(Reprinted from HKCER Letters, Vol. 2, May 1990) 


Provision of Language Education:
A Market Approach

Pak-wai Liu


A government report has proposed that secondary school students should be classified into English and Chinese language streams on the basis of a test administered in Primary 6. Henceforth, the medium of instruction for students will use the language of the stream they belong to, he idea being that students will learn better and their standard of languages will be improved. Such a proposal interferes with the choice of parents and students in an arbitrary manner with irreversible effects on the educational opportunities of children at a very early stage. The following article by Dr. Liu proposes an alternative approach which promises better results while respecting individual choice. -- The Editor.

Centralized Approach to Education

Under the present arrangement in Hong Kong, the delivery of educational services through the school system is highly centralized and controlled. At almost all levels, government and subsidized schools dominate, and these schools are heavily regulated by the Education Department. As a result, the educational services provided by most schools are remarkably homogeneous and do not meet the diversified needs of parents and their children.

Educational service by nature should be a very personalized service. In the case of language education, different children have different learning needs, strengths, and weaknesses. They learn at different paces. Also, parents tend to have different educational goals for their children. A uniform approach to language education is more likely to produce uniform mediocrity rather than uniform brilliance.

Under the restrictions imposed by the Education Department, there is little room or incentive for schools and teachers to innovate. The subsidized sector is essentially an extension of civil service. Teachers and principals are not accountable to parents and students, nor are they responsive to their needs.

Market Demand

There is a strong demand in Hong Kong for education in general, and English language education in particular. The low school drop-out rate, the willingness of many parents to pay for extra private tutorial lessons for their children, and to enroll them in private schools when they fail to obtain subsidized post-Secondary 3 places are evidence of that demand. Given this strong demand, there is potential to use the market mechanism as an alternative to the centralized approach.

Voucher Scheme

One way to allow the market to work with less regulation is to use a voucher scheme. Under a voucher scheme, parents will be issued a voucher by a government agency of a value equivalent to, say the average cost of schooling for a student in a subsidized school. Parents will enroll their children in schools of their choice and present their vouchers as payment for fees. Schools will then redeem the vouchers for cash from the government. In this way, market competition will be introduced into the school system. Schools will now be directly accountable to parents and students, who are the consumers. They must perform in order to remain competitive. Under the voucher scheme, the government should keep regulations to a minimum. Schools must be free to set their fee levels, select their students, hire teachers, decide on their curricula, and organize teaching.

In the case of English language education, given the strong demand, the education market will respond. Different schools may experiment with different ways of improving the effectiveness of English language learning, such as varying the number of English teachers and class sizes, hiring more native speakers, readjusting the timetable to increase the number of English periods, investing more in audio-visual aids and computer-assisted learning packages, and building in financial incentives in the salary package of English language teachers.

The voucher scheme is therefore student-oriented and parent-centered. It aims at making the school system as a whole more accountable to parents and more responsive to demand.

Voucher Schemes in Hong Kong

Hong Kong has some advantages over western countries in raising the likelihood of success of a voucher scheme.

First, Hong Kong is densely populated and compact geographically. Schools are located relatively close to each other. This prevents a locational monopoly from emerging and promotes competition which is essential to the smooth functioning of a voucher scheme.

Second, the economy and society of Hong Kong are rather competitive. The people of Hong Kong are used to the idea of efficiency through competition.

Third, Hong Kong society is relatively homogeneous and well-integrated. The implementation of education vouchers would not lead to racial segregation in schools.

Good Timing for Education Vouchers

The time has never been better for implementing education vouchers in Hong Kong for the following reasons:

(1) By 1991, according to the plan outlined in Education Commission Report No. 1, over 90 percent of Secondary 3 student who wish to continue to Secondary 4 will find a subsidized place. By that time, there will be no excess demand for subsidized places from primary to senior secondary levels. For a voucher scheme to work properly, it is important not to have excess demand because excess demand will allow schools to fill their places easily even if they perform poorly.

(2) The rapid expansion in tertiary education leading up to 1995, outlined by the governor recently, will take away a lot of competitive pressure from among the students. When examination pressure diminishes, schools will find more room to maneuver, and parents will value greater diversity in the curriculum and in the pedagogical approach to their children's education.

(3) Recently, because of 1997, more and more parents are taking their children out of the mainstream school system to enroll them in schools which offer different curricula that prepare them for tertiary studies overseas. A voucher scheme will take care of the needs of these parents easily and may even stimulate the establishment of more international schools to meet the market demand.

(4) By 1995, educational opportunities will have expanded so drastically that much of the previous shortfall will have been met. It will be time for the school system to pay less attention to numbers but spend more time looking inward at internal efficiency, effectiveness, and cost savings.

Comparison with the Direct Subsidy Scheme

The Direct Subsidy Scheme (DSS) was proposed in Education Commission Report No. 3 last year. The DSS, in principle, is similar in spirit to a voucher scheme and, as such, is a major step towards privatization. However, the central theme of the proposed DSS deals with solving the current problems of the decline and the poor standard of private schools, and not with enhancing the efficiency of the school system through a market mechanism. DSS does not rely on the market's internal mechanism to regulate and discipline the schools. It still operates on a set of regulations which include control on school fees. In addition, under the DSS, subsidies will be given directly to schools whereas a voucher scheme will give subsidies and hence the voting power directly to parents. By giving subsidies to schools, DSS eliminates the possibility of differential subsidies to parents from different income groups, whereas under a voucher scheme equalization in educational opportunity can be achieved by giving students from poor families vouchers of higher values.

In summary, a voucher scheme is market-oriented and student-centered, but the DSS is not. Nevertheless, DSS is an improvement over the present centralized, overregulated, and inflexible system.

Dr. Pak-wai Liu is a senior lecturer in Economics at the Chinese University of Hong Kong.


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