Can We Afford Gonski?

This article is a summary of a speech delivered by the National Convenor of Save Our Schools, Trevor Cobbold, to a state-wide meeting of the Meeting of the Victorian Association of State Secondary School Principals on the 11 March. A much expanded and fully referenced version of the speech can be downloaded below

The Turnbull Government claims that we cannot afford the $7 million funding originally planned for the last two years of the Gonksi plan initiated by the previous Labor Government. Labor and the Greens appear to agree, because they both now only commit to a much reduced level of funding for the last two years.

Australia is a low tax country and the Government has a massive potential revenue pool from which to fund Gonski by reducing tax expenditures and clamping down on the use of overseas tax havens by wealthy individuals and corporations.

Taxation statistics published in December by the OECD show that Australia is ranked 29th out of 34 OECD countries in terms of the tax to GDP ratio in 2013 (the latest year for which tax revenue data is available for all OECD countries). Australia had a tax to GDP ratio of 27.5% compared with the OECD average of 34.2%. Even the Government’s own Tax White Paper discussion paper concedes that Australia is a low tax country.

Australia makes heavy use of tax expenditures to provide concessions to individuals and businesses. They include a multitude of tax exemptions, tax deductions, tax offsets, concessional tax rates and deferrals of tax liability. They have the effect of reducing budget revenue. According to research published by the International Monetary Fund, Australia has one of the highest tax expenditures in the world. It tops the list of 16 OECD countries with tax expenditures amounting to 8.5% of GDP.

In addition, the use of tax havens by wealthy individuals and large corporations to avoid tax is rampant.

There is a massive potential revenue pool available to fund the last two years of Gonksi by reducing tax concessions for high income earners and clamping down on the use of tax havens by wealthy individuals and corporations. The potential revenue pool amounts to nearly $40 billion a year, and this is from only the major tax expenditures and tax evasion by the largest corporations.

The major sources of additional revenue are as follows:

Tax concessions for high income earners (top 20%)
• Superannuation: $16.4 billion
• Capital gains: $5 billion
• Negative gearing: $2 billion
• Family trusts: $1.5 billion
• Overseas tax havens: Not quantified
Total: $24.9 billion
Corporate tax evasion
• Large Australian public companies: $4.2 billion
• Overseas companies: $3 billion
Total: $7.2 billion
Other revenue measures
• Refund of unused dividend franking credits: $4.6 billion
• Removing over-funding for elite private schools: $2.1 billion
Total: $6.7 billion
Grand total: $38.8 billion

The extra funding of $3.5 billion a year for the last two years of Gonski is perfectly feasible, especially in the light of the Government’s recently announced a $30 billion increase in defence expenditure over the next decade. Fully funding Gonksi is just a matter of priorities – the money is there, but the Government has determined other priorities.

Funding the last two years of Gonski is no less important than when the report was released by the Labor Government in 2012. For example, in 2015, 18 per cent of Year 9 students from low education status (LES) families did not achieve the national reading standard, 39 per cent did not achieve the writing standard and 11 per cent did not achieve the numeracy standard compared to one to two per cent of students from high education status (HES) families in reading and numeracy and eight per cent for writing.

Average test scores for students from LES families have not improved since 2008 in any Year level in reading, writing (since 2011) and numeracy, and have declined in some instances. For example, there was a 10-point decline in Year 9 reading. Writing fell by 24 points from 2011, which is roughly equivalent to a year or more of learning.

There are very large achievement gaps between the results of students from HES families and those from various disadvantaged backgrounds and the gaps increase through Year levels. For example, the average scores for Year 9 students from LES families are 77 points behind students from HES families in reading, 86 points behind in writing and 77 points behind in numeracy. These gaps are equivalent to about four years in learning. Moreover, the gaps have not reduced and, in some cases, have increased.

Over 80% of disadvantaged students are enrolled in public schools. For example, 82% of students from the lowest socio-educational advantage quartile were enrolled in public schools in 2014 compared to 12% in Catholic schools and 6% in Independent schools.

Despite this, total government funding (Commonwealth and state) for private schools has increased by much more than funding for public schools, and in more recent years funding for public schools has been cut while private school funding still increased.
• Between 1999-2000 and 2013-14, government funding per private school student, adjusted for inflation, increased by $2,203 per student compared with $1,487 per student in public schools.
• Between 2009-10 and 2013-14, public school funding fell by $344 per student while private school funding increased by $838 per student.

The fact is that we cannot afford not to invest in the full Gonksi. Education is an investment in the future. It brings long-term social and economic returns. Fully funding Gonski will improve the life chances of several hundred thousand disadvantaged students and reduce the vast social inequity in education outcomes in Australia.

Greater social equity in education would help reduce social alienation and division and strengthen the social fabric of Australian society. The Prime Minister acknowledges that Australia “is the most successful and most harmonious multicultural society in the world”. This is due in no small part to its inclusive public education system which has broken down barriers for children of immigrant families.

However, students from some ethnic groups are badly missing out. The lack of school success contributes to unemployment, social alienation, high crime rates and religious fundamentalism in some ethnic groups. While many public schools have been highly successful in overcoming socio-economic, cultural and religious divides within their communities, much more must be done in others.

High quality education for all students, whatever their country of origin, is essential to sustain Australia’s multicultural success story. Our choice is continuing social cohesion or more social disharmony and conflict.

There is a huge amount of overseas and Australian research evidence which shows that increased education outcomes for disadvantaged students also has major economic and social benefits. It increases:
• Employment and earnings;
• Work force skills and participation, productivity and economic growth;
• Health outcomes.

There is also strong research evidence that reducing education disadvantage brings long-term returns to government by reducing government expenditure on health, crime and welfare.

The fundamental question is whether the Turnbull Government is willing to make the rich and big business pay their fair share of tax and invest it in reducing disadvantage in education to improve the lives of the low income students, improve workforce skills and participation and increase productivity.

If the Prime Minister really believes in the need to develop an innovative, agile, knowledge-based economy it should be a straightforward choice. A high performing education system with minimum levels of disadvantage means a high performing economy. Full Gonski funding will make Australia a more prosperous, more egalitarian society.

Trevor Cobbold

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