Monday, 9 May 2005

Wananga's failure shows voucher failure

News here that Trevor Mallard is proffering Rongo Wetere's Wananga o Aotearoa a $20 million "short-term loan" (with more to come) and (possibly) appointing a commissioner to oversee the Wananga and (maybe) an advisory group to work alongside the putative commissioner and the existing Mallard-appointed Crown Manager is greeted as expected by Rodney Hide and others with the joy of being vindicated in their attacks on the Wananga and its management.

Well, perhaps that joy is somewhat undeserved.

In the first place, if the Wananga is so badly run, then why should more taxpayers' money be spent where it has already been so flagrantly wasted? Does anyone really expect this "short-term loan" to be repaid?

And would there really be a problem with the Wananga declaring bankruptcy and its assets then used for a decent school? After all, the assets don't go away when bankruptcy is declared, and as it is now the government has just taken control of a private school, not something a libertarian should enjoy.

And why have Bill English, Rodney Hide, Ken Shirley and Deborah Coddington been attacking the Wananga anyway? This Government is spending roughly a billion dollars a year in tertiary education, mostly in what's known as 'low-level' courses such as the degrees in air-hosting and diplomas in dog-washing and the like that have been exposed in various news stories. That billion dollars a year is being spent in a system set up by the previous National Government that 'follows the student'; in other words, if a student decides to enrol for a course, then the government will pay for it.

The other name for such a system is ... a Voucher System. Such a system is exactly what ACT party luminaries such as Rodney Hide, Ken Shirley and Deborah Coddington have been advocating for years, and what English's colleagues put in place at tertiary level. Now they've got it, they don't like what they see. Have they perhaps changed their mind? Or ist just that they don't recognise it for what it is?

Rodney Hide blames Mallard for "pouring in money without control." Does he really not realise that's what a voucher system does?

Let me remind readers of the four basic ways of spending money, with some examples to show what I mean (hat-tip here to Milton Friedman and PJ O'Rourke). See of you can work out which situation describes how Rongo Wetere's chequebook was funded:

1/. You spend your own money on yourself -
e.g, you buy your own toys, and you've probably saved for them. You look after them.

2/. You spend someone else's money on yourself -
e.g., a kid gets hold of Dad's wallet in the toy store. Lots of toys, most quickly broken or ignored.

3/. You spend your own money on someone else -
e.g., you buy a toy for a friend. It's cheap.

4/. You spend someone else's money on someone else. Neither price nor quality are important -
e.g., your parents buy a toy for your friend. Its cheap. And he doesn't want it.

Until 1984, government spending in New Zealand fell exclusively into Category Four above. Following the transformation wrought by Prebble, Douglas and Richardson, government spending was mostly still Category Four, except when it wasn't and was instead Case Two: Case Two describes the whole input-output, 'purchasing of outcomes' waffle that Douglas, Prebble and Richardson applied to government spending, and that Christine Rankin's Welfare empire, John Tamihere's Waipareira Trust and Donna Awatere's Pipi Foundation went on to spend. These last three were all buying toys for others with other people's money (and Donna as you may remember was also caught spending it on herself.)

Case Two also describes Rongo's spend-up at the Wananga. It describes the voucher system too


  1. The voucher system has great potential for secondary education, where it is for a limited amount over a limited number of years.

    However at tertiary level such an approach has significant problems because there is no limit on the voucher. Thus it is a blank cheque with no end in sight.

    To make it work either each person has a voucher for tertiary to a set amount, or tertiary institutes have to charge a fee for their courses, so their is some incentive for people to choose wisely.

    When you can money for signing a piece of paper in a hamburger bar, that is not vouchers at work.

  2. I've never seen an ACT policy document advocating vouchers on the tertiary level. Retract or quote please.

  3. David, you said: "When you can [have] money for signing a piece of paper in a hamburger bar, that is not vouchers at work."

    Well, if government money is handed out on a 'follow-the-student' basis then it's a voucher system by any other name, and the smell is not necessarily sweet. In your example, David, it is just a voucher system without any control exercised over it.

    But the arguments for vouchers chiefly put by advocates for them (such as Milton Friedman) is that vouchers help to to empower parents, and help to remove centralised control. But to make vouchers work, voucher advocates are then caught on the horns of either attempting to avoide to avoid the 'hamburger bar' sign-ups or free laptops for unattended courses or the like by advocating for greater centralised control over otherwise independent educational institutions (as we've seen happen in Early Childhood Education); or, they have to advocate stringent limits to what the voucher can actually pay for, as you advocate above.

    In either case, the voucher system doesn't then have the merits that its advocates claim for it, since 1) it can't be universal, since it needs some limits, and 2)neither does it free schools from centralised control.

    Perhaps there is merit for vouchers in some limited areas. One such application is possibly National's proposed reading voucher scheme, which could liberate students from the appalling teaching of reading they currently receive from the state's factory schools. I'm wary however at the likely result: greater state control of 'approved reading teachers' and a consequent loss of independence for the good ones, at the same time as widespread growth of 'play-way' reading centres run by people like Rongo Wetere. Not a pretty thought.

    Berend, you said: "I've never seen an ACT policy document advocating vouchers on the tertiary level." Neither have I, at least not anything saying "We advocate vouchers." But no need for anyone to advocate for what we've already got, is there.

    In fact ACT's 2002 'policy document.html' on tertiary education doesn't offer much beyond platitudes - apart from their excellent advocacy of Voluntary Student Membership. It does however include the proposal to "Allow equal opportunity to apply for courses by abolishing racial quotas and allowing students to take their funding to any quality-approved course they choose." When funding 'follows the student' as this policy advocates, that's a voucher, even if you don't choose to frighten the horses by calling it that. And it's the system we presently have in place, put there by the previous National Government, and endorsed by the ACT party.

    I assume you're aware, Berend, that ACT are generally in favour of vouchers for education? And that the 'follow-the-student' system of funding that we presently have for Tertiary Education and Early Childhood Education is an example of that? A bureaucraticaly administered example I grant you, but an example nonetheless.

    And neither are working, for reasons I outline above.

  4. I threw my shoe at the TV this mornign when Ken Shirley was ranting on crap about how much money the government had funded the Wananga over the last few years - Its called EFTS based funding - Ken.

  5. Te Wanaga should be killed or downsized. I can't see the point of pumping more money from the government to a tertiary institution which encourages students to enrol just to have a good time, by being proudly showing off to family members they have a student ID from TE WANANGA. Majority of students just enrol just to occupy their time and to avoid being bored at home doing nothing. Also there are benefits such as getting free trips overseas (Cook Island) to learn about how to navigate a canoe. Students also get a free laptop, etc, etc...


1. Commenters are welcome and invited.
2. All comments are moderated. Off-topic grandstanding, spam, and gibberish will be ignored. Tu quoque will be moderated.
3. Read the post before you comment. Challenge facts, but don't simply ignore them.
4. Use a name. If it's important enough to say, it's important enough to put a name to.
5. Above all: Act with honour. Say what you mean, and mean what you say.