Improving Australia’s systems of school education* 29 October 2010 CEET 14 th Annual National Conference Ascot House, 50 Fenton st, Ascot Vale, Melbourne *This presentation is a work in progress. It should not be quoted without the permission of the author.

P 2 Grattan Institute Grattan Institute is Australia's newest think-tank: independent and evidence based Grattan Institute is truly non-aligned The independence of the Institute is underpinned by independent resourcing Focus Cities Energy choices Productivity growth School education Water

Improving school education 1.Moving to the top ranked education systems 2.Teacher effectiveness and student performance 3.Student performance and economic growth P 3 1.How do we create the best education systems in the world? 2.If teacher effectiveness is the key, what is the increase in teacher effectiveness required to lift us into the top performing countries? 3.What would be the impact of this improvement on long-run economic growth?

Moving to the top ranked education systems Australia ranks 8 th in the latest PISA assessment, but only statistically significantly behind Finland, Hong-Kong China, and Canada. There is a 36-point gap that must be overcome if Australia is to replace Finland as the top performing education system in the world There is, on average, a 20 point gap between Australia and Finland, Hong-Kong China, and Canada P 4

Moving to the top ranked education systems What does a 20 PISA score point gap represent? 38 points is equivalent to 1 year’s curriculum Similar to the 36-point gap to replace Finland as the top performing education system in the world But only half a year’s (53%) of a year’s curriculum to be amongst the top performers (Finland, Hong-Kong China, and Canada) Assuming that curriculum gains are additive (and that on average students have 10 years education before they sit PISA) this implies that each grade needs to incorporate an extra 5% (0.526/10 = ) of a year’s worth of curriculum. P 5

Moving to the top ranked education systems How do we best achieve the additional 5% per year? We have a poor record in investing to improve student performance 41% increase in education expenditure between 1995 and However, between 2000 and 2006, Australian student performance in PISA stagnated in mathematics and significantly declined in reading Between 1964 and 2003, funding in the Australian school education sector (government funding for both government and non-government) increased 258%, while numeracy test results significantly fell by 1.1 points Expenditure largely driven by class size reductions P 6

Moving to the top ranked education systems Class size reductions have continually been shown not to have a significant impact on student performance Recent evidence from Florida’s mandated class size reductions Prekindergarten – 3 rd grade – 18 students (reduction of 5 students (22%)) 4 th – 8 th grade – 22 students (reduction of 2 students (9%)) 9 th -12 th grade – 25 students (no change from average) Cost $20b over 8 years + $4b. p.a. $1500 per student per year $1.1 million per school per year Recent research found no significant impact on cognitive or non- cognitive outcomes P 7

Moving to the top ranked education systems The impact of high and low quality teachers outweighs the impact of any other school education program or policy The research findings on the relationship between teacher effectiveness and student performance is remarkably consistent In Australia, conservative estimates suggest that: a student with an effective teacher can achieve in three quarters of a year what would take a full year with a less-effective teacher a student with a teacher in the top 10% of teachers in the country could achieve in a half year what a student with a teacher in the bottom 10% of effectiveness achieves in a full year It’s also cumulative. Students who had three ‘effective’ teachers in a row were percentile points higher on school assessments compared to students assigned ‘ineffective’ teachers over a three year period P 8

Moving to the top ranked education systems Australia needs to increase its PISA score by 20 points if it is to be considered amongst the best performing education systems in the world. 1.Increase the effectiveness of all Australian teachers by 10% 2.Increase the effectiveness of the 15% least effective teachers in Australia P 9

Increasing the effectiveness of all teachers 20 PISA score points is equal to 20/38=0.526 of a year’s worth of curriculum. This implies that each grade needs to incorporate an extra 5% (0.526/10 = ) of a year’s worth of curriculum. Research on the impact of teacher effectiveness on standardised test scores in Australia shows that a 0.5 standard deviation in standardised test scores represented advancing 1 grade. This implies that an extra 5% of a year’s worth of curriculum is equal to x0.5 = standard deviations in test scores. 1 standard deviation increase in teacher effectiveness is associated with a 0.1 standard deviation increase in test scores standard-deviations increase in test scores is equivalent to 0.26 standard-deviations increase in teacher effectiveness (10x = 0.263) standard deviations increase in test scores = 10% in teacher effectiveness P 10

Impact on long-run economic growth Research connecting education with economic growth assumes that: the quantity of education is related to higher individual wages and productivity productivity is a fundamental driver of economic growth More recent research indicates that the quality rather than the quantity of education is more important Focus on quantity of education has been criticised Assumes that a year of schooling is the same in all countries Causality – economic growth results in greater investment in education and years of schooling P 11

Economic growth and years of schooling P 12

Impact on long-run economic growth Focus on education performance attempts to address these issues Causation Test scores are not correlated with school resources Countries with higher test scores in 1980 then had higher rates of growth from Changes in test scores correlate strongly with changes in economic growth rates P 13

Student performance and economic growth P 14

Impact on long-run economic growth What is the relationship between student performance and economic growth? Hanushek and Wößmann One-standard deviation in test scores associated with 1.74% increase in GDP growth rates 1.47% increase in GDP growth rates for OECD countries 1.26% increase in GDP growth rates (including institutional variables) Other research shows smaller gains Lee & Lee (1995)- 1.2% increase in GDP growth rates Barro (2001)- 1% increase in GDP growth rates Ramirez et al. (2007)-0.6% increase in GDP growth rates (insignificant for ) Appleton et al. (2008)-0.8% increase in GDP growth rates A conservative average has a one-standard deviation in test scores associated with a 1% increase in GDP growth rates P 15

Improving school education 20 PISA point gap between Australia and top performing countries Joining the top performers Increase PISA scores by 20 points 5% increase in the curriculum each year 10% increase in the effectiveness of all teachers 0.2% increase in GDP growth Make Australians 12% richer by the end of the century P 16

Improving Australia’s systems of school education* 29 October 2010 CEET 14 th Annual National Conference Ascot House, 50 Fenton st, Ascot Vale, Melbourne *This presentation is a work in progress. It should not be quoted without the permission of the author.