Abbott’s Education Rebate Will Give a Backdoor Funding Increase to Private Schools

A Liberal/National Party government will provide another boost to private schools with a tax rebate on school fees. It will provide a backdoor funding increase and shift more students to private schools. It will further damage public education in Australia and increase social segregation between the private and government school sectors.

The coalition says it will increase the current tax rebate for education expenses and expand the scheme to include school fees. It will provide a 50% tax rebate of up to $500 per year per primary school student for a range of education expenses up to $1000 including school fees. It will also provide a rebate to up to $1000 per year per secondary school student for school fees and other expenses up to $2000.

While the rebate will also be available for government school fees, parents with children in private schools will derive the most benefit from the rebate. They will be able to claim the maximum rebate on private school fees because in most cases their fees exceed the the upper limit of claimable expenses for the rebate.

In contrast, fees in government schools are not compulsory in most states. Voluntary contributions are the main way government schools raise funds from parents and the rebate will not be available for these contributions. In addition, fees in government schools are typically less than $250 per primary student and less than $500 per secondary student, which is well below the upper limit of claimable expenses for the rebate.

If the coalition were serious about being neutral between school sectors it would make voluntary contributions to government schools eligible for the rebate. But, even then private school parents would continue to receive the most benefit because of the disparity between average private school fees and voluntary contributions/fees in government schools.

The rebate will be a windfall gain for all families with children already enrolled in private schools. It will be fully available to all but the very highest income earners as all recipients of Family Tax Benefit A are eligible for the full rebate. The income limit for which some Family Tax Benefit A is available is about $150 000 a year depending on the number of dependent children. This is nearly three times average weekly earnings. Less than 15% of households in Australia have gross income in excess of $150 000 a year.

Maralyn Parker of the Daily Telegraph [21 July] commented:

The Coalition’s promise of a tax refund for school fees is the most blatant offer of middle class welfare I have seen in any election. Voters already paying thousands in school fees will love it. It is certainly not a refund offered with public school working families in mind.

She said it was a “short-sighted, politically self interested policy making and have the potential to take us in the wrong direction in the schooling of our children”.

The rebate will encourage more parents to shift their children to private schools because it reduces the effective fees they pay. The rebate amounts to about a 10% subsidy for medium-fee schools, a 25% subsidy for lower-fee schools and a 50% subsidy for low fee private schools.

It will further undermine public education by encouraging another tier of families in the income distribution hierarchy to enrol in private schools. It will mean that the composition of government schools is likely to become even more concentrated amongst lower income families.

It is possible that some private school parents may lose part, or even all, of the benefit of the rebate. Some private schools may appropriate much of the benefit by increasing their fees. To the extent this occurs, the rebate will serve as a backdoor funding increase for private schools.

The rebate is most likely to lead to an increase in fees for high demand schools with waiting lists. Schools with no excess capacity are in a strong position to increase their fees and appropriate much, if not all, the rebate. In contrast, private schools unable to fill their enrolment capacity may limit fee increases in order to gain additional enrolments. Nevertheless, many will be in a position to increase their fees to obtain part of the benefit of the rebate.

Many private schools will be doing their sums on how best to maximise their revenue from the rebate. They will be assessing what proportion of the rebate they can appropriate by increasing their fees without losing existing enrolments, and thereby revenue, while continuing to attract new enrolments.

As a group, private school parents may do best to use the rebate to claim on other eligible education expenses rather than school fees. Only then could they be assured that that the rebate will not be used to increase school fees.

However, this is unlikely. Many parents will see the rebate as a way of gaining some relief on school fees. In any case, suppliers of other education goods and services eligible for the rebate are also likely to increase their prices as well in order to appropriate some of the benefit.

Thus, the fee rebate is likely to provide a backdoor funding increase for private schools to a greater or lesser extent. It is an outrageous new gift to private schools which adds to the windfall gains and over-funding provided by the Howard Government’s SES funding model and its ‘no losers’ guarantee.

It will add to the existing advantage for private schools in total resources compared to government schools. According to the National Report on Schooling average total expenditure in government schools in Australia was $10 771 per student in 2007-08, excluding the imputed user cost of capital, compared with $10 826 per student in Catholic schools and $15 576 per student in Independent private schools.

As backdoor funding for private schools, the rebate will not be subject to the same regular parliamentary review as are direct funding grants. Although it is equivalent to direct government spending, tax expenditures of this kind largely escape the detailed parliamentary scrutiny and accountability processes associated with normal government spending. As a result, they are less accountable and transparent.

While estimates of the cost of the rebate vary, it is likely to cost in the order of $1 billion a year. This expenditure would be better spent on reducing the massive achievement gap between rich and poor in Australia. It would be better used to improve the learning of disadvantaged students, the large majority of whom are in government schools.

Abbott’s backdoor funding scheme for private schools will compound the increasing social segregation between schools in Australia driven by choice and competition policies and the existing SES funding model for private schools. It will further enhance privilege in education at the expense of greater equity.

Trevor Cobbold

Previous Next

Leave a Reply

Your email address will not be published. Required fields are marked *