Pay up or take a chance on education

by Peter Goss and Julie Sonnemann

Published by The Sydney Morning Herald, Thursday 30 June

Both main parties in this election recognise school education funding is in a mess. But they differ wildly in how they plan to fix it. Voters will have to choose Labor and pay up, or choose the Coalition and take a chance. These choices, each of which has risks and benefits, have roots in our past and serious ramifications for our future.

Decades of argument set the foundation for today’s unhappy settlement. State schools are primarily funded by state governments, and also get some Commonwealth funding. Catholic and independent schools get most but not all of their funding from parents and the Commonwealth.

In theory, governments give more to schools with greater educational need. But special interest deals along the way have complicated things. For example, funding to some non-government schools was maintained – and increased with indexation – even when their socioeconomic student mix should have lowered their entitlement. By 2011, the situation was so bad that businessman David Gonski, charged with reviewing funding for the Commonwealth, lamented Australia’s lack of a logical, consistent and transparent approach to funding schools.

The Gonski review was a radical attempt to end decades of damaging debate by moving beyond fights among government, Catholic and independent sectors, and funding schools based on need.

The key dimensions of educational need are socioeconomic status, Indigeneity, English language proficiency, disability and school remoteness. Concentrated disadvantage in certain schools, particularly in the government sector, reduces performance further. In response, Gonski proposed a “sector-blind, needs-based” model, administered by a new independent umpire called the National Schools Resourcing Body. For a moment, it seemed that Gonski had found a way to end the funding wars. But the moment was brief.

The Labor government, which commissioned the review, made three fateful mistakes. Rejecting the concept of the independent umpire ensured that funding would remain politicised. The promise that “no school will lose a dollar” massively increased the cost of reform. And the six year timeframe to re-align funding meant that the big increases were in 2018-19 and 2019-20, outside the four-year budget cycle, and therefore unfunded.

Despite promising a “unity ticket” on school funding at the 2013 election, Tony Abbott’s 2014 budget removed the big funding increases to low SES schools in the last two years, and effectively froze the relative amount of Commonwealth funding to each sector. Gonski was gone. The 2016 federal budget slightly lifted the rate at which funding would increase, and the Coalition promised that a new deal will be struck in early 2017. But the funding relativities between sectors remain effectively frozen.

The deadlock mostly affects students in government schools, because less than one in ten students in non-government schools attend schools below the SES average. The New South Wales Department of Education argues that the 50 schools with the poorest students – nearly all of them state schools – will lose approximately $1500 per student in 2019 alone. The Bracks Review of Government School Funding finds that Victorian government schools will lose $1.1 billion without the final two years of funding.

So where to from here? A fair and transparent funding model can be created in just two ways: tough trade-offs, or much more money. Labor has chosen the simple but expensive solution. Rather than reducing funds to schools that are over-funded, it will pour enough money into schools to ensure that schools with higher need get the funds they require, while no school loses a dollar. Most of the additional $4.5 billion they are promising in 2018-20 will flow to government schools. Everyone wins – except the taxpayer. The Coalition has announced $1.2 billion extra but not its funding model, and voters will have to take a chance between two possible scenarios.

The first might resemble the Cuban missile crisis, with escalating threats. Unless the Commonwealth re-balances funding across sectors, government schools will continue to be hard done by. State governments will not accept this situation, and since they provide some funding to non-government schools, they have the ammunition to respond. Victoria has already said that failure to fund the final two years of Gonski “will leave the Andrews Labor Government with no alternative but to rethink school funding.” If state governments reduce funding to non-government schools, trust will be shattered for a decade. The funding wars risk going nuclear.

The second scenario is more hopeful: a “Nixon to China” move. The Coalition, with its special relationship with non-government schools, is in a position to make tough trade-offs and remove special deals. Indeed, only the Coalition can safely do this: remember the backlash to Mark Latham’s “hit-list” of private schools. Reform, though difficult, would befit a party that prides itself on economic prudence. Reducing funding to a few schools will not save the budget. But it would create a new course along which funding can flow to where it will make the most difference, without having to pay above the odds. Fair and transparent funding would help the system focus on what matters most, improving teaching practice in the classroom.

While differences in outcomes among schools continue to grow, the festering sore of school funding infects all our education debates. Whoever wins the election must heal it.