of meeting SRS funding standards. The fiscal gains associated with those economic benefits would ultimately offset the cost to government of improved public school funding.

Inadequate funding is linked to falling school completion rates and declining relative performance in international achievement. Students from relatively disadvantaged socio-economic, regional, and Indigenous backgrounds are most likely to be affected.

Additional funding of $6.6 billion per year is needed for public schools to meet the SRS commitments adopted by federal and state governments a decade ago, a 15% increase in total public school funding.

With additional resources, the decline in high school completion rates that has occurred since 2017 could be repaired under a modest estimate, and further gains in completion (in line with historical trends) attained under an optimistic estimate.

The enhanced funding and resulting improvements in school completion could lead to employment, economic activity, productivity gains and social savings equal to $17.8 billion and $24.7 billion annually (in 2022 terms) after two decades.

The findings published in a new report produced at the Australia Institute’s Centre for Future Work, “The Case for Investing in Public Schools: The Economic and Social Benefits of Public Schooling in Australia” has found that the current inadequate funding for public schools is depriving the nation of the significant benefits of high levels of school completion.

The report simulates the short-run and long-run economic benefits arising from the 15% increase in public school funding that would be required to meet the minimum resource benchmarks established through the Schooling Resource Standard (SRS).

These economic benefits are two to four times greater than the additional yearly cost required to fully meet the SRS for public schools.

Fiscal improvements resulting from these economic gains, such as increased tax revenues and reduced social expenditures, would eventually offset the incremental resources needed for full SRS funding.

"Australia's economic success relies heavily on the potential of our young minds,” said Dr Jim Stanford, Director of the Centre for Future Work, and co-author of the report (with Eliza Littleton and Fiona Macdonald).

“Public schools play a critical role in ensuring that students have access to an education that provides them with choice and opportunity throughout their lives – regardless of their postcode or economic and family circumstances.

“With stronger school completion and academic achievement, our communities thrive and our nation benefits from increased economic activity, productivity and earnings.

"Every dollar invested in public education translates into a stronger, more cohesive, and prosperous society. Let’s not rob our students, and our nation, of this opportunity,” Dr Stanford concluded.

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