School Ties

Driving through the leafy suburban streets of Balwyn a few weeks ago, I was struck by the number of real estate boards outside homes which had a strange little logo on them “In the Balwyn High School Zone”. Balwyn High, a state school, is one of the best performed schools in Australia based on VCE results.

Every year, the results figures come out and Balwyn High ranks as highly (if not higher) as some of the “established” public schools such as Melbourne Grammar, Scotch College, Geelong Grammer and Mount Scopus. To get into those schools, parents must pay extraordinary school fees. However, to be able to attend Balwyn High (a “free” state school), you must simply live in the “Balwyn High zone”, hence why living in the zone is such a unique and attractive selling point for local properties. Tim Harford, the Undercover Economist, has written an excellent piece on the interesting distortions this places on the local real estate market and the resources of the school.

In essence, he highlights how odd the system is whereby parents pay for their children’s education by paying more for real estate in that area rather than paying less for real estate and paying more to the school itself. They are basically paying the same amount for their children’s education as those parents who choose to send their kids to a public school – however the school gets none of the benefits – the extra “fees” go to the previous landowner!

Another argument for the voucher system?