Thirty years ago there seemed scarcely any limits to what education could contribute to society. There was a rare unanimity of view between educators, sociologists and economists about the substantial value to be gained from education. It was also widely accepted that a strongly interventionist role for government was necessary to capture the full range of social benefits from education.
     Today there is widespread concern. This disquiet does not simply reflect a rising cost of schooling, although cost per student has risen steadily in Australia. Nor is it a concern exclusively about academic standards, although fears about levels of performance, particularly in literacy, are prominent in public debate. A major contemporary worry, quite different from thirty years ago, is that the existing public school system is no longer viewed as adequately carrying out its role of creating benefits for society as a whole.
     Australia now spends almost twice as much to educate each student as twenty years ago. This is true even when allowance is made for inflation, greater participation in years 11 and 12, and the effect of changed enrolment patterns between government and non-government schools. This rise in overall cost is not the consequence of expensive private schools. Although it will surprise many, the fact is that when the statistics are adjusted to ensure proper comparability of data, it turns out that government schools are, on average, more costly per student than non-government schools.
     This increased cost would not matter if we were getting better performance, but we are not. In 1975 more than a quarter (28 percent) of 14-year-olds failed a test of basic reading. Since then there has been no improvement in overall literacy levels. Reading comprehension for boys has actually declined. There is an increasing weight of evidence that government schools are academically less effective than either independent or Catholic schools, even when allowance is made for differences in student background. There has been a steady drift away from government schools, with parental preference for private school ing becoming stronger as their children approach the all-important Years 11 and 12.
     Perhaps most worryingly, Australian students are not performing well by the standards of our Asian neighbours. In the latest international comparisons of achievement in science and maths, Australia finished below Singapore, Korea, Japan and Hong Kong in almost every grade and subject category. Victorian students were among the worst-performing students in Australia. Several Asian countries have not just caught up, but have surpassed the average performance of Australian students. It is also worth emphasising that the Asian success is not limited to rote-learned facts: there is ample evidence that their students also score better in the higher-order skills of evaluation and problem solving.

What Is To Be Done?

     Simple arithmetic indicates that the combination of rising cost and stagnant performance adds up to a declining cost-effectiveness of the Australian school system. Australia is not alone in these concerns. Other countries, among them New Zealand, Britain and the United States, are also wrestling with policies to improve the functioning and performance of public education. A wide variety of policies has been tried. One of the simplest has been to spend more money. Another approach has been to try to make schools more effective by improving the intangible factors that go to make a good school. Firmer regulation of curricula or teacher standards has also been tried. Little of this reform effort has paid off in better performance. 'School choice' has become a popular innovation, and many variants of this (such as dezoning, and magnet' or specialist high schools) have been tried.
     While much of this has been worthwhile, there has been an increasing realisation that none of these schemes is sufficient. A strong theme in contemporary analysis is that regulatory reform or administered choice do not get to grips with the fundamental issue that public education is effectively a monopoly, and, like any other monopoly, works to maximise the benefits to producers rather than to consumers. On this line of argument what is necessary is fundamental institutional reform that opens up education to competitive market forces. In the United States, proposals which only a few years ago seemed outland ishly radical, such as creating a profit-seeking market for schooling, are today taken seriously. It is a measure of changed attitudes to public education in Britain that the Blair Government elected in May 1997 agreed to maintain the central feature of the Thatcherite school reforms. These reforms allow government schools to opt-out of highly regulated local authority control and operate as autonomous schools funded directly by central government.
     These ideas are not yet part of the reform agenda in Australia, but a decade or more of piecemeal reform by both the Commonwealth and the States has achieved little of lasting value. The idea that governments can buy better school performance simply by spending more money has long been discredited. What is needed is structural reform to liberalise the supply of schools and make them more responsive to parental choice. In many States parents have a choice of government school through dezoning or specialist high schools. These are worth while, but their crucial deficiency is that they offer choice within the limitations of the existing system. With a static pool of school places, choice becomes a zero sum game: what the fortunate few gain is lost by others. Choice within the existing government system becomes competition between parents, not between schools.
     One of the early decisions of the Coalition Government elected in March 1996 was to sweep away bureaucratic restrictions on the supply of private schools and ensure that government schools won't receive funding for students they don't have. Critics claim that the changes will weaken social cohesion through a proliferation of cult or ethnic schools within an increasingly balkanised society. There are also fears that a rapid growth of private schools would drain the public system of students. The criticisms ignore the urgent need for fundamental reform of Australian schools. In particular, much of the adverse comment seems motivated by support for an idealised system of public education that is out of touch with the reality of schools today.
     The Coalition changes are a genuine reform that will do much to improve parental choice of schooling in Australia. What is needed now is equivalent reform of government schools. This can be achieved through the introduction of charter schools. Charter schools are schools which are publicly owned and publicly financed, but are self- governed under the terms of a performance contract. They allow parents, teachers or any qualified group to start schools on their own, and to be freed from the regulatory and administrative constraints that burden most public systems. Charter schools are freed from many government and union regulations and requirements, including those governing curriculum, teaching methods, and the hiring of staff. In exchange, the schools are held accountable for student performance.
     In Australia, Victoria is already experimenting with charters. They are also part of school reform in Britain, the United States, and New Zealand. There have already been striking examples of charter school success. In one of the poorest areas of Los Angeles, charter legislation gave the Vaughn Street School freedom to hire and fire teachers, to lengthen the time spent on instruction, and to raise salaries above district levels. Teachers are free to determine the best instructional methods. In exchange for this autonomy, the school is accountable for the performance of its students. If the school fails to meet those goals, the charter is revoked. In fact, achievement scores at Vaughn Street have risen from the lowest in California to near the state average.
     Charter schools are much more than a device simply to raise academic performance. They have the potential to transform the system itself, redefining the paradigm of public education to which we have become accustomed over the last one hundred years. At present, many public departments of education function as operators of a highly regulated monopoly. Domination by producers ensures that the system is no longer run predominantly in the interests of the parents and community who are the 'consumers' of the system. It is possible to envisage a different structure in which government no longer directly runs schools. All, or nearly all, public schools would instead be operated under charter by independent groups of parents, teachers, or other profit or non-profit organisations.
     These charters--explicit and legally enforceable contracts--would define the school's mission and stipulate the grounds for accountability. By contracting with individuals and groups to offer public educa tion, state departments of education would cease to run and regulate schools directly. Instead of directly running schools, departments of education would become (or would be replaced by) agencies with the specific role of promoting and protecting the interests of parents and the community.
     The book starts exploring these issues by reviewing the broad shifts in educational policy during the past thirty years. Chapter 3 examines in detail the rising cost of education and the concern about academic standards. There is only fragmentary evidence about school performance in Australia, but there is enough to be sure that the general disquiet is not misplaced. There is particular cause for concern about the cost and performance of government schools. Chapter 4 examines many of the reforms that have been attempted in recent years, such as smaller class size, additional funding, and 'effective schools'. The conclusion is that these reforms have brought only minor improvement, largely because they have not tackled the central issue of producer control in education. What is necessary for sustained improvement is to make education more responsive to parental control. Chapter 5 explores the issue of parental choice of schooling, both in Australia and overseas, and argues that much more needs to be done to liberalise the supply of autonomous schools and make them more accountable to parents. Chapter 6 argues that, contrary to many fears, a system of school choice will not worsen social cohesion. It can instead, reduce the scope for conflict over what is taught in schools. This is followed in Chapter 7 with proposals to explore the concept of charter schools in Australia. The book concludes that charter schools can provide the structural reform necessary to make government schools responsive to parental choice and improve the performance of public education in Australia.