Education and training

Budget Review 2019–20 Index

Hazel Ferguson and Marilyn Harrington

Education and training expenses comprise education expenditure reported in the Budget under the 'Education’ function and vocational and industry training under the ‘Total labour and employment affairs’ sub-function of the ‘Other economic affairs’ function.

The Education function expenses consist of:

  • higher education, which includes higher education course subsidies for domestic students, primarily at undergraduate level, through the Commonwealth Grant Scheme (CGS); Research Block Grants (RBGs) to support higher education research; and a range of smaller supporting and enabling programs such as the Higher Education Participation and Partnerships Program (HEPPP)—it excludes research funding outside the Education and Training portfolio, as well as Australian Research Council programs and Department of Education and Training expenditure on research capacity, which are part of the ‘General research’ sub-function of the ‘General public services’ function, which is discussed in General public service and other purposes
  • vocational and other education, which is primarily made up of Commonwealth funding to the states and territories through the National Partnership on the Skilling Australians Fund (SAF) for projects to support apprentices and trainees, as detailed in Budget Paper No. 3, but also includes special education and adult education programs such as the Adult Migrant English Program
  • school education, which mostly comprises specific purpose funding for government and non-government schools to the states and territories under the Australian Education Act 2017 (known as ‘Quality Schools’ funding), and which is detailed in Budget Paper No. 3
  • school education—specific funding, which mainly consists of early childhood education funding provided under the National Partnership Agreement on Universal Access to Early Childhood Education and
  • student assistance, which includes student income support payments such as Youth Allowance, and student loans through the Higher Education Loan Program (HELP).

Vocational and industry training expenses includes expenditure on the Australian Government’s own apprenticeship schemes, such as the Australian Apprenticeships Incentives Program and Trade Support Loans.

Key figures

Education expenditure in 2019–20 will be an estimated $36.4 billion (Table 1 below), representing 7.3 per cent of the Australian Government’s total estimated expenditure (Table 2 below) and 1.8 per cent of estimated Gross Domestic Product (GDP) (Table 3 below). From 2019–20 to 2022–23, education expenses are estimated to grow in real terms (accounting for inflation) by 4.8 per cent.

Expenditure on vocational and industry training in 2019–20 will be an estimated $1.2 billion (Table 4 below). From 2019–20 to 2022–23, these expenses are estimated to increase in real terms by 6.8 per cent.

Table 1: Education expenses, $ million

2018–19
(est.)
2019–20
(est.)
2020–21
(est.)
2021–22
(proj.)
2022–23
(proj.)
Higher education  9 704  9 856  10 118  10 256  10 372
Vocational and other education  1 675  1 699  1 697  1 723  1 620
Schools  19 641  20 880  22 513  23 917  25 365

Non-government schools

 11 956  12 554  13 518  14 245  14 980

Government schools

 7 684  8 326  8 995  9 673  10 385
School education—specific funding   691   742   561   209   151
Student assistance  2 675  2 753  2 767  2 849  3 011
General administration   388   420   391   385   374
Total 34 773 36 350 38 047 39 339 40 893

Note: Figures may not add due to rounding.

Source: Australian Government, Budget Strategy and Outlook: Budget Paper No. 1: 2019–20, p. 5-17.

Figure 1: estimates of Australian Government education expenses

Estimates of Australian Government education expenses

Source: Australian Government, Budget Strategy and Outlook: Budget Paper No. 1: 2019–20, p. 5-17.

Table 2: education expenses as a proportion of total Australian Government expenses, %

2018–19
(est.)
2019–20
(est.)
2020–21
(est.)
2021–22
(proj.)
2022–23
(proj.)
Higher education  2.0  2.0  2.0  1.9  1.9
Vocational and other education  0.3  0.3  0.3  0.3  0.3
Schools  4.0  4.2  4.4  4.5  4.5

Non-government schools

 2.5  2.5  2.6  2.7  2.7

Government schools

 1.6  1.7  1.7  1.8  1.9
School education - specific funding  0.1  0.1  0.1  0.0  0.0
Student assistance  0.5  0.5  0.5  0.5  0.5
General administration  0.1  0.1  0.1  0.1  0.1
Total  7.1  7.3  7.4  7.3  7.3

Note: Figures may not add due to rounding.

Source: Parliamentary Library estimates.

Table 3: education expenses as a percentage of GDP, %

2018–19
(est.)
2019–20
(est.)
2020–21
(est.)
2021–22
(proj.)
2022–23
(proj.)
Higher education  0.50  0.49  0.49  0.47  0.46
Vocational and other education  0.09  0.08  0.08  0.08  0.07
Schools  1.01  1.04  1.08  1.10  1.12

Non-government schools

 0.62  0.63  0.65  0.66  0.66

Government schools

 0.40  0.42  0.43  0.44  0.46
School education - specific funding  0.04  0.04  0.03  0.01  0.01
Student assistance  0.14  0.14  0.13  0.13  0.13
General administration  0.02  0.02  0.02  0.02  0.02
Total  1.79  1.81  1.83  1.81  1.80

Source: Parliamentary Library estimates.

Table 4: vocational and industry training expenses, $ million

2018–19
(est.)
2019–20
(est.)
2020–21
(est.)
2021–22
(proj.)
2022–23
(proj.)
Labour and employment affairs—Vocational and industry training  1 172  1 173  1 216  1 259  1 344

Note: Figures may not add due to rounding.

Source: Australian Government, Budget Strategy and Outlook: Budget Paper No. 1: 2019–20, p. 5-39.

Key drivers and significant policy announcements

Early childhood education

In January 2019, the Government announced the extension of funding ($440.0 million for the 2019 calendar year) for the National Partnership on Universal Access to Early Childhood Education. The
2019–20 Budget has extended funding for the National Partnership for another year (covering the 2020 calendar year) by providing $453.1 million over two years from 2019–20. This extension is amongst the top ten major initiatives identified in the Budget Overview (p. 34).

The noticeable decrease in the forward estimates in the ‘School education—specific funding’ sub-function (Table 1 above) is accounted for by the non-continuation of the National Partnership after 2020. The extension of the National Partnership on a yearly basis has been the practice since 2015. This yearly extension of the National Partnership has continued in spite of continuing concerns by the early childhood education sector about the uncertainty that this creates.

There are also persistent calls, including by the Review to Achieve Educational Excellence in Australian Schools through Early Childhood Interventions which was commissioned by all state and territory governments, for the National Partnership to be extended to three-year-olds, particularly as evidence shows that two years of preschool has more impact than one, especially for developmentally vulnerable children. Labor has responded to this call by announcing its commitment to extend preschool access to three-year-olds with its proposed National Preschool and Kindy Program.

School education

School education expenses will be an estimated $20.9 billion in 2019–20, which is 1.0 per cent of GDP (0.4 per cent for government schools and 0.6 per cent for non-government schools), and will increase in real terms by 13.2 per cent from 2019–20 to 2022–23. According to Table 3.1 in Budget Paper No. 1, funding for government and non-government schools are amongst the top 20 programs by expenses in 2019–20.

Government school expenses are expected to increase more in real terms than expenses for non-government schools (16.2 per cent compared to 11.2 per cent) from 2019–20 to 2022–23. However, the ongoing pattern of Australian Government funding for schools remains; that is, the majority of Australian Government funding is provided to non-government schools and state and territory governments provide most of the funding for government schools. Thus, in 2022–23, government schools will receive an estimated 40.9 per cent of total Australian Government school funding.

School education expenses include additional funding for non-government schools as part of the Government’s response to the National School Resourcing Board’s review of the socio-economic status (SES) score methodology. The SES score determines, for most non-government schools, a school community‘s ‘capacity to contribute’ to their school’s operating costs and hence the level of Australian Government base per-student funding.

The additional funding was first announced by the Prime Minister and the Minister for Education in September 2018 and the initial tranche provided in the Mid-Year Economic and Fiscal Outlook (MYEFO) 2018–19 (pp. 170–71). The funding includes: $3.2 billion over 11 years from 2019–20 to implement the new methodology (based on parental income) for calculating a school’s capacity to contribute; $170.8 million to provide ‘funding certainty’ for non-government schools in 2019; and $1.2 billion over ten years from 2020–21 to establish a new fund to address ‘specific challenges’ in the non-government school sector.

The Shadow Minister for Education, Tanya Plibersek, has stated that Labor has ‘matched the government on funding for Catholic and independent schools.’ Labor has also committed to providing an additional $14.0 billion for public schools over the next decade, $3.3 billion of which will be provided ‘in the first three school years’.

The 2019–20 Budget announcements do not substantially alter existing arrangements (Table 5 below sets out expenses for significant policy announcements). A one-year Local School Community Fund (LSCF), which will provide ‘equipment, upgrades or programs’ to ‘local’ schools, appears to be a small-scale program—the Minister for Education in his budget media release advises that $200,000 will be provided to each federal electorate. Given the number of schools in each electorate, it is possible that not all schools will receive funding—there is no information in the budget documents about how LSCF projects will be determined.

The initiatives to support students and teachers build on a suite of related MYEFO 2018–19 measures
(pp. 170–171). These measures included: $9.8 million over four years for non-government distance education schools (details of this funding was not provided); $2.9 million over two years for non-government schools experiencing ‘unforeseen, short-term financial difficulties’; $2.8 million to extend the Flexible Literacy for Remote Primary Schools Program pilot; and $0.5 million over two years for the Music Count Us In program.

Among the new initiatives, the Government extends its commitment to arts education programs, and provides $9.5 million over four years for online mathematics and phonics teaching and learning resources.

The Budget also continues funding for the National School Chaplaincy Programme (NSCP) by providing $61.4 million in 2022–23 (Budget Paper No. 3, p. 32), in accordance with the Government’s commitment in the 2018–19 Budget to fund the NSCP on a permanent basis.

Higher education

Higher education expenses will be an estimated $9.9 billion in 2019–20, and are estimated to decrease by 1.9 per cent in real terms from 2019–20 to 2022–23. This decrease is driven primarily by constraints on CGS and RBG funding growth, introduced in the MYEFO 2017–18 (p. 143) and MYEFO 2018–19 (p. 169), respectively. The CGS is one of the top twenty programs by expenses in 2019–20, and 73.2 per cent of higher education expenditure.

Sector stakeholders represented by Universities Australia favour demand driven funding under the CGS, which was in place from 2010 and fully implemented from 2012 to 2017. However, this Budget estimates CGS expenses below the level provided in the 2018–19 Budget—that is, funding growth is predicted to be lower than that expected in the wake of the MYEFO 2017–18 announcement which effectively ended the demand driven system by constraining CGS funding increases to the level of population growth in the 18‑year‑old to 64‑year‑old age bracket. This is likely influenced by declines in aggregate higher education demand, which does not appear to have grown beyond 2017 levels based on Department of Education and Training analysis (p. 7), although these figures can obscure unmet demand in particular courses or regions.  

There are few higher education measures in the 2019–20 Budget. The Government has maintained its focus on regional universities, building on its response in the 2018–19 Budget to the Review into Regional, Rural and Remote Education with a $93.7 million commitment over four years from 2019–20 (and $23.7 million per year ongoing) for Destination Australia scholarships, as part of the Population Package (Budget Paper No. 2 does not include a separate line item for the Destination Australia scholarships).

These scholarships would provide $15,000 per year for up to 4,720 domestic and international students studying at a regional campus of a university or vocational education and training provider, as announced in Planning for Australia’s Future Population (p. 35). This measure is funded by terminating the Endeavour Leadership Program.

Vocational education and training

Vocational and other education expenses will be an estimated $1.7 billion in 2019–20, and are estimated to decrease by 11.1 per cent in real terms from 2019–20 to 2022–23. This decrease is driven primarily by the decision in the 2018–19 Budget to run the SAF over five years rather than four while retaining the same total expenditure allocation, and $649.0 million lower expenditure from 2018–19 to 2021–22, due to non-participation in the SAF by Queensland and Victoria (based on comparison of SAF expenses in Budget Paper No. 3 in the 2018–19 Budget and 2019–20 Budget).

The vocational and industry training expenses growth of 6.8 per cent in real terms from 2019–20 to 2022–23, cited above, is primarily due to the $525.3 million budget measure Skills Package—Delivering Skills for Today and Tomorrow, which is being funded largely from the shortfall in SAF spending. 

The quantum of funding for these vocational education and training (VET) sub-functions is notably lower when compared with higher education, reflecting in part the Commonwealth’s shared responsibility with the states and territories for VET.

Key sector stakeholders, such as TAFE Directors Australia, have ‘called for a reframing of the policy debate’ towards more policy and funding coherence across tertiary education. The centrepiece of the 2019–20 Budget for VET, the response to the Independent Review of Australia's Vocational Education and Training System (Joyce Review), commissioned in November 2018, does not appear to address this issue.

The Skills Package—Delivering Skills for Today and Tomorrow comprises a large number of VET-specific initiatives, including the establishment of a National Skills Commission and Skills Commissioner, National Careers Institute and Careers Ambassador, ten national training hubs to support school-based VET in regions with high youth unemployment, additional payments for employers and apprentices in certain occupations, and support for a foundation language, literacy, numeracy and digital literacy skills program.

Although there is only limited information available about the newly announced programs, it appears Delivering Skills for Today and Tomorrow will partially restore funding for skills training for some disadvantaged groups, which ceased as part of the creation of the Industry Skills Fund at the 2014–15 Budget (p. 74).

As these announcements relate to the Australian Government’s own programs, their introduction is not subject to negotiation with the states and territories, however the Government has committed to consultations with the VET sector, and the states and territories about arrangements for the National Skills Commission and Skills Commissioner.

Table 5: significant policy announcements, $ million

Budget measure 2018–19 2019–20 2020–21 2021–22 2022–23
National Partnership on Universal Access to Early Childhood Education—further extension - 136.2 318.3 - -
Local School Community Fund - 30.2 - - -
School Funding—initiatives to support students and teachers - 6.8 5.3 4.3 3.3
Skills Package—delivering skills for today and tomorrow(a) -138.8 -23.2 -11.2 30.7 181.3

Australian Government, Budget Measures: Budget Paper No. 2: 2019–20, pp. 67–70.

(a) The expense figures for the ‘Skills Package—delivering skills for today and tomorrow do not reflect the $525.3 million estimated to be provided over five years for this measure, discussed above. The budget papers appear to offset the Education and Training portfolio spending on this measure against the reduced spending on the SAF from the Treasury portfolio.

 

All online articles accessed April 2019

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