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Government funding should encourage private schools, not penalise them

By Bill Daniels - posted Monday, 12 April 2004

Government funding models for school education in Australia can no longer afford to ignore either the reality of supplier diversity in schooling provision, or the role of private contribution in maintaining the current high standard of education in this country.

In Australia today, we have what is essentially a dual system of schooling, broadly categorised in terms of government schools and non-government schools. The non-government schools sector comprises the Catholic systemic schools – which educate nearly 20 per cent of Australia’s school students – and independent schools, which educate 12 per cent of students. That is, one-third – or over one million – students are enrolled in non-government schools. In terms of secondary enrolments alone, in all capital cities except Darwin the proportion of students educated in non-government schools jumps to over 40 per cent.

The number of students enrolled in non-government schools is significant in anyone’s terms and largely explains why the "public versus private debate" no longer has the same traction with the public as it did in the 1960s or even the 1980s. Non-government schools are now major providers of education to the public and the public recognises this even while some teacher unions and ideologues resist it.


In Australia, both Federal and State and Territory governments contribute to the resourcing of school education. The Federal government is the primary source of government funds for non-government schools, although they also receive some funding from the State and Territory governments. The State and Territory governments are principally responsible for resourcing their own school systems, although the Federal government also contributes quite substantial sums.

The bulk of government funding available to non-government schools is in the form of Federal government per-student general recurrent grants. In January 2001, the Howard Government introduced a new general recurrent funding model, which represented a significant shift in the funding of non-government schools. While it is still a needs-based approach to funding, this model focuses not on the resources of the school (as did the former model) but on the capacity of the school’s community to support it, as determined by the socio-economic profile of the school’s student body.

Under the SES model (as it is known), socio-economic status incorporates three factors that are consistently correlated with educational advantage or disadvantage: parental income, parental occupation and level of parental education. That is, the SES model is far more student-focused than previous funding models.

There is a sliding scale of funding entitlement under the SES model. Students attending schools with the highest SES scores of 130 or more are eligible for only the basic entitlement, which equates to 13.7 per cent of an index related to the average recurrent cost of educating a student in a government school, known as the AGSRC. Students attending schools with an SES score of 85 or lower are eligible for the maximum grant of 70 per cent of the AGSRC.

In dollar terms the gap in funding eligibility for students in the high and low SES schools is substantial. In 2003 students in independent schools with the highest SES scores were eligible for $803 at primary level and $1099 at secondary level; students in independent schools with the lowest SES scores were eligible for $4240 at primary level and $5615 at secondary level.

It is worth noting that the latest available Productivity Commission data shows that in 2001-02 average total government expenditure (that is, federal plus state/territory government expenditure) for a primary student in a government school was $7561 and $9856 for a secondary student. That is, there is a substantial gap in public support available for students in non-government schools. In the context of supplier diversity, this gives government schools a considerable price advantage. Yet their monopoly over schooling provision is being steadily eroded.


Continued growth of the non-government schools sector has enabled governments to harvest a significant private financial contribution toward the costs of schooling in Australia. That contribution is now worth over $4 billion a year but, even so, it is largely glossed over by most commentators as the price parents pay for choosing a non-government provider. However, the importance of this private contribution in sustaining the current standard of school education in Australia cannot be underestimated. Further, if we continue to ignore private contribution as a factor in schools funding we risk losing the chance to define the difference between cost sharing with governments and cost shifting by governments.

Like it or not, private contribution already represents a significant proportion of Australia’s expenditure on education. OECD figures for 2000 (the latest available) show that Australia’s private contribution as a proportion of expenditure on primary, secondary and post-secondary non-tertiary education is third highest amongst OECD countries, not far behind Korea and Germany.

Government funding models must recognise and encourage private contribution, not penalise it. At the very least, all students must be guaranteed a basic funding entitlement no matter which school they attend.

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Article edited by Susan Prior.
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This article is extracted from an address to a Parliamentary Library Vital Issues seminar on schools funding, held in Canberra, 3 March 2004. The full address (pdf, 104k) and accompanying PowerPoint presentation (pdf, 136k) are available on the Independent Schools Council of Australia website.

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About the Author

Bill Daniels is Executive Director of the National Council of Independent Schools’ Associations.

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Feature - Education funding: Private vs Public
Independent Schools Council of Australia
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