Interview on Sky News To The Point with Kristina Keneally and Peter Van Onselen
Turnbull Government’s plan to transform schools; Delivering real needs-based funding and fixing Labor’s model; States and territories cost-shifting to the Commonwealth; Budget priorities; Higher education reforms to drive better outcomes for both students and taxpayers

Kristina Keneally: Okay Peter, well joining us live now in the studio, the Minister for Education Simon Birmingham joins us. Fantastic to have you.

Simon Birmingham: Great to be here, thanks guys. 

Peter Van Onselen: Let’s hope Kristina that this interview- sorry to interrupt Minister – but let’s hope it goes better than this one.


David Leyonhjelm: I’m going to come and kill you Peter Van Onselen. I know where you live, I have tried to break into your house before, I have threatened other people, I’m armed, I am coming after you.

[End of excerpt]

Peter Van Onselen: Maybe we should clarify once again that is out of context. That is very much out of context.

Kristina Keneally: [Talks over] How would you like to threaten my co-worker’s job?

Simon Birmingham: I- look, I get some fabulous text messages occasionally from David Leyonhjelm, he’s a very entertaining man. 

Kristina Keneally: Oh, look at that, he’s on Leyonhjelm’s side, I like that, okay. 

Peter Van Onselen: Let’s talk about obviously two major reforms that you’ve announced in the lead-up to Budget. There was the higher education, and obviously yesterday the schools funding announcement. Both of us, when that media conference was going to air, made the point immediately that we thought that this was political gold for your side. Not that that's what this is all about, but having David Gonski endorse it, it’s really taking the wind out of Labor’s sails. The Catholic schools though now seem to be taking up the cudgels of the attack. What is your answer to their criticisms of the package that clearly David Gonski supports?

Simon Birmingham: Yep, so firstly the big picture reform, David Gonski supported us because we’re doing the types of things that he recommended in 2011 in terms of shifting all schools across Australia to a type of consistent, needs-based, sector-blind funding model. Now in doing that you’re taking out some of the different special deals that different states have negotiated, different sectors have negotiated over the years, and nobody likes losing a special deal or arrangement they might have had. But in relation to Catholic schools across Australia, the reassurance I’d give to parents, principals, teachers is the average funding growth for those Catholic schools is estimated to be about 3.7 per cent growth per student per annum over the next four years. And that’s growth far stronger than any household budget in many instances around the country. It’s growth-

Peter Van Onselen: [Talks over] So they’re not losing money?

Simon Birmingham: They’re not losing money. There’s growth above inflation, above wages growth, and they’re actually in a good position that will see over that four year period an extra $1.2 billion go into Catholic schools around the country. So they should absolutely be able to work with that, adjust. And the idea that there’s a threat to small parish schools as I’ve seen reported in some instances is quite ridiculous. In fact again, quite the opposite, because it’s a needs-based model, and if there are small parish schools operating in regional communities, they’ll receive regional loadings. If they’ve got low socioeconomic students or Indigenous students, they’ll receive loadings for those low SES or Indigenous students, that’s the point of a needs-based model. 

Kristina Keneally: So will the Catholic school system be able to reallocate resources within their system as they have been able to do?

Simon Birmingham: Yes, yes. So we will still- we will calculate their funding from individual schools, build it up into a collective sum just like a state government, and then they get a cheque. And they can decide to reallocate it if they choose to, but we’ll be identifying very clearly that we’ve built it on the basis of the need of each individual school in the sector.

Kristina Keneally: So can you rule out doing any side deals with the Catholic school system in order to get this funding proposal up?

Simon Birmingham: Well, I’m certainly not proposing to do any side deals, and I don’t believe they ought to be necessary. I hope and trust that the Senate will work with us, and I’d love to see the Labor Party decide that they can work with us. They can maintain an argument if they want about the quantum of money that’s being spent, that’s different from fixing the system of distribution and the model of distribution. Yes, we’re putting in an extra $16- $18.6 billion dollars over the next decade. Labor might say it should be more than that. That’s a political argument.

Peter Van Onselen: You’re talking about the mechanism, the structure of how that money-

Simon Birmingham: That actually how you do it. Why is it that Bill Shorten and Tanya Plibersek won’t help us to fix the system and the model of funding even if they want to go to the next election promising even more? 

Kristina Keneally: Can we stick with the Catholic school system for a minute? Is your door open to the Catholic education system? They say they haven’t been consulted on this change, and they may well want to put to you some side deals. Is your door open to them?

Simon Birmingham: My door is open to talk, absolutely, and we met yesterday, and we’ve met many times or a number of times over the last 12 months or so. I understand the issues of concern to them. I think it is a very fair deal. We’re looking at the different states – Victoria is the lowest at 3.5 per cent growth per student, up to a Tasmania of, I think, getting up to about 4.5 per cent growth per student. Again, different Catholic systems are growing at different levels because they’re all starting from a different point, and we’re transitioning them over ten years, like we are independent schools and government schools across the country, to then a common standard at the end of that ten year period. 

Peter Van Onselen: Minister, let me tell you why I don’t think your door should be open to them – because the whole point about this, what I like about it is the purity of the embrace. In other words, you’re not doing exceptionalism for particular cohorts, in this case the Catholic schools. Maybe you’ll have to, because we all know how the sausages are made when it comes to the Senate. That’s out of your control. But I think that they need to be told that this isn’t about creating some sort of exceptional bonus just because it’s a Catholic school rather than any other type of school.

Simon Birmingham: Well, my door is open to talk, to explain, to enhance the understanding, to make sure that we reassure as well. I don’t want to see principals, teachers, parents of Catholic schools out there unnecessarily scared or worried when the truth of the matter in terms of the growth in funding they’re going to receive – $1.2 billion over the next four years – shouldn’t mean there is any adverse impact in Catholic schools around Australia.

Kristina Keneally: It’s been reported that there are some 353 independent over-funded schools that are going to receive a lower share of funding. Can you confirm that number, and can you confirm that there are no public schools on that list?

Simon Birmingham: Yes and yes. In that there’s 24 schools that will see a slight reduction in funding. For some of them, that is as little as $1 or $2 per student, so very marginal reductions. There’s a few hundred schools that will have lower rates of growth as we transition to that common point. Then, of course, there is 9000 plus schools that are going to receive far greater support. It’s an interesting thing to see the debate as it’s unfolded, with this absolute fixation on who are the 24 schools, or what’s the impact on 300

Kristina Keneally: [Talks over] Well, I think Pete is going to get to that-

Peter Van Onselen: [Talks over] Oh, well what-

Simon Birmingham: …when there’s 9000 plus that are actually big beneficiaries.

Kristina Keneally: Just before Pete gets to that, and I know he’s keen to, you said yes and yes, so that 353 or number, the 24 number, they’re not public schools within that list?

Simon Birmingham: No they’re not. 

Peter Van Onselen: And on this – and again, my disclaimer to this is that I like the package, I think it’s good, I think it should be embraced, I think it’s about time that the exceptionalism was removed, I think that the misnomer that what Labor had been proposing in government was what Gonski was proposing needs to be flushed out, and I think this flushes that out, particularly his presence. So, that’s my disclaimer. Having said that …

Simon Birmingham: [Interrupts] I agree with all of that Pete, thank you very much.


Peter Van Onselen: That’s not my question.

Kristina Keneally: So you’re not going to kill him.


Peter Van Onselen: My question, to avoid a repeat of the David Leyonhjelm thing, my question is genuinely why don’t you just say what the 24 schools are so that you don’t keep getting asked?

Simon Birmingham: Well, we will over the course of the next few days. So, we’re going to publish an online tool that will allow everybody to see the impact …

Peter Van Onselen: [Interrupts] Why the delay? Do you want to talk to them individually? Is that part of this …

Simon Birmingham: [Talks over] My department is speaking to all of them individually and they also deserve time to be able to consult with their school councils, with their parent bodies, and make sure that it doesn’t come as a rude shock that people learn through the media. That’s the point of- so, yes, I have a list. I know, obviously, I went through that with the department before we made the final policy decisions. But in fairness to those schools, a few days is not going to kill anybody while they have some time to digest the news, even you Peter. I know you’re anxious…

Peter Van Onselen: [Talks over] No, no. I get that. No, no, this is a follow up question to that if I can. There have been attempts at lists. I’ve seen one in the Fairfax papers. Now, if that list is anywhere near true, I’m not asking you to confirm or deny, you’re not going to do that, you’ve taken me through the process. To the extent that I know about elite schools down the Eastern Seaboard by name, there weren’t that many on the lists that I’ve seen. I mean, I could rattle off- I don’t want to do it, but I could rattle off a host of what I would consider really elite private schools that don’t look like they’re going to be on that list. Why is that? Are they already not getting a share of funding that is such that they don’t get cut and there are 24 others that do?

Simon Birmingham: To an extent Peter, it goes to the question that Kristina asked before about the 300-odd schools that there are a number who will transition to the common share of the Schooling Resource Standard we’re proposing. But in doing that, because it’s happening over a steady ten-year period, indexation means they won’t necessarily go backwards. So, obviously, the Schooling Resource Standard keeps up with costs in the sector, which means it gets a bit bigger each year, so it’s indexed. So they might in the end grow in nominal terms but not necessarily in real terms over that ten-year period for some of those schools. So, that’s why it’s such a small number that actually go backwards. You’d expect to see more of some of the types of schools you speak of on that list.

Although even there you find enormous disparities. I’ve looked at a couple of examples between the very elite Sydney schools where there’s $3000 and $4000 difference in the funding, the per-student funding that the Commonwealth currently gives those schools despite having exactly the same socioeconomic status and largely the same composition. So, even amongst elite private schools, if you want to put them that way, there’s enormous inequity in the current funding model that will see some of them get perhaps a little bit more and some of them get a little bit less.

Kristina Keneally: Minister, I do recall from my time in government and dealing with COAG that when the Commonwealth is making offers like this, they’ve done modelling to work out how each state is going to be affected. I presume you’ve done that modelling, are you able to release it?

Simon Birmingham: Well, we have done work and I think a degree of it is public already and more of it again will become so. We’re certainly sharing information with the states and territories about the level of growth that each of them will see, both in terms of the average per-student and then the projections that we do which obviously are dependent upon enrolment growth and other factors.

Kristina Keneally: Let me ask this if I can, follow up on that, with the states and territories, one of the contentious aspects of Gonski has always been whether or not the states were going to be allowed to shift resources within their budget when they got this additional funding. I seem to recall that Gillard, the Gillard Government, said they couldn’t do that, Christopher Pyne when he was minister seemed to remove that restriction from the states. So, where will your Gonski 2.0 land on that question about being able to reallocate resources when they get this funding?

Simon Birmingham: So, our position there is that we expect the states to maintain their real effort. We don’t want to see costs shifting where the Commonwealth puts more in and the states take some out. That doesn’t improve public policy at all, all it does is leave us with a greater budget challenge and make life easier for them. But we’re not going to dictate beyond that how much they should put in. We’re proposing what we think is a good and reasonable Commonwealth model that takes the share of federal funding for government schools to an all time record high in picking up 20 per cent of the costs of the Schooling Resource Standard there. Whether a state puts in the other 80 per cent is a matter for those states. Under our modelling, some of them will reach 100 per cent of that Schooling Resource Standard with our 20 per cent, because that’s the way they fund their systems. Others won’t quite get there but that becomes a matter between them, their constituent stakeholders, and electorate as to whether they’re paying their fair share relative to another state that is paying more.

Peter Van Onselen: Was the Coalition right when it previously said that the funding of Gonski-style education reforms with debt was inappropriate or is the Coalition right now when it’s decided with debt to fund Gonski-style reforms?

Simon Birmingham: Peter, every Budget is a choice of priorities and how you structure those budgets, and next Tuesday it will show that we’ve put a priority on funding the services that matter to Australians – Australian schools, health care services and the like – but at the same time it will demonstrate we’re still committed to budget repair, which has been a difficult task but in which we’ve continued to make inroads. 

Peter Van Onselen: But Minister, what’s changed? I mean, I know there’s been a change of Education Minister, so maybe that’s your answer, but what has changed? Because it’s still a debt situation. I don’t think there’s been anything profound, but suddenly you’re going down a path which, whilst I praise it, is not the path that the Government was going down before on this front and little has adjusted since then.

Simon Birmingham: Well, we’ve made Budget inroads and we’ll keep making those inroads, and the Budget will show clearly how that’s going to occur. What’s changed in a schooling sense is that we’ve done the hard-yards now over the last 12 months of working through 27 different deals and all of the sweetheart arrangements that underpin them, and determined a methodology that allows us to fix the school funding model in Australia, get to one consistent approach that doesn’t favour one state over another, or one sector or system over another, that is truly needs-based, truly sector-blind. And at the same time, with the work that David Gonski will now do in terms of his second report – that has nothing to do with funding or revisiting his initial report, whose recommendations we’re broadly accepting – he will now do a separate piece of work on how we make sure, with that record growth in funding and investment in schools, it’s used as effectively as possible to lift student outcomes. With those types of policy solutions and opportunities you can make a decision to prioritise more investment.

Kristina Keneally: Well, can I follow up on the Budget inroads? Is one of the inroads that’s going to help pay for this the cuts to university education announced earlier this week?

Simon Birmingham: Well, across the Budget it all comes together, Kristina. So it’s not that one pays directly for another, but of course …

Kristina Keneally: [Interrupts] No, no, if I can pick you up there, because that is entirely the approach that Scott Morrison had laid out when it came to other areas like social services. If we’re going to increase spending in one area of a portfolio, he said we’ve got to cut spending in another area.

Simon Birmingham: Overall – and to use a phrase that Scott’s used on occasions – overall the Budget needs to wash its face in terms of making sure that if we’re going to continue to steadily reduce the level of the deficit and get ourselves back to balance, then new spending proposals have to be offset elsewhere. This is done in the Budget context though, so you’ll have to look at the entire document. However, yes, there are savings in relation to higher education in the order of $2.8 billion over the forward estimates period. I think that the way we’ve structured those with some savings from the university sector, some measures to make the student loan system more sustainable for the long term, do give us a reasonable profile for achieving those savings without having significantly adverse consequences on students or universities. 

Peter Van Onselen: We’re talking higher ed now, and I’m keen to keep doing that, but just a quick one. You had a predilection for borrowing a phrase of Scott Morrison’s; another phrase is good and bad debt – which one does the schools funding fall into?

Simon Birmingham: Well, again, you have to look at Scott’s full context and speech in relation to good and bad debt. What he is talking about is recurrent …

Kristina Keneally: [Talks over] Well, if we do look at his context, he said recurrent funding was bad.

Simon Birmingham: Yeah, and recurrent funding which adds to debt, which of course is why, again, look at the Budget next week, see the work that’s being done to ensure we continue to bring the Budget back towards surplus.

Peter Van Onselen: Higher education funding through, the new structure of more user pays, is it finished now? Because I still think the system is half-pregnant in the sense that you’ve still got no full deregulation and no capping of places. This looks like a band aid, even if it’s an acceptable band aid for the short term.

Simon Birmingham: Well, there are the Budget measures to this, there are also some reform elements, and one of those is that we’re proposing there be a performance pool in relation to universities, which would be around 7.5 per cent of their student payments. We’re guaranteeing that that money will go into higher education. It’s not a back-door way of getting a Budget saving or anything. But my view is – and I explained this to the vice-chancellors on Monday night – that if we’re going to give them the licence to continue to have a demand-driven system there has to be some level of financial accountability, where governments can set policy priorities that ensure there are standards they must meet for enrolments, standards they must meet in terms of supporting students successfully for completion, standards we expect them to meet in terms of the employment outcomes in relation to their students. 

Peter Van Onselen: [Talks over] So that can be ongoing [indistinct]? That can be ongoing in the place of the other …

Simon Birmingham: [Talks over] The 7.5 per cent performance pool is intended to be ongoing. We’ve freed them up so that they can choose to enrol more students in one or two year diploma and associate degree environments, so that no longer do they have to shoehorn everybody in the demand-driven system into three or four year bachelor degrees. With those types of performance mechanisms we can better hold them to account. They’ll have to be designed individually for each institution because they work in different regions with different economic pressures, but I believe that we can do that. The performance pool we’ve indicated in terms of its commencement will start next year, but with a very simple task in terms of the reforms around transparency of admissions processes we expect them to meet, and over the next 12 months we’ll consult about the more detailed design of it. But it’s potentially a big reform element that should give taxpayers and government more confidence that unis will be held to account for the autonomy we grant them and the funding growth we grant them. 

Kristina Keneally: Only a few minutes left. I do want to ask about university education funding, and particularly the requirement that students pay their loans back more quickly, starting, I believe, when they start to make $42,000 a year. Just thinking about the future of a young person in Sydney or Melbourne – rising housing costs, slow wages growth, and now the demand that they’re going to have to pay their loans back more quickly – it seems like we’re really squeezing the young out of any hope of ever being able to purchase their own home.

Simon Birmingham: Well, home ownership is a matter that’s an ongoing discussion with states and others. In terms of the …

Kristina Keneally: [Interrupts] But this can’t help, can it?

Simon Birmingham: Kristina, it can help insofar as where people do pay their debts back faster in their student loans, then of course they have a greater capacity in the rest of their lives to be able to build a deposit, pay back their house loans, or other things.

Peter Van Onselen: It’s a pretty good point, Kristina. By the time you’re ready to buy a home you’ll pay back more of your debt. That’s actually not bad.

Kristina Keneally: You’ve paid back one debt and now you can start saving for the next one.

Peter Van Onselen: That’s not bad, I’ve got to be honest. 

Kristina Keneally: I think it’s pretty weak. 

Simon Birmingham: And as I’ve emphasised, firstly, $42,000 is really quite generous by global standards. Across the ditch in New Zealand students start paying back at $19,000, so $42,000 is generous at global levels. And we’re introducing, yes, a lower threshold, but also, for the first tier of repayment, a lower repayment rate of just one per cent, which is …

Peter Van Onselen: [Interrupts] Why don’t you have higher ones up the line?

Simon Birmingham: We have.

Peter Van Onselen: No, but I mean even higher ones so that it goes beyond whatever 50-plus per cent you’re bringing it to.

Simon Birmingham: Well, we’re taking it up to a 10 per cent repayment threshold for incomes …

Peter Van Onselen: [Interrupts] No, but what I mean, sorry Minister, is why should someone that becomes a cardiovascular surgeon earning a fortune have any of that paid for? And maybe a better example is a lawyer, because people feel like a cardiovascular surgeon probably does some good. But, you know, some law partner in a corporation making over a million dollars a year off their university degree, why should one cent of that be paid for by a taxpayer who’s never got a degree?

Simon Birmingham: Well, arguably that person of course is then going to be spending their life sitting in the top marginal tax bracket and paying a significant rate of income tax. So …

Kristina Keneally: That’s a pretty good argument, Peter Van Onselen. 

Peter Van Onselen: They’re probably minimising it, would be my retort to that, particularly if they’re a tax lawyer.

Simon Birmingham: We’ve been doing our bit to close the loopholes, particularly around multinationals – billions of dollars that we’re recouping there, too.

Kristina Keneally: Alright, Minister, we’re almost out of time. I want to ask really quickly, you’re a minority in the Turnbull Government, one of the few who has gone to public high school. How did that shape your view on the importance of public education when you thought about these reforms?

Simon Birmingham: Look, I found both, I guess, in my attitude, but frankly in sitting down with Malcolm – and both of us spent quite a bit of time with David Gonski and getting to understand his reform and his report – all of us were driven by a sense of fairness and wanting to make sure that there’s an equitable degree of opportunity for all students, regardless of their background, and that’s, yes, fundamental to me and to my background. And I have no doubt that my schools that I went to, which have quite high numbers of low socioeconomic students at them, have historically had high numbers of students from migrant backgrounds, and other challenges that people have faced will be big beneficiaries out of these reforms. But I can’t say that it was me alone driving a fairness equation. It was one that certainly Malcolm shared, and ultimately the Cabinet was driven by too.

Kristina Keneally: That’s a very fair answer, Minister.

Simon Birmingham: Thank you.

Peter Van Onselen: Well, we’re out of time. Simon Birmingham, thanks very much for your company. Appreciate you joining us on To The Point.

Simon Birmingham: Thank you both.