Public education and temporary migration in the ACT

In 2014-15, the ACT government estimates a total of $15,927,000 will be collected as revenue for “User Charges – Non ACT Government” (Budget Paper No. 4, Education and Training Directorate, p.304, “User Charges – Non ACT Government”).  Of this, based on the the Education and Training Directorate’s Annual Report, ~$6m will be collected as “International Private Students Program” (p323).  I believe this figure represents the fees charged to some temporary migrants whose children attend ACT government schools.

Per child, these fees are:

Tuition and Administrative fee for Mainstream Schooling (based on one full academic year)

Preschool: A$ 3,600
Years K-6: A$ 9,320
Years 7-10: A$12,500
Years 11-12: A$13,900
Primary Introductory English Centre: A$ 9,850
Secondary Introductory English Centre: A$13,900

“This fee covers school tuition plus Parental Voluntary Contribution, textbook hire and consumable charges. It does not include the
costs of materials used by students to make items which they take away from the school, non-curriculum excursion costs, and the
support and service fees that may be incurred by students with special needs.”

How many children does $6m of revenue cover at these prices? At the average fee of $11,000 (based on the midpoint of primary and years 7-10),  about 540 children. I’m going to assume the ACT government are not charging these people to make a profit and take this as the cost of providing education in the ACT. This ~$11,000 fee is considered “cost recovery” by the ACT government. I don’t disagree with the concept of cost recovery. I find it reasonable to charge car owners a registration fee to recover some of the cost of driving, just as it is reasonable to price buses to recover some of the cost of public transport.

540 is not the total number of kids in the ACT school system on temporary visas. Many parents who are eligible for a fee exemption. People on 457 visas are exempt if the occupation they work in is on the Skilled Occupation List. What does this mean in English? Some highly skilled people working in the ACT who work in nationally defined shortage areas don’t pay school fees while other highly skilled people do. A minimum of ~100 of the 540 children have parents on 457 visas who pay these school fees (see below for estimates).

Should these parents living in the ACT on 457 visas, who are not classified as working in a national shortage area be subject to an ~$11,000 fee, while other visa holders are exempt? Second, should temporary migrants full stop pay for school fees because they are not Australian citizens or permanent residents?

The exemption exists as the ACT Government want as many of these people to live here as possible. The Education and Training Directorate provided me a rationale for this exemption, saying “In line with the ACT Government’s ongoing commitment to addressing skill shortages in the ACT, ETD approves fee exemptions for dependents of 457 visa holders whose occupation is listed on the Department of Immigration and Border Protection’s Skilled Occupation List.” (see bottom for full email)

The ACT government has an ongoing commitment to address skill shortages that includes attracting people with skills and experience to Canberra. As massive school fees act as a disincentive to move to Canberra, some people on 457 visas are exempt. Other people with 457 visas – people who have been hired by employers to fill vacancies in the ACT – do not receive the exemption, presumably because they do not possess the requisite skills to address any shortage. But an employer needs those skills as they couldn’t find a local ACT resident to do the job. I find this policy highly confusing, given all people on 457 visas are in the ACT because their employers have a skilled vacancy. All of these people are on the same visa, but some of these people are subject to a $11,000 fee while others are not. I am loathe to use this word but I don’t believe this is fair.

Second, I feel the vast majority of people don’t consider public school fees should be subject to “fee recovery”. I believe this because parents don’t directly pay for public childhood education, as evidenced by the lack of a $11,000 invoice every year. If you feel that paying taxes provides an entitlement to public education, why is this entitlement withdrawn for temporary migrants, who pay more tax relative to Australian citizens? In addition, about 70 per cent of 457 visa holders intend to become permanent residents. As soon as this happens, they stop paying school fees in the ACT. Nothing else changes, just moving from one visa to another. Does this arbitrary point of regulation provide a strong enough argument to charge people $11,000 for their kid to go to school? I don’t believe it does.

Regardless of these normative arguments, which you may or may not agree with, there is also a cost/benefit discussion. The financial benefit of this policy is $6m for the ACT government, charged because 540 kids who happen to be migrants go to school at a cost of about $11,000 each. This money contributes to ACT budget revenue, which is $4.24bn. Small revenue payments should never be underestimated as they add up pretty quickly. In general, I agree it is irresponsible and naive to simply cut revenue sources because they aggrieve some group or individual.

Yet what if the costs of this policy are more than $6m?

The direct costs of this policy are borne by parents who struggle under the sheer size of these fees. This may lead to increases in standard work hours (possibly in breach of visa conditions), creating additional stress for families or cutting back on other necessities such as adequate housing and food. It’s easy to say these people can choose to go home but the reality is that this doesn’t occur. A hypothetical:

There were 10 Cooks granted 457 visas in the ACT between July and September. A Cook is not defined on the Skilled Occupation List, ruling out a school fee exemption. People working on 457 visas in the Accommodation and Food Services industry in the ACT earn, on average, $56,500.  A single income Cook on a 457 visa with two kids in ACT government schools will make about $42,000 after taxes. A further $22,000 is deducted for government school fees. This leaves $20,000 for the rest of the year on things like rent, food and bills.

(source)

These are difficult costs to quantify. I don’t know what it’s like to try and survive on this much money in one of the richest jurisdictions on earth, but I imagine it can be difficult. While this is considered this a small amount of money to survive in the ACT, this is a massive increase from what many people can earn in their home countries.

However I believe these direct costs pail in comparison to the indirect costs. The original justification for the exemption is to attract skilled people to the ACT. This assumes large school fees turn skilled people away from the ACT, which would be a serious problem if you have “an ongoing commitment to address skill shortages” . Victoria, Tasmania, South Australia, the Northern Territory and Queensland do not charge equivalent fees. In NSW, the fees are about $5,000, less than half of the ACT fees. Basically, the ACT is putting complete faith the ability of the federal Skilled Occupation List to accurately identify the relevant skilled occupations for the ACT, assuming most 457 visa holders will live elsewhere so they don’t pay large fees for their kids schooling.

So what occupations are on this Skilled Occupation List (and here for individual summary sheets)? The list is dominated by Construction, Resource and Healthcare jobs. This graph shows the ACT labour market compared to the Australian labour market:

(Source)

This shows the Skilled Occupation List is a horrible indicator to identify skill shortages in the ACT. By poorly defining what occupations are relevant for the ACT, on the basis of who is eligible for the exemption of school fees, it is highly likely the ACT government is creating a disincentive for skilled workers to move to Canberra. If the ACT government is serious about solving skill shortages (and this is quite an ill defined term), then this school fee policy is likely having large, serious consequences and costs.

To conclude. I see two strong normative arguments; one against charging people on the same visa different amounts to send their kids to school, and one against charging temporary migrants school fees in the first place. Further, I see enough doubt that the revenue gains from this policy choice do not outweigh the direct and indirect costs. Is all of this worth $6m to ACT Government revenue? I don’t think so.

Estimate of visa category breakdown

These are very rough calculations. We know there were 1,410 primary 457 visa holders in the ACT in September 2013.  Of these 1,410 people, 230 (16 per cent) are in “Skill Level 3” occupations that are definitely not included in the Skilled Occupation List.  These people are liable for school fees. If we use national trends for the 457 program as a whole;

  • we know there are about 0.8 secondary applicants per primary visa holder nationally, likely resulting in ~1100 partners and children in the ACT if there are 1,410 primary visa holders
  • 16 per cent (the Skill Level 3 migrants) of ~1100 partners and children is ~176
  • Of the ~176, I estimate ~100 are children in school with the remainder being partners and dependent children not in school (18+)
  • This means of the ~540 total children in the ACT school system liable for a temporary migrant fee, ~100 are on 457 visas while the other ~440 are on various student visas

However, Skill Level 1 and 2 occupations may also not be on the Skilled Occupation List, meaning that more parents in the ACT would be liable for fees, reducing the number of parents on student visas.

Also, the national assumptions may not hold for the ACT which may attract a higher (or lower) number of families. This may skew the total number of parents liable for the school fee as well.  Further, the split of partners and children may be completely off. This is an assumption based on about 1.5 children per couple.

None of this changes the original $6m figure, the 540 children figure and the $11,000 average cost, just the proportion of each visa category that actually pays for these fees. There may be more or less than 100 children whose parents are on 457 visas.

Email from Education and Training Directorate ACT (23 October 2013)

Dear Mr Sherrell

Thank you for your email of 12 September 2013 regarding public school fees for the children of migrants on Temporary Work (Skilled) (subclass 457) visas.

The Education and Training Directorate (ETD) has advised that the revenues from fees applying to temporary visa holders for dependent children at public schools are based on a cost recovery principle and are recorded in the departmental Operating Statement as “User Charges – Non ACT Government” (page 304, 2013-14 Budget Paper No. 4).  The item you refer to in the Operating Statement “User Charges – ACT Government” primarily relates to charges to other ACT Government agencies for using ETD’s facilities.

I can advise that ACT public school fees for 2013 for students who are dependents of temporary visa holders range from $3,600 for preschool to $13,900 for college (years 11 and 12).  This information can be found at: www.det.act.gov.au/__data/assets/pdf_file/0003/360606/2013_Application_Form_-_Long_Term.pdf.

I do note, however, that under the Enrolment of Non-Australian Citizens or Non-Permanent Residents – Charging Policy temporary residents may apply for fee exemption for their dependents attending ACT public schools.

In line with the ACT Government’s ongoing commitment to addressing skill shortages in the ACT, ETD approves fee exemptions for dependents of 457 visa holders whose occupation is listed on the Department of Immigration and Border Protection’s Skilled Occupation List (www.immi.gov.au/skilled/general-skilled-migration/pdf/sol.pdf).

Thank you for raising this matter.  I hope this information is of assistance to you.  If you have any other questions about school fees, we suggest you contact <removed> on <removed> from the Education and Training Directorate.”

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