School education: the National Plan for School Improvement

Budget Review 2013–14 Index

Marilyn Harrington

The National Plan for School Improvement (NPSI) has two goals for the Australian school system to achieve by 2025: to rank in the top five countries internationally for student achievement in reading, mathematics and science; and to be considered a high quality and high equity schooling system by international standards.[1]

The National Education Reform Agreement (NERA) which all state and territory governments are required to sign by 30 June 2013 lays out the reforms and a new school funding model to achieve these goals.[2] If fully implemented, the NPSI will provide an additional $14.5 billion over six years in government funding for schools, of which the Australian Government will provide 65.0% ($9.8 billion) and state and territory governments the remainder.[3] The new school funding model, which is provided for in the 2013–14 Budget, is the focus of this article.

Current school funding arrangements

Currently, schools receive most of their funding from the National Schools Specific Purpose Payment (SPP). This funding is supplemented by a number of national partnerships (NPs) and the Australian Government’s own school education programs.[4] These arrangements will apply until 31 December 2013. However, some existing NPs and other Australian Government school education programs will continue. These include two non-government school programs—capital funding and short-term emergency assistance—that are currently provided under the National Schools SPP.

Annual increases (indexation) in the National Schools SPP are determined by increases in average government school recurrent costs (AGSRC) and enrolments. AGSRC are based on state and territory government recurrent expenses, which also include Australian Government expenditure.[5] The weighted average AGSRC increase fell significantly from 6.0% in 2011 to 3.9% in 2012.[6]

The new school funding model

The NPSI funding arrangements are referred to as National Education Reform (NER) funding in the budget papers. While the Budget provides more information about this funding (also discussed in the Budget Review article, ‘School education: expenditure’), questions about the new school funding arrangements remain. Some of these questions follow.


The Government has justified its fixed 4.7% indexation rate for the NER funding because of its concern that the AGSRC rate of increase would continue to fall, thereby affecting future levels of government funding. However, the budget papers do not explain how this indexation factor was calculated.

The 4.7% indexation rate is to apply to the Australian Government’s current base funding. State and territory governments will be required to index their existing base funding by 3.0%.[7] However, the NERA states that the overall indexation rate for the Student Resource Standard (SRS) will be indexed at 3.6% per annum.[8] The calculation for this overall indexation rate is not provided in the available documentation. Possibly, the calculation could be explained on the basis that the Australian Government provides about one-third of total public funding to schools and two-thirds is provided by state and territory governments. On this basis, the 3.6% indexation figure is the sum of one-third of the Australian Government’s indexation rate (1.6%) and two-thirds of the state and territory governments’ indexation rate (2.0%). Presumably there will be more certainty about these calculations when the NERA appendix, which will provide this information, is published.

A lower indexation rate (3.0%) will apply to those schools that are funded above the proposed per student amounts of the SRS, as determined by their 2011 recurrent income recorded on the My School website.[9] The SRS amounts ($9,271 per primary school student and $12,193 per secondary school student in 2014) take into account funding by all governments.

Unlike the per student SRS amounts, the various loadings for disadvantage, which are the other component of the full SRS amounts, will be applied equally to all eligible students regardless of the school they attend.

The Government has committed to an independent review of these indexation arrangements, to be completed by March 2015 and implemented from 2016.[10]

Per student funding

The amount of the Australian Government’s contribution to the per student SRS amounts and how much that amount will increase year-by-year to 2019 as the transition to the full NPSI funding model occurs, is not apparent from the budget papers. The NERA states that for government education systems the Australian Government will provide its current funding contribution and its agreed share of the additional NPSI funding adjusted according to the new indexation rates.[11]

Non-government schools

The Budget does not explain how individual non-government schools will be funded. The NERA provides that funding will adjusted according to a school’s ‘capacity to contribute’ determined by the existing socioeconomic status (SES) scores of the current non-government schools funding system.[12] However, the sliding scale of funding between the two announced end points (90% of SRS funding for schools with an SES score of 93 or lower and 20% for schools with an SES score of 125 or greater) has not yet been published.[13]

‘Paying’ for the National Plan for School Improvement

The Budget makes a number of savings that are identified as defraying the costs of the NPSI reforms.[14] Chief amongst these are the higher education and family payments budget measures.[15]

The costs will also be defrayed by the cessation or non-renewal of a number of school NPs and other school programs. These include a ‘redirection’ of $2.1 billion from five NPs that were previously provided for in the forward estimates: Low Socio-economic Status School Communities, Empowering Local Schools, Literacy and Numeracy, Rewards for Great Teachers and Rewards for School Improvement.


The future of the NPSI is uncertain. Only New South Wales has signed the NERA so far and there are mixed messages coming from other jurisdictions. Another outstanding issue is the loading for students with disabilities. In the interim, existing funding for these students will be extended.

Those jurisdictions that do not sign up to the NERA will continue to be funded according to a ‘modified’ version of the current system of funding and will not receive the additional funding on offer with the NPSI. The Government estimates that if the new school funding model is not implemented, school funding will ‘go backwards’ by $16.2 billion over the next six years.[16] It has also released data showing how government and non-government schools will be affected on a state and territory basis.[17]

The Leader of the Opposition, however, has signalled that the Opposition will not back the new funding system unless all states and territories commit to it.[18] He has also repeatedly said that the Opposition cannot support the new arrangements until all the details are known.[19]

[1].       Australian Government, Budget 2013–14: National Plan for School Improvement, p. 5, accessed 17 May 2013.

[2].       Council of Australian Governments (COAG), National Education Reform Agreement (NERA), COAG, 2013, accessed 16 May 2013.

[3].       Information in this article is taken from the following document unless otherwise sourced: Australian Government, Budget measures: budget paper no. 2: 2013–14, pp. 117–23, accessed 17 May 2013. See also: J Gillard (Prime Minister) and P Garrett (Minister for School Education), Resourcing all our kids, classrooms and teachers for the future, media release, 14 April 2013, accessed 18 May 2013. Note there is a difference for the Australian Government contribution between these two sources.

[4].       For further information about the current funding system, see: M Harrington, Australian Government funding for schools explained, Background note, Parliamentary Library, Canberra, 8 March 2013, accessed 18 May 2013.

[5].       For further information about the AGSRC calculations, see: M Harrington, op. cit., pp. 18–9.

[6].       Ibid., p. 20.

[7].       J Gillard and P Garrett, op. cit.

[8].       COAG, op. cit., p. 29.

[9].       COAG, op. cit., p. 29.

[10].      Ibid.

[11].      J Gillard and P Garrett, op. cit.

[12].      COAG, op. cit., pp. 28–9.

[13].      Ibid., p. 28.

[14].      Australian Government, Budget 2013–14: National Plan for School Improvement, op. cit., p. 15.

[15].      These are discussed in the Budget Review articles, ‘Higher education’, ‘Abolishing the Baby Bonus’ and ‘Further savings from family assistance payments’.

[16].      J Gillard (Prime Minister) and P Garrett (Minister for School Education), New data on a fairer funding plan for Australian schools, media release, 19 May 2013, accessed 19 May 2013.

[17].      Ibid.

[18].      P Coorey, ‘Abbott to keep Labor tax cuts’, The Australian Financial Review, 17 May 2013, p. 1, accessed 18 May 2013.

[19].      For example: T Abbott (Leader of the Opposition), Interview with Sabra Lane, AM, ABC Radio, 15 May 2013, accessed 18 May 2013.

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