Schools funding legislation passed by Parliament—an update on the amendments

(This FlagPost updates information in the Parliamentary Library’s Bills Digest for the Australian Education Amendment Bill 2017.)

Following the Government’s negotiations with the Crossbench, the Australian Education Amendment Bill 2017 (the Bill), with significant amendments, has now been passed by Parliament.

Most of the amendments to the Bill follow recommendations made by a number of the non-government parties and by major interest groups in submissions to the Senate committee inquiry on the Bill. Labor and the Australian Greens did not support the Bill. However, the amendments reflect recommendations made by the Greens in their dissenting report on the inquiry into the Bill. Crossbench Senators Cory Bernardi and David Leyonhjelm also did not support the Bill because of the additional costs of the amendments.

The amendments

The amendments to the Bill are set out in the schedule of Senate requests for amendment. As explained in the Supplementary Explanatory Memorandum for the Bill and by the Prime Minister and Minister for Education and Training in their joint media release, major amendments include:

  • The transition period to the Commonwealth share of the Schooling Resource Standard (SRS) for those schools that are funded below their SRS will be accelerated by reducing it from ten to six years (schools funded over their SRS will be transitioned over a ten-year period) and will reach the Commonwealth share of their SRS by 2023 instead of 2027. (The Commonwealth share is 80 per cent of SRS for non-government schools and 20 per cent for government schools.)

  • The ‘starting Commonwealth share’ of the SRS will be re-defined to remove ‘ambiguity’ in the Bill. As the Supplementary Explanatory Memorandum for the Bill explains, this will involve using new 2017 SRS funding amounts that have been re-calculated using ‘up-to-date data, not the current amounts for 2017 under the Act’; the socioeconomic status (SES) scores used to work out the adjusted SRS amount will be those that will be in effect in 2018. This amendment addresses the confusion generated by the Government’s Schools Funding Estimator which showed lower-than-expected 2017 funding amounts and which were confirmed in Senate estimates hearings as not being what schools had actually been allocated in 2017.

  • The amendments reinstate funding arrangements for non-government school system authorities and thus provide for the continuation of current funding arrangements for Catholic and other systemic schools for a further year. This is pending a review of the SES system for determining a non-government school’s need for Commonwealth funding. The Government has committed to completing the review by the middle of next year and implementing any necessary changes in time for the 2019 school year.

  • State and territory governments will be required to contribute their share of funding at 75 per cent of SRS for government schools and 15 per cent for non-government schools, with the aim of all schools being funded by at least 95 per cent of their SRS by 2023 (Commonwealth and state or territory funding combined). State and territory governments currently funding schools at the prescribed rates will be required to maintain their 2017 funding levels in real terms. State and territory governments providing funding at a rate lower than the prescribed rates will be required to maintain their 2017 funding levels in real terms in 2018 and then transition to the prescribed rates in five annual increments. However, the amendments also allow for the prescribed percentages to be negotiated as part of the bilateral school education reform agreements. It would seem that the agreements will also include the actions the Commonwealth may take if the agreed funding rates are not implemented.

  • A National School Resourcing Board, as recommended by the Review of Funding for Schooling (the Gonski review), will be established, thereby strengthening the review requirements of the Australian Education Act 2013 (the Act), particularly in relation to school funding, such as the SES review mentioned above.

Financial implications of the amendments

The Supplementary Explanatory Memorandum for the Bill states that the amendments will result in a $1.1 billion increase in additional funding over the Budget and forward estimates from 2017–18 to 2020–21. In total, the amendments will result in an additional $4.9 billion in funding over the next decade. This will increase total additional funding from $18.6 billion, which was projected in the 2017–18 Budget, to around $23.5 billion.

Of this funding, the extension of the current funding arrangements for non-government school systems will cost an estimated $46.5 million in 2018. About $38.2 million of this funding will be provided to the Catholic education systems and the remainder to other non-government school systems, such as the Adventist, Anglican and Lutheran systems, amongst others.

In the Senate debate on the Bill’s amendments, the Minister for Education and Training, Senator Simon Birmingham, advised that the additional funding will be ‘reflected and budgeted for appropriately’ in the Mid-Year Economic and Fiscal Outlook (MYEFO). It seems likely from this statement that savings to offset the additional costs of the amendments will need to be found—a concern has already been expressed by Peter Noonan from the Mitchell Institute that the savings could be at the expense of the TAFE sector.

Reaction to the amendments

The Labor Party will continue to oppose what it regards as ‘funding cuts’, which it claims, as a result of the amendments, will now total $17 billion (down from $22 billion) over the next decade, and which will ‘hit hardest in our public system, and in low-fee schools’. The Greens did not support the Bill because of the ‘special carve-outs for particular sectors’ which was ‘inconsistent’ with a sector-blind approach, although they did win support for their amendment to enhance the independence and powers of the Schools Resourcing Board.

In spite of the significant concession to defer the implementation of the new school funding arrangements for systemic non-government schools and conduct a review of the SES system, the Catholic education sector remains opposed. The National Catholic Education Commission’s Executive Director, Christian Zahra, argues that the one-year deferral does not go far enough. Zahra considers the retention of arrangements under which non-Government schools are funded according to the average of all schools in their system (known as the system-weighted average) should be permanently retained. Concerns about future funding certainty and the impact on school fees remain, as well as concerns about funding for students with disability and the operation of the National School Resourcing Board.

The other major area of complaint is from some state and territory governments as the additional funding requirement, which has been legislated without consultation with them and which will require them, in most cases, to increase their school funding budgets significantly. Only the Australian Capital Territory, Tasmania and Western Australia currently meet the new target for state and territory funding of government schools.

The Minister’s assertions that the Government does not want to ‘undermine the constitutional autonomy of the states in relation to school funding’ and that the states will ‘still be free to set their funding levels’ has not placated most state and territory governments, particularly those that will have to increase their funding. One state government, Tasmania, has indicated its support, while New South Wales has given qualified support pending receipt of full details of the new arrangements.

Although the Bill has been passed, not all the new school funding arrangements are known. Significant detail regarding the operations of the Act will be provided in regulations, and therefore not revealed until the amendments to the Australian Education Regulation 2013 are released.

(FlagPost amended on 27 July 2017 to incorporate additional information.)


Flagpost is a blog on current issues of interest to members of the Australian Parliament

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