Private Schools Serving Richest South Australian Families Over-Funded by Millions

New figures reveal scandalous over-funding of South Australian Independent schools serving the richest families in the state. Millions of taxpayer funds are being squandered on just nine highly privileged schools  while public schools go begging. The new figures demonstrate the innate unfairness of school funding in South Australia as in other states. The Commonwealth and South Australian governments must ensure that public schools are genuinely fully funded under the next bilateral funding agreement.

The new figures show that nine Independent schools with a median taxable family income of $200,000 or more will be over-funded by $54 million from 2022 to 2028 inclusive by the Commonwealth Government. Of these, just five will be over-funded by $39 million. The nine schools will receive $369 million in funding by the Commonwealth over the period.

The most over-funded schools are St. Peter’s College, Pembroke School, Scotch College, Wilderness School and Westminster School (Table 1).

This is the first time family income figures for private schools have been published. Previously, only income ranges were available. The new figures were supplied to Senate Estimates by the Commonwealth Department of Education in May. They also reveal the schools with the highest median taxable family income.

On average, Independent schools in South Australia are significantly over-funded by the Commonwealth Government. Figures provided to Senate Budget Estimate 2022-23 show that they were funded at 82.7% of their Schooling Resource standard (SRS) in 2023 instead of the legislated target of 80%.

The Wilderness School had the highest median taxable family income of any Independent school in South Australia at $271,000 in 2023. Other high median taxable family income schools include Walford School for Girls ($270,000), Pembroke School ($269,000), Scotch College ($265,000 and St. Peter’s College ($264,000).

It was possible to identify 15 South Australian private schools as having a median adjusted taxable family income of $200,000 or more in 2023. Commonwealth funding and SRS shares could be obtained for 12 of these schools and nine were found to be over-funded by the Commonwealth Government over 2022 to 2028 inclusive. The other three schools were under-funded in 2022, but fully funded for the rest of the period. It is not possible to determine the funding of the other three other schools because they are funded as part of school systems such as the Catholic and Lutheran systems.

Many families of students in Catholic systemic schools also have a median adjusted taxable income of $200,000 or more. The extent of any over-funding cannot be determined because Commonwealth funding and SRS shares cannot be obtained for individual Catholic systemic schools because funding is provided as a block to each system. However, figures provided to Senate Budget Estimate 2022-23 show that South Australian Catholic system schools were funded at 82.2% of their SRS by the Commonwealth Government in 2023 instead of the target 80%.

It should be emphasised that these figures are for what is termed adjusted taxable income.  The major difference between taxable income and adjusted taxable income is that the latter includes personal and employer superannuation contributions and the capital gains tax concession.

The total income of these families is likely to be much higher because high income families account for the large proportion of deductions to reduce their personal taxable income. For example, Australian Taxation Office statistics for 2020-2021 (Table 10) show that 16 individuals with a total income $500,000-$1,000.000 had average tax deductions (excluding superannuation contributions and capital gains tax concession) of $1.3 million each, that is, their average adjusted taxable income was less than zero. Similarly, 152 individuals with a total income of $500,000-$1,000.000 were able to reduce their average adjustable taxable income by average tax deductions (excluding superannuation contributions and capital gains tax concession) of $326,308 per person.

It is worth noting that an adjusted taxable family income of $200,000 or more represents a high income by national standards. The latest tax statistics show that the median taxable income for males in 2020-21 was $59,415 and $44,547 for females. This amounts to a total median taxable family income of $103,962, assuming two income earners per family. . However, about one quarter of all households are single income families with single person households. Consequently, the actual median taxable family income is very likely to be well below $100,000, less than half the benchmark used here to determine high income schools.

The over-funding estimated from official government figures is just the tip of the iceberg because of defects in the Commonwealth system of funding private schools. The Direct Measure of Income (DMI) method introduced by the Morrison Government is fundamentally flawed because it under-estimates the income capacity of families to pay school fees and therefore over-estimates the need for taxpayer funding.

 The DMI under-estimates the capacity of families with children in private schools to pay fees because it ignores other sources of income. It ignores income from grandparents – the Bank of Mum and Dad – such as payment of school fees, childcare, house deposits, etc. It also ignores non-taxed capital gains and business and investment diverted to family trusts, which are largely the preserve of high income earners.

The DMI also ignores lucrative sources of income of elite private schools such as multi-million donations to school building funds as well as income from financial investments, rental properties and hire of facilities such as swimming pools.

The result of all these and other defects is that private schools are vastly over-funded by the taxpayer.

The over-funding of the schools attended by the children of the rich is in stark contrast to the under-funding South Australian public schools. Every public school is hugely under-funded. Suth Australian  public schools are only funded at 90.2% of their SRS in 2024. The under-funding amounts to $363 million or more a year. This is entirely due to under-funding by the South Australian Government. Its funding of  public schools is only at 70.2% of their SRS instead of the current benchmark of 80%.

The South Australian Government also continues to over-fund private schools. The National Schools Resourcing Board found that the South Australian  Government funded private schools at 23.11% of their SRS in 2022 instead of its target of 20%. This over-funding amounts to nearly $33 million.

All this shows just how unfair school funding is in South Australia, as in the rest of Australia. It heavily favours the already advantaged sectors of South Australian society at the expense of the most disadvantaged. Funding for public schools is calamitous because they are massively under-funded by the South Australian Government. Private schools serving the rich are in clover, being fully funded with many over-funded by millions by the Commonwealth Government.

The Commonwealth and South Australian governments must end their stand-off over the next bilateral funding agreement. They must ensure that Southi Australian public schools are genuinely fully funded.

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