Productivity Commission Fails to Lift the Bonnet on its Own Funding Figures

In its report on the National Education Evidence Base, the Productivity Commission claims that it is “lifting the bonnet on Australia’s schools”. Unfortunately, it failed to lift the bonnet on its own funding figures and see that the funding engine is badly misfiring.

The Commission has greatly exaggerated the actual increase in funding and it has missed the key point that past funding increases have not been directed at reducing under-performance. Past funding increases have favoured more advantaged schools over disadvantaged schools. As a result, school performance has largely stagnated over the past 10 years.

The Commission claims that government funding (adjusted for inflation) of Australian schools (public and private) increased by 14% per student over nine years from 2004-05 to 2013-14. This figure is drawn from the Commission’s 2016 Report on Government Services (ROGS).

However, the Commission’s figure is a significant over-estimate for two reasons. First, it includes book entry (user cost of capital, depreciation) and other items (payroll tax, school transport) that account for 25% of public school funding but which are not included in private school funding figures. These items accounted for nearly 30% of the current dollar increase in public school funding. Second, its method of adjusting for inflation under-estimates increasing costs for schools and, therefore, over-estimates the actual increase in resources available [see notes to Attachment A].

When adjusted to compare like with like, the actual increase in school funding was only 4.5% [Chart 1], some three times less than the Commission’s figure. This is a very small increase over nine years and only amounts to an annual increase of 0.5%. In dollar terms, the increase is a mere $472 per student, or a miniscule $52 a year. Not surprisingly, this has had little impact on school outcomes.

But, the story is even worse because the large part of this small increase has gone to the more advantaged private school sector. Total government funding for private schools increased by three times more than for public schools – 9.8% compared to only 3.3%. In dollar terms, funding for private schools increased by $835 per student compared to $385 per public school student [Chart 2]. That is, the most disadvantaged school sector got an increase of $43 per student per year compared to $93 per student per year for private schools.

The Commission also failed to dig deeper into its figures. Here a disturbing picture emerges. State/territory governments, which account for over 80% of public school funding, have been cutting funding of public schools while increasing funding of private schools. State/territory governments have taken the opportunity of an increase in Commonwealth Government funding for public schools of $744 per student to cut their own funding of public schools by $348 per student [Chart 2]. In effect, they have cut the Commonwealth increase by nearly half. In contrast, they managed to increase private school funding by $135 per student to complement the Commonwealth increase of $700 per student.

The cuts to public school funding by state/territory governments are a recent phenomenon and appear to coincide with the increased Commonwealth effort for public schools under the Rudd/Gillard governments. Large cuts in state/territory funding have occurred since 2009-10 and more than offset increases between 2004-05 and 2009-10. Since 2009-10, state/territory funding for public schools has decreased by $623 per student.

It is highly unfortunate that the Commission failed to lift the bonnet on its own funding figures. Its claimed increase of 14% without a commensurate increase in student performance got national headlines and gave succour to those who want to deny additional funding to disadvantaged students and schools.

A significant factor behind the stagnation in Australia’s school results is the failure to improve the results of low socio-economic status (SES), Indigenous and remote area students. Under-achievement in education is highly concentrated amongst these students with a large proportion not achieving the national NAPLAN standards. For example, 18 per cent of Year 9 low SES students did not achieve the national reading standard in 2015, 39 per cent did not achieve the writing standard and 11 per cent did not achieve the numeracy standard.

Even higher proportions of Indigenous students did not achieve the standards while the proportion of remote area students that failed to meet the standards was similar to that of low SES students. In contrast, only to one to two per cent of high SES students did not achieve the reading and numeracy standards and eight per cent did not achieve the writing standard.

Average reading, writing and numeracy scores for low SES students at all Year levels have not improved since the NAPLAN tests were introduced in 2008. There have been improvements in the scores of Indigenous students at some Year levels but mostly results have stagnated or declined. Similarly, there has been little improvement in the results of remote area students.

The large majority of these disadvantaged students attend public schools. In 2014, 82 per cent of students from low SES families, 84 per cent of Indigenous students, 79 per cent of remote area students and 87 per cent of very remote area students were enrolled in public schools.

Moreover, disadvantaged students comprise a much greater percentage of enrolments in public schools than Catholic or Independent schools. For example, My School data for 2014 shows that low SES students comprise 30 per cent of all public school enrolments compared to 15 per cent in Catholic schools and only nine per cent in Independent schools. That is, the percentage of public school enrolments accounted for by low SES students was double that in Catholic schools and over three times that of Independent schools.

Yet, as outlined above, the largest increase in government funding has gone to private schools since 2004-05. Governments have failed to provide the human and material resources for the vast majority of disadvantaged students to achieve better results. The learning needs of these children are being sacrificed to the demands of more privileged and better resourced schools.

The Gonski plan was designed to overcome the appalling misdirection in funding and improve the results of disadvantaged students. But, as the Gonski panel member, Ken Boston, said recently, the plan has been “torn apart at the seams”. It has been torn apart by the Coalition Government: it reneged on funding the final two years of the plan when some $7 billion was due to flow to schools in 2018 and 2019; and it removed conditions on state/territory governments to increase their funding, so that now they can continue to substitute Federal funding for their own as they have done in recent years.

Future funding for public schools and their higher proportion of disadvantaged students is highly uncertain. The Coalition Government has only committed to increasing school funding beyond 2017 by 3.56% a year, a rate that will barely cover rising costs. Apart from NSW, state and territory governments have not committed to the large increases in funding needed for disadvantaged students in public schools.

Moreover, the existing base plus loadings funding model may be further torn apart. The Commonwealth Minister for Education, Simon Birmingham, has acquiesced to demands from peak private school organisations to review the funding loadings for disadvantaged students. Some want them dismantled because they provide more support to public schools.

School funding is at a crossroads. The Gonski plan has been torn to shreds. There is little prospect of real increases in resources for public schools and their disadvantaged students from either the Commonwealth or state/territory governments. The funding arrangements to operate from 2018 are being negotiated behind closed doors with no public consultation, in contrast to the open process adopted by the Gonski review.

There is a very real danger of a national retreat from improving equity in education. It constitutes a threat, not only to the future lives of thousands of disadvantaged children, but to Australia’s national prosperity and social well-being. The forthcoming meetings of the national education ministers’ council must focus on a new national plan dedicated to reducing inequity in education, not exacerbating inequity.

Trevor Cobbold

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