A new plan for school funding

Budget Review 2017–18 Index

Marilyn Harrington

The 2017–18 Budget provides an estimated $79.6 billion for school funding over the forward estimates. This represents growth in real terms of 11.4% over the next four years.

The Government has predicted that under its new school funding plan federal Government funding for schools will be $30.6 billion by 2027.[1] It has committed to delivering an additional $18.6 billion in recurrent funding to implement the new plan.[2] However, this Budget accounts for only $1.7 billion of this additional funding—most of it (over 90%) will be provided in the last six years of the implementation period.

The plan

Key features

The Government has stated that its new plan for school funding will deliver ‘the real “Gonski” needs-based funding model’ by replacing the 27 different funding models that currently exist and providing a uniform funding system.[3] Some of the key features of this new system as outlined in the Budget are:

  • By 2027, the Australian Government will fund government schools at 20% of their Schooling Resource Standard (SRS) amount (comprising a base per student amount and loadings for students and schools that need extra support). Non-government schools will be funded at 80% of their SRS amount. Currently, government schools are funded on average at 17.0% of their SRS and non-government schools at 76.8%.[4] These proportions reflect the Australian Government’s funding role—it is the majority public funder of non-government schools and, conversely, state and territory governments are the main providers of public funds for government schools.
  • Northern Territory government schools will receive additional assistance of $35.6 million to improve student outcomes.[5]
  • The loading for students with disability (SWD) will be transitioned to a new model based on a nationally consistent SWD definition and scaled rates according to the level of classroom adjustment needed. Currently, a flat rate of 186% of the base per student amount for SWD attending mainstream schools and 223% for SWD attending special schools applies, and eligibility is based upon varying state and territory definitions of disability.[6]
  • Transition assistance for ‘disadvantaged and vulnerable’ schools adversely affected by the move to the new system, amounting to $39.8 million over ten years, will be provided.[7]
  • The base per student SRS amount will be indexed by 3.56% annually from 2018 to 2020. Thereafter it will be indexed by a composite of the Wage Price Index and the Consumer Price Index.

Notably, the Government has dispensed with the ‘no school will lose funding' principle that has been a feature of Australian Government recurrent funding for non-government schools since the introduction of the Howard Government’s socioeconomic status (SES) system in 2001. [8]

As a result of the proposed new arrangements, 353 non-government schools which are estimated to be over their entitlement of 80% of the SRS in 2017, will receive less funding or will have their funding frozen or grown at a slower rate.[9] Of these schools, the Government has identified 24 non-government schools as losing funding—the reduction is estimated at less than 2% a year over the next four years.[10] And, following from the Government’s release of its Schools Funding Estimator, the names of the 24 schools have been published in various media reports.[11]

The temporary adjustment assistance, to be provided on a case-by-case basis, will provide relief for some of these schools.

Reaction to the plan

There has been a positive response to the Government’s proposed new funding plan from some in the government and independent school sectors, business, and other school education commentators.[12] The Independent Schools Council, for example, regards the funding announcement as a ‘positive step’ and Peter Goss from the Grattan Institute considers the plan ‘credible’ and one that ‘we have been looking for’.[13]

However, others, such as the Australian Education Union (AEU), consider the plan ‘a poor substitute’.[14] The AEU cites figures that claim the new funding plan will deliver $22.0 billion less in funding over the ten years to 2027 than the previous Labor Government’s arrangements.[15] State premiers and education ministers have complained about the amount of funding their school systems will receive under the new school funding plan, and questioned the accuracy of Schools Funding Estimator calculations.[16]

The Shadow Education Minister, Tanya Plibersek, argues that the SRS will be lower than under Labor and that while the Government has said that a condition of funding will be for states to maintain their funding, there is no requirement for this to happen in real terms.[17] The Opposition has committed to ‘restore’ the $22.0 billion in school funding over ten years.[18]

The Greens consider that the current school funding system in general is ‘broken’. They are also concerned that the new policy represents ‘cuts’ to school funding and have announced that they will refer the Australian Education Amendment Bill 2017, which, if passed, will implement the Government’s school funding plan, to a Senate committee inquiry.[19]

Catholic systemic schools

The Australian Government’s current contribution to per student funding amounts for most non-government schools is adjusted according to a measure of a school’s ‘capacity to contribute’.[20] The measure is based on a school’s socioeconomic status (SES) score, which aims to measure the capacity of the school’s parent community to support the school financially and takes into account parental income. A non-government school’s SES score determines its capacity to contribute as a percentage of the per-student funding amount, ranging from 10% for those with the lowest SES scores to 80% for those with the highest SES scores. Some non-government schools, such as special schools, are exempt from the ‘capacity to contribute’ requirement.

Under the Australian Education Act 2013, SES scores may also be determined by the Minister by legislative instrument. Using this mechanism, Catholic schools in each state and territory Catholic education system, except the Australian Capital Territory (ACT), are funded according to the average of all schools in their system—this arrangement is known as the ‘system weighted average’. The SES score for ACT Catholic systemic schools is the average SES score for all Catholic systemic schools across Australia.[21] The Minister’s ability to determine SES scores will be removed under the new arrangements and all non-government schools will be funded according to their individual SES score. This will mean that Catholic systemic schools with a higher SES score than the current student weighted average SES score for their system will have their capacity to contribute percentage increased and their Australian Government funding reduced.

According to reports from the Catholic education sector, Catholic systemic schools in the ACT will be most affected, presumably because the ACT has a generally high socioeconomic status relative to their current average SES score.[22] Using the Schools Funding Estimator, one media report has calculated that all ACT Catholic systemic schools will have a 7.3% reduction in funding per student by 2027 (not taking into account any structural adjustment assistance that will be provided).[23] The Government has countered by asserting that nationally funding for Catholic schools will increase on average by 3.7% per student over the next four years.[24]

The Catholic education sector is not only concerned that lower levels of funding will result in higher school fees, but it has also been critical of the indexation methodology.[25] It has disputed the Government’s projections for indexation beyond 2020 (estimated at 3.3%) and produced its own lower projection of 1.9% for the proposed floating indexation rate.[26]

Although the Government stated that it would not make any changes to its schools funding plan, it has nevertheless made a concession to the Catholic sector’s concerns by now including in the amending legislation a provision guaranteeing that indexation will not fall below 3%.[27]

Next steps

The Australian Education Amendment Bill 2017 has been introduced into Parliament.[28] The Bill, as has previous school funding legislation, stipulates conditions of financial assistance for the states and territories.[29] These conditions include a national agreement on school education to be developed collaboratively through the Council of Australian Governments and a bilateral agreement relating to the implementation of school education reform. Non-government school education authorities will also have to comply with the reforms.

The national agreement and the school education reforms will be informed by the Review to Achieve Educational Excellence in Australian Schools, which has been established to advise the Government about how the additional funding to be provided by the new school funding plan should be used to improve school performance and student achievement.[30] The Review panel is chaired by David Gonski and is required to report by December 2017. The new school funding agreements with the states and territories will be negotiated in the first half of 2018.

[1].          Australian Government, Budget strategy and outlook: budget paper no. 1: 2017–18, pp. 6-18–6-19; M Turnbull (Prime Minister) and S Birmingham (Minister for Education and Training), True needs-based funding for Australia’s schools, media release, 2 May 2017.

[2].          The budget information in this brief has been taken from the following document unless otherwise sourced: Australian Government, Budget measures: budget paper no. 2: 2017–18, pp.87–8. For further information about the Government’s school funding plan, see: Department of Education and Training (DET), ‘Quality schools’, DET website.

[3].          Turnbull and Birmingham, op. cit. For a list of the 27 funding models, see: Senate Education and Employment Legislation Committee, Answers to Questions on Notice, Education Portfolio, Supplementary Budget Estimates 2016–17, Question SQ16-000854.

[4].          Australian Government, New fairer school funding from 2018, Quality Schools fact sheet.

[5].          Australian Government, Additional funding for the Northern Territory, Quality Schools fact sheet.

[6].          Australian Government, Fairer funding for students with disability, Quality Schools fact sheet.

[7].          Australian Government, A fairer transition to the new model, Quality Schools fact sheet.

[8].          M Harrington, Australian Government funding for schools explained: 2013 update, Background note, Parliamentary Library, Canberra, 8 March 2013, pp. 9 and 35.

[9].          K Andrews, ‘Second reading speech: Australian Education Amendment Bill 2017’, House of Representatives, Debates, 11 May 2017.

[10].       Australian Government, ‘School funding estimator’, DET website; P Karp, ‘Schools hit list revealed: online tool shows Gonski 2.0 winners and losers’, Guardian (Australia), online edition, 9 May 2017; Australian Government, A fairer transition to the new model, op. cit.

[11].       For example, P Karp, op. cit.

[12].       S Birmingham (Minister for Education and Training), More support for Turnbull Government’s schools plan, media release, 4 May 2017.

[13].       Independent Schools Council of Australia, Funding announcement for independent schools a positive step, media release, 2 May 2017; P Goss, ‘Gonski 2.0: Is this the school funding plan we have been looking for? Finally, yes’, The Conversation, 3 May 2017.

[14].       Australian Education Union, Turnbull’s funding con exposed, media release, 4 May 2017.

[15].       Ibid.

[16].       Ibid.; T Plibersek (Shadow Minister for Education), Liberal school funding policy falling to pieces, media release, 5 May 2017; P Singhai, ‘”You should not rely on these figures”: NSW education boss slams federal funding model’, The Sydney Morning Herald, 11 May 2017.

[17].       T Plibersek (Shadow Minister for Education), Interview Fran Kelly, ABC RN Breakfast, Liberals’ school funding cuts, transcript, 3 May 2017.

[18].       P Karp, ‘Bill Shorten’s budget reply commits Labor to restore $22bn in school cuts’, The Guardian (Australia), online edition, 11 May 2017.

[19].       S Hanson-Young (Greens Education Spokesperson), Schools funding needs to be fixed, not cut, media release, 2 May 2017; Greens to refer Government education plan to inquiry, media release, 5 May 2017; Parliament of Australia, ‘Australian Education Amendment Bill 2017 homepage’, Australian Parliament website.

[20].       Information in this section is from the following unless otherwise sourced: Australian Government, Guide to the Australian Education Act 2013.

[21].       Explanatory statement, Australian Education (SES Scores) Determination 2013.

[22].       I Baker, ‘Catholic Education NSW responds: Government funding announcement “unprecedented and insulting”’, The Catholic Weekly, 7 May 2017.

[23].       E Baker, ‘The Canberra schools losing funds revealed’, The Canberra Times, 9 May 2017.

[24].       S Birmingham, Doorstop interview, Nazareth Catholic College, Adelaide, transcript, 5 May 2017.

[25].       D Crowe and S Benson, ‘Catholic schools fear $100m blow’, The Australian, 5 May 2017; Catholic Education Melbourne, School funding promises washed out as Minister relies on poor forecast, media release, 8 May 2017.

[26].       Ibid.

[27].       P Karp, ‘”No special deals”: Morrison defends Gonski 2.0 despite warnings on Catholic school fees’, Guardian Australia, online edition, 7 May 2017; T Dodd, ‘Minister makes funding pledge to assuage Catholic schools’, The Australian Financial Review, 11 May 2017.

[28].       Parliament of Australia, ‘Australian Education Amendment Bill 2017 homepage’, op. cit.

[29].       Information in this paragraph is from: Explanatory Memorandum, Australian Education Amendment Bill 2017, p. 3.

[30].       Information in this paragraph is from: DET, ‘Review to Achieve Educational Excellence in Australian Schools’, DET website.


Note: This version of the brief includes a minor revision relating to ACT Catholic Schools. The revision made on 23/05/17.

All online articles accessed May 2017. 

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