Victoria secretly slices $2.4b from public schools, delays funding promise

The state government secretly ripped $2.4 billion from state schools after delaying by three years its commitment to provide the funding required to pay for the long-promised Gonski education reforms.

The decision was taken despite Education Minister Ben Carroll warning Premier Jacinta Allan and then-treasurer Tim Pallas it would damage the state’s reputation, embed Victoria’s status as Australia’s lowest funder of public schools, and prolong disadvantage and inequities across the school system.

Prime Minister Anthony Albanese and Victorian Premier Jacinta Allan visit Boronia Heights Primary School in January.Credit: Wayne Taylor

Confidential government documents seen by this masthead show the secret funding loss was signed off by the premier after she chaired a March 2024 meeting of cabinet’s Budget and Finance Committee. The unannounced savings were buried in last year’s budget papers.

The federal government, when it became aware of the decision, reduced the funding it would have otherwise provided to Victorian state schools over the next decade.

This is reflected in funding agreements announced earlier this year by Prime Minister Anthony Albanese. Where Queensland will receive an additional $2.8 billion for its state schools from the Commonwealth over the next 10 years, Victoria will receive $300 million less despite having more schools and students.

Confirmation of the cuts will heighten fears ahead of new Treasurer Jaclyn Symes’ first budget – to be handed down next Tuesday – that the cost of servicing Victoria’s debt and major infrastructure program is eating into the state’s capacity to deliver essential services.

Albanese credited Julia Gillard with championing the Gonski reforms. The pair are pictured at last month’s Labor campaign launch.Credit: Alex Ellinghausen

The key change in Victoria’s education funding commitment is the year when the state government will provide to public schools 75 per cent of the School Resource Standard (SRS). This is the amount of government funding a school requires to meet the needs of its students under the Gonski reform model.

The Commonwealth has agreed to lift its share of funding for state schools to 25 per cent, but this is contingent on the states first reaching their benchmark.

In November 2023, the Victorian and Commonwealth governments signed an agreement which committed Victoria to provide 75 per cent of the SRS by 2028. Cabinet-in-confidence documents reveal Victoria quietly abandoned this commitment four months later and is now not planning to reach the benchmark until 2031.

This puts Victoria three years behind Queensland, which in March this year agreed to reach the benchmark by 2028, and six years behind NSW, which brought forward more funding for its public schools to reach the benchmark this year.

Albanese with Allan on April 7, their only joint appearance during the federal election campaign.Credit: Alex Ellinghausen

A federal government source with knowledge of the Commonwealth’s negotiations with the states and territories, but unable to discuss them publicly, confirmed this is why Victoria will receive less money than Queensland over the next decade.

The difference in dollar terms to Victorian schools is initially small. Under the government’s revised timeline, Victoria is this year providing its state schools about $35 million less than what they had previously committed.

By 2027, the difference in annual state funding is more than $300 million, and by 2028, it is half a billion dollars. The cumulative impact across the forward estimates of the state budget is $1 billion, and by 2031, the year when Victoria will reach the 75 per cent benchmark, the total shortfall is calculated to be $2.4 billion.

When the resultant reduction in federal funding is added, Victoria’s state schools will be left nearly $3 billion worse off. This year’s combined, state and federal government funding for Victorian state schools is about $13 billion, which is 90 per cent of the SRS.

Allan, Pallas, ministers Danny Pearson, Symes and Carroll, their respective chiefs of staff and senior bureaucrats from the departments of premier and cabinet, treasury and finance and education are recorded in cabinet committee minutes as being at the March 20, 2024, meeting where the decision was taken to delay Victoria’s commitment.

The Budget and Finance Committee, the new name given to the Expenditure Review Committee, is the most senior government forum for making budget decisions.

Government documents show Carroll proposed a compromise which would have meant Victoria reached the 75 per cent benchmark by 2029, booked more modest savings and provided additional funds ahead of the next pay deal with teachers, which is due to be negotiated this year. His proposal was not supported by the premier or then-treasurer.

The School Resource Standard is only a measure of recurrent funding and does not take into account capital investments by governments in new and upgraded schools. A spokesperson for Minister Carroll said Victoria’s school-building program, which will result in 19 new schools opening next year, was the nation’s largest school-building program.

“We will fund government schools at 75 per cent of the SRS, delivering increased funding in stages during the term of the agreement,” the spokesperson said. “The Victorian government is currently finalising these discussions with the Commonwealth. As they are ongoing, it would be inappropriate to comment further.”

Carroll declined to say whether he had opposed the cuts.

A spokesperson for federal Education Minister Jason Clare confirmed that a new, 10-year bilateral agreement between the state and the Commonwealth setting out the timeframe for Victorian state schools to receive full SRS funding had not been finalised.

“The Commonwealth will continue to work with the Victorian government on their associated bilateral agreement which will set out the funding trajectory over the life of the agreement,” the spokesman said.

When asked if the federal government would seek to convince Victoria to reinstate its commitment to fully fund state schools by 2028, the spokesperson replied: “The minister will not be negotiating this bilateral agreement through the media.”

State opposition education spokeswoman Jess Wilson said this month’s state budget would test Carroll’s authority within government to reverse the funding call.

“These secret cuts have exposed Labor’s utter hypocrisy on public school funding and their failure to provide Victorian students with the education they need and deserve,” she said.

“Whilst spending years demanding the Commonwealth lift their proportion of government school funding beyond agreed levels, the Allan Labor government was secretly cutting billions from public schools.”

The Gonski education reforms, named after businessman David Gonski, are centred on a needs-based funding model in which schools are provided a base rate of funding per student and additional loadings to address social, economic and cultural disadvantages.

Albanese declared during the federal election campaign he had secured support from all state and territories to fully fund the Gonski model.

Victoria’s altered funding trajectory for state schools means that instead of delivering a steady uplift of between $100 million and $200 million a year, funding will stay flat until 2029. An additional $1 billion will then be dumped into the system by 2031.

Confirmation that Victoria is Australia’s laggard state in adopting the Gonski reforms is at odds with its claim to be the “education state”. The funding delay maintains the current divide between government and non-government schools, which already receive 100 per cent of their SRS funding from state and Commonwealth governments.

Allan, in an address last week to the City of Melbourne’s M2050 Summit, said education was “a defining part of who we are as a state”.

Figures published earlier this year by the Australian Curriculum, Assessment and Reporting Authority show that government schools in Victoria receive less state or territory government funding per student than schools in every other Australian jurisdiction.

The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.