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School Funding Investment
08/04/2016
Commonwealth funding for schools

PELECKY, Mr Libor, Assistant Secretary, Industry, Education and Infrastructure, Budget and Financial Reporting, Department of Finance

RAETHER, Mr Rob, Principal Adviser, Social Policy Division, Treasury

STEEL, Ms Lee, Manager, Commonwealth-State Relations Division, Treasury

THOMANN, Mr Mark, First Assistant Secretary, Industry, Education and Infrastructure, Budget and Financial Reporting, Department of Finance

WILKINSON, Mrs Vicki, Division Head, Social Policy Division, Treasury

[10:36]

CHAIR: Welcome. I will begin by apologising that we are running late. The good news is that I suspect we do not have all that much, because some of what we will be asking you, based on the evidence that has just been given to us by the Department of Education and Training, will be questions for PM&C in the subsequent session.

We just had evidence from the department of education which really went to the heart of what we are coming at. As I am sure you are aware, this inquiry has to do with the future of school investment. Obviously, neither of your departments are involved in education policy. Education policy is obviously a matter for the department of education. I guess where this inquiry relates to your departments is around the investment component and funding arrangements.

We just had evidence from the department of education regarding the Prime Minister's statement. I am using the term 'statement'; you can say 'announcement' or call it what you will. I assume everyone here is well aware that on the 30th of last month the Prime Minister, in a speech / media presentation in Penrith in Western Sydney, outlined a proposal for a new funding arrangement relating to state and federal responsibilities for taxation. The next day, on the 31st, he went one step further and bought into that discussion. I am trying to be as nonpartisan as I can in explaining this. The day after, he made more media comment going specifically to the issue of education funding and whether or not the arrangements should be the arrangements that currently stand or there should be new taxation arrangements for the funding of schools. Is that a fair assessment? We are all on the same wavelength there? Yes?

Sorry, I should have done this before. Does anyone have an opening statement that they would like to make?

Mrs Wilkinson : No.

Mr Pelecky : No.

CHAIR: Okay. I might start. The Department of Education and Training said that, prior to that announcement on the 30th and the 31st, they were not involved in providing information to Prime Minister and Cabinet on the briefing of the Prime Minister and that effectively any questions we have relating to those announcements or prior to that point are a matter for PM&C. Is that the same from Treasury and Finance? I might start with Finance.

Mr Thomann : That is correct.

Mrs Wilkinson : That is correct. We brief the Treasurer.

Mr Thomann : And we brief the Minister for Finance.

CHAIR: But from time to time your expertise on matters of Treasury and on matters of Finance is drawn upon by Prime Minister and Cabinet; correct?

Mr Thomann : On some occasions, our colleagues in PM&C will definitely seek advice in the Department of Finance on matters in relation to estimates.

CHAIR: And it is the same with—

Mrs Wilkinson : Yes. It depends on the nature, but we do brief the Treasurer and our advice to government goes via the Treasurer. We do work at departmental level with our colleagues on a range of matters.

CHAIR: The department of education outlined that they were not involved in the preparation of the policy announcement between the conclusion of the green-paper process—I think it was around June last year—until the 30th and 31st, when the announcement was made. I am using the term 'announcement'. I do not mean that with prejudice; just 'statement'. I will start with the Department of Finance. Are you in the same position as the department of education on that?

Mr Thomann : We are in exactly the same situation. We provide advice to our minister, who participates in cabinet deliberations, around a whole range of matters, including the preparation of the government's engagement with states and territories in COAG.

CHAIR: That was not the question. The question, Mr Thomann, was: prior to the announcement by the Prime Minister, there was a gap of work being done by the department of education between the reform paper process, the Federation paper process, and the Prime Minister's statements on the 30th and 31st. The department of education's view is that they had done previous work, and then it became a matter for PM&C, 'Ask PM&C,' and that during that period they were not providing a briefing to PM&C, and they were not asked to. I am asking if that is your position as well.

Mr Thomann : We are in exactly the same situation. In relation to the Federation process, that was a process that was looking at higher level options over a period of time, and that mostly engaged policy departments and PM&C. PM&C were solely responsible for providing advice to the Prime Minister.

Senator O'NEILL: And your engagement with that process ceased at about what time?

Mr Thomann : Our engagement in that process was always on the periphery because it never got to the stage of actually costing specifics.

CHAIR: I will get to that.

Mr Thomann : The Department of Finance, to be fair, have a role linked into costing specific policy and reviewing specific estimates, so obviously we take an interest in broader processes going on in the broader environment, because at some stage of the future we need to be informed, and we may need to engage with departments about costing something. But, in relation to this Federation process, it was very much driven by Prime Minister and Cabinet.

Mrs Wilkinson : Treasury have been involved in the Federation process throughout its duration, and we have provided advice to the Treasurer during the entire process. We have worked with colleagues. We certainly have not provided advice to colleagues in other departments; we have worked with departments. We provide advice to the Treasurer. But we have worked on the Federation process throughout its duration.

CHAIR: And the Federation process ended in a green paper being developed in the middle of last year or the earlier part of last year; correct?

Mr Raether : We are obviously involved in briefing the Treasurer through a whole lot of whole-of-government decision-making processes, which normally include briefing ahead of COAG meetings, so we were involved in briefing the Treasurer as we normally would be as part of whole-of-government decision-making before that COAG—

CHAIR: Sure. You are getting a bit ahead of us, and we will get to that. The question we are trying to get to the bottom of is the Prime Minister's announcement on the 30th and 31st. We will take them as one. It was one announcement in two parts. I paraphrase. The Department of Education and Training and the acting secretary at the time, who is now the deputy secretary, I believe, made the observation that he became aware of those statements through the media—that they were not involved in preparing or briefing the Prime Minister on that and that PM&C were. It would be a matter for PM&C, but in other circumstances from time to time they have been involved in briefings. In this case they were not. Was Treasury involved in the briefings leading into that?

Mrs Wilkinson : We were not involved in briefing the Prime Minister. We have been involved in briefing the Treasurer throughout the entire period, leading up to and in preparation for COAG, but we have not been briefing the Prime Minister.

CHAIR: That is your job. You do not brief the Prime Minister.

Mrs Wilkinson : No.

CHAIR: And you do not brief PM&C?

Mrs Wilkinson : No.

CHAIR: Is it the same for Finance?

Mr Thomann : Ours is a similar situation.

Mr Raether : We obviously consulted as part of normal whole-of-government processes.

CHAIR: When you get asked?

Mrs Wilkinson : Yes.

CHAIR: With Treasury modelling or analysis, for the proposal that is put forward by the Prime Minister regarding alternative payment arrangements between the federal government and the states, is the modelling for that kind of thing what Fiscal Group does? Who does the modelling? Or is that macro? How would it work for that? Would that come under Nigel's group? How does it work?

Mr Raether : It depends what type of modelling you are talking about. Costings are traditionally done by the Department of Finance in consultation with the line agencies, so the cost of a Gonski proposal or a particular proposal would go through that normal costing process.

CHAIR: Why don't we take a step back. I will ask a broader question. A proposal was put forward by the Prime Minister. Prior to the 30th and 31st, had either department done costings on it?

Mrs Wilkinson : Can you just confirm what the proposal that you are referring to is? Are you talking about the income tax—

CHAIR: Yes.

Mr Raether : I think we would have to take it on notice, but I think our Revenue Group may have been involved, given their responsibilities for tax policy. We are from Fiscal Group, but we could check with our Revenue Group colleagues.

CHAIR: And what about Finance?

Mr Thomann : Taxation is purely Treasury's responsibility, so we had no involvement.

Mrs Wilkinson : But we can take that on notice.

CHAIR: Effectively, what you are saying—just to be correct here—is that Fiscal Group were not involved. Whether or not Revenue Group was involved is a matter for Revenue Group, and you are going to take on notice whether Revenue Group was or was not involved; correct?

Mr Raether : That is correct, yes.

CHAIR: From the 31st, between then and the COAG meeting that was held—perhaps we will start with Treasury—can you just go through your involvement through that period? A lot of this is going to have to be put to PM&C. It sounds like PM&C took the lead on a lot of this. We are going to have PM&C shortly. But can you just go through what the role of Fiscal Group was from that point up until COAG?

Mrs Wilkinson : The role of Fiscal Group leading up to COAG was to brief the Treasurer on the range of issues relevant to COAG, and we did that.

CHAIR: During that time, did you brief PM&C at any point?

Mrs Wilkinson : No, we do not brief other government departments; we brief the minister, and the only minister we brief, unless otherwise directed—

CHAIR: Or requested.

Mrs Wilkinson : Yes. We would brief the Treasurer, and our briefing of other ministers would be via the Treasurer's—

CHAIR: Yes. But, from time to time, Treasury has briefed other ministers including the Prime Minister, of course.

Mrs Wilkinson : Historically, we may, and that would be at the request of the Treasurer. But we have briefed the Treasurer in the lead-up to COAG.

CHAIR: But you never briefed the Prime Minister in the lead-up to COAG?

Mrs Wilkinson : Not in the—

CHAIR: Not in relation to these matters?

Mrs Wilkinson : Yes.

Senator GALLAGHER: If, for example, PM&C are developing a paper for the Prime Minister which has an element, a policy side, which involves Treasury, do they come to you for that information, or does that have to go via the Treasurer as well?

Mrs Wilkinson : At departmental level, we will work together as colleagues, depending on the issue.

CHAIR: Did you on this?

Mrs Wilkinson : We briefed the Treasurer in the lead-up to COAG. We did not see the COAG papers explicitly, but we worked with our colleagues in PM&C—

CHAIR: Mrs Wilkinson, it sounds like—and this is fine; this will mean we will be able to move on fairly quickly—what you are saying is that, in the lead-up to this entire process and the entire debate and discussion that were held, the only role that Fiscal Group engaged in was the direct briefing of your minister, and it had no other involvement. Is that correct?

Mrs Wilkinson : Yes. We have briefed our minister over months about a range of issues that cabinet have considered in relation to Federation, as you know, in relation to taxation. Our briefings do not just start the day before a meeting. But, as you are aware, the Federation process has been running for an extended period, as has consideration of taxation, and we have been briefing the Treasurer throughout that entire process for his participation in the cabinet and—

Senator GALLAGHER: In relation to the income-tax-sharing idea, how long has Treasury been working on that?

Mrs Wilkinson : We have been briefing on a range of taxation issues for an extensive period.

Ms Steel : Premier Weatherill raised a proposal in 2015, and the treasurers undertook to have a look at that.

Senator GALLAGHER: That was a different proposal to the one that the Prime Minister floated.

Ms Steel : That is correct, but that was a role Treasury played in—

CHAIR: Fiscal Group was involved in that?

Ms Steel : Fiscal Group was involved to the extent of looking at Commonwealth payments to the states.

CHAIR: Are Commonwealth federal relations within Fiscal Group?

Ms Steel : Yes.

CHAIR: How could it be then, if there is modelling done on state-federal taxation arrangements, that Fiscal Group would not know about it or be involved in it?

Mr Raether : I do not think we are saying we did not know about it; we are saying we briefed the Treasurer as part of the normal arrangements ahead of COAG.

Mrs Wilkinson : But we did not do modelling, because it would have been done by Revenue.

CHAIR: You are saying you did not do modelling?

Mrs Wilkinson : Fiscal Group.

CHAIR: Fiscal Group did not do modelling. But I cannot understand how anyone else could have done modelling if Commonwealth-state relations fall under Fiscal Group. I have sat through so many estimates.

Mrs Wilkinson : Taxation modelling is done by Revenue Group to the extent that there is modelling.

Senator O'NEILL: You do not do modelling; they do the modelling. Is that what you are saying?

Mr Raether : We have a Commonwealth-State Relations Division, which has a number of functions in terms of actually making payments to the states. As to the Commonwealth-state relations between the levels of government, that is obviously primarily through the COAG—

CHAIR: For the special purpose grants, that entire process is done through Fiscal Group; correct?

Mr Raether : The payments are made through the Commonwealth-State Relations Division; that is correct.

CHAIR: Of Fiscal Group?

Mr Raether : That is right.

Ms Steel : And preparation of budget estimates.

CHAIR: A rearrangement of state-federal taxation arrangements, while I understand that there would be revenue implications and Revenue Group would be involved, certainly has other implications on state-federal relations; correct? Fiscal Group would be involved. I cannot understand the situation. I cannot envisage a scenario where Revenue Group would be involved and you would not know about it.

Mr Raether : We do know about it. I think we are saying that we were part of the whole-of-government process with the Department of the Prime Minister and Cabinet leading up to COAG, so we were involved in the process—

CHAIR: No, no. What I asked was this. I said this. Firstly I asked whether or not you, Fiscal Group, had done any modelling. Your answer was, 'No, Fiscal Group has not done modelling.' Then the question was, 'Has Treasury done modelling?' and your response was, 'Revenue Group may have done modelling,' and you were going to check that. I just cannot believe that there could be a situation where the Revenue Group did modelling, without the inclusion of Fiscal Group, if state/federal relations falls under Fiscal Group within Treasury.

Mr Raether : To be clear, the Department of the Prime Minister and Cabinet had a secretariat to do with the federation process. The whole federation process and the green paper process that preceded it have been run out of the Department of Prime Minister and Cabinet. As part of our central agency role, we obviously work with the Department of the Prime Minister and Cabinet and brief the Treasurer on federation matters within Fiscal Group.

CHAIR: I will ask the Department of Prime Minister and Cabinet. With modelling, economic modelling, is there a modelling function within PM&C or do they draw on you for that?

Mr Raether : What do you mean by modelling? Do you mean costings?

CHAIR: Let me ask it this way. I use the term 'modelling' and that has its own meaning. Had you prepared any analysis?

Ms Steel : Yes, we have.

Mr Raether : We provide advice to the Treasurer on the full range of federation options.

CHAIR: Had you provided analysis to the Treasurer prior to the 30th and 31st regarding the direct matters raised in the Prime Minister's statement?

Mr Raether : It goes to the nature of the advice that we have provided. What we can say is that we did provide advice to the Treasurer as part of that process, ahead of COAG, so he was briefed as per the normal process, which would include the matters to be discussed at COAG.

CHAIR: Sure. I am trying to work out if the exact same thing has happened or if it is different. I will paraphrase the advice of the Department of Education and Training, but I do not want to do them a disservice, so if the Hansard record is incorrect we can fix it later. Their advice effectively was that they went through a process, which concluded at the end of the green paper. One of the four high-level options was around state and federal funding arrangements being looked at, which, again, was one of the options. There was a quiet period up until the announcement by the Prime Minister on the 30th and 31st. Then they started briefing on what the consequences of that would be, obviously for their own minister, for their own appropriate purposes. The evidence both departments gave earlier seemed to be that you were both in the same boat.

Mrs Wilkinson : We have been briefing the Treasurer throughout the duration of this process. So to the extent that you are characterising it as a stop, and then nothing, no, we are briefing throughout this process up until and for the COAG meeting. So we have not been briefing and had a hiatus of briefings. We have briefed since the commencement of the federation paper, at process, and have been consistently briefing the Treasurer throughout this entire process in relation to—

CHAIR: But you have not modelled the economic consequences?

Mr Raether : As I said, I do not know what you mean by modelling.

Senator O'NEILL: You have done analysis?

Mr Raether : Throughout the whole period we have done analysis and advice to the Treasurer on federation options.

Senator O'NEILL: For clarification, you are in a different situation from what was described by the education department, in that they said that their engagement in advice around four options, one of which was for the federal government to cease funding—to change its funding model—and hand all responsibilities for government schooling to the states. But their part in that process finished in June. If I hear you correctly, you went on to do analysis for the Treasurer, following on from June, around models that were offered out of the green paper process.

Mr Raether : I think we have already said that we briefed throughout the period, including ahead of COAG, as we normally would, the Treasurer being a senior minister and part of whole-of-government processes that consider the COAG mandate before COAG. So we certainly do provide analysis and briefings to the Treasurer on those matters.

Senator O'NEILL: Did you do analysis on the announcement that the Prime Minister made, which was that the federal government would remove itself from funding of state government schools?

Mr Raether : That goes to the nature of the particular advice and the options that we provided, which is the nature of our advice—

Senator O'NEILL: But your advice arose out of the green paper process and you have continued to give advice throughout the period from June last year up to 31 March, and continued—

Mr Raether : As we have said, we have provided advice on federation matters—

CHAIR: So you have provided advice and analysis to the Treasurer, who is obviously your minister, in the lead up to the 30th and 31st, but you did not provide advice or analysis to the Department of Prime Minister and Cabinet in the lead-up to the 30th and 31st. Is that correct?

Mr Raether : We do not provide advice to the Department of Prime Minister and Cabinet. They are a separate agency with their own capability that provides advice to the Prime Minister—

CHAIR: Your expertise gets drawn on?

Mr Raether : We are part of whole-of-government processes. We obviously talk to PM&C a lot about a range of policy issues, including federation and tax matters. So we certainly are always engaging with the Department of Prime Minister and Cabinet. That is the standard process.

CHAIR: The secretary of the Department of Education and Training said this morning that the first that they were involved with or became aware of the Prime Minister's announcement on the 30th and 31st was through the media. Is that the same situation for Fiscal Group?

Mr Raether : When we became aware of the Prime Minister's announcement?

CHAIR: The education department said they were not involved in the formulation of that. They said that is a matter for PM&C.

Mr Raether : We are not involved in formulating an announcement for the Prime Minister.

CHAIR: Sure, but from time to time when government announcements are made that relate to other portfolio areas, ministers and departments are sometimes not given a heads-up. That is a fact. That is a matter for government—

Mr Raether: I can take it on notice. I do not think either of us was personally involved in drafting material for the Prime Minister. We would not normally.

CHAIR: No-one here was personally involved in drafting material. Whether there were others who were involved in drafting material, you cannot speak for others. You will find out if others were involved in drafting material.

Mr Raether: Yes.

CHAIR: Is that the same for—

Mr Thomann: We were in the same situation.

CHAIR: To clarify, you were not involved in the drafting or preparation of material?

Mr Thomann: We were not involved in the preparation of anything in relation to that announcement.

CHAIR: That would mean that in the immediate period leading up to the 30th and 31st your expertise, as far as you and aware—from the people who are present—was not drawn upon.

Mr Thomann: I am trying to be helpful. I can only repeat what I said previously. We obviously were involved in briefing the Treasurer prior to that COAG. So our expertise was obviously drawn upon in our normal role of briefing the Treasurer ahead of that COAG meeting.

Senator GALLAGHER: Can you tell the committee at what point Treasury provided advice—I do not want to know what the advice says—in terms of the possibility that the Commonwealth would withdraw from funding public schools?

Mr Raether: I suppose that goes to the nature of the advice that we provide—

Senator GALLAGHER: I am not asking about the advice. I am just asking at what point. I have heard the evidence you have provided—

Mrs Wilkinson: But it does go to the nature, doesn't it, when you are asking at what point we provided advice—

CHAIR: No. We have been through this process so many times before. We are not asking anything about the content of the advice. We are not asking about the details of it.

Mrs Wilkinson: But you are, aren't you?

CHAIR: No, we are not.

Senator GALLAGHER: I do not want to know what the advice was. I am asking and what point. We have been told today that there were some options flagged in a white paper 12 months ago that essentially stopped with the change in prime ministers. The federation process, I think we can all accept, stalled. Then there was an idea floated in the week preceding the COAG meeting that flagged the possibility of a fairly substantial change in the way education funding has been provided historically. I am asking at what point Treasury became involved in that.

Mr Raether: I think we would have to take it on notice if you are asking the particular time when we sent up the briefing—

Senator GALLAGHER: That is all I am asking. I am not asking about the nature of the advice. I am asking at what point was Treasury either asked to provide work on or self-initiated work on that proposal. That is the question.

Mr Raether: I think we will take that on notice.

Senator GALLAGHER: So there is nobody here who can answer that?

Senator O'NEILL: Did you do work on that?

Mr Raether: It goes to the nature of our advice—

Senator O'NEILL: No, you either did or you did not. Did you do work on changes to education funding for the Treasurer?

Mrs Wilkinson: Throughout the course of the federation process, a range of options, a range of analysis and a range of work have been done. We have provided—

Senator O'NEILL: Because that was one of the options? So you have done work on that?

Mrs Wilkinson : That is in the papers, so we have provided advice throughout the period since the federation process began on the broad range of options that are available.

Senator O'NEILL: I want to get an understanding of the time that would be involved in providing quality advice to the Treasurer about such a substantive policy change. How much time would the department have to invest in that—allocation of people, resources and timing? Is it that he might have dialled a number the week before COAG and said, 'Can you get me some numbers on this,' or is it a month-long or a three-month long process?

Mrs Wilkinson : Again it is not a point in time. In the context of the federation white paper process since the commencement we have been preparing advice. Obviously as you go through that advising process the skill, the expertise and the analysis on whatever the issue is builds. It is very hard to say how much time is devoted to something like this, which is a long-running process. You are building up a range of advice on a range of areas, including obviously the state government proposals that we have prepared analysis on. We could take it on notice, but I am just not sure how we could quantify that just because it is not a start from nothing and stop sort of process.

CHAIR: The broad evidence that you have provided effectively says that a lot of these questions are more appropriately going to be placed with Prime Minister and Cabinet, who have more direct line item responsibility for a lot of these matters. We do not want to hold you up unnecessarily. On a slightly different matter—and correct me if this is in the wrong place because I imagine this might be more for the macro group—the Reserve Bank recently said that inflation is expected to remain low for some time; is that correct? Are you aware of that?

Mr Raether : I think both of us, unfortunately, would have to pass that to the macroeconomic group.

CHAIR: I will put a few questions on notice. Someone somewhere may be listening to this and they may be able to get me an answer. The eight years of the budget assume that the CPI will be at 2.5 per cent. At budget this estimate could be reduced, or could not be reduced, in line with the Reserve Bank's estimate and this will flow through to a reduction in school funding under the government's CPI school policy. As I understand it, the government has made very clear what its funding proposal is and it directly relates to the CPI. I have two questions, and I understand if you need to take this on notice. It is possible that the lower inflation will see further reduction in the funding available to schools in the budget if there is no policy shift from the government; correct? You can take that on notice.

Mr Raether : There are two questions there?

CHAIR: That was the first question.

Mr Raether : One is the—

CHAIR: The first question is: is it possible that lower inflation will see a further reduction in the funding available to schools in the budget?

Mr Raether : The Department of Education can probably provide more specific advice as to exactly when and how the CPI parameter is applied to the education funding. I think there are two issues there—

CHAIR: Wouldn't that be Finance and Treasury?

Mr Raether : It goes to the particular mechanics of when the state gets the payment. One issue you have articulated is: what is in the forward estimates in terms of an estimation? Certainly that goes to the first part of your question about what is booked into the budget. I am just flagging that I am not across the particular mechanics of whether that is the actual CPI versus a forecast CPI and when it flows through to the payment to the states.

CHAIR: Does Finance know the answer to that?

Mr Thomann : We review and validate estimates on an ongoing basis and it is reported in each budget update. Certainly schools funding estimates are reviewed on the basis of data provided by Education in relation to estimated enrolments, which is based on state data. It is also based on parameters around indexation, so—

CHAIR: One of those parameters at the moment that has been outlined by the government repeatedly is the CPI agreement.

Mr Thomann : The government's policy is that from 2018 the funding base in 2017 will be indexed by CPI.

Mr Raether : I think the government has also said, as part of the COAG communique, that it will have ongoing discussions with the states about post-2017 funding arrangements.

CHAIR: Sure. Mr Raether, that is flagging a possible policy change. The current policy relates directly to CPI. You are right: the government may choose—it may be a different government, who knows? The government may or may not make that decision and it will go through its appropriate processes—cabinet, COAG; proper processes. As it currently stands, the policy relates and makes direct reference to CPI. I may have been taking this the wrong place, but my understanding was—and, obviously, I could be wrong here—that the determination of that envelope based on the policy was a matter for Finance. You are saying, no, the department itself will—to whom should I be asking this question?

Mr Thomann : You are asking the right department: Finance reviews all estimates in preparation for every budget update on the basis of a whole range of parameters, and indexation parameters are particularly relevant to school funding. The government's policy is, that from 2018, the indexation parameter to be applied will be CPI, so we are in the process of reviewing current parameters for data from the department of education and that will inform our validation of the estimates that will appear in the budget.

CHAIR: Sure. But the CPI component, that calculation—that is not funded by the department of education; that is a number, right?

Mr Raether : No, no. To be clear, Treasury in particular are involved in estimating and forecasting CPI. I think what Mr Thomann is talking about is they get the parameter sheet, which includes the CPI parameter, and would validate the particular estimate to be published in the budget papers for that education component. The point I was making previously is that, in terms of the money that actually flows to the states, that is a better question for the department of education, because that is not a budgeting, forecasting matter; that is a payment matter.

Senator O'NEILL: The amount of money that they will have for distribution is going to be impacted by whatever the CPI is at the time.

Mr Raether : That is right. So parameters go up and down, and CPI could be higher or lower than the forecast.

Senator O'NEILL: So the senator's question was: CPI is assumed at 2.5 per cent—if it goes down to 1.9 per cent, does that mean there will be a smaller amount of money for the states to access?

Mr Raether : I think it means that the budget would provide a smaller amount of money in that case, if it went down in terms of what we publish. When the payment to the states is actually made, that will depend on CPI closer to that date is my understanding, but that is the bit of the question you would have to direct to the department of education.

CHAIR: A final thing you can take on notice, Mr Raether—you will need to take this on notice, I believe. At the 2014-15 budget estimates, Treasury provided a 10-year projection of the impact of the government's school CPI indexation policy. It was question BET41 and Mr Ray, head of fiscal group, took away and came back with a 10-year projection. Obviously, we were hoping for the last two years as part of that, if we can get an updated version of the answer to that question. So the question was BET41—you wouldn't have that information with you, would you?

Mr Raether : I think I have the original BET41, but we would have to take on notice, if you wanted further figures.

CHAIR: What we would like to have is that same 10-year projection—obviously, there are the two latest years that we do not have; I believe it will be two years from 2014-15.

Mrs Wilkinson : We will take it on notice.

CHAIR: Thank you. I am going to apologise very quickly to PM&C. We actually have not had a break for broadcasting and we want to do the right thing by them. If possible, we may just have a quick 10-minute break and we will try and be as brief as possible. We know we are running late and holding PM&C up.

Proceedings suspended from 11:15 to 11:22