Australia has one of the most complex, inconsistent and opaque school funding arrangements in the developed world. You couldn’t design a worse school funding system if you tried.

This is because our education system is actually dozens of systems, public and private. Each is shaped by political opportunism, compromise, ideology, and turf-wars. Each is layered upon the others. This jungle severely limits accountability and contributes to growing resource and performance gaps between rich and poor schools, with disadvantaged students suffering most.

It all started with science blocks.

Under the Australian constitution, schooling is a residual power of the states – essentially because it is not listed as one of the Commonwealth’s exclusive powers. This continued colonial arrangements.

Things began to change in 1964, when the Menzies government introduced capital funding for science laboratories for both public and private schools. A few years later, in an attempt to woo Catholic voters and respond to localised funding crises, they provided some funding to non-government schools. Until this time, private schools had largely funded themselves.

The enormous electoral popularity of these piecemeal education programs did not go unnoticed by the Labor Party. On gaining power in 1972, Labor established a comprehensive review into school funding and, from 1974, started providing general recurrent funding to public and private schools based on their perceived needs.

The purpose of the Whitlam government’s program was equity. It provided needs-based, top-up funding to ensure all schools reached — or neared — a ‘community standard’ in their revenue in order to educate their students. Additional federal funding was provided for disadvantaged schools, special education, teacher professional development and innovation.

This involvement has increased and mutated under every successive Commonwealth government, to the extent that education policy and school funding have now become a shared responsibility between the two levels of government.

Chart: Recurrent government funding for schools. (Excludes capital funding and smaller programs, such as chaplains)

(Data source: Productivity Commission, 2011, Report on Government Services)

Both levels of government provide funding to all school sectors. But states still provide most of the funding; three quarters of it in fact. The states have also retained most legislative and regulatory responsibility for schooling, and actually run schools themselves (although a range of national agreements, Commonwealth policies, and conditions attached to Commonwealth tied grants allow significant federal influence). Non-government schools operate under frameworks determined by state governments, with a few Commonwealth funding conditions added on top. Two thirds of non-government schools are Catholic.

The Commonwealth is largely and increasingly responsible for funding non-government schools, as well as a bunch of ad hoc programs, such as Chaplains. This leaves the states responsible for running government schools, which enrol a much larger share of disadvantaged and special needs students.

The expanding Commonwealth role has been driven by ideology and political pragmatism, and aided by the Commonwealth’s greater fiscal and administrative powers. It is largely enabled through section 96 of the Constitution, which allows it to make payments to states on such terms and conditions as it sees fit. In other words, to give money to states to implement Commonwealth education policies.

No other federation in the world mixes responsibilities in schooling more than Australia.

And that’s where the problems multiply.

Because while a series of governments have tried to rationalize the system – most famously the Whitlam government, but also the Howard government, albeit towards different goals – each has added rather than reduced complexity and contradiction.

This Commonwealth funding is delivered via state treasuries, who then pass it on, along with their own funding, to the relevant school system authority, such as the Victorian Department of Education and Early Childhood, the state’s Catholic Education Office, or individual independent schools. Each authority then adds its own revenue before distributing it further down the chain. Finally, individual schools add their own fund-raising — fees and donations — to their little pot. Each schooling authority has its own funding models and separate administrative and accountability procedures, and these vary widely. For example, Victorian public schools have levels of autonomy their counterparts in New South Wales could barely imagine.

This wide mix of funding sources is not necessarily a bad thing. It allows policy innovation, spreading the best funding formulas and limiting the damage of the worst. It also protects schools from over-zealous government budget cuts. But it also makes education funding mighty complicated.

The fragmentation and resulting lack of financial comparability has meant that, until the launch of the MySchool website in 2010, policymakers did not know how much any individual school received from all government and private sources and thus couldn’t determine their relative needs. And the complexity explains the dearth of quality research, the fractured debates and the vicious hysteria on who suffers most from current funding arrangements.

So great is the ignorance and misinformation, that on becoming NSW Education Minister in 2008, Verity Firth did not know that the states have primary — overwhelming — responsibility for funding government schools.

Ideologues, unions and lobbyists fudge the issue even further with half-truths.

It is true, for instance, that the Commonwealth government gives nearly twice as much general recurrent funding to private schools than it gives to public schools. But, when state government funding is considered, total average government funding per public school student ($13,544) is almost double the average amount given to a private school student ($6950). When capital funding like the Rudd/Gillard government’s gargantuan Building the Education Revolution program is included, the share of taxpayer dollars going to public schools increases further.

It is also true that many private schools — particularly those with the most affluent populations – can spend more than double on each student than most public schools. Obviously, schools awash with such cash have no need of precious and limited government dollars.

But how often do you hear that some private schools service more disadvantaged populations and do so with less funding than public schools? Or that some public schools collect more in fees than some private schools?

The obsession with the public or private status of schools is extremely unhelpful. It clouds more than it clarifies. After all, the labels are misnomers. All ‘private’ schools receive public funding and operate under state education frameworks. For many private schools, taxpayers’ money constitutes the bulk of their budgets. In fact, the private sector as a whole receives 60 percent of its revenue from governments.

And all ‘public’ schools have some private income, whether ‘voluntary’ levies or community donations.

Furthermore all schools have some degree of autonomy while still subject to government accountability conditions. While private schools can select their students, many accept all applicants. Conversely, while most public schools must enrol all those in a specified zone, many are more selective than their private counterparts.

Clearly, a school’s funding level should be determined by its relative need, not the name on the top of teachers’ pay slips.

The bigger picture — the federal system in which these many school funding policies operate — is generally ignored because it is so darn complicated.

Successive reforms by state and Commonwealth governments are dumped over each other without full comprehension of how they interact.

The Howard government’s socio-economic funding model for private schools more accurately determined relative financial needs than the model it replaced. But it was derailed by a political promise that no school would have its funding cut. So their elegant model was only half implemented, exacerbating equity problems rather than resolving them.

Such compromises limit the effectiveness of reforms, including attempts to revise funding shares in favour of the most disadvantaged schools and students. It also risks jeopardizing the opportunities offered by our federal system.

The Rudd/Gillard government says that the Gonski review of school funding will tackle this complexity. Unfortunately, it has also promised that no school will lose a dollar, which kind of defeats the whole purpose.

Everybody agrees that current school funding arrangements are inefficient, inconsistent, opaque and obstructive.

They completely, perhaps hopelessly, disagree on how to fix it.

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Bronwyn Hinz is a policy consultant, PhD candidate at the University of Melbourne, and author of Many Hopes One Dream: The Story of the Ethnic Communities’ Council of Victoria (Australian Scholarly Publishing, 2009). Follow her @BronwynHinz or see more of her work at www.bronwynhinz.com

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