The effect of changes to school funding arrangements
Evidence provided to the committee during its public hearings, and
through over 3 400 submissions received in the course of the inquiry,
demonstrated a number of issues around which concerns about the changes to
school funding coalesce:
Uncertainty about future funding, particularly beyond the four
years of funding provided in the 2013-14 Budget;
Lack of clarity regarding the process for amendments to the Australia
Education Act 2013 and the possible effect of removing the 'command and
control' mechanism from the Act;
The need for accountability and transparency measures to ensure
that funding is going to those schools which require it most; and
Transparency around the future levels of funding, particularly
indexation decisions, by states and territories.
The committee considers that without certainty, accountability and
transparency in school funding, achieving high quality educational outcomes for
Australian students will not be possible. The remainder of this chapter examines
these important issues raised during the committee's inquiry.
The effects of funding uncertainty
The committee heard that uncertainty around future funding, funding
arrangements and transition was a critical issue for State and Territory Governments,
schools, principals, teachers and parents.
Mr Tony Harrison, Chief Executive of the Department for Education and
Child Development South Australia, noted that South Australia had been
enthusiastic about signing the agreement under the NPSI primarily due to the
consistency and certainty of the funding which would have been provided. He
noted that 'working in short-term frames of three and four years does provide
significant challenges, particularly for programming at the school level but
also from a more universal education system level as well.'
Mr Harrison cited Singapore as an example of a successful long-term reform
program in his remarks on the benefits of certainty of funding for long-term
It has certainly provided us with the ability to have the
longer term planning, which I know has been often mentioned to this committee
in relation to the development of reform programs for a longer continuous
process. In my more recent reading, there are examples in east Asian countries.
You only have to cite Singapore as a country. They engaged a 13-year reform
program which was largely founded on the learning journey of a child from
commencing school to finishing school. I think the academic research would very
much support that it is difficult to make short, quick gains in education in
relation to improved learning and teaching outcomes; they have to be programmed
on a more extended period of time.
Mr Rob Nairn, Executive Director of Australian Secondary Principals'
Association stressed that principals need certainty of funding to be able to
plan for programs and target resources to areas of need in their schools:
The problem we have had with previous funding
arrangements—things like national partnership dollars that have gone into
schools—is that it is an injection or a silver bullet type thing that was there
for one to three years. Principals got the dollars and made some sort of an
intervention that made a difference, and then the funding disappeared and there
was nothing sustainable. Targeting the money directly to schools where it is
needed, to the students who need it, ensures some sustainability around
programs so that you are not wondering whether you are going to get a silver
bullet bucket of money. You know that there is some sustainability, because you
have the same cohort of students. As you build their capacity you can build
into the various programs. We need a funding model that will enable some
sustainability. The current funding model does not allow that.
Ms Meredith Peace, President of the Australian Education Union, Victoria
Branch explained that uncertainty around future funding could mean that schools
had to cancel programs or could not plan for program implementation:
Certainly one of the things our principals and our schools
said to us throughout the Gonski review, and about the importance of what was
actually delivered through the funding arrangements, was the certainty of
funding beyond a set period of time—that they would be able to plan and put in
place programs of support for students in the long-term, knowing full well that
they could keep that support in place. Even in the last six to 12 months, we
have had principals say to us, in terms of the lack of transparency around funding
for this year, 'We are going to have to let staff go.' Schools found out on the
second last day of the school year what their revised budgets were. They were
not told how much additional money they were getting; they were just given a
revised budget and they had to try and work it out themselves. We had many
schools who were saying, 'We will simply have to end those programs, end the
employment of staff who are providing literacy support to kids in classrooms,
because we have got no certainty of funding now for the sorts of programs we
are running to support kids.' So it has made a very real difference to kids in
classrooms and to our public schools.
The committee believes that the uncertainty around school funding, a
product of the Abbott Government's undertaking to fund only the first four
years of the NPSI, has the potential to derail implementation of its Students
First reforms. Without consistent and certain funding, schools cannot plan
expenditure on programs which will improve teacher quality and educational
outcomes for students. As discussed in Chapter 4, the committee considers that
there is a link between funding and educational outcomes, and the committee is
persuaded that unless funding is consistent and provided over a longer period
than an electoral cycle, educational outcomes will suffer.
It is also clear to the committee that without certainty of
funding it will not be possible to address the funding inequity that exists in
the school system, as identified by the Gonski Review. The committee notes that
Minister Pyne has finally acknowledged the fundamental inequity present in the
Australian schools system. As recently as 2 July 2014 he is quoted as saying:
education system routinely fails children from low socio-economic backgrounds,
indigenous children and those in remote communities. As a developed country, we
should not willingly accept that a child's background determines their
The committee is mindful that the recommendations of the Gonski Review
were designed to address and reduce disadvantage in precisely the areas
Minister Pyne identified.
Unless governments and schools can make long-term decisions and target
those groups of students most in need, the gap between the disadvantaged and
the advantaged in the Australian school system will increase. If the Abbott Government
does not reverse this situation it will have effectively unpicked the
overwhelming consensus built during the Gonski Review and NPSI negotiations.
This will risk further exacerbating the underperformance of schools and
students within the long-tail of disadvantage across the Australian schooling
Without certainty of funding, schools cannot make the best decisions for
students, teachers and the broader school community and act to reduce inequity.
The concerns over the future of school funding post-2017 need to be urgently
allayed. In light of Minister Pyne's recent and overdue acknowledgement of the
existing inequity in the Australian schooling system, the committee emphasises
the importance of the following recommendation.
Recommendation 1 (commit to implementation of the
The committee believes that the significant consensus
achieved from the Gonski Review and the agreements negotiated under the
National Plan for School Improvement (NPSI) must not be lost with the current
government's harmful and confusing changes. The committee recommends the
Australian Government honour its pre-election commitments to fully implement
the national needs-based, sector‑blind funding model incorporated in the
NPSI to improve equity across Australian schools. In particular, the Australian
Government should commit to the following elements of the NPSI:
the six year transition to a nationally consistent Schooling
maintain the commitments made under the National Education
Reform Agreement (NERA) and bilateral agreements with participating states and
territories, in particular the five areas of the NPSI:
empowered school leadership
meeting student need
greater transparency and accountability; and
conduct reviews prescribed under the NERA and strive for
equitable funding for schools most in need.
Uncertainty of funding has a negative effect on all schools and
students, but particularly those from specific groups which rely on additional
funding to decrease inequity: Indigenous students, students with disability,
small schools, remote schools, students with limited English, and students from
a socio-economically disadvantaged background. In this regard, Dr Ken Boston,
former head of the NSW Education Department and former Gonski panellist,
explained that funding targeted to areas of need, such as towards students from
disadvantaged groups, can have a significant effect on education outcomes for
Where it has been possible for schools and systems to target
funding against areas of need, there has been real improvement. The strategic
targeting of available resources on reading in the early and primary years has
clearly resulted in improved achievement: as a result, over the period 2008 to
2013 there has been an improvement in reading in Year 3 and Year 5 (ACARA,
2013: 300), including notable improvement amongst Indigenous students.
A clear example of the negative effect of uncertainty of funding on
students with additional needs can be found in the consideration of disability
funding. The Australian Education Act 2013 includes an interim loading
for disability, which is intended to cover 2014 until a loading can be
determined. Dr Ken Boston, in a speech to the Students With Disability Forum in
Canberra, explained that in recommending the development of a loading for
disability, the Gonski Panel found that there was no common approach across
states with regards to students with disability:
We found there was a problem in striking a loading, because
of the lack of a common approach across states to identifying students with
disability and the extent of educational adjustment required to support them;
and because of the high variability of the cost of support for students with
very different needs.
We noted that COAG had work in progress to overcome this
problem by achieving a nationally consistent approach, which is now close to
The Gonski Panel, Dr Boston explained, recommended that a loading for
disability could only be developed once the lack of a consistent approach had
So, we recommended that, once this nationally consistent
collection of data had been completed, a national schools resourcing body, in
consultation with all governments and accountable to all ministers, should
establish the loadings to attach to the categories of extensive, substantial or
supplementary adjustments required to support the learning of children with
The Department of Education is undertaking work to develop a disability
loading, and advised the committee that a report would be presented at First
Ministers in January 2015.
Meanwhile, the effect of this uncertainty on students with disability was
outlined by Ms Stephanie Gotlib, Executive Officer of Children with Disability
There is a great deal yet to be finalised and negotiated
before the planned introduction of a disability loading, but what is of central
concern to CDA [Children with Disability Australia] is the lack of clarity
about the process that will be undertaken to deliver a coherent and effective
load funding model by 2015. CDA has asked, since the initial commitment was
made to develop a disability loading, for the articulation of a clear program
of work occurring to develop this loading and how this will be in place for the
2015 school year as promised. This is still not clear for CDA. Additionally, it
is of concern that there have only been minimal meaningful consultations and
involvements of groups outside of government in this work to date despite there
being a great deal more expertise in this area outside government than in the
Compounding the uncertainty around future disability funding is advice
from the Department of Education regarding projections of annual Commonwealth
funding growth for the Student with Disability loading.
The figures show the rate of growth increasing in only two
jurisdictions—Western Australia and the ACT—from 2016-17 to 2017-18. In all
other jurisdictions the rate of growth decreases and for the case of the
Northern Territory, funding for 2017-18 goes backwards.
Disability loading and the NDIS
At its public hearings the committee heard evidence which raised
concerns about the interaction between the NDIS and the disability loading. Mr
Rappensberg from Novita Childrens' Services described the situation in South
South Australia is a special circumstance because it is the
trial site for children for the NDIS, which is not replicated in other states
in Australia. The interface issues between the NDIS and education funding will expose
themselves first in this particular state.
The other issue is in relation to the
loadings and how they are applied—whether they are applied generically to the
school or individually to the child to fund specific supports. An organisation
like Novita provides a specific support to an individual child, yet the loading
may be applied to the school generically in relation to the cohort of children
with special needs that they have. So that potentially is an issue as well
because, as service providers move into a fee-for-service arrangement under the
NDIS and the security of their previous block grant funding is removed, a service
provider needs to charge a fee to be able to provide a service. So, come 1
July, in South Australia service providers entering schools will need to charge
a fee for the service that they are providing, which will not be funded by the
NDIS, because of that clarity around the NDIS not funding supports that access
Further, Ms Julie Astley, Director Operations (Client Serivces) from
Novita Childrens' Services noted that communications about the interaction
between the NDIS and the disability loading were not clear, a fact which made
the realities of supporting children with a disability difficult for parents
Certainly, the communication that we receive lacks sufficient
detail to be able to get an informed feel on a day-to-day level for how schools
will be uplifted to better support children with disabilities in the school
environment and then the flow-on effect to service providers to support the
schools in their endeavours. The lack of clarity, the uncertainty, is a
prevalent comment that we hear in our ongoing, day-to-day communication with
schools, as we provide services for and with them for kids with special needs.
Mr Harrison advised of the South Australian Government's support for the
need to clarify the interaction between the disability loading and the NDIS
With some 13½ thousand, we, like all jurisdictions, have
finite resources and go through rigorous processes of assessment to try to
determine where the greatest needs are to ensure that we best utilise available
funds as effectively and efficiently as we can. The strongest comment I can make is the need for absolute
alignment between the two approaches from NDIS and also from improved funding
which goes into the education area as well.
The committee is concerned that the uncertainty around continuing
funding for students with a disability is a particularly urgent example of the
negative effect of the change in funding arrangements. Likewise, the committee
notes that other disadvantaged groups could also be acutely affected. The
confusion around the interaction between the disability loading and the NDIS is
also of concern to the committee. The committee believes that the above
evidence from South Australia highlights that partnerships between the State
and Territory Governments and the Australian Government are critical in the
ongoing development of school education policy.
The committee considers that the collection of data and decisions about
the loading for students with a disability is of urgent priority. It is
essential that this work is completed to provide certainty for schools,
students and families.
The committee believes that eroding the agreements established with
participating states will impact severely on vulnerable groups in the education
system, such as students with disabilities. If a comprehensive loading for
students with a disability is not established by 2015, this group of students
will become an example of the tragic consequences of the Abbott Government's
failure to work collaborative within the consensus built by the agreement with
Recommendation 3 (disability loading)
The committee recommends that the government moves, as a
matter of urgency, to a disability loading based on actual student need. To
this end, the committee recommends that data collection and decisions about the
loading for students with a disability should be expedited so as to provide
certainty around a needs-based disability loading to replace the temporary
arrangements in 2015. This must happen in close consultation with advocacy
groups, the various school sectors and states and territories.
Recommendation 4 (disability loading)
The committee recommends the Federal Government honours its
election commitment for increased funding to cover unmet need for students with
Further, the committee recommends that the government works
with all states, territories and advocacy groups to clarify the interaction
between the disability loading and the National Disability Insurance Scheme.
Recommendation 5 (disability loading)
The committee recommends that information assisting parents
and carers of students with a disability be produced and distributed as soon as
Proposed amendments to the Australian Education Act
The proposed amendments to the Australian Education Act 2013
centre on the removal of the so called "command and control" mechanisms.
Mr Cook provided the committee with advice as to the proposed amendments:
I think the command-and-control aspect certainly talked about
what requirements there would be for states and territories and approved
authorities to document in great detail the things they were doing. I do not
think anyone has the view—and certainly the minister does not—that transparency
and accountability is not a good thing, as I said in my opening statement. The
My School website information around some of those things—providing information
in relation to what states and territories are required to do around COAG
education targets—is all part of the work that is required to be done around
accountability and transparency. But the question the minister has put to
schools, states and territories is whether it is undue reach by the
Commonwealth to tell schools how they should be running their business—telling
every school that they must have a school improvement plan and that this is how
it needs to be made up, this is what it needs to look like and this is what
needs to be in the plan.
Mr Cook provided a subsequent update in which he noted that the deadline
for submissions regarding proposed amendments was the first week of May 2014.
The department had collected a number of submissions as part of consultation on
the proposed amendments, and some states and territories had asked for
extensions until the end of May 2014. Mr Cook then outlined the next steps in
the consultation process:
Our proposal then would be to look at all of those written
submissions to summarise areas where states and territories and other
stakeholders have a view that they would like to see some amendments to the
current act. Our process then would be that we would actually go out and
consult face to face around that just to make sure we are covering the sort of
things they are suggesting. We would then provide that advice for government
and then it is a matter for government as to when the amendments would be
proposed to come before parliament.
The department elaborated on Mr Cook's information in an answer to a
question on notice from Budget Estimates:
Following the receipt of all submissions, the department will
prepare issues papers to inform more detailed discussions at consultation
sessions with peak stakeholders in August 2014. Initial drafting of possible
legislative amendments will occur later in 2014 for discussion with peak
stakeholders as part of a third and final phase of consultations. This
timeframe enables considered consultation by stakeholders and sufficient time
to draft amendments with a view to tabling legislation in 2015.
In its answer, the department advised that as at 20 June 2014, 17
submissions had been received from stakeholders. Submissions received included:
the National Catholic Education Commission, Independent Schools Council of
Australia, Victoria, Queensland and the Northern Territory. The department
expected to receive submissions from New South Wales, Western Australia, South
Australia and the Australian Capital Territory.
As far as the committee is aware the submissions received by the department
have not been made public.
Mr Cook also advised the committee on issues that states and territories
had identified as problematic with the Australian Education Act 2013:
Cook: The states and territories have indicated a number of
areas, including things like a view that there is too much power, I guess,
delegated in the federal minister in their ability in the current act to
require states and territories to take particular courses of action, such as
policy actions, for example. There is concern about some of the specific goals
that are outlined in the act in relation to PISA growth and things like that.
It is probably fair to say generally that states and territories would have a
preference that certain aspects of the act be less specific and provide less
power to a federal minister, with the view that they are the ones who are
actually responsible for school education and for seeking improvements in
Hehir: The main sections tend to be the section 77, section 105
and section 22 sort of areas. But they are the areas where the Australian
government minister has the power. So they are the broad areas they are looking
The Australian Secondary Principals' Association summed up community
concerns regarding proposed changes to the Australian Education Act 2013,
and in particular noted the need for mechanisms to ensure that governments
committed to a needs-based funding model:
Without knowing the proposed changes it would appear that any
changes to reduce command and control will increase the disconnect between the
commonwealth and the states. Whilst the current Act provides for transparency,
we are concerned that this will be lost and result in deregulation /
decoupling. ASPA does not support anything that reduces transparency and
removes the obligations of governments to the provision of a high quality
equitable education for all students.
We support broad accountability measures within a system in
which funding and support is transparent and where governments properly assume
their obligations to ensure long-term provisions for all students. We do not
support OFSTED type accountability.
Given the timing of consultations on the proposed amendments to the Australian
Education Act 2013, and the fact that many states and territories refused
to participate in the committee's inquiry, there is limited information
available around the proposed amendments. However, it is clear to the committee
that removal of the 'command and control' aspects of the legislation would be
highly detrimental to the implementation of the national needs-based funding
arrangement under the Act. As discussed below, there are already problems
emerging regarding states' and territories' compliance with the aim of
implementing a national needs-based funding model.
It has been clear to the committee throughout its inquiry that the lack
of certainty and the confusion around funding has caused great anxiety in the
broader school community; particularly among groups who depend on additional
funding to address inequity, such as students with a disability.
The committee believes that any consultations on proposed amendments
need to be transparent and to form part of a community discussion. The Gonski
Review was the catalyst for broad community debate about school funding policy
and the committee considers that there is scope to build on that community
Accountability and transparency around provision of funding
The first payments to states and territories under the Australian
Education Act 2013 were made on 7 January 2014:
...representing approximately $4.7 billion to 837 approved
authorities representing 9,435 schools:
- $398 million for the first of 12 monthly payments for 6,708
- $2.6 billion for 50 per cent upfront payments to 1,655
- $1.7 billion for 50 per cent upfront payments to 1072
Further payments to non-government schools are generally made
in July (25 per cent) and October (25 per cent plus any enrolment adjustments).
Funding for government schools will be provided to states and territories
However, in regards to funding in the years after the forward estimates,
the Department has provided very little information:
For arrangements beyond the forward estimates, the Government
has committed to working cooperatively with states and territories and the non‑government
sector to deliver sensible and stable funding and will draw on the planned
review processes for the loadings and indexation, scheduled to start during
States, territories and non-government authorities have been
advised, in January 2014, of the intention to begin these planned review
processes for the loadings and indexation.
The difficulty of ensuring that the implementation of the Students First
model actually provides funding to schools which need it is further compounded
by the need for further negotiation with State and Territory Governments
regarding post 2017 funding. Further, that the Abbott Government has only
committed to four years of funding rather than six, despite some states having
signed the NERA which extends to six years of funding, means confusion about
how funding arrangements will apply, for example the Victorian Minster for
Education has said:
The national funding agreement was signed in, I think, early
August last year, and that committed the Victorian and the Australian
governments to $12.2 billion of new funding over six years. The Victorian
government’s share of that is $5.4 billion over those six years, and we are
beginning to deliver that money into our schools this year. This is the first
budget since that agreement was signed. There is $1.2 billion already out
there, and there is [$1.6 billion] of initiatives in this year’s budget towards
that six-year goal. We know that that is backloaded. Most of the funding comes
on stream in the second half, in fact in the last two years, of that six-year
agreement. We will certainly do our bit, with guarantees that we will provide
the $5.4 billion over six years that we said we would put on the table, and
obviously we will hold the federal government accountable to do its bit in
terms of the balance of the money.
"expectation" for states to maintain funding
The Minister for Education, the Hon Christopher Pyne MP, wrote to the
non‑participating jurisdictions of Queensland, Western Australia and the
Northern Territory regarding the allocation of funding and outlining the Abbott
Government's belief in states' autonomy:
The Government recognises that states and territories remain
responsible for their schools and that all non-government schools should
maintain their independence and autonomy. In 2014 it is the Government's
intention, following consultation, to amend the command and control aspects of
the Australian Education Act 2013 to ensure jurisdictions maintain
authority for their schools.
Given our joint commitment to addressing student need and
improving educational outcomes for all students, it is my expectation
that your Government would continue its funding effort across schools [in the
relevant state or territory] through the forward estimates period.
As noted in Chapter 6, the Northern Territory advised the committee of
its intention to use the additional Commonwealth funding for capital projects.
At Budget Estimates, senators put to the Australian Department of Education the
Northern Territory's intention. It appears from the response that department
officials were unaware of the possibility that the territory would use the
funding for capital projects:
Senator WRIGHT: He [Mr Ken Davies, Chief Executive,
Department of Education Northern Territory] said it was [the Northern Territory
Government's] intent to spend the money on schools but they could not guarantee
every dollar would go to education costs.
Ms Paul: I think it has to. I think it has to under
the act. We will have to go and look at the—
Senator WRIGHT: Well, it has to. But if it does not,
it is not quite clear. How do you monitor? You monitor by results?
Ms Paul: I think we might be asking them tomorrow.
Senator WRIGHT: That is what I am asking you now. You
obviously were not aware of it. That was my first question. Did you follow that
up with the Northern Territory government? Clearly not, if you did not know
Ms Paul: We will now.
Western Australia, several witnesses noted, appears to have taken the
Abbott Government funding and cut State Government spending on schools.
Mr Rose, Senior Vice President of the State School Teachers' Union of
Western Australia explained:
The decision by the state government to agree to an
arrangement with the federal government post the federal election has allowed
them to drastically cut the budgets of schools in WA. A total of $180 million
has been cut from WA schools this year. More than 500 full-time-equivalent
teachers have been cut from the public system. More than 500 non-teaching
positions, such as educational assistants and Aboriginal and Islander education
officers, have been cut. Funding specific to the most disadvantaged students,
the School Support Program Resource Allocation or SSPRA funding, has been cut
by 30 per cent. Schools have also lost money designed for the performance
management of teachers, level III teacher programs and a long service leave
levy of $600 per teacher and $400 per support staff.
While its status as a non-participating state is not clear,
the Victorian State Government, in its recent Budget Estimates in May,
demonstrated the difficulty of accounting for Australian Government school
funding down to a school-by-school level when the Minister for Education
refused to provide a breakdown of school funding:
In Victoria there is no such thing as Gonski money. It is the
money that the state government puts into education, it is the money that the
federal government puts into education and that is the school funding. We do
not treat them as two separate buckets of money. It is school funding, and we
do not divide them up like that, especially in Victoria where we have a very
devolved education system, where we do not have line item budgets, where we
allow schools to spend the funding that they receive on the programs and
services that are going to best meet the needs of their community.
Mr Nairn, Australian Secondary Principals Association, summed up the
contrast between the state agreements under NPSI and the situation under
...Under Gonski, if we took the pure Gonski model, we had some
consistency and we had transparency across all the states and territories. What
we have now, through political processes, different negotiations were done with
different states and territories. We now have the situation where even states
that did not sign up for it have got dollars without any necessity to increase
or put in their contribution as well. That is a concern, because there is no
transparency. That is one of our biggest issues at the moment. The old funding
model was very hard to fathom and there was not a lot of transparency around
that. We believe that Gonski was going to provide the new funding model and
would provide some transparency across each of the states and territories.
That, through political processes, has gone, because not all the states and
territories signed up and we do not have pure Gonski going through each of the
states and territories. We believe a lot of that transparency is gone.
At the June 2014 Budget Estimates, senators sought to clarify with the Australian
Department of Education whether there were any guarantees that States were
bound to use Australian Government school funding for needs-based educational
outcomes, as opposed to capital projects. The department's reply was
Senator WRIGHT: If a state wanted to spend all of the
additional Commonwealth money that they received on capital infrastructure,
would there be anything to stop them from doing that?
Ms Paul: It is given to the states. The states are, of
course, their own entities. They can spend the money as they wish. But, as the
minister said, they have to be accountable to their electorate and to who they
represent, their citizens, if you like. They are also accountable quite clearly
through mechanisms like My School and so on on how their schools perform. And
they need to pay their teachers et cetera. I would be astonished if they would
Senator WRIGHT: We have been hearing today that this
is the first national needs based funding system, thanks to the Commonwealth
government, that has been delivered, but in fact there is no guarantee at all
that states and territories like Western Australia, Queensland or the Northern
Territory actually have to use the needs based funding formula, is there? There
is no requirement. There is no legal sanction if they do not.
Mr Cook: There never has been.
The committee agrees with Mr Nairn and other submitters that the lack of
transparency around states' allocation of school funding, particularly that funding
provided by the Abbott Government for the purpose of implementing quality
educational outcomes, is a major concern. The following recommendations would,
the committee believes, help to ameliorate the lack of transparency and
increase accountability around school funding so all governments can work
together to ensure that funding goes to schools which need it most.
In particular, the committee is concerned that the lack of transparency
in co‑contribution arrangements will result in an inability to ensure
that funding is going to schools which need it most. The committee finds it
entirely unacceptable for the Education Minister, at a time of significant
fiscal constraint, to rely solely on his "expectation" that State and
Territory Governments would continue its school funding efforts. At a time when
the Abbott Government is cutting approximately $30 billion in school
funding over the medium-term, it is entirely unsatisfactory for it essentially
to be handing blank cheques to the three jurisdictions that refused to sign up
to the NPSI.
Under the Abbott Government's changes to school funding arrangements,
there are no binding mechanisms by which non-participating states and
territories can be held to maintaining their current expenditure and working towards
achievement of the Schooling Resource Standard. As an example, the committee
notes that the Northern Territory Government, as outlined above, indicated its
intention to put the additional funding towards capital expenditure. More
concerning still is that the Department of Education was unaware of the
situation; indeed had not maintained some review of the Territory's funding
Without accountability mechanisms, there is no way to ensure that school
funding arrangements are geared towards addressing the inequities in school
funding, particular for those student groups most in need.
Recommendation 2 (non-participating states)
The committee recommends that the government work with
non-participating states and territories to:
maintain the existing education spending of all
non-participating states and territories;
ensure appropriate indexation of education spending for all
non‑participating states and territories;
ensure that adequate co-contribution arrangements are agreed
by all non‑participating states and territories to establish a national
School Resource Standard; and
achieve agreement with non-participating states and
territories to the national funding model and NPSI established under the Australian
Education Act 2013.
The committee has found throughout its inquiry that much information on
school funding arrangements is vague, obscured by the various reporting methods
of government jurisdictions in Australia. The committee believes that without
clear information which is consistent across jurisdictions there cannot be an
appropriate level of accountability. Meanwhile, the Abbott Government is
working to reduce the accountability measures in the Australian Education
Act 2013. In his letter to stakeholders inviting submissions on the removal
of "command and control" features of the legislation, Minister Pyne
sought comments on:
...where stakeholders perceive the Act or Regulation afford an
overreach of Commonwealth powers and involve unnecessary reporting to the
Commonwealth in this regard and ways to streamline the administration of
financial and general accountability processes.
The committee is deeply concerned that the Abbott Government is working
towards removing accountability and transparency from funding arrangements.
Throughout its report, the committee has highlighted the importance of
accountability to implementing a national needs-based funding model. The
committee believes the Abbott Government should act immediately to increase
accountability and dispel the confusion and uncertainty which has developed
through lack of public information and transparency.
Recommendation 6 (federal-state relations and
The committee recommends that the Department of Education
produce an annual 'report card' detailing the breakdown of school funding
funding provided to states and territories (participating and
non‑participating) and non-government schools by sector;
comparable information contributed by state and territory
governments about their school funding;
the extent to which these arrangements are achieving equitable
funding to schools and students in most need; and
funding broken down to a school level.
Transparency around future funding levels
Achieving the SRS
The Gonski Review described the SRS are being a basis on which the
Australian Government could determine the total funding to government and non‑government
systems and schools and its allocation of that contribution across school
Further, the SRS could act as a constant monitor of funding for schools:
...the resource standard could also be used by state and
territory governments to set the desired level of aggregate funding from state
and territory governments for both government and non-government sectors in
each jurisdiction. This would signal a greater commitment by state and
territory governments to the funding of non-government schools as part of the
new funding arrangements, as well as to the adequate funding of government
schools. The same would be the case for Australian Government funding of
Progress towards achieving the SRS, particularly post 2017 when the
Abbott Government has deemed that arrangements will be subject to negotiations
between the Australian Government and the States, is in doubt. In answer to a
question taken on notice, the Australian Department of Education was unable to
outline progress towards the SRS post 2017:
Question No. 3 (16 May):
Senator Jacinta Collins (Chair) asked on 16 May, Proof
Hansard pp 39-40:
What will changes from 2017 mean to any progression towards
reaching any commonality in an SRS?
The Department is unable to determine the progression.
The Schooling Resource Standard (SRS) is a common standard
including a base amount and loadings for disadvantage. Because the SRS is a
measure of total funding for education, of which Commonwealth funding is only a
proportion, a number of significant assumptions would need to be made,
requiring extensive modelling, for example:
- the Commonwealth share of funding and additionality;
- the position of each school’s funding relative to the SRS;
- the distribution of funding by systems; and
- the consistency of indexation rates over time.
Somewhat ironically, the figures which the Department would require to
calculate the progression towards commonality in the SRS formed part of the
agreements with participating states under the NPSI. Participating states such
as South Australia are able to show progression over six years (that is past
2017) due to the projections based on their NPSI agreements.
However it is clear that the change from six years of funding to four
years will have a negative effect on schools' ability to achieve the SRS. The Department
for Education and Child Development South Australia advised that:
The State Government does not have projections of the number
of schools that will be operating below the SRS by 2017. However, the
transition arrangements for South Australian schools to reach the SRS in 2019
are not linear, with the majority of additional funding to be provided in 2018
Given that the South Australian Government had matched their funding
commitments under the NERA to the 6 years of funding in that agreement, the
change to 4 years of funding creates the potential for a significant shortfall
and consequently means that the SRS is unlikely to be achieved.
At the committee's public hearing on 16 May 2014, senators asked the Australian
Department of Education about an assertion in The Australian that the Abbott
Government is proposing to contribute 19.1 per cent of each state's notional
allocation to the SRS in government sector schools. Mr Cook explained:
For the presentation of the numbers in the budget—and it is
important that I make this point because the government has been very clear
that there will be formal negotiations around the distribution of funding from
2018 on—basically what has happened is, looking at the total bucket, how much
does the Commonwealth spend in 2018 in the government sector?
To do that, you look at what the
Commonwealth spent in 2017, apply consumer price index growth, apply enrolment
growth to get a figure, and then look at the total public funding to the SRS in
2018. You divide that and you get a figure of 19.1 per cent. So the Commonwealth
contribution to the SRS in terms of public funding in 2018 is 19.1 per cent
[for government schools].
Mr Cook noted that although there may be a difference in SRS in
different states and territories, the 19.1 per cent applied equally across all:
For the Northern Territory, for example, their schooling
resource standard is the highest in the country, because they have the greatest
amount of loadings and need. So their 19.1 per cent has a higher dollar value
but in proportion it is the same as the 19.1 per cent that Victoria receives.
But Victoria's schooling resource standard is not as high as the Northern
Territory's because they do not have the significant levels of Indigenous
population and distance and those sorts of things. So it is a needs-based model
still in that sense for the purposes of the budget presentation. Everyone in
the government sector is getting 19.1 per cent of Commonwealth funding of their
schooling resource standard. That is how it is applied and that is how it
appears in the budget papers.
Mr Cook did not believe that any school would get less in 2018 than they
would in 2017, the difference in the SRS across states notwithstanding:
The question was: will any school get less in 2018 than they
get in 2017? On the basis that schools will actually be getting whatever they
got in 2017 plus 2½ per cent plus enrolment growth, the answer to that would be
no. Everyone will get at least 2½ per cent plus enrolment growth.
Mr Cook provided an expanded explanation at Budget Estimates hearings on
To be fair, I guess we now have a methodology, for the budget
paper presentation, where everyone is getting 19.1 per cent Commonwealth
contribution to their state schooling resource standard. What that means for
the Northern Territory, which is about $24,000 per child, is that that they
will get 19.1 per cent of $24,000 because they have a greater need than most
other states on a needs based funding model. Victoria, which probably has less
need around things like Indigenous students and location and things like, will
have an amount, I think, of around $12,000. They will get 19.1 per cent of
that. Everyone gets an equal proportion of what the actual schooling resource
standard is for their state. So that is the government sector.
Asked the slightly different question (to that of the above question on
notice), what the position of having all schools reaching a national SRS in
2018 would be, Mr Cook again was unable to provide a firm answer. Instead
he argued that there were too many variables post 2017:
We have given you some data, which is question three, which
is what your question was: what proportion of the SRS will be reached by the
end of 2017? I do not have 2018 data, I am sorry. You will see that it is
incredibly variable, depending on the agreements of the previous government.
Some sectors are well above 100 per cent. Some sectors are below 100 per cent.
In some states the government sector will be ahead of the non-government
sector. In other states the non-government sector will be ahead of the government
sector. Unfortunately, I cannot answer the question that you are asking about
individual schools because states and territories then distribute their funding
to individual schools. It would be misleading for me to say. I just could not
answer it because a state may change how they apply some of their funding to
schools over the next four years as well. The best I can give you is the
information that is there at the moment around what it looks like by 2017.
The Gonski Review envisaged the SRS as a marker of school funding and
consequently a measure of accountability of governments and transparency around
the funding going to each school:
A resource standard could assist in identifying total
investment requirements over time for school education in Australia and provide
a more reliable and relevant benchmark against which costs and outcomes for
school systems and schools can be assessed. A resource standard, particularly
if applied by all schooling systems, would also provide assurance to parents,
taxpayers and communities that all Australian schools have the financial
resources required to deliver defined and appropriate educational outcomes for
all Australian children.
Under the new arrangements proposed by the Abbott Government, there is
real danger that the SRS will not achieve the potential foreseen for it by the
The committee disputes the Australian Department of Education's claim
that the arbitrary 19.1 per cent figure will deliver each state an 'equal
proportion' of funding towards the SRS. It is the committee's opinion that the
arbitrary 19.1 per cent Australian Government contribution to government sector
schools will result in a significant shortfall in school funding for many
states. As a consequence, the burden will either fall on the State Governments
to make up the difference in funding or many government schools will not reach
Non-participating states are being effectively handed a blank cheque by
the Abbott Government. There is no way of ensuring that the funding will be
used to improve educational outcomes. Consequently there can be little
confidence that non‑participating states would make up any shortfall
resulting from the 19.1 per cent allocation.
Further, due to the cavalier way the Abbott Government has treated the
participating states' agreements, reducing the funding horizon from six to four
years, there is little incentive or motivation for participating states to
co-contribute to make up any shortfall.
As a result of the Abbott Government's decisions, it highly likely that
a proportion of government schools from around Australia will never achieve
their SRS. This will jeopardise the wide-spread improvements in student
outcomes that will flow from a properly and strategically funded needs-based
The SRS, if implemented properly, could be a benchmark for school
funding by State Governments and the Australian Government. However there is a
very real possibility that not only will many schools not achieve the SRS, the
transparency and accountability that an SRS represents will be lost.
As discussed in Chapter 2, the National Commission of Audit's
recommendation was that school funding be indexed for inflation. At Budget
Estimates in June 2014, the Department of Education advised that it had not
provided input to the considerations of the NCOA regarding indexation.
The beginning of Chapter 7 examined the difference that indexation from
2017-18 makes to the overall funding for schools; representing a substantial
decrease given that the indexation begins as the funding for years five and six
under NPSI would have commenced. Department of Education representatives
advised that the indexation review, flagged in the NERA, would be proceeding,
although they were not in a position to comment on any specific issues arising
at the present regarding the indexation post 2017:
Senator JACINTA COLLINS: So whilst you say the education price index has some
issues, you are not in a position to say what would be an appropriate school
indexation price index?
Ms Paul: No. We are not in a position to say what it would be.
Senator JACINTA COLLINS: That was going to be the subject of the review of
indexation, was it not? I can only assume—I think we had this discussion in the
select committee—that it will now not proceed.
Mr Cook: The minister has written to education ministers about
discussions around indexation as part of the formal negotiations. The budget
papers are very clear that there will be formal negotiations on funding
distribution in 2017-18. The minister has indicated that he will discuss
indexation as part of that. Just to your earlier point about an education
index, I might have indicated some of this in the select committee as well—
The Productivity Commission's 2014 Report on Government Services data
shows that over the period from 1999 to 2012 actual recurrent expenses for
school funding increased at an annual rate of 5.8 per cent.
Similarly, the Australian Bureau of Statistics education price index shows that
education expenses rose 5.1 per cent in March Quarter 2013 to March Quarter
2014. By comparison, the annual CPI inflation rate to March 2014 is 2.9 per
Given the historic and current rates of the education sector price indexation
track near double the CPI rate, it is clear the Abbott Government's decision to
index school funding to CPI from 2017-18 will put at risk the funding required
to sustain the long-term implementation of a needs-based funding model.
Meanwhile, the effect on school funding levels of CPI indexation from 2017‑18
is already clear to State Governments and advocacy groups. Mr Martin Hanscamp,
Executive Officer of the Australian Association of Christian Schools told the
committee on 16 May that the indexation of funding would pose considerable
challenges for long-term financial planning for schools.
Mr Colin Pettit, Secretary, Department of Education Tasmania advised the
committee that the decline in indexation from 4.7 per cent to 2.5 per cent
would mean cuts of 'approximately $9 million per annum' for the state.
The decrease in funding caused by indexation from 2017-18 means that if
states and territories are to maintain schools funding and implement a
needs-based model, they will have to make up the shortfall in funding. Chapter
3 discussed the example of South Australian Education Department, which
explained how the state's school funding had been planned against the original
six years of funding under the NERA.
The decision to index funding from 2017-18, two years before the end of
the NERA signed by participating states leaves open the possibility that states
may decrease their school funding in the medium term as they cannot rely on
funding past four years. Mr Cook, Associate Secretary, Department of Education
has advised that there is nothing to prevent participating states from reducing
their own agreed indexation rates:
Those states and territories that have signed the National
Education Reform Agreement. I guess they have agreed indexation rates and it is
a matter for them as to whether they continue those indexation rates...There is a
signed agreement between the Commonwealth and the states. No state has said to
me that they are not implementing that agreement as it currently sits.
The committee believes that the Abbott Government's decision to
implement CPI indexation from 2017-18 will result in a significant cut to
school funding. The actual figures, both historical and current, show that
education costs have risen at around 5–6 per cent per annum in nominal terms.
By comparison, this is double the Abbott Government's long-term assumed rate of
CPI inflation of 2.5 per cent per annum.
Even when an adjustment is made for enrolment growth, which historically has
risen by 0.8 per cent per annum,
from 2017-18 the Abbott Government's spending on education will fall by
approximately 1.5–2.5 percentage points per annum compared to long-term trends.
This annual reduction in Commonwealth education sector investment, from what
was agreed under the NPSI, will contribute to the Abbott Government's projected
$30 billion cut to school funding over the medium term.
As discussed above, the cut in funding has led to uncertainty in state
and territory forward planning on school funding. The committee is concerned
that the decision to make such a decrease in school funding going forward sends
a message to States and Territories that the Abbott Government is not focused
on improving educational outcomes.
The committee notes that the indexation rates for schools funding in the
2014‑15 Budget impose an even more severe indexation rate than that
recommended by the National Commission of Audit. This report demonstrates the
committee's view that indexation to the CPI and "enrolment growth" is
not adequate to maintain appropriate levels of funding for schools.
Recommendation 7 (indexation rate post 2017)
The committee recommends that the Australian Government
should reinstate an appropriate indexation rate for school funding. The
government should ensure that Commonwealth school funding is not cut in real
terms by adopting a more realistic indexation rate that ensures annual
indexation is not below actual cost pressures. The committee notes that the
previously agreed rates increased Commonwealth funding at 4.7 per cent per
annum and states' contributions at 3 per cent per annum.
Need for ongoing scrutiny of the effect of changes to school funding
As outlined throughout this report, there has been a lack of clear,
consistent articulation of intention from the Abbott Government with regards to
its changes to school funding arrangements. For example, at the time of writing
and as described above, the committee has very little information about the
proposed amendments to the Australian Education Act 2013. The
consultation process on proposed amendments is being conducted behind closed
doors and no submissions have been published by the Department of Education.
Non-participating states are under no obligation to make a commensurate
contribution to school funding. The only leverage the Commonwealth has retained
is the Education Minister's "expectation" that non-participating
state will continue to adequately fund schools. At a time when the Abbott
Government is forcing $30 billion of cuts onto the states over the medium
term, it is highly likely that non‑participating states will further
reduce their education budgets. Indeed, as discussed above, non-participating
states do not appear to be obligated to put Australia Government funding into
schools. There is no way the Abbott Government can guarantee that school
funding provided to non‑participating states is being used to address
inequity and provide funding to those groups of students most in need.
Participating states, which should be able to rely on the commitments
they made under the Australian Education Act 2013, now face uncertain
funding as the Abbott Government has committed only to the first four years of
funding, with modest indexation from 2018. As states now hand down their
2014-15 budgets, participating states are facing the difficult question of how
to address the funding shortfall which will result from CPI indexation in years
five, six and beyond.
The committee is deeply concerned by the ongoing uncertainty around
school funding, and the Abbott Government's cuts to school funding with
indexation post 2017. The committee has heard evidence that these cuts are
having a detrimental impact on school programs and that funding uncertainty is
jeopardising planning. The committee agrees with the comment from Mr Gonski on
So the concept of aspiration (or indeed their [the National
Commission of Audit] concept of efficiency) ends in 2017 and from then on
funding increases by indexes not specifically related to changes in costs in
education. If the funding be wrong in 2017 it will be perpetuated and if
circumstances and aspirations change after that date they will be presumably
irrelevant. No doubt this is simple but like a lot that is simple it is not
Without clarity from the Abbott Government about its intentions past the
first four years of funding and the proposed amendments to the Australian
Education Act 2013, State and Territory Governments cannot work towards
addressing inequity in the school funding system. The committee believes that,
prior to the introduction of the Students First funding arrangements; there was
widespread consensus and purpose amongst stakeholders, underpinned by the
agreements under the NPSI. The committee considers that this consensus is now
at risk of disintegrating, along with the ability of all governments to work
together to implement a needs-based funding model for schools.
As the Abbott Government has provided few accountability and
transparency mechanisms around its changes to school funding arrangements, the
committee believes that the Parliament must undertake increased scrutiny, to
ensure that schools and students most in need do not suffer as a result of the
changes to funding.
Recommendation 8 (ongoing scrutiny)
The committee recommends the Senate pay particular regard
any further cuts to Commonwealth or state education funding;
the effect on Commonwealth-state relations with any further
cuts or changes, particularly the effect on states' ability to adequately fund
any reviews conducted or amendments proposed to the Australian
Education Act 2013.
The committee also recommends that the Senate refer any
amendments proposed to the Australian Education Act 2013 to the Senate
Education and Employment Legislation Committee for inquiry and report.
From the left:,Mr Stephen Palethorpe (Committee
Secretary), Principal Ms Kathryn Entwistle, Senator Deborah O'Neill, Senator
Penny Wright (Deputy Chair). The committee conducted a public hearing and site
visit at the Darlington Primary School, Adelaide on 30 April 2014.
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