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Non-government schools get many subsidies as well as public funding

By David Giblin - posted Wednesday, 28 April 2004

The debate about the funding of private education has been raging ever since governments first reached into their collective pockets and started passing over taxpayer dollars to private schools. Indeed, the debate has been part of the public agenda for 50 years. Supporters of publicly funding non-government schools will present a host of arguments in support of their case; some based on ethical grounds others on blatant misinformation.

The classic argument generally put forward by supporters of private schools, is that non-government schools save the taxpayer money by shifting the cost burden away from government and on to parents who choose private schooling. These arguments were frequently used by the former Minister for Education, David Kemp and lately by the current Minister, Brendan Nelson.

This argument dates back to the mid-1960s when there was no state government aid to non-government schools. At the time Goulburn was used as a “test” site. As part of the campaign to secure government funding, the Catholic system threatened to close its schools in this area, thereby flooding the government schools with additional enrolments. The state (ALP) government at that time buckled and introduced funding specifically targeting science laboratories and libraries in private schools.


The argument at that time was quite valid. With no state aid going to non-government schools, any child educated outside the public system meant the government did not bear the cost of educating those students. The argument, however, is not valid today. Since the mid-1960s there has been a steady increase in taxpayer dollars, from both state and federal governments, flowing into non-government schools.

This increase has now reached a point where the total funding of both Catholic and Independent schools exceeds the funding levels of government schools. This financial year, the federal government has budgeted for a $4.7 billion spending spree on non-government schools, compared to just $2.2 billion being allocated to government schools.

The massive increases in federal funding to the non-government sector have largely been the result of the “Socio-Economic Status” (SES) funding formula. This formula allocates funding based on the postcode of the student. This has allowed private schools to target wealthy individuals within low-SES areas, thereby gaining the benefit of both increased government funding and the parent’s ability to pay what are often exorbitant school fees. Interestingly, it has been the wealthy, elite private schools that have emerged as the major beneficiaries, with some of these schools receiving as much five times their previous funding level.

Since February of this year all private schools, including the Catholic school system, have their funding allocation based on the SES formula. The inclusion of the Catholic schools will see an additional $326 million flowing into the Catholic school system, a system that has already admitted publicly to having 80 per cent of their operational costs paid for through federal and state government funding. Indeed, based on some calculations this figure can be as high as 95 per cent of their operational costs.

This calculation does not include additional grants for capital works, library funding, access to computer rollouts and interest rate subsidies on capital works loans, to name but a few additional benefits flowing into non-government schools.

In addition to these generous handouts the non-government sector is often included in educational schemes that are funded entirely out of the taxpayer's purse. The Board of Studies, for example, services all sectors including Independent and Catholic schools; many of them quite small, with access to curriculum, provision of both the HSC and Schools Certificate exams and with school registration. Of the 11 field officers employed by the Board it is estimated that at least one third of their time is spent supporting the non-government sector in achieving registration.


Similarly, the Department of Education and Training often provides free or subsidised services to the non-government sector. This has included subsidised access to program support materials, access to public speaking and debating competitions, access to sporting and artistic events, and use of Environmental Education Centres to name but a few. This hidden subsidy of private education often goes unseen and unrecorded.

Because the vast majority of non-government schools are run by “charities” in the form of religious institutions they are exempt from paying most forms of taxation. This results in a major financial loss to the government especially in the area of payroll tax. The government as an employer of teachers in the public system pays payroll tax on every employee. This occurs not only within the public education sector but also across all government agencies. Any non-government school run by a religious organisation or registered charity avoids the payment of this tax. Charity status also allows these schools to avoid other areas of taxation applicable to government schools.

Most non-government schools offer tax deductibility on at least part of the school fees going to their schools. This is offered on contributions to building and library funds set up by the school and allows parents of non-government school students to reduce the level of personal tax being paid. This further impacts on the amount of funding available to governments.

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About the Author

David Giblin is a publicity officer for the Federation of Parents and Citizens' Association of NSW.

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