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State Aid for Non-Government Schools: The emerging debate
Greg McIntosh
Social Policy Group
19 August 1996
Major Issues
Introduction
'State Aid': the Background
Enrolment Patterns
Funding Pattern
Overseas Comparisons
Threshold Questions Relevant to the Debate
Endnotes
Appendices
- Table 1: Recurrent Grants: Government Schools - State and Commonwealth
Payments
- Table 2: Recurrent Grants: Non-Government Schools - State and Commonwealth
Payments
- Table 3: Capital Grants: Government Schools - State and Commonwealth
Payments
- Table 4: Capital Grants: Non-Government Schools - State and Commonwealth
Payments
The current budgetary environment appears to be contributing to the
resurrection of the 'state aid' debate that characterised much of the
1960s and early 1970s. The Commonwealth first began direct funding to
non-government schools in 1964, largely in response to the problems being
faced (overcrowding, inadequate buildings and poorly trained teachers)
by Catholic schools at that time.
More recently there has developed a general consensus that non-government
schools should receive 'state aid' and the debate now centres around the
level of that 'aid' and particularly the level of such funding relative
to that provided for government schools. At present the Commonwealth funds
approximately 12% of total spending on government schools and approximately
38% of total spending on non-government schooling. Figures highlighting
what appears to be a disproportionate funding share going to the non-government
sector (for example, according to the Chair of the Schools Council, Anne
Morrow, between 1989 and 1994 total government funding - Commonwealth
and State - for non-government schools rose by 30% per student, compared
to a rise of only 9% for government schools) has led to a renewed interest
in the 'state aid' issue. Analysis of figures comparing funding for 1977
- 78 with that of 1994 - 95 confirm the pattern identified by Ms Morrow.
Moreover, a brief analysis of the funding provided to the private education
sector in comparable overseas countries does appear to indicate that Australian
governmental provision for private schooling is in the average to above
average range.
There has been a steady but constant drift of enrolments away from the
government sector to the non-government sector - in 1978, 21.2% of full
time students were enrolled in non-government schools; by 1985 the equivalent
figure was 25.8% and the 1996 figure is estimated to be 29.4%. Changes
mooted by the Coalition Government to the New Schools Policy (which limits
Commonwealth funding to new non-government schools that satisfy certain
criteria) may well have the effect of exacerbating this drift to the non-government
sector.
The fact that the Commonwealth provides in excess of 65% of all government
recurrent and capital expenditure going to the non-government sector means
that as enrolments move in that direction there is cost shifting, in terms
of financing schools, from the States to the Commonwealth. In a purely
budgetary sense it is advantageous for the States and Territories to encourage
the growth of non-government schools.
There would appear to be a series of questions that go to the core of
the 'state aid' debate that need to be considered by the various interests
and groups involved with the funding of schools in Australia :
- What is an appropriate level of funding for the schooling systems
in Australia?
- What is an equitable and appropriate split of funding for government
and non-government schools? How should this split be decided? Is the
present system of needs based funding for non-government schools fair
and equitable?
- What specific roles should State/Territory and Commonwealth governments
have on policies/funding for government and non-government schools?
- Are present accountability mechanisms required of both government
and non-government schooling systems for Commonwealth and State funding
adequate and appropriate?
- What restrictions, if any, should be placed on the establishment of
new schools, particularly new non-government schools?
- To what extent should market forces be allowed to determine enrolment
patterns in schools?
It would appear that the divisive 'state aid' debate that characterised
much of the 1960s and early 1970s is about to re-emerge. According to
one observer...
After a decade in the wings the bitter State aid debate is about to be
revived. The old players - Federal and State governments, teacher unions,
independent schools, parents' spokesmen - are already taking up position.
There is talk of a public campaign for State schools.(1)
The essential reason for the re-emergence of this debate is changed
patterns of school funding over time and the apparent decline in funding
for schools relative to rising educational costs, especially costs involved
in emerging fields such as information technology. In particular, the
highlighting of government funding patterns showing that the growth in
funding over recent years has gone disproportionately to the non-government
sector has led some supporters of government schools to question the existing
funding framework. As well, the Government's plans to scrap the existing
New Schools Policy (which limits Commonwealth funding to new non-government
schools that satisfy certain criteria) and abolish the Schools Council
have been underlined by the supporters of government schools as indicators
of continuing government policies which put that sector at risk.
Leaders in the non-government sector have also entered the debate. For
example, the Chair of the Catholic Education Commission, Gerry Gleeson,
has called on the Prime Minister to maintain funding for Catholic schools.
Mr Gleeson is concerned that funding will be reduced to the Catholic sector.(2)
The danger, particularly in times of economic restraint, is that the
apparent goodwill and co-operation that has existed between the schooling
sectors could become a thing of the past:
The resource cutbacks and limitations in some States condition the debate.
Growing cooperation among those involved in schooling, both government
and non-government and teachers and parents, is unlikely to continue if
these cutbacks persuade interest groups to think it is necessary to fight
for a better share of a shrinking pool of schooling resources.(3)
This paper begins by providing the historical background to 'state aid'
for non-government schools in Australia and its early political character.
It goes on to show the pattern of enrolment and funding over the years
and illustrates the increase in funding for the non-government sector.
It looks briefly at some comparisons with other countries and concludes
with some questions for policy makers. The paper does not attempt to address
the philosophical issue of whether or to what degree governments should
give aid to non-government schools, or some non-government schools, or
the influence this may have on the growth of that sector. It does however,
note one consequence of the current funding arrangements: because the
Commonwealth funds in excess of 65% of all government recurrent and capital
expenditure going to non-government schools any proportionate growth in
enrolments for this sector represents a cost shifting from the States
and Territories to the Commonwealth.
Whilst primary and secondary education is essentially the responsibility
of the States, the Commonwealth Government has nevertheless become more
involved in schooling, both government and non-government, in Australia.
Uncertainty over the legality of the Commonwealth being directly involved
in education led the Government in 1946 to propose amendments to the Constitution.
Acceptance of the Government's proposals in a national referendum allowed
Section 51 (xxiiiA) of the Constitution to be amended to give the Commonwealth
power to make laws 'with respect to the provision of benefits to students'
in all States of Australia. The Commonwealth has also used Section 96
of the Constitution, which allows for the Federal Parliament to 'grant
financial assistance to any State on such terms and conditions as the
Parliament thinks fit', to extend its involvement in education.
It is only in relatively recent times that direct funding has gone to
both government and non-government schools. In the 1870s and 1880s most
of the colonies passed legislation that effectively excluded the non-government
sector from public funding. This legislation established the tradition
that government funding should go only to free and secular government
schools. The tradition maintained that non-government schools should be
fully funded from private sources only. However, by the 1960s various
pressures were building up that led to the Commonwealth and then the States
to become directly involved with the funding and support of non-government
schools.
The 1950s and 1960s saw a rapid expansion in school enrolments, an expansion
that State governments found increasingly difficult to resource adequately.
The predominant non-government sector was the Catholic sector and these
schools were particularly suffering from overcrowding, inadequate buildings
and shortages of properly trained teachers. As the Commonwealth government
was the jurisdiction with the best revenue base it was to this level that
parents, educators and others forcefully put the case that the Commonwealth
should make up the shortfall in school funding, not only to government
but also to non-government schooling. The problem however, with 'state
aid' to private schools, was that many associated this with aid to Catholic
schools - they were the sector that would get the most 'state aid'. Further,
opponents of 'state aid' believed that the Church and State should be
completely separate and thus general taxpayer support for church schools
was totally inappropriate. The pressures on the schooling sectors and
the fact that education had become a significant electoral issue led to
a changing political atmosphere.
The two major political groupings at the federal level, both of whom
opposed 'state aid' in the late 1950s and early 1960s, had changed their
policy positions by the mid to late 1960s. R.G. Menzies, Prime Minister
and leader of the Liberal/National Party Government from 1949 to 1966,
had initially opposed general funding of government (and non-government)
schooling on the grounds that schooling was a State constitutional responsibility.
However, it was his government in 1964 that began the process of direct
Commonwealth aid to schools. The ALP had been consistently opposed to
'state aid' since the 1957 split when much of its Catholic support went
to the Democratic Labor Party (DLP). However, by 1966, after much infighting,
the ALP had changed its policy platform to include the provision for federal
aid to non-government schools. E.G. Whitlam, then deputy leader of the
federal ALP, was firmly of the view that schools needed support from the
Commonwealth and that this support had to go to both sectors or neither
sector.(4)
Prior to 1964, the States funded government schools directly and the
Commonwealth provided general revenue grants to the States, a portion
of which was used by the States to supplement their funding for government
schools. There was some minor support given by the Commonwealth to non-government
schools in the 1950s - allowance of tax deductibility of school fees and
gifts to school building funds - but it was not until the 1960s that direct
support was provided. In 1964 direct Commonwealth funding for government
and non-government schools began - the passage through the Commonwealth
Parliament of the States Grants (Science Laboratories and Technical
Training) Act 1964 enabled funding for science laboratories and equipment
for secondary schools. Since that time, Commonwealth funding for schools
has increased markedly with in excess of $3b being allocated in 1996 to
both government and non-government schools.
Since the mid to late 1960s there has been a general consensus that
non-government schools should receive 'state aid' - both the major political
groupings have supported this principle and non-government schools have
been financially supported by successive governments. The debate now centres
around the level of government funding for non-government schools and
in particular the level of such funding relative to that for government
schools.
The latest statistics show that as at August 1995 there were 9648 schools
in Australia - 7122 government schools and 2526 non-government schools.
The total number of full-time students attending these schools was 3 109
337 - of these, 2 207 853 (71% of total) were in government schools and
901 484 (29% of total) were in non-government schools.(5)
Over the longer term, with some fluctuations, there has been a steady
but constant drift of enrolments away from the government sector to the
non-government sector - in 1978, 21.2% of full time students were enrolled
in non-government schools; by 1985 this figure had increased to 25.8%
and the 1996 figure is estimated to be 29.4%.(6) Graph 1 shows school
enrolment patterns over time.
Graph 1
There appear to be a variety of reasons for this drift in enrolments
including the fact that private schools tend to put more effort into advertising
and extolling their virtues than do government schools, increasing affluence
among certain sections of Australian society leading to more parents being
able to pay the fees asked at private schools and perceptions (whether
they be based on hard evidence or not) that the government sector is more
volatile in areas such as industrial disputation and the maintenance of
standards and discipline. However, according to the Chair of the Schools
Council the key reason is the increasingly generous funding provided to
the non-government sector :
A consequence of increased government funding is that non-government schools
become more affordable for their clients. The increase in government expenditure
on non-government schools has resulted in the transfer of students from
government to non-government schools(7)
The vast majority of Commonwealth funding to both government and non-government
schooling comes under the ambit of the States Grants (Primary and Secondary
Education Assistance) Act 1992. The Commonwealth presently funds approximately
12% of the total spending on government schools, the balance of the funding
coming from the State/Territory jurisdictions. Approximately 38% of total
spending on non-government schooling is provided by the Commonwealth,
with 18% being provided by other governments and 44% coming from private
sources.(8)
According to one analysis there has been a dramatic increase in the
proportion of government funding going to the non-government sector. The
Chair of the Schools Council, Anne Morrow, maintains that between 1989
and 1994 total government funding (Commonwealth and State) for non-government
schools rose by 30 per cent per student, compared to a rise of only 9
per cent per student for government schools.(9)
If one looks at the situation over the longer term the pattern alluded
to by Ms Morrow is confirmed. A comparison of recurrent and capital spending
(the two major components of funding for schools) and enrolment shares
in 1977 - 78 and 1994 - 95 shows that the non-government sector has done
well relative to the government sector.
In 1977 - 78 total Commonwealth/State expenditure (excluding Commonwealth
joint programs) was $4351m, $3949m of that amount (90.8%) went to government
schools and $402m (9.2%) went to non-government schools.(10) In 1978 the
enrolment share for each sector was: government 78.8% and non-government
21.2%.(11)
Recent recurrent and capital funding levels provided by both Commonwealth/State
governments to the government and non-government schooling sectors in
1993 - 94 and 1994 - 95(12) are illustrated in Tables 1 - 4 at Appendix.
From the Tables it can also be seen that in 1994 - 95 a total of $11 770m
($10 607m from the States and $1162m from the Commonwealth) was provided
for recurrent purposes to government schools and a total of $2 644m ($923
m from the States and $1721m from the Commonwealth) was provided to non-government
schools for recurrent purposes. In that same period (note the figure for
non-government capital funding applies to the 1994 calendar year not the
1994-95 financial year) a total of $912m ($704m from the States and $208m
from the Commonwealth) was provided for capital purposes to government
schools and $155m ($49.5m from the States and $105.5m from the Commonwealth)
was provided for capital purposes to non-government schools.
Calculations show that in 1994 - 95 the government sector received 81.9%
of total recurrent and capital funds provided by both levels of government
and the non-government sector received 18.1% of those funds. In 1995 the
relevant figures for enrolment share by each sector was as follows: government
schools 71% and 29% for non-government schools.(13) Further analysis shows
that, comparing 1977 - 78 with 1994 - 95, there was a 321% increase in
expenditure per student for government schools and a 393% increase in
expenditure per student for non-government schools. These figures do confirm
that the relative position of the non-government sector has improved markedly
over the period analysed.
Graph 2
Graph 3
Graphs 2 and 3 show the proportions of total government spending going
to the two sectors for 1977 - 78 and 1994 - 95.
Tables 1 to 4 also clearly show the importance of Commonwealth funding
to the non-government sector - in excess of 65% of all government recurrent
and capital expenditure going to that sector comes from the Commonwealth.
This fact means that as enrolments in non-government schools grow there
is cost shifting in terms of financing schools away from the States to
the Commonwealth. Thus, in a purely budgetary sense it is advantageous
for State/Territory governments to encourage the growth of non-government
schools and enrolments. According to the Minister for Schools, Vocational
Education and Training (Dr Kemp) every child educated at a non-government
school saves the relevant State government an average of $1800 per child.(14)
The abolition of the existing Commonwealth New Schools Policy, if it leads
to further growth in the non-government sector, will further exacerbate
this trend.
The evident increase in the share of funding going to the non-government
sector has almost certainly been the result of Commonwealth funding priorities.
A previous study (covering the period 1976 to 1993) undertaken by the
author found that whilst total Commonwealth funding (both government and
non-government) increased over the period by 82%, funding for non-government
schools (excluding joint programs) increased by 189.8%, whilst funding
for government schools (excluding joint programs) increased by only 28.2%.(15)
It would appear that, in comparison with other developed countries,
Australian governments provide a substantial level of financial support
for the non-government sector.(16) A report released by the Organisation
for Economic Co-operation and Development (OECD) in 1992 analysed public
subsidies to private education in 12 countries over the period 1970 -
1988.(17)
With respect to the subsidisation of all education sectors (including
tertiary and pre-primary), the Report found that in 1987 only 3 of the
12 countries studied that had higher levels of government support for
private education than Australia. According to the Report, the 12 countries
were ranked as follows on real public subsidies to private education as
a percentage of real public current expenditure on education (1987): the
Netherlands 69.6%; Belgium 55.3%; France 12.5%; Australia 11.3%;
Germany 7.8%; Switzerland 7.4%; Japan 6.1%; Norway 5.9%; the USA 4.6%;
New Zealand 1.0%; Canada 1.0%; and Sweden 0.1%.(18) Over the period 1970
to 1988, the Report found that the countries with the highest rates of
growth in public subsidies for private education were Japan, with an average
annual growth rate of 11.4% (most of which occurred in the 1970s); Norway
9.1%; Germany 7.9% and Australia 7.2%.(19)
Comparisons between the 12 countries on the primary and secondary schooling
sectors were less comprehensive because differing countries used different
methods in the way they aggregated the data. Three of the countries studied
(Australia, Sweden and Switzerland) aggregated the primary and secondary
sectors thus enabling at least a comparison with two other jurisdictions.
On this basis it was found that 17% of all public subsidies on primary
and secondary schooling went to the private schooling sector in Australia
in 1987 compared to 7.7% in Switzerland and 0.2% in Sweden.(20)
Whilst these figures are limited and somewhat dated they do indicate
that Australian governmental provision for private schooling is in the
average to above average range when compared to similar developed nations.
The main thrust of the argument by the proponents of a strong government
schooling sector is that the funding balance has skewed too far in favour
of the non-government sector. Unless the size of the total 'pie' available
for schooling, both government and non-government, is increased this sentiment
is likely to be continually and forcefully expressed. Of course, if there
are cuts in funding going to the schooling sector by the Commonwealth
Government and/or by the various State/Territory Governments then in all
likelihood a very divisive 'state aid' debate similar to that which characterised
the 1960s and early 1970s could re-emerge.
In this context it is perhaps worthwhile posing a series of questions
at the core of the 'state aid' issue that will need to be considered by
the various interests and groups involved with the funding of schools
in Australia :
- What is an appropriate level of funding for the schooling systems
in Australia?
- What is an equitable and appropriate split of funding for government
and non-government schools? How should this split be decided? Is the
present system of needs based funding for non-government schools fair
and equitable?
- What specific roles should State/Territory and Commonwealth governments
have on policies/funding for government and non-government schools?
- Are present accountability mechanisms required of both government
and non-government schooling systems for Commonwealth and State funding
adequate and appropriate?
- What restrictions, if any, should be placed on the establishment of
new schools, particularly new non-government schools?
- To what extent should market forces be allowed to determine enrolment
patterns in schools?
Government policy responses at both the Commonwealth and State/Territory
level to these and related questions will largely determine the tenor
of the debate on 'state aid' and the extent to which it may again become
a divisive debate in Australia.
- Slattery, Luke, 'Private school aid puts education policy to the
test', The Australian 23 May 1996.
- The Canberra Times, 3 May 1996.
- McKinnon, Ken, Review of the New Schools Policy-Final Report (April
1996), Canberra, DEETYA, 1996, p. 2.
- Whitlam, Gough, The Whitlam Government 1972-75, Ringwood,
Viking, 1985, pp. 299-300.
- Schools, Australia, ABS Catalogue No. 4221.0, April 1996.
- ABS Schools various; and Dr David Kemp, 'Kemp confirms Labor's
New Schools Policy to go', Press Release (Minister for Schools, Vocational
Education and Training), 21 May 1996.
- Morrow, Anne, Schools Funding In Australia-The Need for Change,
Speech to the Australian Council of Social Service, 24 May 1996.
- Budget Paper No. 1 1995-96, pp. 3-85, 3-86.
- Morrow, op. cit..
- Figures adapted from chapter 8 of Australian Students and Their
Schools, Canberra, ABS & Schools Commission, 1979.
- ABS Catalogue No. 4202.0 (1979).
- Figures provided to the Senate Employment, Education and Training
Legislation Committee by the Department of Employment, Education and
Training (in the Committee's Additional information received,
vol. 4, January 1996).
- ABS Catalogue No. 4221.0 April 1996.
- House of Representatives Hansard, 21 May 1996 p. 930.
- McIntosh, Greg, Commonwealth Funding for Schools, Parliamentary
Research Service Background Paper No. 14, 1994, p. 33.
- This level of support is probably a consequence of the importance
of the Catholic sector and the fact that historically it has been poorly
resourced compared to other parts of the schooling sector.
- Public Educational Expenditure, Costs and Financing: An Analysis
of Trends 1970-1988, Paris, OECD, 1992.
- ibid, p. 178.
- ibid, p. 179.
ibid, p. 185.
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