Australian Government funding arrangements for schools will change from 2018. Speculation about this change is taking place amid a national and international debate about what matters most in improving school outcomes and whether more funding is the answer.
Australian Government funding for schools
The Review of Funding for Schooling (the
Gonski Review) argued that a significant increase in funding by all governments
was required to lift the performance of school students, particularly those
from disadvantaged backgrounds.
The then Labor Government developed a new
school funding system based on the Gonski Review’s
recommendations for a new schooling resource standard (SRS) comprising per
student funding and loadings to address student and school disadvantage. The long-term
goal was for all schools to be at least funded at 95 per cent
of their SRS by 2019.
The total amount of additional
funding ($14.5 billion) to achieve this goal was to be phased in over
six years, with the Australian Government contributing $9.8 billion
(65.0 per cent) and state and territory governments the remainder. Most
of the Australian Government’s funding was to be
provided in the last two years of the transition period.
By the time of the 2013 election, however, only
three state and territory governments had concluded agreements with the
Australian Government to implement the new system (the non-government school
sector automatically became part of the new system).
The Coalition Government and school funding
Following its election in 2013, the Coalition
only to the first four years (2014 to 2017) of Labor’s school funding plan. It
also applied the new funding arrangements to all state and territory government
education systems, including those that had not concluded, or had rejected, agreements
with the previous government. These jurisdictions were not required to meet the
original agreement’s terms nor contribute additional funding.
The Government has indicated that it will change how schools are
funded from 2018. Its vision for the future is outlined in its pre-budget
statement, Quality Schools, Quality Outcomes. However, no
detail about distribution arrangements, which will be a matter for negotiation
with the states and territories, has been provided. Nevertheless, the process
has already begun with the Government announcing that a new
indexation rate, which is lower than the current rates, will apply to
school funding from 2018.
Figure 1: Australian Government funding for schools,
1999–00 to 2019–20 (real prices)
Source: Parliamentary Library; Australian
Government, Budget strategy and outlook: budget paper no. 1: 2016–17;
Australian Government, Final budget outcome, various years.
Notes: * Estimates and projections. Spike in expenditure from 2009–10 to
2010–11 was the result of the Building the Education Revolution (BER) stimulus
Does funding matter in improving educational
Those who question the benefit of additional expenditure in
improving educational outcomes (including the Government in Quality Schools, Quality Outcomes) highlight the
declining performance of Australian 15-year-olds in the Programme
for International Student Assessment (PISA) vis-a-vis the significant increases
in school funding.
The Australian Council for Educational Research (ACER) summary report on PISA 2012 shows the significant
declines in mean mathematical and reading literacy performance. The former
declined by 20 score points on average between PISA 2003 and PISA 2012 and the latter declined by 16 score points from PISA 2000 to PISA 2012.
At the same time, Australian Government expenditure on schools grew by
70.0 per cent in real terms from 2000–01 to 2012–13 (see figure above).
Both the proponents of increased school education expenditure and
those that question its value in improving educational outcomes, can draw upon
a substantial body of research to support their cases.
The proponents of ‘Gonski’ funding, such as the Australian Education
Union in its report Getting Results, point to evidence that shows
the importance of increased investment in improving educational outcomes, particularly
for disadvantaged students. A number of anecdotal reports provide similar evidence.
International research also supports the argument for increased
funding. A recent major review of this research, Does Money Matter in Education, concluded: ‘aggregate measures of per-pupil spending are positively associated
with improved or higher student outcomes’. This review also found that schooling
resources that cost money are ‘positively associated with student outcomes’.
In contrast, a PISA analysis, Does Money Buy Strong Performance in PISA?, concludes
that higher expenditure on education does not guarantee better student
performance. What is more important among high-income countries is how the
resources are used.
This finding aligns with the tenor of recent
Australian reports and commentary which examine strategies for improving
educational outcomes, particularly for those from disadvantaged backgrounds. One
example is the Grattan Institute’s Orange
Book 2016: Priorities for the Next Commonwealth Government, which
suggests that the key reforms to lift student outcomes are ‘well known’. These
include focusing more on student progress and not just achievement, improving
teaching practice in the classroom, and making ‘trade-offs’ to improve how and
where money is spent.
A recent ACER report, Five Challenges in
Australian School Education, concurs with the widely accepted view that
what is important is how funding is targeted. However, the report does not
completely reject the notion of increased funding:
... whether or not increased funding makes a difference depends on
how it is applied. Our national challenge is to maximise the impact of
government expenditure by targeting it on evidence-based strategies to improve
performances in Australian schools.
has proposed that future funding should be contingent
upon state and territory governments maintaining their funding effort and
committing to specific education reforms. The proposed new conditions for
funding relate broadly to improving literacy and numeracy outcomes and the
quality of teachers and teaching, including a focus on disadvantaged schools
and science, technology, engineering and mathematics (STEM) subjects; and providing
more foreign language teachers and access to languages education. There has
been a mixed response to these proposed reforms and initiatives similar to
these reforms have been endorsed by the Council
of Australian Governments’ (COAG) Education Council and are already being
The proposed reforms and distribution arrangements for school
funding will have to be negotiated through COAG, which has
that ‘discussions on new funding arrangements should be concluded by early 2017’.
Given the recent history of school funding reform efforts, it is
likely that negotiating and implementing the new arrangements for school
funding will be difficult.
M Harrington, Funding the National Plan for School Improvement: an explanation, Background note, Parliamentary Library, Canberra, 26 June 2013.
M Harrington, ‘School education’, Budget review 2016–17, Research paper series, 2015–16, Parliamentary Library, Canberra, 2016.
Back to Parliamentary Library Briefing Book
For copyright reasons some linked items are only available to members of Parliament.
© Commonwealth of Australia
With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.