Budget Review 2014–15 Index

Marilyn Harrington

The 2014–15 Budget confirms the end of the school funding reforms as introduced by the Labor Government, and implements a new funding arrangement for schools from 2018.[1] This will be the third change to Australian Government funding arrangements for schools since 2009.

Funding for students with disability and the National School Chaplaincy Programme are two other areas of budget interest.

School funding

The Government’s proposed changes to school funding mean that schools will not receive about $7.0 billion (over indexation) in additional federal funding. This funding would have been provided in 2018 and 2019 had Labor’s school funding reforms been fully implemented.[2] From 2018, funding will be based on 2017 levels indexed by the Consumer Price Index (CPI), projected at 2.5%, with an allowance for enrolments.[3] The Budget has provided $54.1 million in 2017–18 to ‘maintain real Commonwealth school funding beyond the 2017 school year’.[4]

This indexation rate is different to the National Commission of Audit’s recommendation for an indexation factor comprising the weighted average of the CPI and the relevant Wage Price Index.[5] It is also lower than the current indexation rates which, for participating schools under the Australian Education Act 2013 (the Act), are 3.0%, 3.6 % or 4.7%, depending on the level of a school’s funding.[6] The indexation rates for non-participating government school systems are not available.

The Minister for Education, Christopher Pyne, has stated that the funding system from 2018 will remain needs-based and that it will include disadvantage loadings.[7] In evidence to the Senate Select Committee on School Funding, a Department of Education official confirmed that the only change to the current funding model will be the indexation arrangements, but the distribution methodology for both government and non-government schools is still to be negotiated.[8] However, school funding arrangements may also change when they are considered as part of the White Paper on the Reform of Federation.[9]

While the overall quantum of funding to the states and territories will increase in 2018, the projected growth rate for the school education function will decline by about a third from 6.2% in 2016–17 to 4.0% in 2017–18, as the following table shows.

Real growth in school education sub-function, % change^(a)

a) Parliamentary Library estimates. Prices adjusted for inflation by the CPI to June 2014 prices.  Out-year index numbers calculated using Treasury estimates of CPI growth. 

It is not possible from the budget papers to determine how the quantum of funding projected for 2017‑18 differs from funding that would have been provided had the current funding arrangements continued. Departmental advice to the Senate Select Committee indicates that the Australian Government will provide 19.1% of total public funding to the Schooling Resource Standard for government schools in 2018.[10]

The Budget has identified $80.0 billion in savings in school education and hospital expenditure by 2024‑25. It appears that about a third of these savings will be the result of the proposed changes to the indexation arrangements for school funding. [11] It appears also that there will be about $6.0 billion less in Australian Government funding for schools in 2024–25.[12]

The Budget shows the continuing pattern of school expenditure—the Australian Government will provide the majority of its funding to non-government schools (state and territory governments provide the majority of their funding to government schools) over the forward estimates. In 2014–15, an estimated $5.1 billion (35.6% of funding in the schools sub-function) will be provided to government schools and an estimated $9.3 billion (64.4% of funding in the schools sub-function) to non-government schools. By 2017–18, there is a slight shift in these proportions when it is projected that 37.9% funding will be provided to government schools and 62.1% to non-government schools. Non-government schools national support is ranked tenth, and government schools national support ranked twentieth, in the Budget’s list of top 20 programs by expenses in 2014–15.

Another budget trend is expenditure on non-government schools compared to higher education. In 2013–14, non-government school expenditure was an estimated 29.5% of total education expenditure compared to 30.2% for higher education. By 2017–18, there is a noticeable difference with projected proportions of 34.4% and 28.9% respectively.

Funding for students with disabilities

The Budget does not extend funding for the More Support for Students with Disability (SWD) National Partnership beyond 2014–15.[13] The 2013–14 Budget extended funding for this National Partnership in 2014, but this was intended only as a temporary measure pending the finalisation of the arrangements for the SWD loadings, to be implemented from 2015.[14]

There are interim SWD loadings for 2014.[15] Advice was also provided to the Senate Select Committee on School Funding that about $4.8 billion for SWD will be provided over the forward estimates.[16]

The National School Chaplaincy Programme

The budget measure that provides the most new funding for schools is the continuation of the National School Chaplaincy Programme (NSCP)—$245.3 million over five years. The Government is also restructuring the NSCP so that it provides only for school chaplains as it was when it was first introduced under the Howard Government in 2007.[17] In 2012, the Labor Government extended the NSCP to include the employment of secular welfare workers.[18]

The NSCP continues to be controversial.[19]  It is also currently subject to its second High Court challenge, which, if successful, will have significant implications for many other government programs that are not currently specifically authorised by Commonwealth legislation. [20]

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