Table of Content Section1|2|3|4|5|6|7|8|9 Appendix1|2|3|4|5|6|7 Notes|Executive Summary|Download(PDF format, 798KB) SECTION NINE - TEXTBOOK LOAN LIBRARY 9.1        As noted in SectionSeven, there is an inherent problem in the current textbook selection process due to the lack of pressure on the party selecting the textbook, i.e. schools, to closely consider price. Under the current textbook selection system the expected competitive market condition of a buyer being under pressure to choose the lowest price (all other factors being satisfied) is lacking. The Council considers that finding the means to place pressure on schools to make textbook purchases at the lowest price, will address this anomaly. One option would be to require schools to construct textbook loan libraries from funds allocated to them for that purpose. 9.2        Accordingly, the Council is proposing, as one option, that Government fund schools to purchase textbooks from publishers and set up textbook libraries[27] to lend textbooks to all students, by using the public funds currently allocated to provide assistance for the purchase of textbooks by means tested students.  The existing textbook assistance scheme in Hong Kong 9.3        Government currently provides several publicly funded schemes[28] to ensure that students are not denied access to education due to a lack of means. The Student Financial Assistance Agency (SFAA) is the responsible body for administering these schemes, including the School Textbook Assistance Scheme (STAS). STAS provides cash grants, on a means-tested basis, to needy primary and secondary students in public sector schools and local private schools under the Direct Subsidy Scheme for the purchase of essential textbooks and stationery.  9.4        There are two elements under the present STAS, i.e. the textbook element and the non-textbook element (to pay for miscellaneous school-related expenses including various types of stationery, study aids, other tuition fees, etc)[29].  9.5        The existing rates of the textbook element are set at 100% of the average surveyed costs of textbooks. Prior to 1999/2000, the rates for secondary students were set at 80% of the average costs. This was based on the assumption that secondary school textbooks are longer lasting and students may sell them, or they may be inherited by others at the end of the school year. In recognising that this assumption may not necessarily happen in practice and to simplify the arrangements, the SFAA removed the 20% discount in 2000-2001. 9.6        Based on the available statistics[30], it is observed that current government grants for textbook purchase assistance have close to tripled over the last few years, i.e. from $94 million in 1996-1997 to $341 million[31] in 2000-2001. This was partly contributed by extending the ambit of the STAS to include students attending secondary 4 to 7 and local private schools under the Direct Subsidy Scheme. Another reason might be due to the growth in numbers of needy students, as a result of the recent economic downturn. With the removal of the 20% discount on the rate of grant for secondary student textbook purchases, the total amount of assistance provided to students was further increased, with effect from 2000-2001 school year. A spokesman for the SFAA said in 2001, the increase in the rate for primary students is also due to an increase in number and price of textbooks.  9.7        Outlined in Appendix 7 are the current costs of the existing textbook purchase assistance scheme in Hong Kong and the financial aspect of setting up a textbook loan library scheme based partly on those funds, and some contribution from students who currently pay for textbooks.  Textbook Loan Libraries 9.8        At present, almost 40% of the student population are recipients of textbook purchase grants. Taking into account the fact that government expenditure on textbook assistance amounts to approximately $341 million p.a. and the textbook publishing industry is estimated to be worth $1.5 billion a year[32], it can be observed government is subsidizing students by contributing approximately one quarter (23%) of the textbook market. 9.9        In view of the role government is playing in the textbook market through the existing assistance scheme, an option to consider is providing financial assistance directly to schools to bulk purchase[33] books for the purposes of setting up school textbook loan libraries. The loan libraries would operate on the basis of providing textbooks to students on loan, for either no payment for means tested students, or for payment of a notional amount to others. The notional amount could be set at a level to cover any shortfall between the cost of textbooks and the amount of government grant. Textbook loan libraries operated by schools are common in many other jurisdictions. Overseas experience 9.10        A brief summary of the varying degrees of textbook assistance given in other jurisdictions, including details on textbook loan libraries, is as follows:    Gov’t / Schools provide textbooks or Students borrow textbooks from schools Remark Australia  - In public schools, textbooks are usually recycled with students, in effect, borrowing textbooks from schools, without parents? contribution. - In private schools, parents buy textbooks for their children. Canada  - Schools provide textbooks to students on loan without parents? contribution. France  - Schools provide textbooks to students on loan without parents? contribution in compulsory education. - Textbooks will normally be re-used for 4 years. Germany  - Schools provide textbooks to students on loan without parents? contribution. - Textbooks will normally be re-used for several years. Hungary  - Parents buy textbooks. - Govt provides textbook assistance to needy. Italy  - Textbooks are provided free to primary students. - Parents buy textbooks thereafter. Japan  - Textbooks are provided free to students in compulsory primary and lower secondary education. - These books are students? own property. Korea  - Schools provide textbooks free to primary students.. Mainland China  - Students buy their own textbooks from stores. - Students pay a standard textbook price as determined by govt. Netherlands  - Schools provide textbooks on loan to students. New Zealand  - Running textbook loan programs. Norway  - Textbooks are lent out by schools (free of charge) during compulsory schooling. - Students in upper secondary education have to buy their own textbooks. Singapore  - Students have to purchase their own textbooks. - Needy can apply for free textbooks. - Students pay a standard price as approved by the Ministry for new textbooks. - Schools use the same textbooks with seldom revisions - so a mature market for second hand textbooks is available. Spain  - Parents buy textbooks with textbook grants to assist those in need. Sweden  - Schools provide textbooks for compulsory levels. - Parents buy textbooks for post-compulsory levels. Switzerland  - Schools provide textbooks in primary and lower secondary levels. Taiwan  - Students buy textbooks in most elementary and junior high schools. UK  - For govt. funded schools, students will be provided textbooks free but have to return them to school after use; while for non-govt. funded schools, textbooks are included as part of the school fees paid by students, i.e. students purchase new books from schools. - Textbooks will normally be re-used for 2-4 years. US  - For govt. funded schools, students will be provided textbook free but have to return them to school after use; while for non-govt. funded schools, students either purchase new or used books, or rent books from school library at a fee. - Textbooks will normally re-used for 3-6 years. Source: Information was gathered from Education Department and variousoverseas consumer associations and government informationsources. 9.11        From the above research, provision of textbooks can be broadly classified into three kinds. They are 'free provision' which means the government provides textbooks to students freely and students do not have to return the textbooks after use, 'loan system' which means the government provides textbooks to students freely but students have to return the books after use (some may subject to a small rental fee or deposit) and 'purchasing system' which means students have to buy textbooks themselves.  9.12        As 'free provision' incurs heavy financial burden on the government, very few countries/places such as Japan are using this system. Under 'loan system', government provides textbooks to students but they have to return the textbooks at the end of school year to let other students re-use them. Normally, the textbooks will be re-used for 3-4 years. 'Loan system' is practiced in many western countries such as Canada, USA and Germany as part of free education. However, the 'loan system' is usually more common at primary and lower secondary levels. At upper secondary levels, parents usually need to buy textbooks themselves. As for the 'purchasing system', students have to buy textbooks themselves but assistance will be provided for those in need. This practice is more commonly practiced in Asian countries/places such as Hong Kong, Mainland China, Singapore and Taiwan.  Alternative Options 9.13        There are a number of permutations of the method outlined in Appendix 7 that could be devised to cater for the basic concept of a requiring schools to maintain a textbook loan library, and thereby place pressure on them to consider price in the selection process. For example, another option could be that only those students who would be eligible to receive textbook grants would to be able to borrow from a textbook loan library. Under this option, funding would be directly injected into schools for the purchase of textbooks to be used by this group of students. Students who do not currently receive financial assistance would not be subsidised; as would be the case under the option described in Appendix 7. A difficulty in using the loan library concept selectively within schools, rather than applying it to all students raises two problems. One problem is that there would be a consequential 'labeling' of those students who need financial assistance. The other is that schools may have difficulty in predicting demand for textbooks unless they are informed beforehand how many students need financial assistance. 9.14        Another alternative is that the loan library concept could be introduced on a trial basis. For example, beginning with those schools with a large number of students who currently receive financial assistance. The labeling effect may still be an issue, but in these circumstances it would be applied to schools not to individuals. Impact of loan library Impact on government  9.15        From the calculations in the option outlined in Appendix 7, it can be assumed that the setting up of a loan library for all students is, in general, financially viable. Under the option outlined in the Appendix there is no additional government expenditure and the majority of students (about 63%) will pay only $215 rental a year instead of about $1,589[34] a year for the purchase of textbooks. The rest of the students will either pay half of the rental or do not pay at all. These figures could change depending on the cost of textbooks in the future, the life span of textbooks (durability) and any extra administrative costs incurred by schools that need to be covered. Impact on schools 9.16        It can be expected that the creation of loan libraries will increase the administrative burden on schools, in terms of making storage facilities available, maintaining records on borrowings, collecting the nominal fees, and repairing textbooks for reuse. Some financial assistance would therefore need to be considered. As an alternative, school representatives suggested to the Council that if the loan library concept was taken up by government, it could give consideration to utilizing the public library facilities in Hong Kong for storing and distributing the textbooks. Impact on students/parents 9.17        Some parents or students might not like the idea of borrowing textbooks because of an aversion to second hand goods. However, it should be noted that a substantial number of parents and students currently purchase second hand textbooks, and in any event, if an aversion to second hand goods is an issue, parents and students would not be precluded from buying their own, should they so desire. If substantial numbers of students choose to buy textbooks rather than borrow, the administrative costs in maintaining stocks for loan might outweigh the advantages that are only received by a few students.  Impact on publishers/retailers 9.18        Depending on the extent to which the concept is taken up, the creation of loan libraries will impact publishers and retailers as volumes will lessen because of the longer life span. Retail sales will be more focused on meeting school demand tied largely to the physical life of a textbook, rather than student demand tied to the school year. However, as noted in Section Five, one of the publisher associations noted that there was an increasing trend towards lower volumes in the industry as the growth of a second hand textbook market had already impacted on the sales of new textbooks. The Council expects that as the industry has adjusted to the presence of a second hand textbook market, it will correspondingly adjust to the presence of loan libraries. 9.19        In response to the loan library concept, both publisher associations accepted that the Council's ultimate reason for raising the option was to assist the consumers of textbooks. However, they expressed a concern for their industry if the concept was to be adopted by government, and had doubts that it would satisfy the Council's expectations of lowering textbook costs. The associations also felt that the implementation costs, as far as the industry was concerned, should be fully detailed, in view of their perception that the concept would cause substantial disruption in the industry. 9.20        The associations considered that the problems with textbook pricing were structural and that over the last months there had been dialogue with ED  - to sort out some of the problems with textbook review schedules and curriculum reform (see Council recommendation in Section Six); - to separate the supply of teaching aids from the supply of textbooks (see Council recommendation in Section Four); and  - regarding the use of information technology (see Council recommendation in Section Four). 9.21        The Council accepts that there are structural problems as noted by the publishers, and has made recommendations to address them. As for the view that prices will not be lowered, the Council considers that the price of textbooks is a function of not only fixed and variable costs of producing textbooks, but the pressure from purchasers in seeking lower prices, and the pressure from competitors in seeking market share and striving for efficiency. If the market remains contestable, there should be adequate downward pressure on prices[35]. 9.22        Adoption of the loan library concept will also affect the existence of a second-hand textbook market. However, the loan library concept is in effect replicating the functionality of second hand textbooks, which as noted by publishers is in increasing demand.  9.23        In this regard, it should be noted that textbooks that are currently purchased by students who have been given financial assistance to make those purchases, would be available for sale into the second-hand textbook market, thereby providing those recipients of financial assistance with unintended financial gain. The creation of loan libraries would remove this unintended use of public funds.