‘To those who have, more will be given’: Largesse to private schools continues

by | Oct 9, 2020 | Government

As families at public schools scrimp and save to provide the bare necessities, the federal government funnels ever more money into private schools without taking into account parents’ true capacity to pay. Trevor Cobbold reports.
In line with the adage “never let a good crisis go to waste”, the Morrison Government has taken the opportunity of the Covid-19 pandemic to extend its largesse to private schools. The Budget Papers reveal that private schools received more than a billion dollars in advance payments in 2019-20 to re-open their schools.

Some of the wealthiest private schools in the country have already reaped millions from Jobkeeper. They include in NSW the King’s School, St Joseph’s College, Frensham and The Armidale School , as well as Geelong Grammar, Trinity Grammar, Wesley College and Bialik College in Victoria.

The Government also gave $10 million to private schools to offset Covid-19 hygiene costs for items such as soap, hand sanitiser, classroom cleaning products and additional cleaning services. Similar funding was not provided to public schools.

All this adds to the largesse the Morrison Government has continued to shower on private schools. The main component is $3.7 billion in additional funding for Catholic schools over the next 10 years as a result of a new method of funding private schools introduced this year. Independent schools lose from this measure but are partially compensated by special funding deals.

These include a $1.2 billion slush fund for Catholic and Independent schools called the Choice and Accountability Fund, some $172 million for schools to transition to the new funding method and $46 million for ACT private schools to adjust to higher levels of funding….yes, really! None is based on the Gonksi principle of needs-based funding.

Deeply flawed funding model

The new funding model for private schools is based on a measure of the direct income of families called Adjusted Taxable Income (ATI). It is used to assess their capacity to contribute to private school income and thereby determine the level of Commonwealth funding for each private school.

However, ATI is a deeply flawed measure that will result in massive over-funding of private schools because it ignores several sources of family and school income as well as family and school wealth. As a result, the financial need of schools is over-estimated and consequently they receive more government funding than warranted.

A fundamental flaw in the funding model based on ATI is that it assumes that the parents pay the school fees. There is widespread evidence that many higher income grandparents pay at least part of the fees. Research by the industry superannuation fund REST shows that almost one-third of grandparents draw down on their superannuation to pay school fees for grandchildren. Other research indicates that about 60% of private school students have their fees at least partly paid by their grandparents.

Sources of income ignored

However, grandparents partially or wholly paying school fees is only part of the story. Grandparents financially support their children in myriad ways such as through deposits on houses, paying for house renovations, household assets, cars, and holidays, and so on.

The REST research shows that 72% of people aged 50 and over planned to help their children financially with such purchases, with 28% reporting they helped their children pay for holidays, 21% helped with house deposits and 23% helped fund house renovations.

Income provided for these purposes frees up family income to be used to pay school fees. But because this money is non-taxable gift income, it is not included in ATI.

ATI also under-estimates the total disposable income of families who receive a capital gain because only 50% of the gain is recorded as taxable income. The capital gains tax discount is worth more than $10 billion a year, and more than 80% of it goes to the top 20% of income earners. Many high-income families with children in private schools are likely to be recipients of this non-taxed income.

There is also no accounting of non-disclosed income held in Australia or in overseas bank accounts and tax havens. The use of both to hide income is mainly used by high-income earners who, by and large, send their children to private schools.

The ATI also ignores the wealth of families, which is a significant factor in capacity to contribute. Assets such as shares, securities and other investments are just as much part of capacity to contribute as direct income. The assets of schools are also ignored in assessing their financial need.

Millions in donations not counted

Private donations are a significant source of income for private schools, especially high fee schools.

The billionaire owner of Canberra Airport, Terry Snow, recently donated a record-breaking $20 million to Canberra Grammar School to fund a new auditorium, a music department and library.

In September last year, Loreto Kirribilli in Sydney invited families to donate $1 million each in a campaign to raise $100 million.

Many schools even receive donations from overseas. The Australian Independent Schools USA Foundation raises donations in the US and Canada for 24 elite Australian private schools.

Yet these donations are simply not counted when it comes to the federal government’s calculations for funding private schools.

Government funding of private schools based on the capacity to contribute of families is inherently flawed because it ignores all these sources of family and school income as well as family and school wealth. The insuperable problems demand a new approach to funding private schools.

Time for needs-based funding

Instead, the basic principle behind the government funding should be that every school would operate with sufficient resources required to provide an adequate education for all students. Governments have the responsibility to ensure that children should not be deprived of an adequate education because they attend an under-resourced school.

Government funding would therefore only fill the gap between the income from fees, donations and other sources a private school receives and the community standard. Schools with private income above the community standard are not entitled to baseline government funding because such extra funding simply extends their advantage over public schools.

Under this model, government recurrent funding for private schools would incorporate three features:

  • A baseline component that varies between schools to take account of the funding obtained from private sources such as fees and donations;
  • Baseline funding would be discounted according to the extent to which private schools meet the same social obligations of public schools; and
  • Funding loadings for schools with disadvantaged students.

This model would finally provide a genuine needs-based funding model that ends the extraordinary over-funding of private schools.

This article is a summary of a new SOS Education Policy Brief.

ABOUT THE AUTHOR

Trevor Cobbold

Trevor Cobbold

Trevor Cobbold is National Convenor of Save Our Schools.

3 Comments

  1. Avatar

    I’m so angry at all Politicians who seem incapable of distinguishing between religious ideology, belief systems and interpretations that impact on present day, entirely separate realities and discussions.

    Apart from its rank hypocrisy, it’s tribalism at its worst and most destructive, especially when all the major religious institutions have
    been found to be guilty of the most heinous of crimes, child abuse, who deliberately hid and enabled this practice of abuse to continue.

    What we have at its core, is not a race for the ‘right’ religious interpretations who is better or best, what we have is a spiritual crises at the very core of our existence and how we fit into our existence, our bodies, our relationships and living with nature, with all of its quirks. Authoritarians, impose your will and one size fits all Vs Democratic, with appropriate systems and guidelines that fall within the many aspects which it encounters.

    Just like any Government, we are not here to serve it, it exists to serve us, which may come as a shock to many eventually, and what needs to be recognised is how much the ‘Roman Catholic’ canon of laws has shaped our Governance
    systems https://en.wikipedia.org/wiki/History_of_the_Catholic_Church#Social_teachings which is another conversation again.

    What we have on our hands is chaos, and to quote the words of a good friend “This chaos that’s building, it’s not just political. It isn’t just about the election. Electing Biden or Trump – it’s going to be one type of chaos or another – that’s the choice. The fact is
    because of chaotic momentum, change has been initiated. That’s what’s true – that’s what you have to see. Every level of life is screaming for change. The environment is screaming for change. The animal kingdom is screaming for change. The air is screaming, the trees say stop we can’t burn anymore! What is not screaming for change? It’s not about politics, it’s about the survival
    and balance of life. So yes there’s going to be a lot of chaos ahead, but how we have to look at it is through wisdom and ask – what kind of chaos do we want?” https://www.booktopia.com.au/anatomy-of-the-spirit-caroline-myss/book/9780733800337.html?

    Chaos has given us time to ask those questions, and we will need to continue to ask those questions, therefore, status quo Private Education at glorified institutions is not going to be any kind of amelioration at all.

    That will be something for each individual to craft, and then seek to enhance that knowledge with additional layers of
    education, if that’s an option for anyone other than the 1% and their vaunted bubbles after Rebekah Sharkie’s sell out, who is a Liberal whether she acknowledges that or not https://en.wikipedia.org/wiki/Rebekha_Sharkie#Political_life.
    Hope it was worth the price Rebekah, not your proudest moment. The meaning of desire for knowledge https://twitter.com/jamesdenselow/status/1314086446115020805

    As for the entire knock-on effects of neoliberalism, some historical content in two snap shots: https://en.wikipedia.org/wiki/Detlev_Karsten_Rohwedder; https://en.wikipedia.org/wiki/Treuhanda

    Seems that we are incapable of learning anything, anytime, rather than just sometimes.

  2. Avatar

    Should simply be a fraction of the per student funds given to public schools.

  3. Avatar

    WHY are Australian workers taxes being used to subsidise Private Religious Schools, when those Religions DO NOT PAY TAX on their massive investment income all over the World???

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