Press Conference, Adelaide
AAT decision on Malek Fahd Islamic School funding; Tax cuts

Simon Birmingham:     I welcome the decision today of the Administrative Appeals Tribunal to affirm and uphold the decision of my department to suspend funding to the Malek Fahd Islamic School Limited in New South Wales. This is an important decision because it validates the work that my department has undertaken in terms of ensuring that taxpayer dollars provided to non-government schools are used exclusively and explicitly for the benefit of students; that in no way can school funding, government funding, be used in a manner that is for-profit, that is against the fit and proper person test under the Education Act, or that doesn’t meet high standards of probity and governance. Our expectation is that every single recipient of taxpayer dollars will absolutely adhere to high standards and ensure every dollar is delivered and used for the benefit and wellbeing of students in their schools. 

Now, this I realise is a difficult time for the good parents, teachers and students at the Malek Fahd School. I appeal to them to work hard as a community to find the most appropriate solutions for their school and for their students. We’ve been in contact with the New South Wales Education Minister and the New South Wales department to make sure we are ready for any and all contingencies that Malek Fahd may undertake as a result of this determination. The decision is very clear: that the school has been operating in a manner that is for-profit, that is benefiting the AFIC, and indeed that it would continue to do so in the future under current arrangements that are in place. 

This is a completely unacceptable situation, and of course it is why it is completely unacceptable for any further taxpayer dollars to go into this situation. We have adhered to every single one of the AAT’s findings to date in relation to this matter, and it is our expectation that we will continue to do so. And we hope that rather than prolonged or continued legal matters, that the school and AFIC are able to work to get their house in order, and or to support students to find alternative arrangements in the long run if that’s what it takes to ensure that we have certainty that the best possible outcomes are available for those students, and that scarce taxpayer education dollars are used for the benefit and wellbeing of schools and students alone.

Journalist:        Does this mean that the school will close?

Simon Birmingham:     Well that is entirely a matter for the school and the school community. There is no requirement under the Education Act that they must be in receipt of taxpayer dollars. If they continue to be registered as a school in the New South Wales school system, then it is entirely open for the school to continue to function and operate in the future. So it’s a matter for the school, the school council in terms of how they in the future handle this situation.

Journalist:        Does it have implications though for their registration and their ability to continue as a school?

Simon Birmingham:     They are matters, again, that the New South Wales registration authorities will have to give full consideration to. I’ve got no doubt that they would be looking closely at the findings of the AAT and the determinations that our department has made to make sure that all requirements under New South Wales law are being met by the school.

Journalist:        If it does close it’s going to cause quite a bit of upheaval isn’t it? There’s 2400 or so students that will be needing to find a new school.

Simon Birmingham:     There are around 2000 students involved here, and I know that they are innocent students, as are their families, as indeed are the hard-working teachers of the school. And I do feel for them, but of course there is an important principle here where we have to ensure taxpayer dollars are used for the benefit and wellbeing of students. Now, we will work, should the school close, with the New South Wales authorities to make sure there is support and assistance for those families and students to transition into other schools in the nearby area.

Journalist:        The school says it has distanced itself from the Islamic Council and the previous management has been removed. From that point of view, is there not room to negotiate a future for this school in terms of funding?

Simon Birmingham:     The school has made progress and the AAT ruling makes clear that indeed, in response to a number of the initial findings of non-compliance that my department found, the school has addressed some of those. But the AAT is also clear and explicit that the school would continue to be operating in a for-profit circumstance, providing benefit through to AFIC, and that that would be, of course, unacceptable, in breach of the Act, and that it is right and proper that the department has made the determination to cease funding, and that of course has been upheld by the independence of the AAT.

Journalist:        Educationally, is it a good school?

Simon Birmingham:     Well it’s not for me to necessarily judge there. 

Journalist:        Did your findings and the work of your department find any problems with the quality of the school?

Simon Birmingham:     Our focus has been on the appropriate governance and use of taxpayer dollars, and that is rightly where the focus has been. I saw media reports before Christmas that highlighted some good HSC results in the school. I have no doubt that there are hard-working teachers, there are well-meaning parents and there are students who are trying to achieve their best, and we need to make sure that all of those individuals are rightly supported through these circumstances, but that cannot be at the expense of upholding high standards and ensuring that taxpayer dollars are not leached out of this school into other for-profit entities.

Journalist:        Will the Government be able to recoup any of the funds that have been handed over, or will you seek to?

Simon Birmingham:     Now that we’ve reached this stage we will be looking at legal advice in relation to some of the funds that have been handed over, and seeking to ensure that if there are funds that can be recouped they rightly are, if that’s within the confines of the Act and the expectations of the Act. 

Journalist:                    Through this legal process, I think there was an interim decision about payments, 5 million or so should be handed over. Did that happen mid-last year, and if that’s the case would you be seeking those funds to be returned?

Simon Birmingham:     So, contrary to some early media reports I’ve seen, the Commonwealth did adhere to all AAT determinations, which included interim payments that we were ordered to make. Now of course, they will be subject to consideration under any future legal advice, just as any other previous payments would be.

Journalist:        And obviously the school has hinted towards an appeal, lodging it as early as next week. What would you do in that regard?

Simon Birmingham:     I understand the school has indicated that it will appeal to the Federal Court. Look, I would urge the school – and I note the school has urged AFIC – to make concessions to the school, to hand over land and tenure and title to the school of certain assets that are the subject of these adverse findings. These are matters between the school and AFIC. 

There are really a couple of clear messages here. One is, firstly, to everybody operating as a non-government school, that we will apply the highest standards and enforce the Education Act and ensure that the governance standards, the protocols, the principles, and especially the not-for-profit test are enforced under the Australian Education Act. But there is also a more specific message for AFIC in this regard, which is that they clearly have not put the interests of teachers, parents and students first and foremost in the way they have handled these matters, and that AFIC needs to take a long hard look at the way they have handled these matters in relation to this school, and indeed others, that has put those who are trying to do the best on the ground in very difficult circumstances. 

Journalist:        Talking of others, the associated South Australian school, what are the current circumstances they’re in?

Simon Birmingham:     So as you would recall, there were six schools that initially were the subject of audit; the Malek Fahd School we’ve been talking about. Three schools are currently operating under strict conditions that were put in place around their continued operation, and to date appear to have been meeting those conditions. Two schools, the one in South Australia and one in Canberra, have been determined to not necessarily be acting in relation to all of the conditions placed upon them. And so they have been given show cause notices around continued funding to those entities, and there is a process underway for them to demonstrate that they are operating in compliance with the conditions. But again, there’s a strong message here from the AAT finding, from the action we’ve taken in relation to Malek Fahd and the defence of our decision, and that is that we will not take a backwards step when it comes to the governance of schools and when it comes to ensuring that every single taxpayer dollar is used for the benefit and the wellbeing of students alone. 

Journalist:        Is this decision with Malek Fahd a warning shot- or should serve as a warning to the South Australian school?

Simon Birmingham:     Well this is absolutely a clear indication that our processes have been right and proper, that our determinations have been upheld, and that we will ensure the Education Act and all of its conditions are applied, and that we expect schools to meet every single condition. And in relation to the South Australian school and the Canberra school that currently have show cause notices against them, those schools need to know that we will not take a backwards step, and that we expect every single dollar to be used for the benefit and wellbeing of students, and we expect high standards of probity, governance and integrity.

Journalist:        Is the South Australian school cooperating with the department investigations?

Simon Birmingham:     Well there’s an ongoing process, and the South Australian school has been providing some information to the department and has been requested to provide further information. 

Journalist:        Do you think there’s a risk that they may head the same way as Malek Fahd?

Simon Birmingham:     I don’t want to pre-empt or predict outcomes that might occur, but we will absolutely enforce the conditions that have been imposed upon schools in relation to their funding as a result of their mispractice in the past.

Journalist:        Should parents that sent their children to that school be concerned about the circumstance that school now finds itself in?

Simon Birmingham:     Well look, I think parents obviously will make their own judgements about the ongoing viability of a school, but I expect that the management, the governance of that school, as of every school, is at the highest standard. And I expect that they cooperate fully with the request for information from my department, and that ultimately they work to comply with every single condition, not only under the Australian Education Act, but also imposed on them when funding was reinstated to them.

Journalist:                    For Malek Fahd, if they can at any point in the future prove that they have severed ties with the council and are not operating for-profit, would you revisit re-funding them?

Simon Birmingham:     There are processes that can be considered in relation to future funding for a school, but of course we would have to be absolutely confident that the independence and the high standards of governance and probity were clearly in place, and that every single dollar was purely going to the benefit and wellbeing of students. 

Thanks everybody.

Journalist:        Just on another issue, Peter Costello’s been critical of the Government’s company tax cut approach. Do you think he’s right? Should the Government pursue personal tax cuts over company tax cuts?

Simon Birmingham:     Well, I haven’t seen Mr Costello’s comments, but we went clearly to the last election with policies to reduce the rate of company tax, and we did so because that is demonstrably the best way to spur investment in Australia, to make Australia a more attractive destination for businesses to invest in, and to give us the best hope of creating more economic growth, more jobs, and more business investment in Australia into the future. And I would’ve expected that somebody like Peter Costello would recognise and support the fact that we want to be an attractive destination for investment, and that we ought to be delivering the lowest possible tax base that we can manage to do so.