Comparing school funding policy arrangements
Prior to the September 2013 federal election, the Coalition had
committed to a "unity ticket" with then Prime Minister Kevin Rudd on
school funding. The Coalition position was widely reported, as it contrasted
sharply with previous comments from the Shadow Spokesman on Education the Hon
Christopher Pyne MP that a Coalition Government would honour only the first
year of the NPSI funding. The Australian reported the Hon Tony Abbott MP
(then Leader of the Opposition) explaining the "unity ticket" as:
"There is no difference between Kevin Rudd and myself
when it comes to school funding," the Opposition Leader said at an
independent school in Melbourne.
"We will honour the agreements that Labor has entered
into. We will match the offers that Labor has made. We will make sure that no
school is worse off.
"The essential difference between Labor and the
Coalition going into the coming election is not over funding, it's over the
amount of control that the commonwealth government should have. Under the
Coalition, you'll get the funding but you won't get the strings attached."
In late November 2013, the new Education Minister, the Hon Christopher
Pyne MP, angered State and Territory Governments by announcing that the Abbott
Government would remove the NPSI model and renegotiate agreements with all
states and territories.
The ABC reported Minister Pyne as saying that the Abbott Government
would honour funding for 2014, but a new model would be implemented after that
In regards to the Prime Minister's "unity ticket" pledge, Minister
Pyne was quoted by the ABC as saying:
"The way our system works is no government can bind any
future government - what one government does, another government can
undo," he said.
"I made it very clear before the election that I didn't
buy up to the Labor Party model. We said that we would have the same funding
envelope and we will." 
Statements by the Prime Minister, the Hon Tony Abbott MP, in early
December 2013 appeared to change the Coalition's policy on school funding
again. The ABC reported the Prime Minister as saying that the
Coalition's election commitment was to 'match the funding total, not the model
used to distribute it'.
At this time, the Prime Minister was reported as saying that funding would be
steady over four years:
"Under the Coalition, schools will get the same quantum
of funding over the four years that they would have under Labor had it been
re-elected. In fact, they will get a little bit more," he told Channel Ten
"I think Christopher [Pyne] said schools would get the
same amount of money and schools - plural - will get the same amount of money.
"We are going to keep the promise that we actually made,
not the promise that some people thought that we made, or the promise that some
people might have liked us to make."
At a joint press conference on 2 December 2013, the Prime Minister and
the Minister for Education provided a further statement of the Abbott Government's
position on school funding, this time committing to funding the NPSI funding
for four years. A further commitment was made to provide $1.2 billion to
Western Australia, Queensland and the Northern Territory which had not signed
agreements to be participating states under the Australian Education Act
The joint statement on 2 December 2013was reported as a 'backflip' and
the media linked the change in policy to the widespread criticism of Minister
Pyne's statements in November.
That there had been widespread consensus and support for the
recommendations of the Gonski Review and the agreements under the NPSI was
clear from the anger of State and Territory Governments at the Coalition's
policy change post‑September 2013. The Australian documented the
reactions of a number of states:
Mr O'Farrell [then Premier of NSW] led the charge, attacking
Mr Pyne's performance and revealing he had written to the Prime Minister
seeking his involvement to avoid a worsening standoff.
"I continue to be concerned in the way in which the
federal Education Minister...is dictating this debate through the media and not
doing what any other reasonable minister, state or federal, would do, which is
pick up the phone and explain what the hell is going on," he said.
NSW Education Minister Adrian Piccoli joined Labor state
education ministers in accusing Mr Pyne of breaking an election promise of a
"unity ticket" on Gonski and labelling any shift away from
needs-based modelling as a "body-blow" for education. "He [Mr
Pyne] must be the only person in Australia who thinks the SES (socioeconomic
status) model is a good model," Mr Piccoli said. "The Gonski
panel said 'no' [to the SES model] (and) if you walk into any school in NSW
every teacher and principal would say 'no'."
South Australian Labor Premier Jay Weatherill said there had
been a hardening of resolve among all states ahead of Friday's meeting, saying:
"We're not going to let the federal government backslide on their
commitment to school funding." He stopped short of committing to legal
[Former] Tasmanian Education Minister Nick McKim, also the
state's Greens leader, said his and other states would be "demanding"
Mr Pyne provide "the full $2.8 billion of (Gonski) funding".
"This is one of the most spectacular broken promises in
Australian political history," Mr McKim said.
It is clear from the commentary from September 2013 to May 2014, when
the Federal Budget partially clarified the Abbott Government's changes to
school funding, that there has been substantial confusion around the Abbott Government's
intentions. This confusion, and the resulting uncertainty, as well as the
funding changes such as indexation, are examined in this chapter.
Comparing NPSI and Students First: funding
The Students First model over the period 2013-14 to 2016-17 matches the
funding allocated under the NPSI. Funding is distributed using the formulas
contained in the Australian Education Act 2013, with the caveat that
amendments to the Act have been foreshadowed. Importantly though, the Students
First model does not include the funding that would have been allocated for
years five and six of the NPSI. This funding represents the bulk of the
Australian Government funding in the NPSI: $7 billion.
A representation of the progression of the NPSI funding appeared in the
Mid-Year Economic and Fiscal Outlook (MYEFO) published in December 2013:
Figure 13—Progression of ODA, NDIS and NPSI funding over
The MYEFO noted in relation to the chart:
The projections for [Students] First assume all States and
Territories participate and there are no changes to the former Government's
policy except those announced publicly on 2 December 2013.
The Students First funding, as documented in the MYEFO chart,
demonstrates that additional annual funding from the Commonwealth increases
from $0.5 billion in 2013-14 to $3.7 billion by 2019-20:
Table 8—MYEFO breakdown of school funding
This funding trend in MYEFO reflects the NPSI funding specified for
participating states, even though the funding is re-titled as Students First
(due to the change of government at the September 2013 federal election).
The 2 December 2013 joint announcement by the Minister for Education,
the Hon Christopher Pyne MP and the Prime Minister, the Hon Tony Abbott MP, was
the first instance in which the Abbott Government had confirmed that school
funding under Students First would match that under the NPSI for only the first
four years of the policy.
In May 2014, the 2014-15 Federal Budget showed the Abbott Government's
decision not to match the NPSI funding for years five and six and implementing
a modest rate of indexation of school funding from 2018:
The Government will provide an additional $54.1 million in
2017-18 to maintain real Commonwealth school funding beyond the 2017 school
year. From the 2018 school year onwards, total school funding will be indexed
by the Consumer Price Index, with an allowance for changes in enrolments.
At the committee's public hearing on 16 May 2014, Mr Cook from the
Department of Education advised that indexation from the end of 2017 (as
detailed in the 2014-15 Budget) would be CPI plus enrolment growth:
Mr Cook, I am sorry to interrupt, but it might be useful if all
of us clarify these points as we go. When you say 'CPI enrolment growth', what
does that mean exactly?
Cook: It is plus. It is enrolment growth on average is around two
per cent. You have that, plus CPI, which is projected to be 2.5 per cent. So
there is your growth of 4.5 per cent.
If your enrolment grows two per cent—
Cook: On average. I am giving an average level here. What it
means at the individual school level is, if you have 50 more children in your
school, there is an enrolment growth and you will get funding for 50 more
children. The alternative is, if you get 50 more children, all you are going to
get is consumer price index and that is not where the government has gone. The
government has been very clear that, if you get more children in your school,
then your budget will increase. It will increase at a student level also by 2.5
per cent CPI.
All you doing is adjusting enrolment and applying CPI.
Cook: That is correct. It is enrolment plus CPI.
It is essentially the CPI on the basis that you do not limit
On this point, the committee questions the use of enrolment growth as a
component of indexation. The Department of Education provided no rationale for
the inclusion of enrolment growth in calculating the indexation rate for school
funding, nor the way in which Mr Cook had reached his calculation of 2 per cent
The ABS reported that enrolment growth in 2013 was 1.5 per cent on the
enrolments in 2012 which itself had represented a growth of 1.4 per cent on
2011 levels. Previous years had seen enrolment growth of less than 1 per cent
The ABS noted that growth in enrolments were significantly greater at primary
level than at secondary level.
Commonwealth spending cuts of approximately $30 billion
The Budget Overview noted in relation to the indexation arrangements:
In this Budget the Government is adopting sensible indexation
arrangements for schools from 2018, and hospitals from 2017-18... These
measures will achieve cumulative savings of over $80 billion by 2024-25.
The following chart shows the dramatic effect of moving to CPI
indexation on the funding arrangements going forward for both schools and
Figure 14–Demonstration of future 'savings' achieved by
indexation of funding for schools and hospitals post 2017
At its public hearing on 16 May 2014, the committee sought advice from
the Department of Education regarding the exact amount of 'savings' detailed in
the above chart. Department officials were not able to explain to the committee
how much of the $80 billion worth of cuts would come from schools. They took
the questions on notice. However, the response provided on 2 June 2014 to the
question was that the Department of Treasury would have to provide the
When following up the answer during Budget Estimates on 4 June 2014, committee
members were advised by the Department of Education to seek advice directly
from the Department of Treasury. The following extract from Budget Estimates
demonstrates the reluctance of the Department of Treasury to provide a
Senator WRIGHT: I would like to have a bit of a better
understanding about the proportion of the $80 billion reduction in hospitals
and schools funding flagged in the budget papers, which relates to school
funding. What proportion of that figure will come from schools?
Mr Ray: Earlier we took a question on notice which
would go to the precise numbers. Senator Wong asked us, effectively, to provide
the detail of the gap between the two lines in the chart and we took that on
Senator Cormann: We will provide that on notice.
Mr Ray: But I did say earlier that the schools number
is something less than $30 billion, and something more than [$50 billion] is
The decision to apply CPI indexation from 2018 was described by the
Department of Education at Budget Estimates as a 'whole of government change'
which would 'affect more than schooling'.
When asked if the department had done any modelling work to ascertain the
effect on student outcomes of the move to CPI indexation, department
We did not do that work because the move to CPI indexation is
beyond schooling. It was a whole of government decision, so it was not work
that we put forward.
The department has also previously stated that it has no forecast data
on which to make a determination about projected indexation from the end of
That the significant difference in funding for schools in years five and
six of implementation of the funding model was a very real concern expressed
almost universally by submitters and witnesses. Mr Chris Bonnor provided the
committee with a summation of these deeply held concerns:
...we need to remember that the Gonski recommendations were
welcomed by almost all players in school education. If we fall short of what
was agreed, and if the funding does not go beyond four years, the argument
about improving equity is going to degenerate to what we had before—that is, a
redistribution of the resources we have. I have lived through that in my
career. I do not want to go there again, and I hope you would not either.
The Association of Independent Schools of South Australia told the
committee quite clearly that without the funding previously committed by the
Rudd/Gillard Governments for years five and six, South Australian independent
schools would fall behind. Mrs Grantskalns, Chief Executive of the Association
of Independent Schools of South Australia explained:
It is in years 5 and 6 that the money to support
individualised programs and school-based programs for those students is
delivered. There is no genuine extra money, really, for the first four years
for our schools, so it is years 5 and 6 where schools will be supported to
deliver all that they would want to be able to deliver. Schools are actively
engaging with those students; it is not that they are not doing their very best
to meet the needs. But it is also true that money is helpful in doing that, for
a whole range of reasons: because of the access it can give you to a wider
curriculum, to co-curricular programs and to all kinds of experiences that cost
money. So the fact that we fall further behind every year for the next four
years makes years 5 and 6 critical if we are ever to get to the point where we
have some equity with other schools in other states.
From the left: Senator Sean Edwards, Senator Penny Wright (Deputy
Chair), Mr Stephen Palethorpe (Committee Secretary), Senator the Hon
Jacinta Collins (Chair), and Senator Deborah O'Neill. The committee conducted a
public hearing and site visit at the Immaculate Heart of Mary School, Adelaide,
30 April 2014.
In NSW, The Daily Telegraph quoted Secondary Principals Council
president Ms Lila Mularczyk as saying that the NSW State Government's
contribution for years five and six alone would not be enough to adequately
fund schools; the Australian Government's contribution was vital:
“Without the final years of the Gonski fairer funding model,
young people in our schools are denied additional access to programs and
teachers to narrow their learning gap. This may include paraprofessionals to
support disengaged students and infrequent school attenders or students
requiring additional learning needs support because of poor language
proficiency or students with learning or physical disabilities.”
The NSW Teachers Federation citied research by former deputy
Director-General of Education in NSW Dr Jim McMorrow which stated that the
Abbott Government's changes to funding arrangements would take $2.67 billion
away from schools over the period 2018-2020.
The NSW State Government has confirmed that it is committed to the
funding arrangements over the six years, no matter what funding is provided by
the Australian Government.
The day after the 2014-15 Federal Budget, the NSW Treasurer, the Hon Andrew
Constance, told ABC Radio that the Abbott Government funding cuts will have
'major ramifications' in NSW schools resulting in a $1.6 billion 'hit' in years
five and six.
At the recent NSW Nationals party conference, the Hon Adrian Piccoli,
NSW Education Minister spoke in support of a motion calling on the Australian
Government to commit to the six years of the NPSI agreements. The Australian
quoted the minister as saying that he had signed the NERA because it
represented a significant benefit to regional schools:
“Our performances are embarrassing, and should be
embarrassing to all Australians, in terms of the differences between regional
NSW and metropolitan.
“Why was I the strongest advocate across all education
ministers? I think it’s because I’m the only National Party minister. Our
electorates benefit the most.”
Mr Piccoli agreed the federal budget deficit needed to be addressed,
but it was about the choices. For example, the federal government had decided
to increase defence spending, he said.
By contrast the Victorian State Government noted that it could not
determine the levels of federal funding going forward due to the lack of
clarity from the Abbott Government, and this affected the overall amount of
funding available for schools in Victoria:
We look forward to the federal
budget this evening, and we will have some clarification regarding the ongoing
funding, for example,
in the year 16-17.
School years do not finish
the year, so we are seeking commitments for school
years as well to give some certainty to our schools. We look forward
to some clarity from the federal
government this evening as it hands
down its budget. But there is no year-by-year breakdown of what is going to be spent over the next six years. As I said, two of those
years are outside
the forward estimates. We have identified $1.6 billion of new funding that is going into our schools
this year as a result
of the funding
agreement, on top of the [$1.2 billion] that is already
existing. As I said, the remainder of the money is held in the central
contingency, just like we do not put the total capital
spend for the next four years in the forward
estimates. The money is added to as each year’s
budget is done. This is our first year since the funding
agreement, and in subsequent budgets, when I am back here next year talking
to you, I will be able to talk about the next component
or the next instalment from the federal
and state funding
that has gone into our budgets.
Despite these uncertainties, the day after the 2014-15 Federal Budget,
the Victorian Treasurer, the Hon Michael O'Brien, told ABC Radio that
regardless of the actions of the Abbott Government, Victoria was committed to
the funding arrangements for years five and six.
Participating states are struggling to hold to the agreements signed as
part of the NPSI. This demonstrates the strength of the consensus reached
between the Rudd/Gillard Governments and the participating states and
territories and the importance of certainty of funding through the medium-term
(that is, out to years five and six). In an article for The Conversation
website in late November 2013, Professor Louise Watson, Director of the
Education Institute at the University of Canberra, described the importance of
the consensus reached with states and territories by the previous government on
education funding as a legacy which was now gone:
The funding agreements now being reviewed by [Minister] Pyne
were based on a bipartisan national consensus between state and federal
governments which recognised the need for school reform and was committed to
evidence-based school improvement.
They represent the culmination of efforts by both Labor and
Coalition governments since the late 1980s to move beyond the “blame game” that
was typical of federal interventions in the past. Given current concerns about
the performance of Australian schooling, the new federal education minister
places much at risk by trampling over this legacy. 
The following chapter—chapter 8—examines the key concerns raised by
submitters and witnesses during the committee's inquiry. A consistent feature
of the concerns raised is difficulties faced by those who have to implement the
changes as the Abbott Government transitions school funding from NPSI to
Despite these strong commitments from State and Territory Governments to
the needs‑based funding arrangements, the committee is disappointed about
the refusal of many State and Territory Governments to participate in the
Submissions were received from the Northern Territory, Queensland, the
Australian Capital Territory, and South Australia. However only South
Australia, the Northern Territory, and Tasmania chose to attend the committee's
public hearings. Western Australia and Queensland at first agreed to attend
hearings, but declined at the last moment, causing great inconvenience to the
committee and other witnesses.
New South Wales refused to appear at hearings or provide a submission,
despite the committee giving invitations for the State Government to attend
three different public hearings. Regardless of the public commitment of the NSW
Premier the Hon Mike Baird MP to the importance of school funding,
the NSW Department of Education and Communities was singularly uncooperative
with the committee's requests for assistance and information. Most recently,
the committee requested a copy of the presentation by the department to Mr
Gonski referred to during his May 2014 Jean Blackburn Oration:
One of the most satisfying hours I have spent in the last 12
months was attending at their invitation a meeting with the department of
education in New South Wales. There a well prepared and thought through
presentation given by senior members of that department put up on the screen
the essence of our proposed needs based approach and demonstrated that so much
of it has and is being implemented in New South Wales.
The Minister for Education, the Hon Adrian Piccoli MP, in response to
the committee's request for the presentation, declined to provide the
information, arguing that as the material was out of date it would be 'of
limited use to the committee'.
Further, the committee is disturbed by the inability or unwillingness of
the Commonwealth Department of Education to properly answer questions put
regarding the implementation of the Students First funding arrangements. It
particularly concerns the committee that the Department of Education was
apparently shut out of the decisions surrounding the CPI indexation of
Commonwealth school funding on the basis that it was a 'whole of government
change' which would 'affect more than schooling'. Of equal concern was the fact
that the department was unable to explain the quantum of reduced spending from
the education portfolio (which is in the vicinity of $30 billion over the
period 2017-18 to 2024-25).
Of even greater concern to the committee is the apparent disintegration
of the consensus around school funding which had existed prior to the Abbott Government's
changes to the funding arrangements.
The committee is deeply disappointed by the conduct of those states
which have not participated and the actions of the Australian Department of
Education. The committee considers that such behaviour is likely to increase
the state of confusion over school funding in Australia.
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