Education in Australia, New Zealand and the Pacific
Education in Australia, New Zealand and the Pacific

Michael Crossley

Michael Crossley is Professor of Comparative and International Education, Director of the Research Centre for International and Comparative Studies and Director of the Education in Small States Research Group at the Graduate School of Education, University of Bristol, UK. Author affiliation details are correct at time of print publication.

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, Greg Hancock

Greg Hancock has worked as an Australian Schools Commissioner, the Chief Education Officer of the Australian Capital Territory and most recently at AusAid and The World Bank. Author affiliation details are correct at time of print publication.

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and Terra Sprague

Terra Sprague is a Research Fellow in the Research Centre for International and Comparative Studies at the Graduate School of Education, University of Bristol, UK. Author affiliation details are correct at time of print publication.

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Bloomsbury Academic, 2015




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Federalism in Australian Education

DOI: 10.5040/9781472593450.ch-003
Page Range: 41–60

Without understanding the specific (some might say peculiar) form of Australian federalism, it is hard to understand the realities of Australia’s education system. The current chapter sketches the mainsprings of Australian federalism, its key provisions and its evolution, and then examines its impact on education, using government funding of non-government schools as a case study that illuminates both increasing federal intervention and state resistance, as well as the key social implications. While jurisdictional elements are treated, the emphasis on funding is used to reveal key changes in federal state intervention and control over education.

Resulting from Constitutional Conventions held in 1891 and 1897–1898, the Australian federation came into being in 1901, replacing a system of individual British colonies that had been established for a century or so. Constitutional provisions were ultimately agreed to by voters in the various Australian colonies, and then passed into law by the British Parliament.

Like other federations (Brazil, Germany, Canada, the United States), a critical issue of longstanding is the division of powers between the national government and states or provinces, and how the two levels coordinate (The existence of a third tier of Australian government, local Councils, is beyond the remit of the current analysis and is of no substantial relevance to education.) (Fenna, 1994). The existence of both state and federal authorities affects education quite directly, and can be a source of contest and division. At times, (constitutional) courts must arbitrate between national and other levels of jurisdiction. This has meant that the division of powers, including over education, has not been static but has rather evolved. In the Australian case, this resulted in an uneven evolution in the direction of enhanced federal (in Australia, the term used is Commonwealth) authority over education: ‘The power of the Commonwealth waxes and that of the States wanes, as approving High Court judges have affirmed’ (APH, 2001: p. 28). But even this is not uniform, with some sectors (schooling, and vocational–technical education) being administered and funded largely by the states, while higher education has traditionally been administered and largely funded by the Commonwealth.

The foundations of federalism

The basic principles behind Australian federalism, as set out in the Constitution, were that Commonwealth powers should be restricted to areas governing the national economy and foreign relations. In practice, this meant defence, customs and excise, external trade and commerce and the post office.

These broad founding principles, however, were given more specific expression in various sections of the Constitution. Under §106 and §107, for example, states retain rights and powers except where otherwise stipulated. This also means that states should retain rights to their own internal matters, whereas the Commonwealth retains powers with respect to matters that go beyond any single state (i.e. that cross state boundaries). An example is industrial relations, where state Acts of parliament govern workplace relations, including the employment conditions of teachers in public schools across the state. It is important to point out that Australia has one of the largest private schooling sectors in the Organisation for Economic Co-operation and Development (OECD), but private teachers’ working conditions are generally negotiated with either the large Catholic system, or their own school.

Under §51, and in one or two other places, the Commonwealth has power to legislate over certain areas. This includes taxation, money supply, trade between states and dealing with overseas entities and financial borrowing. Its Corporations powers, however, have proved more contentious. Under §51 (xx), the Commonwealth may legislate with respect to ‘Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth’. Also under §51 (xxiii), the Commonwealth was given power over ‘invalid and old-age pensions’, while the costs of World War One led to the introduction of modest national income tax provisions. War again provided a significant impetus, when the Commonwealth government passed uniform tax legislation in 1942, during World War Two, a decision that was subsequently upheld by the High Court, in the first Uniform Tax case, of that same year. The decision withstood further challenge in the High Court in the Second Uniform Tax case, of 1957 (APH, 2001: pp. 23–24). The effect of these decisions was to vest and then consolidate monopoly power to collect income tax in the Commonwealth government, a move with far-reaching implications that still echo today, as seen later. A state premier and trenchant critic of the process of increased centralization of (fiscal) power in the hands of the Commonwealth argued in 2000 that the blame lay largely with the High Court, and its liberal interpretation of the External Affairs power:

The resulting increase in the range and scope of the Commonwealth Parliament’s powers has enabled Commonwealth legislation to govern and regulate almost all aspects of Australian life. (Court cited APH, 2001: p. 23)

In general terms then, we can say that the states were given broad residual powers (but no defined powers), while the Commonwealth was given some specific powers, and the power to legislate with respect to those arenas only. This principle had already been clearly articulated in 1891, by Henry Parkes, one of federalism’s founding fathers:

. . . the powers and privileges and territorial rights of the several existing colonies shall remain intact, except in respect to such surrenders as may be agreed upon as necessary and incidental to the power and authority of the National Federal Government. (APH, 2001: p. 7)

In practice, many policy arenas are governed by shared arrangements – Commonwealth powers are often held concurrently with the states. The only significant policy power exclusive to the Commonwealth is the power to impose customs duties and excises (§90).

Adjudicating conflicts

This raises a key problem – what to do when state and Commonwealth interests conflict? Here, §109 of the Constitution holds that, wherever state and Commonwealth legislation conflicts, ‘the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid’ (APH, 2001; see also Fenna, 2004: p. 169). §51 (xxix) further specifies that where Commonwealth legislation refers to international commitments (the so-called External Powers provision), it over-rides any conflicting state legislation (by virtue of §109).

An example of how different jurisdictions interact is in the area of industrial relations, where the Commonwealth was given authority to legislate in the area of conciliation and arbitration (workplace relations), but only where a dispute crossed state borders. Thus, as indicated earlier for example, there are different state and federal Acts governing industrial relations, but here again the Moore v Doyle case established the precedent that, where state and Commonwealth legislation clashed, the latter took precedence (McClelland, 1991; Hose, 2003).

The actual details, however, were not for the Commonwealth itself to decide, but were adjudicated on a case-by-case basis by the High Court, Australia’s supreme legal authority. Thus the role of the High Court of Australia is particularly significant in interpreting the actualities of federalism and the respective roles of the state and federal governments. Unlike lower courts, the High Court is not bound by principles of stare decisis (precedent), so it can – and has – changed course, at various times, and reverse an earlier decision. While its decisions in the first decade or so after federation were more in the spirit of states’ rights, subsequent interpretations have tended to defend and extend federal intervention and/or the power of the Commonwealth.

Examples of High Court decisions have included the following extensions of Commonwealth powers:

  • That the Commonwealth be the single agent of income tax collection (and bar states from doing so). This was not the case before 1942 – when both levels of government levied income taxes.

  • That the Commonwealth may attach (unlimited) conditions to state grants, under §96.

  • That the Commonwealth can gain further powers under §51.

  • That the Commonwealth may exert control over goods for export and the conditions under which these were made.

  • That the Commonwealth may use the Racial Discrimination Act to over-ride state authority and legislation.

  • That the Commonwealth may protect the environment and over-ride state decisions on land use, by reference to §51 (xxix).

Use of external affairs powers

While the above largely exhaust the ways in which the Commonwealth has been able to extend its powers over many aspects of policy, the key mechanism referred to in §51 (xxix) has proved quite contentious. It gives to the Commonwealth power to legislate with respect to ‘external affairs’, something it has used to leverage greater control over the states. Although this section has not been used to over-ride state-specific legislation in education, it was applied in 1975, for example, when the Racial Discrimination Act was invoked to over-ride discriminatory Queensland legislation that outlawed the state Aboriginal Land Fund from purchasing grazing properties. The basis for federal intervention in this case was that Australia had become a signatory to UN Declaration of Human Rights in 1960. The External Affairs power was famously again invoked in 1983, when the new World Heritage Properties Protection Act was passed, and then used to list the Franklin River, Tasmania with UNESCO as a protected site, thereby preventing the construction of a hydro-electric plant. In both cases, while the relevant authority (over land use) was clearly vested in the state, Commonwealth external affairs powers were deployed to over-ride state powers. In both cases, Australia’s formal status as a signatory to an external treaty (which, unlike some other countries, is a Cabinet decision, and requires no parliamentary or other mandate) formed a sufficient base for the invocation of Commonwealth powers. Such powers can prove to be a double-edged sword, however: in an era of increasing globalization, ‘. . . the Commonwealth might gain power at the expense of the States within the domestic arena, while at the same time losing sovereignty in the international arena’ (APH, 2001: p. 28).

Fiscal levers and the special case of education

So, what does this mean for education? Curiously perhaps, the Australian Constitution is largely silent with respect to education. It is only briefly mentioned in §51, and is generally defined as a state matter – yet intriguingly, higher education, and universities, are, as seen earlier, administered by the Commonwealth. Why is this the case? The answer lies in the fact that, notwithstanding that universities are established by Acts of state parliaments,[1] the Commonwealth supplies the lion’s share of universities’ resources, (although, as vice chancellors never tire of pointing out, this proportion has declined significantly over the past two decades or so: from an average of perhaps over 80% of their budgets, to half or less, for all Australian universities).[2] In this case, then, it is fiscal, rather than legislative authority, that is responsible for the allocation of power: s/he who pays the piper, calls the tune. In general terms, this phenomenon is termed in Australia Vertical Fiscal Imbalance (VFI) – that is, the Commonwealth occupies a superior financial position, by virtue of holding the bulk of revenue (around 80%). A recent Victorian report succinctly summarized the peculiar paradox of Australian federalism:

In Australia, the Commonwealth collects the vast majority of taxes, and in particular has exclusive power to impose duties of customs and of excise, and has been solely responsible for collection of income tax since 1942. The states and territories on the other hand are responsible for delivering a majority of services, such as in the areas of education and health. (Victorian Parliament, 2012: p. 15)

While most federations have a degree of VFI, the rate in Australia is significantly higher than in comparable countries such as the United States, Canada and Germany (Victorian Parliament, 2012: p. 17). There are somewhat different processes at work here. On the one hand, the Australian system deliberately aims to equalize levels of service, notably including education, across the different states, via a mechanism termed horizontal fiscal equalization (HFE), which compensates those states with weaker revenue streams. On the other hand, special purpose grants (see later) are made to states on the basis of relative service levels, irrespective of their different fiscal strengths.

But since the Commonwealth is responsible for only around 50 per cent of total government spending, much of the remainder is allocated to the states, often as Specific Purpose Payments (SPPs), commonly known as tied grants. SPPs, as their name implies, are for specific purposes, and the Commonwealth may invoke §96 to impose ‘restrictive policy conditions’ as a condition of accepting the grant (APH, 2001: p. 24). The use of these instruments grew dramatically during the Whitlam Labor government (1972–1975) (especially in the areas of education and health). The instruments were used as a means to enhance Commonwealth powers to make national policy, effectively using financial levers as a means to circumvent constitutional division of powers. According to former Prime Minister Gough Whitlam, the relevant section of the Constitution (§96) ‘was Labor’s “charter of public enterprise” because it enabled the Commonwealth to use its fiscal dominance to invade major policy areas of State jurisdiction’ (APH, 2001: p. 25). As a result, tied grants rose from 2.0 per cent to 5.5 per cent of GDP, almost tripling their overall proportion. Although the subsequent (1976–1983) Liberal[3] (conservative) government reversed this process, it has continued since that era to the point where:

. . . tied grants became a distinctly coercive element in Australian federalism, a way for governments in Canberra to establish uniform national policies despite recalcitrant state governments. (Fenna, 2004: p. 174)

During the 1980s and 1990s, SPPs (tied grants) averaged around half of all Commonwealth grants, but the introduction of a form of value-added tax, the Goods and Services Tax (GST) (a reform to which the states assented in 1999, and which came into effect in July 2000), has meant that this proportion declined. (Nonetheless, the 2012 Victorian inquiry into Commonwealth funding found that a little over half of Commonwealth revenues supplied to the state was in the form of tied grants [Victorian Parliament, 2012: pp. 18–19]). GST revenue was to be transferred directly to the states, but in line with the principle of HFE, as outlined earlier. This has proved contentious with wealthier states such as Western Australia complaining that they are in effect, subsidising fiscally weaker states, such as South Australia and Tasmania.

In 2002–2003, some $21.6 billion were in the form of SPPs, of a total of $53 billion of Commonwealth transfers. Over $7 billion was for education, and closer to $8 billion for medical benefits. Such transfers have included conditions such as the following, which while selectively applied can be effective ways of enforcing national policy development(s):

  • That states must expend the funds on the purpose for which they were designated.

  • That states must match the Commonwealth grant, from their own treasuries.

  • That state policies must conform to Commonwealth policies.

  • That states must agree, for example, to the national blood alcohol limit, in order to receive road funding (so-called ‘Piggy-back’ requirements).

Funds are dispersed via the Commonwealth Grants Commission.

State premiers, and treasurers, while continuing to rail against such Commonwealth controls, have according to some,

. . . learnt to manipulate the system in ways that help retain aspects of State power. To an extent the States collude in the ongoing fiscal arrangements that deliver them large grants of money for which they have no responsibility for collecting as taxes. They reap the political benefits of spending money without attracting the odium of raising it, which makes a certain political sense even if it offends good public finance principles. (APH, 2001: p. 25)

All in all, the evidence about the use and abuse of tied grants is mixed. While reforms introduced from 2007 by the Rudd-Gillard Labor government (2007–2013) were intended to usher in a new era of ‘cooperative federalism’, one contemporary analyst characterized tied grants as a ‘. . . fragile and uncertain policy-making instrument, consistently open to political opportunism, ideological fluctuation and policy and implementation resistance from the states and local stakeholders’ (Ramamurthy, 2013: p. 117). At the same time, the same author acknowledged their role in ‘. . . assisting states to overcome local resistance to controversial policy reforms such as greater (school) principal autonomy, and performance pay (for teachers)’ (Ramamurthy, 2012: p. 128).

Cooperative federalism?

So, how are things to be managed, given that state and federal interests often do not coincide, and political power at state level may be vested in the hands of one political party, while a different party is in power at the federal level? Ministerial Councils are used to manage specific policy arenas, or particular issues/problems. The main one that has operated in the area of education is the (former) Ministerial Council on Employment, Education, Training and Youth Affairs (MCEETYA), founded in June 1993 by the Council of Australian Governments (COAG) who amalgamated several existing councils to increase policy coordination across the interrelated portfolios. Three previous councils were merged – the Australian Education Council (AEC), the Council of Ministers of Vocational Education, Employment and Training (MOVEET) and the Youth Ministers Council (YMC) – to form the MCEETYA. In July 2009, the Council was re-named MCEEDYA (Ministerial Council for Education, Early Childhood Development, and Youth Affairs). In January 2012, this was replaced with the Standing Council on School Education and Early Childhood (SCSEEC).

The latest re-organization of the Commonwealth Public Service, consequent upon the election of the Abbott conservative government in 2013, saw the previous Department of Employment, Education and Workplace Relations split into different departments, one of which became the Department of Education, responsible for childcare, early childhood education, school education, post-school, higher education, international education and academic research. At the time of writing, the initiation of an Education Council (EC) had been announced, with transition arrangements to be named during 2014 (COAG, 2013b). While membership of the foreshadowed EC had yet to be announced, the principles of federalism are likely to dictate a similar membership to that of its preceding councils. MCEETYA, for example comprised state, territory, Australian Government and New Zealand ministers with relevant responsibilities (portfolios of education, employment, training and youth affairs), with Papua New Guinea and Norfolk Island having observer status. Functions of the impending EC, too, are likely to be similar to its preceding councils, such as MCEETYA:

  • coordination of strategic policy at the national level,

  • negotiation and development of national agreements on shared objectives and interests (including principles for Australian Government/State relations) in the Council’s areas of responsibility,

  • negotiations on scope and format of national reporting on areas of responsibility,

  • sharing of information and collaborative use of resources towards agreed objectives and priorities and

  • coordination of communication with, and collaboration between, related national structures.

COAG – an umbrella coordinating body

Specific councils, such as MCEETYA, MCEEDYA or the foreshadowed EC, operate under the umbrella of the COAG. Founded in 1992, the COAG is the peak Commonwealth/state government relations forum in Australia, with ten members: the prime minister, state premiers, territory chief ministers and the president of the Australian Local Government Association (ALGA). The prime minister chairs COAG, which usually meets once a year, although the recent COAG communiqué foreshadowed bi-annual meetings (COAG, 2013b). Its Secretariat is situated within the Department of the Prime Minister and Cabinet (PM and C).

COAG’s role is to initiate, develop and monitor the implementation of policy reforms that are of national significance and which require cooperation by Australian governments (examples include National Competition Policy, water reform, environmental regulation, a National Education Agreement, the use of human embryos in medical research, counter-terrorism arrangements, gun regulations, etc.). Issues may arise from, among other things, Ministerial Council deliberations; international treaties which affect the states and territories; or major initiatives of one government (particularly the Commonwealth Government) which impact on other governments or require the cooperation of other governments.

COAG meets on an as-needed basis. However, former Prime Minister John Howard stated after the April 1999 Premiers’ Conference that, since there would be no further Premiers’ Conferences following the landmark Intergovernmental Agreement on the Reform of Commonwealth–State Financial Relations, COAG would meet at least once a year from 2000. Alternatively, COAG may settle particular issues out-of-session by correspondence. In recent years, a number of issues have been settled in this manner. The outcomes of COAG meetings are contained in communiqués released at the end of each meeting. Where formal agreements are reached, these may be embodied in Intergovernmental Agreements.

Some have argued that notwithstanding a promised new era of ‘cooperative federalism’ heralded by a perhaps overly ambitious incoming prime minister (Kevin Rudd), and the initiation of an Intergovernmental Agreement on Federal Financial Relations that promised collaboration on policy development and service delivery as well as facilitated implementation of priority social and economic reforms, the ensuing breakdown in trust between the state and Commonwealth governments has inhibited the effectiveness of COAG in recent years. A new format must be found that encourages both cooperation and competition and gives the states more initiative to introduce items and issues (Keating, 2009: pp. 34–39; Gallop, 2012: p. 44; Kildea, 2012). It has been argued that an end to forms of dysfunctional and biased ‘top-down bargaining behavior’ on the part of Commonwealth authorities is needed, in order to make federalism work more effectively (Ramamurthy, 2012: pp. 119–127). Twomey is only one of many to point to the ‘inefficiency, duplication and waste’ of the current system (Twomey, 2007: p. 1), while others have argued for strengthening of both the various Ministerial Councils, and COAG (BCA, 2006), and for more cooperation between state and federal governments: ‘. . . a more collective approach based upon mutual interest and less scope for “passing the buck”’ (Matthews, 2009: p. 66). Criticism has been also voiced by some state leaders that the increasingly burdensome Commonwealth reporting requirements associated with National Partnerships was against the spirit of cooperative federalism (Kildea, 2012).

Case study: federalism and school funding

The case of school funding provides a rich tapestry that illustrates how federalism has evolved in Australian education. The separate systems of colonial schooling that emerged during the early part of the nineteenth century were often sites of sectarian rivalry and dispute; it was not until 1848 in New South Wales, for example, that the Denominational Schools Board was created, to respond to and mediate between the competing claims of the major Christian denominations for support. (Non-Christian schools were ignored, although a few existed). Subsequently, the passage of Free, Compulsory and Secular Acts in the various colonies during the final decades of the nineteenth century effectively removed state support for sectarian (called Denominational) schools (Proctor and Sriprakash, 2013; Campbell and Proctor, 2014; Sherington and Hughes, 2014). The passage of the various Acts in different colonies reflected the temper of the times, in particular, a climate of efficiency, and rising secularism (seen by many Catholics as a cloak for Protestantism) (Wilkinson et al., 2007; Sherington and Hughes, 2014). There was a sense that ‘. . . public education would serve public interests by creating responsible citizens, while widening educational opportunities’ (Sherington and Hughes, 2014). But wasteful duplication of limited resources, and in particular, the fact that schools from different denominations, each of which gained state support, competed for limited numbers of pupils, was also a major concern: ‘. . . In many districts there were three competing schools, all receiving aid, with an average of 75 children in the district attending school . . . (Hogan, 2005: pp. 113–114; Sherington and Hughes, 2014).

This settlement, whereby private denominational schools continued, but without state support, endured for some 80 years, until the 1960s, when it came under substantial challenge. During the decades without state support, both Protestant and Catholic sects concentrated their resources on developing single sex, denominational schools, that often charged high fees, although the much larger and more socially comprehensive Catholic system made a more systematic effort to limit these, and to contain costs. (This was helped by the fact that until the 1960s, Catholic schools were largely staffed by priests, brothers and nuns, often members of teaching orders.) The expansion of the public schooling systems imposed significant demands on individual state finances – even during the interwar years, state spending on education rose substantially (by almost 50%), as a proportion of their overall budgets, at least until the Great Depression of the 1930s. This proportion of the state budget doubled again from 1938 to 1958 (Sherington and Hughes, 2014). In part this reflected the major expansion of secondary schooling in the post World War Two era, a response to rising aspirations, the post war baby boom and Australia’s vigorous post-war migration scheme that saw many new migrant children entering the schooling system (Welch, 2013b: pp. 105–115).[4] Yet, although as was seen earlier, education had constitutionally been reserved as a matter for the states, World War Two saw minor interventions by the Commonwealth which, impelled by fears unleashed by war’s advent, provided grants to the states, for example, for the purpose of improving the fitness of schoolchildren (Sherington and Hughes, 2014). As well, in 1952, changes to the taxation regime saw school fees of up to £50, and gifts to schools for school building, become tax deductible (Wilkinson et al., 2007: p. 24; Sherington and Hughes, 2014). Again, the benefits accrued overwhelmingly to families whose children attended non-government schools.

At the state level, the ‘Goulburn school strike’ of 1962, by Catholic authorities who ‘closed’ their schools temporarily, sending some 2,000 to enrol in public schools, was designed to push the New South Wales state government to pledge support for the non-government sector, a tactic that ultimately succeeded with the state government assenting to per-capita grants for such schools. In Victoria, the next most populous state, interest rate subsidies had been introduced for non-government schools in 1965 on borrowings for school buildings. In 1967 these were doubled and per capita grants made available. The Victorian decision on per-capita grants was then swiftly followed by all other states (Wilkinson et al., 2007: p. 36).

But arguably the first breach in the federal wall came in 1964, with the States Grants (Science Laboratories and Technical Training) bill that provided modest Commonwealth funds for science education (just as the United States and the United Kingdom had done somewhat earlier, and at least in part for the same reason – the anxiety among the capitalist West, after the Soviet Sputnik space launch of late 1957, that their assumed technological lead was being threatened). Given that the scheme was announced a matter of days before the 1963 federal election was held, some argued that it was a none-too-subtle bid for the Catholic vote. Support for this view was evident in the response of some Protestant groups not to accept such funds, although the pattern was diffuse (Wilkinson et al., 2007: pp. 33–34). May 1964 also saw the introduction of Commonwealth secondary scholarships that provided both reimbursement of fees and a living allowance to support recipients in completing the final 2 years of secondary school. The decision became contentious when it was shown that three times the proportion of non-government pupils were successful at gaining such scholarships compared to pupils from government schools, whose parents were almost certainly much poorer (Wilkinson et al., 2007: p. 33). Federal grants for the construction of school libraries were finally introduced in 1968, somewhat delayed by the prime minister’s drowning, just days after having received the submission in 1966 (Wilkinson et al., 2007: pp. 35–40, table 2.1). Per capita grants of $35 per primary pupil and $50 per secondary pupil were introduced by the Federal government in 1970, with a total of $24.2 million being allocated in the scheme’s first year of operation. Promised federal support to non-government schools then swiftly grew to $60 million (Wilkinson et al., 2007: p. 41).

A watershed initiative occurred in 1973 with the establishment of the Australian Schools Commission. The Commission, pledged by the federal Australian Labor Party prior to the 1972 election that brought it to government, was in significant part a response to changes in federal-state financial relations. As indicated earlier, the fact that the Commonwealth government had acquired the sole right to levy an income tax meant that it amassed the lion’s share of income. Economic expansion of the late 1960s and early 1970 ensured that federal government coffers grew, and hence pressure for funding support for non-government schools was directed at the federal government rather than at the more impecunious states. After surveying the state of schools around the country, and documenting substantial and ongoing inequities, the Schools in Australia (Karmel) Report of 1973 recommended that standards needed to be improved in general, and resources increased, especially for schools in disadvantaged communities, and that government support was necessary for all schools, both government (where, then as now, disadvantage was concentrated) and non-government. Although it had been initially proposed that non-government schools that received substantial support would have reciprocal obligations, this was quickly rejected: indeed, to the contrary, ‘. . . although the Church and other corporate schools willingly accepted the largesse of both Commonwealth and State grants, they were also determined to be “independent”’ (Sherington and Hughes, 2014).

Subsequent (Hawke) federal government proposals to phase out support to the wealthiest schools were also soon abandoned, and by the 1980s non-government schools were receiving more federal government support than government schools (Dudley and Vidovich, 1995). In 1996, the incoming Howard federal government removed any limits on the expansion of the private sector, and instituted subsidy schemes to non-government schools, both the initial enrolment benchmark adjustment (EBA) and its ‘socio-economic status’ (SES) successor, that were widely criticised as inequitable (including the insertion of a ‘no-losers’ provision into the latter, in response to pressure from the non-government sector) (Proctor and Sriprakash, 2013: p. 230; Welch, 2013a: pp. 208–209). The socially regressive logic of the latter scheme was pilloried by a well-known economist:

The average Australian has fewer than two legs. Not many fewer but, as the number of one-legged people far exceeds the number of three-legged people, there is no doubt about the end result. Not surprisingly though, designers of products, from pants to staircases, don’t focus on the average. Rather they tend to focus on the characteristics of the majority. Not so the Federal Government, though. Its attempt to explain why exclusive private schools are to receive millions of dollars in additional funding have relied squarely on the confusion that blind reference to averages can create. (Gittins in Welch, 2013a: p. 208)

By now any pretence that government funding to non-government schools was needs-based, as had been recommended by the Karmel Schools Committee report in 1973, or that recipients of such largesse might have reciprocal obligations, had been abandoned. Both state and federal governments were shovelling funds to private schools, with no strings attached. The effects were predictably fissiparous: state schools were becoming residualized as more and more parents expressed nervousness at the prospect of sending their children to the local government school, while the private sector expanded unchecked (Campbell et al., 2014). The years from 2001–2002 to 2008–2009, for example, saw combined federal and state government funding to government schools increase by 48 per cent, but 64 per cent to Catholic schools and 82 per cent to ‘Independent’ schools (ACARA, 2011; The Australian, 2012).

In the face of this unregulated expansion, and its socially regressive effects, the federal Labor government of Julia Gillard commissioned the first systematic review of school funding in 40 years, the so-called Gonski Review (Review of Funding for Schooling), which consulted widely before proposing in 2011 that a substantial increase in funding was warranted and that the largest component be directed at government schools, where disadvantage was concentrated. Government support, it argued, whether from state or Commonwealth sources, should be on the basis of need according to a base resource standard that was guaranteed to all schools, and which would be supplemented in the case of schools with higher proportions of disadvantage (such as high proportions of indigenous, poor or recently arrive migrant pupils). Such schools are, overwhelmingly, public schools. This clear re-articulation of a needs-based approach to funding was also an important re-articulation of the need to coordinate government funding across state and federal boundaries.

The politics surrounding the report and its recommendations were predictable and intense. Despite widespread support from virtually all quarters, including the non-government sector, the conservative federal opposition criticised it, claiming (in defiance of the evidence) that there was nothing wrong with existing funding arrangements (see earlier).[5]

But the debate also crossed political boundaries, with some conservative states expressing their support for a Labor federal government initiative. Indeed, the Commonwealth government moved to conclude deals with several state governments, including in the two most populous states, each headed by a conservative government. At least two other conservative state governments, however, refused to sign an accord with the Commonwealth.

In one sense, the state-federal concord, at least with the majority of states, was no surprise: the deals were to result in billions of dollars of additional school funding over the ensuing few years to hard-pressed state governments that signed on to such arrangements with the Commonwealth. But it was instructive that several conservative states expressed support for the principles of the Gonski funding scheme. As the Premier of the most populous state reportedly said:

I think it would be disappointing if the opportunity that Gonski has presented wasn’t accepted . . . [I]t’s a formula that benefits both public education and non-government education . . . that we would dismiss at our own peril. (The Conversation, 2012)

In the febrile atmosphere of an impending federal election, this left the federal opposition nowhere to hide: in the face of strong community support, including premiers and ministers of education in state government from its own side of politics, it performed an abrupt volte face, promising to support the Gonski proposals, albeit with significantly less funding in the final 2 years of the scheme. This promise proved short-lived, however: upon coming to power in the subsequent federal election, it attempted to go back on its pledge (The Conversation, 2013). Once again, widespread community resistance made it perform yet another volte face, reverting to its previously promised support. At the time of writing, a by-now-skeptical community awaits implementation.


Federal systems of government have their strengths and weaknesses; and coordination across the different levels of government is critical to the effectiveness and efficiency of any federation and any policy arena, including education. This is by no means always easy, especially when political ideologies collide, with one party in government at the federal level and another at state level. The Australian example is characterized by the need to equalize service provision across a vast terrain and very uneven population distribution, as well as across states with very different fiscal profiles. This too has not proved easy, including in education. The evolution of federal arrangements, including via critical interpretations at various junctures by the High Court, has seen power transfer from the states to the federal arena. This has gradually drawn the Commonwealth government to intervene more and more, despite initial reluctance based on the premise that education was, constitutionally, a state matter.

Now, in a more neo-liberal era, arguments about individual rights and choice (including of school) are tending to supplant earlier priorities of state-building, citizenship and communalism, of which the local state school was an important pillar. Such neo-liberal principles are increasingly transcending former party-political differences, although this does not necessarily mean that state-federal coordination automatically becomes easier.

Clearly, however, the peculiar paradox of Australian federalism – that the Commonwealth collects by far the bulk of income (by virtue of its sole right to levy income tax), while states are responsible for delivering the bulk of services, including schools and technical education – remains a work in progress. In education, the Commonwealth has a leading role in higher education, and is assuming a greater role in the school sector, by virtue of its greater fiscal leverage. This has become a more commonly wielded instrument of federal power, via the increasing use of tied grants, and other such instruments that made federal funds to states conditional on acceptance of specific terms. This has included in recent years, for example, the provision of Commonwealth funds to the states for education that were made conditional upon acceptance of the public reporting of school performance data by state authorities.

The example of school funding underlines several of these elements: growing assertion of federal authority, after initial reluctance premised on the basis that education was a ‘state matter’; the increasing use of federal funding as a lever to impose conditions on at times reluctant state governments (who, as argued earlier, have learned to manipulate the system); and the ongoing need for improved state-federal coordination, via reforms to instruments such as MCEEDYA (and the foreshadowed CE), as well as COAG. Improved efficiency and coordination on their own, however, are not enough; the basis for government intervention is also critical. Commonwealth and state government support for fissiparous policies that residualize the government sector, while promoting the interests of the non-government sector based on spurious arguments about choice, will, if left unchallenged, undermine the health and overall performance of the Australian education system. Such divisiveness would be anathema to the founding fathers of the Australian federation, intent upon welding a nation together.


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[1] The principal exception being the Australian National University, established in the Australian Capital Territory.

[2] This was by no means always the case, of course: the ‘Murray’ Report into Universities (1957) reported that in 1956, states had provided 50.3 per cent of universities’ recurrent budgets for general purposes and 5.8 per cent for specific purposes, compared with Commonwealth proportions of 29.2 per cent and 2.0 per cent, respectively (table 4, Murray Report, p. 24). The report also pointed to a Commonwealth agreement to provide support for state funding for universities on a £1 per £3 basis; the support was capped, but had more than doubled over the years 1951–1957. Further Commonwealth funding was in the form of Commonwealth scholarships that paid the fees of approximately one-third of full-time students at university. In addition, the Australian National University and Canberra University College, both in Australia’s national capital, were fully funded by the Commonwealth. The committee proposed the initiation of an Australian University Grants Committee to advise on ‘the financial needs of universities’ (p. 109). A subsequent inquiry into the future of universities (the Martin Report) led to, inter alia, Commonwealth funding being provided to build teachers colleges (Martin Report, 1964).

[3] In the Australian context, Liberal refers to conservative parties, of which the largest holds the title Liberal.

[4] Secondary enrolments more than tripled from 1955 to 1975 (Proctor and Sriprakash, 2013: p. 228).

[5] Although by no means the first time that governments put politics over policy, it was a particularly egregious example of the triumph of ideology over evidence. For another example, see Welch (2014).