On at least some indicators Australia’s education system performs pretty well. Australian 15 year-olds scored above the OECD average on literacy and mathematical reasoning skills in the last two PISA (Programme for International Student Assessment) surveys. And the spread of scores was relatively tight. Not as tight as in countries such as Korea and Finland, which also had higher average scores than us, but nevertheless the gap between the best and the worst students was not nearly as large as in a country such as Germany, whose GDP per capita is pretty close to ours. Another positive indicator is that we have succeeded, by international standards, in creating a fairly large, and accessible, higher education system: around 6.5% of all Australians aged 15 and over are enrolled in it, one of the highest rates in the OECD. Only countries such as Korea, Finland and the United States have larger systems. We have also succeeded in making higher education accessible to adults: around one in five of all higher education students is aged 35 or over, exceeded only by some of the Nordic countries and by New Zealand and the United Kingdom. And if you use graduate unemployment rates as the yardstick, the higher education system has fairly good links to the labour market. Unlike in countries such as Spain, our recent graduates move easily and quickly into jobs.

While our education system offers well developed pathways to the more able, it is much less successful in offering attractive and challenging options to the lowest achievers. After they reach the point at which they have a choice about participating in education, far too many young Australians decide to opt out of learning completely: fewer young Australians complete high school (or its equivalent such as an apprenticeship) than do young people in other countries. The best indicator of this is the participation rate at 17 (the average age of a Year 12 student). In 2003 only 80% of 17 year-old Australians were taking part in education, a figure that was towards the lower end of the scale of OECD countries, and well below the figures of over 90% recorded by countries such as Norway, Sweden, Japan, Finland and Germany.

This poor performance in upper-secondary education (including both its school and TAFE manifestations) has both individual and national consequences. One is that, while we have large numbers of graduates, we also have large numbers of young adults with low qualifications: one in five 20-24 year-olds lacks an upper-secondary certificate (or its equivalent such as a trade certificate), one of the highest rates of low-qualification in the OECD, and well below Norway’s figure of five per cent. The outcomes from the system, then, are polarised: good for the able, less so for the less able.

Low upper-secondary participation rates translate into teenage unemployment rates that are higher than they should be, given the health of our economy and the good overall performance of the Australian labour market. Teenage unemployment is among the highest in the OECD, and ten times the rate recorded in Denmark, the OECD’s best performer. The proportion of all 15-19 year-olds neither in full-time education nor full-time work has been around 15% for at least a decade. And to make the problem worse, low qualified young people are at a greater disadvantage in the labour market in Australia than in most other OECD countries, with an unemployment rate for low-qualified 20-24 year-olds that is over twice that for those who have completed high school. There is a direct economic cost of our under-performing upper-secondary system. As the Business Council and the Dusseldorp Skills Forum pointed out earlier this year, raising our Year 12 (or equivalent) completion rates from 80% to 90% would add around $9 billion to GDP. And this could be achieved at only a twentieth of the cost, in additional educational expenditure, of the increased GDP.

This is not primarily a problem caused by the Australian labour market, which, by international standards, is remarkably ‘youth friendly’. We have youth- and training-wages, and many ways in which young people can combine learning and work such as part-time jobs, apprenticeships and work-study programmes. Employment protection levels are low, and usually this helps new labour market entrants. The problem lies on the supply side: too many young people leave school too early. If our schools were more attractive, fewer young people would leave early, teenage unemployment would fall, and qualification levels would rise. This would benefit young people, the labour market, and the economy.

Two things need to happen. The first is that the places in which young people learn have to become more appealing: with a more adult-learning environment and with a wider range of support services such as guidance and remedial assistance for weaker students. The second is that all schools must offer young people of upper-secondary age a wider range of more interesting subjects to choose from, tailored to the needs of the full range of adolescents’ developing vocational and personal interests and talents. It is hard to do either of these in the traditional Australian 7-12 high school: discipline and attendance policies and teaching styles tend to be tailored to the needs of younger students; and grade cohorts are too small to allow wide subject choice in Years 11 and 12. The Vocational Educational Training (VET) in schools initiative can have little impact if schools at most can offer one or two vocational subjects.

The way to achieve both is for Australia to switch from the dominant model of schooling that is unusual by international standards (all young people staying in the same school from the beginning of high school to the end of Year 12) to the more common OECD model: separate schools for lower- and upper-secondary education. We should aim, within a five- to ten-year period to do as most other countries, as well as Tasmania and the ACT, have done, and have all upper-secondary education take place in senior high schools, or senior colleges: tailored to the needs of older adolescents, and able to offer wider range of vocational and non-vocational subjects to students. It is no coincidence that the ACT, which adopted this model many years ago, has the highest retention rates in the country. And Tasmania is the only state to record an appreciable increase in Year 12 retention rates over the last decade. This will involve transitional capital costs, which it would be appropriate for the Commonwealth to assume, building on the model of the Australian Technical Colleges, but considerably broadening it. It will also involve negotiations on teacher working conditions, as well as on co-operation between schools and TAFE in the medium term. But these problems are not insoluble, as Tasmania has shown.