Labor’s Amendments to Education Act Will Not Ensure Full Funding of Public Schools

The Federal Education Minister, Jason Clare, has tabled a Bill in the Parliament to amend the Australian Education Act to provide “a pathway to full and fair funding for all schools”. However, the pathway is blocked for public schools and the Bill fails to remove all impediments to full  and fair funding for public schools. It also creates a pitfall that could delay funding increases in future. Public schools will remain under-funded by billions even if all states and territories sign up to the Better Fairer School Funding agreements. Other amendments to the Act are needed to support full funding for public schools.

Blockages on the path to full funding of public schools

The key amendment is minimalist. It changes the current limit of 20% on the Commonwealth share of funding the Schooling Resource Standard (SRS) to a share that is no less than 20% for all jurisdictions except the Northern Territory where the share will be no less than 40%.

This change does not secure full funding for public schools.

First, the amendment simply replaces a funding ceiling with a floor. It does create the opportunity to increase the Commonwealth share of funding public schools but it does not guarantee it. As outlined below, there is a compelling case on educational, social and economic grounds for a greater role for Commonwealth funding of public schools that warrants a higher floor than prescribed in the Bill.

Second, the Bill fails to end the “accounting tricks” in the current and new agreements that swindle public schools of billions in funding. This is a major obstacle to full funding of public schools.

Public schools were defrauded by the funding agreements negotiated between the Morrison Government and state/territory governments. The fraud consisted of allowing the states and the Northern Territory governments to claim, as part of their share of funding the SRS of public schools, funding for items specifically excluded from how the SRS is measured. They could claim funding for capital depreciation and school transport up to 4% of the SRS of public schools. In addition, many states could claim funding for regulatory agencies such as curriculum and teacher registration authorities.

As outlined below, these “accounting tricks” have swindled public schools of billions in funding over 2019-2024.

The Bill also creates a potential pitfall for increases in Commonwealth funding of public schools. It provides that the Commonwealth share for public schools in a year is the percentage prescribed by regulation. Further, the amendment states that the Parliament cannot disallow the regulation.

One protection against a future government arbitrarily reducing an agreed Commonwealth share is that the Bill requires that the share prescribed by regulation in a year cannot be less than that in the previous year. In other words, the Commonwealth share can only be maintained or adjusted upwards in any year. In addition, the Minister must consult with the Ministerial Council on any regulation to be made in this regard.

However, this may not provide full protection for any agreed increases in the share of funding public schools. There is no provision to stop a future government changing the regulation to maintain a current year share rather than increase it according to the terms of a funding agreement. For example, the new school funding agreement with the Tasmania Government provides that the Commonwealth will increase its funding share for public schools from the current 20% to 22.5% by 2029. Similarly, the new Northern Territory funding agreement specifies that the Commonwealth will gradually increase its funding share for public schools from 21.% in 2024 to 40% by 2029.

A new federal government in 2025 could easily change the regulation to delay planned increases until later in the agreement period. The changes would only have to be tabled in the Parliament and would not be subject to disallowance. Thus, a government could act peremptorily without public scrutiny and create funding uncertainty for public schools. Any such delay in funding increases could hold back improvements in student learning and outcomes. The obligation to consult with the Ministerial Council on the matter is just that, the Minister makes the final decision whatever the Council says.

Removing the blockages and the pitfall

The debate on the Education Bill is adjourned until the November sittings of the Parliament. The debate is an opportunity to correct the blockages to full funding of public schools. SOS proposes two amendments.

• Increase the Commonwealth share of funding public schools to a minimum of 25% of their SRS.
• Prohibit the states from including non-SRS funding items as part of their share of funding the SRS of public schools.

Save Our Schools also proposes making the transition regulations disallowable by the Parliament.

Increase Commonwealth Government share of funding public schools to at least 25% of their SRS

While the states have primary constitutional responsibility for education, there is a strong case for a greater Commonwealth role in the funding of public schools. National goals for schooling imply an important role for the national government in supporting all students to achieve successful school outcomes and increasing social equity in education outcomes.

The Commonwealth also has special responsibilities relating to Indigenous Australians and migrants, which implies a key role in funding public education. The large majority of Indigenous and immigrant students attend public schools. The Commonwealth has long had a national goal to improve education outcomes for Indigenous students and close the gap between Indigenous and non-Indigenous students.

The Commonwealth also has exclusive constitutional powers over immigration. It has responsibility for helping migrants in a range of social issues, including education, to support their integration in Australian society and ensure social cohesion.

The Commonwealth has the major role in economic policy to support national economic growth and prosperity. Education is an important driver of economic growth through improving the knowledge and skills of the workforce. Adequate funding for public schools is fundamental to providing a highly skilled workforce.

The joint Commonwealth and state responsibilities for public education mean that the relative funding shares have to be negotiated and the actual division of funding shares for each state may vary as they do between the new Western Australian and Northern Territory agreements. However, the current limit on the Commonwealth role should be removed and provision be made to give the Commonwealth a greater role in funding public schools, thereby increasing equity in education. The Education Act should provide for the Commonwealth to at least fund public schools at 25% of their SRS. It would make a significant contribution to  progressing national educational, social and economic goals.

Save Our Schools recommends that Section 35A Commonwealth Share, clause (a) for a government school be amended to delete “20%”  and substitute “a minimum of 25%”

Prohibit inclusion of non-SRS funding as part of state funding shares of the SRS of public schools

The second amendment is to Section 22A Conditions of financial assistance—State-Territory insert the following or similar as a new sub-clause:

State and Territory funding contributions to government and non-government schools is measured according to the Australian Curriculum, Assessment and Reporting Authority (ACARA) financial data reporting methodology for state/territory Net Recurrent Income Per Student (NRIPS) and does not include any funding types excluded from NRIPS.

The Morrison era funding agreements allowed the state and Northern Territory governments to artificially boost their SRS share with non-SRS funding items. For example, the target SRS share in the current Victorian agreement for public schools in 2024 is 70.43%. However, its actual share after adjusting for the “accounting tricks” is 65.82%. The funding loss is estimated at $661.4 million for the year. Overall, public schools across Australia were defrauded by about $13.1 billion over the course of the Morrison agreements from 2019-2024 inclusive.

These “accounting tricks” have been continued in the new funding agreements between the Commonwealth and Western Australian, Tasmanian and Northern Territory governments. It is highly likely they will also be included in any new agreements with the other states.

Public schools in other states will remain under-funded whether or not they sign new agreements. The billion dollar fraud will remain if the current agreements are rolled over and they will be included in any new agreements. The prospect is that public schools across the country will still be under-funded in 2029, 17 years after Gonski proposed full funding.

There can be no doubt that such funding items are excluded from the estimation of the SRS. The estimation of the SRS is based on financial data collected by ACARA for the My School website. The measure of income is Net Recurrent Income Per Student (NRIPS). ACARA’s My School: Key Principles and Methodology (2023) clearly defines what is excluded from this measure. The exclusions include school transport, depreciation and umbrella costs associated with curriculum standards, national testing and teacher registration. It says: “These funds have been deemed to be outside schools’ recurrent operations” [p.13].

It should be noted that the Morrison era agreements and the new agreements did not permit the states and territories to claim non-SRS funding items as part of their share of funding private schools. This is another way in which the school funding arrangements are biased against public schools. The states and the Northern Territory are allowed to defraud public schools but not private schools.

It is imperative this fraud on public schools be ended. This can be done by prohibiting the inclusion of non-SRS funding as part of the state/territory shares of funding public schools.

Changes to the Commonwealth funding share should be subject to disallowance by the Parliament

As discussed above, allowing the Commonwealth share of funding public schools in each state and territory to be prescribed by regulations creates the potential for a future government to delay increases in funding agreements. Maintaining the funding share of the previous year instead of meeting the agreed increase for any year could create some uncertainty for public schools about when the funding share will be increased. It could also restrict the resources available to make learning improvements in public schools.

Save Our Schools proposes that  regulations on the Commonwealth shares should be subject to disallowance by the Parliament. This provides for some public scrutiny and debate.

Conclusion

The Explanatory Memorandum to the Bill claims:

For the first time, all jurisdictions who are party to the BFSA 2025-2034 will have a formally agreed pathway to reaching 100 per cent SRS funding for government schools.

This is demonstrably untrue as outlined above. For as long as the accounting tricks continue, public schools will remain underfunded. The proposed amendments are critical to ensuring that public schools are genuinely fully funded. The Commonwealth should play a greater role in the funding of public schools to meet national education goals that all children receive an adequate education and increase social equity in education. The states and territories must stop defrauding public schools with their accounting tricks.