Australia’s largest states are holding out for a greater commonwealth commitment in public schools, as new analysis shows fully financing the sector would provide an economic payoff up to four times bigger than the annual investment.
The education minister, Jason Clare, introduced the commonwealth’s proposed school funding agreement in late July, which sets out how much the federal and state governments will provide towards the Schooling Resource Standard (SRS).
The SRS, agreed to by governments as part of Gonski reforms more than a decade ago, is the minimum dollar amount required to provide a baseline education to students.
Claire proposed a 2.5% increase in the commonwealth share towards public schools which would bring the commonwealth contribution to 22.5%. He gave holdout states and territories until 30 September to sign on or continue their funding arrangements.
But more than a week later, Queensland, Victoria, New South Wales and South Australia have defied the deadline and maintain they have until the current agreement expires on 31 December to push the federal government for a 5% increase.
Only the ACT has reached the SRS. Data from the Australian Curriculum, Assessment and Reporting Authority (Acara) shows that 98% of public schools are underfunded and the majority of private schools are overfunded.
Clare said he had put $16bn of additional funding on the table and reached agreements with the Northern Territory, Western Australia and Tasmania.
“If any state doesn’t want to sign on to a similar agreement, the current funding contribution from the commonwealth will roll over for next year,” he said.
But the NSW education minister, Prue Car, said the current offer left students in her state shortchanged by $1,000 each, despite the state government’s commitment to increase its share to 75% of the SRS in 2025.
Analysis of Acara data found NSW spent more on public schools in 2022 than the commonwealth spent on schools nationally ($11.5bn compared with $9.8bn).
“We will continue to demand our fair share from the commonwealth right down to the wire,” she said. “This is a once-in-a-generation opportunity to get a deal for … students.”
Victoria’s education minister, Ben Carroll, said he would continue to negotiate with the commonwealth but maintained it needed to deliver a 5% increase.
“Victoria has done the heavy lifting … the commonwealth say they have $16bn on the table nationally over 10 years, well Victoria has invested $16.9bn in school infrastructure alone over that time period.”
South Australia’s minister for education, training and skills, Blair Boyer, said he had reaffirmed his commitment to negotiating in “good faith” last week and awaited the commonwealth coming back with a “fair offer”.
New analysis from economist and director of the Centre for Future Work at the Australia Institute, Jim Stanford, found there would be significant economic, social and fiscal benefits from funding public schools to 100% of the SRS.
The analysis, released on Wednesday, projected higher GDP from full funding would generate revenue gains for the government that exceeded the expense of meeting SRS funding benchmarks in the first place – driving a net fiscal gain of $3bn to $7.5bn annually after two decades.
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The outcome would be a longtime economic payoff of 2.7 to four times bigger than the annual investment required, projected via increased productivity and wage outcomes for school graduates and reduced income support and social expenditures as a result of better overall education.
“The failure to fully fund public schools is clearly a case of false economy,” Stanford wrote in the report.
“The relatively small amounts of money ‘saved’ in the near term, are more than offset by long-run underperformance [including] school attainment and completion, productivity, GDP and fiscal balances.
“This is money the federal government is quite literally leaving on the table.”
Clare will introduce legislation this week allowing the commonwealth to provide extra funding to public schools in excess of 20%.
But it is unclear whether the legislation will pass. Last month, three crossbench senators – David Pocock, Fatima Payman and Jacqui Lambie – banded with the Greens to urge the commonwealth to increase its share towards public schools by 5% to 25%, a figure they say is necessary to finally reach 100% public school funding.
The Greens spokesperson for primary and secondary education, Penny Allman-Payne, said the party had asked for a briefing on the legislation but “none has been forthcoming”.
She said Labor’s reported amendments would change the commonwealth’s legislated share of public school funding “from 20%, to 20%”.
“How is anyone meant to take them seriously?” she said. “It wouldn’t even lock in the inadequate 22.5% offer that most states have refused to accept.”