Each year of early school leavers costs Australia in the billions


Abacus with multi colored beads – concept for education or calculating

Australia has many who struggle, missing most or all milestones at school, leaving without completing Year 12, later failing to gain qualifications or work skills and then limping through adult life ill-equipped to thrive and provide for themselves and their families.

And the cost to these individuals, their families, the country and the economy amounts to billions of dollars through a lifetime of low tax payments, dependence on government support and costs on public health and criminal justice systems.

The sums associated with lost opportunity are large and sobering.

Our new Mitchell Institute report, Counting the costs of lost opportunity in Australian education, uses a deliberately conservative analysis of criminal justice costs, public health costs and loss of tax revenue to work out overall costs to individuals and our community.

For the 2014 national cohort of 37,700 early school leavers, the lifetime financial cost to the government and taxpayer is $12.6 billion. Costs to the community, such as the social consequences of crime and lost earnings, amount to another $23.2 billion. For the 2014 group of 24 year olds who weren’t learning or earning  and who remain that way for most of their lives – and there were nearly 46,000 of them – the lifetime fiscal cost of their disengagement is as much as $18.8 billion and the social cost as high as $50.5 billion.

The Australians caught in these statistics are not the young students bemoaning their HECS debt; they are not the skilled car workers worried for their future after a lifetime of steady work, nor are they newly arrived migrants beginning their life here with energy and hope.

Indeed, they are not one homogenous group: they include the 10% of students who miss every educational milestone from school entry to exit. They include the 40% of remote and very remote students who do not finish school. They include the high number of Indigenous students who do not finish Year 12. They include young people unable to take time away from caring for others. They also include a large number of young people with health problems and disabilities, for whom work opportunities are scarce.

Roughly one quarter of Australia’s 19 year olds do not complete Year 12 or its equivalent and a similar proportion of 24 year olds are not fully engaged in work, training or education.

But, if Australians imagine all young people ‘eventually find their way’, as if by magic, our research shows that is not true for many.

Using ABS data and the Housing Income and Labour Dynamics in Australia survey (HILDA) it is possible to track those who, at aged 24, were are not fully engaged in employment, education or training.

Our tracking of 25-44 year olds from 2001-2014 reveals almost all those who left school without Year 12 or equivalent, and who were still without qualifications by the age of 24, remain so for the rest of their lives. For men, the figure is a staggering 90% and women were not doing much better, at 82%.

It is clear achievement and skills are largely locked in by the age of 25 – if you don’t have a degree, a diploma, a certificate or a trade by then, you are unlikely ever to.

For individuals, missing out on the benefits of education generates costs that go on and on. Not just for them but for their families and children. It affects job prospects, wages and job satisfaction but also influences decisions people make around health, marriage, housing and parenting.

Costs to the taxpayer from this group on the margins of the economy include foregone taxes as well as increased expenditure on crime, health, welfare and income support.

An analysis of health, employment and criminal justice data both here and overseas shows that increased education brings many benefits to the individual and to society as a whole.

Most are not unexpected: a survey of male prisoners shows many have no education beyond Year 9; income surveys show those with a qualification beyond Year 12 earn up to 55% more than those who leave before completing school. Health outcomes for those with higher levels of education are better, with less dependence on the public health system.

It is easy to overlook the struggle of the individual but when seen in this population-wide context, and with the costs to the economy outlined, it is clear more needs to be done.

This is not just a problem for those who are lost. It is not a problem seen only in disadvantaged communities. Nor is it a problem contained within the walls of our health, welfare and corrections institutes. Lost education opportunities are costing all Australians, everywhere, a lot.

It is a matter of urgency to pay attention to the problems arising from flawed systems. In the meantime, we’ll keep paying the price.

Read the full report and recommendations at the Mitchell Institute.

Professor Stephen Lamb holds the Research Chair in Education at Victoria University and is Director of the Centre for International Research on Education Systems (CIRES). Dr Shuyan Huo is a senior research fellow at CIRES, and a former principal analyst in the Victorian Department of Education and Training (VDET).

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