COMMITTEE REPORT
This Bill succeeds the States Grants (Primary and Secondary Education
Assistance) Act 1992 which provided Commonwealth funding for schools
for the period 1993 to 1996. It authorises continuing Commonwealth funding
for both government and non-government schooling for the 1997-2000 quadrennium.
The Bill fulfils the government's commitments to promote excellence
and achievement through the provision of quality education and prepare
our young people for an active and productive life both in the work
force and as participating citizens in the community and global economy.
The Bill fosters a partnership approach with states and territories
which recognises both the constitutional responsibility of states and
territories for education and the Commonwealth's role in guiding national
directions and priorities. [2]
The financial assistance (totalling $13.7 Billion in constant prices
over the quadrennium) is provided in three forms - general recurrent
grants, capital grants and grants for targeted programs. The vast bulk
of Commonwealth Specific Purpose Payments for schools comes under the
ambit of this Bill. For example, out of the total expenditure of in
excess of $3 Billion for the 1996-97 financial year, only $35.7m is
appropriated under other legislation.
The major part of this funding will continue to be directed to the
general recurrent and capital grants programs. The government has, however,
decided to replace a complex array of more than 40 school related programs
of targeted assistance by a streamlined set of five programs: namely,
Literacy, Languages, and Special Learning Needs, which are included
in the Bill; and two other programs School to Work, and Quality Outcomes,
the funding for which is included in other legislation.
Apart from streamlining the number of targeted programs, the Bill also
allows for more flexibility (via broadbanding) with respect to how money
is expended on some of these targeted programs. The effect of the broadbanding
provision will be to give schools systems and school authorities added
choice and flexibility in determining some of their priorities for targeted
funding.
The Bill also aims to strengthen the reporting obligations (via the
annual National Report on Schooling In Australia) of the States
and the Territories with respect to schooling in their jurisdictions
by establishing a process to develop a range of core data related to
student learning.
The streamlining of targeted programs from 40 differentiated targeted
assistance programs into 5 main assistance areas, broadbanded to allow
States to move funds around according to particular needs and priorities,
appears to have found general acceptance. There were, however, some
concerns raised with the Committee which went to the question of whether
the broadbanding of funds might result in funds being spread too thinly,
leaving those pockets of severe disadvantage with inadequate resources
to effect any meaningful change.
In terms of the broadbanding, it seems to us that if the Commonwealth
has a commitment to ensure that funds are available...then the Commonwealth
has the responsibility to direct those funds appropriately. We are not
clear now what is going to be available to the public system, or to
the private sector.... [3]
The Committee acknowledges the anxiety that may exist in this regard,
because some groups will no longer see funds specifically allocated by
the Commonwealth for the benefit of their particular clients. Such anxiety
has tended to focus on the former Disadvantaged Schools Program and the
Country Areas program. However, from 1997 the mechanism which will be
used to allocate funds under the former Disadvantaged Schools program
and the funds allocated to schools under the new Early Literacy and Numeracy
Strategy will be the ABS Index of Relative Socioeconomic Disadvantage
(IRSED), in conjunction with ABS enrolment data and the ACER's Youth in
Transition survey data. [4]
The IRSED provides a general indication of socioeconomic disadvantage
and was recommended by the Taskforce on School Statistics, above other
similar indices. A revised mechanism is also being used for the Country
Areas portion of the new Special Learning Needs program. The updated mechanism
will take account of shifting enrolment patterns across States and retains
the key variables which measure geographic isolation. In order to better
target the client group, the new allocative mechanism will use school
enrolment numbers which meet these geographic criteria, not just population
numbers which were previously used. [5]
As well, it would seem that the increasing emphasis on schools being
responsive to their local communities, with priorities being determined
at the community level, should enhance the capacity of education authorities
to identify local areas of disadvantage and direct funds accordingly.
The broadbanding approach gives the State and non-government school
authorities more discretion to use funds in a way that best meets national
schooling objectives as well as allowing education providers greater
scope in determining local priorities, while reducing their administrative
burden.
The changes do not represent a rEducation in Commonwealth funding for
schools. In fact, the 1996-97 Budget provides an increase of $167 million
for programme costs (and does not include running costs effects). [6]
The impact of the changes, however, will need to be monitored, and the
Committee understands that this will be done through a revised National
Report on Schooling - the core accountability report to the nation
on the effectiveness of Australia's schools.
The Committee notes the concern highlighted by a representative of
ethnic schools involved in after-hours language teaching programs:
We have had concerns in relation to community languages element
of funding up until now, as to..how those funds are distributed [by
States] to after-hours ethnic schools.... There are some states, for
example Victoria which has the ministerial council...which bring together
all players and also there is a bipartisan approach to the LOTE provision
and the after-hours ethnic schools program. We have boards in South
Australia and in New South Wales, but we have concerns in some of the
states where, for example, up until this day the New South Wales government
has not paid out its per capita funding to the after-hours ethnic schools...
[7]
In the Committee's view, these issues must be resolved at State level,
but it is reasonable for the Commonwealth to expect States to exercise
their discretion with respect to broadbanded funds on the basis of well-informed
advice from affected parties.
Special education was another area on which the Committee sought explicit
comment, and received the following reply:
[On] the question of how...special education needs would be
satisfied up against the competing needs of other areas within the
particular broadband into which they have been placed: I think that
will be all right. I do not have any real doubt that special education
needs will get their fair share. I do not have any doubt about that.
I think that will be worked out satisfactorily. But I do think that
the issue of adequate funding for special education is a problem...
The government has said that it did not do it in this budget
because, for various reasons, it was not sure of the magnitude of the
problem; it is a complex area, so it will set up a special working party
to look at it and invite the various elements of the school sector,
including the National Catholic Education Commission, to participate
in and contribute to that working party. We have had subsequent discussions
with the minister and we are certainly satisfied that he is serious
about that and we intend to pursue it. [8]
The Committee is satisfied that the streamlining and broadbanding of
the targeted assistance programs is a positive step which should reduce
red tape, enhance flexibility, and therefore improve effectiveness.
The Committee heard a number of claims about the overall level of Commonwealth
financial support for schools, and the changes to those levels arising
out of the States Grants Bill. It is therefore appropriate to
explore this issue in order to situate the Bill in the broader education
funding context.
The Commonwealth contribution to schools is effected through two mechanisms
: Specific Purpose Payments (SPPs or "tied grants") and Financial
Assistance Grants to States (FAGs or "untied grants" or "block
funds"). States have, on average, expended 24% of their FAGs on
government schools, and 2% on non-government schools. Not surprisingly,
there is some variation in the per capita amounts expended by different
States, but the overall levels of expenditure are fairly clear, even
though it is not really possible to 'track' a dollar of FAGs to any
particular outlay.
While the States Grants Bill specifies provisions for SPP payments
to the States, consideration of these provisions cannot sensibly be
isolated from consideration of the overall funding picture.
In its submission to the Committee the Commonwealth described this
picture, and the place of the States Grants allocations in it,
in tabular form as set out on the next page.
On this account, which involves total Commonwealth funding to schools:
[A]verage per capita Commonwealth funding for a
student in a government school is estimated to increase from $2,263
to $2,668, or by 17.9%. Over the same period Commonwealth funding for
a student in a non-government school is estimated to increase from $2,405
to $2,764, or by 14.9%. Commonwealth funding includes Specific Purpose
funding for schools and attributed Financial Assistance Grants applied
to schools. The level of assistance for students in government schools
increases further when States' own source funds are included. [9]
Commonwealth assistance to government and non-government schools:
SPPs and attributed FAGs (a)
| |
1996 |
1997 |
1998 |
1999 |
2000 |
2000/1996% |
| GOVERNMEN'T |
| SPPs($000) |
1,358,353 |
1,414,011 |
1,419,161 |
1,440,791 |
1,454,610 |
|
| FAGs($000)(b) |
3,645,700 |
3,828,100 |
4,076,200 |
4,293,900 |
4,381,500 |
|
| |
5,004,053 |
5,242,111 |
5,495,361 |
5,734,691 |
5,836,110 |
16.66% |
| |
| Enrolment(No.) |
2,211,173 |
2,205,194 |
2,196,104 |
2,192,032 |
2,187,649 |
|
| Per capita ($) |
2,263 |
2,377 |
2,502 |
2,616 |
2,668 |
17.9% |
| |
| NON-GOVERNMENT |
| SPPs ($000) |
1,910,593 |
2,046,994 |
2,176,272 |
2,319,733 |
2,441,013 |
|
| FAGs ($000) |
303,800 |
319,000 |
339,700 |
357,800 |
365,100 |
|
| |
2,214,393 |
2,365,994 |
2,515,972 |
2,677,533 |
2,806,113 |
26.73% |
| |
| Enrolment (No.) |
920,800 |
940,589 |
963,758 |
989,437 |
1,015,351 |
|
| Per capita |
2,405 |
2,515 |
2,611 |
2,706 |
2,764 |
14.92% |
(a) Assumes state fiscal contributions (1996 Premiers' Conference)
do not affect FAGs funding for schools
(b) Budget Statement 1996-97 page 3-180, converted to calendar year
estimates. Grants Commission Estimates of attributed FAGs applied
to schools are 24% for government schools and 2% for
non-government schools
Several witnesses questioned the proportion of FAGs funding which DEETYA's
submission attributed to education expenditure by States, namely the
Grants Commission Estimates of 24% for government schools and 2% for
non-government schools.
As far as I understand, financial assistance grants are untied
in every sense. In a practical sense they are paid to state treasuries.
Therefore, the Commonwealth has no control over how state treasuries
allocate financial assistance grants. It seems to me to be a very bold
assumption to say that any proportion of financial assistance grants
is allocated to education at the state level [10]
The Committee has sought independent verification of the DEETYA figures
from the Parliamentary Research Service. [11]
The methodology involved a distribution of FAGs outlays on a pro rata
basis and allocating FAGs in proportion to State spending on each function
after deducting any SPPs for that function. The figure arrived at for
government and non-government schools combined was 21.7%, which accords
with the percentages identified by DEETYA.
Several witnesses also questioned the assumption that decisions of
the 1996 Premiers' Conference about State fiscal contributions did not
affect FAGs funding for schools.
We know that the states are under increased difficulties to provide
for public schooling of a high quality, particularly when you add the
implications of the rEducations in financial assistance grants to the
rEducations in tied grants... [12]
In our state one quarter of the state budget is school education
and, clearly, any fundamental change to financial assistance grants
will have to be felt to some extent... [13]
The argument about the impact of cuts to FAGs has been canvassed in
a numbers of forums. However, the Commonwealth Budget Statements 1996-97
describe the position in relation to FAGs and the Premiers' Conference
decisions as follows:
The 1996-97 Budget and the forward estimates reflect the decisions
of the 1996 Premiers' Conference and previous conferences to maintain
the level of FAGs in real per capita terms on a three year rolling
basis.
The States have agreed to make State Fiscal Contributions to
the Government's deficit rEducation programme by making payments to the
Commonwealth in the three years to 1998-99. The contribution of each
State will be on a per capita basis and will be reviewed annually at
future Premiers' Conferences in light of the Commonwealth's fiscal position.
[14]
The Commonwealth Department (DEETYA) contends that, while it is a matter
for the States to determine the attribution of FAGs, States "have
traditionally been very careful in considering any rEducation to schools'
funding. There is no evidence that the impact...of the rEducation in FAGs
is being passed on to schools." [15]
Moreover, an examination of the actual decisions by States with respect
to education funding indicates that States and Territories are increasing
their education funding effort, as Minister Kemp revealed in parliament:
I have had my department look closely at the actual decisions,
not the imputed decisions, of the state governments in relation to school
spending. The actual decisions of the states have been to increase school
funding in state budgets by 6.37 per cent since the Premiers' Conference.
So you can impute all you like cuts of hundreds of millions to public
education. You can deem that, but the fact is they have actually increased
spending through their state budgets by some 6.3 per cent. That is true
for each of the states and each of the territories. [16]
The Minister's statement is based on an analysis by DEETYA of State
and Territory budget papers which concludes that education spending
in 1996-97 will be 6.3% over their spending in 1995-96. The Committee
is satisfied that on current figures the Commonwealth's projections
of funding for schools, and in particular the per capita Commonwealth
funding for students from the combined SPPs and FAGs, are soundly based.
The major changes contained in the Bill relate to the establishment
and funding of non-government schools and the implications these changes
have for the government sector. The Bill abolishes the previous government's
New Schools Policy from the beginning of 1997.
Emphasising the theme of choice, this Bill legislates a new
and more equitable policy for non-government schools seeking Commonwealth
funding. ... The application process under the previous government's
new schools policy was bound in red tape, as was the process for reviewing
the funding category of those schools already in receipt of funding.
Furthermore, the Labor government's new schools policy confined
non-government schools approved for funding since May 1988 to a maximum
funding level of category 6. This arbitrary restriction has jeopardised
the existence of many deserving schools worthy of a higher level of
support from governments. It also restricted parental choice in non-government
schooling for their children, especially for low income families. [18]
Thus the so-called "level 6 funding cap" is to be removed.
Under the new arrangements non-systemic schools will be able, if eligible,
to access funding from the full range of categories 1-12.
This government's policy for newly commencing schools will make
a school's entitlement to Commonwealth funding primarily dependent upon
state or territory government recognition. There will, of course, be
a requirement that schools be run by an incorporated body, be non-profit
making and enter into an agreement with the Commonwealth. Non-government
school funding will, however, be both simple and equitable. This is
a most important measure. [19]
To help offset the additional cost to the Commonwealth that an increase
in non-government school enrolments will cause, an Enrolment Benchmark
Adjustment for schools has been introduced. This will enable the Commonwealth
to preserve for itself 50% of the net recurrent savings to a State or
Territory resulting if students shift from the government to the non-government
sector to the extent that, in any given State, the share of enrolments
in non-government schools exceeds that which pertains in 1996 (the "benchmark"
share.) The other 50% remains with the State to redirect as it sees
fit.
Australia is unique in providing public funding support to a blended
schools sector which embraces government schools, systemic non-government
schools (e.g. the Catholic system) as well as independent non-government
schools which may or may not affiliate into statewide or national groupings.
At both Commonwealth and State levels, such a heterogeneous mix of schools
is regarded as not just an accident of history, but as a legitimate and
appropriate way for education to be delivered in modern, pluralist communities.
To date, over the period of this blended system, there has been a parity
of educational performance between the public and the private sectors.
[20]
Supporters of both government and non-government sectors acknowledge
the importance and contribution that each sector makes to the education
of Australia's children, and it is vital that the funding and policy
frameworks established by governments enhance and strengthen both sectors.
The States Grants Bill provides for financial arrangements between the
Commonwealth and States which seek to meet the educational needs of
students regardless of which school sector they attend. The Committee
is of the view that any debate about education funding mechanisms should
remain within the context of Commonwealth-State financial agreements,
and should not be pursued as an issue between government and non-government
schools.
Changes to the previous New Schools Policy
The previous New Schools Policy emerged as part of the state aid 'settlement'
of the mid-1980s. [21] It was introduced
by the Commonwealth (Labor) government in 1985 following the government's
acceptance of the recommendations of a Schools Commission report. This
report recommended:
- arrangements for new schools based on the principle of `planned
educational provision'
- funding priorities for new schools to be established against four
broad categories of `priorities'
- the establishment of State level bodies to advise the Commonwealth
on relative priorities.
In the event, only South Australia and the Northern Territory established
Commonwealth-State Joint Planning Committees. The other States and Territories
established New Schools Committees comprising nominees of the state education
department, the state Catholic commission, the association of independent
schools and one Commonwealth nominee. At present, a debate is still running
about the adequacy of the representativeness of these bodies. [22]
In 1988, as part of the Commonwealth government's May Economic Statement,
the New Schools Policy was altered to increase minimum enrolments for
new schools, and limited new non-systemic schools to funding no higher
than Category 6 - although new systemic schools were not so restricted.
Further changes were announced by Minister Dawkins in 1991, allowing
schools to seek a review of their funding category after they had been
in operation 5 years, but strengthening the assessment process for commencing
schools.
The non-government sector still grew under the New Schools Policy, with
251 new schools opening since 1986 of which only 18 have closed [23].
However, the policy was criticised as discriminatory, particularly in
relation to small, community based schools which embraced a particular
philosophical or religious ethos. A useful summary of the concerns about
the policy was expressed to the Committee as follows:
We strongly identify with the feelings of parents who wish to
impart to their children their particular philosophy of education, be
it religious, secular, cultural or otherwise and who, because of government
policy, are either prevented from or penalised for so doing. The new
schools policy is not, in our view, soundly based...We would believe
that any group in the community who wishes to operate a school and who
meet appropriate criteria, can provide appropriate education, should
be permitted to do so....They need to meet minimum requirements, they
must have properly registered teachers, appropriate facilities and so
on. But subject to that, any group should be permitted to operate schools
in this community. We have diversity in virtually all other areas of
life in this community. We ... have it in sport, we have it right across
the areas of consumer choice and so on. We do not see that education
should be singled out as an area where there ought not be diversity.
[24]
The New Schools Policy also compounded the difficulties faced by schools
after they had reached the viable stage and met the criteria of eligibility
for Commonwealth support. This occurred because many schools had to
borrow funds for their establishment, and thereafter had ongoing debt
to manage, even though they had proven viable:
A small school, the Castlemaine Waldorf school in Victoria, was
registered by the state government in 1990. It took three years to achieve
the minimum number of 50 students. The school is now thriving.... In
its first three years, apart from the enormous amount of personal effort
that parents had to put in there, they also had to accumulate debt to
actually make up for the funding that was not available. The cost to
the school over certainly the medium if not the long term, financially
and having to manage the debt as an additional cost... has been very
substantial. [25]
One of the major justifications of the New Schools Policy related to
the issue of planned educational provision. It was argued that the establishment
of a new school should take into account, among other things, the impact
of the proposed new school on the cost-efficiency and viability of any
existing neighbouring schools; notwithstanding that a new school, usually
by virtue of its distinctive ethos, tends to draw its students from
a wide catchment area. The Committee agrees that proper planning is
an important issue, but that this should be done at the State or Territory
level. Schools are a State responsibility, and the State is be best
placed to determine the appropriateness of a new schooling initiative.
The use of Commonwealth funding criteria as a de facto planning
instrument - which has to an extent been the effect of the New Schools
Policy - is clumsy and does not allow the planning responsibilities
to fall where they properly should lie, namely with the States and Territories.
That the latter have tended to allow the New Schools Policy to prescribe
aspects of planned education provision at the State level is exemplified
in the following comments of the ACT Government:
[The ACT] registration procedures for non-government schools
are quite comprehensive, but did rely on the New Schools Policy in
three areas:
. control of minimum and maximum enrolment numbers
. control of impact on existing schools and the requirement
for 2% growth
. control of financial viability
It is the view of the ACT Government that it should have been
provided with advance warning of the proposed changes so that legislation
and regulations could have been amended to provide sensible controls.
[26]
Clearly, State and Territory education authorities exercise a strong
planning role in relation to government schools. As far as non-government
schools are concerned, though, several witnesses considered State school
registration mechanisms were insufficiently tuned to planning considerations.
Moreover, it is evident that registration criteria differ significantly
from State to State, which can be problematic for the establishment
of non-government schools which have affiliations across State borders.
However, the Committee is encouraged by the advice of the Department
of Employment, Education, Training and Youth Affairs that planning has
been a consistent feature of new school development to date, and has
involved public and private education authorities:
The state governments, the Catholic education authorities and
the independent school authorities have been involved in planning processes
with the Commonwealth over the past 10 years, in a formal sense,in most
states, on new schools committees. In some states, they have other arrangements.
So the concept of planning for new schools would not be surprising for
state government officials or, indeed, for independent or Catholic education
officials. It is a matter for each of the states to determine, given
this policy decision, how they wish to proceed in future with their
planned educational provision arrangements. [27]
The Committee is of the view that well-designed, transparent planning
mechanisms, operating at the State and Territory level, engender confidence
amongst all parties interested in the provision of school education,
whether in the government or non-government sectors. It is almost inevitable
that the establishment of a new school in the vicinity of existing schools
will be a source of anxiety for those communities affected. A planning
mechanism in which the public has confidence, and to which concerned
people have ready access, will facilitate reasoned debate and defuse
potential conflict. It also militates against prejudice or suspicion
concerning the equitable distribution of public monies to schools in
both sectors.
The Committee RECOMMENDS that the Ministerial Council of Employment,
Education, Training and Youth Affairs (MCEETYA) promote the coherent
development of planned educational provision at school level through
the establishment of transparent State and Territory planning mechanisms
which address both government and non-government schools. Such mechanisms
could take the form of restructured New Schools Committees or Joint
Planning Committees which would need to be representative, accessible
and open to public scrutiny.
The current existence of New Schools Committees or Joint Planning Committees,
albeit in a possibly restructured form, should provide a suitable basis
for State level planning.
Projected expansion of non-government schools
Those opposed to the abolition of the New Schools Policy, which entails
the removal of the Level 6 funding cap for new schools, argue that the
result will be a proliferation of non-government schools, with the result
that:
- a greater proportion of public funds will flow to private schools,
and (particularly under the new Enrolment Benchmark Adjustment) this
will be at the expense of public school funding
- the viability of existing schools, both government and non-government,
may be threatened as local students transfer
- the schools sector will become more volatile, with implications
for the stability of employment of teachers
The issue of the alleged flow of funds to the private sector at the
expense of the public sector will be explored more fully in the Committee's
discussion of the Enrolment Benchmark Adjustment later in this report.
On the question of threats to the viability of existing schools posed
by the introduction of a new school in their vicinity, the Committee
sought responses from a variety of witnesses. A witness from the Steiner
Schools Association, for example, considered that the establishment
of a Steiner school would not threaten nearby schools because:
what we offer is, if you like, quite idiosyncratic, [so]our catchment
tends to be very broad rather than concentrated in a locality. I do
not think I am aware of Steiner schools actually affecting individual
schools round about. We draw in from very wide areas because people
will come to the schools for the education. [28]
To the question that, low fee Anglican schools, say, might draw some
of the students away from an existing Steiner schools, the witness replied:
They might, yes, if they were doing their job....[However, the]
parents who want the ethos of the school and the whole package deal
that Steiner schools present I do not think would be touched by any
other school. There might be a very, very small move to a school but
negligible from our point of view. [29]
This is not to say that that the arrival of a new school does not introduce
an element of competition into educational provision in the area. This
may well impact upon enrolments in an existing school, and the extent
to which that represents a real risk will no doubt rely in large part
upon how finely tuned to student numbers is the school's viability.
A witness from the Catholic system observed:
There would be some examples of that,not many, but there certainly
would be some. Again let me give you a Western Australian example.
There is a new non-government school which started recently in the
town of Geraldton which is, we thought, pretty well served by government
and Catholic schools, and I think that has provided some pretty strong
competition for the major Catholic college in that town. We did not
oppose the establishment of this school, but I know that there was
some anxiety about it.
I am sure those stories could be repeated in many other parts
of Australia, but in general we have been satisfied with the way the
planned educational provision has worked, even though at times it has
meant delays in starting new Catholic schools or at other times where
we wanted to start a new Catholic school we have not been able to because
someone has been in there first. [30]
With respect to the suggestions of a major expansion of non-government
places under the new legislation, representatives of the various non-government
school groups were of the view that this was highly unlikely. The Catholic
system, for example, has been very stable, experiencing very small changes
in enrolments over several decades. The advice from its representatives
is that this is unlikely to change:
I do not think that the abolition of the new schools ... will
make much difference to what has been happening. If you look at the
trend ... over the last decade, there has been a quite substantial
increase in the proportion of students enrolled in non-government
schools. I would not expect that rate of increase to change at all.
In fact, I would be surprised if it did not start to slow down. I
think that there are limits to the proportion of Australians who are
looking for a Catholic education and who are prepared substantial
fees...
[There] is not a vast, pent up demand for new non-government
school places, particularly for new non-government schools that will
suddenly be given expression to by this policy.... If there were,
and it were uneconomic or damaging to the government school systems
in the states, I would hope and expect that the state governments
would exercise their responsibility for planned educational provision
and ensure it did not happen.
Representatives of the non-government sector who had been involved
in establishing new schools highlighted to the Committee the fact that
such initiatives were no small undertaking, and people would not be
rushing into them lightly.
I would be surprised if the removal of the new schools policy
actually created a whole lot of new school initiatives. Apart from the
question of funding, the issue of starting up a school for your children
I know from experience to be an absolute monster of a job. [31]
I do not think [the non-government sector] will grow rapidly...
I do not know how far it would go but I would be very surprised if it
went up to more than about 35 per cent. I just think there is a limit
to what people want... The current funding arrangements, people say,
are generous but they still leave most schools teetering on the financial
edge. [32]
Contrary to claims that the removal of the new schools policy
will result in an inordinate rate of growth of new private schools,
it is maintained that there are sufficient economic factors and state
regulations to keep such growth under control. I do not believe that
there is going to be a blow-out in the numbers of new private schools.
[33]
The are some other issues which the Committee believes will have a
constraining effect on any alleged explosion in non-government schools.
The first is the availability of capital funds. Capital grants for non-government
schools will drop from $120 million in 1996 to around $90 million for
the next three years and reduce by around $10 million in the Year 2000.
Establishing new schools is an expensive business, and there is competition
between existing as well as new private schools for this capital, the
allocation of which is made by a State level committee. The second issue
is bound up with the operation of the Enrolment Benchmark Adjustment,
which will see the Commonwealth recoup 50% of any savings to a State
arising from a proportionate shift of enrolments from government to
non-government schools. The State, of course, will retain 50% of the
savings for use as it sees fit, but it might be expected that under
such arrangements States will consider, perhaps more seriously than
they have before, the implications for government enrolments of the
establishment of a non-government school.
In any event, official government estimates indicate that between 1995
and 1999 enrolments will move by around 0.53% annually, at the end of
which period 68.9% of students will still be in government schools.
On taking into account all of the above considerations, the Committee
is not persuaded that the new legislation will lead to an explosion
in the numbers of new non-government schools.
The Level 6 funding cap
The Level 6 "funding cap", introduced in 1988, was in effect
a mechanism by which new schools were put to the test financially, in
the sense that they would not be "propped up" by Commonwealth
dollars while proving their economic viability.
I can recall a time prior to the new schools policy when [economic
viability] was a serious issue, when schools were established and did
close within a short period of time; and the issue was not just one
of the waste of the recurrent dollars that were provided and the disruption
to children's schooling but also, in some cases, public equity in capital
funds provided. They were all really serious issues and were grappled
with by successive Commonwealth governments. We do have to look at viability.
These schools, whether they are non-profit or not, are small businesses,and
we know how difficult it is to establish small business and to make
it viable. That was one of the reasons that the category 6 cap was put
on schools, so that schools did not begin with an unrealistic expectation
of what it was going to be like to try to maintain their schools. [34]
However, in restricting non-systemic new schools to a funding category
below which they might have normally been entitled - according to the
resourcing formula which took into account the school's actual resources
and their ratio to the average cost of schooling (the so-called ERI
[Education Resource Index] formula) - it was argued by many that the
Commonwealth was acting in a discriminatory way. Existing schools with
similar needs and profiles might be supported at much higher funding
levels. The removal of the funding cap relocates the emphasis on needs-based
assessments of eligibility for Commonwealth support. An example of what
this means for the non-government sector was provided in relation to
Lutheran schools in Western Australia:
We have a school that will open next year, 1997, in Perth. It
had its funding capped at category 6. It then planned accordingly. All
other Lutheran primary schools are categories 8, 9 and 10 in Western
Australia. ... They were given the opportunity to put together their
figures again... You are more concerned about having fees at a level
to make the enrolment inclusive of a wide range of the population. [35]
The Level 6 funding cap combined with the requirement that a new school
enrol a certain minimum number of students before Commonwealth funds
could be accessed proved a major difficulty for small, community-based
schools.
[There] were two major inhibitors on our schools. One was the
cost impact on parents unfairly and inequitably applied, totally contrary
to a needs based policy drawn out of the ERI with the level 6 cap. And,
secondly, it artificially forced schools to recruit numbers of students
from other existing government and non-government schools in order to
get established. [36]
The issue of minimum enrolments for non-government schools was raised
on several occasions by witnesses. Support for minimum enrolment criteria
tended to be on the grounds of ensuring schools' viability. Those opposed
to minimum enrolment criteria regarded such regulations as an artificial
imposition. One witness highlighted the relative differences between
government and non-government schools with respect to enrolment numbers:
The...total number of government schools with primary school
populations lower than 36, based on [1995 ABS] statistics...was 753
and the non-government sector had 107. That...represents in the non-government
sector 12.5 per cent of the total number of schools with populations
less than 36. Yet the new schools policy says that, in order to get
funding for a non-government primary school, you had to have a population
of 50....If those government schools are considered educationally viable
with populations less than 36, it surely would have to be a matter of
argument that non-government schools are similarly viable. [37]
The removal of the level 6 funding cap will mean that 38 existing funded
schools, as well as at least 50 unfunded schools with State recognition,
will be eligible for placement in any of the 12 funding categories. [38]
The Enrolment Benchmark Adjustment
The operation of the Enrolment Benchmark Adjustment (EBA) has been
the site of the most intense debate in relation to the States Grants
Bill. It is a mechanism designed to manage the flow of funds between
the Commonwealth and States as students move between school sectors.
The EBA has been explained by the Minister (Dr Kemp) in the following
terms:
[What] we are calling the enrolment benchmark adjustment [is]
the mechanism which will allow the Commonwealth to share in any savings
which the states will make as a result of the movement of pupils from
government to non-government schools.
The average saving for state governments when a pupil moves
from a government to a non-government school is $3,400. The Commonwealth
is saying to the states, "You have, over the last decade or so,
made savings of the order of $3 billion as a result of this outflow."
..[Thus] the states have had...a very big incentive to shift students
from government to non-government schools...
In the legislation that we are putting forward, we propose
to halve that incentive...
The fact is that the per capita funds remaining for every government
school student as a result of this policy actually increase. There is
more funding per student for every government school student after the
result. There is more funding, and that greater funding allows the government
school sector to improve the quality of what it offers to its remaining
students. [39]
The EBA "adjusts the share of government general recurrent grants
to the States by approximately 50% of the gain that would accrue to State
governments as a result of enrolment drift from the government sector
to the non-government sector". [40]
In simple terms, beyond the benchmark proportion of non-government enrolments,
an average net saving to the State of $3,400 per student arising from
the transfer of students from a State school to a private school would
return to the Commonwealth $1700 per student, leaving the rest of the
saving with the State for use as it sees fit.
Consequently, as the States are able to retain the 50% remaining
gain, even though the Commonwealth is reducing its overall tied funding
to the States for government students, the overall funding level from
all sources available for students remaining in the government sector
would actually increase on a per capita basis as there are fewer students
being funded. [41]
The EBA does not automatically apply every time a student transfers.
It is triggered only if at the end of each year there is a proportionate
shift in the enrolments between the government and non-government sectors
beyond that actual proportion which is measured on the basis of 1996
census data. That is, the EBA is:
the adjustment to government grants as a consequence of the
movement in the ratio of non-government students to government students
from the 1996 Benchmark.
The EBA would be calculated at the end of each year following
the student census to determine the actual drift in student enrolments
in a State...The calculation would also involve using actual average
expenditure by States on students in government and non-government schools...If
the census showed no change in relative enrolment shares or an increase
in the government share, the EBA would not be triggered. [42]
It is estimated that the percentage share of students in non-government
schools will increase from 29.4% in 1996 to 31.1% in 1999. Using proportionate
measures to determine the public-to-private drift, of the projected total
enrolment change of approximately 88,000 students across all schools from
1996-99, around "54,000 students who would have been in the government
sector will be in the non-government sector.". [43]
This last figure would be the basis for the funding adjustment made. [44]
Because the EBA is only triggered if there is a proportionate increase
in the non-government share of enrolments, the Committee believes there
will be a strong incentive for States to ensure that they at least maintain
their current share of enrolments. This would involve turning around
the trend of the last few years, but if a State should choose to give
priority to such a task, it would be the students in the government
schools which would benefit.
The projected savings to the States and the associated EBA amounts
are set out in the following table provided by DEETYA:
Enrolment Benchmark Adjustment Savings
($ million)
| |
1996-97 |
1997-98 |
1998-99 |
1999-2000 |
| State Savings |
na |
53.526 |
118.284 |
184.053 |
| EBA |
na |
26.763 |
59.142 |
92.027 |
Several witnesses questioned the use of 'average costs' as opposed
to 'marginal costs' in determining savings arising from student transfers.
This issue is one which the Committee considers has not been resolved
satisfactorily in the debate thus far, and is one which should be settled
as quickly as possible. The Commonwealth Department (DEETYA) has not
clearly articulated the distinction, nor explained how it has accommodated
such a distinction in its EBA calculations, other than to advise the
Committee that:
The decision to recoup [to the Commonwealth] only 50 per cent
of the saving to a state was based partly on issues surrounding marginal
costs versus average costs. [45]
This suggests that the Commonwealth at least recognises the legitimacy
of the average/marginal cost distinction. However, there remains a disagreement
between the Commonwealth and the States (and others) as to how that
distinction should be validly applied in the context of attributing
savings when students transfer out of a government school.
Some considerations put before the Committee include the following:
- The transfer of students out of the government system will be manifested
at the individual school level often only as very minor changes to
the numbers of pupils in a class. This will not result automatically
in savings to a school's global budget, nor to the running costs of
a system's infrastructure. There may be some savings eventually if
there is a resultant decrease in the numbers of teachers needed, say,
but such savings would be significantly smaller than the savings attributed
by use of an average which took system-wide non-teaching as well as
teaching cost components into account.
- When a student leaves a non-government school, that school immediately
loses the per capita Commonwealth and State funds attaching to that
student, as well as any private fees, and the school must adjust accordingly.
It could be argued that such treatment should be consistent across
both sectors; or at least that under the proposed EBA the public school
does not suffer to the same degree as the private school as the former
will only lose 50% of its Commonwealth funds when a student leaves.
As already noted in the evidence and submissions put before the Committee,
the State governments are concerned that the figures suggested by DEETYA
as attributed savings arising from enrolment drift have been calculated
according to an inappropriate methodology. The Committee is not in a
position, given the time and information available, to pursue a detailed
assessment of the conflicting claims between DEETYA and the State governments.
However, both in submissions to this Committee and in evidence presented
at public hearings, the governments of the States and Territories have
indicated quite clearly that there are aspects of the States Grants
Bill with which they have concerns. These concerns are directed in particular
at the effect of the Enrolment Benchmark Adjustment.
Given that the Enrolment Benchmark Adjustment is not intended to apply
until financial year 1997-98, it may be prudent for the Commonwealth
government to undertake a detailed consultation with the States - perhaps
under the auspices of MCEETYA or COAG - on the actual effect of the
EBA. This should be done in time for any necessary adjustments to be
made prior to finalising the 1997-98 budget.
The Committee RECOMMENDS that DEETYA undertake immediately a round
of detailed consultations with the State and Territory governments in
relation to the anticipated savings arising from the Enrolment Benchmark
Adjustment, and report to the Minister on the outcome of those consultations
as soon as possible.
The issue of "residualisation"
Allegations about "residualisation" are based on arguments
that the combined effect of the abolition of the New Schools Policy
and the introduction of the Enrolment Benchmark Adjustment will provide
extra opportunities for, and act as a stimulus to, the removal of students
from the government sector by parents anxious about the future resourcing
and quality of public schools.
As has been demonstrated clearly above, there will be no explosion
in non-government schools leading to a dramatic rise in non-government
enrolments; and the increase in total per capita Commonwealth funding
for government students (17.9%) will be greater than the rise for non-government
students (14.9%). Moreover, State government budgets reveal an average
increase of 6.3%expenditure by States on education in 1996-97 over 1995-96.
In addition to the extra $45 million literacy funding and $56.7 million
increase in the study of Asian languages and culture provided for in
this Bill, other legislation will provide for $187 million for vocational
education in schools and $17.4 million for civics education. Such funding
will enhance the quality, range and relevance of offerings in Australia's
schools.
The Committee understands that it is important that the public schooling
system reflect the broad range of Australian society in its cultural
and socio-economic mix. It is also desirable that the public sector
retains its share of able and committed students amongst the broad spread
of abilities in its student population.
A number of predictions were placed before the Committee about the extent
of enrolment transfers over the next few years, despite the official data
showing that the shift would be less than 2%. A prominent analyst in this
debate, Ms Louise Watson, has estimated that, "add[ing] together
the effect of the trend, plus the new schools policy, plus the abolition
of the enrolment maxima the numbers of enrolments in non-government schools",
[46] produces an increase in non-government
school enrolments about one third as high again as the government's estimates
of the increase.
But even if the increase in raw numbers of students is about one third
higher than government estimates of the increase, the corresponding
proportional shift within the whole school population would still be
less than 2.7%. In other words, if the proportion of non-government
students in Australia's student population is currently 29.4%, even
on Ms Watson's analysis that proportion would rise to no more than 32.1%.
The Minister (Dr Kemp) addressed the residualisation arguments in the
following terms:
The member for Fremantle also referred to the shift to non-government
schools as having the potential to siphon the elite and accelerate the
push toward non-government schools. The fact is that my department estimates
that by 1999 some 2,200,000 students will be in government schools -
some 69 per cent of school enrolments - and that these students will
be receiving quality education. This can hardly be categorised as `residualisation'...
The government sector has been residualised when 70 per cent of students
are there! We are putting in place in this legislation policies that
will provide for quality education. [47]
The Committee is of the view that claims of residualisation of the
public sector of schooling are alarmist. State governments have always
taken seriously their constitutional responsibilities for the provision
of education, and this States Grants Bill reinforces those responsibilities
and underpins them with a $14 billion commitment over the next four
years.
The States Grants Bill has generated considerable debate about
the relative benefits flowing to government and non-government schools
arising out of the broadbanding of Targeted Assistance, the abolition
of the New Schools Policy and the introduction of the Enrolment Benchmark
Adjustment. These issues have been canvassed thoroughly by the Committee
in public hearings, and the various arguments analysed in this report.
As far as possible the Committee has sought to bring realistic appraisals
to bear upon the many claims that have been made in relation to the
impact of this Bill. There are some financial details relating to the
attributed levels of EBA savings by States which are still to be determined
by the States themselves.
The Committee expects that the Commonwealth will work closely with
the States in clarifying those details, and understands that DEETYA
will be proactive in this regard. In summary, the Committee is satisfied
that the Bill provides a proper framework for the management of education
funding arrangements between the Commonwealth, States and Territories.
The Committee RECOMMENDS that the States Grants (Primary and Secondary
Education Assistance) Bill 1996 be passed without amendment.
Senator J Tierney
Chair
Footnotes
[1] This Introduction is taken largely from
the Bills Digest No.42 1996/97 prepared by Greg McIntosh
[2] Second Reading Speech (Mr P Reith,
19 September 1996)
[3] Transcript of Evidence p34 (Ms
Brown, Australian Centre for Equity through Education)
[4] Information Paper Delivery of Commonwealth
Targeted and Quality Schooling Programs from 1997 DEETYA p7
[5] Information Paper Delivery of Commonwealth
Targeted and Quality Schooling Programs from 1997 DEETYA p8
[6] Information Paper Delivery of Commonwealth
Targeted and Quality Schooling Programs from 1997 DEETYA
[7] Transcript of Evidence p182, 1
November (Mr S Romaniw, Australian Federation of Ethnic Schools Associations)
[8] Transcript of Evidence p204 1November
(Professor Tannock, National Catholic Education Commission)
[9] Submission No.102, Department of Employment,
Education, Training and Youth Affairs.
[10] Transcript of Evidence p190,
1 November (Ms Watson)
[11] See Table on State & Territory Government
Outlays 1994-95 in the Appendix to this report.
[12] Transcript of Evidence p193 (Dr
McMorrow, NSW Department of TEC)
[13] Transcript of Evidence p195 (Dr
McMorrow, NSW Department of TEC)
[14] Budget Statements 1996-97 p3-181
[15] Submission No. 102, Department of Employment,
Education, Training and Youth Affairs
[16] Hansard p6423, 6 November 1996
(Hon D Kemp)
[17] Extracted from Bills Digest No.42
1996/97 prepared by Greg McIntosh
[18] Second Reading Speech (Mr P Reith,
19 September 1996)
[19] Second Reading Speech (Mr P Reith,
19 September 1996)
[20] Transcript of Evidence p 140
(Professor Anderson)
[21] Submission No. 13, NSW Department of
Training and Education, Vol1, p42
[22] K R McKinnon Discussion Paper: Review
of the New Schools Policy AGPS 1995, p47
[23] K R McKinnon Discussion Paper: Review
of the New Schools Policy AGPS 1995, p13
[24] Transcript of Evidence pp167-168,
1 November (Mr Rockman, Australian Coordinating Committee of Jewish
Day Schools)
[25] Transcript of Evidence p181,
1 November (Mr Layden, Steiner Schools Association)
[26] Submission No. 146, ACT Government
[27] Transcript of Evidence p214,
1 November (Mr Daniels, DEETYA)
[28] Transcript of Evidence p183,
1 November (Mr Layden)
[29] Transcript of Evidence p183,
1 November (Mr Layden)
[30] Transcript of Evidence p205,
1 November (Dr Tannock, National Catholic Education Commission)
[31] Transcript of Evidence p183 (Mr
Layden, Steiner Schools Association)
[32] Transcript of Evidence p206,
1 November (Dr Tannock, National Catholic Education Commission)
[33] Transcript of Evidence p56, 24
October (Mr Spoor, Seventh Day Adventist Schools)
[34] Transcript of Evidence p 24 October
(Ms Brown, Australian Centre for Equity through Education)
[35] Transcript of Evidence p171,
1November (Mr Jericho, Board for Lutheran Schools)
[36] Transcript of Evidence p64, 24
October (Mr Crimmins, Australian Association of Christian Schools)
[37] Transcript of Evidence p55, 24
October (Mr Crimmins, Australian Association of Christian Schools)
[38] Submission No. 102, Department of Employment,
Education, Training and Youth Affairs
[39] Hansard p. 5507, 16 October 1996
(Hon D Kemp)
[40] Submission No. 102, Department of Employment,
Education, Training and Youth Affairs.
[41] Submission No. 102, Department of Employment,
Education, Training and Youth Affairs.
[42] Submission No. 102, Department of Employment,
Education, Training and Youth Affairs.
[43] Submission No. 102, Department of Employment,
Education, Training and Youth Affairs
[44] Submission No. 102, Department of Employment,
Education, Training and Youth Affairs. Table 4.
[45] Transcript of Evidence p213,
1 November (Mr Evans, DEETYA)
[46] Transcript of Evidence p 188,
1 November (Ms Watson)
[47] House of Representatives Hansard
p5329, 16 October 1996 (Dr Kemp)