A couple of times each year, there is a lot of fuss about increases in private-school fees. This causes much consternation among people who oppose public spending on non-government schools. Fee increases are often greater than inflation, taking tuition in a handful of private schools to $20,000 a year, and there are a substantial number of schools with fees above $15,000 a year.

This is a huge amount of money. It is net of tax and is for tuition alone. You could reasonably add another couple of thousand dollars for building funds, school uniforms, excursions, laptop computers and other non-optional items.

There are two sides to the story, of course. Private schools have to charge fees. Their government funding alone is insufficient to offer an adequate, let alone a quality, education. The highest-fee schools tend to have the lowest government funding - as little as $1500 per student. And, as educators of the public, they are clearly entitled to government support.

But most non-government schools charge modest fees. The pertinent question is why do some charge so much? When the average per capita cost of schooling in both the public and non-government sectors is about $10,000, why do some schools need income of more than twice that amount?

Spokesmen for independent schools have offered a variety of explanations. The Association of Independent Schools of Victoria recently pointed to the fact that the consumer price index for education is higher than the general CPI. This is a fallacious argument. Rising school fees are one of the causes of a high CPI, not the other way around. Some heads of independent schools, including Barker College in Sydney, have said the fee increases are necessary because "to offer the very best education there has to be a corresponding cost, and we want to give our parents the very best".

For those of us who believe in school choice, the issue of high fees presents a bit of a quandary. On the one hand, we don't want undue government interference in the affairs of private schools. On the other hand, very high school fees undermine community support for the principle of government funding for independent schools.

But the real reasons for high and increasing fees make the position somewhat clearer.

The first reason is straightforward. The largest single expenditure item for schools is teacher salaries. With a national shortage of highly qualified teachers, particularly of maths and science, private schools pay more to get the best teachers, including people from outside the teaching sphere, and this is reflected in fees.

The second reason is that some private schools, being responsible for their own buildings and facilities, are hugely in debt and rely on fees to service these debts as well as cover running costs.

The third reason is that the education market allows schools to charge high fees. Most of the high-fee schools have long waiting lists and elite schools will charge as much as people are willing to pay. Why parents are willing to pay up to $20,000 a year for school is the critical issue. There is so little comparative, quantitative information available about schools that many zealous parents use price as an indicator of quality. If more information were available on performance, parents would be able to more accurately determine whether $20,000 is really buying a quality education or just lavish facilities. A poorly informed market impedes competition and allows inflated prices.

The fourth reason is instability in government funding. Non-government schools are in fact heavily dependent on federal government funding. They fear that the election of a Labor government will see their income substantially cut, and some schools have been lifting their fees to create cash reserves in case this happens.

Australia has a quasi-market in school education that is less efficient and less effective than it should and could be. We need real choice. All schools should be funded on a per-student basis that is not subject to political whim. Parents need to be able to make informed decisions. If they still want to spend their hard-earned cash on performing arts centres, rifle ranges and Olympic swimming pools, that is their prerogative.

Jennifer Buckingham is a research fellow at The Centre for Independent Studies (which is not affiliated with independent schools).