Imagine a field of wheat which has been watered unequally. Some parts will grow to their potential, but some won’t. In the end, it’s bad for the whole field’s productivity.

Economist James Galbraith’s agricultural metaphor, almost biblical in its tone, neatly represents the issue of economic inequality and the individual and collective damage it can cause.

In the debate on school funding, he speaks directly to the unequal educational outcomes that result from the structure of our social arrangements.

Ahead of the government’s policy response, it is important to understand the Gonski report’s recommendations in the broader context of the growing inequality in wealth and income in Australia.

Inequality and society

Despite an upsurge of recent interest following the Occupy movement protests, inequality has not been a regular part of Australia’s mainstream political debate. When it has, those with the temerity to point out the growing inequality in our community have run the risk of being labelled “class warriors”.

We are an increasingly wealthy nation, but with steadily growing inequality. The gap between the top twenty per cent and the rest has widened and there has been a hollowing out of the middle – a phenomenon found in many developed economies.

What’s surprising though is that most people do not seem aware of this.

Research by behavioural economist Dan Ariely of Duke University and Harvard’s Michael Norton found that people in the United States have a distorted idea about the distribution of wealth, believing it to be more equal than it really is. They found similar results in Australia.

When people were asked what sort of distribution of wealth was ideal, they suggested a distribution roughly equal across all segments of society. When asked what was actually the case, they knew this ideal didn’t reflect reality, but dramatically underestimated the extent of inequality.

There is now a substantial body of research comparing developed countries which shows that the greater the inequality the more social ills a society has, including lowered life expectancy, higher rates of mental illness, drug and alcohol abuse, educational under-performance and diminished trust.

There is also strong evidence of the link between inequality and the willingness of societies to invest in social goods, whether in education or health or public housing or conservation. We don’t know the precise mechanisms that mediate this relationship between inequality and these social ills, but it’s likely to include investment in education in particular – and that’s what I want to look at here.

The facts about Australian schools

The Gonski panel relied upon significant original research from both Australian and international sources.

One of the things that we didn’t need to be told was that there has been a drift in Australia toward a greater private provision of education and away from the government sector, particularly at secondary level. This has meant greater segregation in education – segregation by income, parental status and wealth.

Government schools increasingly educate a much higher proportion of students with disadvantages of various kinds – those with disabilities, those from a low socioeconomic background, indigenous children and those from remote areas. As a result, many have come to describe the public system as “residualised”, catering for the the majority of the most difficult to teach children.

This is not true across the whole of the government sector; it is a small proportion of schools who have very high concentrations of disadvantaged students. These are the schools with the really difficult education tasks.

Our educational performance

The first thing to note is that Australia’s educational performance compared with other countries has generally been good. Although I hasten to add, that both the international and national educational measures do not give a comprehensive snapshot of what schools do and how they do it.

In particular, such measures cannot capture the wider social benefits that accrue to a well-educated community, or the creativity of students nor of their citizenship.

With that qualification, while Australia has stood near the top of international rankings, recently we have been losing ground, partly because some countries are performing better on these tests, but also because Australian students performance has been declining in absolute terms.

An increasing proportion of our students are leaving school without having acquired key skills and the NAPLAN results indicate that the proportion of students in the lowest band has increased while the proportion in the the highest achieving group has also declined.

Trends are notoriously difficult to read, and it may be that some of these data won’t stand the test of time, but nonetheless, there does seem to be a suggestion of declining overall performance, both in relative and absolute terms.

The long tail of disadvantage

The more significant problem, however, and the one that the panel was specifically asked to address, was the question of the long tail of disadvantage – the big gap in performance between the highest and lowest performing students and the connection this has with parental income and education.

The OECD has reported that, amongst its member countries, differences in students' backgrounds accounted for some 55% of performance differences between schools; for Australia, the figure is 68%.

Societies that have good educational outcomes are those with reasonably narrow economic inequality and modest inequality in educational provision. As a 2010 OECD report put it, “The evidence is conclusive; equity in education pays off. The highest performing systems across the OECD countries are those that combine high quality and equity.”

Australia’s long tail – and it is growing – is due, in part, to the fact that socioeconomic status is a stronger predictor of educational performance here than it is Finland or South Korea or Japan.

The temptation is always to blame the poor performance on schools and teachers, particularly in the government school system. But what the data showed was that the real problems were the concentration of disadvantage and the failure to apply the appropriate resources needed for the educational task.

It’s worth noting that some of the best performing systems internationally actually spend less money than some of the worst performing systems, so it’s not necessarily about the amount of funding – although the Gonski panel did recommend an increase.

It’s really about where the money goes. And what we found was that in Australia, the money is not going where it’s most needed.

Greater transparency and equality

Among our recommendations was that the funding arrangements should be transparent, logical and fair, ensuring value for money and accountability. We argued for the establishment of a school resourcing standard linked to benchmarks derived from the top performing schools and, in addition, for various loadings for identified individual disadvantages.

But we were also very clear that there should be additional loadings for the concentration of disadvantage; we argued there should be extra resources applied to those schools who had high proportions of aboriginal students, for example, or high proportions of students from low socioeconomic backgrounds.

While I can’t speak for other panel members, I think that if we were designing our school system from the start it would more likely resemble those of Sweden or Finland which are unitary systems with a single funding source.

However, that horse has bolted and to some extent what we confronted was the need to repair our system – to try to fill the gaps that have emerged over the decades, with funding responsibilities separated as they are between the Commonwealth and the states and different funding regimes applied to government and private schools.

But our model, in a sense, tried to be blind to the type of school a child attends, except that we also argued, in keeping with current practice, that where parents choose to send their children to an independent school, their capacity to pay should be a relevant consideration.

In our deliberations, we tried to take account of the needs of students and the capacity of their parents, with a long term desire to see greater integration in schooling. I, for one, think we should aspire to a public education system which is open to all and good enough to inspire the confidence of all parents.

But we heard often that one of the reasons parents take their children out of government schools is that they think the schools are not up to standard and that their children are likely to do less well.

The result is that what education experts Ming Ming Chiu & Lawrence Khoo call “privileged student bias”; resources are diverted from poorer students to the children who are already well-served. Their studies, along with those from the OECD, show very clearly that where there are high levels of segregation along the lines of wealth, power and status, with high concentrations of disadvantage, the overall level of performance drops.

Where should the money go?

The Gonski panel didn’t say where we thought the money should go, but obviously improving the capacity of teachers to fit the school program to the needs of their students and providing additional professional and support staff in areas such as language development and behaviour management are important.

Generally speaking, with the exception of funding, the evidence suggests that devolving decision making so it is as close as possible to the classroom makes most sense. As an aside, in my view, the development of a prescriptive national curriculum is going in exactly the wrong direction; giving teachers and principals the responsibility for curriculum and the distribution of resources within the school, within a broad framework, is likely to achieve a far better outcome than a top down system.

We’ll soon see what the government will do with the Gonski recommendations when it delivers its response in the next few weeks, but what the debate on school funding needs now is a more forensic look at what is really happening in Australian education, without the ideological blinkers.

This article is based on a lecture by Dr Carmen Lawrence hosted by the Ideas and Society Program at La Trobe University.

You can also listen here to Dr Lawrence speaking with La Trobe university’s Matthew Smith on the Gonski reforms.