Interview on ABC Radio Melbourne Drive with Raf Epstein
Turnbull Government’s plan to transform schools; Delivering real needs-based funding and fixing Labor’s model; Higher education reforms to drive better outcomes for both students and taxpayers

Rafael Epstein: Melbourne Grammar School gets about 140 per cent of its Schooling Resource Standard. It’s gone down a little bit. The exclusive girls’ school in Sydney, Loreto Kirribilli, gets 283 per cent of its Schooling Resourcing Standard, but they’re just the isolated examples. In fact, across Victoria and New South Wales, according to federal Education Department numbers, all of the public and Catholic system schools are under-funded, and more than 150 private schools are over-funded. That might be about to change. The Federal government surprised everybody by announcing a schools funding package today and there was David Gonski ready to do another review, this time a way of ensuring the Government gets bang for its education buck.

Malcolm Turnbull’s Minister for Education and Training is Senator Simon Birmingham. Good afternoon.

Simon Birmingham: G’day Raf, good to be with you.

Rafael Epstein: Look, back in the distant mists of time when Mark Latham was Opposition Leader, he proposed that 67 schools should lose money and I think another 111 private schools should get a freeze on funding. Is that what you’re doing?

Simon Birmingham: Well, no, we’re not isolating schools in that way. What we’re doing is saying that there should be one single, uniform, needs-based approach to school funding from the Federal Government across the country, noting that states and territories have their own methodologies and approaches for their share. And so what we’re doing is we’re picking up the recommendations of David Gonski’s work from six years ago in 2011 and we’re broadly applying those recommendations to a fair, needs-based approach for schools funding that makes some of the difficult decisions that Julia Gillard and Bill Shorten in the Labor Party squibbed (*) on back then when they promised that implementing this no school would lose a dollar, when they stitched up different deals with different states that actually then further distorted school funding rather than put it on a consistent footing. We’re now saying, no, we’re going to do the hard yards over a ten-year transition period to get everybody onto the same national school funding model.

Rafael Epstein: You said today that 24 private schools will have negative funding. Which 24 schools, can you name any of them?

Simon Birmingham: Well, I could but I won’t Raf. Out of respect we will be … 

Rafael Epstein: [Talks over] Have they been contacted yet?

Simon Birmingham: We are of course talking to those schools and they deserve the opportunity to speak to their school councils and their parents about these circumstances before we start going out there and naming them.

Rafael Epstein: And if I started stabbing in the dark, Melbourne Grammar, Scotch College, Kings, it’s those type of schools?

Simon Birmingham: Oh look, you can choose to stab in the dark as much as you like. I’m not going to take the bait. The principle here is that we want to transition everybody to a common landing point. Now, a quirk of history in Australia is that the Commonwealth Government is the prime funder for non-government schools, alongside parents of course, who are an even bigger funder in many instances, and state governments under their constitutional responsibility are the main funding agent for government schools. We’re going to commit to the Federal Government in future paying around 20 per cent of the formula for funding of government schools, that’s up from about 17 per cent at present. It’s well up on what historically it used to be. If you go back to 2005, 2006 it was just 8.9 per cent of state government school funding. So, we’re really stepping up to become a clear partner there.

The problem though at present is across different states and territories, we’re paying close to 14 per cent of school costs in one state, 17 per cent in another state …

Rafael Epstein: [Interrupts] And you need to make it uniform. I just wonder if I can ask if I’ve got my numbers right. Let’s move away from individual schools. 24 private schools will have a funding cut. In your press release, there’s another – there’s about 9000 schools in Australia, I think – there’s another 353 schools in your press release that will be transitioned down. So is it fair to say that 24 schools will get a cut and at least 353 private schools won’t get the same increase they would’ve received; is that fair?

Simon Birmingham: So, all schools at present, particularly in the non-government space, they virtually all start at a different share of funding under the formulas, so we want to transition those non-government schools to receiving 80 per cent of the agreed Commonwealth formula over the ten-year period. And because they all start at different starting points but we want them to finish at a common end point, that means their indexation levels will be different over that period of time.

Rafael Epstein: I understand but that’s an explanation, which is valid, I just …

Simon Birmingham: [Talks over] Yeah, sure, and to give you a broad sense that nationally …

Rafael Epstein: … those 353, are they getting a freeze?

Simon Birmingham: … that what we’ll see is around 49 schools, independent schools indexed between zero and 2.5 per cent, so that would be less than inflation growth for those schools, so they keep getting growth but that …

Rafael Epstein: [Interrupts] Sorry to interrupt but that 49’s less than they would have received under the current system?

Simon Birmingham: Well, under the current system, yes that is a little less than they would’ve received in terms of growth. So, their funding keeps growing but at a lower rate.

Rafael Epstein: Understood, not quite at the same rate of increase.

Simon Birmingham: That’s right.

Rafael Epstein: And the 353, what is transitioned down mean for them? Is that the same, they’re not getting quite the same rate of increase?

Simon Birmingham: Yeah, so some of them might be getting 81 or 84 per cent of the Schooling Resource Standard at present. So, over a ten year period, their transition is very marginal and hardly noticeable at all compared with normal indexation. So, you get a number like that because of those sitting on the margins of the arrangement. Overall, independent schools will still see funding growth. In Victoria what we anticipate to get to this new model is that on average government schools will grow by about 5.2 per cent in their funding mix and non-government schools, Catholics and independents, will grow by around 3.8 per cent of thereabouts.

Rafael Epstein: Why isn’t it class war when the Coalition does this?

Simon Birmingham: Well, it is about good public policy that ensures we have a consistent needs-based approach to school funding. 

Rafael Epstein: Brendan Nelson, when Mark Latham announced that list, said it was a policy of punishment and persecution that will actually discourage parents from making sacrifices for their children. So, I’ll ask that again, when Labor proposes it it’s class war, when you propose it it’s good policy. What’s the difference?

Simon Birmingham: Well, I never saw any detail behind what Mark Latham proposed in the dim, dark days of yesteryear. What we have is a clear methodology that for non-government schools applies what’s known as the capacity to contribute discount. So, the wealthier a non-government school is then the more the Commonwealth funding is discounted for that school. But for low-SES non-government schools, we fund them quite generously to ensure that parents do have that choice and that hard-working Australian parents are supported to make the choice of where they send their child to school. We want to make sure that government schools, non-government schools are all funded on a clear, transparent, equitable basis. And importantly, because it’s not just about money, we’ve asked David Gonski to do this further piece of work that doesn’t look at how much is spent or who it’s given to but looks at how it can best be invested by individual schools and school systems to make sure we get the best bang for our buck out of this record investment.

Rafael Epstein: Will there be a list publicly of- I think you were talking about 400 schools or so who won’t get quite as much as they would have. Will that list be public at some stage?

Simon Birmingham: Yes, just as current school funding arrangements are all there on the My School website, we’ll make sure that there’s a calculator available publicly. But of course, we want to treat all of those schools with respect and give them the due courtesy of understanding how it impacts them first.

Rafael Epstein: Are you spending less than Labor on schools over the decade?

Simon Birmingham: We’re spending less than Labor because we haven’t got as many compromises, special deals, and the like built into our model. But we are investing …

Rafael Epstein: Is 22 billion less, is that right over the decade?

Simon Birmingham: Well, I’m not really sure what Labor’s election policy was entirely costed and premised on but …

Rafael Epstein: I haven’t had a chance to look at all of your detail, forgive me for interrupting Minister, but some journalists have said that in your government notes it says we are spending $22 billion less over the decade. Is that right, that’s in part of the notes you released today?

Simon Birmingham: Look, not that I’m aware of but I’d have to go away and trawl through all those pages. I can tell you in terms of Victoria, that over ten years, we’ll be providing $61.5 and that that’s an 8.1 per cent increase on funding to Victoria compared with just last year’s federal budget.

Rafael Epstein: Look, 1300222774 is the phone number. The Federal Government with the Education Minister Simon Birmingham have surprised many of us with a new private schools funding package, perhaps finally getting to what David Gonski recommended which was just funding each school according to need and not saying that no school would ever lose, which is what previous governments have done, including I should say both Coalition and Labor.

Can I just clarify as well, Minister, David Gonski is there which is clearly a huge PR coup for you, because the unions and the ALP are always asking people to give a Gonski, but what package of money will he be examining? Is he looking at the extra money that’s already been spent, that will be spent?

Simon Birmingham: Well, it’s the extra money that will be spent and, of course, there’s an extra $2.2 billion in this year’s budget alone, an increase over the decade of $18.6 billion. But I anticipate that as David and the panel of educators who will work around him and alongside him do their work that ultimately they’ll be having a look at with record growing levels of funding, how do you use it all most effectively. There’s real additional growth going into our schools, but I hope that David’s credibility, as you rightly say, ministers of all political stripes, unions and others have urged us to adopt the recommendations of his report on school funding, I hope that the credibility he has in the sector that there will also be a good, collegiate approach to ensure that when we get recommendations about how to improve quality in our schools and the reforms in the way schools operate and teaching practices and other things, that there is a similar level of collegiality from the states and territories endorsing his work. 

Rafael Epstein: Look, I know you’re very busy and I’m sure your time is short but I can’t resist a question; big university changes announced yesterday, it’s going to- people are going to pay more for their degree and pay it more quickly. Aren’t we just making it even tougher for people who already can’t afford to rent and buy a house?

Simon Birmingham: No Raf, these are quite modest and measured reforms in the university sector, but we do have a student loan arrangement at present that is one of the most generous in the world and under our reforms it will still be one of the most generous in the world, but we’ve got …

Rafael Epstein: [Interrupts] We’ve got some of the most expensive houses in the world too.
Simon Birmingham: We’ve got $52 billion worth of student debt sitting on the government books and on current estimates, around one quarter of that will never be repaid. Now, if that becomes a significant problem, as it looks like it could, then future ministers are going to face real challenges as to how we maintain that equity of access that ensures any Australian from any financial background can go to university without paying a dollar up front. Out reforms, by putting in place a lower repayment threshold of $42,000 but also a lower repayment rate for that first threshold of just 1 per cent mean that a graduate will start paying their student loan a little bit earlier but they’ll be paying back about $8 a week against that student loan.

Rafael Epstein: You’re not worried you’re going to scare people away from university? There’s lots of research that suggests people look at the cost after the degree and the more expensive it gets, the less inclined they are to study.

Simon Birmingham: Well, all of the evidence from the days that that HECS was introduced by the Hawke Government right through various increases and changes have shown a trajectory of only one way in terms of enrolment numbers at universities and that’s up.

Rafael Epstein: [Talks over] That doesn’t mean people aren’t dissuaded. I mean, there’s an expanding demand, that doesn’t mean people aren’t deterred.

Simon Birmingham: It doesn’t mean there might not be on the margins some people who are deterred, but of course we want people to think about the value of their higher education degree, we want to make sure they’re making considered decisions about enrolment. We don’t want, though, to deter anybody by having upfront costs, upfront fees, and in the end taxpayers will still be paying the overwhelming majority of students’ fees in many instances and, on average, contribute 54 per cent of the fees for the student and provide, of course, a very generous subsidised loan that doesn’t have any interest applied to it beyond inflation and doesn’t have to be paid back until somebody has a job earning more than $42,000.

Rafael Epstein: Just a final example question, I don’t know how many graduates are on $120,000 – not many of them – but if they are they’re paying ten per cent of their salary on top of their tax to repay their loan. That makes it impossible for someone to borrow to buy a house doesn’t it?

Simon Birmingham: Well, Raf, what it will also mean is that they pay back their loan a lot faster and the benefit of that for everybody is that the costs for the Government of running this loan account are reduced by getting loans paid back faster and, of course, students will extinguish their loan faster to be able to get on with the rest of their lives.

Rafael Epstein: Appreciate your time today, thank you.

Simon Birmingham: Thank you, pleasure.

Rafael Epstein: That’s the Education Minister Simon Birmingham.