The Age article linked back to Andrew Leigh's web site but I couldn't find his original comments. Despite his comments, I have do not know of any place where merit pay has worked. The small example from Denver Colorado quoted shows the problem and has very little to do with merit.
It offers an extra 3% if the teacher goes to a hard-to-staff school. What has this to do with merit? And I would want a lot more than 3% to take on some of the schools in Victoria.
On the merit side it offers 3% if test scores exceed expectations. Does this mean all subjects are now tested? It will side effect of making teachers teach to the test. Does it mean every student has to exceed expectations? There will be a rush to teach 'good' classes. What about the 'unteachable' student. There are only a few but some students have no interest in doing anything with school. And despite the rhetoric by politicians a school is not going to be able to do anything with them.
They offer an extra 9% for extra degrees etc. Extra qualifications should be rewarded but it doesn't necessarily make a better teacher. Extra 2% for professional development (PD) - given the amount of rubbish PD we get shoved down our throats we deserve the extra for having to put up with it.
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