Since the 1960s, the productivity of Canadian schools has diminished considerably. Education spending has risen, and students who manage to finish their high school studies are increasingly ill equipped to meet the demands of the labour market or to move on to postsecondary studies. In education, Canadian taxpayers are no longer getting their money’s worth.
In 1995, Canada spent an average of $5,401 per pupil on elementary and high school education – nearly 30% more than the OECD country average of $4,162. Yet only 75% of Canadians more than 18 years old held high school diplomas in 1996 – the second lowest ratio among the G7 countries and barely higher than the last-place United States, pulling up the rear at 72%.
To improve our performance, governments should consider setting up a universal system of school vouchers. As the National Post reported recently, the federal government has already been quietly running the equivalent of a voucher system for native students, and there is no reason this type of system could not be adapted to allow all parents in a province to do the same.
The idea of vouchers has been attracting considerable attention in Quebec over the last few months and should be one of the key issues debated in the coming general election. One political party, Mario Dumont’s Action Démocratique, has promised to set up a pilot project for a universal voucher system as early as September 2004, if it is elected. So far, the debate has remained at the level of generalities, with reactions following the pattern seen elsewhere. Last week, however, the Montreal Economic Institute released the first in-depth study of how a voucher system would affect Quebec’s education system and how much it would cost to implement (see Le choix de l’école pour tous – Un projet de bons d’étude adapté au Québec).
With universal vouchers, all parents would receive an identical sum of money, whether they chose the public school in their neighbourhood, a public school in another neighbourhood, or a private school. The aim is to put schools in competition by linking school financing to the number of students they receive.
Choosing a private school is expensive. In Quebec, for instance, the state subsidizes about 50% of the costs of private education. Even so, it costs an average of $1,878 per year to register a child in the private sector. Parents who choose private schools must also continue paying their school taxes. In other words, a choice of schools is offered only to parents who are prepared to pay the price.
Private schools already operate in a competitive market. As a result, costs per student are lower than in the public sector. Excluding transportation costs and looking only at comparable expenses, it costs an average of $6,401 to educate children at the pre-school, elementary and high school levels in Quebec public schools, whereas private schools need an average of only $5,828 per student. The choice of schools and the resulting competition thus gives private schools an incentive to be 8.95% more efficient on average than public schools in terms of costs alone.
Private schools are also more efficient than public schools in terms of school performance. In province-wide tests at the end of high school studies, students in the private sector had results 7.8 points higher than those of students registered in the public sector in 2000-01. The proportion of students passing the tests was 84.0% in the public sector compared to 94.7% in the private sector, a 10.7% difference in favour of a freer education market.
Our study shows that, with a system of universal school vouchers, parents (or students, if they have reached adult age) would receive on average $6,029 per school-age person. With increased choice for parents, it can be expected that public schools would have just as great an incentive to reduce their expenses and increase the quality of services they offer. The result would be a significant rise in the productivity of the province’s schools as a whole and considerable savings for Quebec taxpayers.
Setting up a system of universal school vouchers would require an education spending adjustment of $315-million in the short term. On the other hand, our evaluation also shows that universal school vouchers would produce an appreciable reduction in education spending in the medium term and would increase school productivity. Universal school vouchers would enable Quebec taxpayers to save more than $660 million annually and would thus produce a net saving of $345-million per year.
The comparison of school test results in the public and private education sectors also suggests that increased competition between schools, made possible by universal school vouchers, would improve the school performance of students, though it is impossible to predict the size of this increase. But even if school vouchers did not succeed in raising the school performance of students, the savings achieved would be enough on their own to increase school productivity significantly.
Sylvain Bernier is Associate Researcher with the MEI and author of the Research Paper entitled Le choix de l’école pour tous – Un projet de bons d’étude adapté au Québec.