Private School Fee Increases Have Exceeded Increases in all Inflation Measures

The standard justification for high fee increases in wealthy private schools is that they are necessary to cover rising costs. This is a complete sham. Fee increases over the past decade have far outstripped all major measures of rising costs.

Fees in wealthy, so-called elite, schools have nearly doubled since 2001. Fees in 22 elite NSW schools more than doubled between 2001 and 2011, increasing by 104 per cent. Fees in 17 Victorian schools increased by 88 per cent over the same period. The increases to 2010 were about 95% and 80% respectively.

These fee increases are double or more the increase in costs facing private schools, whatever measure is used.

The wage price index published by the Australian Bureau of Statistics (ABS) shows that private education and training costs increased by 44 per cent between 2001 and 2010. The Gross Domestic Product (GDP) price index also published by the ABS shows that inflation increased by 39% between 2000-01 and 2009-10. The Consumer Price Index (CPI) increased by only 29% between 2000-01 and 2009-10.

The GDP price index and the CPI measure general price increases across the whole economy and are therefore not appropriate as measures of rising prices for labour and other inputs faced by schools. Many other industries are able to constrain price increases by increasing productivity. The education sector has little opportunity to offset price inflation because of its high dependence on professional labour and few prospects to substitute technology for such labour.

Instead of these measures, it is preferable to use the wage price index for education and training. Salaries account for about 80 per cent or more of total school costs, so this gives a fair indication of the extent of rising costs in private schools.

Private school organisations also seek to justify their fee increases by citing cost increases in government schools as measured by Average Government School Recurrent Costs (AGSRC). This is also an inappropriate and misleading measure of rising prices faced by schools because it combines both pure price increases and actual increases in resources in government schools. For example, it covers both increases in prices for existing resources, such as increased salaries for teachers and increased prices of books, as well as increases in the number of teachers employed in government schools.

In any case, AGSRC also increased by far less than elite private school fees since 2001. The primary school AGSRC increased by 69% between 2001 and 2010 while the secondary AGSRC increased by 60%, much less than the fee increases of around 80-95% in the wealthy private schools over the same period.

Thus, no matter which inflation measure private schools turn to justify their large fee increases they all show that fees increases in the most elite schools have far outstripped their cost increases.

Another measure of rising costs cited by private school organisations is the education component of the CPI. However, this is a completely inappropriate measure because it includes the increases in fees charged by private schools. It is not a measure of increasing prices of labour and other inputs paid for by schools but a measure of the increase in prices – that is, the fees – paid by families.

The SES funding model was intended put a lid on private school fee increases. John Howard said that fees would fall as a result of the increase in funding for private schools provided by the scheme. The former Commonwealth Education Minister, David Kemp, said that the SES funding scheme would put downward pressure on school fees, make them more affordable for families and have a “democratising impact” on private schools.

Clearly, none of this has come to pass. The huge increases in fees and government funding have simply allowed the elite private schools to maintain their exclusivity and improve the quality of education for those privileged to attend by reducing class sizes and adding to their already lavish sporting and other facilities.

Trevor Cobbold

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