DISSENTING REPORT

STATES GRANTS (PRIMARY AND SECONDARY EDUCATION ASSISTANCE) BILL 1996
CONTENT


DISSENTING REPORT

INTRODUCTION

The States Grants (Primary and Secondary Education Assistance) Bill 1996 represents a major shift in the financial arrangements between the Commonwealth and the States with respect to the funding of education. Moreover, it heralds the first moves by the Commonwealth to abrogate key national responsibilities for ensuring an equitable and high quality schooling system in Australia.

For the past two decades the Commonwealth has assumed, for extremely good reasons, an important leadership role in promoting advances in the curriculum, teaching and infrastructure of Australia's schools, in both the government and the non-government sector. It has presided over an unprecedented rise in the numbers of students staying on at school beyond the compulsory years; the development and implementation of the National Goals for Schooling; dramatic improvements in the professional development opportunities for teachers; and the establishment of probably the most equitable schooling system in the world.

All of this is being put at risk by a government which is unwilling to bear its responsibility for the promotion of the national interest, and this in an arena which is universally declared to be the most critical in terms of assuring a nation's future -that of education.

We simply cannot afford to reduce our efforts in this area because, despite the significant improvements over the last decade or more Australia's contribution to schooling as a proportion of GDP remains among the lowest of the OECD countries. Indeed, an investment of around $2 billion would be needed to raise the investment in our schools to the average of OECD countries. [2]

If we want Australians to be self-managing and flexible, to take initiative, to be problem solvers, these are attributes which have their genesis in school education. Therefore Australians must be able to access, wherever they live, and whatever their personal circumstances, schools which are adequately resourced and professionally conducted. This Bill puts such opportunities at risk for that large majority of young people who attend public schools. Moreover, this Bill promotes the notion of education as a private rather than a public benefit by advancing the interests of private schools, without first securing the provision of high quality public education. The non-government schooling sector is a valuable feature of Australia's education landscape, but it must not crowd out the picture.

There are three main elements of the States Grants Bill which have significant implications for Australian schools:

All of these are major changes to the way in which the Commonwealth has previously involved itself in school education, and their impacts require careful scrutiny. To implement such changes without a clear understanding of what they will mean for the day-to-day experience of children in our schools would be irresponsible in the extreme. This Minority Report seeks to undertake that scrutiny, to expose weaknesses and to render clearly the likely outcomes of implementing the legislation.

 

CONTEXT

Australia has developed a blended system of private and public education which has generally served the nation well. Following the divisive state aid debates of the early seventies, the system settled into a broadly acceptable modus operandi, facilitated and maintained by the New Schools Policy introduced by the Federal Labor government in 1986. For most of the last two decades, the Commonwealth has "at least maintained its funding in real terms and kept funding levels (in percentage terms) ahead of enrolment increases" [3], while there has been a general decline in the levels of expenditure on schooling by the States and Territories. [4]

Of particular importance, given the muddied debate about the links between expenditure and outcomes in education, is that there has to date been no discernible difference in the overall educational performance of the government and the non-government schooling sectors. The Labor and Australian Democrat Senators are concerned that this key feature of the current blended system will start to disintegrate under the proposed new arrangements. This would be disastrous not only for Australia's economic future, but for the somewhat fragile harmony that has been thus far maintained in the community with respect to the government's financial support for public and private schools.

This concern is based, at least in part, on the evidence placed before the Committee by a long-time analyst and researcher of schools, both public and private, Professor Don Anderson. It is worth setting out his concerns in some detail.

Of further concern to the Labor and Australian Democrat Senators is that the increased enrolments in the non-government sector appear to exhibit socio-economic characteristics which have implications for the balance and range of Australian students present in the two schooling sectors. The shift from public to private has not been random:

Such data lends weight to the concerns of those who place value on having a public education sector which is representative of the full spectrum of Australian society. Social cohesion, tolerance and respect for difference are all enhanced when the day-to-day engagement of young people at school occurs in a pluralist social environment. One witness noted the recent lecture by the Minister (Dr Kemp) in which the Minister referred to the issue of social cohesion. The witnesses comments on Minister's views bear repeating here:

The question of choice and the social role of schools

Much has been made by the Minister of the issue of choice, which has constituted one of the government's prime justifications for the major changes being proposed through this Bill. But it is the view of the Labor and Australian Democrat Senators that choice is a problematic concept, the rhetorical simplicity and appeal of which masks its complex political status and its vulnerability to a range of interpretations.

One witness provided a convenient account of 'choice' as it pertains to the Australian education system:

The Labor and Australian Democrat Senators believe that the dilemma referred to here, which goes to the heart of any Australian government's policy about how best to provide for our nation's schools, has simply been ignored for the sake of preserving an ideological commitment. As the Prime Minister has been fond of telling us, the present government is 'for all Australians', yet the present Bill eschews that perspective quite spectacularly.

A timely comment on the issue of choice is provided by Professor McKinnon in the context of his government-commissioned review of the New Schools Policy. He reminds us that:

Moreover, choices are conditioned by the policy environment in which such choices are made. Again, the Labor and Australian Democrat Senators concur with the witness who pointed out to the Committee that:

Thus there is a significant weakness in the policy upon which the States Grants Bill is predicated. It is meant to provide for financial assistance to primary and secondary schools, but it does so with notions of parental choice as its overarching purpose, rather than a purpose directed towards educational outcomes. It was repeated on several occasions to the Committee [11] that choice has had no impact to date on educational outcomes in Australian schools. What is likely, however, is that a deliberate favouring of private provision over public provision in our schools could quickly lead to a deterioration in the latter.

Several witnesses also pointed out that increased choice for some people inevitably means less choice for others. As well, the choice does not simply operate at the level of parental preference. The choices able to be exercised in the private sphere are less constrained than those which can be exercised by public providers given their particular responsibilities for the public benefit.

One of the key considerations which must be taken into account when dealing with choice in an education context is that the (private) choice of parents is being exercised, to a greater or lesser degree, with (public) funding. Australia does not operate a voucher system which would facilitate the direct expenditure of separate quantums of public funds by a private citizen. Instead, public funds are largely expended on behalf of citizens by properly authorised public agencies to optimise the general benefit to the citizens as a whole. In the words of one witness:

An important question associated with choice, and the way in which it is inextricably bound up with broader questions about the kind of education system that Australia strives for, is the question about the social role of our schools and the socio-economic profile of school populations. This has important repercussions for the cohesiveness of our society and the strength of its democracy. It has become increasingly evident of late that these are concerns which governments must address as a fundamental component of all social and economic policy-making.

The issue of the social mix of students in our schools has already been introduced above. The Labor and Australian Democrat Senators regard it as an issue which is very much alive both at the macro level of education policy and the micro level of individual families' decisions about the education of their children. The following statement is illuminating on both counts, and is worth quoting at some length:

Another aspect of this situation has been revealed by JK Galbraith in his discussion of the 'contented majority'. It goes to the point that, if governments encourage people who have private means, and can buy private services, to opt out of the public system, those people will abandon the public system and in time come to oppose funding to support. [15]

The ramifications of such a scenario are profound. The Labor and Australian Democrat Senators consider that, unlike other policies which deal with infrastructure-type services, there is a serious attempt being made to fund individual family choice to a high degree, which has enormous risks for our capacity to ensure a quality, comprehensive, readily accessible education system. The Labor and Australian Democrat Senators note international evidence that governments maintain a viable public sector service by ensuring that around 85% of people use it. The present Bill will breach such constraints significantly in excess of the status quo which itself is already beyond that international benchmark.

As already emphasised, choice is conditioned by the policy environment in which that choice is to be exercised, and the policy environment of the State Grants Bill is sending clear messages to Australian parents that if they choose to opt out of the government sector their children will be catered for in the non-government sector by a significant public subsidy. In such a situation, parental fears for the future of their offspring in a public system which is seemingly at risk of Commonwealth neglect cannot be ignored in estimating future patterns of enrolment. This aspect was eloquently set before the Committee by a representative of the NSW Federation of P&C Associations:

Such a situation is anathema to Australia's traditional education ethos.

 

RATIONALISATION AND BROADBANDING OF TARGETED ASSISTANCE PROGRAMS

Under the previous government, the Commonwealth funded a number of specific purpose programs which focused on target groups of students who are educationally disadvantaged. The National Equity Programs for Schools (NEPS) included the following components:

As well, a Students with Disabilities loading was paid with general recurrent grants, and a collaborative initiative of Commonwealth, State and Territory governments - the National Asian Languages and Studies in Australian Schools (NALSAS) Strategy - sought to assist schools to enhance their provision in Asian studies.

Importantly, the NEPS program was the Commonwealth contribution to the National Strategy for Equity in Schooling which was approved by Commonwealth and State ministers for education in 1994, and represented "national consensus on priorities, goals and expected outcomes for the priority student groups for the period 1995-2000." [17] The Labor and Australian Democrat Senators are concerned that the proposed changes put key aspects of the National Strategy at risk, and will not adequately realise the agreed goals articulated in 1994.

There is something to be said for targeted assistance programs being flexible, to enable decisions to be made at the State level concerning the expenditure of funds on particular needs. However, allocations must be determined through transparent decision-making processes, and there must be accountability sufficient to assure the Commonwealth that the goals for which the funds were made available are being met. In other words, flexibility must not weaken the effective targeting of funds to areas of greatest disadvantage.

The rationalising of around 40 targeted programs into five main programs risks blurring the specific goals which the discrete programs targeted in an unequivocal and identifiable way. For example, the drawing in of the Disadvantaged Schools program into the broader Literacy strategy may well mean that pockets of acute disadvantage get lost in the broader push to national goals which are articulated expressly in literacy terms and which will be judged using literacy measures. Disadvantage is a complex phenomenon which does not lend itself to one type of measure, either in the analysis or the treatment of it. Several witnesses with expertise in equity matters pressed their concerns about inadequate targeting.

The Labor and Australian Democrat Senators are concerned that successful programs conducted under NEPS' highly targeted approach may disappear, simply because under a broadbanded system, the specific target group will not have an identifiable element of the broad funding package earmarked for their use. Such money is therefore much more susceptible to erosion from a range of other demands which may or may not be as pressing. The Students at Risk Program is a key example here:

The majority report states that from 1997 the mechanism which will be used to allocate funds under the former Disadvantaged Schools Program (DSP) 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. [20] A revised mechanism is also being used for the Country Areas portion (CAP) of the new Special Learning Needs program. But the impact of these changes is significant.

In a letter from DEETYA to school authorities seeking their comments about the proposed changes to targeted programs, a table was attached which set out the differences between the amounts for both programs (DSP and CAP) under the existing, compared with the recommended, new systems. [21] The Labor and Australian Democrat Senators note with some concern that the letter was dated 29 July and required comments by 19 August, setting an impossible time frame for consultations within the States about their response.

According to the table, in Victoria, for example, the DSP allocations will drop by 11.8% ($7.85 million) overall, with State schools bearing a 10.8% rEducation - a loss of $6.67 million. Western Australia experiences the most significant rEducation under the new CAP methodology, dropping 3.22% overall, with Victoria, South Australia and Tasmania also experiencing cuts. Combined with the substantial cuts to schools and teacher numbers in Victoria, students in that state will be most severely affected by these changes.

Accountability for the expenditure of Commonwealth targeted program funds has always been a problematic issue. The National Report on Schooling is barely adequate as a general account of the state of the nation's schooling system, let alone as an accountability instrument for the achievement of national equity goals. What is of considerable concern to the Labor and Australian Democrat Senators is that it will be more difficult than ever to monitor the operation and effectiveness of the new broadbanded programs. This is especially so given the sizeable cuts to DEETYA staff who were previously able, at least to some extent, monitor developments 'on the ground'.

The successful targeted programs under the former NEPS have built up that success over time, but have remained somewhat fragile, and are susceptible to small changes in the availability of dollars. This fragility will be exacerbated under the new regime. Previously, the Commonwealth has provided leadership not only at the National Strategy level, but also in very specific equity areas. The Students At Risk (STAR) program, for example, has been a very effective mechanism for focussing attention on a particular area of high educational need.

Without sufficiently tight targeting to areas of greatest need, and without responsive accountability mechanisms in place, effective programs could easily crumble. Once lost, it would be virtually impossible to resurrect such programs. The Commonwealth has, over several decades, pursued a careful equity strategy, and has almost single-handedly been responsible for tackling disadvantage in schools, targeting and nurturing areas of highest need. The record of some States in this area has left a lot to be desired.

The Labor and Australian Democrat Senators urge the States and Territories to exercise their broadbanding options with care, and to ensure that adequate advisory mechanisms are in place to ensure that allocations are made on the basis of need, with priority to those students and schools which suffer the greatest disadvantage. It is apparent that there are considerable differences between States in their approaches to equity programs, and these must be reconciled if Australian students are to enjoy similar levels of access to programs irrespective of where they live. One example which highlighted the differential treatment of targeted programs concerned the ethnic schools' after-hours languages programs.

The accountability issues attaching to the targeted programs are quite profound. It was always the case, even under NEPS, that the Commonwealth had a difficult time ensuring even a modest level of accountability by the States for the ways in which they spent NEPS funds. Under the new arrangements, that difficulty will be compounded in the extreme. It is absolutely essential that the Commonwealth is in a position to assure itself that funds provided to the States to redress educational disadvantage are efficiently and effectively deployed.

In an earlier inquiry, this Committee received evidence of States automatically creaming off the top of NEPS funds a certain percentage for 'administrative costs', and of funds which did not get passed on to intended recipients for many months after the start of the school year. These problems are likely to be exacerbated under the proposed supposedly 'more flexible', but certainly 'looser' regime.

The Labor and Australian Democrat Senators are not only interested in the number of dollars applied to targeted programs, but in the outcomes which those dollars achieve. It is important to have in place effective ways of measuring those outcomes. One of the key problems with this Bill as far as the equity programs are concerned is that, since the reporting arrangements depend upon the States and Territories agreeing with the Commonwealth on the reporting mechanisms, the States and Territories have an effective veto over the form and degree of rigour which such reporting mechanisms should embody.

The Labor and Australian Democrat Senators RECOMMEND that, with respect to the reporting obligations of all parties under the National Report on Schooling,

 

CHANGES TO THE NEW SCHOOLS POLICY

The previous government's New Schools Policy has been portrayed by the present government as some kind of insidious and discriminatory piece of regulatory engineering designed to suppress choice and to deny minority groups the opportunity to establish schools reflecting their particular religious, philosophical or ethnic concerns. On the contrary, the New Schools Policy was introduced to manage the expansion of choice and the growth of distinctively-styled schools, but in a way which was consistent with economic efficiency, educational accessibility, and the need to avoid the divisiveness which had emerged during the 'state aid' debates of the 1970s and early 1980s.

The Policy flowed out of a special Schools Commission report on the growth of the non-government sector. Moreover, in announcing the policy, the then Minister (Hon Susan Ryan) "pointed out that the dual system of schooling required the development of cooperative arrangements among the funding partners, in particular with the States." [25] It was clearly the Commonwealth's wish to proceed in harmony with the States and the non-government school authorities to facilitate a socially and economically sound approach to planned educational provision.

The suggestion that the New Schools Policy acted like a wet blanket thrown over the fire of non-government sector development is completely erroneous. In the year in which the policy was announced, "a large number of schools sought review of their funding categories which resulted in 73 schools being placed in more favourable categories." [26] By 1988, the proportion of students enrolled in non-government schools had increased from the 1985 figure of 25.8% to 27.3%, and from 1989-94 enrolments continued to increase, to the extent that by 1994, in all States, the non-government share of enrolments had increased to over a quarter of all enrolments.

Overall, during the period since the introduction of the New Schools Policy, a total of 251 new schools opened, of which only 18 have closed. [27] This is hardly evidence of suppression of non-government schools by a repressive regulatory regime. Of particular interest here is the fact that, since the New Schools Policy, few schools have closed. In the first couple of years of the Policy, 117 new schools opened and 100 schools closed, with 97 of these being closures of schools which opened prior to 1985. Clearly the New Schools Policy, under which large numbers of new schools opened and very few closed, introduced stability to the sector.

The New Schools Policy is essentially about planned educational provision. If the need for planning is not already sufficiently obvious in its own right, the need for it was clearly stated by a host of witnesses - notably representatives of the non-government sector:

Moreover, the States and Territories have tended to rely on the New Schools Policy as their de facto planning mechanism. This was revealed most clearly in an illuminating submission from the ACT Government:

It was clear from the evidence that many witnesses assumed or expected that States took their planning responsibilities seriously in relation to non-government schools. It was equally clear, however, that such faith in the States was not justified by the facts of the matter. The State registration process for non-government schools, which in the absence of the New Schools Policy would be where the establishment of new schools would be determined, is wholly unsuited to perform a planning role. Moreover, there are considerable differences from State to State in the registration requirements and the rigour with which they are applied. The Labor and Australian Democrat Senators were disturbed to hear of the inadequacy of some States' registration procedures across a range of important issues:

Of particular concern is that in State and Territory registration requirements, questions of a school's financial viability are often not taken into account; minimum enrolment requirements apply in only one jurisdiction; and only the Northern Territory has a registration criterion that concerns itself with a new school's impact on other schools. These are all crucial factors in planned educational provision. The Commonwealth government has announced its intention to rely on the States to determine whether or not a new school should proceed. The irony is, that thus far the States have relied on the Commonwealth's New Schools Policy to determine whether or not a school should proceed. The Labor and Australian Democrat Senators consider it entirely irresponsible for the Commonwealth to dispense millions of taxpayers dollars based on registration processes in the States and Territories which are not geared to planning considerations, viability of a proposed school, impact on other schools and so on.

A number of witnesses emphasised the need for national guidelines to ensure that State registration procedures were sufficiently rigorous to serve as planning mechanisms. The Business Council's National Industry Education Forum called for "national guidelines that give you some sense about how to establish schools" and that "there should be a capacity to...monitor whether or not [states] are fulfilling those guidelines". [32]

A further complicating factor here is the relative stringency of the planning that is required of education departments for new government schools when compared with what applies to non-government new schools. One witness described this in terms of "double standards over the opening and continuing of government schools compared to non-government schools" with requirements for state schools being "many times larger". [33] Nowhere has this been more starkly demonstrated than in the recent decisions by the Victorian government whereby state schools which do not have a minimum number of students are being amalgamated or closed. While State secondary schools, for example, are regarded as non-viable if they fall below 400 pupils, non-government schools are allowed to operate with numbers as low as 10 pupils per year level. The Commonwealth government compounds the inequity of the situation by proposing to abolish the New Schools Policy and thereby remove minimum enrolment criteria of any sort for non-government schools.

Issues of school viability are closely bound up with questions of planning. As was noted above, the 251 new schools established since the New Schools Policy was introduced have, with very few exceptions, proved viable. This stands in stark contrast to the preceding period when non-government schools opened and folded with disturbing frequency. The fallout from such instability should not be underestimated, a point made strongly to the Committee by people closely involved with such matters:

On the evidence, it is clear to the Labor and Australian Democrat Senators that the abolition of the New Schools Policy effects a change in the ease with which non-government schools might get started at the expense of sound educational planning, and the exposure of substantial Commonwealth funds to considerable risk. To allocate significant funds to schools whose registration could have been determined according to the most meagre of criteria is indefensible.

Moreover, its abolition puts at risk the mutual goodwill between state and private schools arrived at following the divisive 'state aid' debates of the 1970s-80s. The New Schools Policy was the key formulation in the resolution of those longstanding tensions. The Labor and Australian Democrat Senators note that many witnesses emphasised the importance of avoiding a return to 'state aid' conflicts. The Australian Parents Council, for example, stated that:

Given that the States Grants Bill provides for financial arrangements between the Commonwealth and States it would be folly for the government to allow the provisions of such a Bill to be articulated in terms of the relative benefits flowing to the private or public sectors. But the Labor and Australian Democrat Senators note that, in relation to this inquiry into the States Grants Bill, the Committee has been inundated with letters from parents and others expressing their opposition to this States Grants legislation. This opposition has been expressed almost invariably in terms of benefits which the Bill is seen to bestow upon private schools at the direct cost to public schools.

This is precisely the consideration which led to the earlier 'state aid' debates, and the Labor and Australian Democrat Senators express their deep concern that this Bill will provoke a similar outcome. The recent quoting of Minutes of a Coalition ERC meeting [39] which recorded that "[Dr Kemp] noted that the Coalition sought to encourage students to move from government to non-government schools" compounds the Labor and Australian Democrat Senators' fears in this regard.

In summary, the alleged restrictive and discriminatory features of the New Schools Policy do not hold up under scrutiny, particularly in the light of the data pertaining to the expansion of the non-government sector during the period since 1985, and to the stability and viability of new schools established under the NSP. The operation of the New Schools Policy has created an environment in which both government and non-government schools can get on with the job unfettered by divisiveness of the 'sate aid' variety. The intrinsic merits of the New Schools Policy, articulated by the Schools Commission in its 1985 report, and acknowledged by the States and Territories in their use of it as a de facto planning mechanism since that time, further affirm its value.

The Labor and Australian Democrat Senators RECOMMEND that the States Grants (Primary & Secondary Assistance ) Bill 1996 be amended to include provisions requiring proper planning processes in the development and establishment of new non-government schools. Such processes should reflect the considerations regarding new non-government school proposals articulated by Professor McKinnon in his Review of the New Schools Policy.

 

THE INTRODUCTION OF THE ENROLMENT BENCHMARK ADJUSTMENT

Some preliminary remarks on funding

Before turning to a detailed consideration of the Enrolment Benchmark Adjustment, some comments concerning the broader education funding picture are warranted.

The first concern relates to the claims by the government that it is increasing education funding in the 1996-97 Budget, a claim which at least deserves closer scrutiny.

The Labor and Australian Democrat Senators note with interest that, although the States Grants Bill deals with the allocation of Specific Purpose Payments to States, the Commonwealth's submission to this Committee, and the Minister's arguments elsewhere, insist on the inclusion of attributed levels of Financial Assistance Grants throughout the Commonwealth's justification and explanation of its funding proposals. The Labor and Australian Democrat Senators have major concerns about the assumption that a 24% share of FAGs will continue to be applied by the States to education. While that has been roughly the share attributed in the past, it is an average across all States which masks the differences between States, and is an average which has been drawn across a period whose policy environment was considerably different from that which is now proposed. As one witness put it:

In any event, recent decisions of the Premiers' Conference have seen the Commonwealth ask the States to pick up a total of $1.5 billion dollars over the triennium as a contribution to the Commonwealth's debt rEducation program. This will put even more pressure on already stretched State budgets. It is clear from the DEETYA submission that the calculations of per capita funding have been made on the explicit assumption that "state fiscal contributions (1996 Premiers Conference) do not affect FAGs funding for schools." If the States actual fiscal decisions do not prove to be as assumed by the Commonwealth, the estimated per capita figures will be different. Given that services like health and education are 'big ticket' items in State budgets, it would be surprising if these portfolios were not modified in order to achieve the contributions agreed at the Premiers Conference. Moreover, as Table 14B.1 on page 3-180 of the Budget Statements makes clear, the FAGs grants have incorporated road grants as follows: $398.2m in 97-98; $414.9m in 98-99; $432.2m in 99-2000; a total of $1.25 billion over the forward estimates. This significantly distorts the amount of FAGs funding available for other purposes, including education.

The majority report claims that DEETYA analysis of State budgets reveal that, on average, States are increasing their education budgets by over 6%. But how meaningful is this for the purposes of analysing the impact of this States Grants Bill ? Indeed, the recent announcements by the Victorian government of further substantial rEducations in schools, for example, can hardly be considered an increase in that State's education effort. Moreover, spending by the States on school education as a proportion of total outlays has been falling steadily. Figures derived from unpublished ABS data commissioned by Novus Research reveals:

On this account, there seem little grounds for the confidence expressed by the Commonwealth regarding the States' willingness to cordon off education from budget cuts, let alone increase their own proportion of the total education funding bucket. The question of the role of FAGs in influencing State effort, and the impact of the 1996 Premiers' Conference decision has been a frequent theme of the criticism directed at the States Grants Bill in parliament

Whether the 1996 Premiers' Conference decisions are described as a 'cut to FAGs' or an 'agreement by the States to assist the Commonwealth's deficit rEducation strategy', the key point is that the Commonwealth will not be contributing $1.5 billion to the FAGs pool as initially planned. It then remains a matter for judgment as to whether the States will reduce their efforts proportionately or will raise the replacement revenue. There remains then the questions as to whether any reduced State effort will include rEducations in education, or whether any replacement revenue will find its way into the education funding vote from State treasuries.

In the view of the Labor and Australian Democrat Senators, such uncertainty gives little grounds for confidence about figures predicated on an attribution of 24% of FAGs to education, and also on the assumption that this proportion will be maintained by the States. A State official appearing before the Committee had a clear view on this matter:

Overall, the Labor and Australian Democrat Senators consider that the true funding picture for education remains a very hazy one, and that the government is pursuing a risky strategy in grounding some quite radical changes to Commonwealth-State education funding arrangements on such shifting sands. The reaction of the States to this particular Bill, regardless of the political persuasions of the incumbent State and Territory governments, is a further strong reason for the Commonwealth to reconsider its position.

 

The Enrolment Benchmark Adjustment

The introduction of the Enrolment Benchmark Adjustment, while not explicitly articulated within the States Grants legislation, is nevertheless provided for under Section 44 of the Bill, and has been the source of some of the most intense controversy in relation to the Bill.

Part of the controversy arises from the lack of consultation involved with the measure. State governments, who have been planning ahead on the basis of existing financial arrangements, have suddenly had a significant fiscal spanner thrown in the works. Individuals and groups who warrant, and have hitherto been granted, a stake in the education policy process, consider that they have been disenfranchised by the government's failure to consult on this radical change to funding policy.

The Labor and Australian Democrat Senators agree that consultation is of the essence, especially when policy changes are radical, have major financial implications and potentially realign the schooling sectors. State governments were highly critical of the lack of consultation:

The EBA has been explained by the Minister (Dr Kemp) in the following terms:

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." [52] 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.

The EBA is not simply a process whereby, on average, $1,712 is removed by the Commonwealth from the State for every student that leaves a government school and transfers to a non-government school.

The EBA is triggered by a shift in the proportion of government and non-government school enrolments. The 'benchmark' refers to the proportions applying in each State as measured by the 1996 school census.

This becomes particularly problematic for the State systems if government school enrolments stay at the same levels in terms of numbers of students, but nevertheless represent a decreasing proportion of the total school enrolments because of 'natural growth' increasing the absolute numbers of enrolments in non-government schools. Senator Allison of the Australian Democrats has calculated that, under these circumstances, and on the basis of DEETYA projections of enrolment growth, around $270 million would be deducted over four years from government schools recurrent grants. Senator Allison has also developed a table of figures which expands on material provided by DEETYA (see next page), and has calculated the effects of the EBA on the government's most recent enrolment projections.

Over a four year period in which government school enrolments drop by 23,000 and non-government school enrolments increase by 94,000, the EBA produces a dEducation from government schools of $305 million. Because the adjustment is triggered by an end-of-year census of schools, it is not until the following year that the 'adjustment' is made to grants. Therefore, by the year 2000, only $179 million will have been deducted for the triennium from the EBA. However, the balance - some $123 million - is deducted from the following year. Thus, the 'debt' of the year 2000 is carried over to the next.

By the year 2000, this shift in proportion of government/non-government enrolments means an annual, EBA-induced dEducation of $123 million if the proportion were to remain constant from thereon in.

The promotion of the EBA as easy way by which the Commonwealth could automatically transfer funds between the public and private schooling sectors was seen by some witnesses as the hallmark of its inadequacy:

The concern that the EBA is a simple mechanism which fails to match the complexity of its environment was raised on several occasions. The Labor and Australian Democrat Senators consider that the EBA is a blunt instrument which lacks the capacity to manage complexity of the type described by one witness in the following terms:

Several witnesses expressed the view that, if the EBA is addressed on its own simple terms, its effect can be described fairly in the following way. When a student leaves the state sector for a non-government school, the Commonwealth withdraws an average of $1700 from the State as an off-set to the Commonwealth's extra expenditure incurred as it now has to fund that student in the private sector.

The justification is that the State will save a total of $3400 from the loss of the student, and the Commonwealth is entitled to share that saving, and leave 50% of it with the State. However, Commonwealth recurrent funding to the States for public school students is around $400 per head. The removal of $1700 is therefore equivalent to the removal of the Commonwealth's per capita funding for four students. In other words, the loss of one student from the State sector results in the loss to the State of the equivalent of four students' funding from the Commonwealth recurrent grants.

The alleged savings to the States and the associated EBA amounts are set out in the following table provided by DEETYA:

 

Enrolment Benchmark Adjustment Savings

  1996-97 1997-98 1998-99 1999-00
State savings n.a. $53.526m $118.284m $184.053m
EBA n.a. $26.763m $59.142m $92.027m

Many witnesses questioned the use of 'average costs' as opposed to 'marginal costs' in calculating savings arising from student transfers. As the Majority Report acknowledges, this issue is one which has not been resolved satisfactorily in the debate thus far. 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:

In the view of the Labor and Australian Democrat Senators, this leaves much to be desired. While this suggests that the Commonwealth at least recognises the legitimacy of the average/marginal cost distinction, it fails completely to counter the criticisms presented to the Committee by a range of witnesses and submitters, including State and Territory governments.

Some of these criticisms are set out below:

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.

State governments have made it quite clear that they regard figures suggested by DEETYA as attributed savings arising from enrolment drift been calculated according to an inappropriate methodology. 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 many aspects of the States Grants Bill with which they have concerns, but these concerns are directed in particular at the effect of the Enrolment Benchmark Adjustment.

NSW considered that the EBA process may in fact result in a net cost to the State. In its submission to the Committee, the NSW government stated that "the Commonwealth's proposal will result in a net cost to this State of between $20 million to $30 million for every 2% shift in enrolment shares between Government and non-Government schools." [58] In oral evidence the Committee heard similar advice from Queensland officials:

If I could take up that point: based on the Commonwealth's assessment that there is going to be about a 1.7 per cent drift to the non-government sector, and given their assessment of cuts to the states of about $1,700, and given our existing enrolment share, then that would have an impact of the order of about $16 million per annum by the year 1999....If anything, the abolition of the new schools policy will accelerate that shift, so the 1.7 per cent estimate could be conservative. It has also not taken into account the growth in enrolments that we will experience between the current year and the turn of the century. An absolute bare minimum would be around $16 million and we suspect that it will probably be higher. [59]

The NSW argument can be summarised as follows:

Queensland government officials appearing before the Committee shared many of the NSW concerns, declaring that they "could see no policy or equity rationale for the enrolment benchmark adjustment that is proposed." [60] The submission from the Tasmanian government criticised the proposed arrangements as "based on the misconception that there will be savings to the State if the enrolment mix changes...[Certain assumptions are] inappropriately simplistic... Furthermore, Tasmania...cannot achieve the economies of scale...which the large States enjoy". [61]

The Tasmanian submission argues that "the Commonwealth should be prepared to contribute to an expansion of the non-government sector with additional funding, rather than expecting the government school sector to fulfil this function through sacrificing existing levels of funding." The Western Australian government submission "vigorously opposed" moves to "introduce funding arrangements that rapidly increase enrolments in non-government schools and to fund these places from cuts in expenditure on government schools." [62]

There is another aspect to the States' possible response to the EBA which was raised by one witness. A State education minister, confronted by the withdrawal of the per capita $1700 of Commonwealth money from the state system when a student moves to a private school, may decide that, as Commonwealth money has followed the student to a non-government school, then it would be appropriate for the State to recoup the "lost" money from the very sector which has benefited by the Commonwealth's action.

The State minister could choose to reduce proportionately the amount of State funding going to the non-government sector. The Labor and Australian Democrat Senators consider that the EBA could result in considerable gamesmanship by State Treasuries as they try to come to grips with a potentially dramatic fiscal change which has been thrust upon them without consultation and which impacts severely upon the forward planning which they have in place. Australian students will be the losers, irrespective of the sector in which they are enrolled.

Another interesting parallel in the 'marginal vs average costs' debate lies in the area of higher education funding. It was drawn to the Committee's attention by Professor McGaw:

Further criticism of the government's calculations was forthcoming from an independent analysts, Ms Louise Watson, who used DEETYA figures to arrive at projections considerably different from those presented by the Department:

Given that Ms Watson's paper had received wide coverage in the press and amongst education researchers, one might have expected that any major flaws in her projections would have come to light. At the very least one might have expected DEETYA to attempt a specific refutation of her claims. Neither of these has eventuated, which seems to the Labor and Australian Democrat Senators to confirm the view that the government's calculations and projections are problematic.

It is interesting to note that the original Commonwealth projections in Budget Measure 5 of Programme 1 set down total savings from the EBA over the quadrennium to be just over $128 million. However, in the table provided to this Committee in its submission, the EBA contribution totals $178 million - a $50 million difference from the Budget Papers. The Labor and Australian Democrat Senators consider that such variations, for which no doubt an accounting justification can be made, nevertheless point to the difficulty of producing sound financial projections.

In a situation where relatively small movements in some factors - for example, proportionate enrolment share - can have major implications for funding levels, proper decision-making calls for caution in the 'number crunching' and close consultation with the affected parties. If, for example, a State retained the same number of government school enrolments from year to year, but the proportion of all students attending non-government increased, then the State schools would have resources shifted away from them, even though their student numbers remained the same.

These concerns of the Labor and Australian Democrat Senators are reinforced by Ms Watson's calculation that :

Other analysts have expressed similar reservations concerning the validity of the government's projections about school enrolments to the extent that enrolment patterns have not been sufficiently well analysed.

The Labor and Australian Democrat Senators believe that it is irresponsible for the government to proceed with such radical changes to the funding regimes of schools while there remains so much doubt about the validity of the projections supposedly justifying such changes.

The Labor and Australian Democrat Senators agree with Ms Watson that:

On this account, the Labor and Australian Democrat Senators are of the view that the government will decide in haste only to repent at leisure. However, such repentance will entail enormous pain to Australian schools and their students, to say nothing of the disruption to State and Territory education authorities.

To pursue the present course when there are so clearly a host of imponderables and disputed claims is indefensible. The conflict with the States alone, evidenced by the submissions and oral evidence placed before the Committee by Ministers and officials, should suffice to give the government pause with respect to the introduction of the EBA. The Labor and Australian Democrat Senators urge the government to reconsider the EBA, and attend to overall resourcing issues for Australia's schools.

The Labor and Australian Democrat Senators RECOMMEND that the government not proceed with the implementation of the Enrolment Benchmark Adjustment mechanism, and that

 

OTHER GENERAL ISSUES

Accountability

The Labor and Australian Democrat Senators have already highlighted accountability concerns arising out of the changes to the targeted assistance programs. However, those concerns extend more generally into the realm of the public accountability of all schools for the provision of education which is consistent with Australia's best interests socially, culturally and economically. This is particularly important given the very large sums of public money that are expended on schools, and the significant differences between the private and public school sectors in terms of their responsibilities to public authorities, and through these, to the Australian community generally.

A useful exposition of accountability issues was provided by representatives of secondary principals from the government school sector:

While the Labor and Australian Democrat Senators would not necessarily agree with all the propositions expressed or implied in the above, it conveys the overall sense of the differential accountability which applies in the two sectors. The private sector stresses that it is highly accountable to the parents of its students. The same applies, and to an ever-increasing extent, in government schools, which are increasingly locally managed. But government schools are required to fulfil a range of important other responsibilities in conformity with State legislation guaranteeing a 'free', universal and secular education to all, and in accordance with more general international obligations arising from UN conventions and agreements to which Australia is signatory.

The government's proposals, especially concerning the Enrolment Benchmark Adjustment, are predicated on a simplistic view of the two schooling sectors which regards the private system as having the same responsibilities, cost structures, service obligations and accountabilities as the public system. This is patently not the case, and to speak blithely of students transferring between systems with average cost adjustments being made accordingly totally ignores the financial implications which arise from the factors just mentioned.

Accountability also applies to the Commonwealth government in terms of its 'accounting' to Australia's citizens for the policy path down which it seeks to steer the community, and for the overall level of resources which it is prepared to commit to one of its traditionally most important functions - namely the education of our children.

As far as our education systems are concerned, the accountability of the Commonwealth government to Australia's citizens goes beyond a concern to enhance 'choice'. It is a term which has been translated from the marketplace into education and is being forced to retain the status and reverence ascribed to it in the market, even though in its new environment it should be subordinated to the more important notions of equity, quality, comprehensiveness, relevance and accessibility.

 

Competition

Competition is another notion which has been imported into the education debate to serve particular ideological ends, and to render education susceptible to the discourse of the marketplace. A telling comment on the risks of the inappropriate application of ideas and methodologies from a market context to a service context is revealed in the following remarks of the Rt Hon Malcolm Fraser:

The Labor and Australian Democrat Senators are alert to the dangers referred to here, and are critical of the government's predilection to employ market words like competition in support of its policy. Several witnesses expressed concern at the inappropriate application of 'competition-speak' to an education environment:

The Labor and Australian Democrat Senators agree with these sentiments. Good pedagogy challenges and stretches students, encourages cooperation between students, and views competition as operating only within that pedagogical framework.

That competition is not a particularly straightforward concept, nor one that necessarily produces an optimal outcome for the community, was reinforced by Professor McGaw:

Another curiosity with respect to competition was raised by a secondary school principal, who was struck by the fact that the idea of cooperation between the Commonwealth and State governments in the provision of education might be seen in a somewhat different light under the new proposals:

The Labor and Australian Democrat Senators note that the valuing of competition as a means to educational effectiveness is simply not justified by the evidence.

The Labor and Australian Democrat Senators are committed to a vision of Australian schooling which is equitable and of high quality. Such a vision requires that the public sector is supported through an explicit commitment of governments to a primary obligation for ensuring universally accessible public schooling. Such a commitment entails the resourcing of public school systems to provide leadership in pedagogy and curriculum and to promote a vigorous culture, economy and democracy. The Labor and Australian Democrat Senators are concerned that the States Grants Bill is in several key respects inimical to such a vision.

 

 

Footnotes

[1] Porter, M The Competitive Advantage of Nations Free Press, NY p628

[2] Marginson,S et al. Creating and Education Nation for the Year 2000 AEU Discussion Paper 1995, p5

[3] McIntosh, G Commonwealth Funding for Schools PRS Background Paper No.14, 1994, p34

[4] McIntosh, G Commonwealth Funding for Schools PRS Background Paper No.14, 1994, p36

[5] Transcript of Evidence pp139-140,p143 and p146,1 November (Prof. Anderson)

[6] Transcript of Evidence p140, 1 November (Prof. Anderson)

[7] Transcript of Evidence p81, 24 October (Prof McGaw, ACER)

[8] Transcript of Evidence p139, 1 November (Prof Anderson)

[9] McKinnon,K Report of the Review of the New Schools Policy 1996

[10] Transcript of Evidence p192, 1 November (Ms Watson)

[11] For example, see Transcript of Evidence p139, 1 November (Prof Anderson)

[12] Transcript of Evidence p140-141, 1 November (Prof Anderson)

[13] Transcript of Evidence p39 24 October (Ms Brown, Australian Centre for Equity through Education)

[14] Transcript of Evidence p75, 24 October (Dr Marginson, University of Melbourne)

[15] Cited by the Member for Fremantle (Dr Lawrence) Hansard p5296 15 October 1996

[16] Transcript of Evidence p93-94, 24 October (Mr Molesworth, NSW Federation of P&C Associations)

[17] Commonwealth Programs for Schools 1996 : Administrative Guidelines AGPS p2

[18] Transcript of Evidence p34, 24 October (Ms Brown, Australian Centre for Equity through Education)

[19] Transcript of Evidence p36, 24 October (Ms Brown, Australian Centre for Equity through Education)

[20] Information Paper Delivery of Commonwealth Targeted and Quality Schooling Programs from 1997 DEETYA, p7

[21] Letter from DEETYA Schools and Curriculum Division, 29 July 1996

[22] Transcript of Evidence p148, 1 November (Ms Burrow, AEU)

[23] Transcript of Evidence p182 & 184 1 November (Mr Romaniw, Australian Federation of Ethnic Schools Associations.)

[24] Transcript of Evidence p73, 24 October (Dr Marginson, Melbourne University)

[25] McKinnon,K Discussion Paper: Review of the New Schools Policy AGPS 1995, p9

[26] McKinnon,K Discussion Paper: Review of the New Schools Policy AGPS 1995, p10

[27] McKinnon,K Discussion Paper: Review of the New Schools Policy AGPS 1995, p13

[28] Transcript of Evidence p 200, 1 November (Dr Tannock, NCEC)

[29] Submission No. 6 (Anglican Schools Commission)

[30] Submission No. 146 (ACT Government)

[31] Transcript of Evidence pp44-45, 24 October (Mr Lee, IEU)

[32] Transcript of Evidence p88, 24 October (Ms A McLeish, National Industry Education Forum)

[33] Transcript of Evidence p90, 24 October (Mr Staples, ACSSO)

[34] Transcript of Evidence p43 24 October (Ms Rolley, IEU)

[35] Transcript of Evidence p45 24 October (Mr Lee, IEU)

[36] Transcript of Evidence p179, 1 November (Mr Dunne, Australian Parents Council)

[37] Transcript of Evidence p193, 1 November (Dr McMorrow, NSW Government)

[38] Transcript of Evidence p202, 1 November (Dr Tannock, NCEC)

[39] Media Release 7 November 1996, Shadow Minister for Education (Mr Baldwin)

[40] Hansard p5281, 15 October (Hon.P Baldwin, Shadow Minister)

[41] Transcript of Evidence p190, 1 November (Ms Watson)

[42] Marginson et al Creating an Education Nation AEU, Melbourne 1995, p32

[43] Hansard p5281, 15 October (Hon.P Baldwin, Shadow Minister)

[44] Hansard p5283, 15 October (Hon.P Baldwin, Shadow Minister)

[45] Transcript of Evidence p195, 1 November (Dr McMorrow, NSW Government)

[46] Transcript of Evidence p143, 1 November (Ms Morrow, Australian Schools Lobby)

[47] Transcript of Evidence p192, 1 November (Dr McMorrow, NSW Government)

[48] Submission No. 101 (Hon R Lucas, SA Government)

[49] Submission No. 117 (Mr P Ellis, Queensland Government)

[50] Submission No. 145 (Hon. T Rundle, Tasmanian Government)

[51] Hansard p5507, 16 October 1996 (Hon D Kemp)

[52] Submission No. 102, (Department of Employment, Education, Training and Youth Affairs.)

[53] Transcript of Evidence p144, 24 October (Ms Rolley, Independent Education Union)

[54] Transcript of Evidence p77, 24 October (Dr Marginson, Melbourne University)

[55] Transcript of Evidence p213, 1 November (Mr Evans, DEETYA)

[56] Transcript of Evidence p143, 1 November (Ms Morrow, Australian Schools Lobby)

[57] Transcript of Evidence p194, 1 November (Mr Taggart, NSW Government)

[58] Submission No. 13 (NSW Dept of Education and Training)

[59] Transcript of Evidence p197 1 November (Ms Deeth, Queensland Treasury)

[60] Transcript of Evidence p194, 1 November (Mr Ivessa, Assistant Under Treasurer, Queensland)

[61] Submission No. 145 (Hon.Tony Rundle, Premier of Tasmania)

[62] Submission No. 33 (Hon C J Barnett, Minister for Resources Development, Energy and Education, WA)

[63] Transcript of Evidence p80, 24 October (Prof McGaw, ACER)

[64] Transcript of Evidence p188, 1 November (Ms Watson)

[65] Transcript of Evidence p189 1 November (Ms Watson)

[66] Transcript of Evidence p74, 24 October (Prof McGaw, ACER)

[67] Transcript of Evidence p191, 1 November (Ms Watson)

[68] Transcript of Evidence p83, 24 October (Mr Stalker, Australian Secondary Principals Association)

[69] Transcript of Evidence p94, 24 October (Mr Molesworth, NSW Federation of P&C Associations)

[70] Extract from Dateline program 29 October 1991.

[71] Transcript of Evidence p97, 24 October (Mr Molesworth, NSW Federation of P&C Associations)

[72] Transcript of Evidence p78, 24 October (Dr Marginson, Melbourne University)

[73] Transcript of Evidence p82, 24 October (Prof McGaw, ACER)

[74] Transcript of Evidence p83, 24 October (Mr Woolley, Australian Secondary Principals Association)

[75] Transcript of Evidence p192, 1 November (Ms Watson)