Senator VANSTONE (Minister for Employment, Education, Training and Youth Affairs)(5.47 p.m.) —Let me come back to the point that I was trying to get you to come to; that is, whether you accept simply that, when a government student shifts to a non-government school and you maintain funding as though that student was still there at the government school, that is a saving to the state or territory. If you want to avoid that, that is fair enough.

Senator Carr —I have answered that question for you, Minister.

Senator VANSTONE —I do not believe you have. Nonetheless, I have the floor now—I am happy to sit down and let you have another go. I will move on in any event. The proportion of enrolments in non-govern ment schools has moved from about 24.4 in 1983 to 29 in 1995. The aggregate of the annual savings to the states since 1983 because of that shift is estimated to be about $3 billion.

The enrolment benchmark adjustment seeks to split those savings fifty-fifty with the states. It reduces the potential for cost shifting between levels of government. It adjusts the share of government school general recurrent grants to states by approximately 50 per cent of the gain that would accrue to state governments as a result of the enrolment drift from the government sector to the non-government sector. The states still retain the remaining 50 per cent gain.

I will give you an example of the operation of the EBA. If the census showed an increase in the non-government enrolment share at the end of 1997, the states would gain on average $3,400 per student. That is their saving. The effect of the EBA is that the states would retain $1,700 and $1,700 would be deducted from the Commonwealth's grants to the states. If the census showed no change in relative enrolment shares or an increase in the government share, the EBA would not be triggered. For example, if a state experienced a 0.4 per cent increase in the share of non-government enrolments—up from 29 per cent in 1996 to 29.4 per cent in 1997—and that equated to a drift of 5,000 students, the EBA would be triggered. If the average net saving in the state was $3,400 per student, the total saving would be $17 million. Under such a scenario, the Commonwealth would retain $8.5 million and the state would retain $8.5 million.

The total projected Commonwealth funding for all schools is an increase of $3.7 billion over the next four years. That comes through SPPs, EBAs and FAGs. You asked what would happen if the numbers stayed the same—I think that is what your point is—in government schools and the proportion changed because there was an increase in non-government sector enrolments. I just point out that your whole question is prefaced on an assumption on your part that, where there is an increase in enrolments, government schools will not be able to have a share of them because they are not performing well enough to attract the parents' choices. That is your assessment. That is the scenario you are working on.

You ask then would the funding decrease. Let me make it plain to you: total funding to schools, government and non-government, will increase. But if the enrolment benchmark is triggered, that necessarily means that some of the money that would otherwise have been kept by the states for their government schools would go the other way. I think that is the whole purpose of it. It amazes me that you have not yet come to grips with that.