Press conference, Adelaide
Review into how socio-economic status (SES) scores are calculated for non-government schools; Jenny Macklin; Upcoming by-elections




Simon Birmingham:     Well, thanks very much for coming. A little over 12 months ago, the Turnbull Government legislated to provide – for the first time ever – for consistent fair needs-based funding for Australian schools from the Federal Government. This was an approach that we’d never seen before because previously arrangements for school funding had been littered by historical deals, by special arrangements. Whereas what we have provided, as a government, is a six to 10-year transition path to ensure that school funding is transparent, that it’s consistently applied for government schools regardless of the state or territory that the school is in, that it is consistently applied for nongovernment schools regardless of the state or territory sector, religion or otherwise that school comes from, that it’s based on need in accordance with the Gonski school funding formula and that it provides support for every single Australian student from the Australian taxpayer.


This transition ensures that there is significant growth in funding for every school sector, that for government schools over the next few years they see per student growth in students, in student funding of around 6.5 per cent, that for non-government schools that per student growth rate is around 4.5 per cent. In each case, per student, per annum real growth off of record levels above rates of inflation or wages growth to allow for additional support and investment in supporting the students who need it most; in ensuring they get the assistance that they require.


Our approach stands in stark contrast to Labor. The Gillard Government commissioned the Gonski report and then ignored the Gonski report, instead striking 27 different special deals across the country and instead putting in a place that rather than getting to any type of consistency in school funding, as we are within six to 10 years, Labor was going to leave us 150 years down the track still with an inconsistent model. Labor Party still has no school funding policy, no approach and cannot tell any school across the country whether or not they would fund them consistently based on need or what support they would receive under Labor.


The Turnbull Government, in applying these landmark reforms, also accepted the recommendation of the Gonski panel that there should be an independent entity established. And we put in place the National School Resourcing Board in legislation to allow for that clear independent assessment of how school funding formulas are applied and the technical details of how they work.


In response to concerns that were expressed about one element in relation to school funding, we initiated the first review of the National School Resourcing Board. That first review was to look at how the Socio-economic Status Score methodology works. The SES scores are important, they’re important because for nongovernment schools, they inform what is deemed the capacity to contribute discount. That is how much the base funding provided to a school, not additional loadings, is discounted relative to that school community’s capacity to contribute. SES scores were first developed and applied by the Howard Government, they’ve been around a long time and they’re important because what they allow governments to do is provide the greatest support to those nongovernment school communities who have the least capacity to contribute to their school fees. So, those school communities who have lower incomes, lower means, get greater financial assistance from government. But because of historical arrangements, they have not had the direct impact in the past, which has been muted to some extent, whereas under our six to 10-year transition, we were bringing about a circumstance where they would be applied consistently, fairly, equally across the board. But we heard concerns about that methodology and we initiated the Board’s work to assess it. I want to thank Michael Chaney, the chair of the Board, and all of its members, for what is a very thorough, well-researched analysis in relation to this technical aspect of school funding methodology.


The Board has recommended a move from what is currently an SES score calculated based on the use of Census districts, to assess family income, occupation and educational status to instead a more direct measure of family income. The Board has clearly done analysis about the impact of this in terms of its accuracy and its viability and importantly the Board recommends that there be further work undertaken, that this not apply in advance of the 2020 school year and that we work through a very thorough and transparent process to prove up exactly how this new methodology would be applied.


The Turnbull Government welcomes these recommendations, we welcome this report. And we are committed to consulting and working with school sectors to ensure that if these recommendations are to be applied, they are applied in a fair, transparent, consistent way.


I want to stress that this report has no bearing in relation to funding for government schools. Government school funding will continue to grow from its record levels to higher levels by that 6.5 per cent per student, per annum as per our reforms last year. But this does relate to the nongovernment school sector. And we’ll work carefully with the states and territories who provide some funding to non-government schools, as well as with the National Catholic Education Commission, the Independent Schools Council of Australia and all other stakeholders to make sure that in responding to these recommendations, we give full consideration to their concerns and make sure that we address this thoroughly, fairly and rigorously.


Ultimately, funding for all sectors will continue to grow from record levels to higher levels into the future. Schools and parents should be confident they’re going to keep receiving significant support from the Australian Government towards their operations. They should also know the Turnbull Government will stick to our principles. Our principles are that school funding should be transparently applied, that it should be based on need, that it should be applied consistently and that ultimately every student should receive support from the taxpayer, according to the need of their school community.


We’ll continue that consultation process over the course of this year. I would expect the Government will respond to this report this year and will be working with the different sectors over the coming months to ensure that we address their concerns and layout a clear framework to assess the methodology and to ensure that if implemented it delivers the outcomes which we want, which is a fair analysis of need, a fair approach to assessing the capacity of school communities to contribute so that we can be confident that the schools who received the greatest amount of money are those of greatest need.


Journalist:                    So just to be clear, will you embrace this SES score model, is the question whether you accept the model or how you implement the model?


Simon Birmingham:     The Turnbull Government recommends- sorry, the Turnbull Government is welcoming receipt of this report. We are pleased with the work that the Board has done; it provides a strong case for an alternative approach. We note the fact that both the NCEC and ISCA today have welcomed the report, but have also asked for careful consideration of it and for the type of consultation with them that I’ve committed to undertaking. So that is what we will do, we’ll go through a thorough proper process of consultation and then we’ll have a detailed response to this report.


Journalist:                    If the model is taken up, is it inevitable that elite schools would lose funding?


Simon Birmingham:     What the report shows very clearly is that if this type of technical change to the funding formula were to apply, there would be impacts in terms of SES adjustment to schools in both independent and Catholic sectors. Firstly it shows, though, that there is quite a strong degree of correlation in many cases between the existing methodology and the proposed alternative methodology. So there wouldn’t be radical shifts across the board but instead perhaps incremental shifts in some cases. The report also makes clear that you would see a circumstance where schools in the Catholic sector and in the independent sector would move up and would move down in their SES scores based on the alternative methodology. So, you’d see movements in both directions, in both sectors and that’s why we want to make sure we work through all of the impacts of this to ensure that the data that underpins it is robust. As I said, the report recommends this could not apply before 2020. And that’s because the recommendation is for a rolling three-year assessment of median income of the parents in school community. And of course, it takes time to get that data and ensure you have the right data mix.


Journalist:                    But where would this model then do that tinkering if people- if schools are changing is it the tail end, the elite schools that are going to see the most tinkering?


Simon Birmingham:     Well, of course, what it would do is apply the principles the Turnbull Government wants. And that is that school funding ought to be determined on need, that school funding when it comes to how we assess the capacity of the school community to contribute ought to be based on a valid database in terms of how much that school community can contribute. At present the SES methodology relies on Census data. And it collects Census data and assesses household income as well as educational status and attainment, as well as occupational status. And it spits out an SES score based on an assessment of that data. This report finds that’s a pretty through methodology and importantly that that methodology was largely the best available historically. However, recent data matching capabilities within government make it possible now – which wasn’t possible before – to use an income matching approach instead. Clearly, an income matching approach would in many instances give a more precise measure of a school community’s capacity to contribute than an average Census-based data may do so. That’s why we’re having a look at how now – if you were to implement these recommendations – we can ensure that every school has confidence in the data that underpins them and then the fairness of the outcome.


Journalist:                    Just some questions from Canberra. What’s your thoughts on Jenny Macklin’s retirement?  


Simon Birmingham:     Well, 23 years is an amazing accomplishment in any political career. And Jenny Macklin has clearly been a trailblazer over her 23 years in Parliament. I congratulate her on her contributions; I acknowledge her significant policy contributions. Haven’t always agreed with the policies that Jenny has argued for or the beliefs that she’s always applied, but I recognise that Jenny is somebody who has always had the best interests of the nation at heart according to her values, has, of course, been a trailblazer for many women, deserves our congratulations on a successful career. Best wishes for the future.


Journalist:                    What else could be done to encourage more women to get involved in federal politics?


Simon Birmingham:     It’s incumbent upon all of us to encourage anybody who has an interest and a desire to step forward and offer themselves to serve in our national or state parliaments around the country, to engage in the political process. My message to all Australians is that our political parties and our political processes are only as strong as your engagement in them. And particularly to women, to people from multicultural backgrounds, to Indigenous backgrounds, others who may not have historically been as well represented in our parliaments as they should have been, that we welcome and encourage your participation in our political parties and ultimately our parliaments.


Journalist:                    And lastly, how confident is the Government of winning Longman?


Simon Birmingham:     It’s going to be incredibly challenging for the Government to win any of the by-elections off of the Labor Party. It’s more than 100 years since a Government has won a by-election off of an opposition. And clearly it would be incredible feat to be able to do so now in the circumstances, given that weighted history that is piled up against the Government. But we are working hard. I myself have visited both Braddon and Longman this week to campaign with our candidates, to highlight the Government’s investment in terms of our child care reforms, to underline the fact that we’re only able to make record investment in supporting families with child care, record investment in our schools, because we have a strong economy, because we’re able to bring the Budget back to balance while still delivering those essential services, while as we did yesterday, tackling the difficult complex issues such as GST distribution, but doing so in a fair way that helps all states. I think if you look at an issue like the GST distribution, or indeed the complexities of school funding, what you see with the Turnbull Government is a government that is willing to tackle the difficult policy issues and do so based on principles and fairness. Whereas the Labor Party squibbed it on GST issues, squibbed it when it came to the difficult decisions around school funding; instead just carving out special deals. Our approach will be one of principle, one of ensuring we do the right things by Australians in making sure that we deliver what they expect of a good Liberal-National government: sound economic management, jobs growth, balanced budget and investment in the services Australians care about.


Journalist:                    Minister, just back on schools funding, if I can. Does this work in this extensive report, does it show that some schools are being effectively subsidised because their students come in from poorer areas, even if the parents are well off?


Simon Birmingham:     I would encourage everybody to read the report carefully to assess, indeed, the arguments that are made for the shift in the technical approach to how the SES methodology is undertaken. The report, as I say – and I draw people’s attention to the graph on page 37, that shows a fairly strong correlation between the existing approach to calculating SES scores using the Census-based area data that captures income, education and occupation status, versus how it might- what the outcomes might be, instead using the direct income methodology that the Board has recommended. You do see quite strong levels of correlation. But small movements both up and down for schools from both the Catholic and independent sectors.


Journalist:                    Minister, you’ll appreciate we haven’t had this report long. Haven’t had much time to digest it…


Simon Birmingham:     That’s why I’m happy to highlight particular tables that you can look at.


Journalist:                    How do you allay concerns that independent schools could be worse off under the changes. Is this just reopening the schools funding fight from last year?


Simon Birmingham:     This is the Turnbull Government showing our determination, as we demonstrated last year, to fund Australian schools fairly, consistently, transparently and based on need. And I think that’s what Australians expect. Now, in terms of the impacts for school sectors and individual schools, we will work carefully through those, but I stress again, on current projections, funding for government schools grows by 6.5 per cent per student, per annum and is untouched by these reforms or these recommendations. Funding for non-government schools is projected to grow by around 4.4 per cent per student, per annum on average. And even with the recommendations here, schools would overwhelmingly still be seeing strong growth above inflation, above wages, to support investment and support in their students’ outcomes.


Journalist:                    Is there anything that the Government could implement, if you do put this new system in place, to prevent independent and Catholic schools raising their fees if they are getting less funding? Is there something that you can do about that or not really?


Simon Birmingham:     The setting of fees is a matter for individual schools and the report deals quite comprehensively with issues in relation to whether fees should play any role in assessing the capacity to contribute of a school community. What the report recommends is that, logically, in assessing the capacity to contribute of a school community towards the cost of operating that school, you should look at the income, the median income, of the families within that school to assess that capacity to contribute. That is a fair and valid approach. If some schools choose to charge then greater fees because of additional services that those schools offer, that’s a matter between those schools and those school communities.


Journalist:                    If you’re now using actual parent income to make these calculations, could schools then game that system by actually choosing who they- choose to enrol, offering scholarships to maybe bring down the average income for a school to attract more federal funding?


Simon Birmingham:     I guess it’s important to acknowledge that schools already enrol people from very wide backgrounds and that non-government schools are often offering subsidies, bursary, scholarships, to help enrol people who may not be able to afford the fees of that school. And that this type of approach is simply building on an approach that has previously been in place, which is to have an averaging system of what a school community looks like in terms of their income profile or their capacity to contribute as a school community, and suggest a different, more granular set of data that the report recommends would provide a stronger, clearer outcome in terms of that SES score and the assessment of that capacity of that school community to contribute. That wouldn’t stop schools from indeed continuing to enrol a diversity of families, from continuing to offer scholarships, bursaries, et cetera to support families from lower income groups to enrol in those schools. And indeed, if a school community were to take more families from lower income groups, offer more Indigenous scholarships, well yes, just as at present, that may lower the SES score of that school, yet it’d have the same result in the future.


Journalist:        Are you relying on parents giving you their annual income if it’s not collected by Census?


Simon Birmingham:     That’s a very important question. I’m glad you got to it because, no, the report makes very clear that there will be no expectation of schools to have to collect tax file numbers or parental income data and there will be no visibility of schools over the individual income of parents at that school. What the report recommends is that using previously unutilised – unavailable, I should say – previously unavailable data matching technologies within government, we could take essentially the address records of parents that we already collect from schools, currently we match that with Census data to be able to provide the SES score, the report recommends instead we would effectively be matching it with direct income data held within government to assist the median income of families at that school. But…


Journalist:        For the ATO or…?


Simon Birmingham:     Correct. But at no time would a school have to collect a tax file number or collect family income or have visibility of the individual family income. It would simply be using a different dataset within government to produce an SES score compared with the dataset that is currently used.


Journalist:        So people like at the school, you know, principals, teachers, wouldn’t be seeing a household’s income in their system?


Simon Birmingham:     Principals, teachers, school boards would not be seeing the income of parents, would not be asking for parents’ tax file numbers, would not be having any visibility in that sense. This will still just be internal government mechanism to create an SES score just using a different set of data to do so. So rather than using Census data, you would instead be using direct income data.


Journalist:        Taxable income is not the only measure of families, often some of the wealthiest people may have in fact a low income on paper. Does that distort, particularly the calculations for particularly elite schools? Perhaps the families there might look like they have very low incomes through the Tax Office?


Simon Birmingham:     The report has looked at questions of wealth and has indicated that down the track if there were better, more reliable measures of wealth then that could be looked at. But based on what’s available at present in terms of the means to be able to assess wealth, the view of the National School Resourcing Board was that wealth measures are not reliable or robust enough to be included, and that income measures provide a strong enough proxy in that sense and that essentially the schools you would expect to have the highest SES scores based on the income of their families, median income of their families, would have the highest SES scores under the approach that’s recommended…


Journalist:        Are they perhaps still lower than they would be if you looked at a more full [indistinct]?


Simon Birmingham:     Well again you need to understand that under the way the SES methodology works at present, once the school has an SES score above 125 it has the maximum capacity to contribute discount applied which is that essentially its base level of funding is discounted by 80 per cent and it doesn’t matter above that point how high the income is or the wealth is of the school. Once they’re in that category then it’s already hit the maximum discount level. And that is a very important thing to understand. It is often misunderstood in terms of the way non-government school funding works in Australia, that we are trying to deliver a model where those schools that are often singled out for media attention in relation to their funding receive the greatest discount against their base funding compared with frequently schools who are catering for lower income school communities. But ultimately, we run this SES methodology to ensure that the schools with the least capacity to contribute, the lowest family incomes receive the greatest support, those schools with the highest capacity to contribute, the highest family incomes receive the least support and we do that to ensure that choice is available to as many parents as possible so that families who do not have the means to be able to pay higher fees receive access and opportunity in those school communities to schools that are charging lower fees because their school community has a lower family income or capacity to contribute.


Thanks guys.