Doing the Sums for Boarding School

doing-the-sums-for-boarding-school

The Pastoralists and Graziers Association recently launched a campaign to have the full cost of private schooling fees for regional students made fully tax deductable.  On the surface it makes sense when rural families are being forced to make the hard decision to either fork out hundreds of thousands of dollars on private school boarding expenses or split the family and move one parent to the city.

We know that the cost of education has soared 61 per cent in the past decade, dwarfing the 34 per cent rise in wage growth for the same period.  With school fees tracking along at double the rate of inflation it is becoming increasingly difficult for all but the wealthiest county families to send their kids away.

It is only going to get worse. For a child born in 2018, the estimated cost of a six year private high school education at a PSA school in 2030 will be around $80,000 pa. That’s half a million dollars that is not going back into the farm or rural economy. For two kids that equates to a nice million dollar housing unit in Subiaco next to the soon to be completed world class Bob Hawke College at Kitchener Park, across the road from Perth Modern School.  This is a school that will offer all the bells and whistles of the private schools down the road minus the rowing shed and the school fees.

The one thing we do know is the price of wheat and sheep is not going to track along at 4% per annum to offset these education cost increases, meaning that these expenses will be demanding a far greater share of the family farm budget than in the past. If the government does not do something about the increasing cost of boarding fees then they are going to see an escalation in the drift of families out of the wheatbelt, further driving the corporatisation of WA agriculture and its move to a drive-in drive-out culture which will decimate country towns.

We all know the disadvantages of living in a remote and regional location – whether on a station, farm or small country town they all suffer from limited educational opportunities.  This is particularly bad today for students entering a highly competitive global world where education is everything.  Unfortunately, education is expensive for both governments and parents, but it has become really expensive for country people.

The state government currently spends around $5 billion a year on education plus another half a billion on building and maintaining school buildings. It runs eight regional residential hostels across the state linked to country high schools. While many of these schools are very good, they do not offer rural students the level of interaction and educational, opportunities that is on offer in the state-based city schools.

Just as we have moved to centralise our health, arts and sporting facilities in Perth, with the billions of dollars in facilities concentrated within 10 kilometres of the CBD, it’s strange that the state government continues to focus its residential hostels in the regions with the exception of the City Beach Hostel which is restricted to gifted and talented kids.

One would have thought that a Labor government with its egalitarian ethos would be seeking ways to break down barriers and offer as many opportunities to country kids as possible.  Maybe the new Hawke High will be the trigger to expand the City Beach College to be available to all country high school students, which would work will for regional families that hub in and out of Perth.

As for the PGA, their focus on a tax deduction for both boarding costs and tuition may play well to wealthy pastoralists, but it is likely to fall on deaf ears in the political arena.  A federal government will not offer private school tax deductibility to the bush at the exclusion of the city.  The politics and economics of offering a tax deduction to city and country private fee paying families across Australia without a budget breaking expensive offset of additional funding to public school families means the PGA policy will get a F mark.

As Bismarck stated, ‘politics is the art of the possible’. So, what is possible in this complex debate that pits state and federal government funding and public and private schools against each other? A history lesson is instructive on what is possible in the future. Prior to 1969, Commonwealth support for private schooling had been largely indirect through personal income tax breaks. The tax deductibility of school tuition fees remained in place from 1952-53 until 1973-74 when it was replaced by a tax rebate. The rebate was initially worth about one third of the deductibility arrangements in real terms and then it was eventually abolished by the ALP in the 1985-86 budget.

Currently government assistance to all private schools is limited to a direct payment to the schools which equates to on average $10,000 per student, (falling to $3000 to the more expensive PSA schools) while the public system gets $13,764 per student.

Assistance for Isolated Children Scheme payments is dependant on parental income and relevant to the boarding fees paid. In 2019 the boarding allowance is $10,838 per year.  If a parent selects let’s say Northam residential college, the charge is $14,143, leaving an out of pocket expense of around $3000. If they elect to send their child to one of the big private schools the boarding cost is around $25,000, which after the rebate from the commonwealth government leaves out of pocket expenses of around $14,000.  Interesting to note that the full cost to the WA Dept of Education of running a residential college is $22,835 which is in line with the $25,000 that private schools are charging, once you factor in an additional $2000 for capital expenditure.

For the state government, their underlying goal should be to encourage as many remote families as possible to reach for their cheque book and select a private school, and then deposit the savings into the state system. Every student that goes into the state residential system costs the state government $15,857 plus the additional $13,764 for tuition in a state school resulting in a total cost of close to $30,000. Hence the state government has every incentive to keep as many kids in the private boarding system as possible and one would think it should provide the 2,000 or so boarders in the private schools with additional funding to keep them there.

The better solution is for the PGA and WAFarmers to lobby the federal government to double the funding support for boarding families to $20,000. This would be a much fairer policy and a more politically saleable proposal. It would reduce the boarding fee gap faced by private school parents to match the gap faced by families of state government hostel boarders which is around $3000.

If the state and commonwealth governments split the bill it would effectively reduce the boarding fee to be in line with the state system of $3000.  Then parents who elect to go fully PSA private still get the pain of picking up the $27,000 or so for tuition and those who choose to go public have an almost free education.  The important thing is to level the playing field and make it fairer across the board. The total cost to the taxpayer of this policy equates to 2000 students x $10,000 or $20m.  For Western Australia Education Department budget this is a drop in the ocean compared to what the state currently spends on education.

We know that the growing city/country divide plus the globalised world that puts education as a driver of future success, is pushing families to the city in search of the best possible and most affordable education outcomes. The state government needs to recognise this and look at making it more attractive for skilled parents and farmers to stay in the bush while offering their children a world class education.

The old model of state residential colleges being solely based in regional towns needs a complete review. There must be a big demand for a state government run Perth college that gives country students access to all the sporting, educational, arts and specialist support options that come with living in a big city.

You may ask, “why should the government do this”? The answer is simply because it’s a state development issue. It is more cost effective than having a drift of private school students entering the public system, and it addresses the issue of the ongoing brain drain from the bush to the city when those children hit high school age. The state government should take a leadership role and commission a comprehensive economic and social review of our boarding school system from the perspectives of both the private and public school sectors.

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