This paper defines and measures output in Queensland’s school education sector. It explores approaches to capturing changes in the quality of education using data on senior secondary certifications and NAPLAN achievement.
- In Queensland, governments spend over $9 billion on school education each year, but, like other nonmarket sectors, little is known on its measured productivity.
- Productivity analysis measures how effectively inputs are being transformed into outputs. In the context of schools, both outputs (school enrolments) and inputs (numbers of staff and per-student funding) have increased over time.
- It is problematic to calculate productivity for non-market sector industries such as education. This was highlighted in the Commission’s 2016–17 Queensland Productivity Update.
- The key difficulty in measuring output and productivity is to accurately measure output volume in a way that also internalises the quality of education goods and services. Prices cannot be used to calculate output, like in the market sector, as goods and services are not sold through a market but are often allocated through an administrative process.
- This paper proposes that, for schooling, data on the proportion of students achieving above minimum standards on National Assessment Program—Literacy and Numeracy (NAPLAN) testing and the proportion of students receiving a senior secondary certificate can be used to adjust enrolment data for quality.
- Once adjusted for quality, output has grown by 23.24 per cent in Queensland from 2009 to 2016. This compares to raw enrolment growth of 12.02 per cent. Quality-adjusting output therefore has a material impact on the figures produced.
- These adjusted figures have a significant impact on productivity estimates, improving the outlook for Queensland. After adjustment, figures for Queensland’s productivity growth average at 0.138 per cent per annum compared to –1.223 per cent without the adjustment. While close to zero, this figure compares favourably with the Australian adjusted average of –0.963 per cent per annum.
- Strong growth in NAPLAN achievement in Queensland has likely driven this result. As these output gains are unlikely to remain consistently high, the key issue is to better understand how productivity is working in terms of inputs.
- The measure for education output developed in this paper can be used to better inform policy making and public discussion on schooling.
- Further, the results of this paper show that adjusting output for quality is important when analysing productivity in non-market sectors. It is hoped that this paper can encourage further discussion on this topic and extend to other non-market industries such as health.