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.
