The importance of education spending
More scholar for the dollar the key to a brighter future for NL
Public and private spending on education in Newfoundland and Labrador is among the lowest in the country as a share of how big the provincial economy is.
The most recent figures from Statistics Canada show Newfoundland and Labrador spent about 5.5 percent of gross domestic product on all levels of educational institutions in 2020/2021.
There’s a slightly different figure too - spending on education - but the most recent figures in that comparison show roughly the same thing even though the most recent numbers are from 2015/2016. In 2007, Newfoundland and Labrador spent 4.7 percent of GDP on education, peaked in 2009 with 6.2% and generally has been between 5.0 and 5.5 percent.
Compared to other provinces, Newfoundland and Labrador is at the bottom end of education spending as a share of GDP along with Alberta, Saskatchewan, and British Columbia with all other provinces at least a couple of percentage points above.
“The research on educational attainment (educational levels) and the labour market is unequivocal [:] high levels of educational attainment are consistently linked with well-paying occupations that provide individuals with status and financial security.”
That’s the wordy but accurate description of the connection between education and financial success and security.
It’s from a 1998 report by the provincial education department, titled Post-Secondary Indicators.
Recent studies indicate that the relationship between education and earnings is positive, strong and persistent for both young graduates and older workers. High educational attainment is also one of the strongest predictors of an individual’s ability to access employment opportunities offering authority and autonomy in the workplace such as supervisory and management positions.
Higher level of education is tied to job opportunities.
It’s the surest way to fix income inequality.
Arbitrarily boosting minimum wage won’t do it.
The fight over minimum wage is a lazy joke by labour and business leaders.
If you want to reduce poverty and close the income gap, education is the key.
Productivity is important too. Iôn his 2017 comparison of French, German, American, British and Italian economic productivity, Thomas Piketty tied education and productivity generally:
“It was the investment in education in the Trente Glorieuses (the thirty years’ post-war boom),” Piketty wrote in Le Monde in 2017, “ which enabled France and Germany to catch up with the United States between 1950 and 1990. The real issue today is to maintain and extend this evolution.”
If we compare productivity - how much a worker produces for a given hour of work - Newfoundland and Labrador performs better than most provinces but it is still well behind international competition. This report by the Conference Board of Canada is typical.
But you get the real importance of productivity in this 2023 assessment by the Alberta-based economist Trevor Tombe. The image at the start of this column and the bar chart above are both taken from Tombe’s assessment. As Tombe puts it, productivity “is not merely some abstract economic concept. It’s at the heart of any robust economy, and central to the living standards of each of us. GDP per capita roughly captures the total amount of income generated each year within an economy.”
Simply put: lower productivity almost always means lower living standards.
Tombe’s chart shows the relative position of Canadian provinces and American states. As he notes, Ontario’s productivity is on par with that of Alabama.
And in his suggestion of how to improve productivity, Tombe’s first suggestion is to make improved productivity a goal across party lines. It’s *that* basic an idea. But among his most obvious suggestions on how to boost productivity: education. Invest more in skills training. That’s right there with improved infrastructure spending, streamlining taxes and regulations, and - as Tombe notes - more cost-effective policies to deal with things like climate change.
“More scholar for the dollar” is the way Phil Warren used to describe it when he was minister of education. The author of one of the most significant education reforms in Newfoundland and Labrador history (the 1967 consolidation) was education minister in the early 1990s. At the time, government understood the connection between education and individual prosperity. The reforms Warren started in the 1990s were intimately connected to the Strategic Economic Plan’s vision of “an enterprising, educated, distinctive, and prosperous people working together to create a competitive economy based on innovation, creativity, productivity and quality.”
Three things to finish this column.
First, just spending more on education isn’t the answer. That’s another lazy and irresponsible joke. A better answer will have to wait for another column. For now let’s just start with the connection between education and our collective standard of living.
Second, some of you will notice that the provinces that tend to spend less of their GDP on education are also the most productive, the most GDP per person. Part of that is the distorting effective of having an economy driven by oil and gas extraction and mining, both of which produce a lot of money disproportionately to employment. If you look more closely at Newfoundland and Labrador productivity lately, it’s been declining, by the way, which might be a clue to what’s going on in the parts of the economy that aren’t resource extraction.
Third, another part of the education spending part of this discussion is the relative inefficiency of spending in Newfoundland and Labrador. In this province, we tend to spend more per person than other provinces for all public services. Although the common excuse for that is our small population and big space, that’s not really true. Saskatchewan has roughly the same number of people per square kilometre but the province spends significantly less per person than Newfoundland and Labrador does. Spending in this province has stayed the same as student populations dropped. That gives you effectively a false positive if the money is being soaked up by bureaucracy and isn’t going into the classroom.
As Tombe noted, productivity has to be part of the political consensus across ideologies. In Newfoundland and Labrador, we have to start way before that with the political discussions to find that consensus first. That’s a basic challenge because to get from where we are to where we want to be as a society involves shedding ideas and behaviour that so many people are wedded to but that are, in effect, obstacles to finding a successful and prosperous future for all.
This column is about starting a conversation about education spending and productivity.
Re: Scholar for the dollar - in all the wrangling about Provincial rights under the constitution, my opinion is that Education is the one that matters. It's where, as a society, if we, or a like minded group of us, decide to, we can effect change in how we live.
Great article!
As an observer with some contacts throughout various parts of the education system, its clear that too much money is being soaked up in management and bureaucracy.
Ask any teacher. Money is not being allocated properly to give them the resources they need on the front lines.
At Memorial, its seems to fit the bill of the old saying, "Too many Chiefs, not enough Indians."