Gonski 2.0: Good start, but three questions need to be answered

by Peter Goss and Julie Sonnemann

Published by the Australian Financial Review, Friday May 5

Looking beyond the media hype, is Gonski 2.0 a good plan for Australian schools and students? Or is it just a tricky political stunt by a desperate Prime Minister?

We believe the former. Looking at the facts on the table, it appears Australia finally has a credible plan to deliver Gonski’s core principle: needs-based funding.

Schools will get a lot more money from the Commonwealth under Gonski 2.0: up from $17.5 billion in 2017 to $30.6 billion in 2027. The previous Labor government had promised to increase funding by $22 billion more, but that plan retained special deals of the past and was unnecessarily expensive in a time of tight budgets.

Gonski 2.0 does a much better job of sending money to the right places. Government schools will get Commonwealth funding equal to 20 per cent of their needs, up from 17 per cent now, and non-government schools will receive Commonwealth funding equal to 80 per cent of their needs, up from 77 per cent now (schools’ funding needs are calculated using a formula called the Schooling Resource Standard, or SRS).

The states and territories will now receive a consistent rate of Commonwealth school funding as a percentage of SRS. This is a big and good change. Under the current model, comparable students in similar schools can receive vastly different amounts from the Commonwealth depending on which state or territory they live in.

Three key issues for Gonski

Gonski 2.0 also involves taking money from over-funded rich schools and redirecting it to under-funded disadvantaged schools. This is an important break from the former Labor government’s promise that “no school will lose a dollar”. It will save the Commonwealth about $1.5 billion over the next decade.

But the key to Gonski 2.0 – the feature that makes this plan much more affordable – is the change to the way school funding is indexed. At present, funding is legislated to grow at 3.6 per cent per student per year. But wages are growing at historically low levels, so schools don’t need as much extra money to cover wage costs. Under Gonski 2.0, from 2021 school funding will grow in line with a blend of wages and CPI, saving the Commonwealth billions of dollars over the long run. We argued for this approach last November in our report, Circuit breaker: a new compact on school funding.

Before a final verdict can be delivered on Gonski 2.0, however, we need more detail on at least three key issues.

First, how quickly will the most disadvantaged schools get the extra money they need? At what rates will other schools grow, including those that are very close to reaching their SRS?

Second, will the government improve the way the Schooling Resource Standard is calculated? The 2011 Gonski review said more data and work was needed to finalise the costings, including how much extra money schools should get for disadvantaged students such as those with disabilities or from poor families. This did not happen in a systematic way. The formula should be reviewed over the next 12 months.

Third, we need to know what extra “requirements” the Commonwealth will impose on the states and territories regarding their funding of schools. This is especially important given the states and territories have primary responsibility for school education.

If there is no devil in this detail, we believe Gonski 2.0 could mark the start of a new era in Australian schools and a long overdue end to the funding wars.