Review on 2012-13 Budget: Education

Review on 2012-13 Budget: Education

Education is one of the aspects that the public concerns most. The government, to fulfill public's expectation, puts a lot of resource into this area and it is the largest government expenditure currently which will be about $60 billion in 2012-13. With such a great amount of investment, we may wonder whether the government has well making use of the money or not. Therefore, in this paper, we will examine the efficiency of the use of the public money in education by study the education prospect in 2012-13 budgets.

To start with, the Pre-primary Education Voucher Scheme is successful in providing the opportunity for poor children having kindergarten education, but there are plenty rooms to improve. Before the Voucher Scheme, government directly subsidizes kindergartens that are public schools. This means that public schooling is a 'take it or leave it' for a household. In this sense, the public school system may out education as the existence of public education leads to a large increase in the opportunity of private. (See figure 1). This means that the public school may indeed reduce the consumption of poor families. After the scheme launched, the subsidy is directly going to parents and therefore the crowd out effect disappears. As a result, the introduction of vouchers causes the family to purchase more education (See figure 2) which achieves the goal of providing the opportunity for poor children having kindergarten education.

Besides helping the poor having a chance to have kindergarten, the voucher scheme can be justified as investment made in early childhood to disadvantaged children has the highest returns. This means if the government can induce more people sending their children to kindergarten, though using public money, can yield a reasonable return.

However, the scheme still has plenty things to improve. First, the voucher scheme has limited effect on improving the kindergarten market efficiency. One of the advantages claimed by the proponents is that the vouchers promote free market competition among both private and public schools and therefore improving the teaching quality. However, in Hong Kong, only the non-profit kindergarten can accept vouchers which mean the effect of the voucher scheme on improving market efficient is very limit. Furthermore, the voucher scheme in Hong Kong may actually increase the gap between poor and rich children in terms of teaching quality. It is because a kindergarten can only accept vouchers if it offers local curriculum. Therefore, poor families may tend to enter these kindergartens, but as local curriculum is much easier than the curriculum offered by private or profited kindergarten. The poor children may have a disadvantage when compare to those children. To conclude, the voucher is not perfect, if the government simply wants more children having pre-primary education but not putting emphasis on improving the market efficiency, the better way is actually providing free and compulsory pre-primary education instead of voucher scheme.

(figure 1)

(Figure 2)

Another thing in the budget is the introduction of small class teaching. Since 2009, the government has introduced the small-class teaching in primary school progressively which incurs a 1.2 billion annual expenditure as the higher demand of teaching staff and resources. The government also started to reduce in phases the number of students allocated to each Secondary 1 class from 38 to 34. This policy is obviously good for students as it reduces the externalities and it is imperative for the government doing so. The advantage of the small class teaching can be showed by a simple graph (See figure 3). Intuitively, the big class size can generate a negative externalities, it is because when there a large number of students, teachers are difficult to control the order in the classrooms, that means a student's naughtiness can result in a worse case in a big size class as teachers cannot control. One the other hand, small class can also have positive externalities that teachers have felt more relaxed and enthusiastic when teaching a smaller class. A random experiment done by Krueger found that students in the small classes tested higher than students in the large classed. Therefore, to enhance the learning environment, it is reasonable for the government to introduce small class teaching. Moreover, Due to the fact that the birthday rate in Hong Kong has

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