Morrison takes leap of faith in bid to end Catholic school funding wars

Scott Morrison’s own party in NSW has indicated its ire at the policy shift to end the funding war with the Catholic sector.

Scott Morrison and a student at Galilee Catholic Primary School in Sydney. Picture: AAP

Scott Morrison and his Education Minister, Dan Tehan, have done the essential political patch-up job on school funding, appeased the Catholic sector, returned to the Liberal orthodoxy on parental choice — but have triggered a new conflict with the NSW Liberal government.

The Morrison government misread the extent of policy and political differences between the Liberal governments in Canberra and Sydney. NSW Education Minister Rob Stokes told Inquirer he could not commit to the new agreement and would not sign up, while NSW Premier Gladys Berejiklian declined to endorse the package, championed the Gonski principles and created an unexpected roadblock for the Prime Minister.

This is highly damaging for Morrison and Tehan because the argument used by Stokes is similar to that mounted by Labor deputy leader and opposition education spokeswoman Tanya Plibersek, who brands the deal as a “special fix” that is “completely unfair because it leaves out the government school sector in its entirety”. The Labor-union-government school lobby is certain to intensify its campaign against the Coalition after this “peace deal” with the two private school sectors. With national and NSW elections due early next year, the internal Liberal conflict looms as an intense embarrassment unless resolved.

The NSW government position seems bizarre and untenable. There are no losers in this deal. Stokes, by refusing to co-operate, could jeopardise the extra funds from Canberra going to Catholic and independent schools, hardly an electoral plus for state Liberals.

The new deal has been put together in a scramble. Many core details are yet to be sorted and many stakeholders are confused. It involves an extra $4.537 billion across the decade for non-government schools, which represents a critical shift in relative funding from the original Turnbull-Birmingham model in favour of non-government schools. It also means the embrace of a new needs formula that replaces the area-based socio-economic status system — that was opposed by the Catholic sector — in favour of a direct measure of median parent income with the new system to begin over 2020-22.

Morrison and Tehan locate the policy revision within the Liberal philosophy of choice long championed by John Howard. “Everyone here is doing better,” Morrison said. “For parents that means choice remains affordable, an affordable choice in non-government schools. We don’t believe, as I said in Albury, that one set of students have to do worse for another set of students to do better.”

Under the package, federal funding for government schools rises from $7.4bn this year to $13.7bn in 2029, an increase of 86 per cent. This is the same as under the Turnbull-Birmingham model. Federal funding of non-government schools was planned to rise from $11.3bn this year to $18.2bn in 2029 — but that is now increased by an extra $4.5bn, making a total increase of 100 per cent.

The Catholic sector is the major winner; the independent sector has gained but has not yet committed to the new “needs” formula; and the government school sector keeps the same funding increase as before. The Catholic campaign against the Coalition, seen in the Batman and Longman by-elections, will finish. Morrison and Tehan have laid the basis for a restoration of Coalition-Catholic ties.

Implicit in this deal is a far bigger and unresolved question for Australia that transcends the “needs” principle: it is the Catholic quest for public recognition and funding of their ultimate aspiration — to run a parallel low-fee school system, affordable for parents who want the option of a faith-based school, and that operates as a permanent alternative to free public schools. This is the ultimate Catholic goal.

It is significant that Sydney’s Catholic Archbishop, Anthony Fisher, welcomed the deal, saying: “There is a need for every parent to have a real choice in education, including the option of a faith-based school.” The Catholic sector felt a low-fee private school choice was rendered untenable by the Turnbull-Birmingham policy.

While the Turnbull government was close to finalising a ­revised deal, Catholic sources say the quantum was increased under Tehan above the $3.8bn boost being canvassed by the previous government. The row between former federal education minister Simon Birmingham and the Victorian Catholic authorities led by Stephen Elder in effect cost Birmingham his job, with Morrison appointing Tehan to fix the issue and the politics.

“I think public school parents are entitled to believe this government has turned its back on children being educated in the government schools,” Plibersek told Inquirer. “Labor has said consistently we will restore every single dollar of the $17bn taken from schools by this government. Of course this will be an election issue.” Plibersek said government school parents were now entitled to ask: “What about my child? Why doesn’t my child get a fair funding deal?”

Plibersek does not oppose the extra funds to private schools, but she wants the public sector to be compensated as well. In truth, the Coalition is funding schools generously and Labor plans to fund them even more generously. Under the Coalition, the rate of ­increase fell because it declined to honour the full projections of the Gillard government.

The Coalition intends to boost funds for all schools by $310bn across the decade. Labor will campaign to fully restore the original Gonski projections, meaning roughly an extra $14bn or about $17bn before this announcement.

The revised package, however, has highlighted yet again the ­internal Liberal differences. “We were consistently told there would be no special deals,” Stokes told Inquirer. “We believed the formula would apply to all sectors and be based on need. We are now faced with what ­appears to be a significant increase in funding just to the Catholic and independent sector. This would be a departure from the Gonski principles of a needs-based sector blind approach.” In effect, Stokes accuses Tehan, whom he likes, of picking sides. Morrison implied yesterday that the NSW problem would be resolved but it may be harder than he thinks, given Berejiklian has stayed aloof, a high-risk stance for her. Stokes was immovable yesterday, saying: “If that’s the situation then we cannot sign any agreement.” Yet it is highly contentious for the NSW government to oppose the delivery of extra federal funds to private school sectors on the basis that government schools must also receive extra funds from Canberra.

Labor’s Victorian Education Minister, James Merlino, said the Victorian government was not against the deal but wanted government schools to get similar support. “This is one mess that is still far from fixed,” Merlino said. “The federal government now needs to focus all of its attention to ensure we have a fair deal for kids at government schools.” The NSW Teachers Federation ­attacked the package as “an inequitable, unfair and corrupt funding model” and said it “will ­reignite the funding wars”.

The National Catholic Education Commission “fully supported” the Morrison-Tehan package. The opposition of the Catholics to the original Turnbull policy had two elements. First, they wanted the SES method scrapped, arguing that it was “flawed” as a mechanism to determine the capacity to contribute by parents and it “assumed all families from the same neighbourhood were equally wealthy”.

Under Birmingham, an independent panel headed by prominent businessman Michael Chaney was appointed to assess the SES model. The recommendations of this impartial panel vindicated the Catholic critique. The panel, supported by government agencies, found the SES method “is no longer the most accurate measure available”.

It recommended the linking of government databases and access­ing of tax records to calculate the median income of parents at a school and using this as a ­superior measure of parental ­capacity to contribute. This ­reformed method lies at the heart of the new package. The bulk of extra funds given to the Catholic sector arises from the transition to the new direct income method.

Funding for all private schools will be calculated on this basis from 2022. Individual schools can start their transition in 2020, 2021 or 2022. The Catholics believe this method will end much of the discrimination against their low-fee schools that attract a higher proportion of students from poorer families, a phenomenon that saw the SES biased against them. Plibersek has signalled Labor’s inclination to accept the new measure.

But the second element in the Catholic opposition was more subtle, far-reaching and has not really penetrated the public ­debate — this is the view that schools policy cannot just be based on “need” and that every child and every parent or guardian should have the option of an ­affordable low-fee, faith-based ­alternative to public education. Without addressing this bigger point, Morrison and Tehan have responded to the dire warning from the Catholic sector that the earlier Turnbull policy would have forced the elimination of a range of low-fee Catholic schools.

By its rethink, the Morrison government moves closer to the Howard school funding approach and politics. Its critics say it has succumbed to a special deal or “fix”; its advocates say it has ­embraced a superior reform to ­assess needs-based funding. In fact, both are correct.

The independent school sector expressed “cautious optimism” the school funding wars can end. It says the government has not made “special deals” that favour one private school sector over ­another. But Independent Schools Victoria head Michelle Green said “significant work” lay ahead to ­ensure the new model could be “fully implemented in a phased process over 10 years”.

In short, the independent sector has not endorsed the new model. Tehan has asked all states and non-government school sectors to co-operate in helping to ­deliver the new system. He has pledged an appeals process if any school feels it is unfairly penalised. Tehan estimates the independent sector will gain an extra $259 million from the full package.

Pivotal to the entire debate and the source of much confusion is how the commonwealth and states share school funding, a source of constitutional and political history. The commonwealth is the main funder of private schools and the states are the main funders of government schools. Forget this and the debate cannot be comprehended.

Under the package, by 2027 the federal government will reach its target of 20 per cent of government school funding up from its present 17 per cent share with the states, reflecting their traditional responsibility, meeting 80 per cent. The reverse 80:20 ratio ­applies to private schools. Under the package, the federal government will increase its share of private school funding from 76 per cent last year to 80 per cent in 2027. Private schools receive commonwealth funds passed through to them by the states and territories. But each school sector, in a critical provision, can redistribute funding between their schools to meet need.

Morrison left nobody in doubt this week about his goal. It is to ­terminate the political war with the Catholics and restore the pro-Catholic school Howard strategy. He indirectly repudiated the ­complaints from the NSW government. “There’s no impact on the state government’s arrangements here,” he said. “The commitments we’ve made to them under the needs-based funding ­arrangements remain completely in place.”

In this complex package for private schools there are three elements: interim funding worth $170m for 2019; $3.2bn over 2020-29 for the full transition to the new model; and a $1.2bn Choice and Affordability Fund to be set up under regulation with supporting agreements with the Catholic and independent sectors.

Material provided by the government yesterday shows that in relation to the second element — the $3.2bn for full transition over a decade — the average annual funding increase is 6 per cent for government schools, 4.1 per cent for Catholic schools and 5.1 per cent for independents. Assessing the total funding increase over the decade, the boost for government schools is 101.4 per cent, for Catholic schools it is 62 per cent and for independents it is 81.2 per cent.

In coming months there will be a huge debate about cuts in school funding. But that is not the real story. The real story is the generous funding of schools and the ­recent bidding war. Remember the Turnbull government shelled out an extra $5bn to get its schools policy through the Senate. Now the Morrison government has shelled out an extra $4.5bn to satisfy the private school sectors.

Morrison repudiates the claim he is cutting funding to government schools. “We’re funding public schools at record levels. As you know, state governments are the principal funders of state schools. The commonwealth government has always been the principal funder of non-government schools. That’s not news, that’s a longstanding arrangement.”

But Plibersek is ready to fight. After the Coalition package was released, she said: “I mean, billions of dollars of cuts, years of wasted reform time, and now this final insult that says if you send your kids to Catholic or independent schools, that’s great, we’ll back you — if you send your kids to public schools, tough luck, you’re on your own, we don’t care about your children. That’s what you’ve heard from this government.”

There is one certainty: the school funding wars are far from over.