Chapter 2 - Consideration of the issues
2.1
The Committee received evidence both in support
of the bill and critical of some aspects of the policy to be implemented. Some
submissions supported the proposed legislation in principle, but indicated
reservations about some clauses. This spread of opinion was reflected in
evidence taken by the Committee during nearly two days of public hearings.
2.2
The principal issues raised in submissions and
in evidence were as follows:
- the school funding roles of the Commonwealth and the states and
whether the funding formula has seen a reduction in the proportion of
Commonwealth funds going to government schools;
- whether the SES model of funding was fair and equitable, given
its focus on the financial resources of the student community better than the
financial capacity of the school, or whether it was intentionally skewed to
give disproportionate benefit to schools hitherto in the lower funding
categories; and
- whether the reporting and accountability processes are in keeping
with the spirit of MCEETYA decisions and represent appropriate Commonwealth
leadership in schools policy, or whether these measures fail to acknowledge
state responsibilities.
2.3
A general issue, raised in consideration of a
number of issues listed above, was the extent of consultation between the
Commonwealth on the one hand, and state and non-government agencies on the
other. The Committee heard evidence from state education authorities that
their consultations with DETYA officials were more in the nature of one or two
hour briefings, and that their first indications of what was proposed in the
bill came only after its introduction. The Committee, on hearing later
evidence, believes that there is much less substance in this claim than
it was led to believe by state officials.
2.4
As noted in the previous chapter, the adoption
of the SES funding mechanism has been under active consideration for at least
ten years. Other elements of the bill were also well signposted. The
agreement of the Catholic systems to stay out of the SES model was decided in
1998. It could not be expected that the actual appropriations proposed in the
bill would be revealed before its introduction. MCEETYA is not the body which
determined appropriations: this is a Commonwealth responsibility. The record
was set straight in evidence given by DETYA officials to the Committee:
There is one further observation that I would like to take up at
this point to address an issue that I understand has had some prominence over
the last day or so – that is, the issue of consultation in respect of the
development of the SES model, and particularly consultation with state and
territory colleagues and governments. I must say that any reasonable and
objective assessment of this will see that there has, in fact, been quite
considerable consultation with both sectors in the schooling area. Terms of
reference for the review of the ERI were circulated and, indeed submissions
received from most jurisdictions, if not all, over the period February through
to April, including from Victoria. Following that, there was a round of
consultations with state and territory authorities. Responses to the
consultation report were received from Victoria, Queensland, the ACT and South
Australia over the period December 1997 through to January 1998. There was a
funding forum involving the New South Wales, Victoria, Queensland, Western
Australia, South Australia, Tasmania and Northern Territory education
departments in December 1997.
With the announcement of the SES model in the 1999 budget
context, there were briefings of state and territory education authorities on
13 May, at which multiple representatives of most, if not all, education
authorities attended, and these were followed up by further detailed briefings
during May and June. That, again, included a number of the jurisdictions that
have given evidence to the committee. Likewise, further SES briefings were
undertaken earlier this year on data issues and they touched on the registered
schools board in the Victorian, Tasmanian and Queensland jurisdictions. Since
the introduction of the bill, we also undertook a national process of
consultations – a process that has now been completed – with all jurisdictions
across all states, territories and national peak bodies between the period 20
July and 17 August.[1]
2.5
The Committee is satisfied that appropriate
levels of consultation were conducted with interested parties, including state
governments. It notes that non-government parties were well satisfied with the
same levels of consultations as were described above by DETYA officials in
relation to state governments.
The Commonwealth’s role in school funding
2.6
Central to the debate on this bill is the issue
of the particular responsibilities of the Commonwealth to fund non-government
schools. The Minister has been unequivocal: it is the primary funding
responsibility of the Commonwealth. The reasons are historical and, in
following precedent over most of the thirty years since the first Commonwealth
assistance was given to schools, the current legislation follows an
evolutionary pattern. A Commonwealth initiative in 1963 opened the way to
provide a measure of justice to non-government schools struggling to maintain
their existence. The science teaching grants promised by Sir Robert Menzies in
the election campaign of that year set a precedent for future governments at
the Commonwealth level. The ad hoc nature of such grants ended with the
establishment in 1973 of the Australian Schools Commission and the beginning of
routine special purpose grants. That financial assistance to non-government
schools has originated mainly from Commonwealth grants is an obvious
consequence of the overwhelming demands of government schools on state
finances. This has left only a very small proportion of recurrent funding
available to non-government schools from state budgets, in addition to indirect
assistance.
2.7
Funds allocated under this bill are therefore
predicated on the fact that government schools take most of the state funding
for schools. States Grants Acts as a consequence have always provided a
disproportionate share of school funding to non-government schools. Even so,
government schools have always benefited considerably from Commonwealth
supplementary funding from the States Grants Acts. The $9.3 billion of
Commonwealth funding for government schools which is provided for in this bill
is a record amount. Commonwealth funding for government schools is now
increasing at a greater rate than is state funding. Included in that $9.3
billion is $800 million in capital grants to government schools. This
compares to the capital grants allocation of $334 million over the same period
to non-government schools. If government schools receive recurrent funding at
the lowest rate it is because the bulk of recurrent funding comes from state
appropriations. State appropriations themselves rely heavily on general purpose
revenue grants, sometimes known as ‘block grants’, from the Commonwealth in
order to fund the ordinary services of government, including government
schools.
2.8
In summary, this bill provides for continued
levels of support for government schools in a way that reflects current
responsibilities. States provide base funding for government schools, and
Commonwealth recurrent funding provides a supplement. This is consistent with
the constitutional responsibilities of states and with the strategic policy
role of the Commonwealth.
SES funding model
2.9
The Committee found very little evidence of
disagreement over the use of socio-economic status (SES) based funding
arrangements for non-government schools. As described in Chapter 1, the model
has been tested and found to be satisfactory. SES has been overwhelmingly
supported by schools whose level of funding it will determine. It is
considered to be a fairer and more equitable means of allocating Commonwealth
funding than the current Education Resources Index (ERI)-based arrangements.
Like ERI, the SES contains a basic entitlement, complemented by a needs-based
component. Unlike the ERI, however, the SES model uses an assessment of needs
which is related to the resources of the school community rather than an
assessment of the assets and so-called ’financial capability’ of schools.
2.10
The SES model was first developed in 1973 for
the purpose of identifying areas of educational disadvantage, and has been used
by various government departments, Catholic Education Commissions and
Independent Schools Block Grant Authorities to target needs-based recurrent and
capital funding. For instance, in 1986 the Schools Commission assisted a study
by Deakin University on indicators of socio-economic disadvantage for
Australian schools. In 1995 DETYA, on behalf of MCEETYA examined the use of
SES indicators in the allocation of funding for disadvantaged students in all
school sectors.
2.11
The SES model also fits the philosophy of the
current government in giving greater emphasis to supporting the needs of
individual families and students. There has, hitherto, been a preoccupation
with shaping educational funding policies to institutions rather than to the
users of educational services. Services provided by schools and other
educational institutions have been ‘supply driven’. The Committee notes with
approval the policy of the government to reverse this trend: allowing the
recipients of education to determine the demand, and have schools and other
educational institutions respond to this demand. SES model funding assists in
facilitating this change, as noted in one submission:
Given that an increasing number of parents are making decisions
about their children’s schooling based on the particular needs of an individual
child, it becomes increasingly necessary to question the rationale for a system
of funding based on schools rather than family and student need. The SES
funding model is a stepping stone towards a system of funding that places the
interests of families and students at its heart ...
The needs of families and students, not institutions, should be
the focus of the method of funding Australia’s education provision, particularly
given the diverse geographic, cultural and religious diversity that is fostered
within our democracy. The establishment of a growing number of non-government
schools designed to maintain the variety of cultural and religious traditions
of ethnic groups in Australia has generated significant educational, social and
economic benefits.[2]
2.12
The Committee accepts claims by some independent
schools that the previous funding allocation method, ERI, had been altered and
added to over the years for the purpose of constraining the growth of the
independent sector.[3]
This had the effect of limiting private investment in education.
2.13
Another problem which arose from the ERI model
was the inflexibility of its application to sudden changes in economic
conditions faced by many parents. No where is this more obvious than in rural
Australia. As one witness told the Committee:
The problems...were exacerbated for rural schools, particularly in
the mid-eighties when the rural recession really began to bite in states like
Western Australia, and country communities changed significantly. The schools
there found that they had declining enrolments but, because of the funding
formula, they were trapped into a category and, because of the add-ons they
could not get out of that category. That is one of the advantages, I believe of
the SES. If you look at the SESs of rural schools in comparison with city
schools they are generally lower and they generally reflect more fairly the
composition of the school community.[4]
2.14
At the time of the public hearings on this
inquiry, the amounts payable to schools when the SES model was a matter of some
speculation. Subsequently, the Minister released the details of the SES scores
for each school and statistics showing the proportion of funding that would go to
schools at particular SES levels. Grants to a number of independent schools
servicing higher SES communities will rise under the new formula, due largely
to previous underfunding over many years. Such schools will continue to
receive, as they have done in the past, funding per student which is only 13.7
per cent of the average cost of a government schools student. The poorest
non-government schools will receive up to 70 per cent.
2.15
The Committee received no evidence that the SES
model gives disproportionate benefit to so-called ‘wealthy’ schools. As DETYA
advised:
Any new funding system is going to introduce changes in the
relative positions of schools. So it is not specifically the change to the SES
model that is causing those changes; the SES model will simply identify what
changes will occur. In a policy decision that says there is going to be
funding maintenance, that is where the increase will occur, because the SES
model will identify schools that have been under funded in the past, they will
receive more funding and those that were perhaps ove rfunded are going to be
maintained. So it is an issue of the changing relativities being funded out of
an increased budget for those relativities being changed.[5]
2.16 The arrangement whereby Catholic
systems are funded at Level 11 under the ERI has resulted in comment to the
effect that the National Catholic Education Commission is opposed to the SES
model. As the submission from the NCEC states:
The bill has the support of the NCEC. The NCEC recognises that the
bill provides security of funding to Catholic schools and systems over the next
quadrennium. The bill seeks to link grants for Catholic schools to the average
costs of schooling in the government sector. The NCEC strongly endorses this.
For Catholic schools and school systems the bill will enhance equity and
accessibility for families who wish to exercise their right to choose the
school for their children which meets their needs.[6]
2.17 The reservations that appear to have
been expressed about the SES mechanism by the NCEC representatives appearing
before the Committee need to be seen in the context of the statement above. The
NCEC did not support the retention of ERI as a funding mechanism. It makes the
point that a combination of funding entitlement measures should be used. While
the Committee strongly supports the SES model as the most appropriate measure
available, but does not deny that the test of experience may require some
modifications in due course. This is a normal process in the administration of
funding policy.
Reporting and accountability processes
2.18
The Committee recognises two fundamental
principles underlying current government policy in education. The first is the
right of every young Australian to have access to schools and post-school institutions
which best meet their needs. The second is the obligation placed upon schools
and other learning institutions to deliver the outcomes which students
require. The current government has announced its commitment to improved
reporting and accountability as a means to improving outcomes through national
goals for schooling and national performance targets.
2.19
This bill provides for payments to states to be
made conditional upon that stage being committed to MCEETYAs National Goals for
Schooling and to achieving performance measures as set out in regulations made
under the act. These regulations are likely to be agreed to by MCEETYA before
being gazetted. The Committee believes this needs to be considered in relation
to evidence presented to it by state governments concerned about sovereignty
issues.
2.20
The submission from the New South Wales
Government claims that the financial accountability requirements included in
the bill ‘go far beyond the reasonable expectations of accountability and are
likely to be counterproductive’[7].
A representative of the Victorian Department of Education, Employment and
Training gave evidence to the Committee, speaking in the same vein about
Commonwealth-state accountability and reporting relationships: ‘This
unilateral and heavy-handed approach by the Commonwealth ... has the very clear
and real potential to bring ... cooperative endeavour to a standstill’.[8]
2.21
The Committee acknowledges that submissions from
governments in South Australia and Western Australia about the issue of reporting
and accountability also inject a cautionary note into debate on this issue.
The South Australian submission says that the bill provides for the publication
of disaggregated data to identify schools having problems. This would be
contrary to the policy of the South Australian Government which is opposed to
publishing comparative information about schools.[9] The Committee notes the
understanding of the South Australian Government that the substance of the
regulations to be made by the Minister for Education, Training and Youth
Affairs will, based on DETYA advice, reflect the ‘agreed view of MCEETYA.[10] The submission from the
Minister for Education in Western Australia notes that as yet no decision has
been made by MCEETYA on whether to introduce performance targets because the
National Education Performance Monitoring Taskforce is currently investigating
the issue.[11]
2.22
The Committee is equally confident that a
‘federal’ understanding of the importance of this issue will emerge in future
MCEETYA discussions, as will a resolution of technical issues relating to
reporting. The disaggregation of jointly funded projects does present
technical problems in regard to reporting outcomes and the Committee urges the
Minister, as chair of MCEETYA, to resolve these difficulties. The good
intentions of the Government are apparent in its agreement to set out
requirements in the form of regulations which are disallowable by either House:
an incentive to ministers and officials to avoid the risk of their
disallowance.
2.23
It is noteworthy that Opposition senators have
not shown any interest in drawing state departmental officials who appeared as
witnesses on the question of reporting, although this issue featured
prominently in the evidence those officials presented to the Committee.
Senators on all sides share high expectations of the Commonwealth’s role in
providing direction to national educational objectives.
2.24
The Committee is generally in agreement on the
issue of reporting requirements to the extent of supporting a Commonwealth
initiative to have outcomes information available to legislators, students and
others with interests in the school systems, including the taxpaying
community. While the Committee agrees with state views that a ‘MCEETYA
solution’ to the issue of reporting and accountability is desirable, it agrees
with the Minister that, in the last report, the Commonwealth should show
leadership in this area of policy. This legislation gives substance to the
Commonwealth’s material interest in this issue. The states should not be
surprised at the measures that are provided for.
Allegations of community divisions
2.25
The Committee noted with interest comment in
several submissions, including those from the Australian Independent Teachers’
Union and the New South Wales Government that the thrust of this legislation
was contributing to antagonistic feelings between school sectors over the
issues of Commonwealth assistance to non-government schools. Apart from the
fact that the sectarian basis for much of the opposition to ‘state aid’ has
been swept aside by social change, evidence of any alleged ‘backlash’ is not
apparent to those who form the Committee majority, and has not been raised in
any parliamentary forum, to the knowledge of the Committee, for many years.
Even the most assiduous reading of press reports and commentary have failed to
reveal accounts of this.
2.26
Support for the principle of basic Commonwealth
assistance to all Australian schools is overwhelming. Public support for this
policy is so pervasive that no mainstream political group is opposed to it. The
Committee notes with some surprise that the Australian Education Union
maintains an ancient and outmoded policy in regard to financial assistance to
non-government schools, no doubt unrepresentative of its membership. The
Committee views such attitudes as unhelpful in allowing government schools to
compete effectively for their enrolment base. While it sees evidence of
innovation and ‘best practice’ in government schools, it is critical of the
defensive attitude of many of its so-called supporters.
Conclusion
The States Grants (Primary and Secondary Education
Assistance) Bill 2000 represents a forward step in providing financial security
for Australian schools. On this secure basis schools can plan confidently to
meet the needs of their supporting families and communities. The bill provides
a $22 billion package aimed at raising standards across all schools and, for
the first time, providing some assurance that the education dollar is expended
in a way that delivers the desired outputs.
Taken overall, therefore, the bill represents more than an
appropriation. It represents a commitment by the government to achieving the
national goals agreed to by MCEETYA. To a much greater extent than previous
States Grants Bills, this bill includes a blueprint for continued reform of the
national school system.
For these reasons the Committee majority supports this bill.
It recommends that it be passed without amendment.
Senator J Tierney
Chair
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