This paper compares and contrasts the aggregate cost of education in Australia with the cost of education in each of its eight capital cities surveyed in the Consumer Price Index. It appears that education is becoming a relatively more expensive item among Australian households with rising substantial differences across various geographical areas. Over the last three decades on average the Australian economy witnessed an overall annual inflation rate of 4.2 per cent, whereas the growth of education cost was 7.3 per cent per annum. It is interesting to note that the rising cost of education was not the same across all capital cities. This paper shows that in Adelaide, Brisbane and Sydney the cost of education grew more than Darwin, Canberra and Melbourne. Our results clearly indicate that the introduction of the Higher Education Contribution Scheme (HECS) in 1989, the Goods and Services Tax (GST) in 2000 and the Reserve Bank of Australia’s (RBA) inflation-targeting policy launched in 1993 each have significantly contributed to changes in the real cost of education over our sample period (1982q1-2009q4).
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