Chapter 1Introduction
Purpose of the bill
1.1The purpose of the Better and Fairer Schools (Funding and Reform) Bill 2024 (the bill) is to give effect to the Australian Government's (government) commitment to put all Australian schools on a pathway to full and fair funding. The bill enables the increased funding provided by the government under the Better and Fairer Schools Agreement (BFSA), as well as strengthening the focus on transparency and accountability of school funding.
1.2In his second reading speech, the Hon Jason Clare MP, Minister for Education (Minister Clare), noted that currently the Australian Education Act2013 (Act)allows the Commonwealth to provide a maximum of 20 per cent of the Schooling Resource Standard (SRS) to public schools. Minister Clare expressed that the bill would turn 'that ceiling into a floor' and enable the government to 'ratchet up funding for public schools' and fulfil the government's commitment to work with states and territories to get every school on a path to 100 per cent of its fair funding level.
1.3The Australian Government Department of Education (department) explained that development of the bill was informed by targeted consultations with all states and territories, as well as education stakeholder groups including non-government education peak bodies and First Nations representative peak bodies. The bill was also informed by outcomes of the BFSA development and negotiation process, as well as aspects of the Expert Panel's Review to Inform a Better and Fairer Education System (Expert Panel Review).
Context of the bill
School funding
1.4Australian schools are funded by a combination of Commonwealth funding, state and territory government funding, funding from fees, charges and other parental or private contributions. The public funding for government and non-government schools is split between the state and territories and the Commonwealth in the following way:
state and territory governments provide the majority of public funding for government schools and the minority of public funding for non-government schools; and
the Commonwealth provides the majority of public funding for non-government schools and the minority of public funding for government schools.
1.5Commonwealth funding for schools is provided for under the Act, which imposes requirements that the states and territories must comply with as conditions of receiving financial assistance. One of these conditions is for states and territories to be a party to a national agreement relating to school education reform.
1.6The department estimates that the total recurrent funding provided by the Commonwealth in 2024 will total $29.2 billion. This is split into $11.3 billion to government schools, $9.9 billion to Catholic schools and $8.1 billion to independent schools.
1.7Commonwealth funding for schools is paid to the states and territories for all schools in their jurisdiction. State and territory governments are then responsible for distributing the funding to approved authorities who administer funding for one or more schools. Approved authorities for government schools are state and territory education departments. Approved authorities for non‑government schools are the legal bodies approved for the school/s by the Commonwealth Minister. The basis for the Commonwealth's recurrent funding arrangements is the School Resource Standard (SRS).
Schooling Resource Standard
1.8The SRS is an estimate of the total amount of public funding a school requires to meet its students' educational needs. The SRS is based on the central recommendation that came out of the Review of Funding for Schooling(Gonski Review), which was led by Mr David Gonski AC. The SRS is made up of a base amount and up to six needs-based loadings.
1.9The base amount of SRS is calculated by 'multiplying the number of students enrolled at the school for the year by the SRS funding amount for the school for the year'. However, the SRS base amount can be reduced for most non-government schools based on the school's Capacity to Contribute (CTC). Thefinal SRS funding amounts for 2024 are $13 570 for primary students and $17 053 for secondary students.
1.10As well as receiving an SRS base amount, schools can receive up to six SRS loadings, four of which are student-based for student priority cohorts and two that are school-based for disadvantaged schools. The department calculates the SRS loadings for each school each year. The student-based loadings are:
students with disability loading;
Aboriginal and Torres Strait Islander loading;
socio-educational disadvantage loading; and
low-English proficiency loading.
1.11The two school-based loadings are:
school size; and
school location.
1.12As of 2023, government schools in all jurisdictions—excluding the Australian Capital Territory—are funded below 100 per cent of the SRS, despite the Commonwealth delivering its 20 per cent commitment.
National School Reform Agreement
1.13As outlined in the Act, one of the conditions of receiving financial assistance from the Commonwealth, is for the states and territories to be a party to a national agreement relating to school education reform. The current joint agreement between the Commonwealth, states and territories is the National School Reform Agreement (NSRA) which covers five years, 2019–2023. The NSRA sets out eight policy initiatives against three reform directions with a focus on key areas which include:
supporting students, student learning and achievement;
teaching, school leadership and school improvement; and
enhancing the national evidence base.
1.14The NSRA was due to expire in December of 2023, however it received a one‑year extension to allow for a Productivity Commission (PC) review and the Expert Panel Review 'to advise on what reform priorities should be included in the next agreement'.
1.15The PC review found that the NSRA had 'done little' to improve student outcomes and suggested that the next school reform agreement should:
… include firm targets for improving academic achievement for all students, including students from priority equity cohorts, in each jurisdiction.
1.16The Expert Panel Review made a number of recommendations to inform the next national agreement which included:
… enabling reforms including data collection and use, funding transparency and accountability, and that the next Agreement is a 10-year agreement with a five-year review point. It called for greater transparency over the way needs-based funding is being allocated to ensure that parents and communities are assured that funding fully meets student need.
Better and Fairer Schools Agreement
1.17The BFSA was released by the government on 31 July 2024 and is due to commence on 1 January 2025. It will replace the current NSRA which is due to expire on 31 December 2024. The BFSA will run for 10 years as recommended by the Expert Panel Review. The BFSA will commit all governments to targeted reforms focusing on three priority areas:
equity and excellence;
wellbeing for learning and engagement; and
a strong and sustainable workforce.
1.18The BFSA also contains ten National Reform Directions which will support the achievement of the three priority areas.
1.19At the time of writing, three states and territories have signed onto the Heads of Agreement, they are:
Northern Territory – signed 31 July 2024;
Western Australia – signed 3 September 2024; and
Tasmania – signed 25 September 2024.
1.20Under the BFSA, the states and territories are also required to have a bilateral agreement with the Commonwealth that sets out state and territory-specific actions to improve student outcomes.
1.21In order to receive Commonwealth funding for schools from January 2025, each state and territory will need to have signed the Heads of Agreement and a Bilateral Agreement in 2024. Negotiations are still underway with the remaining states and territories to sign them onto the BFSA.
Key provisions of the bill
1.22The bill comprises two schedules, with Schedule 1 relating to grants of financial assistance to the states and territories, and Schedule 2 relating to the transparency and accountability of school funding. The following section provides a summary of the key aspects of the bill.
Revised funding arrangements
1.23Parts 1 and 2 of Schedule 1 would amend the Act in relation to the conditions that apply to the provision of financial assistance to states and territories. They would also amend the provision of the Commonwealth's share of school funding to government schools.
Conditions for funding
1.24Under paragraph 22(2)(a) of the Act, it is a precondition for payment of Commonwealth financial assistance that a state or territory is party to a national agreement relating to school education reform. Item 1 of Part 1 of the bill replaces the current paragraph to provide clarity about the condition of financial assistance to states and territories. Under the proposed new paragraph, a state or territory must be party to an agreement that satisfies three criteria:
the Commonwealth and one or more state or territories are parties to;
it is open to any state or territory to become a party to the agreement; and
the agreement relates to school education reform.
1.25Subject to passage of the legislation, the new paragraph 22(2)(a) would commence from 1 January 2025 along with the new agreement, the BFSA, that would replace the NSRA that expires at the end of 2024 if, or as agreed by, the Commonwealth and states and territories.
Commonwealth share
1.26Section 35A of the Act currently provides for the Commonwealth funding share to be 20 per cent for government schools and 80 per cent for non-government schools. As the government has now offered an increased funding share of 22.5 per cent for government schools (through BFSA negotiations with states and territories who sign onto the 10-year agreement), the bill seeks to replace the previous provisions.
1.27Item 7 of Part 2 of Schedule 1 of the bill would replace current Section 35A and set new provisions that would require the Commonwealth share to government schools to be set through regulations from 2025 onwards. The bill would also establish conditions on the regulation-making power, which would include:
putting in place a minimum amount that can be set for the Commonwealth share for government schools at 40 per cent for the Northern Territory and 20 per cent in any other case, which embeds a 'funding floor';
introducing a provision that ensures that once the Commonwealth share has been set by regulation it is either maintained or adjusted upwards, preventing any subsequent regulations from reducing that share without changing legislation;
inserting mandatory consultation requirements for the Commonwealth Minister to consult with the Ministerial Council before regulations prescribing the Commonwealth share for government schools can be made.
1.28Additionally, the regulations prescribing the Commonwealth share for government schools would be exempt from disallowance by Parliament in recognition of the regulations giving effect to school funding as determined by a national agreement between the Commonwealth and the states and territories, and intergovernmental negotiations.
State and territory contributions
1.29Part 3 of Schedule 1 of the bill would make complementary changes to the state and territory shares set out for the Northern Territory for 2025 onwards. This would reflect the higher funding floor for the Northern Territory in Part 2 of Schedule 1 and in line with the funding agreement reached between the Commonwealth and the Northern Territory.
Transparency and accountability of school funding
1.30Schedule 2 of the bill would amend the Act to introduce additional measures that strengthen the focus on the transparency and accountability of school funding. Minister Clare noted in his second reading speech that this:
… strengthens the reporting and public transparency requirements around how taxpayer funding is invested, without placing additional burden on schools.
Key purpose of the Act
1.31Item 1 of Schedule 2 of the bill would add a new paragraph at the end of section3 of the Act that would make clear that a key purpose of the Act is to support transparency and accountability in relation to school funding agreements. This change would complement other amendments in Schedule 2 of the bill that introduce new measures to support transparency and accountability of school funding.
Publishing of school education information
1.32Item 2 of Schedule 2 of the bill would insert a new regulation-making power that allows the regulations to prescribe the kinds of school education information that can be published by the Minister under section 125(2) of the Act. The prohibition on publishing of personal information would be retained.
Annual statement by the Minister
1.33Item 3 of Schedule 2 of the bill would insert a new section 127A, which introduces an obligation for the Commonwealth Minister to provide an annual statement to the Australian Parliament relating to the progress made on school education reform agreements. The introduction of an annual statement is in line with the recommendations of the PC Review of the National School Reform Agreement and the Expert Panel Review.
Financial implications
1.34According to the Explanatory Memorandum, while the bill itself would not have a direct financial impact, it would enable the new funding agreements under the BFSA. The BFSA, if signed by all states and territories, would commit approximately $16 billion of additional Commonwealth funding for government schools from 2025 to 2034.
Consideration by other parliamentary committees
1.35When examining a bill, the committee considers any relevant comments published by the Senate Standing Committee for the Scrutiny of Bills (Scrutiny Committee) and the Parliamentary Joint Committee on Human Rights (Human Rights Committee).
1.36Both the Scrutiny Committee and the Human Rights Committee had yet to consider the bill at the time of writing. However, the Explanatory Memorandum's statement of compatibility with human rights states that the bill is 'compatible with human rights as it advances the right to education'.
Conduct of the committee's inquiry
1.37The committee advertised the inquiry on its website and invited submissions by 24 October 2024.
1.38At the time of reporting the committee has accepted and published 86submissions, which are listed at Appendix 1. The public submissions are available on the committee's website, along with additional information and answers to questions taken on notice.
1.39The committee held one public hearing in Canberra on 13 November 2024. A list of witnesses who appeared at the hearing is available at Appendix 2.
1.40The evidence from the committee’s hearing on 13 November 2024 could not be fully incorporated in Chapter 2 of the committee’s report before the reporting date. However, the Hansard transcript of the hearing is attached at Appendix 3 to assist readers.
1.41The committee thanks those individuals and organisations who contributed to the committee’s inquiry by preparing written submissions and giving evidence at the public hearing.