A report prepared by an independent expert for the ACT P&C Council shows that the ACT Government has failed to sustain a case for its plan to close 39 schools and partially close 5 others. The Government has failed to undertake a comprehensive cost-benefit analysis of the impact of Towards 2020 and major impacts of the plan have not been properly considered.
The report was prepared by Ms. Margaret Starrs, an economist, who is a member of the Australian Competition Tribunal. She was commissioned by P&C Council to develop a comprehensive framework to analyse the full economic and social impact of Towards 2020.
This framework provides a benchmark by which to assess the likely impact of the school closure plan. A comparison of Government statements on the impact of its school closure plan with the cost-benefit framework provided Ms. Starrs reveals some major deficiencies in the Government’s planning and in its estimates of the likely impact of Towards 2020.
In effect, the report shows that the Government has failed to sustain a case for school closures on financial and economic grounds. It has also failed to sustain a case on educational grounds and it has failed to consider the extent to which the costs of the school closure plan will be largely borne by particular groups.
The report also points to some possible confusion about the objectives of Towards 2020 and suggests that its objectives should be clarified.
Failure to consider full economic impact
A key conclusion of the report is that the ACT Government has only considered the financial effects on the operating costs of schools. It has excluded other significant economic effects on families and the community as well as for the Government itself.
Ms. Starrs shows that there are no estimates of traffic management and school bus service costs or the use of sites no longer required for education purposes, all of which have financial implications for government.
There will be one-off costs to Government to install traffic management infrastructure to provide accessible and safe new routes to another school for students who continue to walk or cycle. This new infrastructure may include new walk/cycle routes, safe road crossings with traffic signals or grade separated crossings.
Changes in school location are likely to result in changes in demand for bus transport to school. ACTION may need to purchase additional buses and expand bus depot facilities. School bus operating costs will increase with the extra demand and student fares do not cover full costs, so the Government will faced with additional net operating costs.
In addition, there are a range of other costs to families and the broader community that have not been included in the Government’s estimates of the impact of Towards 2020.
Personal transport costs will increase as the average distance and time to travel to school will increase with school closures. Families will incur car and bus transport costs. There are also a range of other costs to society arising from increased use of transport services. These include air pollution, greenhouse gas emissions, noise and road accidents.
Another major omission is the effect of school closures on property values. The closure of a neighbourhood school may lead to a fall in residential and commercial property values because there is no nearby school. If school sites are sold, the Government will gain additional revenue but this may be at the expense of a further reduction in property values because re-zoning for other purposes, such as residential use, is likely to lead to a reduction in existing residential property values.
Failure to demonstrate educational benefits
The consultant’s report concludes that the Government has failed to demonstrate why or how the Towards 2020 plan can be expected to improve the quality of public education. It says that a cost-benefit analysis should address the effects on educational quality and outcomes.
The report notes that the literature seems to suggest that smaller schools are associated with better education outcomes than larger ones, although the results can vary with school type, socio-economic background of students and school size itself.
The report also notes that the school closure proposal would mean a loss of parent choice because there of fewer schools overall and fewer small schools, in particular.
Failure to consider the incidence of the costs and benefits
The consultant’s framework for assessing the school closure plan also strongly implies that the Government has failed to adequately consider the incidence of the costs and benefits of the plan.
While standard cost-benefit analysis of policy initiatives is not directly concerned with who wins and who loses as a result of a policy proposal, the consultant’s report notes the distribution of the costs and benefits of a policy are an important factor in the decision making process, particularly if some groups experience the major part of the losses.
The report notes that the changes in transport costs to students and parents should be analysed because these costs are borne by individuals as part of the requirement to attend school. Such an analysis would be useful in identifying whether some groups experience significant costs while others experience significant benefits simply because they live in a particular location or due to socio-economic factors.
Similarly, the report says that who incurs changes in property values consequent on school closures should be considered in the analysis of the incidence of the costs and benefits of Towards 2020.
The report also states acknowledges that the closure of the neighbourhood school may also adversely affect local communities in ways that are not normally considered in cost-benefit analysis. These may include the loss of a sense of community, social support networks between families, and sites for community activities that are not directly related to education. The report says that these impacts should be considered alongside the results of any cost-benefit analysis.
Confusion about objectives
The report says that there is potential for confusion about the objectives of Towards 2020. It notes that the stated objective of Towards 2020 is to give ACT students access to a diverse range of high quality public schools. However, public statements by the ACT Government also suggest that saving costs and reducing the education budget are also objectives of the proposal. Yet, savings are not a stated objective of Towards 2020.
The report suggests that the objectives of the school closure plan need to be clarified and that this would be assisted by a thorough cost-benefit analysis.
By implication, the Starrs report is quite damning of the Government’s approach in Towards 2020. It shows that the Government has adopted a narrow service provider perspective on the impact of Towards 2020 instead of assessing the costs and benefits from the point of view of the whole community.
The Government has only considered the financial effect on school operating costs and not the broader financial, economic and social impacts on families, the community and the Government itself. A full cost-benefit study and an analysis of the incidence of the costs and benefits of Towards 2020 should be undertaken before any decision is taken to close schools.