Army Assessors, Tax Refunds and Education

Here's my Chronicle column for this month.
Lessons Important for Us All, The Chronicle, 3 July 2012

In his splendid new book, Thinking, Fast and Slow, psychologist Daniel Kahneman talks about how reluctant we are to change our minds. To illustrate his point, Kahneman tells the story of how and his fellow psychologists would evaluate candidates for leadership in the Israeli army. They would set difficult challenges – such as one in which a team of eight soldiers had to use a long log to get each of them over a six-foot high fence without touching the fence. At the end of the exercises, the psychologists were confident that they had determined which of the soldiers had leadership potential.

Every few months, the assessors had a feedback session, in which they could compare their ratings with the opinions of commanders in the field. It turned out that the expert ratings were ‘largely useless’ – yet the psychologists kept on with the exercise nonetheless. They knew that as a general rule, their ratings were only slightly better than chance. Yet on an individual level, the psychologists still held to the belief that their method worked.

As a rule, politicians are not known for their willingness to change course when confronted by evidence that a government program isn’t working. John Maynard Keynes apparently said, ‘When the facts change, I change my mind. What do you do, sir?’. But a parliamentarian who changes his or her position risks being lambasted as a flip-flopper.

Yet occasionally, we politicians do change our minds. Take the case of the Schoolkids Bonus. In 2007, Federal Labor went to the election promising to introduce an Education Tax Refund, which would let parents eligible for Family Tax Benefit Part A to claim some educational expenses back on their tax return.

Because the scheme ran through the tax system, parents only got the money if they could produce receipts showing that they’d bought educational items. It sounded like a good plan, but it turned out that remarkably few parents received it. Of the 1.3 million who were eligible, 1 million failed to claim the full amount of the refund.

When we looked across postcodes, it turned out that the claim rates were lowest in the most disadvantaged parts of Australia. It looked like many parents were forgetting their receipts, failing to file a tax return, or both. What sounded like a good program wasn’t working for the neediest.

So from last month, we’ve decided to scrap the Education Tax Refund, and replace it with a guaranteed payment called the Schoolkids Bonus. Eligible families will receive an annual payment of $410 for each child in primary school, and $820 for each child in high school. Parents will still spend more than that on their child’s education, but we now know that the money’s getting to the neediest.

Admitting error isn’t easy, but in creating the Schoolkids Bonus, I’m really pleased we’ve learned our lesson and improved the program. Most importantly, I’m glad we’ve helped the neediest Australian kids with their lessons too.

Andrew Leigh is the Federal Member for Fraser, and his website is

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