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Wednesday, 26 February 2020
Page: 1756

Mr TEHAN (WannonMinister for Education) (10:00): I move:

That this bill be now read a second time.

Today I'm introducing the Australian Education Amendment (Direct Measure of Income) Bill 2020. It supports the broader Australian government commitment to provide every child with a quality education, regardless of where they live and what school they attend, by providing funding that is fairly and transparently distributed, and allocated according to need.

The funding of non-government schools in Australia is a shared responsibility between the parents and guardians of the students attending those schools, the Australian government and the state and territory governments.

Through this bill, the Australian government is introducing a more accurate methodology to calculate the capacity of a non-government school community to contribute to the cost of schooling.

This more targeted and accurate direct measure of income will support the Australian government needs based funding model for Australian schools.

Under the government's Quality Schools Package, there will be more Commonwealth government money for disadvantaged students through loading payments, including those from remote and regional areas, those with a disability and Indigenous students.

For the first time, real needs based funding will be provided and will grow from $17.5 billion dollars in 2017 to $32.5 billion dollars in 2029.

Through this bill, the new methodology will use the best available data to estimate the capacity of parents and guardians to contribute to the cost of schooling, which will ensure more funding flows to the schools that need it the most.

The bill proposes changes to the capacity to contribute methodology and schools' transition to the uniform Commonwealth share of the schooling resource standard. The financial impact of these changes is an estimated additional $1.3 billion in Commonwealth recurrent funding over the budget and forward estimates from 2019-20 and 2022-23, and an estimated $3.4 billion increase in recurrent funding over ten years from 2019-20 to 2028-29. This will see the Commonwealth's investment in education increase to a total of over $314 billion dollars from 2018 to 2029.

The bill also includes measures to support financial certainty by allowing schools time to plan as the new arrangements are implemented.

Separate to this bill, but as part of our broader reforms to education funding, the government has also established a $1.2 billion Choice and Affordability Fund that will assist schools during the transition to the new direct measure of income contained in this bill as well as support parental choice and affordability of schools, assist schools in regional and remote areas and in drought affected areas, enhance student wellbeing and support initiatives and lift outcomes in underperforming schools.

The Australian government contributes funding to government and non-government schools through the Australian Education Act 2013.

As the Australian Education Act currently stands, recurrent school funding is calculated by reference to a base amount of funding for every primary and secondary student, along with six loadings that provide extra funding for disadvantaged students and schools. This is commonly referred to as the 'schooling resource standard'. For most non-government schools the base component of the schooling resource standard is discounted by a 'capacity to contribute percentage'.

The current capacity to contribute discount is calculated using an area based measure. Under this methodology, a school community's capacity to contribute is calculated by averaging certain indicators of the socioeconomic status (SES) for each Australian Bureau of Statistic (ABS) Statistical Area Level 1 (SA1) in which the students at the school reside—that is, the SES score for a school is based on an averaging of characteristics of all people residing in a certain geographical area (SA1), not just families of students attending the school. This methodology uses data from the ABS 2011 Census of Population and Housing.

The new methodology included in this bill was the result of recommendations made by the National School Resourcing Board in its Review of the socio-economic status score methodology: final report June 2018.

As part of the review, the board consulted widely, it received 34 substantive responses to the issues paper, including a number of detailed proposals which informed the board's consideration and analysis. The board also received 261 submissions which were largely part of a coordinated standard response from individuals or school communities.

Board members undertook 38 face-to-face consultations in all states and territories with non-government education authorities, school leaders and communities, state and territory government agencies, researchers, policy analysts and other interested parties.

The Australian government agreed to all six recommendations made by the board and this bill gives effect to the relevant recommendations to implement the capacity to contribute function.

The review found that recent innovations mean that a better measure is now available to calculate a school community's capacity to contribute, based on a more robust and reliable set of data.

The new direct measure of income is a targeted, more accurate approach, ensuring funding flows to the schools that need it most. The bill gives effect to the changes required to the calculation of financial assistance for non-government schools and rates of transition to the nationally consistent Commonwealth share under the act. Over 2020 to 2022, schools will move to the new direct measure of income when it is most financially beneficial for them to do so. During 2020 and 2021, the capacity to contribute percentage of schools will be based on the best of one of three options including the current SES methodology, the SES methodology using more recent data and the new direct measure of income. This will allow schools time to plan and adjust to the new measure.

As a result of the changes proposed in the bill there is also the need for future amendments to the Australian Education Regulation to give effect to the new direct measure of income. The Australian Education Regulation outlines the financial accountability and other conditions that are required to enable funding to be provided under the Australian Education Act.

I will provide a summary of our proposed changes to the Australian Education Regulation to state and territory governments and the non-government school sector as part of our consultation on the implementation of the new measure. It will also assist with the consideration of this bill.

The amendments to the regulation will cover how the direct measure of income capacity to contribute scores are calculated. The amendments will also include how non-government schools transition to the nationally consistent Australian government share of the Schooling Resource Standard.

The Australian government will continue to consult with schools on the new direct measure of income and how it affects them. We will continue to provide information as soon as possible to help schools plan financially for their future.

In addition, the bill will amend the Australian Education Act to clarify the authority and appropriation to continue to support the making of GST inclusive payments of non-government schools funding. This will preserve the longstanding arrangements for the payment of GST-inclusive amounts.

In summary, the bill will:

•   amend terminology from 'SES score' to capacity to contribute or 'CTC score';

•   enable the regulation to prescribe a new method for calculating a non-government school's CTC score by reference to a direct measure of income of a school community;

•   enable the regulation to alter the way in which the Commonwealth share for a non-government school is calculated, and alter the period over which that transition occurs, in order to manage any adverse financial impacts arising from the change in capacity to contribute score methodology;

•   broaden the definition of a 'majority Aboriginal and Torres Strait Islander' school and enable the minister to make a determination that a school is likely to be a majority Aboriginal and Torres Strait Islander school for the year to avoid any unintended application of the capacity to contribute methodology; and

•   amend the act to provide clear authority and appropriation to continue to make GST-inclusive payments, where necessary.

Government schools will continue to receive record levels of total Australian government funding, with an estimated $127.8 billion dollars of recurrent funding expected to flow to government schools from 2018 to 2029 providing strong growth in funding.

In fact, the government's spending is growing fastest for state schools at around 6.4 percent per student each year from 2018 to 2023, compared to per student growth of five percent for the non-government sector.

As a result of this bill, the school funding model will remain sector blind and Australian government funding for non-government schools will continue to transition to 80 per cent of the Schooling Resource Standard. The government will continue to refine the model over time.

The Australian government is delivering needs based funding arrangements that ensure students with the same need in the same sector attract the same level of support so that every Australian child, no matter where they live, can have access to a world-class education.

I commend the bill.

Debate adjourned.