The alarming ‘opportunity costs’ of Labour party spending

Although Economists get criticised from time to time ? I still value that subject as the major of my first degree. One of the central concepts of Economics is that of ‘opportunity cost’. That is; what would be the value of the alternative use of the money/resources? For this government, with their ongoing spending choices in Education, the opportunity costs are alarming.

Education is always quite rightly of huge concern in New Zealand but, more than usual, there is a growing disquiet. Modern Learning Environments (MLEs), the teacher shortage, the huge disparities between children of different ethnicities, and the NCEA review throwing much greater concern back at families trying to help their children pathway to a great future. The sector is desperate for transformation and the best we seemed to have offered up at present is a three-year talk-fest including panels of people almost secretly appointed. The losers are our Maori, Pasifika and poorer youth and much of this stems back to an election promise that the education spend simply could not afford ? the $2.8billion election bribe for tertiary students.

The winners are the children of the middle class and rich who have all of the tools and pathways to get themselves to university. This has included my three children ? two university educated in New Zealand and one in the USA. Studies by the University of Auckland have made it clear that degree graduates earn approximately $1.5 million more over a career as opposed to those who take a different pathway. That makes taking a loan to study the best investment since Dr Who took the Tardis to the 2025 Melbourne Cup and then returned to the present to bet a fortune on the winner. A disclaimer is that my wife and I went to university in the 1980?s when you could do it almost for free and emerge with little or no debt. However ? life has changed and a $60k debt against massively improved earning potential is a winning situation.

So ? what is the opportunity cost of the government?s fee-less tertiary education? It is the massive missed chance to do something about the University Entrance gap between Asian/European and Maori/Pasifika. The 2017 published results showed that:

  • 69% of Asian students gained UE,
  • 57% of European students, and
  • 32% of Maori or Pasifika students.

This should make us genuinely angry. There is little point in offering ?free tertiary study to transform society? if those that need opportunity and ?transformation? cannot get a ticket to ride. It is with utter despair that I hear government and leaders of education begin to talk about ?appropriate pathways? based on ethnicity and less than subtly telling many of our youth that the high remuneration pathways are not for them based on the colour of their skin.

The new government takes this part of society for granted. Where else have these groups got to go with their vote is their reasoning. And, to an extent, they are right, the previous government did not do enough in this area either ? they were hesitant and timid.

Much thought needs to go into how any new money is spent on education. Hugely expensive flash buildings and ?modern learning environments? are likely to be doing nothing at all to improve knowledge and skills. The secret of the success of our two Villa Education Trust Charter schools (that started on a tiny fraction of a State school set-up) is that we absolutely allocate our spending for the good of the children and families. Fifteen per class, close attention from skilful and well-qualified teachers, breaking down barriers through the provision of uniform, stationery and IT and the use of community infrastructure. There are lessons to be learnt here and, given that we expect to soon be Designated Character schools and therefore more closely aligned with the sector (or at least not pariahs) we would hope that the decision makers come and learn them.

The new government, though, needs to quickly grow a conscience. Their $2.8billion seems to have not added a single tertiary student into our schools of higher learning. The ?opportunity cost? is very clearly what could have been won for young Maori, Pasifika and low-income families if it had been aimed at redressing the huge gaps up to the UE level. It may be that the risk was that Labour would not have been in power. The truth is that holding to ideals always carries risk and the current government threw away their ideals because they simply wanted to win.


by Alwyn Poole