School funding and improving education outcomes

Dr Shannon Clark, Social Policy

Key issue
Equity and quality are key themes of recent reforms to school education in Australia. This article provides an overview of reforms including changes to needs-based funding. Issues of quality, including student performance, attracting and retaining quality teachers, and the use of evidence to improve school performance will be prominent in debates about the future of education.

School funding in Australia—background and context

Responsibility for funding schools in Australia is shared between the Australian and state and territory governments. The Australian Government has traditionally been the majority funder of non-government schools and the minority funder of government schools, while for states and territories, funding responsibilities are reversed.

States and territories are responsible for regulating schools in their jurisdiction, infrastructure and maintenance funding, and the administration and management of resources in schools. Australia has a national curriculum which state, territory and non-government education authorities are responsible for delivering.

In 2018 there were almost 3.9 million full-time equivalent students in Australian schools. Of these, 65.7 per cent were enrolled in government schools and 34.3 per cent in non-government schools.

Australian Government expenditure on schools has increased in real values from 2010–11 to 2017–18 (Figure 1). By 2022–23, Australian Government school expenditure is projected to be $25.3 billion, of which $15.0 billion will be invested in non-government schools and $10.4 billion in government schools. Over the next ten years, Australian Government funding per student will increase 46 per cent.

Figure 1: Australian Government funding for schools (real values), 2010–11 to 2022–23

 Australian Government funding for schools (real values), 2010–11 to 2022–23

Sources: Australian Government, Budget strategy and outlook: budget paper 1: 2019–20; Australian Government, Final budget outcome, various years. Notes: *Estimates and projections; real values expressed in 2017–18 constant dollars based on CPI (2010–11 to 2017–18) and 2019–20 Budget estimates for CPI changes from 2018–19 to 2022–23.

Despite funding for schools increasing, the performance of Australian students has declined in international assessments such as Programme for International Student Assessment (PISA). As a result, there has been debate about the role of funding in improving educational outcomes. While the Grattan Institute agrees that extra funding would only improve outcomes if appropriately targeted, it disputes that Australia is a big spender on school education: ‘[o]n average, governments in comparable countries spend 20 per cent more per student than Australia’.

Recent reforms to school education

Concerns about declining student performance and increasing inequity between the highest and lowest performing students are driving educational reform efforts.

PISA 2015 results show that Australia has slipped backwards across all three domains—reading, maths and science—since 2003, both relative to other participating countries, and in terms of Australian students’ scores. PISA 2018 results will be released in December 2019.

In May 2017, the Turnbull Government announced reforms to needs-based funding. The Government committed to meeting 20 per cent of the Schooling Resource Standard (SRS, see Box 1) for government schools, and 80 per cent for non-government schools. The reforms also required states and territories to meet their share of the SRS, with the aim of reaching at least 95 per cent of the SRS for all schools by 2023. These reforms passed Parliament in June 2017.

Box 1: The Schooling Resource Standard

The SRS was a recommendation of the 2011 Review of Funding for Schooling (Gonski Review). The SRS was proposed to form the basis for recurrent funding for Australian schools across all sectors. It comprised a per-student base-funding amount for primary and secondary students with six additional loadings to address sources of disadvantage. The SRS was calculated based on resources used by high-achieving schools.

For most non-government schools, the base per student SRS amount is reduced by parents’ capacity to contribute to the school’s operating cost, determined by the school’s socio-economic status score (SES score).

In addition the Turnbull Government also announced that David Gonski would undertake a review to achieve educational excellence in Australian schools. The review, dubbed ‘Gonski 2.0’, was delivered in March 2018 and made 23 recommendations.

The findings and recommendations from Gonski 2.0, along with other reports, the Independent Review into Regional, Rural and Remote Education and Optimising STEM [Science, Technology, Engineering and Mathematics] Industry-School Partnerships: Inspiring Australia’s Next Generation, informed the development of the National School Reform Agreement (NSRA) which the Council of Australian Government’s (COAG) Education Council agreed to in 2018.

The NSRA and bilateral agreements between the Commonwealth and most states and territories commenced on 1 January 2019 and end on 31 December 2023. Victoria currently has an interim agreement and will reportedly soon sign a bilateral agreement.

Although overall funding for schools has increased, calls for the Australian Government to provide more funding to government schools are likely to continue. Analysis from the Grattan Institute argues that the NSRA locks in underfunding for government schools—most will be funded to 95 per cent of their SRS by 2023 while non-government schools will reach 100 per cent of their SRS.

National School Resourcing Board

As part of the reforms, the National School Resourcing Board (NSRB) was established in 2017 to provide independent oversight of Commonwealth funding under the Australian Education Act 2013. Responding to concerns about the appropriateness and accuracy of the SES score for determining parental capacity to contribute for non-government schools, the NSRB’s first priority was to review the SES score methodology.

The review made six recommendations, including that a school’s SES score be determined by a direct measure of median parental income of a school’s students instead of the current ‘area-based’ approach which is based on average SES scores for the residential addresses of the student population.

In its response, the Morrison Government agreed to all recommendations, and committed to phase in the new measure over three years from 2020. During the transition to the new funding arrangements from 2020 to 2029, the implementation of the direct measure would see the Government provide an additional $3.2 billion in funding to non-government schools. In addition, in September 2018, the Government announced the establishment of the Choice and Affordability Fund, a $1.2 billion fund to ‘address specific challenges in the non-government sector’, including support for schools in drought-affected areas and for underperforming schools.

The NSRB is currently reviewing needs-based funding requirements and loading for students with disability. Reports are due in October and December 2019 respectively.

Improving teaching quality and student performance

In line with recommendations from Gonski 2.0, the NSRA emphasises the need to improve student outcomes through quality teaching and the use of evidence to inform practice and policy development. Governments committed to implement eight national policy initiatives to achieve the agreement’s outcomes:

  • enhancing the Australian Curriculum to support teacher assessment of student attainment and growth
  • opt-in online learning assessment tools to assist teachers
  • review senior secondary pathways into work, further education and training
  • review teacher workforce needs of the future
  • strengthening the initial teacher education accreditation system
  • a national unique student identifier
  • an independent national evidence institute to inform teacher practice, system improvement and policy development and
  • improving national data quality, consistency and collection to improve the national evidence base and inform policy development.

Strategies to raise the status of teaching and to improve teacher quality may include attracting high-achieving students to teaching, both school leavers and people with experience in in-demand areas such as STEM; retaining experienced teachers; ensuring the quality of initial teacher training; and building leadership capacity of teachers and principals.

A Parliamentary inquiry into the status of the teaching profession lapsed when the election was called in April 2019. The House of Representatives Standing Committee on Employment, Education and Training published a document summarising issues from the public hearings conducted. Key issues included the need for consideration of: teacher selection; support for new teachers, including induction processes and mentorship; support for schools in areas such as administration, managing social, behavioural and health-related issues to free up teachers; and better use of data.

In February 2019, the COAG Education Council also gave in-principle support to the scope and focus of the national evidence institute proposed in Gonski 2.0. Options about the operating model for the institute, the entity type and funding are to be presented to the council for consideration in mid to late 2019.

Measuring student outcomes

In Australia, student outcomes are measured through the National Assessment Program–Literacy and Numeracy (NAPLAN), which assesses students in Years 3, 5, 7 and 9. The assessments are undertaken nationwide in May each year and test students in four domains: reading, writing, language conventions (spelling, grammar and punctuation) and numeracy.

Results from NAPLAN are reported in a number of ways, including public reports, individual student reports, and reporting on the My School website. National NAPLAN results are reported through summary results released in August and a full national report released in December.

NAPLAN is increasingly facing criticism about its impact on students. Concerns about unintended negative impacts of the test include ‘teaching to the test’, the impact on schools from the publication of NAPLAN results on the My School website, and the pressure placed on students due to the tests being perceived as ‘high stakes’. The move to online NAPLAN testing was marred by technical glitches in 2019.

The Gonski Institute argues that negative effects of NAPLAN outweigh the positive and recommend redesigning the national assessment. The Institute says that negative consequences for students could be avoided by replacing the current census approach to sample testing of students.

In contrast, the Centre for Independent Studies argues that NAPLAN should be retained, and that a sample approach would not have the same major benefits in that it could not be used as a tool to help students individually and would not promote transparency and accountability for schools.

There have been numerous calls for a comprehensive review into NAPLAN. In June 2018, the COAG Education Council agreed to a ‘narrow’ review of NAPLAN, focussing on the presentation of data, despite a number of state and territory education ministers advocating for a broader review. The report is due to COAG in June 2019.

Delivering reforms and future steps

The NSRA sets out milestones and timing for national policy initiatives until 2023. Achieving these milestones will require all governments to negotiate and implement actions within their areas of responsibility.

All governments will also need to agree on a shared vision for the future of school education. Since 2008, the Melbourne Declaration on Educational Goals for Young Australians (the Melbourne Declaration) has underpinned governments’ goals for schooling in Australia. The document is the most recent of a series of declarations agreed to by all Education Council Ministers that outlines nationally consistent directions for education. A review of the Melbourne Declaration is currently underway.

Further reading

National School Resourcing Board, Review of the socio-economic status score methodology: final report, Department of Education and Training, Canberra, 2018.

M Harrington, ‘Schools funding legislation passed by Parliament—an update on the amendments’, FlagPost, Parliamentary Library blog, 28 June 2017.


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