Wednesday, 7 December 2005

Wananga, waste, and voucher failure

The report on Rongo Wetere's Te Wananga o Aotearoa is rife with stories of profligacy and nepotism, of first class air travel, million dollar contracts to family members, and tales of money wasted on failed IT projects. 'Shocking,' declare all the usual suspects. 'Outrageous.'
ACT leader Rodney Hide told NZPA that Mr Shirley had been vindicated. 'The wananga was out of control and so was the spending. If it hadn't been for ACT's Ken Shirley they would still be running amuck now.'
Thank God for ACT's Ken Shirley, eh?

But hang on a second. Don't mainstream businesses indulge like this all the time? Don't politicians fly first class? Don't all businesses have a few failed projects every now and then? And what's wrong with a good old family business that's making money hand over fist? Why complain about Wetere & Sons & Daughters then? The complaint is that it's taxpayers' money that's being wasted, of course. My money and yours:
"It's just a shame that so much taxpayer money was so poorly accounted for and that it required a huge public exposure to get the Government to respond," Mr Hide said.
So why exactly was so much taxpayer money so poorly accounted for? I'm glad you asked. It was wasted because Wetere & Sons & Daughters were just cashing in on the latest 'free-market' fad: educational vouchers -- a fad in which state control over independent schools is relinquished, and in which funding -- ie., taxpayer money -- 'follows the student.' Milton Friedman is the scheme's godfather, and he supports it as a shortcut to the separation of school and state. National offered a voucher scheme at the last election as a system to encourage reading -- in fact, it was they who set up the system at tertiary level (and called it EFTS).

ACT, explained Deborah Coddington in her valedictory speech, "campaigned hard on the merits of a voucher system, which allows all parents – not just the affluent – to take children to the school they choose, ACT’s policy since 1996." And so it still is. Introduce vouchers, let funding follow the child, and all will be well in New Zealand's schools: universal choice, freedom from central control, and freedom to experiment. So why for goodness sake are they and others complaining when the voucher system is implemented?

Describing the vouchers system, Deborah Coddington eulogised, "If I were a teacher I’d be terribly excited about this scheme. Imagine getting together with a group of likeminded teachers and planning an independent school where you could make classes as big or small as you liked? Where you could diversify, be creative, take young people and let them soar?"

Rongo and family were terribly excited, just as Deborah hoped they would be. They made their plans for an independent school, the 'funding followed the student,' and hey presto the whole family soared! It turns out, doesn't it, that all is not well with the system. Not well at all -- unless you're Rongo Wetere's banker, or some part of the Wetere whanau.

It turns out that when government money just follows the student that many students just like the bells and whistles and the free laptops, and they don't really give a rat's arse for the quality of their course -- and most of these 'playway course' aren't a million miles from what they've had at primary and secondary schools anyway. And their parents -- what about them? Most of their parents are so happy that their kids are studying and someone else is paying that they don't bother to read the fine print. It's not their money being poured down a drain, is it, and after all the youngster is so happy with his new laptop...

It turns out that there are no short cuts to freeing schools from the state. All the latest clamouring for government control shows that as long as government money is involved, goverments will want to take control over how it is spent. And as long as government money is being spent, Friedman's own law of spending has to be invoked, as it was last time I wrote on this issue:
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 if 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. He doesn't want it.

Until 1984, most government spending in New Zealand fell into Friedman's Category Four -- somebody spending somebody else's money on someone they didn't care about. After 1984 and the transformations wrought by Prebble, Douglas and Richardson, most government spending was still Category Four, except for the way inter-departmental spending was done. All that spending was and still is Category Two: spending someone else's money on yourself. That type of spending is like a young kid in a toy store who's got his hands on his nanny's purse, which pretty much describes Christine Rankin's former Welfare empire, John Tamihere's Waipareira Trust and Donna Awatere's Pipi Foundation.

The whole 'input-output, 'purchasing of outcomes' waffle that Douglas, Prebble and Richardson applied to government spending can all be basically characterised as Category Two spending, and it's what describes Rongo's spend-up at the Wananga.

It describes the voucher system too. Like I said, in the battle to separate school and state, there are no shortcuts. Vouchers are just another shortcut to freedom that hasn't worked, and like all such failures the reaction against it sees the government taking back more control: "The days of tertiary institutions being funded using a "bums-on-seats" formula are numbered," announced new Tertiary Education Minister Michael Cullen recently.

When will the advocates for less government learn that shortcuts to freedom just don't work?

Linked Articles: Wananga CEO says no fraud, nepotism or corruption found
Milton Friedman: Public Schools: Make Them Private
'Not PC' (May 9, 2005): Wananga's failure shows voucher failure


  1. While I do not think your analogy between the wananga debacle and a voucher system is fair your comments about govt are. The problem with trying to get the govt out and the private sector in, whether in education, health or welfare, those NGO's completely self-funding eg Catholic Family Support Services (yes, you have to look hard to find them) do not want ANY funding coming via the govt because it gives govt power to interfere with their operations. The same objection comes from independent schools.

    Instead of a voucher the state should just return the tax paid for education. If there is no tax to return (which is most likely in the case of those who availed themselves of the 'free' wananga courses)the alternative is to run schools which rely on charity and sponsorship.

  2. Lindsay, you're right - and that's exactly what Peter was saying.

    Education is a service. Health is a service. Plumbing and hairdressing are services.

    Best left to those who know what to do, eh. Like all businesses, they'll either sink or stay afloat.

    Doesn't matter how often you sink when the state's propping you up.
    You tend to swim really hard when it's your own money, though.

  3. Hi Lindsay,

    Look, I wasn't drawing an ~analogy~ between the voucher system and what has happened at the Wananga so much as pointing out that a voucher system is what we have in NZ at the tertiary level (and have done since National introduce the ETFS scheme in 1990), and the Wananga is a perfect demonstration of one of the dangers with vouchers.

    And as Sus suggests, I heartily agree with you that "ANY funding coming via the govt ... gives govt power to interfere with their operations." As they say, a government that gives you everythingyou want is big enough to take it all away again. I believe many in the early childhood sector have learnt that lesson in recent years.

    I agree too with your own conclusion, which is identical with mine: "Instead of a voucher the state should just return the tax paid for education." Exactly. In thecurrent copntext, tax credits for education are the way to go, and a necessary first step to separating school and state.

  4. Those 1-4 examples aren't very accurate.

    "You spend your own money on someone else"
    "It's cheap"

    Speak for yourself. Don't get buying me an Xmas present now will you ;-)

  5. Of course, it does depend on who exactly the 'someone-else' is. :-)


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