The economic impacts of longer postgraduate initial teacher education

About the report

The report delivers on the NSW Productivity Commission 2021 White Paper recommendation to complete a cost-benefit analysis of the initial teacher education (ITE) two-year master’s requirement.

In 2014, NSW implemented a 2011 national decision for university graduates to undertake a two-year Master of Teaching degree. Previously a one-year Graduate Diploma of Education was sufficient. All states and territories implemented the reform.

The Commission finds that implementation of the two-year master’s has deterred mid-career professionals looking to become teachers. It has cost the NSW community around $3 billion in lost welfare over the past seven years. These costs comprise loss of teacher earnings, additional student debt for teachers, and loss of lifetime income for students. Had ITE remained as a one-year graduate diploma, NSW would have seen more than 9,000 extra ITE completions in the 2015 to 2022 period.

While the Commission’s analysis focuses on economic impacts for NSW, the issues identified have clear national implications.

Key findings

• Since NSW implemented the 2011 national reform to double the length of postgraduate ITE in 2014, NSW ITE completions have trended down. If the pre-2014 completions trend had continued, NSW tertiary institutions would have produced more than 9,000 extra ITE graduates between 2015 and 2022.
• NSW school students will have less access to qualified or experienced teachers because the two-year master’s requirement restricted teacher supply. Restricted supply contributes to teachers having to teach subjects outside their expertise, which harms student achievement. The Commission estimates poorer outcomes from additional out-of-field teaching costs around 95,000 NSW students $25,000 each in lost lifetime earnings (present value).
• Based on a review of empirical evidence, the Commission estimates that teachers having an additional year of ITE has a negligible impact on student achievement. On the other hand, the literature consistently points to additional years of on-the-job teaching experience having a positive impact, especially for early-career teachers.
• Lengthening postgraduate ITE has placed additional costs on aspiring teachers who commenced ITE between 2015 and 2022, as they were required to undertake an extra year of university, pay an additional year of fees, and forgo a year of earnings. The Commission estimates this policy change has cost them around $60,000 each.
• Teachers who would have preferred to go into teaching but were deterred by the higher cost also face a loss of welfare, estimated to be around $20,000 each.
• The welfare costs of the policy will continue to grow unless it is reversed. A key recommendation of the report is that postgraduates be allowed and equipped to teach with a one-year graduate diploma as soon as practicable.