Renewing schooling federalism: getting the settings right

Allowing the states full responsibility for funding for all schools would lead to more coherent allocation decisions. Flickr/andresmh, CC BY

The reform of Australia’s federation is under review. In this special series, we ask leading Australian academics to begin a debate on renewing federalism, from tax reform to the broader issues of democracy.

Bronwyn Hinz from the Mitchell Institute for Health and Education Policy and The University of Melbourne argues why the states should have full responsibility for funding all schools.


Riddled by unhelpful duplication, stagnating performance, growing inequities, poor investment and limited cooperation, schooling is often cited as an example of what is wrong with Australia’s federal system. Most of these problems stem from inadequate coordination, mis-matched revenue to responsibilities, and inappropriate Commonwealth involvement which restricts or perverts policy goals.

It needn’t be this way. Federalism as a system of governance offers greater opportunities than unitary systems for policy innovation and customisation to local needs, is more cost-effective, more democratic and is better placed to respond to the challenges in our changing economic and global context, which require greater policy sophistication and flexibility. But for this to occur, we need to get the settings right.

Lessons on federalism and schooling

I’ve previously discussed the complexity of our intergovernmental school funding and policy settlement that Gonski sought to untangle. More recently I outlined the reasons why the states are better placed than the Commonwealth to manage the schooling portfolio. Arguably, the current Commonwealth government has taken some steps in the right direction by untying some of the school funding provided to states.

However, the states should have full responsibility for funding all schools. This would lead to more coherent allocation decisions and go a long way to ensuring that more money flows to where needs are greatest. This would also mean that all schools, government and non-government schools could be held accountable for the outcomes they provide, would be better supported in doing so, and that state education ministers could fulfil their responsibilities for outcomes for all children. Research suggests that this would lift the performance not only of struggling schools, but of the system as a whole.

States – and their schools – would have the flexibility and support to develop their own cohesive improvement strategies that respond to the needs of their school communities, without being distracted from their own priorities by the passing “gravy train” of Commonwealth grants. (Of course, to meet these restored and enhanced responsibilities they would need restored or enhanced revenues, such as a share of income tax or larger untied grants from the Commonwealth.)

The significant benefits that accrue to the nation from a well-educated population make some strategic intergovernmental coordination and collaboration towards shared goals a worthy pursuit.

The National Competition Policy of the 1990s is a model worth emulating. Reforms to be pursued were agreed collaboratively rather than imposed from above. States had the freedom to determine how they would achieve the reforms, which were monitored by an independent body, the National Competition Council. The benefits of these microeconomic reforms – greater productivity and revenue – were shared.

The COAG Reform Agenda attempted a similar strategy to pursue a new wave of reform focused on human capital. Despite many significant achievements, the mountains of data collected by the states were not always readily comparable, timely, accessible or helpful. And the Reform Council monitoring the progress was recently abolished as part of the Commonwealth’s 2014 budget, demonstrating the Commonwealth’s undue predominance. The National Education Agreement (NEA) of 2009 likewise tried to achieve intergovernmentally-determined goals and restore greater policy autonomy to the states. But Commonwealth conditions quickly multiplied and data and monitoring problems remained, limiting the NEA’s effectiveness.

These experiences teach us the importance of effective national architecture to enable sustained improvements.

States have more experience and expertise

We need a robust forum for productive intergovernmental collaboration and discussion, supported by strong agreements, and an independent institution to support and monitor reforms. Data must be comparable, “fine grain”, timely and accessible to all those working or researching in the policy sphere.

The Australian Curriculum, Assessment and Reporting Authority (ACARA) - with modifications - could serve in this role. It is already responsible for NAPLAN (the national assessment program) MySchool, the National Curriculum and the National Report on Schooling. Although it officially acts on the instructions of all the state, territory and Commonwealth education ministers through the Education Council, the disproportionately heavy influence of the Commonwealth in both the Council and ACARA is widely acknowledged and should be dramatically reduced. States have far greater experience and expertise to take this leadership role.

Most of the Commonwealth’s activities in schooling could be returned to the states or to ACARA, who could also drive improvements to consistency in reporting on student achievement, expenditure, program outcomes and how these were achieved, without limiting flexibility at the school, system and state levels. This could be complemented by a philanthropic entity to channel large donations towards needy schools and worthy initiatives.

The experience of Canada, a comparable federation, demonstrates that federal government involvement isn’t necessary to achieve a high performing, high equity school system. But complete Commonwealth withdrawal from Australian schooling is highly unlikely. It is also unwise, removing flexibility and “insurance” mechanisms from our system, desirable features when facing complex and changing policy problems. The Commonwealth could and should still play a role supporting national policy goals as determined by the Education Council, or providing supplementary funding in exceptional circumstances.

The substantial differences in schooling outcomes and performance in different Australian states indicate the large impact that even small differences in policy settings can make.

The suggestions above would maximise the opportunities offered by our federal system for the states and other players to collaborate, target resources, improve accountability and learn from each other in a continuous cycle of improvement - without sacrificing innovation and local responsiveness on the altar of uniformity or control.


Renewing Federalism is in partnership with the Australian National University’s Tax and Transfer Policy Institute at the Crawford School of Public Policy and with the University of Melbourne School of Government.

Our Renewing Federalism series will culminate in a symposium on October 2 at ANU. If you would like to attend the event, please see event details and RSVP here.


Read more in the series here.

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