April 19, 2021

Is New Zealand investing enough in our youth?

Education's share of GDP is falling

Education spending has increased significantly over the past 15 years, but the question is whether it has increased enough to meet the country’s needs.

Investing in the younger generation is commonly looked at as investing in the future. The kids going through early childcare or school now, will one day be the kids running the country. The quality of education services, whether it be environment, funding, opportunities, support, or teaching, are crucial for building our youth into successful adults for the future. Education remains the government’s third largest core expense each year.

The above index graph details the change to New Zealand’s younger population and the government’s education spending from 2005 to 2019. 0-19 year olds make up the youth of our population, and during the past 15 years have only increased by 5 percent. A very small and minor increase to the age group, compared to much larger increases seen in other age groups.

The government’s total expenses has increased significantly since 2005, from $44.7billion to $87billion in 2019, while education spending has increased from $7.9billion to $14.3billion. There have been large increases in spending over this period, however, inflation would have eroded the value, or purchasing power, of the spending. Reducing the actual effect of these large increases. Gross Domestic Product (GDP) has almost doubled over this time, up to $322billion in 2019. With education spending as a percentage of GDP steadily declining since 2009, as depicted below.

GDP has increased by nearly three times as much as education spending since 2009

Although both, education spending and GDP have substantially increased in nominal terms since 2009, there has been a large decrease in the share of GDP, that education is allocated. Less and less of the increasing GDP is being put aside for our youth’s education. With inflation negating the true effect of the increases in education spending, and with decreases in educations share of GDP, is it about time New Zealand significantly increased education spending? What has made education so much less valuable now, than what it was in 2009?

As mentioned above, the size of New Zealand’s younger population has been more-or-less static over the past 15 years, and in fact is falling as a percentage of our total population. The decreasing in spending could be attributed to this. However, in an increasingly complex and competitive world for kids, and negative signs from education performance indicators, suggests changes need to be made.

NZ was specifically noted in the 2018 PISA report findings as a country experiencing a steady decline

According to the Organisation for Economic Cooperation and Development’s (OECD) Programme for International Student Assessment (PISA), New Zealand is ranked above average against the 78 countries who participate. This looks like a good result, we are above average in all three subjects; mathematics, reading and science. But it’s not all good news. Our OECD score in the PISA has been declining for multiple years now. Reading has been declining since 2000, mathematics since 2003, and science since 2006. NZ is managing to remain above the OECD average, but for how long? Decreasing value on the education sector, decreasing educational performance, it doesn’t sound like much of a coincidence.

With decreasing attainment in New Zealand, and an increasingly competitive and complex world for children, it is important to begin investing more into our youth. It’s hard to say if just increasing spending will result in increasing levels of attainment, but there is a strong argument for doing so. With trends suggesting New Zealand will continue to decline in education performance indicators, increasing spending might be a useful step in the right direction for attempting to solve New Zealand’s decreasing attainment problem.