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Gonski: Commission of Audit got it wrong on school funding

David Gonski said he still stands by the recommendations in his review, despite them not being accepted by government. AAP

Chair of the Review of Funding for Schooling David Gonski has spoken out on his role in the controversial funding plan, released in 2011.

In a speech to the Australian College of Educators at The University of Melbourne, he told a packed auditorium he did not regret taking part in the review, despite the controversy which ensued. Here is an edited excerpt.

I am often asked: do I regret any part of what we said in the review?

Let me start by saying no document is ever perfect. However two years on I think our analysis has stood up to scrutiny. Some may disagree with aspects and conclusions but I’m not aware of any major holes that have been found.

If I have a regret it is the decision which we took to include in the report calculations of what our suggestions on a new school resource standard were likely to cost.

Ironically not many of the words of the review covered this – but I and my colleagues felt having outlined a new funding formula and having done a lot of work in costing it that we should show what we had done. This we felt would evidence the depth of the analysis we had undertaken.

We also wanted, by noting the amount, to put it into context. We knew that the additional cost to governments which we noted was $5 billion based on the 2009 numbers was a large number but we also knew that it was an increase of just under 15% of all government recurrent funding for schooling that year. We also knew that it was less than 0.5% of the gross domestic product of Australia for that year.

Our calculations were based on our terms of reference and the announcement of the government of the time that “no school will lose a dollar per student as a result of the review”.

Obviously on that basis any change we proposed to existing funding of necessity would involve more money. If you have a cake and the portions are already divided, if you want to give more to any you need additional cake!

In retrospect, the decision to mention the number clouded the entire response to our review. Major media outlets talked of further billions for education and no doubt those who had to find the amount were very bluntly reminded of what was involved.

In fact our review was more subtle than an ask just for more money.

Lost in the discussion for more money were the central tenets of our review. We advocated:-

A. Funding to be unified i.e. given by state and federal governments to the different sectors together rather than states substantially only funding their school system and the bulk of Commonwealth funding being as a consequence paid to independent and faith-based schools.

B. We wanted a transparent method for determining funding which was based on aspirational educational outcomes rather than last year’s costs. We saw the AGSRC as rather an opaque formula/calculation based on historic costs without a necessary focus on what was sought as to outcomes.

C. We wanted to lock in formulas for a period of time so that those operating school systems and schools themselves would be able to plan on a longer term basis.

D. We advocated a funding system based on need.

One of the easiest decisions we were able to take is what we as a review team believed “equity” should mean in determining a suitable funding system in Australia.

We felt strongly and unanimously that a funding system must ensure that differences in educational outcomes are not the result of differences in wealth, income, power or possessions.

Flowing from this a funding system based on need was both obvious and important.

E. We suggested five groups of disadvantage for which we felt there was a need for loadings to be made in any resource funding system. We found this task relatively easy and I believe what we came up with is correct. The concept of loadings for low socioeconomic; disabled; indigenous; those who don’t have English as their first language and those who live in remote areas covered what we saw as the areas of need and where we believed improvement could be made if money was available.

I note that the actual amount of the loadings is a more difficult area and we acknowledged in the text of our report that they were put as a guide and that different views may prevail as to how each should be weighted.

F. We advocated that all sectors should receive government funding. We believed this is right both in principle and based on history and practice. We felt that state schools systems and special schools should be funded to the level of 100% of any calculated school resource standard. The level of funding (between 20% and 90%) given to other systems and schools we believed should be based on a concept of capacity to charge fees (as distinct from what fees were actually charged).

We suggested reluctantly retention of the same system as was being used then which in turn was based on socioeconomic standing from area census figures. We were however open to finding an alternative over time to the SES approach.

G. We advocated some independence of governments and designated sectors in the determination of formulas once the aspiration had been conceived and agreed upon as the basis for the relevant school funding resource component. We felt this was a good governance tool so that no allegations could be made that calculations were opaque and indeed correct in their calculation.

I should add we suggested that aspirations should change over time. Our suggested aspiration to get started was a benchmark that at least 80% of students achieve above the national minimum standard in both reading and numeracy across the three most recent years of NAPLAN results. Approximately only 1600 of the 10,000 schools achieved this at the time of our numbers.

Some asked the question: why look at money? Why not rather put your efforts into looking more into class sizes, productivity of teachers, etc.

Each time I heard this I knew that the person asking it had either not read the terms of reference of our review or indeed the review itself.

Ours was a funding review.

Our terms of reference were not to work out how best to deliver education or indeed educational outcomes, but how to fund it. If it had been the former a business person like me would not have been the best choice to chair it and indeed many of you here tonight would have been a better choice.

We did in Chapter 5 of the report make some comments on improving excellence in school education. Inherent in that chapter was an acknowledgement that certain essential elements are needed for a successful school education system but that was not the essence of what we were asked to opine on.

Interestingly the whole methodology of our thinking was to establish a new school resource standard which had plugged into it an aspiration and then a determination by looking across the breadth of the country (over all its sectors) and determining who is achieving that aspiration and what it is costing. That cost then would drive the resulting formulas.

Doing it this way we were not advocating particular ways of educational involvement but merely looking at the costs of a particular aspiration for those who are at that point now.

A further question which is asked often is where are the review and its suggestions now?

One of the most satisfying hours I have spent in the last 12 months was attending, at their invitation, a meeting with the Department of Education in New South Wales. There a well prepared and thought-through presentation given by senior members of that department put up on the screen the essence of our proposed needs based approach and demonstrated that so much of it has and is being implemented in New South Wales.

I am aware that other states of Australia have also started to move in full or part towards that end.

So whilst money was the headline some of our basic recommendations have and are seeing the light of day. As to the money it seems guaranteed to 2017 and I am pleased with that. However the question is what happens then. The budget of last week seems to follow the suggestion by the Commission of Audit that after 2017 funding be based on indexed increases of 2017 funding. This is unfortunate and I will discuss it further later in this paper. I sincerely hope that in the period between now and 2017 the federal government will change the presently budgeted position.

I am often urged to lobby for more and to say more. I don’t believe this is the role of the chair of a review panel. We have – to use a legal phrase – delivered our judgement. We may have focussed on overall dollar cost more than we should but our basic principles are clear and I’m not sure that they are easily refutable. Arguments over what should be the aspiration which is funded and what are the loadings for disadvantage and the like will and should continue.

I am confident in the ability of so many I met in positions of power in education that they are taking what we said seriously and it is for them and those who hold the purse strings to decide which way to go. To them I note –

I cannot easily forget the differences I saw in the schools I visited. To say that many of the schools in the state systems need further assistance both in money and tender loving care is to me an understatement.

Governments need to embrace the importance of school education to individuals and to the productivity of our society. There needs to be a commitment to a properly funded needs based aspirational system and a failure to do so will be to our detriment.

For completeness, I should add that I was saddened when it was suggested that I had lobbied to fund the proposals of our review by plundering the tertiary sector and in particular the funding of the universities of this country.

As I said on that day publicly our review was not asked and wouldn’t accept the role of having to make decisions between parts of the education sector as a whole.

As a chancellor of one of the Go8 universities I am proud of what universities do in this country and definitely believe that their funding should be sustained and continued.

The recent report of the National Commission of Audit includes comment on school funding.

Whilst I am happy that the Commission has specifically noted its support for government investment in schooling, I am disappointed with the general commentary they have provided in this area.

It is their view that increased funding does not necessarily equate to better school outcomes. They base this assertion on the fact that school education funding increased in real terms in Australia between 2000 and 2012 but results in international tests declined.

Both statements are true. Funding did increase and comparative results in PISA scores decreased. However there could be and indeed are many other reasons to explain this. Monies may have increased but not been given in the correct areas. Also as the standing in PISA scores is relative, other countries may be more adept in where they put their money to improve their country’s scores.

As I said earlier the essence of what we contended, and still do, is that the way monies are applied is the important driver. Increasing money where it counts is vital.

The monies distributed over the 12 year period to which the commission refers were not applied on a needs based aspirational system, any effect of our review only starting this year ie. 2014.

The Commission believes that the funding arrangements based on our needs-based concepts are complex and not based on a detailed analysis of the costs of delivering education.

I don’t believe our concepts were particularly complex. They most definitely were based on funding an outcome which was costed by taking the actual costs of the schools who were achieving what we took as the initial aspiration.

In any event to reject an advance in effective distribution of monies merely because it is complex is too simplistic.

The commission suggests the states be given the task of disbursing funding to all schools (ie. funding be given to states for all school sectors). This would mean that the Commonwealth would effectively not participate in the distribution of the monies.

Our suggestion was for states and the Commonwealth to work together and where useful to use an independent body to make determinations that required independence from governments. We believe that the states should operate their own school systems but we were aware that if the states were asked to oversee the funding of the other systems on a day-to-day basis two problems could occur–

A) Those states would potentially be placed in a position of conflict.

They would be operating their own systems and at the same time having to oversee distributions to competitors. Here I acknowledge some of the safety mechanisms suggested by the commission to overcome this problem but I doubt that those safety mechanisms would be sufficient nor be seen to be so.

B) Leaving the entirety of a state’s education to a state could lead to a situation of different educational systems (with different aspirations and attributions etc) in different parts of Australia. We felt this was undesirable and indeed if one wanted to see complexity, it was the multiplicity of funding systems that existed in Australia at the time we did our review – all resulted from different parts of Australia doing different things based on different formulae. We believed as a country we needed some uniformity and that policy should be aimed at such.

My biggest regret with the views of the Commission is their suggestion that the funding of 2018 should be based on 2017 funding indexed depending on changes in the CPI and the relevant wage price index.

So the concept of aspiration (or indeed their concept of efficiency) ends in 2017 and from then on funding increases by indexes not specifically related to changes in costs in education. If the funding be wrong in 2017 it will be perpetuated and if circumstances and aspirations change after that date they will be presumably irrelevant. No doubt this is simple but like a lot that is simple it is not adequate.

I am surprised the Commission didn’t, given that it was seeking to save monies for the Commonwealth, accept our suggestions but question one of the tenets we were given, namely that all schools should receive the same as what they were receiving per student prior to the new resource. Embracing the concept of needs-based aspirational funding in an environment of wanting to save money would be better served in my view by concentrating on that aspect rather than seeking to go backwards to resourcing based on historic figures indexed which is effectively what we had prior to 2014.

As I said earlier, I hope that the federal government will for the reasons referred to above re-consider over time the position taken in the budget papers in respect of school funding after 2017.

Despite my view that our team has given its judgement I do believe there is one recommendation there that I can continue to speak on and would very much like to help to have implemented.

This is recommendation 41 which reads “the Australian government should create a fund to provide national leadership in philanthropy in schooling and to support schools in need of assistance to develop philanthropic partnerships”.

I am aware that the previous government took some very initial steps towards the implementation of this recommendation.

It is my belief bringing together the concepts of a need for further money and the great belief in our country in education that there are generous companies and individuals who would want to assist in bringing good education to people generally and to those disadvantaged in particular.

The establishment of a fund can provide –

i. Assistance to schools that don’t have the ability to seek out monies from philanthropic sources.

ii. Facilitation of inducements such as matching arrangements which can make philanthropists donate and donate big.

iii. Coordination of the knowledge of and dissemination to similar types of need for funds whether they be within a city, a state or Australia generally.

I know philanthropy can’t solve the entire problem but I also know that encouraging philanthropy can provide some very needed additional money.

Such a fund can allow those who wish to assist students and education generally to be involved in a constructive and focused way. At the same time this giving can at least provide a modicum of support towards those who are providing services that need further funds showing them tangibly that others care and are prepared to put their own money behind them.

I hope the present government will embrace recommendation 41 and nurture it. Let me however state categorically that facilitating philanthropy must not be seen as a substitute for the requirement of governments to deal with funding of a needs based aspirational school system.

I would leave you with the strong view that two years on I believe that the findings of our review continue to be discussed and in many respects are being implemented. As the chairman of the review itself I remain proud of being involved and pleased that I was given the opportunity to make a stand. The stand is to advocate the improvement of equity in education funding but it is even more than that, it is to cultivate support for the benefits of school education and how we should revere it and those, I might say, who work within that sector.

It is also a clear statement that all of us who work in one sector owe it to our community and to ourselves to keep broad and contribute as broadly as we can.

I salute Jean Blackburn and all of you who are involved in education – may you continue in what you are doing as it is worthwhile and your work like that of Jean Blackburn will be undoubtedly worthy of both remembrance and celebration.

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