School funding circuit breaker with appeal to all

by Peter Goss

Published by The Australian, Monday 28 November

school-funding-report-web-graphicIn two weeks, commonwealth and state education ministers meet to write the next chapter of an Australian political saga: the best and fairest way to fund our schools.

For half a century, arguments over how much money the commonwealth and states should allocate to government, Catholic and independent schools was tense and often toxic. After the failure of the Gillard, Abbott and Turnbull governments to properly introduce the needs-based funding model recommended by the 2011 Gonski Review, it seems to have reached an impasse. The core legislation, the 2013 Education Act, manages to be too expensive — some schools will still be over-funded at the end of the century even while many schools will be underfunded for decades.

But thanks to unprecedented low wages growth, a historic opportunity exists to properly fund all schools on the basis of need without spending more. This opportunity is set out in Grattan Institute’s latest report Circuit Breaker: a new compact on school funding.

If either main party implemented the position on funding it holds today, schools and taxpayers would lose. Labor has taken the big-spending approach. But its 2016 election plan for schools is too expensive. It would cost the commonwealth nearly $7 billion more than legislation between now and 2021 and more than $18bn over 10 years.

In its 2016 budget, the Coalition moved to contain cost growth. Its proposed approach costs about $1.7bn less than legislation through to 2021, through changes that are yet to pass into law. The government says it remains committed to needs-based funding, but has not articulated a credible path for achieving it.

It is dangerous to change one part of a complex funding system without considering the impact overall. Recently the government flagged a new agenda to equalise commonwealth contributions across states. In isolation of other changes, this would have a perverse impact. Some well-funded government schools would gain further, while some of Australia’s most underfunded schools and students would get less.

In our report we propose a circuit-breaker that reconciles the core principles on both sides of the debate. The new compact delivers a needs-based, stable, simple, fair and transparent system without breaking the budget.

There is common ground. The core Gonski principle, as described by one of the review’s panel members, was the idea that “it is in our national interest that every child … should be given the kind and amount of individual support necessary to ensure a fair go”. This principle was translated into legislation via a funding formula that accounts for the different needs of different students, and rules around annual funding increases that incrementally move all schools towards their target level of funding.

But in a world of ongoing low inflation, the automatic annual increases in school funding that are locked in legislation are now billions of dollars more generous than they need to be.

The compact creates big savings by reducing indexation rates in line with wages growth. It then allocates these funds to get all schools to their needs-based funding target by 2023.

Under the compact, underfunded schools are much better off compared to legislation or the 2016 budget. Chronically disadvantaged schools gain the most, and could use the extra funds to invest in specialised support staff and in the professional development of their teachers.

About half of schools close to or at their targets would have slower funding growth than under the legislation. But they all maintain their purchasing power and most of them will be better funded than today. A very small number of schools are over-funded and would lose money, overturning Gillard’s promise that “no school will lose a dollar”.

Compared to the 2016 budget, two-thirds of schools would be better off.

But the compact is not just about properly funding schools; it is also about ensuring that funding improves teaching and learning. It kickstarts a much-needed transformation of teaching and learning in all schools, by investing in new roles for expert teachers to drive improvement in our classrooms.

The new compact proposed in “Circuit Breaker” creates the needs-based funding system both parties say they want. It redirects money to the schools that need it most. It invests in teaching quality. And it has the same budget outcome for the commonwealth as proposed in the 2016 budget, although some states will probably need to step up.

Tough choices are needed to create a coherent, transparent and nationally consistent approach for how funds are distributed across schools, sectors and states. It will take political courage, and a bipartisan approach. But tough budgets can make for better decisions, and the compact points the way.

It is time to end the exhausted funding debate and to start the debate that counts in this century — how to improve teaching for all students in all schools. Whether this happens depends at least in part on the outcomes of the Education Council meeting on December 16. Our education leaders must not let politics get in the way.