The Virtues of the Australian Model

by Reihan Salam

Alex Tabarrok notes some of the strengths of the Australian economic model. Others, including Scott Sumner, have observed that Australian monetary policy appears to have been at least somewhat helpful in helping the country avoid any serious economic contractions over the past twenty years. David Alexander, who had served as a senior advisor to Peter Costello, Australia’s long-serving Treasurer under John Howard’s Liberal-National coalition government, has praised Australia’s “low-tax egalitarianism.” And he makes an argument that runs counter to U.S. conservatives concerned about the “47 percent”:

[A]s a broad rule, if small government is the aim then progressivity through lower taxes on the lower paid and lower spending on upper income earners is more likely to achieve that goal than flatter tax and spending structures.

I was particularly struck by Tabarrok’s observation concerning the high market share of private schools (40 percent) in Australia. In part, this reflects the fact private schools in Australia receive partial public funding, with the level of funding benchmarked against Average Government School Recurrent Costs (AGSRC) and varying according to the socioeconomic profile of the student population. Australia’s Parliamentary Library offers more detail:

• those non‐government schools with the lowest SES scores (85 orless) are funded at 70.0 per cent of AGSRC

• those non‐government schools with the highest SES scores (130 or greater) are funded at 13.7 per cent of AGSRC and

• those non‐government schools with an SES score between 85 and 100 are funded along a continuum, with each single point change in the SES score resulting in a change in funding 

Were a system like this in place in the U.S., one assumes the educational landscape would change considerably.