Roles and responsibilities in education
PART A: EARLY CHILDHOOD AND SCHOOLS
ISSUES PAPER 4
December 2014
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Table of Contents
Getting involved and having your say................................................................................................................. iii
Introduction .................................................................................................................................................................... 1
CHILD CARE & EARLY CHILDHOOD LEARNING .............................................................................................. 3
1.1 Introduction ........................................................................................................................................................ 3
1.2 Evolution of our child care and early learning arrangements........................................................ 4
1.3 Pressures on current child care and early learning arrangements .............................................. 7
1.4 Questions for consideration ...................................................................................................................... 16
SCHOOLING .................................................................................................................................................................. 19
2.1 Introduction ..................................................................................................................................................... 19
2.2 Evolution of our school education arrangements ............................................................................ 20
2.3 Pressures on current school education arrangements in Australia.......................................... 26
2.4 Questions for consideration ...................................................................................................................... 37
APPENDIX A: Summary of child care and early learning service types .............................................. 42
ACRONYMS ................................................................................................................................................................... 43
GLOSSARY ..................................................................................................................................................................... 44
REFERENCES ............................................................................................................................................................... 48
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Getting involved and having your say
The Australian Government would like as many people as possible to be thinking about how our
federal system of government can be improved, particularly in relation to roles and
responsibilities in education.
A Green Paper setting out options for reform will be published in the second half of 2015, ahead
of the publication of the White Paper in 2016.
The Green Paper will allow the public the opportunity to make written submissions on the
proposals put forward.
For more information, please visit the website www.federation.dpmc.gov.au.
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Introduction
Education, from early childhood to higher education, is a lifelong continuum.
At its most fundamental level, it is about people and the knowledge, skills, capabilities and
qualifications they need to fulfil the life chances they aspire to and participate effectively in
society and in the economy.
This issues paper examines the current arrangements put in place by governments to support
our educational attainment: in child care and early learning and schooling (Part A); and
post-school, in vocational education and training (VET) and higher education (Part B).
More specifically and consistent with the White Paper’s Terms of Reference, it considers how the
current split of roles and responsibilities, and the overlap and duplication inherent in them, is
contributing to pressures on the efficiency and effectiveness of our education system, and
governments’ capacity to deliver better services and educational outcomes for their citizens.
Looking at the education sector and through this lens, Australians would probably identify the
following as some of the major problems with the current arrangements:

child care is becoming increasingly expensive and hard to access. Costs continue to rise
and there continues to be fierce competition for quality child care places, the supply of
which does not always meet the demands of today’s flexible workforce;

despite all the attention schools funding and policy has received over recent years,
student outcomes continue to be mixed and quite poor for our most disadvantaged
students. We continue to slip behind our international competitors on a range of
educational outcomes. While the recent moves to needs-based funding should help, there
is still more that can be done to improve outcomes; and

the current VET arrangements are messy and have resulted in eight different systems
which still fail to meet the needs of business and students. The design of the market for
VET qualifications is not providing the training needed to prepare a skilled and mobile
workforce for an economy in transition to new global economic realities, and there
continues to be unacceptably low completion rates for those undertaking qualifications.
Not all of these problems are caused by the current allocation of roles and responsibilities
between the Commonwealth and the States and Territories, and not all of them can be fixed by
any reallocation. But the current arrangements have also undoubtedly blurred the lines of
accountability to the general public; in the education sector, Australians now do not know who
to hold to account for what.
The level of Commonwealth involvement in education, traditionally a State and Territory
responsibility, has increased markedly since the Federation came into being. It also varies in
degree and type across the sectors. Over recent years, the Commonwealth has increased its
involvement in most aspects of the child care and early learning and schooling sectors, and now
plays a key role in setting national policy and providing funding, despite these clearly being State
and Territory responsibilities under the Constitution.
Similarly, the arrangements between the Commonwealth and the States and Territories across
policy, funding, and regulation in the VET sector have also seen the Commonwealth’s
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involvement increase. The sector where the division of roles and responsibilities is most clear is
the higher education sector, where the Commonwealth is clearly recognised and understood to
be the major player.
While the current arrangements have largely come about through shared arrangements, and in
some cases deliberate system design, which are negotiated and agreed between the
Commonwealth and the States and Territories, they are contributing to a system that it less
efficient, effective and equitable than it could be in terms of delivering outcomes for all
Australians.
While the paper treats each sector separately, it is important to keep in mind the system as a
whole, and to note that the downsides of the current arrangements are most obvious at the
juncture points in the system, especially between preschools and schools, schools and VET, and
VET and higher education. Here, policies are usually designed by different policy makers from
different departments across different levels of government. This pursuit of different policy
objectives has resulted in arrangements that are not always conducive to achieving enduring
reforms and improvements in outcomes. The aspiration of achieving cleaner lines of
responsibility and better public accountability should not come at the cost of proper policy
coherence.
Consequently, there are legitimate questions to be asked as to whether these arrangements are
functional and rational, and should continue, and what the appropriate role for the
Commonwealth should be.
Advocates of Commonwealth involvement will point to national interest considerations, and the
benefits that can be achieved for Australians through nationally harmonised or uniform
approaches. However, others will argue these benefits may come at the expense of diversity,
innovation and competition, and sometimes choice, among and within the States and Territories,
and that the national interest can be progressed with, or without, the Commonwealth’s
involvement, or through re-conceiving the Commonwealth’s involvement.
The principles outlined in the Terms of Reference — accountability, subsidiarity, national
interest considerations, equity, efficiency and effectiveness of service delivery, durability and
fiscal sustainability — provide a useful tool in guiding these considerations.
To encourage discussion and debate this paper asks questions about the nature of current
arrangements.
This paper does not propose specific reform options or solutions. Instead, the Green Paper to be
published in the second half of 2015 will consider the application of the principles to future
arrangements and set out possible reform options. The Green Paper will invite the public to
make written submissions, ahead of the publication of the White Paper in 2016. Further details
on how to get involved and have your say are at page iii of this paper.
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CHILD CARE & EARLY CHILDHOOD LEARNING
1.1 Introduction
High quality child care and early learning services make a big difference to children, families and
communities.
Positive experiences in the early years improve children’s long-term education and well-being.
High quality child care and early learning improves performance in the early years of school and
enhances children’s capacity to capitalise on later educational opportunities. Vulnerable and
disadvantaged children, and those with additional needs, have the most to gain from
participation.
All governments recognise that the benefits of child care and early learning extend beyond the
child and their family, eventually accruing to Australia’s economy. These services can improve
economic performance in the short-term (through increased workforce participation), and the
longer-term (through young people and adults with the skills to adapt to changes in their lives)
and reduced dependence on government services (including welfare and employment
services).1
Australia’s child care and early learning sector is highly diverse, with services delivered by a mix
of commercial, government (including local government) and community providers. The main
service types are long day care (LDC), family day care (FDC), preschool, outside school hours
care (OSHC), in-home care, and occasional care. Mobile services also operate in some rural and
remote communities and some jurisdictions offer distance preschool programmes. A summary
of service types is at Appendix A.
The sector is market-oriented, allowing families to choose a service and delivery model to suit
their needs. Almost 16,500 Child Care Benefit (CCB) approved services and more than
4,000 dedicated preschools operated in Australia in 2012-13.2 Around half of approved services
are provided on a for profit basis.3
The vast majority of Australian children benefit from a child care and/or early learning service
before starting school.4 In 2013, around 1.1 million children attended an approved child care
service and 98 per cent of four-year-olds (around 288,000 children) were enrolled in a
preschool programme.5 Preschool programmes can be delivered through preschools attached to
schools, standalone preschools, or approved LDC centres. Around 40 per cent of all children
enrolled in a preschool programme are enrolled in a LDC centre.6
For further discussion about the benefits of child care and early learning, see: OECD (2006) Starting Strong II – Early
Childhood Education and Care, OECD Publishing.
2 Productivity Commission, Child Care and Early Childhood Learning, Draft Report, Canberra, 2014, p. 81-88.
3 Productivity Commission, Child Care and Early Childhood Learning, Draft Report, Canberra, 2014, p. 77.
4 This includes services to help parents support their child’s development.
5 Department of Education; Australian Bureau of Statistics, Preschool Education Australia, 2013,
cat. no. 4240.0.
6 Australian Bureau of Statistics, Preschool Education Australia 2013, cat. no. 4240.0.
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Traditionally, the main purpose of Commonwealth involvement has been to facilitate parents’
workforce participation by subsidising the cost of child care. The Commonwealth is the major
funder of the sector. It provided more than $6.5 billion in 2013-14, with child care fee assistance
representing the bulk of this expenditure.7
The States and Territories have traditionally been responsible for regulating child care and early
learning services. State and Territory funding focusses on child care quality and early learning.
In 2012-13, the States and Territories spent around $1.4 billion (including Commonwealth
funding provided under National Partnership Agreements),8 with around 80 per cent of this
funding directed to preschool provision.9 Local governments also play a prominent role. They
plan, manage, fund and deliver a range of children’s services, including child care and early
learning.
Increasingly, the roles of different governments have become blurred, especially by the recent
policies of all governments looking to incorporate educational elements into child care settings
to achieve better quality care.
The Productivity Commission has undertaken an inquiry into future options for child care and
early childhood learning, with a focus on developing a system that supports workforce
participation and addresses children's learning and development needs.10 The Commonwealth is
considering broader reforms to the sector in response to the Productivity Commission’s final
report. Although there will be some overlap between the two processes, the White Paper has a
unique focus on the allocation of roles and responsibilities between governments.
1.2 Evolution of our child care and early learning arrangements
Early Federation to 1970s: the advent of preschools
The introduction of compulsory schooling excluded very young children (usually those aged
under six). Provision of early childhood education was therefore largely dependent on private
initiative, with charitable Kindergarten Associations (or similar) in each State operating services
for disadvantaged children.11 Significant State involvement in preschool provision commenced
during the 1960s and 1970s.12 However, preschool did not meet the needs of working mothers
and the following decades saw a strong push for increased child care services.13
Productivity Commission, Child Care and Early Childhood Learning, Draft Report, Canberra, 2014, p. 131.
Productivity Commission, Report on Government Services, Volume B: Child care, education and training, Canberra,
2014, p. 3.8.
9 Productivity Commission, Report on Government Services, Volume B: Child care, education and training, Canberra,
2014, p. 3.8.
10 Productivity Commission, Child Care and Early Childhood Learning, <http://pc.gov.au/projects/inquiry/childcare>.
11 For example: the Crèche and Kindergarten Association of Queensland and the Kindergarten Union of
South Australia.
12 F Press and A Hayes, OECD Thematic Review of Early Childhood Education and Care Policy, Australian Background
Report, OECD, Paris, 2000, p. 17.
13 F Press and A Hayes, OECD Thematic Review of Early Childhood Education and Care Policy, Australian Background
Report, OECD, Paris, 2000, p. 18.
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1972 to 2006: Commonwealth support for child care
The Child Care Act 1972 marked the first substantive Commonwealth involvement in the sector.
It established Commonwealth support for not-for-profit organisations to operate day care for
the children of working and sick parents.14
The focus of Commonwealth funding subsequently shifted from providers (supply) to families
(demand), with the Commonwealth offering fee-relief to families using non-profit child care
centres in 1984 and those using for-profit providers in 1990.15 Soon after, the Commonwealth
began helping government and not-for-profit preschools cater for Indigenous children.
In 1994, the Commonwealth moved to a two-tiered subsidy system comprising means tested fee
relief (Childcare Assistance) and a rebate for work related child care costs (the Childcare Cash
Rebate Scheme).16 Significantly, Commonwealth subsidies were linked to compliance with a new
national Quality Improvement and Accreditation System, which operated concurrently with
State licensing schemes.17
CCB was introduced in 2000 as the main Commonwealth child care subsidy, replacing both
Childcare Assistance and the Childcare Cash Rebate Scheme. The Child Care Tax Rebate (CCTR)
was introduced in 2004, allowing eligible families to claim a proportion of out-of-pocket child
care costs (up to a cap) as a tax rebate.18 Since 2006-07, the CCTR has been paid directly to
families (rather than claimed through the tax system), and was renamed the Child Care Rebate
(CCR) in July 2009 to reflect this.
Despite the growing emphasis on quality over this period, Commonwealth funding remained
focused on addressing child care affordability to facilitate workforce participation. The States
and Territories continued to concentrate on quality and early learning, including preschool
provision and licensing of child care services.
2006 to 2014: National reforms to lift quality and access
In response to mounting evidence about the benefits of early childhood development, all
governments sought to improve access to child care and early learning programmes and lift the
quality of those services.19 These goals were progressed by individual governments and
cooperative action through the Council of Australian Governments (COAG). From 2007, COAG
agreed to:

deliver universal access to preschool in the year before school through the National
Partnership Agreement (NP) on Early Childhood Education, and subsequently the NP on
Universal Access to Early Childhood Education (NP on Universal Access);
House of Representatives, Debates, No. 41, 1972, Child Care Bill 1972 Second Reading Speech, p.2288.
G McIntosh and J Phillips, ‘Commonwealth Support for Childcare’, Australian Parliamentary Library Publications,
Canberra, 2002.
16 M Lindsay, ‘Some Recent Developments in Child Care: 1 January 1994 – 30 September 1995’, Current Issues Brief 6
1995-96, Australian Parliamentary Library Publications, Canberra, 1995.
17 M Lindsay, ‘Some Recent Developments in Child Care: 1 January 1994 – 30 September 1995’, Current Issues Brief 6
1995-96, Australian Parliamentary Library Publications, 1995.
18 The Child Care Tax Rebate rate was originally set at 30 per cent, increasing to 50 per cent from July 2008.
19 See for example: Organisation for Economic Cooperation and Development, Starting Strong II: Early Childhood
Education and Care, OECD, Paris, 2006.
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
the National Indigenous Reform Agreement, which included a target to ensure Indigenous
four-year olds in remote communities could access preschool by 2013;

the construction of Children and Family Centres to provide services to Indigenous children
under the NP on Indigenous Early Childhood Development (now expired); and

a National Quality Agenda, through the NP on the National Quality Agenda for Early
Childhood Education and Care (Quality NP). The National Quality Agenda aims to lift the
quality of services, promote national consistency and reduce regulatory burden through the
introduction of a National Quality Framework (NQF). The NQF replaced existing State and
Territory licensing and national quality assurance processes.
The collapse of ABC Learning in 2008 (the first child care provider listed on the Australian Stock
Exchange) reinvigorated debate about child care regulation and the merits of private provision.
In response, the Commonwealth increased its scrutiny of services to ensure the responsible use
of Commonwealth fee assistance.
Current settings
The Commonwealth continues to focus on providing child care fee relief (mainly CCB and CCR).
Eligibility for Commonwealth assistance is governed by legislation and regulations collectively
known as Family Assistance Law. The Commonwealth also influences the policy direction of the
NQF and supports preschool participation through NPs with the States and Territories. It
recently offered States and Territories a 12 month extension of funding for universal preschool
access when the current NP on Universal Access expires in December 2014.20 The COAG
Education Council (comprising Commonwealth and State and Territory ministers) is responsible
for agreeing national priorities for school education and early childhood, and reports to COAG.
States and Territories have primary carriage of regulation (including quality assessment), and
are responsible for preschool provision. The majority of services — most preschools, LDC, FDC,
and OHSC — fall within the scope of the NQF. The NQF governs approval (licensing) of services,
imposes minimum standards (including for staff-to-child ratios and staff qualifications) and
introduces a national quality assessment process. 21
The National Quality Agenda — a joint Commonwealth and State and Territory reform —
incorporated educational and developmental elements into child care settings to achieve better
quality care and improved learning outcomes. This unified governments’ interests at the time in
child care and early learning, and enabled diverse markets and settings to operate within the
NQF. Services covered by the NQF are required to deliver an approved learning framework (an
educational element).
The fixed-term extension to the NP on Universal Access in 2013 provided for 600 hours of preschool in the year
before school, delivered by a degree qualified early childhood teacher who meets the NQF requirements. On
5 September 2014 the Government announced its intention to enter into new NP arrangements; S Ley (Assistant
Minister for Education) Abbott Govt commits $406m for preschool certainty, media release, 5 September 2014,
<http://sussanley.com/abbott-govt-commits-406m-for-preschool-certainty/>.
21 The NQF operates under an applied law system comprising the Education and Care Services National Law and
Regulations.
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Both levels of government offer varying degrees of support for disadvantaged children and
children with additional needs to participate in child care and early learning.
1.3 Pressures on current child care and early learning arrangements
An increasing number of families are using child care and early learning services. Children are
also attending child care for longer. In 2013, more than 1.1 million children attended an
approved service in Australia.22 Commonwealth expenditure on child care and early learning
increased from $1.6 billion in 2003-04 to over $6.5 billion in 2013-14.23 States and Territories
also increased expenditure on child care and early learning during this period.24 Around
$400 million per year in funding for preschool is included in time-limited NPs agreed between
the Commonwealth and States and Territories, which can affect the funding certainty for the
sector.
Despite this growing public investment in the sector, child care fees have increased substantially.
The average cost of care (across all income ranges) for one child reached around 9 per cent of
disposable income (after subsidies) in 2013.25 Further, high effective tax rates (caused by the
interaction of child care fee assistance, family payments, and personal income tax rates, can be a
significant disincentive for single parents and secondary income earners in some families to
participate in the labour force or work additional hours.26
Accessibility also remains a concern. In many locations there are limited places and waiting lists
are long. In particular, regional and remote communities and parents with irregular or
unpredictable work requirements can experience difficulty securing suitable care. Some parents
have argued that the lack of suitable care options limits their ability to work.
Increasing demand for child care and early learning services is likely to exacerbate existing
affordability and accessibility pressures. The Productivity Commission has estimated that, if
current policy settings remain in place, just over 100,000 additional full-time places will be
needed by 2026.27
The complexity of the current system also imposes unnecessary costs and makes it difficult for
families and services to navigate. The sector attracts State or Territory and Commonwealth
regulation. Child care and early learning services are also subject to local government
regulations (including building regulations). Further, the existence of multiple (sometimes
overlapping) programmes aimed at improving access to services can make it difficult for families
and providers to work out what assistance is available to them.
Department of Education, Child Care and Early Learning in Summary, December quarter 2013, Canberra, 2014, p.2.
Department of Education, Submission to the Productivity Commission Inquiry into Child Care and Early Childhood
Learning, 2 February 2014, p. 16, viewed June 2014, <http://pc.gov.au/__data/assets/pdf_file/0005/133466/sub147childcare.pdf>.
24 Productivity Commission, Report on Government Services, Volume B: Child care, education and training, Canberra,
2014, Table 3A.3.
25 Department of Education, Child Care and Early Learning in Summary, December quarter 2013, Canberra, 2014,
p. 10.
26 Productivity Commission, Child Care and Early Childhood Learning, Draft Report, Canberra, 2014, p. 6.
27 Productivity Commission, Child Care and Early Childhood Learning, Draft Report, Canberra, 2014, p. 197.
22
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Not all of the pressures on child care and early learning can be attributed to the allocation of
roles and responsibilities between levels of governments. Some pressures arise from how
jurisdictions exercise their responsibilities and can be resolved by individual governments.
However, clarifying roles and responsibilities between governments will free up resources to
tackle these issues and will make it easier for the community to hold the right level of
government to account.
Pressures on child care and early learning also cannot be resolved in isolation. In particular,
preschool and school are closely linked. This is especially the case for the year before
compulsory school commences (preschool) where there are different arrangements across
jurisdictions and services can be delivered on shared sites, including preschools attached to
schools. Victoria’s ‘Linking Learning Birth-12 Years Project’ aims to improve collaboration
between child care and early learning services and schools to create a more seamless approach
to curriculum and pedagogy across the education continuum.
Policy
Both levels of government develop policy with respect to: equity and access; quality; workforce
development; and consumer information.
Equity and access
The Commonwealth and the States and Territories have been working together (through COAG)
since 2008 to boost preschool participation. Both levels of government also separately offer
programmes to promote equitable access to child care and early learning services. However,
some families still report difficulty accessing appropriate services when they need them.
Accessibility concerns arise where there are not enough places to meet demand, or where the
places available do not meet the needs of families looking for care. For example, emergency
services workers can find it difficult to secure affordable child care that matches their irregular
or unpredictable work hours. Inflexible child care arrangements adversely affect workforce
participation and contribute to family stress. Some families pay for surplus days to ensure care
will be available when work commitments arise. Others rely on informal care arrangements that
do not attract Commonwealth fee relief.
The Commonwealth helps cover child care fees for children who are at risk of serious abuse or
neglect, and families experiencing temporary financial hardship.28 It also administers
programmes to: (1) help establish or maintain services in areas where they might otherwise be
unviable;29 (2) help services include children with additional needs;30 and (3) improve
educational outcomes for Indigenous children.31
States and Territories also fund initiatives to address equity and access issues associated with
child care and early learning. For example, in Queensland the Embedding Aboriginal and Torres
Special Child Care Benefit.
Community Support Programme.
30 Inclusion and Professional Support Programme.
31 For example: the Children and Schooling Programme (part of the Indigenous Advancement Strategy).
28
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Strait Islander Perspectives in Early Childhood programme strengthens the capacity of preschool
providers to engage with Indigenous families. In New South Wales, the Supporting Children with
Additional Needs programme helps preschools include children with additional needs.
Quality
States and Territories are responsible for administering the NQF, including as regulators.
However, both the Commonwealth and States and Territories influence quality policy through
the COAG Education Council and the Quality NP. The Australian Children’s Education and Care
Quality Authority — the independent, national authority that oversees the NQF — is jointly
funded by the Commonwealth and the States and Territories, and is responsible to relevant
ministers from all jurisdictions.32 These arrangements require agreement by all nine
governments to change the quality standards in the NQF.33
Workforce development
Workforce development initiatives are not coordinated between governments. In 2014, LDC
providers had the opportunity to apply for Commonwealth funding to help meet the costs of
professional development for their staff.34 The Commonwealth also funds Professional Support
Coordinators and Indigenous Professional Support Units to deliver subsidised professional
development, training and advice for services (other than LDC centres).
States and Territories also support the child care and early learning workforce. For example, the
Western Australian Government provides scholarships for early childhood educators and the
Victorian Government offers low-cost professional development opportunities.
Information
All levels of government are involved in providing consumer information about child care and
early learning. The Commonwealth operates the My Child website and the Child Care Access
Hotline to help families identify vacancies and make informed decisions about care. It also funds
a home based parenting and early learning programme that empowers parents to prepare their
child for school.35 In most States and Territories, official information on child care and early
learning is delivered through local government and portfolio agency websites. Queensland also
operates a Kindy Hotline to provide advice and information on child care and early learning.
Australian Children’s Education and Care Quality Authority, How We Work, viewed August 2014,
<www.acecqa.gov.au/welcome/how-we-work>.
33 Any changes to the NQF must be agreed by the COAG Education Council.
34 Long Day Care Professional Development Programme.
35 Home Interaction Program for Parents and Youngsters.
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Information about the quality and availability of child care and early learning services, and how
families are accessing them, also plays an important role in helping governments plan. The
Commonwealth requires enrolment and attendance information from services for the purpose of
administering child care fee assistance. States and Territories also collect information from
services. Improved data sharing arrangements could help all governments better respond to the
pressures facing the sector.
Funding
Child care and early learning services attract a mix of local government, State, Territory and
Commonwealth funding, and the composition of funding is different in each jurisdiction.
Different levels of government make most funding decisions independently. This can lead to
poorly targeted support that distorts families’ choices and reduces the level of assistance
provided to those most in need.
Government expenditure has increased substantially in recent years – by 80 per cent ($3 billion
in real terms) since 2007-08.36 Individuals also contribute to the sector through the payment of
fees.37 Over the past five years, fees have grown on average by 7.8 per cent per annum.
The Commonwealth provides around 80 per cent of government funding for child care and early
learning.38 Around 85 per cent of this funding goes to CCB and CCR to help families meet the cost
of child care.39 Growth in child care attendance and fees has caused expenditure on these
payments to increase from under $2 billion in 2003-04 to over $6.5 billion in 2013-14.40 CCB and
CCR are not available in relation to most dedicated preschool services, but they do extend to LDC
services delivering a preschool programme. Government expenditure is likely to continue to
grow as demand for child care and early learning places are expected to increase over time. If
current arrangements continue, Commonwealth outlays on child care fees assistance are likely
to nearly triple over the next decade.41
Despite this significant investment in fee assistance, many families still find the cost of child care
prohibitive. The consequences of not participating in early learning programmes are most
severe for children from disadvantaged backgrounds and those with additional needs.
A smaller proportion of Commonwealth funding is concerned with the educational aspects of
child care and early learning. This includes:

funding to States and Territories under the NP on Universal Access ($404 million allocated in
2014-15);
Productivity Commission, Child Care and Early Childhood Learning, Draft Report, Canberra, 2014, p. 123.
Preschools in public schools and some services operating under the Budget Based Funded Programme are free from
compulsory fees.
38 Productivity Commission, Child Care and Early Childhood Learning, Draft Report, Canberra, 2014, p. 128.
39 Productivity Commission, Child Care and Early Childhood Learning, Draft Report, Canberra, 2014, p. 131.
40 Department of Education, Submission to the Productivity Commission Inquiry into Child Care and Early Childhood
Learning, 2 February 2014, p. 16, viewed June 2014.
41 Department of Education, Submission to the Productivity Commission Inquiry into Child Care and Early Childhood
Learning, 2 February 2014, p. 27, viewed June 2014.
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
funding to States and Territories under the Quality NP (around $19 million allocated in
2014-15);

funding to help government and not-for-profit preschools to improve preschool attendance
and early learning outcomes for Indigenous children (around $14 million allocated in
2013-1442);

support for the professional development of educators (including the LDC Professional
Development Programme, for which around $207 million has been allocated over three
years); and

a trial of online foreign language learning in up to 40 services providing a preschool
programme (around $9.8 million allocated over two years).
Chart 1.1 below provides a breakdown of Commonwealth funding.
By contrast, State and Territory funding focuses on preschool. The States and Territories spent
around $1.4 billion on child care and early learning in 2012-13 (including around $550 million
in Commonwealth funding provided under NPs).43 Approximately 80 per cent ($1.1 billion) was
directed to preschool provision.44
Preschool funding predominantly benefits children in the year before school. Current funding
levels do not support preschool provision for younger children, except in limited circumstances.
For example, Victoria provides funding for 3 year olds in child protection to attend preschool.
The interaction between preschool funding and Commonwealth child care fee assistance is
perceived by some States and Territories to be inequitable.45 States and Territories that deliver
preschool directly (i.e. through schools) spend more per child than those that favour private
provision (i.e. through child care centres, which attract Commonwealth assistance).46
This funding has been rolled into the Children and Schooling Programme, which forms part of the Indigenous
Advancement Strategy.
43 Productivity Commission, Report on Government Services, Volume B: Child care, education and training, Canberra,
2014, p. 3.8.
44 Productivity Commission, Report on Government Services, Volume B: Child care, education and training, Canberra,
2014, p. 3.9.
45 Western Australian Government, Submission to the Productivity Commission Inquiry into Child Care and Early
Childhood Learning, 20 February 2014, p. 2, viewed June 2014,
<http://pc.gov.au/__data/assets/pdf_file/0018/134460/sub416-childcare.pdf>.
46 Productivity Commission, Child Care and Early Childhood Learning, Draft Report, Canberra, 2014, p. 152.
42
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Chart1.1: Composition of Commonwealth funding (2014-15 Budget)
* This includes equity and access programmes,
and support for the child care and early learning
workforce.
Source: Department of Education. Total Commonwealth expenditure on child care and early learning is
projected to exceed $7.2 billion in 2014-15.
Delivery
Australia’s child care and early learning sector is diverse. Families can choose from a range of
centre-based and home-based services to meet their needs. These are delivered by a mix of
community, commercial and government providers. For example, local governments in Victoria
manage, fund and deliver many child care and early learning services.
State and Territory governments have designed service delivery models that reflect their
demographic, geographic and cultural circumstances. As a result, service delivery varies
significantly across jurisdictions. Delivery of child care and early learning is sometimes
integrated with other services. For example, the Northern Territory Mobile Preschool
Programme incorporates nutrition education and other health services.
A number of jurisdictions have developed innovative delivery models to meet the unique needs
of local communities, including rural and remote communities. For example, almost 50 per cent
of children in the Northern Territory live in remote and very remote areas (compared to less
than 3 per cent nationally).47 These children access early learning programmes via a range of
models, including multi-level classes and mobile preschools. Similarly, Queensland offers
“ekindy” —distance early learning for children in rural and remote locations, and those unable
to access a centre-based program for medical reasons. In Victoria, Kindergarten Cluster
Management (grouping a number of kindergarten services under a management organisation)
supports service delivery in communities where independent providers may not be viable.
There is a strong demarcation in the delivery of preschool programmes across Australia.
Chart 1.2 below illustrates the distribution of preschool enrolments across provider types.
47
Australian Bureau of Statistics, Northern Territory Census, Community Profiles, cat no. 2002.0, ABS, Canberra, 2011.
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New South Wales, Queensland and, to a lesser degree Victoria favour private provision. In these
jurisdictions, LDC centres play a significant role delivering preschool programmes. In
Western Australia, South Australia, Tasmania and the Australian Capital Territory, preschool is
predominantly delivered by the State or Territory government. It is largely embedded in the
school system and is considered to be the first year of formal schooling.
Fees are generally lower for dedicated preschool programmes than LDC. Preschool in
government schools is generally funded by State or Territory government on the same basis as
schools and parents are not generally required to pay fees. State or Territory governments may
subsidise private preschools, but not usually preschool programmes in LDC centres.
Chart1.2: Distribution of children enrolled in a preschool programme, by provider type
(2013)
Source: Australian Bureau of Statistics, Preschool Education Australia 2013, cat. no. 4240.0, ABS,
Canberra, 2014. Excludes children enrolled in more than one provider type or across multiple preschools.
An increasing number of parents (particularly mothers) in the workforce and mounting
evidence of the potential benefits of child care and early learning have fuelled demand for
services. The occurrence of non-standard work hours is also likely to continue, suggesting an
ongoing need for more flexible care options.
Regulation
The States, Territories and the Commonwealth all regulate elements of the sector, albeit for
different, complementary reasons. States and Territories are responsible for regulating services,
including with respect to safety and quality, and are responsible for administering the NQF in
their jurisdiction. They handle almost all service interactions. The Commonwealth does not
directly regulate service delivery, but it does regulate eligibility for Commonwealth child care fee
assistance.48
48
Not all child care services are eligible or choose to provide child care which attracts Commonwealth fee assistance.
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Approval to operate under the NQF does not constitute approval for the purpose of
Commonwealth child care fee assistance, which must be sought separately from the
Commonwealth. While this allows the Commonwealth to influence quality, it can also lead to
overlap and duplication of approval processes for providers. To establish a new LDC centre,
potential providers are required to: apply for approval (a license) from the State or Territory
authority; apply to the Commonwealth for approval to administer child care fee assistance on
behalf of families; and (if applicable) comply with local government planning regulations.
Services that attract Commonwealth fee assistance are also subject to dual reporting obligations,
albeit for different purposes. In addition, services that receive Commonwealth child care fee
assistance are not necessarily within the scope of the NQF, and may be regulated by other State
or Territory legislation or unregulated.
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Summary of current arrangements
The following table summarises current government involvement in the sector.
Area
State and Territory role
Policy
Funding
Delivery
Overlaps
Shared
Policy lead for preschool.
Policy lead for services not
covered by the NQF.
Shared policy role with respect
to quality (through the NQF)
and equitable access.
Shared
Policy lead for child care
affordability.
Shared policy role with respect
to quality (through the NQF)
and equitable access.
Secondary policy role with
respect to preschool access
(through the NP on Universal
Access).
Medium
Both levels of government
have a policy role. For quality
and access (including
preschool access), these roles
are coordinated through COAG.
However, the Commonwealth
and the States and Territories
independently develop and
implement policy to target
equitable access to child care
and early learning.
Secondary
Lead
Medium
Shared funding role for
preschool (though the relative
contribution of each
government varies according
to how services are delivered).
Provides funding to ensure
equitable access to services
and support workforce
development.
Majority funder of child care
(through fee assistance).
Majority funder of information
services.
Shared funding role for
preschool (through States and
Territories).
Provides funding to ensure
equitable access and to
support workforce
development.
Some services attract
Commonwealth child care
funding (through fee
assistance) as well as State or
Territory preschool funding.
Both levels of government
directly contribute funds to
ensure quality, equitable
access to services and to
support workforce
development.
Lead
Secondary
Low
Provides preschool services
(though the extent to which
governments directly deliver
preschool services varies
across jurisdictions).
Directly supports the delivery
of around 340 child care
services, predominantly in
regional, remote and
Indigenous communities.
There is minimal overlap, as
Commonwealth funded
services target areas where
mainstream services would be
unviable.
Lead
Lead
Medium
Lead for regulating the use of
Commonwealth child care fee
assistance.
Works with States and
Territories to oversee the NQF.
Most services are subject to
both Commonwealth and State
or Territory regulation and
reporting obligations – though
for different purposes.
Lead for approving (licensing)
and regulating services
(including those covered by
Regulation the NQF).
Works with the
Commonwealth to oversee the
NQF.
Key
Lead
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Commonwealth role
Who leads
Secondary
Level of overlap
Shared lead
Reform of the Federation White Paper
High
Medium
Low
1.4 Questions for consideration
Collaboration between the Commonwealth and the States and Territories has improved quality
and access. However, the pressures discussed above indicate that existing arrangements could
be improved. The principles in the White Paper’s Terms of Reference provide a useful lens for
considering the allocation of roles and responsibilities between governments.
Accountability
To hold governments to account, members of the public must be able to: (1) identify which
government is responsible; (2) access information about government performance; and
(3) influence government behaviour.
Overlapping Commonwealth and State and Territory roles (and changing policy emphasis over
time) risk obscuring which level of government is ultimately accountable for child care and early
learning, especially preschool education.
Questions for discussion


Does the current allocation of roles and responsibilities between governments provide
certainty about which level of government is accountable for child care and early
learning? If not, how can this be remedied?
Does the community have sufficient information to hold governments accountable for
outcomes? If not, what changes are needed?
Subsidiarity
The principle of subsidiarity means responsibility should sit with the lowest level of government
practicable. Lower tiers of government usually have the strongest capacity to respond to the
specific needs of their constituency. However, subsidiarity is not always inconsistent with
Commonwealth involvement. For example, due to economies of scale and equity considerations,
the Commonwealth may be the lowest level of government capable of subsidising child care by
making payments to families.
Questions for discussion


16
Do current arrangements provide sufficient flexibility for States and Territories to meet
local needs? Has the overlap of Commonwealth and State and Territory responsibilities
hindered this?
Which level of government, if any, should be responsible for responding to market failure
in the child care and early learning sector?
Reform of the Federation White Paper
National Interest
The provision of high quality child care and early learning services is in Australia’s national
interest. Sometimes the national interest is served through collaboration between governments.
Smaller jurisdictions in particular can benefit from cooperative policies, actions and
investments. However, this does not necessarily imply that Commonwealth leadership or
involvement, or national uniformity, is required. There is an argument that Commonwealth
involvement should be limited to where it would engender significant efficiency gains, or where
there are extensive spill-overs into other areas of Commonwealth responsibility. For example,
the most significant consequence of effective early learning is school readiness, with schooling
being a State and Territory responsibility.
Questions for discussion



Is there a national interest rationale for continued Commonwealth involvement in child
care and early learning? If so, in which roles and how should those roles be determined?
How can national interest goals be pursued without undermining State and Territory
responsibilities?
In what areas, if any, do the benefits of national consistency outweigh the benefits of
jurisdictional diversity?
Equity, efficiency and effectiveness of service delivery, with a focus on regions
Cooperation between governments has led to improvements in child care and early learning, and
efficiencies in harmonising regulatory regimes. The establishment of the NQF is an example of
this. However, ongoing shared roles can lead to reduced equity, efficiency and effectiveness of
service delivery. For example, the overlap between the NQF and Commonwealth oversight for
the purpose of child care fee assistance may act counter to the efficient delivery of services. Child
care services are required to obtain approval from the Commonwealth in addition to the State or
Territory. These services are also required to report to both levels of government.
Questions for discussion


What changes could be made to roles and responsibilities that might improve the equity,
efficiency and effectiveness of child care and early learning service delivery for children,
families and providers?
Are there changes that could be made to roles and responsibilities to improve outcomes
for vulnerable or disadvantaged children?
Durability
Disruptions to policy, funding, regulation or service delivery can create uncertainty and impose
transition costs. Accordingly, it is important for the allocation of roles between governments to
be able to withstand changes in population, community expectations, workplace flexibility, and
funding bases. Since 1972, successive Commonwealth governments have committed funding to
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support access to child care, although the nature and extent of the funding have changed over
time and policy settings around quality have evolved.
Questions for discussion

Given child care usage is expected to continue to grow strongly for some time, how can
roles and responsibilities be allocated in a way that minimises the risk of frequent
changes in the future?
Fiscal Sustainability
Public investment in child care and early learning has grown substantially in recent decades.
Total government expenditure has increased by around 80 per cent since 2007-08.49 It is
expected to continue to increase as demand for child care services grows. At the same time, child
care fees have risen and accessibility remains a concern. The use of fixed-term NPs for child care
and early learning initiatives has created uncertainty for States and Territories, providers and
families. It has been suggested that this uncertainty prohibits long-term planning and deters
investment.50
Questions for discussion


How can all governments ensure expenditure on child care and early learning is
sustainable?
What responsibilities should families have in contributing to the costs of child care and
early learning, in addition to contributions made through the tax system?
Productivity Commission, Child Care and Early Childhood Learning, Draft Report, Canberra, 2014, p. 123.
New South Wales Government, Submission to the Productivity Commission Inquiry into Child Care and Early
Childhood Learning, 17 March 2014, p. 33, viewed June 2014,
<http://pc.gov.au/__data/assets/pdf_file/0010/134965/sub435-childcare.pdf>; Victorian Government, Submission to
the Productivity Commission Inquiry into Child Care and Early Childhood Learning, 21 February 2014, p. 12, viewed
June 2014, <http://pc.gov.au/__data/assets/pdf_file/0007/134467/sub418-childcare.pdf>.
49
50
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SCHOOLING
2.1 Introduction
All Australian governments recognise the social and economic benefits of a high quality and
equitable school education system. High quality schooling gives children the ability and
confidence to fully participate in their community. It also supports productivity and helps
children develop capabilities that increase the likelihood they will be in employment. This is
especially important for children from disadvantaged backgrounds and Aboriginal and Torres
Strait Islander children.
Australia’s schooling system has three sectors, each with different funding and organisational
arrangements — State and Territory owned and run government public schools, systemic
Catholic schools,51 and independent schools (which can include independent Catholic schools).
Together these sectors educate 3.6 million students in over 9,000 schools annually.52 In 2013,
65 per cent of students attended government schools, with 21 per cent attending Catholic
schools, and 14 per cent attending independent schools.53 There has been a gradual movement
of students from the government to non-government sector over a long period, with 22 per cent
of students attending non-government schools in 1970, compared to 35 per cent today.54
Government schools are owned and run by State and Territory governments, are notionally free
(though they are able to levy non-compulsory fees), offer a secular curriculum, and are required
by State and Territory legislation to guarantee a place for all students. Government schools have
a higher proportion of their students coming from disadvantaged backgrounds and students
from Indigenous communities. 55 Non-government schools are regulated under State and
Territory legislation, but are largely autonomous at the operational level. The majority of them
are affiliated with religious organisations.
In 2012, the Commonwealth contributed $12.3 billion and the States and Territories
$25.5 billion to support school education.56 Currently, the Commonwealth funds all Australian
schools on the basis of need under the Australian Education Act 2013. All Commonwealth
funding under the Act is provided to States and Territories as tied grants which must be spent on
schooling. Commonwealth funding for independent and Catholic systems is passed on by the
States and Territories in the amounts specified by the Commonwealth.
Systemic Catholic schools are overseen by State and Territory-based Catholic Education Commissions which
provide advocacy and representation, and oversee distribution of government funding to their schools.
52 Australian Bureau of Statistics, Schools, Australia, 2013, cat no. 4221.0.
53 Australian Bureau of Statistics, Schools, Australia, 2013, cat no. 4221.0.
54 Australian Bureau of Statistics, Schools, Australia, 2013, cat no. 4221.0.
55 D Gonski et al, Review of Funding for Schooling – Final Report, Commonwealth Government, Canberra, 2011.
56 Australian Curriculum, Assessment and Reporting Authority, My School 2012 financial data, 2014.
51
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2.2 Evolution of our school education arrangements
Pre-Federation to 1963: A State responsibility with limited Commonwealth involvement
Non-government (‘denominational’) schools were established in the colonies shortly after
European settlement and received some support from colonial governments. With the
establishment of formal state schooling in the late 1800s, all governments withdrew support for
non-government schools, leaving them fully reliant on their own financial sources.
Responsibility for schooling did not transfer to the Commonwealth at Federation, and the
States57 remained responsible for all aspects of schooling, including policy, funding, delivery and
regulation.58 From the late 19th century, governments in all six colonies began providing free,
secular primary education. Consequently, attending primary school, either at a public or
non-government school, became compulsory.
Although the Commonwealth was not heavily involved in schooling, it established a federal
Department of Education in 1945. Its main roles were in maintaining international relationships,
research, collection of statistics, and to manage grants of financial assistance in all areas across
the education spectrum.
1964 to 1983: An increasing role for the Commonwealth, particularly in funding
Following the Second World War, Australia experienced rapid population growth leading to
increased demand for schooling, largely absorbed by the State government systems. At the same
time, the capacity for States to raise revenue had been limited by the transfer of income tax
powers to the Commonwealth in 1942 and changes to grant funding arrangements.59 This
resulting imbalance led to calls for the Commonwealth to increase its funding role in schools.
Accordingly, in 1964, the Commonwealth passed legislation to provide grants for science
laboratories and equipment in government and non-government secondary schools. This was
followed by other forms of capital assistance.
In 1970, the Commonwealth began providing regular grants for non-government schools at flat
per student rates.60 This was done, in part, to ensure parents had greater choice in the type of
schooling their children received.
The Commonwealth was responsible for schooling in the Northern Territory (NT) and the Australian Capital
Territory (ACT) prior to the Territories receiving self-governance in 1978 and 1988 respectively. Prior to the 1970s it
shared delivery arrangements in the NT with South Australia, and in the ACT with New South Wales. For
inter-governmental financial purposes the Northern Territory has been regarded by the Federal Government as a
State since 1 July 1988.
58 Commonwealth Department of Education, Training and Youth Affairs, Education for All Australians: A History of the
Commonwealth Education Agency 1945-2001, Canberra, 2001.
59 For example, James notes how Section 87 of the Constitution, which guaranteed the transfer of excess
Commonwealth revenue to the States, was ‘undermined’ by the Commonwealth redirecting surplus revenue into a
trust fund. See: D James, ‘Federal-State Financial Relations: The Deakin Prophecy’, Department of Parliamentary
Library, Research Paper 17, 2001.
60 D James, Federal-State Financial Relations: The Deakin Prophecy, Department of Parliamentary Library, Research
Paper 17, Canberra, 2001.
57
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Since 1974, the Commonwealth has provided recurrent funding for all schools and spending has
progressively increased.61 It also expanded its involvement into assistance for disadvantaged
schools, special education and teacher development.
While primarily focused on funding during this period, the Commonwealth did make small
interventions on grounds of equity and national consistency. For example, the Commonwealth
played a facilitation role in minimising differences between State and Territory curricula. It also
introduced targeted programmes for Indigenous and rural students.62
1983 to 2007: Increasing Commonwealth involvement in policy and increased funding for
non-government schools
From the early 1980s to 2007, in response to emerging economic and labour market challenges,
and to address inconsistencies between the States and Territories, the Commonwealth increased
its role in education policy. In 1989, all education ministers signed The Hobart Declaration, a
framework for national cooperation, particularly in curriculum and assessment. It was updated
in 1999, through The Adelaide Declaration, which added priorities including VET, information
technology, literacy and numeracy, civics and citizenship. Agreement to these priorities was
necessary for the States and Territories to receive Commonwealth funding.
Commonwealth funding to schools continued to increase during this period. For example, in
1975-76 funding was approximately $4 billion (in 2013 dollars),63 and by 2007-08 that figure
had increased to almost $12 billion.64 Alongside increases in funding, the Commonwealth added
more conditions to grants under Section 96 of the Constitution. These included: the provision of
information to support national performance measures; participation in literacy and numeracy
testing for years 3, 5, 7 and 9 (a precursor to NAPLAN – the National Assessment Program –
Literacy and Numeracy); reporting on achievement against agreed national benchmarks; and
meeting specific curriculum requirements such as compulsory physical, values and drug
education, and compulsory history in junior high school years.
Also during this period, there were significant changes to the Commonwealth’s regulation and
funding of non-government schools. For example, in1985 the Commonwealth introduced the
New Schools Policy to manage the establishment of new non-government schools. This policy
required new non-government schools to meet minimum enrolment and impact assessment
criteria. In effect, this policy discouraged the proliferation of new, small schools in areas already
satisfactorily serviced by both public and private schools. This policy was subsequently removed
in 2007, significantly reducing requirements around the establishment of new non-government
schools and making it easier for schools to qualify for Commonwealth assistance. It also moved
to the socio-economic status (SES) funding model which led to a very significant increase in
funding to non-government schools. Subsequently there was an increase in the number of small,
low-fee, independent schools.
M Harrington, ‘Australian Government funding for schools explained: 2013 update’, Australian Parliamentary
Library Publications, Canberra, 2013.
62 Commonwealth Department of Education, Training and Youth Affairs, Education for All Australians: A History of the
Commonwealth Education Agency 1945-2001, Canberra, 2001.
63 Calculated using ABS inflation calculator:
<www.abs.gov.au/websitedbs/d3310114.nsf/home/Consumer+Price+Index+Inflation+Calculator>.
64 Commonwealth of Australia, 1975-76 and 2007-08 Budget Papers, Canberra, 1975 and 2007.
61
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The Victorian and South Australian governments devolved power to the local school level
considerably during this period. Since the 1990s, Victoria introduced reforms which made
principals the primary education decision-makers for their schools. Similarly, since 1999, South
Australia has given power for staffing, grants and utilities to local schools.
2008 to 2014: Towards a national harmonised approach
In late 2007 the Council for the Australian Federation (CAF) — a body which comprises all States
and Territories — published an eight-point action plan to increase national consistency in
schooling.65 It promoted the benefits that could arise from certain types of national reforms, and
acknowledged that ongoing collaboration between the Commonwealth, States and Territories
had facilitated significant educational reform. This was further reflected in the 2008 Melbourne
Declaration on Educational Goals for Young Australians (Melbourne Declaration) where all
Australian education ministers agreed to future directions and aspirations for schooling.
During this time, the Commonwealth’s involvement increased based on many of the elements in
the CAF plan and the Melbourne Declaration. Some of the major reforms agreed by all
governments included: the introduction of a national curriculum, starting with English,
mathematics, science and history; an Aboriginal and Torres Strait Islander Education Action Plan
to improve reading, writing and numeracy, and year 12 attainment rates; public reporting on
schools; and nationally-consistent teacher registration and professional standards.
The Commonwealth introduced 10 schools-related NPs which offered almost $25 billion to
States and Territories in return for improved outcomes, sometimes matched funding, specified
activities and detailed reporting. These covered literacy and numeracy, additional support for
low socio-economic status schools, and teacher quality. They also covered the short-term,
historically large capital investments made through the $16.2 billion Building the Education
Revolution programme66 and $2.4 billion Digital Education Revolution programme.67 The
current national education agencies68 were also established, or reconstituted, by the
Commonwealth and States and Territories to deliver reforms like the national curriculum,
NAPLAN and teacher standards.
This period also saw the Commonwealth place different types of conditions on its recurrent
funding in two different stages. First in 2009, the Commonwealth moved the bulk of its funding
(not including NPs) into a single National Specific Purpose Payment (NSPP), containing both a
government and non-government school component69, which required States and Territories to
Council for the Australian Federation, Federalist Paper 2, The Future of Schooling in Australia, CAF, Melbourne, 2007.
National Audit Office, Building the Education Revolution—Primary Schools for the 21st Century, Audit
Report No.33 2009–10, Canberra, 2010.
67 Department of Education, Employment and Workplace Relations, Portfolio Budget Statement 2010-11, Outcome 2.5.
68 National education agencies are the Australian Curriculum and Assessment Authority (ACARA), the Australian
Institute of Teaching and School Leadership (AITSL) and Education Services Australia (ESA), which replaced the
former Curriculum Corporation.
69 Funding under the NSPP was legislated under the Schools Assistance Act 2008 which specified recurrent, capital
and various targeted programs to be implemented (targeted programs included: Country Areas Program, Languages
Program, English for New Arrivals Program, Literacy, Numeracy and Special Learning Needs Program).
65
66 Australian
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work towards schooling outcomes agreed in the National Education Agreement, rather than to
deliver specific programme activities, as was the case previously. This approach was supported
by all States and Territories and was consistent with and enabled by the Intergovernmental
Agreement on Federal Financial Relations (IGA FFR), the governing framework of
Commonwealth and State and Territory government interactions.70
Commonwealth expenditure on schools was anchored to State and Territory expenditure on
schools through the Average Government School Recurrent Cost (AGSRC) model.71 The AGSRC
included all spending by the Commonwealth and the States across areas like employee-related
expenses (e.g. salaries, wages and allowances, superannuation, payroll tax); out-of-school
expenses (e.g. regional and central administration); other operating expenses (e.g. student
transport, cleaning, utilities, repairs and maintenance, rentals and leases); and grants and
subsidies paid to schools for school education. It excluded capital expenditure, depreciation and
notional user cost of capital. Commonwealth funding for non-government school funding was
governed by the Schools Assistance Act 2008, which was based on the SES funding model and
AGSRC.72
The second stage was a move away from funding based on historical spending73 to a needsbased funding model following the Review of Funding for Schooling in 2010-11.74 This also
followed changes in a number of jurisdictions to provide funding to schools based on need over
the preceding decade, most notably, Victoria’s Student Resource Package, South Australia’s
Student Centred Funding Model, Tasmania’s School Resource Package, needs based funding
approaches in Queensland and New South Wales’ Resource Allocation Model.
Under the needs-based funding approach, the Commonwealth provided funding based on a perstudent resourcing standard — a Schooling Resource Standard (SRS) — with loadings to take
account of student disadvantage. It rolled in the Commonwealth funding previously provided
under the NSPP, the non-government Schools Assistance Act and most of the active NPs.
The move to needs-based funding through the SRS provided more Commonwealth funding to
States and Territories and the non-government sector. Funding under the SRS is calculated based
on what level of funding is needed to ensure all students, no matter their level of disadvantage,
are sufficiently funded to allow them to reach their educational potential. It was also designed to
provide more consistency across sectors than had previously existed and across States and
Territories. In exchange, States and Territories were asked to agree to a new National Education
The Commonwealth also had funding agreements with each non-government education authority which set out
various conditions of funding.
70 COAG Reform Council, Lessons for Federal Reform: COAG Reform Agenda 2008-13, CRC, Sydney, 2013, p. 44.
71 Review of Funding for Schooling: final report, DEEWR, Canberra, 2011, p. 56.
72 Under the SES funding model, schools were assigned a Socio-Economic Status value based on the residential
addresses of students, which was used to estimate the capacity of a school’s community to support its school.
73 This was the Average Government School Recurrent Costs model referred to above.
74 Under the Commonwealth’s needs based funding model, funding for government schools across all jurisdictions is
calculated according to a SRS. This calculates the level of funding required to educate a student with minimal
disadvantage to a high standard (‘the base per student amount’) and then adds ‘loadings’ based on the additional
amount required to bring students with different types of disadvantage to that level. Funding for non-government
schools is also based on the SRS. However, the base per-student amount is discounted by the capacity of their school
community to contribute towards the operating costs of the school. The Commonwealth’s funding for all schools is
based on arrangements contained in the Australian Education Act 2013.
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Reform Agreement (NERA) which required detailed reporting on reform activity and
commitments to specified levels of schools funding based on the Commonwealth’s calculations
of funding need.
This was a significant departure from the IGA FFR. Take up varied across the States and
Territories for a combination of reasons, including the perceptions of greater Commonwealth
control over schools and the difficulty in applying a national funding model to all jurisdictions
given differences in efficiency and costs of service delivery.
However, in order to ensure a national agreement on school funding, following the 2013 election,
Commonwealth funding based on the SRS was extended to those jurisdictions which had not
agreed to the NERA.
In its 2014-15 Budget, the Commonwealth announced that, from the 2018 school year onwards,
total recurrent Commonwealth schools funding will be indexed by the Consumer Price Index
(CPI) and enrolment growth from the 2017 funding level, distributed evenly across the States
and Territories. Final State and Territory allocations of Commonwealth funding for 2017-18
onwards are subject to formal negotiations between the Commonwealth, the States and
Territories, and the non-government schools sector.
Current settings
Both levels of government now play a significant role in the schooling sector. There are some
elements for which both the Commonwealth and the States and Territories are jointly
responsible and where there is a high degree of cooperation, such as funding and identification
of national policy priorities. There is also well-established national architecture, some of which
is funded jointly by the Commonwealth and the States. This national architecture oversees
implementation of agreed national priorities most clearly in curriculum, national statistics and
reporting, national testing and teaching standards. The areas with the most significant shared
responsibilities are summarised in Box 1.
States and Territories are predominantly responsible for delivery and regulation of schools
within their jurisdictions, with more limited involvement by the Commonwealth. For example,
States and Territories are responsible for managing all government schools and registering and
regulating all schools in their jurisdiction (including non-government schools). In recent times
however, most States and Territories have devolved decision making for delivery of schools,
giving principals and school communities more control now than they have previously had.
Box 1: Areas of schooling with shared roles through national collaboration
1) Curriculum: The Australian Curriculum, Assessment and Reporting Authority (ACARA)
develops and sustains the national curriculum. It is an independent agency jointly funded by the
Commonwealth and States and Territories, whose work plan is endorsed by all education
ministers. The States and Territories all have curriculum development functions which decide
how the national curriculum will be implemented in their schools and develop subjects outside
the national curriculum. The Australian Curriculum and ACARA are currently being reviewed by
the Commonwealth.
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2) Assessment: States and Territories participate in the National Assessment Program (NAP),
which includes the National Assessment Program – Literacy and Numeracy (NAPLAN) for Years
3, 5, 7, 9, NAP sample assessments, the Programme for International Student Assessment (PISA)
and Trends in International Mathematics and Science Study (TIMSS). NAPLAN is managed by
ACARA on behalf of the COAG Education Council (a COAG council comprising Commonwealth
and State and Territory ministers with responsibility for school education and early childhood
development). The tests are developed by ACARA in collaboration with States and Territories.
States and Territories are responsible for the implementation and administration of NAPLAN,
including delivery, in their jurisdiction. The Australian Government manages PISA and TIMSS,
including contracting a National Project Manager on behalf of all States and Territories to deliver
the tests and report results. In addition, States and Territories operate their own assessment and
certification regimes for schooling, especially for Years 11 and 12.
3) Data collection: Education authorities, systems and schools collect and analyse data on
activities to support the administration of their schools and to drive improvement in student and
school performance. All governments support the development of national standards and
measurement frameworks through the COAG Education Council to increase the transparency
and accountability of schools.
4) Performance reporting: Education authorities, systems and schools undertake their own
analysis and performance reporting (for example, attendance and national testing) with key
national goals agreed to through COAG. ACARA undertakes central analysis of NAPLAN results
and publishes reports and online results at the national, state, territory and school level as
agreed with all jurisdictions.
5) Teacher quality: The registration, professional development, employment and management
of teachers are the responsibility of the States and Territories which all have their own teacher
quality initiatives under way. Involvement of the Commonwealth in teacher quality has
increased over time. For example, the Australian Institute of Teaching and School Leadership is a
national body funded by the Commonwealth, though its work plan is endorsed by all education
ministers. It is responsible for professional standards and supporting professional practice,
working with teacher employers and teacher education providers.
6) Teacher training: The majority of initial teacher education programmes are offered in public
universities — almost all students enrolled in a teacher education programme are in
Commonwealth-supported places. This means that many of the formal levers for the training
provided to those studying teaching at university rest with the Commonwealth in its role as the
majority funder of universities. The Commonwealth’s Teacher Education Ministerial Advisory
Group is considering improvements to initial teacher education programmes in response to
concerns about the quality of teaching graduates. The States and Territories, as the employer of
public schools teachers, are responsible for ongoing training once teachers are in the workforce
and as a result, they also undertake frequent reviews into teacher education. They can also
exercise considerable influence over how initial teacher training courses in universities are
delivered through their role in agreeing the Standards and Procedures for the Accreditation of
Initial Teacher Education Programs in Australia, which they approve through the COAG
Education Council.
7) Funding: Both levels of Government provide funding to all schools, resulting in eight different
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needs-based funding models and the need to regularly renegotiate funding arrangements. The
Commonwealth calculates all its funding under its SRS model, and States and Territories fund
their schools under their own needs-based funding models. For historical reasons the share of
funding provided to different sectors is also very different by level of government. This means
not all students are funded equitably. Similar schools in different States or Territories are funded
differently. Similar schools in different sectors within the same State are also funded differently
based on the different funding shares between the levels of government. The SRS model had
aimed to provide more consistency, but would not have fully eradicated these differences.
2.3 Pressures on current school education arrangements in Australia
There are a number of pressures in schools, such as increasing costs, instances of declining
school outcomes, and difficulties in preparing students for moving to the workforce or further
study (often described as post-school transition).
Not all of these pressures have necessarily been caused by the current shared schooling
arrangements, or can be ‘solved’ by changing the allocation of roles and responsibilities. But the
current fragmented and disjointed mix, and the often times competitive pursuit of different
policy solutions between the Commonwealth and the States and Territories, has not helped the
pursuit of better educational outcomes.
Schooling in Australia is a significant investment from all governments. It is the third biggest
area of spending by all Australian governments (the Age Pension and hospitals being the larger
areas of spending), comprising 8 per cent of GDP and 7 per cent of total Commonwealth
spending. In 2012 the Commonwealth contributed $12.3 billion to schools (including transfers
to States and Territories), and the States and Territories contributed $25.5 billion.75
Spending by all Australian governments grew by 37 per cent, in real terms, in the ten years
between 2002-03 and 2012-13.76 This has been driven largely by State and Territory policy
decisions to decrease the teacher to student ratio, as well as the increase in the average length of
service of teachers and increases in student numbers. During this period, funding growth has far
outstripped student growth. Growth in student numbers has been averaging 0.8 per cent, while
funding has grown by an average of around 4 per cent per year for government schools and
around 5 per cent for non-government schools since 2000-01.77
Over the next four years, spending is projected to continue to increase. This primarily reflects
recent policy decisions (by both levels of government) to increase per student funding to
schools. Even in the absence of these policy decisions, funding is likely to continue to grow as a
Australian Curriculum, Assessment and Reporting Authority, My School 2012 financial data, 2014.
J Daley and C McGannon, Grattan Institute paper: Budget pressures on Australian governments, Grattan Institute,
Melbourne, 2014. Increases in funding also occurred as a result of programme funding, National Partnerships and
through the Building the Education Revolution.
77 Commonwealth of Australia, Towards Responsible Government - The Report of the National Commission of Audit,
Canberra, 2014.
75
76
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result of expected increases in enrolment numbers. The Australian Bureau of Statistics projects a
faster increase in the school age population between now and 2024 than has occurred in the
recent past.78
The proportion of students in non-government schools compared with government schools is
also rising. In the last decade, enrolments at Catholic and independent schools have increased by
12 per cent and 25 per cent respectively. The bulk of this increase is in low fee non-government
schools. Conversely, government schools’ enrolments only increased by less than 5 per cent over
the same period.79
The trend is repeated in the total numbers of schools in each sector. Between 1999 and 2013, the
number of independent schools has increased by 10 per cent (96 schools), while the number of
government schools has decreased by 4 per cent (316 schools).80 While this puts downward
pressure on the overall level of government spending in schools, it will continue to put upward
pressure on Commonwealth spending as the primary funder of non-government schools.
However, despite this increased government investment, student outcomes have been mixed
across a number of key metrics. Australia does not compare as favourably internationally as it
did just a decade ago and there are mixed outcomes against NAPLAN headline data and some
declines for our most vulnerable students (Box 2 provides detail on Australia’s recent
performance on educational outcomes).
Box 2: Schooling metrics in Australia which are declining or stagnant
Falling student results internationally
In 2012, Australia performed equal 17th in mathematics, equal 8th in science and equal 10th in
reading out of 65 countries and economies in the OECD’s PISA results. This compares to equal
3rd in science and equal 2nd in mathematics and reading in 2000. While there are now more
countries participating in PISA, there are nonetheless more Australian students in the bottom
two levels of achievement and fewer in the top two levels of achievement than a decade ago.
While there is variation in results across the country, declining performance is found in all
jurisdictions.
Mixed NAPLAN results
While there has been some improvement in NAPLAN results between 2008-2014 (increases in
mean scale scores in Years 3 and 5 reading) some aspects showed no improvement and in some
cases declined. For example, between 2008 and 2013, Year 7 numeracy declined and Year 5
numeracy and Years 7 and 9 reading did not improve. Over the same time period, there was
minimal improvement in the proportion of students achieving at or above the minimum
standards.
Mixed results for vulnerable students
There are similar trends for some of Australia’s more vulnerable students, such as Indigenous
Australian Bureau of Statistics, Population Projections Australia, 2012 to 2101, cat. no. 3222.0.
Australian Bureau of Statistics, Schools Australia 2013, cat. no. 4221.0.
80 Australian Bureau of Statistics, Schools Australia 2013, cat. no. 4221.0.
78
79
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and low socio economic students. For example, between 2008 and 2013, there has been mixed
progress in the Closing the Gap COAG targets. The proportion of Indigenous students at or above
the national minimum standards in reading and numeracy has shown a statistically significant
improvement in only two out of eight instances – Years 3 and 5 Reading.
There are also particular pressures around Indigenous student attendance rates. School
attendance rates for Aboriginal and Torres Strait Islander students are lower than for
non-Aboriginal and Torres Strait Islander students in every State and Territory. In secondary
school, over 20 per cent of Indigenous students are absent on any given day. The COAG Reform
Council’s 2013 report: Education in Australia 2012: Five years of performance showed that there
had been no improvements in Aboriginal and Torres Strait Islander students’ school attendance
between 2008 and 2012, and in some areas, attendance had gone backwards.
Similarly, between 2008 and 2012, the reading achievement of students in the lowest
socio-economic group declined in Years 7 and 9.
Falling numbers of students making a successful post school transition
Despite increased investment, increased year twelve completion rates and more involvement by
the Commonwealth in youth transitions in recent years, fewer students are making a successful
transition from school than a decade ago. From 2006 to 2011, the national proportion of young
people (17–24 year olds) who were fully engaged in work or study declined from 73.9 per cent
to 72.7 per cent. The largest falls were in Queensland (3.3 percentage points) and Western
Australia (1.9 percentage points).81
The reasons for declining outcomes are complex and nuanced, and are affected by a number of
historical, cultural and social factors. Increasing costs of schooling coinciding with declining or
stagnating results is not a phenomenon isolated to Australia or federations more broadly.
However, improving the allocation of roles and responsibilities could make it easier for
governments to identify what the problems are, who is responsible for fixing them, while
empowering citizens to hold the appropriate level of government to account for taking the
action necessary to improve outcomes.
At present the levers used to influence schooling outcomes are dispersed between the
Commonwealth and the States and Territories. This, therefore, makes it difficult for any one level
of government to improve student outcomes given the policy coherence that is required.
Priorities also vary across jurisdictions, influenced in part, by the variation in the local needs of
the schooling population or differing policy decisions by different levels of governments. On one
hand, this is a considerable strength of a federation where each level of government delivers
services in a way best suited to their constituents. On the other hand, when multiple
governments are involved, and pull in different directions, it can mean a fragmented and
81
COAG Reform Council, Education in Australia 2012: Five years of performance, CRC, Sydney, 2013.
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uncoordinated approach to the design and delivery of educational policies and programmes and
lower quality teaching and education. A regular criticism from stakeholders in the education
sector is that many times policy responses from governments are ‘siloed’ and are incoherent
across sectors and the continuum of education, failing to focus on the important transitional
junctures, such as those between early childhood and schools, and schools to VET or higher
education or the workforce.
Difficulties in improving student outcomes are also exacerbated by the fact that schooling data
does not always provide clear indications of where investment makes the most difference. In
part this is driven by the fact that, although all governments are aggregating, collecting and
analysing schools data, this is not necessarily being shared or collected in a way that can be
easily compared. This leads to duplication of effort and makes taking decisions on what reforms
genuinely make a difference even more difficult.
This can cause difficulties where decisions by one level of government affect the other. For
example, the decisions by States and Territories to decrease class sizes (for which there is
limited evidence to suggest improved education outcomes) increased average government
school costs impacting government expenditure, including from the Commonwealth. Further,
some States have suggested that, though they have agreed to participate in various National
Partnerships, the agreed deliverables diverted attention from other reforms which were more
consistent with their own schooling objectives and impacted on schools’ capacity to plan,
evaluate progress over the longer term and continue effective programs.
Overlapping responsibilities can also create waste where both levels of government deliver
similar services, but in slightly different ways. For example, both levels of government encourage
a focus on science, technology, engineering and mathematics through teacher training
programmes.
Policy
States and Territories are constitutionally responsible for schools and arguably ought to have
primary carriage of schooling policy for all the schools in their jurisdiction, noting that the
extent of State and Territory involvement in non-government schooling varies markedly.
Despite this, the Commonwealth has been increasingly involved in proposing, shaping and
facilitating schools policy (mostly with the agreement of the States and Territories) through
funding arrangements, legislation (the AEA), COAG Education Council or national bodies such as
ACARA and AITSL. Commonwealth involvement in policy development is sometimes justified on
the basis of national interest and to catalyse national reforms where it may be difficult for any
one jurisdiction to push for uniformity, for example, the My School website and the collection of
national statistics.
The Commonwealth and States and Territories can, and do, cooperate effectively in some areas.
The development of the CAF action plan by States and Territories alone is an example of this.
However, in other areas overlapping responsibilities and the pursuit of different policy solutions
between levels of government may be making effective reform more difficult, for example:

29
Teacher training, selection, retention and quality: all governments agree that teacher quality
is the biggest in-classroom determinant of student outcomes and that for outcomes to
improve schools need better teachers who stay in the system longer. Despite this shared
Reform of the Federation White Paper
understanding and investment from both levels of government, improvements in teacher
training, selection, retention and quality have been difficult to achieve. In part this is driven
by the fact that responsibilities for teachers are dispersed over numerous different areas.
For example, the majority of teacher education programmes are offered in public
universities and the Commonwealth subsidises the cost of university tuition for almost all
teaching students which, arguably, places the levers for improving teacher training more
fully in the control of the Commonwealth. States and Territories on the other hand are
responsible for the registration, professional development and management of teachers and
AITSL sets national standards and supports high quality teaching practice. This means no
one level of government or agency has control over the full teacher ‘life cycle’ making
delivering a holistic effort at improving teacher quality and retention difficult.

Focus on vulnerable cohorts and youth transitions: all governments have a genuine interest in
assisting vulnerable students. This means both levels of government make and deliver
policies for the same cohort of students independently of each other. For example, ‘inside
the gate’ services for Indigenous students (including broader responsibility for school
attendance) are the responsibility of States and Territories. However, the Commonwealth
has become increasingly involved in services delivered ‘outside the school gate’, particularly
in relation to attendance (such as the School Enrolment and Attendance Measure and the
Remote Schools Attendance Strategy). Although most of the work for vulnerable cohorts is
done in partnership between the States and Territories and Commonwealth, there have
been instances where national policies and agreements are perceived as being too
prescriptive to genuinely complement activity by the States or Territories, or have adopted a
‘one-size-fits-all’ approach, rather than allow for jurisdictional differences.
Similarly, while States and Territories are responsible for schooling, the Commonwealth is
responsible for employment and welfare programmes, higher education and national job
markets. These junctures between governments lead to different programmes being
developed by different levels of government that focus on only one end of the student
experience.
Funding
Total public spending on schooling grew by 37 per cent in the ten years between 2002-03 and
2012-1382 and is projected to continue to grow by 4.3 per cent a year over the next four years.83
States and Territories are the primary funders of public schools. In 2012, they provided about
79 per cent of their total recurrent funding, which equates to over $22 billion84. They also
contribute around 15 per cent of total government funding to the non-government sector
(around $3 billion). The level of State and Territory funding to non-government schools varies
J Daley and C McGannon, Grattan Institute paper: Budget pressures on Australian governments, Grattan Institute,
Melbourne, 2014. Increases in funding also occurred as a result of programme funding, National Partnerships and
through the Building the Education Revolution.
83 Commonwealth of Australia, Towards Responsible Government - The Report of the National Commission of Audit,
Canberra, 2014, chart 9.7.4.
84 Australian Curriculum, Assessment and Reporting Authority, My School 2012 financial data, 2014.
82
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between jurisdictions, with New South Wales and Western Australia (roughly about 25 per cent
of total recurrent public funding) and the Northern Territory historically providing the highest
level of assistance to non-government schools.85 While this is usually provided to support
running costs, some jurisdictions also offer low-interest loans to their non-government sectors
to cover capital expenditure.
The level of funding States and Territories provide to individual schools is set by their own
funding models. These funding models are used to allocate all government funding (including
funding from the Commonwealth) to government schools. Most States now have needs-based
funding models (rather than funding models based on historical spending). For example, schools
in NSW, Victoria, Queensland, South Australia and Tasmania receive a combination of core and
needs-based resources. The move to needs-based funding has largely been to ensure that
funding (as an enabler of better educational outcomes, rather than improving outcomes in its
own right) should be more targeted and reflective of students’ and schools’ needs and
characteristics; more resources would be directed to those students and schools experiencing
the most disadvantage.
Decisions on how schools use funding is also increasingly devolved to local schools, for example,
Queensland’s Great Results Guarantee initiative. This initiative channels additional federal
funding received in 2014 directly to schools and requires them to publish how they will use the
funding to improve outcomes.
The Commonwealth is currently the majority government funder of non-government schools,
providing around 75 per cent of all public funding to non-government schools (over $7 billion,
excluding capital funding), and over 40 per cent of total recurrent funding. The Commonwealth
also provides 16 per cent of funding for government schools (over $4 billion).86 The
Commonwealth’s investment in non-government school funding reflects its longstanding policy
objective of providing parents with affordable choices in the school their child attends. This can
be seen as complementing the service provision of the States and Territories who focus most of
their funding on guaranteeing a government school place for all students.
While States and Territories act as the ‘post box’ for Commonwealth funding for nongovernment schools, due to Constitutional reasons (the Commonwealth is not able to fund
schools directly), the States and Territories do not have any authority to redistribute or withhold
this funding.87
Commonwealth funding is provided based on the SRS. However, around 17 per cent of
independent schools were receiving funding that was greater than the amount dictated by the
Commonwealth SRS formula at the time of its implementation and are having their funding
levels grandfathered and indexed at 3 per cent. This means that not all students are consistently
funded on the same basis with some schools projected to take decades to be brought down to
the current resourcing standard.
Commonwealth of Australia, Towards Responsible Government - The Report of the National Commission of Audit,
Canberra, 2014.
86 Australian Curriculum, Assessment and Reporting Authority, My School 2012 financial data, 2014.
87 This arrangement has led to complications in the Commonwealth taking action to recover funds directly from
non-government schools, as this must be done through the relevant State or Territory.
85
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Further, funding arrangements in NSW, Victoria, South Australia, Tasmania and the ACT reflect
agreements reached with the previous government (all of which had slightly different transitions
towards the SRS), whereas arrangements with Queensland, Western Australia and the Northern
Territory were settled under the current government. This means that States and Territories
receive slightly different levels of funding based on when they made agreements with the
Commonwealth.
In 2014-15, the Commonwealth has, also, and for various reasons, budgeted over $200 million
for programmes related to schooling that are in areas that are arguably the responsibility of
States and Territories, including:

the National School Chaplaincy Programme, to support the States provision of pastoral
care services to students ($61 million in 2014-15);

activities to restore the focus on science, technology, engineering and mathematics
subjects in primary and secondary schools through improved teacher training
($5.7 million in 2014-15);

the Parliament and Civics Education Rebate programme, which funds and encourages
civics and citizenship education (this is funded out of the $57 million Quality Outcomes
programme which funds a range of strategic projects);

the Helping Children with Autism package which provides professional development for
school leaders and teachers working with students with autism spectrum disorder
($5.6 million in 2014-15);

the Flexible Literacy Learning for Remote Primary Schools programme which will fund
effective approaches to teaching in rural and remote primary schools ($6 million in
2014-15); and

funding for ACARA to develop of languages curriculum ($1.2 million in 2014-15).88
This type of programme funding, and the Commonwealth’s previous focus on time-limited,
catalytic funding through NPs, has been criticised by the States and Territories as inhibiting
schools’ capacity to plan, limiting the ability to evaluate the progress or effectiveness of the
programme over the longer term, and requiring the State or Territory to then ‘pick up the tab’
for meeting community expectations that successful initiatives will continue to be funded.
Some States and Territories have also been concerned that this type of competitive
Commonwealth programme funding has conflicted with their emphasis on promoting school
autonomy and accountability for single-line school budgets, and distracting their attention from
the school’s priorities by applying for the grants.
However, States and Territories have generally responded to such Commonwealth programmes
in a way that suggest they would rather have the funding, with the conditions, than not have the
88
Commonwealth Department of Education, 2014-15 Portfolio Budget Statement, Canberra, 2014.
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funding at all. Following the High Court decision Williams No. 2 in regard to chaplaincy, the
Commonwealth is more restricted in the type of programmes it can introduce in relation to
schools in the future. These kinds of programmes exemplify the tensions in the way the
Federation currently operates.
The different Commonwealth, State and Territory and private funding shares to government and
non-government schools are summarised in Figure 2.1 below. This figure includes the over
$200 million of programmes administered by the Commonwealth in schools discussed above.
The different levels of funding per student are also summarised in Chart 2.2 below.
Figure 2.1: Total school recurrent funding by source and sector, 201289
Source: Australian Curriculum, Assessment and Reporting Authority, My School 2012 financial data, 2014.
Notes: Percentages refer to the proportion of funding within a sector and may not add to 100% due to rounding
89
Australian Curriculum, Assessment and Reporting Authority, My School 2012 financial data, 2014.
33
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Chart 2.2: Average net recurrent income per student by source of income and sector, 2012
($) Annual net recurrent income per student
20,000
18,000
16,000
5,500
14,000
12,000
Commonwealth funding
9,800
4,000
2,000
0
State and Territory
funding
6,900
8,000
6,000
2,000
1,900
10,000
Private income
2,300
10,500
3,400
700
Government
Catholic
Independent
Source: My School 2012 financial data (released March 2014; ACARA)
Note: figures in columns represent dollar amounts of recurrent income per student, and rounded to the nearest ‘00
Delivery
States and Territories are responsible for managing government schools. Their education
departments have overall responsibility for workforce management, planning, property
management and capital works for government schools, with some responsibilities delegated to
smaller schooling districts in some jurisdictions. The day-to-day running of schools is generally
the responsibility of school principals. A trend towards greater autonomy for delivery resting
with individual schools has been occurring over the last few decades.90
The Commonwealth typically does not involve itself in the delivery of school education. The
areas where it does ‘deliver’ services complementary to schooling, such as the Remote School
Attendance Strategy or youth transitions programmes, are often linked to issues in which the
Commonwealth also has a constitutional interest such as Indigenous affairs or employment and
welfare.
Regulation
States and Territories all manage the registration, regulation and compliance of all schools
within their jurisdictions, including non-government schools. The focus of Commonwealth
Other reforms to devolve power to school level include: New South Wales - Local schools, Local Decisions;
Victoria - Student Resource Package; Queensland – Great Schools Guarantee Initiative; Western Australia Independent Public Schools; South Australia – Student Centred Funding Model and Innovative Community Action
Networks; Tasmania - School Resource Package; and Northern Territory – Global Schools Budget. The Commonwealth
has supported some of this through its Empowering Local Schools NP and the Independent Public Schools project
agreements, which is a nationalisation of a model pioneered by Western Australia. For example, Queensland is
supporting 250 state schools to become Independent Public Schools (IPS) by 2017 and the NT 6 schools in 2015.
The Queensland and NT IPS initiative offers increased flexibility over elements such as staffing, budget, facilities and
curriculum offerings.
90
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regulation of the schooling sector primarily relates to establishing and confirming continued
entitlement to receive Commonwealth funding, performance reporting, and basic financial
accountability.
In addition, the Commonwealth also requires each school to pass its own ‘fit-and-proper’ person
test to be eligible to receive Commonwealth funding, and to submit detailed financial
information to ensure appropriate expenditure of Commonwealth funding before it can receive
funding. As both the Commonwealth and the States and Territories require non-government
schools to meet conditions and standards, in some circumstances schools and education
authorities are required to provide similar information more than once.
Nationally consistent teacher registration guidelines were recently developed by AITSL and
endorsed by all States and Territories. However, the general registration of teachers remains a
responsibility of the States and Territories. Although the work done by AITSL is seen to add
value there is nevertheless some duplication in the work AITSL does in setting national
standards, improving teaching and supporting high quality practice (though not strictly
regulation) with what States already do through their own education departments.
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Summary of current arrangements
The table below summarises the current levels of involvement in schools.
Area
State and Territory role
Shared Lead
High
Responsible for developing
schooling policy for all the
schools in their jurisdiction.
Identifies Commonwealth
policy priorities.
Both levels of government
currently have a shared role in:
curriculum development; teacher
quality; assessment;
measurement and reporting
against national standards; and
supporting Indigenous students.
These usually come about
through negotiated national
reforms.
Assists to identify national
priorities through
Education Council.
Also responsible for
national statistics.
Lead
Funding
Secondary
High
Majority funder of government Majority government funder Both levels of government fund
schools.
of non-government schools. schools. All schools are funded by
the Commonwealth using the
Secondary funder of nonSecondary funder of
same model, although the
government schools.
government schools.
funding received is redistributed
across the sector by the States
and Territories, and Catholic
Education Commission using
their own models.
Lead
Responsible for managing all
government schools.
Secondary
Low
Typically not involved, with The Commonwealth does not
some limited exceptions for deliver schooling directly.
Indigenous students and
other small programmes.
Lead
Secondary
Medium
Responsible for the
registration, regulation and
compliance of all schools
within their jurisdictions.
Has regulatory
requirements for
non-government schools
which receive
Commonwealth funding.
Non-government schools are
primarily regulated by States and
Territories, but there are
significant regulatory and
reporting requirements overseen
by the Commonwealth.
Delivery
Regulation
Also responsible for the
registration, professional
development and management
of teachers.
Key
Lead
36
Extent of shared space
Shared Lead
Assist to identify national
priorities through Education
Council
Policy
Commonwealth role
Who leads
Secondary
Extent of shared space
Shared lead
Reform of the Federation White Paper
High
Medium
Low
2.4 Questions for consideration
While the Commonwealth has moved to reduce its involvement by reviewing legislation and
agreements to reduce its level of ‘command and control’, there remain a number of shared roles.
As with the child care and early learning chapter, the principles in the White Paper’s Terms of
Reference are useful in considering roles and responsibilities in schooling.
Accountability
Both levels of government now work together on schooling. However, if shared roles are not
combined with clear accountability there is a risk of public confusion about who is responsible
for outcomes, and ongoing blame games between governments. The former COAG Reform
Council (CRC) noted that, as more education related NPs were introduced between 2008 and
2013, it became less clear which level of government was accountable for outcomes.91
Accountability should not, however, result in unnecessary red-tape. Duplication in
administrative and reporting requirements can detract from effective achievement of school
education outcomes. For example, some duplication occurs in the non-government schools’
financial reporting to state and Commonwealth departments.
Questions for discussion


Does the current split of roles and responsibilities result in uncertainty about which level
of government is accountable for schooling outcomes? If so, can this be remedied?
What measures are needed to ensure the public can assess delivery of school education
and hold the appropriate level of government accountable?
Subsidiarity
The constitutional responsibility of States and Territories for schools and schooling outcomes
aligns with the principle of subsidiarity — that is, as far as practical responsibility rests with the
level of government closest to the delivery of the service. The Commonwealth has a significant
funding role (including its direct funding relationship with non-government systems and
independent schools) even though the costs of delivering schooling outcomes are primarily
driven by decisions outside of the Commonwealth’s influence; for example, reductions in class
sizes and negotiations of state-based teacher awards. Although this investment is generally
welcomed, States and Territories have argued that conditions or requirements attached to
Commonwealth funding constrain their ability to focus on their own priority areas.92 Similarly,
the States and Territories have argued that, while the Commonwealth has played a catalytic role
in some successful national reforms, such as curriculum, national assessment, public reporting,
COAG Reform Council, Lessons for federal reform: COAG reform agenda 2008–2013, CRC, Sydney, 2013, p. 47.
COAG Reform Council, Education in Australia 2012: Five years of performance, CRC, Sydney, 2013. The CRC reported
(at p. 44) that ‘State stakeholders identified that many National partnerships restricted their flexibility in delivering
services and hindered innovation’. See also: Queensland Government submission to the Senate Education,
Employment and Workplace Relations Legislation Committee Inquiry Into the Provisions of the Australian Education Bill
2013.
91
92
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and teacher quality, these reforms could, and should, be driven by them, rather than the
Commonwealth.93
Questions for discussion



What benefits, or costs, would arise from assigning full responsibility for school
education to the States and Territories?
If responsibility for school education continues to be shared, what roles should be
assigned to which level of government? What roles are truly national and assigned to the
Commonwealth?
In the areas where there is a national approach, is there sufficient flexibility to allow for
States and Territories and the non-government sectors to adapt to local conditions and
develop innovative approaches?
National Interest
In general, the national interest will be best served through subsidiarity (discussed above).
However, in some cases, economies of scale or spill over effects (where the actions of one
government have a disproportionate impact on other governments), or if a necessary function
cannot occur unless the Commonwealth does it, could mean it is better to adopt a centralised
approach. For example, the Commonwealth has a legitimate interest in the outcomes of school
education as there are spill over effects on national productivity and welfare and employment
settings which the Commonwealth is responsible for funding. Also, a national curriculum makes
moving interstate easier for families, and consistency in Year 12 credentials is likely to deliver
some benefits for university entry and national employers who may be comparing potential
workers from across the country. The difficulty is assessing the extent of this role and the nature
of the Commonwealth’s involvement, if any.
While national harmonised approaches can sometimes be more appropriate, efficient and
helpful to smaller jurisdictions, they may come at the expense of diversity and competition. The
national interest is not the specific remit of the Commonwealth. States and Territories can, and
do, work together in the national interest — neither the Commonwealth’s involvement, nor the
participation of all jurisdictions, are necessarily pre-requisites for this. For example, in
considering the national education agencies or some of the national architecture (such as
national curriculum and NAPLAN), now that the Commonwealth has played its catalytic role, it
arguably could be the case that this work continues to be maintained by the States and
Territories.
Richard Bolt, Secretary of the Victorian Education Department, recently commented on fixed term Commonwealth
funding to specific reforms: “They distract attention from schools' priorities to the short-term preoccupations of the
Commonwealth … they divide accountability and dilute focus [and] have had no tangible or measurable result."
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Questions for discussion



Is there a national interest for Commonwealth involvement in school education? In which
roles?
How can the national interest be pursued without undermining the role of State and
Territory governments, or non-government systems or independent schools, in
delivering schooling?
What type of national architecture and processes would best support the delivery of
national priorities and objectives? Does the Commonwealth have a role in sustaining
these or could States and Territories take these on?
Equity, efficiency and effectiveness of service delivery, with a focus on regions
Not all schools are funded equitably. The Commonwealth, and the States and Territories use
their own funding models to determine the distribution of funding within the sector based on
the unique characteristics of their schools (for example, geographic distribution of schools,
concentration of disadvantage). Also for historic reasons, within the Commonwealth model,
approximately 17 per cent of independent schools are funded above the current resourcing
standard, although this is being phased out.94
At the moment, service delivery is complicated by both levels of government performing similar
functions in certain areas. Commonwealth and State and Territory education departments
currently perform similar or related functions around curriculum, national assessment, and
teacher standards, as well as in national bodies funded to administer these policies, such as
ACARA and AITSL. For example, States and Territories all have curriculum development
functions in their governments, while the Commonwealth co-funds ACARA’s curriculum
development function. Although States and Territories are responsible for teacher standards and
accreditation, AITSL also has its own (State and Territory agreed) standards and procedures.
Similarly, the regulation of non-government schools occurs at both levels of government,
although there is some differentiation in roles. There are also a small number of programmes
aimed at similar target groups or outcomes which are delivered by both levels of government.
This creates potential inefficiencies for those delivering school services.
There are also considerations around equity of access and student mobility. At present, the
Commonwealth’s main role in ensuring equity of service delivery, is to provide needs-based
funding weighted to the factors that increase the cost of schooling and to ensure minimum levels
of service delivery through national standards (for example, Australian curriculum and national
teaching standards). For example, prior to the introduction of the schooling resource standard
and its planned introduction of a single disability loading, there was large variation in how
States and Territories funded students with disability. ACER research in 2011 suggested that the
national average additional spending per student with disability was $13,000. However, in South
Australia this amount was around $5,000 and in the ACT $26,000. Previously, the
Commonwealth of Australia, Towards Responsible Government - The Report of the National Commission of Audit,
Canberra, 2014, Appendix 1, 9.7 Schools Funding.
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Commonwealth had used some aspects of NPs to provide support for equity, including in the
regions95.
Questions for discussion


Which level of government is best placed to address equity issues?
To what extent, if any, do shared roles enhance or detract from the effective achievement
of school education outcomes? If shared roles continue, what mechanisms are needed to
ensure collaboration is efficient?
Durability
There have been significant changes and reforms to the schooling sector over the last 50 years.
The proliferation of time limited projects, or policy specific funding from the Commonwealth,
particularly through National Partnerships has added to the sense of flux around roles and
responsibilities. Over this period the Commonwealth introduced 10 schools-related National
Partnerships which offered almost $25 billion to States and Territories in return for improved
outcomes, matched funding, specified activities and detailed reporting. National Partnerships
covered almost all aspects of schooling, including literacy and numeracy, additional support for
low socio-economic status schools and teacher quality. National Partnerships also contained a
range of inputs and prescriptions that increased the administrative and compliance burden on
the states and were seen as inconsistent with the broader Intergovernmental Agreement on
Federal Financial Relations.
Schooling arrangements are often strongly contested during Federal and State elections, and are
subject to change at both levels of government. For State and Territory governments, this can
create disincentives for investment in long-term reform, and to improve efficiency, if there is an
expectation of imminent change: improvements take time to realise, and longer-term data are
needed to see the impact, especially in education. For schools and school communities it creates
uncertainty and limits their ability to plan, continue effective programmes and focus on
achieving desired goals. The community’s confidence in the capacity of governments to know
how to improve student outcomes, and see through changes, also becomes eroded.
Questions for discussion

What configuration of roles and responsibilities between the Commonwealth and the
States and Territories and non-government sector would be most likely provide funding
and policy certainty in the long term?
For example, the Improving Teacher Quality NP had a specific focus on increasing teacher retention through
rewarding quality teachers and school leaders in rural, remote and hard-to-staff schools.
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Fiscal Sustainability
All governments have increased funding to schools by over $11 billion in real terms over the past
ten years. However, as with other important policy areas, governments will need to consider
future levels of funding for schooling against other priorities within their current resourcing
constraints. Key to this, as with other policy priorities, will be identifying fiscally-sustainable
revenue bases for both the Commonwealth and the States and Territories.
Schools funding is projected to continue to increase as the number of students increases over
time and also as a result of the existing schools funding arrangements. Much of the additional
cost is being borne by the Commonwealth in part because of the funding arrangements
negotiated under the previous government and also because enrolments in non-government
schools, which are predominantly funded by the Commonwealth have grown far faster than
government schools which are funded by the States. This trend is likely to continue.
Questions for discussion


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How can roles and responsibilities be aligned to ensure the fiscal sustainability of the
school education system while maintaining high quality student outcomes?
What responsibilities should families have in contributing to the costs of their child’s
schooling in addition to contributions made through the tax system?
Reform of the Federation White Paper
APPENDIX A: Summary of child care and early learning service types
The child care and early learning sector has a diverse array of service types, falling into two
broad categories: centre-based and home-based.
Summary of the main types of formal child care and early learning services.
Long day care
Centre based child care offered on an all-day or part-time basis,
primarily to children aged zero to five.
Preschool
A structured, play-based early learning programme delivered by
a degree-qualified teacher in the year or two before compulsory
school. These programmes can be delivered in a variety of
settings, including child care centres, dedicated (or standalone)
preschool services and preschools in schools. In some States, the
term “kindergarten” is used instead.
Family day care
Small group child care provided by an educator (supported by
central management and coordination staff) in their home.
Occasional care
Short-term or irregular child care, usually provided at a centre,
aimed at children aged zero to five.
In home care
Child care delivered in the child’s home by an educator. (This
type of care is usually informal. However, in home care
supported by central management and coordination staff can
attract Commonwealth payments in limited circumstances.)
Outside school hours
care
Child care provided outside of school hours (including during
school holidays) at a centre or using school facilities, catering for
school aged children.
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ACRONYMS
The following is a list of the acronyms used in this paper.
ACARA
Australian Curriculum, Assessment and Reporting Authority
AITSL
Australian Institute of Teaching and School Leadership
CAF
Council for the Australian Federation
CCB
Child Care Benefit
CCR
Child Care Rebate
COAG
Council of Australian Governments
ESA
Education Services Australia
ISCA
Independent Schools Council of Australia
IGA FFR
Intergovernmental Agreement on Federal Financial Relations
NAPLAN
National Assessment Program – literacy and numeracy
NCEC
National Catholic Education Commission
NP
National Partnership Agreement
NP on Universal Access
National Partnership Agreement on Universal Access to Early
Childhood Education
NQF
National Quality Framework
NSPP
National Specific Purpose Payment
OECD
Organisation for Economic Cooperation and Development
PISA
Programme for International Student Assessment
Quality NP
National Partnership Agreement on the National Quality Agenda for
Early Childhood Education and Care
VET
Vocational Education and Training
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GLOSSARY
Australian Children’s Education and Care Quality Authority – the independent, national
authority charged with overseeing the implementation of the National Quality Framework.
Australian Curriculum, Assessment and Reporting Authority (ACARA) – develops and
sustains the national curriculum, manages the national assessment programme (e.g. NAPLAN)
and undertakes performance reporting and analysis. ACARA is established under
Commonwealth legislation, is jointly funded by the Commonwealth and the States and
Territories and is accountable to the COAG Education Council.
Australian Early Development Census – a nationwide survey that shows how young children
have developed as they start their first year of formal full-time education. The Australian Early
Development Census is a Commonwealth initiative.
Australian Education, Early Childhood Development and Youth Affairs Senior Officials
Committee – consists of Senior officials from all Australian and New Zealand government
education departments and supports Education Council through analysis, policy development
and information sharing. The Committee is supported by a number of specific working groups,
such as the Data Strategy Group and Schools Policy Group.
Australian Institute of Teaching and School Leadership (AITSL) – provides national
leadership in promoting excellence in teaching and school leadership and maintains national
teacher and principal standards. AITSL is funded solely by the Commonwealth, the
Commonwealth Minister for Education is the sole member of the company but its work plan is
endorsed by the COAG Education Council.
Average Government School Recurrent Costs model – a model used to determine resource
standards in calculating Commonwealth funding for schools between 1995 and 2008. The model
was calculated based on all spending by the Commonwealth and States and Territories across
areas like employee-related expenses (e.g. salaries, wages and allowances, superannuation,
payroll tax); out-of-school expenses (e.g. regional and central administration); other operating
expenses (e.g. student transport, cleaning, utilities, repairs and maintenance, rentals and leases);
and grants and subsidies paid to schools for school education. It excluded capital expenditure,
depreciation and notional user cost of capital.
Building the Education Revolution Programme – a 2009 Commonwealth investment
initiative that aimed to provide economic stimulus through construction and refurbishment of
school infrastructure and build an environment to help children, families and communities
participate in activities that will support achievement, develop learning potential and bring
communities together.
Child Care Benefit (CCB) – is a means tested Commonwealth payment available to parents
accessing approved or registered child care. Parents can choose to have their Child Care Benefit
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paid directly to their child care service (and passed on through reduced fees), or claim it as a
lump sum after the end of the financial year.
Child Care Rebate (CCR) – a rebate of up to 50 per cent of out-of-pocket child care costs
(capped at $7,500 per year) available to parents accessing approved child care for the purpose of
attending work, training or study related commitments. The rebate is not means tested. Parents
can choose to have it paid directly to their child care service (and passed on through reduced
fees) or paid to their nominated bank account. Alternatively, parents may choose to have it paid
as a lump sum quarterly or after the end of the financial year directly to their bank account.
Children with additional needs – includes children with diagnosed disability (including
children with high support needs), children from culturally and linguistically diverse
backgrounds, children from a refugee or humanitarian intervention background and Indigenous
children.
Commonwealth child care fee assistance –collectively refers to the Child Care Benefit, Child
Care Rebate and Jobs Education and Training Child Care Fee Assistance, through which the
Commonwealth provides families with financial assistance to help cover the cost of approved
child care.
Commonwealth Family Assistance Law – the legislation and regulations that underpin
Commonwealth child care fee assistance. A list is available at <http://education.gov.au/familyassistance-law>.
Council of Australian Governments (COAG) – COAG is the peak intergovernmental forum in
Australia and was established formally in 1992 to increase cooperation among governments in
the national interest. COAG’s members are the Prime Minister (who chairs the meetings), State
and Territory Premiers and Chief Ministers, and the President of the Australian Local
Government Association.
COAG Education Council – a COAG council comprising Commonwealth and State and Territory
ministers with responsibility for school education and early childhood development.
Digital Education Revolution Programme – was a 2007 Commonwealth Government initiative
that aimed to change teaching and learning in Australian schools to prepare students for further
education and training, and to live and work in a digital world.
Education Resources Index – an adjustment used between 1985 and2000 when calculating
funding for non-government schools. The Education Resources Index was based on the actual
income raised by the school compared to a resource standard. It was replaced in 2001 by the
socio-economic status model.
Education Services Australia (ESA) – supports the delivery of national priorities and initiatives
including national education ICT initiatives and infrastructure to ensure access to and
interoperability between systems. ESA is owned by all Australian Education ministers, receives
project funding only, and work plan is endorsed by COAG Education Council.
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Independent Schools Council of Australia (ISCA) – represents the interests of the
independent school sector on a national basis such as in relation to Commonwealth funding and
representation on national policy making bodies.
Intergovernmental Agreement on Federal Financial Relations (IGA FFR) – Signed in 2008,
the IGA FFR establishes the overarching framework for the Commonwealth's financial relations
with the States and Territories. It is intended to establish a foundation for the Commonwealth
and the States to collaborate on policy development and service delivery, and facilitate the
implementation of economic and social reforms in areas of national importance.
National Assessment Program – literacy and numeracy (NAPLAN) – is an annual assessment
for all students in Years 3, 5, 7 and 9 to test the types of skills that are essential for every child to
progress through school and life. It is run at the direction of the Education Council.
National Catholic Education Commission (NCEC) – maintains effective liaison with the
Commonwealth Government and other key national education bodies. NCEC complements and
supports at the national level the work of the State and Territory Catholic Education
Commissions.
National Education Agreement – is a COAG agreement that came into effect in 2009. The
national agreement encompasses the COAG’s objectives for Australia’s school system and forms
a schedule to the IGA FFR. National Education Reform Agreement – is a COAG agreement that
came into effect in 2013. The national agreement encompasses the national plan for school
improvement and detail on the Commonwealth’s Schooling Resource Standard. It was designed
to be a replacement to the National Education Agreement.
National Partnership Agreement (NP) – an agreement between the Commonwealth and States
and Territories. An NP defines mutually agreed objectives, outcomes, outputs and performance
benchmarks or milestones related to the delivery of specific projects, improvements in service
delivery or reform.
National Quality Agenda – the overarching name given to the quality reforms agreed by COAG
through the National Partnership Agreement on the National Quality Agenda for Early Childhood
Education and Care, including the National Quality Framework.
National Quality Framework – a jointly governed, uniform national approach to the regulation
and quality assessment of child care and early learning services.
National Specific Purpose Payment – a Commonwealth financial contribution to support State
and Territory delivery of services across a particular sector.
Preschool – a structured, play-based early learning programme delivered by a degree-qualified
teacher in the year or two before compulsory school. These programmes can be delivered in a
variety of settings, including child care centres, dedicated preschool services and preschools in
schools. In some States, the term “kindergarten” is used instead.
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Project agreements – a type of National Partnership Agreement used to implement projects
that are considered low-value and/or low-risk. Project agreements are simple, standalone,
outputs-focussed documents that are generally bilateral although they may be multilateral in
certain limited circumstances.
Registered care – care that may be provided by relatives, friends, neighbours, nannies or
babysitters who are registered as carers with the Commonwealth Department of Human
Services.
Schooling Resource Standard – this is the Commonwealth’s funding model. It calculates the
level of funding required to educate a student with minimal disadvantage to a high standard
(‘the base per student amount’) and then adds ‘loadings’ based on the additional amount
required to bring students with different types of disadvantage to that level.
Socio-economic status model –a funding model introduced in 2001 as an adjustment when
calculating funding for non-government schools which replaced the Education Resource Index.
This model assigned schools a Socio-Economic Status based on the residential address of
students which was used to estimate the capacity of a school’s community to support its school.
Special Child Care Benefit – extra Commonwealth assistance available to families for a child at
risk of serious abuse or neglect, and/or a family in hardship.
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Australian Bureau of Statistics, Preschool Education Australia 2013, cat. no. 4240.0, ABS,
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Australian Bureau of Statistics, Schools, Australia, 2013, cat no. 4221.0, ABS, Canberra, 2014.
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Organisation for Economic Cooperation and Development, Starting Strong II: Early Childhood
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Western Australian Government, Submission to the Productivity Commission Inquiry into Child
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Legislation:
Australian Education Act 2013 (Commonwealth)
Child Care Act 1972 (Commonwealth)
Schools Assistance Act 2008 (Commonwealth)
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