Education spending expected to flatline over the next 40 years

EDUCATION spending will flatline over the next 40 years under current policy settings.

EDUCATION spending will flatline over the next 40 years under current policy settings, opening the door to another Gonski-style fight over school funding.

The Intergenerational Report forecasts spending on education and training to rise from 1.7 per cent of GDP this year to 2 per cent in 2055 under current policy settings.

However, it would drop to just 1 per cent of GDP if the government successfully deregulated university fees.

But in figures certain to alarm state governments, the report reveals the government’s “sensible” indexation arrangements ­announced in last year’s budget will limit the growth of school funding on a per person basis from $660 in 2014 to just $690 by 2055.

INTERACTIVE: The InterGenerational Report

This translates to a modest increase from the $4200 currently paid per school student to $4600 in 2055.

While school-age participation rates are projected to remain relatively stable over the 40-year reporting period, the report says spending forecasts are also influenced by the trend towards enrolments in private schools.

The report exposes the full impact of the government’s $80 billion savings announced for schools and hospitals in last year’s budget.

In the last Intergenerational Report, released by Labor in 2010, there was a forecast $610 per person spend in 2014-15, almost ­doubling to $1130 in 2049-50. Translated to a proportion of GDP, this represented a steady 1 per cent from 2014-15 to 2050.

This was before the Gillard government’s proposed Gonski reforms, which would have increased commonwealth funding to the states.

In last May’s budget, the ­Abbott government announced it would adopt “sensible indexation arrangements” for the states to fund schools and hospitals, flagging further reform following the federation white paper on Australia’s taxation system.

Under the revised funding agreements that come into effect in 2018, the commonwealth pays states on a formula determined by enrolments and inflation.

The government’s budget changes to the indexation ­arrangements for schools and hospitals achieved savings of $80bn by 2024-25.

Premiers reacted angrily to the cuts and the reversal of the Gonski funding arrangements, accusing the commonwealth of trying to force a debate on the GST by squeezing state budgets.

Education Minister Christopher Pyne yesterday said he did not accept that education funding would flatline.

“What it (the report) shows is that spending and lending on education is increasing from $1200 per capita to $1900 in today’s dollars, so it actually shows an increase if you include all aspects of how the government spends money on education.”

The report says spending on education and training is “projected to be maintained in real terms per person over the reporting period”.

Once higher education and ­vocational education loans are taken into account, the amount the government provides per person is projected to rise from $1500 in 2014-15 to $1900 in 2054-55. Spending per tertiary student is projected to fall from $11,800 in 2014-15 to $9400 in 2055.

When the higher education student loan program — HECS — is taken into account, then spending is projected to rise from about $19,100 per student to $23,100 in 2055.

The government’s higher education reforms are unlikely to pass into law this month as hostile senators plan to oppose them.