Total investment in education
Government expenditure on education continues to grow faster than gross domestic product.
Date Updated: April 2008
Indicator Description
Total government investment in education.
What We Have Found
Government expenditure on education continues to grow faster than gross domestic product.
Why This Is Important
Investment in education indicates the level of resources available to education providers to deliver education. It shows how these resources are apportioned between different levels of education and the 'costs' of investment overall and at these different levels. Investment in education provides a picture of who pays these 'costs' and how they are shared among participants in education and society as a whole, including the role of private investment in funding education. Evaluating how different countries invest in education provides important context for examining how educational participation and outcomes vary between these countries. Investment in education is greatly influenced by supply and demand factors such as demographic structure, enrolment rates, income per capita, and prices for educational resources, and so this indicator links with most other indicators.
How We Are Going
Government expenditure on Education as a percentage of GDP (gross domestic product) has remained relatively stable between 1996/97 and 2006/07, increasing at just over one percent per annum. In 2006/07, 5.6% of GDP was spent on education. The one outlier to the trend occurred in 2005/06 with the establishment of the Student Loan Fair Value Recognition scheme, in effect a change in accounting practise. This resulted in a one-off cost to the government of $1.415 billion. If the cost of the scheme is excluded then there was a 2.9% increase from 2004/05 to 2005/06.
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Government expenditure on education in New Zealand (1996/97 to 2006/07)
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 Source: Statistics New Zealand, New Zealand Income Survey (1997-2007, June Quarter) |
Over the same period, Government spending on education as a percentage of total government expenses has grown from 15.2% in 1996/97 to 18.6% in 2006/07, an increase of 23%.
In 2004 New Zealand's public expenditure on education institutions as a proportion of GDP (5.6%) was above the OECD mean across 28 countries (5.0%). However, this above-average expenditure relative to GDP is partially explained by New Zealand’s relatively high proportion of school-age people compared with other OECD countries.
| Public expenditure on education institutions as a percentage of GDP (1995 and 2004) |
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If New Zealand had the same proportion of 5-29 year-olds (this corresponds to the compulsory school age and most tertiary students) as the OECD average, then total expenditure on educational institutions as a proportion of GDP would be the same as the OECD average.
There was a 16% growth in public expenditure on education institutions as a percentage of GDP between 1995 and 2004. This gave New Zealand the 2nd highest growth amongst the OECD countries.
| Age-adjusted public expenditure on education institutions as a percentage of GDP, by level of education (2004) |
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| Source: OECD Education at a Glance (2007) |
Broken down by level of education, and adjusting the 5-19 year-old population in each country to be at the OECD average level, New Zealand's public expenditure on primary, secondary, and post secondary, non-tertiary education institutions as a proportion of GDP in 2004 was slightly above the OECD average, at 3.8%. New Zealand's public expenditure on primary, secondary, and post secondary, non-tertiary education institutions as a proportion of GDP was also higher than the United States, Australia and Ireland.
New Zealand spent marginally below (0.9%) the OECD average on tertiary facilities, though is slightly higher than the relative expenditure on tertiary facilities in the United Kingdom, Australia and Ireland.
Where To Find Out More
The following indicators, relating to student numbers and expenditure on education, should also be considered:
References
OECD (2006). Education at a Glance: OECD Indicators 2006. Paris: OECD.
OECD (2007). Education at a Glance: OECD Indicators 2007. Paris: OECD.
New Zealand Treasury (2007). Financial Statement of the Government of New Zealand for the Year Ended 30 June 2007. Wellington: New Zealand Treasury.