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2016-2017
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
AUSTRALIAN EDUCATION AMENDMENT BILL 2017
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Education and Training,
Senator the Honourable Simon Birmingham)
AUSTRALIAN EDUCATION AMENDMENT BILL 2017
OUTLINE
The Australian Education Act 2013 (the Act) came into effect on 1 January 2014, and is the
principal legislation for the provision of Australian Government recurrent funding for
schooling.
Funding under the Act is provided to state and territory governments for distribution to
approved authorities for government and non-government schools, block grant authorities,
capital grants authorities, and non-government representative bodies. Entities in receipt of
Commonwealth funding under the Act must meet the conditions of financial assistance that
are outlined in the Act.
The Act currently outlines funding calculations for schools, reform arrangements and a
range of technical matters. The Australian Education Amendment Bill 2017 (the Bill) is
presented in a single schedule divided into three parts, with changes to the calculation of
funding for schools, other policy changes (relating to reform and accountability
arrangements) and a range of miscellaneous and technical amendments.
As the Act currently stands, recurrent funding varies depending on negotiated arrangements
with state or territory governments. Under current arrangements, all non-government
schools and systems, together with states and territories that entered into bilateral
agreements under the National Education Reform Agreement, are classified as
'participating'. Only New South Wales, South Australia and the Australian Capital Territory
meet the legal requirements to be 'participating', with other states and territories
'non-participating' under the Act.
The Government has provided funding to all states and territories as if they were
participating under the Act, in line with the final offers made to states during negotiations in
2013. Nevertheless, the transition arrangements set out in bilateral agreements and final
offers result in inconsistent arrangements that mean students with the same need in the same
sector are treated differently, simply because of the state or territory in which they live.
Furthermore, funding entitlements are calculated based on previous funding levels, rather
than based on need as measured by the Schooling Resource Standard (SRS). It is estimated
that under current arrangements it will take more than 150 years for all schools to transition
to the SRS.
The Government is committed to deliver needs based funding arrangements that ensure that
students with the same need in the same sector attract the same level of Commonwealth
support. To this end, a number of changes are required to the calculation of financial
assistance for schools under the Act.
In Part 1, the Bill will:
retain the SRS, as recommended by the 2011 Review of Funding for Schooling, led
by Mr David Gonski AC. The SRS will continue to comprise a base per-student
amount, discounted by the school community's capacity to contribute for non-
government schools and supplemented by loadings for disadvantage
move to a funding approach in which the Commonwealth will provide a consistent
Commonwealth share of the SRS, being:
1
o 20 per cent for all government schools, which reflects the Commonwealth's
historic role as the minority public funder of this sector
o 80 per cent for all non-government schools, which reflects the
Commonwealth's historic role as the majority public funder of this sector
ensure that all schools will transition to their relevant share of the SRS by 2027. A
starting Commonwealth share percentage will be established for all Australian
schools based on funding received by approved authorities for schools in 2017. This
share will be adjusted each year from 2018 to 2027 until the relevant
Commonwealth share is reached
provide for transition adjustment funding to assist schools where necessary to adjust
to the new arrangements during the 10 year transition period, with details of
eligibility and fund implementation to be set out in the Australian Education
Regulation 2013 (Regulation)
provide updated base amounts of the SRS (for both base primary and secondary
schools) for 2018, calculated using the same methodology applied to more up-to-
date data (2015 MySchool and 2013-2015 NAPLAN data), and reflecting 3.56 per
cent indexation for 2018
allow for the indexation of base amounts to be tied to an indexation rate to ensure
that funding growth keeps pace with cost and wages growth in the broader economy,
but never drops below three per cent. A new floating indexation rate will generally
apply from 2021, and will be a composite of 75 per cent of the Wage Price Index and
25 per cent of the All Groups Consumer Price Index number published by the
Australian Bureau of Statistics. Nevertheless, the Bill will provide a minimum
indexation rate of three per cent. In addition, a power to set a different rate of
indexation through regulation is included, and for 2019 and 2020 it is intended that
indexation of the base amounts will be set at 3.56 per cent to provide funding
certainty while the sector adjusts to the new arrangements
change the calculation of the 'student with disability' loading to include
differentiated loadings to better reflect the needs of students in the top three levels of
adjustment (supplementary, substantial or extensive) under the Nationally Consistent
Collection of Data on School Students with Disability
require the Minister to determine in writing each individual non-government
school's SES (socio-economic status ) score, which reflects the particular
circumstances of the school, for the purpose of its capacity to contribute percentage.
The power of the Minister to determine a single SES score for a group of schools by
legislative instrument - which gave rise to the so-called 'system weighted' SES
scores for certain non-government schools - is removed by the Bill
reduce the benefit afforded to non-government primary schools under capacity to
contribute calculations.
In addition to changes to the school funding model the Commonwealth is seeking to
strengthen the linkage between Commonwealth financial assistance and the implementation
of evidence-based reforms to improve student outcomes.
The Commonwealth will work with the states and territories to develop and deliver a new
national schooling agreement that will drive reform and help to address declining student
performance.
A number of consequential changes are required to the Act. The changes will reduce the
level of Commonwealth government control over the way schools are operated and the way
funding is used by education authorities.
2
In Part 2, the Bill will:
update the Preamble and Objects of the Act to better align them with the principles
of needs-based and sustainable funding, nationally-agreed goals for schooling, and
nationally-agreed evidence-based reforms
stipulate the following conditions of financial assistance on the states and territories:
o that they implement national policy initiatives for school education as agreed
by the Education Council of the Council of Australian Governments
(Ministerial Council) or otherwise prescribed by the regulations
o that they are party to a national agreement on school education (to be
developed collaboratively through the Council of Australian Governments)
o that they are party to a bilateral agreement with the Commonwealth relating
to implementation of school education reform for both government and
non-government schools within their jurisdiction
o that they fulfil their obligations under the national and bilateral agreements
leave the setting of state and territory funding to the states and territories, however,
to avoid cost shifting to the Commonwealth, the states and territories will be
required to at least maintain their 2017 per-student funding levels as a condition of
Commonwealth funding
stipulate the following new ongoing policy requirements for approved authorities for
non-government schools:
o that they co-operate with their respective states and territories in
implementing national policy reforms and agreements discussed above
o that they implement policy initiatives in accordance with the regulations.
remove the outdated distinction between participating and non-participating schools
to align with the Government's policy to fund states under consistent needs-based
funding arrangements
remove the requirement for approved authorities responsible for more than one
school to have implementation plans, leaving the Government to work cooperatively
with jurisdictions to implement and monitor national policy agreements
remove requirements for approved authorities to have school improvement
frameworks, allowing approved authorities and schools to continue to manage their
improvement processes at the local level, and reduce unnecessary red tape
improve transparency of Commonwealth schools funding by including additional
annual reporting requirements on the Minister through the publication of
Commonwealth funding for all schools.
Implementing and administering the Act since 2014 has also shown some aspects to be
ambiguous, unnecessary or otherwise administratively cumbersome and these will also be
amended.
In Part 3, the Bill will:
refocus the consultation process for significant regulations that impact state and
territory governments, by requiring the Minister to consult with, and have regard to
relevant decisions of, the Ministerial Council prior to making regulations that affect
the ongoing policy or funding requirements of approved authorities for government
schools, or conditions imposed on States and Territories for financial assistance
received under the Act
simplify the Act in relation to the count of students for calculating funding
entitlements, and allowing regulations to specify the administrative detail of the
student count
3
enable some obligations of approved authorities, block grant authorities and non-
government representative bodies, e.g. to acquit Commonwealth schools funding, to
survive the revocation of their approval
amend provisions regarding decisions to vary and revoke approvals to receive
funding under the Act, in order to enable the imposition of conditions intended to
bring approval holders into compliance with the Act, and to streamline the process
for review of decisions by removing the internal review step (approval holders will
retain the right to seek independent external review)
amend provisions relating to reducing funding to, or recovering funding from,
approval holders due to non-compliance or overpayment, so that the Minister must
be satisfied of the circumstances giving rise to the non-compliance or overpayment
enable broader delegation of administrative functions under the Act and Regulation
by the Secretary of the Department.
FINANCIAL IMPACT STATEMENT
The changes to the calculation of school recurrent funding under the Bill result in a
$1.5 billion increase in additional recurrent funding over Budget and forward estimates from
2017-18 to 2020-21 (an increase of $1.1 billion for government schools and an increase of
$366 million for non-government schools) and an $16.4 billion increase in recurrent funding
over 10 years from 2017-18 to 2026-27 ($10.6 billion for government schools and $5.8
billion for non-government schools).
Total recurrent funding for government schools will increase from $6.8 billion in 2017 to
$9.0 billion in 2021 (an increase of 33 per cent), and total recurrent funding for
non-government schools will increase from $10.7 billion in 2017 to $13.1 billion in 2021
(an increase of 22 per cent).
The transition adjustment measure given effect by this Bill has a financial impact of $13.4
million over the Budget and forward estimates ($39.7 million over 10 years from 2017-18 to
2026-27).
4
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Australian Education Amendment Bill 2017
The Australian Education Amendment Bill 2017 (the Bill) is compatible with the human
rights and freedoms recognised or declared in the international instruments listed in
section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Bill
The Australian Education Act 2013 (the Act) came into effect on 1 January 2014, and is the
principal legislation for the provision of Australian Government recurrent funding for
schooling.
Funding under the Act is provided to state and territory governments for distribution to
approved authorities for government and non-government schools, block grant authorities,
capital grants authorities, and non-government representative bodies. Entities in receipt of
Commonwealth funding under the Act must meet the conditions of financial assistance that
are outlined in the Act.
The Act currently outlines funding calculations for schools, reform arrangements and a
range of technical matters. The Australian Education Amendment Bill 2017 (the Bill) is
presented in a single schedule divided into three parts, with changes to the calculation of
funding for schools, other policy changes (relating to reform and accountability
arrangements) and a range of miscellaneous and technical amendments.
As the Act currently stands, recurrent funding varies depending on negotiated arrangements
with state or territory governments. Under current arrangements, all non-government
schools and systems, together with states and territories that entered into bilateral
agreements under the National Education Reform Agreement, are classified as
'participating'. Only New South Wales, South Australia and the Australian Capital Territory
meet the legal requirements to be 'participating', with other states and territories
'non-participating' under the Act.
The Government has provided funding to all states and territories as if they were
participating under the Act, in line with the final offers made to states during negotiations in
2013. Nevertheless, the transition arrangements set out in bilateral agreements and final
offers result in inconsistent arrangements that mean students with the same need in the same
sector are treated differently, simply because of the state or territory in which they live.
Furthermore, funding entitlements are calculated based on previous funding levels, rather
than based on need as measured by the Schooling Resource Standard (SRS). It is estimated
that under current arrangements it will take more than 150 years for all schools to transition
to the SRS.
The Government is committed to deliver needs based funding arrangements that ensure that
students with the same need in the same sector attract the same level of Commonwealth
support. To this end, a number of changes are required to the calculation of financial
assistance for schools under the Act.
5
In Part 1, the Bill will:
retain the SRS, as recommended by the 2011 Review of Funding for Schooling, led
by Mr David Gonski AC. The SRS will continue to comprise a base per-student
amount, discounted by the school community's capacity to contribute for non-
government schools and supplemented by loadings for disadvantage
move to a funding approach in which the Commonwealth will provide a consistent
Commonwealth share of the SRS, being:
o 20 per cent for all government schools, which reflects the Commonwealth's
historic role as the minority public funder of this sector
o 80 per cent for all non-government schools, which reflects the
Commonwealth's historic role as the majority public funder of this sector
ensure that all schools will transition to their relevant share of the SRS by 2027. A
starting Commonwealth share percentage will be established for all Australian
schools based on funding received by approved authorities for schools in 2017. This
share will be adjusted each year from 2018 to 2027 until the relevant
Commonwealth share is reached
provide for transition adjustment funding to assist schools where necessary to adjust
to the new arrangements during the 10 year transition period, with details of
eligibility and fund implementation to be set out in the Australian Education
Regulation 2013 (Regulation)
provide updated base amounts of the SRS (for both base primary and secondary
schools) for 2018, calculated using the same methodology applied to more up-to-
date data (2015 MySchool and 2013-2015 NAPLAN data), and reflecting 3.56 per
cent indexation for 2018
allow for the indexation of base amounts to be tied to an indexation rate to ensure
that funding growth keeps pace with cost and wages growth in the broader economy,
but never drops below three per cent. A new floating indexation rate will generally
apply from 2021, and will be a composite of 75 per cent of the Wage Price Index and
25 per cent of the All Groups Consumer Price Index number published by the
Australian Bureau of Statistics. Nevertheless, the Bill will provide a minimum
indexation rate of three per cent. In addition, a power to set a different rate of
indexation through regulation is included, and for 2019 and 2020 it is intended that
indexation of the base amounts will be set at 3.56 per cent to provide funding
certainty while the sector adjusts to the new arrangements
change the calculation of the 'student with disability' loading to include
differentiated loadings to better reflect the needs of students in the top three levels of
adjustment (supplementary, substantial or extensive) under the Nationally Consistent
Collection of Data on School Students with Disability
require the Minister to determine in writing each individual non-government
school's SES (socio-economic status ) score, which reflects the particular
circumstances of the school, for the purpose of its capacity to contribute percentage.
The power of the Minister to determine a single SES score for a group of schools by
legislative instrument - which gave rise to the so-called 'system weighted' SES
scores for certain non-government schools - is removed by the Bill
reduce the benefit afforded to non-government primary schools under capacity to
contribute calculations.
In addition to changes to the school funding model the Commonwealth is seeking to
strengthen the linkage between Commonwealth financial assistance and the implementation
of evidence-based reforms to improve student outcomes.
6
The Commonwealth will work with the states and territories to develop and deliver a new
national schooling agreement that will drive reform and help to address declining student
performance.
A number of consequential changes are required to the Act. The changes will reduce the
level of Commonwealth government control over the way schools are operated and the way
funding is used by education authorities.
In Part 2, the Bill will:
update the Preamble and Objects of the Act to better align them with the principles
of needs-based and sustainable funding, nationally-agreed goals for schooling, and
nationally-agreed evidence-based reforms
stipulate the following conditions of financial assistance on the states and territories:
o that they implement national policy initiatives for school education as agreed
by the Education Council of the Council of Australian Governments
(Ministerial Council) or otherwise prescribed by the regulations
o that they are party to a national agreement on school education (to be
developed collaboratively through the Council of Australian Governments)
o that they are party to a bilateral agreement with the Commonwealth relating
to implementation of school education reform for both government and
non-government schools within their jurisdiction
o that they fulfil their obligations under the national and bilateral agreements
leave the setting of state and territory funding to the states and territories, however,
to avoid cost shifting to the Commonwealth, the states and territories will be
required to at least maintain their 2017 per-student funding levels as a condition of
Commonwealth funding
stipulate the following new ongoing policy requirements for approved authorities for
non-government schools:
o that they co-operate with their respective states and territories in
implementing national policy reforms and agreements discussed above
o that they implement policy initiatives in accordance with the regulations.
remove the outdated distinction between participating and non-participating schools
to align with the Government's policy to fund states under consistent needs-based
funding arrangements
remove the requirement for approved authorities responsible for more than one
school to have implementation plans, leaving the Government to work cooperatively
with jurisdictions to implement and monitor national policy agreements
remove requirements for approved authorities to have school improvement
frameworks, allowing approved authorities and schools to continue to manage their
improvement processes at the local level, and reduce unnecessary red tape
improve transparency of Commonwealth schools funding by including additional
annual reporting requirements on the Minister through the publication of
Commonwealth funding for all schools.
Implementing and administering the Act since 2014 has also shown some aspects to be
ambiguous, unnecessary or otherwise administratively cumbersome and these will also be
amended.
In Part 3, the Bill will:
refocus the consultation process for significant regulations that impact state and
territory governments, by requiring the Minister to consult with, and have regard to
relevant decisions of, the Ministerial Council prior to making regulations that affect
7
the ongoing policy or funding requirements of approved authorities for government
schools, or conditions imposed on States and Territories for financial assistance
received under the Act
simplify the Act in relation to the count of students for calculating funding
entitlements, and allowing regulations to specify the administrative detail of the
student count
enable some obligations of approved authorities, block grant authorities and non-
government representative bodies, e.g. to acquit Commonwealth schools funding, to
survive the revocation of their approval
amend provisions regarding decisions to vary and revoke approvals to receive
funding under the Act, in order to enable the imposition of conditions intended to
bring approval holders into compliance with the Act, and to streamline the process
for review of decisions by removing the internal review step (approval holders will
retain the right to seek independent external review)
amend provisions relating to reducing funding to, or recovering funding from,
approval holders due to non-compliance or overpayment, so that the Minister must
be satisfied of the circumstances giving rise to the non-compliance or overpayment
enable broader delegation of administrative functions under the Act and Regulation
by the Secretary of the Department.
Human rights implications
The Bill engages the following human rights:
the right to education - Article 13 of the International Covenant on Economic,
Social and Cultural Rights, and Articles 28 and 29 of the Convention on the Rights
of the Child
the rights of persons with disabilities - Articles 9 and 24 of the Convention on the
Rights of Persons with Disabilities
the right to privacy - Article 17 of the International Covenant on Civil and Political
Rights, and Article 16 of the Convention on the Rights of the Child.
Right to Education
The Bill engages the right to education in Article 13 of the International Covenant on
Economic, Social and Cultural Rights. Article 13 recognises the right of everyone to
education, which is directed towards the full development of the human personality and the
sense of its dignity and to enable all persons to participate effectively in society. It also
recognises the liberty of parents and guardians to choose non-government schools for their
children, provided those schools conform to the minimum educational standards set out by
the Commonwealth. The right to education for children is also found in Articles 28 and 29
of the Convention on the Rights of the Child.
One of the main aims of the Bill is to link Commonwealth funding to evidence-based
reforms proven to lift student outcomes. The Bill will ensure that the Commonwealth will
work collaboratively with the states and territories to develop and implement a new national
agreement on school education. This promotes the right to education.
The Bill removes historically-based inequities undermining Commonwealth funding for
school education, and will ensure all government and all non-government schools receive a
consistent sector-based share of Commonwealth funding by 2028. This will ensure all
schools are funded according to the same needs-based funding provisions of the Act. This
promotes the right to education.
8
The Bill will decrease Commonwealth interference in the way schools are operated and free
up resources to allow principals, teachers and school communities to manage delivery of
education at a school more effectively. The Bill removes the requirement for approved
authorities for more than one school to have an implementation plan, and for all approved
authorities to have school improvement frameworks and school improvement plans in place
for each of their schools. This removes duplication of existing requirements and frees up
resources to focus on the delivery of education. This promotes the right to education.
The Bill is compatible with the right to education.
Rights of Persons with Disabilities
The Bill engages Articles 9 and 24 of the Convention on the Rights of Persons with
Disabilities. Article 9 recognises the right of persons with disabilities to participate fully in
all aspects of life, and Article 24 recognises the right of persons with disabilities to an
inclusive education.
One of the key changes to the funding calculations made by this Bill is to modify the
existing 'student with disability' loading, in order to leverage the Nationally Consistent
Collection of Data on School Students with Disability (NCCD). A key aspect of the NCCD
is determining the number of students who are being provided with "a reasonable
adjustment to access education because of disability" and judging the level of adjustment
being provided (support provided within quality differentiated teaching practice,
supplementary adjustment, substantial adjustment and extensive adjustment).
The Bill amends the student with disability loading to allow for funding to be provided at
different rates based on students' required level of adjustment. This will enable funding to
be better targeted to student need as identified through the NCCD. This change will help
ensure that schools are resourced in order to provide school education to students with a
disability.
The Bill is compatible with the rights of persons with disabilities.
Right to privacy
The right to privacy is set out in Article 17 of the International Covenant on Civil and
Political Rights, and Article 16 of the Convention on the Rights of the Child.
The Act permits the use and disclosure of 'protected information' in accordance with the
regulations, and to publish protected information other than personal information (within the
meaning of the Privacy Act 1988). 'Protected information' is defined in section 6 of the Act
as any information obtained under or for the purposes of the Act. The Act does not 'protect'
information, in that it is not intended to prohibit the lawful use or disclosure of information
obtained under or for the purposes of the Act.
The term 'protected information' has caused some confusion among schools and in the
administration of the Act. Consequently, the Bill will change this definition to 'school
education information'.
To the extent that the right to privacy is engaged, this change to the terminology of
information obtained under or for the purposes of the Act, does not impact on the right to
privacy contained in Article 17 of the International Covenant on Civil and Political Rights,
or Article 16 of the Convention on the Rights of the Child.
9
The Bill is compatible with the right to privacy.
Conclusion
The Bill is compatible with human rights because it advances the protection of human
rights.
Circulated by authority of the Minister for Education and Training, Senator the
Honourable Simon Birmingham
10
REGULATION IMPACT STATEMENT
Name of department/agency: Department of Education and Training
OBPR Reference number: 19792
Name of proposal: Schools Funding and Reform Arrangements
Summary of the proposed policy and any options considered:
The proposal in this Bill seeks to affirm a needs-based funding model. Over ten years from
2018, Commonwealth funding for schools will transition to consistent Commonwealth
shares of the Schooling Resource Standard (SRS) so that students with the same need in the
same sector attract the same Commonwealth funding.
The Bill will further support the implementation of evidence-based education policies that
will support improved student outcomes through nationally and bilaterally agreed reform
activity. It also seeks to ensure accountability for the use of Commonwealth funding by
linking funding growth to the implementation of reforms.
New arrangements recognise the primary responsibility that state and territory governments
have for schooling within each jurisdiction, and will focus on evidence based reform activity
that will drive improvements in outcomes across all sectors.
What are the regulatory impacts associated with this proposal?
Decisions on national reforms will be made through the Ministerial Council, including
Regulatory Impact Requirements--where an individual reform may have a regulatory
impact on businesses, a COAG Regulatory Impact Statement process will be triggered to
assess costs and benefits.
What are the regulatory costs associated with this proposal?
Nil - there are no regulatory costs for business, community organisations or individuals
associated with this proposal or associated legislative changes.
Regulatory burden and cost offset estimate table
Average annual regulatory costs (from business as usual)
Change in costs Business Community organisations Individuals Total change in
($ million) cost
Total, by sector ($0) $0 $0 ($0)
Cost offset ($ million) Business Community organisations Individuals Total, by source
Agency $ $ $ $
Are all new costs offset?
Yes, costs are offset No, costs are not offset Deregulatory--no offsets required
Total (Change in costs - Cost offset) ($ million) = ($Z)
11
What are the offsets for the regulatory costs associated with this proposal?
N/A
12
AUSTRALIAN EDUCATION AMENDMENT BILL 2017
NOTES ON CLAUSES
Clause 1 - Short title
Clause 1 provides for the Act to be the Australian Education Amendment Act 2017.
Clause 2 - Commencement
Subclause 2(1) inserts a three column table setting out commencement information for
various provisions in the Bill. Each provision of the Bill specified in column 1 of the table
commences (or is taken to have commenced) in accordance with column 2 of the table and
any other statement in column 2 has effect according to its terms.
The table has the effect of providing for the following commencement times:
matters to commence on the day the Act receives the Royal Assent:
o sections 1 to 3 and anything else in the Act not otherwise covered by the
table
o item 109 of Schedule 1
matters to commence on 1 January 2018:
o Schedule 1, other than item 109.
Item 109 of Schedule 1 to the Bill is a transitional provision relating to the making of
regulations before 1 January 2018, when those regulations will commence on or after
1 January 2018. As it relates to the making of regulations before 1 January 2018, it needs to
commence before then.
Subclause 2(2) provides that any information in column 3 of the table in subclause 2(1) is
not part of the Act and may be inserted or edited in published versions of the Act.
Clause 3 - Schedule(s)
Clause 3 provides that any legislation that is specified in a Schedule is amended or repealed
as set out in the applicable items in the Schedule and that any other item in a Schedule has
effect according to its terms.
13
LIST OF ABBREVIATIONS
Act Australian Education Act 2013.
BGA Block grant authority.
Ministerial Council Education Council of the Council of Australian Governments.
NCCD Nationally Consistent Collection of Data on School Students with
Disability.
NGRB Non-government representative body.
Regulation Australian Education Regulation 2013.
Transitional Act Australian Education (Consequential and Transitional Provisions)
Act 2013.
14
Schedule 1 -- Amendments
Part 1 - Funding for Schools
Explanation
Consistent calculation of recurrent funding for all schools under the
Act
Currently, Commonwealth recurrent funding for schools under the Act is calculated using
six different methodologies, set-out across Divisions 2, 3 and 5 of Part 3, and Part 4, of the
Act. These methodologies involve treating approved authorities, and the schools those
authorities are approved for, in differing ways.
Recurrent funding for government schools in states and territories that are subject to Part 4
of the Act, that is, Queensland, Victoria, Tasmania, Western Australia and the Northern
Territory, is not directly calculated under the Act, nor does the Act directly calculate and
attribute needs-based funding loadings for those schools. Instead, recurrent funding is
distributed, at the state and territory level, and indexed each year in accordance with a
legislative instrument made by the Minister for Education and Training.
Recurrent funding for non-government and government schools that are subject to
Division 5 of Part 3 of the Act, that is, schools whose approved authorities are in transition,
is calculated at the approved authority level for all of the authority's schools and using four
differing methodologies (depending on the funding characteristics of those schools and
approved authorities in 2013).
Generally, the effect of these differing methodologies is as follows:
recurrent funding in relation to some schools is determined each year by the
Minister, with the Minister able to determine any amount between a minimum floor
and a maximum cap. The minimum floor is calculated by reference to a per-student
amount, indexed each year by 4.7 per cent, multiplied by all the students at all the
schools of the relevant approved authority. The maximum cap is calculated by
reference to the total of what the schools of the approved authority would receive if
those schools were subject to Division 2 of Part 3 of the Act
recurrent funding in relation to some schools is calculated each year by reference to
a per-student amount, indexed each year by 3 per cent, multiplied by all the students
at all the schools of the relevant approved authority
recurrent funding in relation to some approved authorities that are only approved for
special schools or special assistance schools, is also calculated each year by
reference to a per-student amount, indexed each year by 3 per cent unless increased
by regulation, multiplied by all the students at all the schools of the relevant
approved authority
recurrent funding in relation to some schools that have transferred between approved
authorities since 1 January 2014 is determined each year by the Minister.
The Act does not directly calculate and attribute needs-based funding loadings for these
schools.
15
Recurrent funding for non-government schools that are subject to Division 2 of Part 3 of the
Act, such funding is calculated at the school level, with loadings also calculated and
attributed in relation to certain characteristics of the school and its students (for example,
loadings in relation to students with a disability, students that identify as Aboriginal and
Torres Strait Islander, and location and size of the school).
In addition to the six differing methodologies for calculating recurrent funding under the
Act, numerous non-legislative arrangements also impact the amount of recurrent funding
calculated under Division 5 of Part 3, and Part 4 of the Act.
The complexity, and inconsistency, that is inherent in calculating and providing recurrent
funding for schools under the Act using six differing methodologies, gives rise to potential
uncertainty for the schooling sector, creates potential inequity and confusion in relation to
Commonwealth schools funding, and limits opportunities for consistency and transparency
in relation to the distribution of such funding.
Amendments provided in Parts 1 and 2 of Schedule 1 to the Bill will ensure that recurrent
funding for all schools is calculated from 1 January 2018 under Divisions 2 and 3 of the Act,
no matter whether such schools are government or non-government, and in which state or
territory they are located. These amendments will ensure that, from 1 January 2018, there is
a consistent and transparent basis for the calculation of recurrent funding for schools under
the Act. This will include the direct calculation and attribution of needs-based funding
loadings and a single methodology for such calculation.
Recurrent funding for all schools will be subject to the formula contained in section 32 of
the Act, which calculates the Commonwealth funding share of the total of the base amount
for a school (representing an amount per primary and secondary student at the school) and
needs-based funding loadings linked to characteristics of students and the school. These
needs-based funding loadings are set out in Division 3 of Part 3 of the Act.
The Commonwealth funding share for a government school is set at 20 per cent of the base
amount and loadings calculated for a school under the Act; and the Commonwealth funding
share for a non-government school is set at 80 per cent of the base amount and loadings for
a school calculated under the Act. Such funding shares reflect the fact that the
Commonwealth is the majority public funder of non-government schools, whereas states
and territories are the majority public funders of government schools.
In order for all schools to have recurrent funding calculated under the Act on a consistent
and transparent basis, it will be necessary for the Commonwealth funding share for those
schools to move from their current variable amounts to the relevant percentage (20 per cent
or 80 per cent) over a 10 year period beginning on 1 January 2018.
Consequently, from 1 January 2018, all schools that attracted recurrent funding under the
Act in 2017 will be defined as transitioning schools until the end of 2027. Transitioning
schools will have a Commonwealth funding share that is adjusted over time, while still
attracting needs-based funding loadings and having recurrent funding calculated on a
consistent and transparent basis.
New schools - those which open on or after 1 January 2018 - will generally not be
transitioning schools, and will attract the relevant Commonwealth share (20 per cent or 80
per cent) of the base amount and loadings from the start of their operations.
16
The amendments provided in Parts 1 and 2 of the Bill will, for the first time, ensure all
schools will have recurrent funding calculated on a needs basis under the Act.
Changes to calculation of recurrent funding for schools under the Act
To support the approach discussed above in providing a consistent and transparent
calculation of recurrent funding for all schools, elements of the way in which recurrent
funding is calculated under Divisions 2 and 3 of Part 3 of the Act will be changed.
An element of the recurrent funding calculation in section 32 of the Act for a school is that
school's base amount. A school's base amount is calculated by reference to a per-student
amount for primary students, and a per-student amount for secondary students, at the school,
termed 'SRS funding amount' under the Act. Currently, SRS funding amounts are indexed
each year by a fixed 3.6 per cent.
The amendments to the Act contained in Part 1 of Schedule 1 to the Bill will affect SRS
funding amounts in the following two ways:
SRS funding amounts will, from 1 January 2018, be re-based to reflect more up to
date data, and reflecting 3.56 per cent indexation for 2018. The SRS funding amount
for a primary student for 2018 will be set at $10,953, and the amount for a secondary
student for 2018 will be set at $13,764. These amounts are calculated using the same
methodology used to determine the 2014 amounts, updated with 2016 My School
data and 2013-2015 NAPLAN data
from 2021 indexation of SRS funding amounts will no longer be set by a specific
percentage, rather that indexation will reflect the actual increase in costs to schools
each year, set by reference to a formula reflecting yearly changes in indexes relating
to prices (the Consumer Price Index) and wages (Wage Price Index). This change
will ensure that the indexation of SRS funding amounts represents the fair,
reasonable and transparent increase in costs to schools of providing school
education. Nevertheless, to ensure certainty and stability of funding, this indexation
rate can never drop below three per cent
a power to set a different rate of indexation through regulation is included, and for
2019 and 2020 it is intended that indexation of the base amounts will be set at 3.56
per cent to provide funding certainty while the sector adjusts to new arrangements.
The amendments provided in Part 1 of Schedule 1 to the Bill will also remove the capacity
for the Minister to set SES (socio-economic status) scores by legislative instrument under
the Act, and will modify the table that determines non-government schools' capacity to
contribute percentages by reference to their SES scores. A school's capacity to contribute
percentage is a factor used in the calculation of the school's base amount, to ensure that
amount reflects a school community's capacity to financially contribute to that school.
Currently, via legislative instrument, there is a capacity for a school's SES score to be
determined in a way that such a score may not fully reflect the genuine capacity to
contribute of the school community. This capacity will be removed through the amendments
in Part 1 of the Bill, ensuring the transparency of the SES scores. The Minister still retains
the ability to determine an SES score for an individual school if satisfied the original score
does not accurately reflect the general socioeconomic circumstances of the school.
The amendments provided in Part 1 of Schedule 1 to the Bill will also change elements of
the needs-based funding loadings in Division 3 of Part 3 of the Act.
17
The current single formula for the student with disability loading will be replaced with three
formulas that reflect the three highest levels of adjustment required for a student with
disability used in the NCCD. Currently, the student with disability loading is not able to
reflect the differing levels of adjustment provided to students with a disability, and is not
able to recognise the differing costs to schools of providing school education for such
students.
The amendments provided in Part 1 of Schedule 1 to the Bill will ensure that
Commonwealth recurrent funding is able to more accurately reflect whether a
supplementary, substantial or extensive level of adjustment is required for a student with a
disability at a school. This will ensure that schools are better placed to have the resources
available to provide holistic school education to students with a disability and make
decisions based on the needs of individual students.
In addition, amounts used in connection with the calculation of a school's size loading that
are indexed each year will now be indexed in the same manner as the SRS funding amounts.
Indexation of non-government capital funding to take account of
changes in student numbers
Commonwealth funding for capital expenditure by non-government schools is calculated
and payable under Division 2 of Part 5 of the Act. Section 68 of the Act prescribes the
maximum amount that is payable in any year. This amount was set at $134,496,000 in
2014, and it has been indexed every year thereafter by the "indexation percentage" - which
is either 100%, or the percentage prescribed in the regulations (subsection 68(3)).
The regulations have prescribed indexation factors of 102.30% for 2015 and 101.76% for
2016 (see section 24A of the Regulation. The 2017 indexation factor has not yet been
prescribed).
Subsection 68(4) of the Act requires that, before the Governor-General makes regulations
prescribing the indexation factor for a year, the Minister must consider changes in the
indexes of building prices and wage costs prescribed by the regulations. These indexes are
prescribed in section 24B of the Regulation.
However, while the indexation factor reflects changes in building costs and wage costs in
the construction sector, it has not taken account of changes in enrolment in the
non-government school sector. This means that, although the amount of Commonwealth
funding for capital expenditure by non-government schools has kept pace with changes in
costs of construction, it has not kept pace with changes in student numbers, so that it has
declined marginally in real terms on a per-student basis.
Consequently, the Bill will amend subsection 68(4) of the Act to require that, before the
Governor-General makes regulations prescribing the indexation factor for a year from 2018
onwards, the Minister must consider changes not only in the indexes of building prices and
wage costs prescribed by the regulations, but also the change in student enrolment in
non-government schools.
Transition adjustment funding
As all schools will have recurrent funding calculated under Divisions 2 and 3 of the Act
from 1 January 2018, and as most schools will transition towards a Commonwealth funding
share of either 20 per cent or 80 per cent (depending on whether the school is a government
18
or non-government school respectively), it may be necessary to provide limited transition
adjustment funding support for some schools during this process.
Accordingly, amendments to the Act in Part 1 of Schedule 1 to the Bill will enable transition
adjustment funding to be provided to vulnerable schools, in limited circumstances to be
prescribed by regulations. Such funding is only intended to be available to schools where, as
a direct consequence of all recurrent funding for schools being calculated under Divisions 2
and 3 of Part 3 of the Act from 1 January 2018, financial hardship has occurred and that
hardship is not able to be rectified through distribution of recurrent funding by the approved
authority for the school on a needs-basis.
Analysis of clauses
Items 1, 6, 11 and 16 relate to ensuring that recurrent funding for all schools is calculated
under Divisions 2 and 3 of Part 3 of the Act from 1 January 2018. Note that Part 2 of
Schedule 1 to the Bill contains further consequential amendments to bring effect to this
objective.
Item 6 will insert definitions for transitioning school and transition year in section 6 of the
Act.
Transitioning schools are those schools that attracted recurrent funding under the Act in
2017 (that is, all existing schools currently funded under the Act). Regulations may also
prescribe other schools as transitioning schools (and hence set their Commonwealth share
through the transitional funding mechanism in new clause 35B); this facility may be used to
prevent approved authorities artificially inflating their funding by closing existing
transitioning schools and re-opening them as ostensibly "new" schools, for example.
Transition years are the calendar years between 2018 and 2027, inclusive.
Items 1 and 16 will insert a new definition of Commonwealth share in section 6 of the Act,
and provide for that Commonwealth share in new clauses 35A and 35B in Division 2 of
Part 3 of the Act. The effect of these amendments is to specify the Commonwealth funding
share of the Schooling Resource Standard (SRS) for schools from 1 January 2018.
For a school that is not a transitioning school (that is, a new school that commences
operations on or after 1 January 2018), new clause 35A provides that the Commonwealth
share is:
20 per cent for a government school; or
80 per cent for a non-government school.
Such funding shares reflect that the Commonwealth is the majority public funder of
non-government schools, whereas states and territories are the majority public funders of
government schools. Nevertheless, it should also be borne in mind that government schools
have a zero per cent capacity to contribute, whereas most non-government schools will have
a capacity to contribute between 10 per cent and 80 per cent (see section 54 of the Act), and
this capacity to contribute reduces the base amount of Commonwealth funding that a
non-government school attracts under section 33 of the Act.
Clause 35A will further enable regulations to prescribe a Commonwealth share that is
different to that set out above. This regulation-making power is designed to ensure that
sufficient flexibility is built into the Act for future government decisions on schools funding,
while maintaining appropriate and sufficient Parliamentary oversight.
19
For a school that is a transitioning school, new clause 35B ensures that such school will
transition to the relevant Commonwealth share by the end of 2027 in a consistent and
transparent manner. This will be achieved by establishing a starting Commonwealth share
percentage for the school (based on recurrent funding payable to the approved authority for
the school in 2017), and adjusting this percentage in 10 equal annual increments until the
relevant Commonwealth share (20 per cent or 80 per cent) is reached in the last transition
year, 2027.
Subclause 35B(1) sets out the formula for working out the Commonwealth share for a
transitioning school for a transition year. This Commonwealth share is the school's starting
Commonwealth share, plus a specified percentage (transition rate) of the difference
between its starting Commonwealth share and the usual (non-transition) Commonwealth
share for that kind of school (called the final Commonwealth share).
The starting Commonwealth share for a transitioning school is the ratio of the 2017
recurrent funding amount of the school's approved authority to the adjusted SRS amount
of the approved authority.
In turn, the 2017 recurrent funding amount of a school's approved authority is the recurrent
funding to which the school's approved authority was entitled to under the Act in 2017.
The adjusted SRS amount of a school's approved authority is a notional amount which the
approved authority would have been entitled to in 2017 for all of its schools, if Division 2 of
Part 3 of the Act applied to those schools in 2017, the amendments made to Divisions 3 and
4 of Part 3 of the Act by this Bill had been in force in 2017, and the Commonwealth share
was 100 per cent - that is, the schools were fully Commonwealth-funded in 2017 under the
same needs-based funding model that will apply from 2018 onwards.
Note that this formula will generate a starting Commonwealth share for each transitioning
school of an approved authority that is the same for every transitioning school of that
approved authority. Nevertheless, there is a residual capacity to specify the starting
Commonwealth share for a particular school by regulation, for example, in circumstances
where the school is part of an approved authority that is not a system, but operates
autonomously from all other schools of the approved authority, has markedly different
characteristics from the other schools of the approved authority, and consequently should be
treated as an independent school for transitional funding purposes.
Every year during the transition period, the Commonwealth share for a transitioning school
will be adjusted towards the final Commonwealth share by an amount equal to the transition
rate for that year multiplied by the difference between the starting Commonwealth share and
the final Commonwealth transition rate for that year. The transition rate starts at 10 per cent
in 2018, and increases by 10 percentage points every year thereafter; it is 20 per cent in
2019, 30 per cent in 2020, 40 per cent in 2021, etc.
Each transitioning school will have its own Commonwealth share for each transition year
set mathematically under this methodology, and once the school's starting Commonwealth
share is known, it will be possible to derive its Commonwealth share in any transition year
thereafter. This will give certainty of funding for the school immediately and into the
future.
20
A capacity for an alternative transition rate for a school for a year to be set by regulation is
included to account for unforeseen circumstances, and is limited to a transition rate no less
than a school is entitled to under the approach specified above and no more than 100 per
cent.
Importantly, during transition, any changes in student characteristics at the school (and
therefore level of need as measured by the SRS) will be reflected in the school's funding
entitlement, as the funding entitlement will be calculated as a share of the SRS.
Example of calculation of a transitioning school's Commonwealth share
In 2017, the 2017 recurrent funding for a non-government school's approved authority is
$7,000,000, and the adjusted SRS amount for that authority is $10,000,000.
Under subclause 35B(2), the school's starting Commonwealth share is $7,000,000 divided
by $10,000,000, expressed as a percentage - or 70 per cent.
Under subclause 35B(6), the school's final Commonwealth share is the Commonwealth
share for the school as if it were not a transitioning school - since the school is a
non-government school, its final Commonwealth share is 80 per cent (see
paragraph 35A(b)).
In 2018, the school's transition rate is 10 per cent.
Thus, in 2018, using the formula in subclause 35B(1), the school's Commonwealth share is:
70 + ((80 - 70) x 10%) = 71 per cent.
In 2019, the school's transition rate increases to 20 per cent.
So in 2019, using the formula in subclause 35B(1), the school's Commonwealth share is:
70 + ((80 - 70) x 20%) = 72 per cent.
Similarly, the school's transition rate increases to 30 per cent in 2020, so its Commonwealth
share increases to 73 per cent; its Commonwealth share is 74 per cent in 2021, 75 per cent in
2022, and so on, until in 2027 it reaches 80 per cent (equivalent to its final Commonwealth
share).
Item 11 will make a minor technical amendment to section 32 of the Act, as the
Commonwealth share for a transitioning school may change year on year, and as such the
formula in section 32 will reference the Commonwealth share for a school for the year.
Items 5, 8, 12, 13, 14, 20, 21, 22, 23, 24, 25, 26, 27, and 28 relate to the setting and
indexation of SRS funding amounts under the Act.
Items 12 and 13 will amend section 34 of the Act to provide new, re-based and indexed,
SRS funding amounts for primary and secondary students from 2018.
Items 20, 21, 25, and 26 amend the maximum size loading amounts and the starting
amounts in sections 44 and 49 of the Act respectively, to set new amounts for 2018. These
amounts are factors in calculating a school's size loading, and are simply the amounts for
2014 grown by relevant indexation since that year.
21
Item 8 will insert new clause 11A in Division 2 of Part 1 of the Act (Interpretation).
Clause 11A provides for the indexation factor (SRS indexation factor) to be applied to SRS
funding amounts for a year. The SRS indexation factor for a year is the higher of 1.03 (i.e. a
three per cent indexation rate) or the number worked out under subclause (2). Subclause (2)
provides for the calucation of an indexation factor that comprises 75 per cent of the change
in the Wage Price Index and 25 per cent of the change in the All Groups Consumer Price
Index number (weighted average of the 8 capital cities), between the June quarter of the
previous year and the June quarter of the current year.
New subclauses 11A(5) and (6) further enable regulations to prescribe the indexation. For
2019 and 2020 it is intended that the SRS indexation factor will be set through regulation at
3.56 per cent, to provide funding certainty while the sector adjusts to new arrangements.
The new floating SRS indexation factor worked out under subclauses 11A(1) to (4) will
apply from 2021.
Such flexibility is also important to enable the Commonwealth to act, if required, to meet
pressing circumstances, for instance, to ensure schools are able to continue to operate with
reasonable funding growth in an extreme deflationary environment (where the SRS
indexation factor formula would result in zero or negative indexation), or where changes in
the economy-wide CPI and WPI indexes are markedly different to changes in education cost
structures.
Item 14 will amend the formula in subsection 34(3) of the Act, to enable the SRS
indexation factor determined under new clause 11A to be applied to the calculation of SRS
funding amounts for the year.
Items 22 to 24, 27 and 28 will amend sections 44 and 49 of the Act, to enable the SRS
indexation factor determined under new clause 11A to apply when working out a school's
size loading each year. This ensures consistency and transparency in the indexation applied
to each aspect of the calculation of recurrent funding for schools under the Act.
Item 5 is a consequential amendment and will insert a new definition of SRS indexation
factor in section 6 of the Act, referring to clause 11A.
Items 3, 29 to 36, 41, 42, and 43 relate to removing the capacity for the Minister to
determine SES scores for a group of schools by legislative instrument under the Act, and
modifying the table setting out schools' capacity to contribute percentages.
Items 29 to 35 will amend sections 52 and 53 in the Act to remove the capacity for the SES
scores for a group of schools to be determined by legislative instrument. Each school will
have its own SES score determined administratively in accordance with the method set out
in the regulations. The Minister will retain the power to determine an SES score for an
individual school.
Item 3 is a consequential amendment to the definition of SES score in section 6 of the Act,
and items 41 and 42 are further consequential amendments to sections 118 and 129 of the
Act respectively, to reflect the amended operation of section 52.
Item 36 will insert a modified capacity to contribute percentage table in subsection 54(3) of
the Act, in order to reduce the benefit afforded to non-government primary schools under
capacity to contribute calculations, which has led to some primary school students attracting
22
more Commonwealth funding than secondary students, notwithstanding the different cost
structures of each level of education.
Item 43 is a savings provision, ensuring that existing SES scores for schools continue to
have effect until the Minister otherwise determines, by administrative decision, new SES
scores.
Item 17 will insert a new student with disability loading in the Act, by repealing and
replacing section 36 of the Act. From 2018, the student with disability loading will
encompass three distinct loading percentages, based upon the level of adjustment provided
to a student with a disability. New subclauses 36(2), (3) and (4) set out these adjustments,
being supplementary, substantial and extensive. Regulations will specify the classification
of students at each of these levels of adjustment, which will be based upon the NCCD.
Further to this, regulations will specify the loading percentage which attracts to each level of
adjustment, replicating the current approach to setting the student with disability loading
percentage by regulation. (See new subclauses 36(5) and (6)).
More information on the Nationally Consistent Collection of Data on School Students with
Disability can be found at:
www.education.gov.au/what-nationally-consistent-collection-data-school-students-disability
Items 37, 38, and 39 will amend section 68 of the Act, to require the Minister to have regard
to changes in student enrolment in non-government schools when having regulations made
that prescribe the indexation of the non-government capital funding cap for a year under
section 68.
Items 7, 9, 10, and 40 relate to the new transition adjustment funding.
Item 40 will insert a new clause 69B in Division 3 of Part 5 of the Act. The purpose of the
new clause is to provide for the establishment of transition adjustment funding for transition
schools. New subclause 69B(1) will enable the Minister to determine an amount of transition
adjustment funding for a transition school for a transition year if the Minister is satisfied
prescribed circumstances apply in relation to the school for that year. Under section 29 of the
Act (as amended by items 9 and 10), amounts determined under subclause 69B(1) will be
paid to states and territories at such times and in such amounts as the Minister determines.
In order to ensure appropriate Parliamentary oversight of the transition adjustment funding
for transition schools, funding will be appropriated under annual appropriation Acts, and
regulations made under section 130 of the Act can include:
the eligibility criteria or preconditions for transition adjustment funding (the
'prescribed circumstances' for subclause 69B(1))
matters that the Minister may or must take into account in making a funding
determination under subclause 69B(1)
the amount of funding that may be paid for a transition school for a transition year
(whether a fixed amount, a capped amount, or an amount worked out by formula)
(see subclauses 69B(2) and (3))
the total amount of transition adjustment funding available for a transition year
(which could be a fixed amount, a capped amount, or an amount worked out by
formula - see subclause 69B(4)).
23
A funding determination under subclause 69B(1) is not a legislative instrument
(subclause 69B(5)). Subclause (5) is included to assist readers, as any determination under
subclause 69B(1) is not a legislative instrument within the meaning of section 8 of the
Legislation Act 2003.
Item 7 will amend section 9 of the Act, to ensure that the provisions of the Act relating to
overpayments apply to amounts determined under subclause 69B(1) and paid under
section 29 of the Act. Items 9 and 10 will amend section 29 of the Act to provide for the
making of payments of transition adjustment funding on account of determinations under
subclause 69B(1).
Items 2, 4, 15, 18, and 19 are minor technical amendments that change the descriptor for
one of the needs-based funding loadings calculated under the Act. Section 38 of the Act will
now be termed socio-educational disadvantage loading, rather than the current low
socioeconomic status student loading. This descriptor better aligns with the components of
this loading, set-out in section 38 of the Act, which are based on the socio-educational
disadvantage of a school, not the socio-economic status.
Item 44 is a savings provision, ensuring that the Act continues to apply to recurrent funding
for 2017 and earlier years, as if the amendments made by the Bill had not occurred. This is
important to ensure that final recurrent funding outcomes for 2017, and any related issues as
to overpayments, continue to be able to be administered under the Act in force prior to the
commencement of the amendments in the Bill.
24
Part 2 - Other Policy Changes
Explanation
Preamble and Objects of the Act
The Bill will update the Preamble and Objects of the Act to better align with long term
national goals for schooling, and the principles of needs-based and sustainable funding
linked to nationally agreed evidenced-based reforms.
The Preamble and Objects of the Act will also be simplified, in order to more clearly specify
the primary objectives and expectations of the Act, and an overarching, principles-based
outline of the objectives for the provision of Commonwealth schools funding. As the
Preamble and Objects do not directly impose obligations on approved authorities, it is
considered desirable for these to provide a snapshot of objectives for the provision of
Commonwealth schools funding and the role of the Commonwealth, states and territories in
improving educational outcomes.
Consistent calculation of recurrent funding for all schools under the
Act
The Act currently distinguishes between 'participating schools' and 'non-participating
schools' for the purpose of calculating recurrent funding and some associated conditions.
Recurrent funding for non-participating schools is provided under Part 4 of the Act, whereas
recurrent funding for participating schools is provided under either Division 2 or 5 of Part 3
of the Act.
As discussed under 'Part 1 - Funding for schools' above, from 1 January 2018 all schools
will have recurrent funding calculated under Division 2 of Part 3 of the Act. As a
consequence of this, there will no longer be a need for Division 5 of Part 3, and Part 4, of
the Act and related provisions. Further to this, the distinction between participating schools
and non-participating schools is no longer required. By removing this distinction, provisions
in the Act that only applied to participating schools will be able to apply to all schools and
the approved authorities of those schools.
The result of this change means that the Act is no longer required to reference participating
schools, participating states and territories, non-participating schools and non-participating
states and territories. Further, provisions in the Act that dealt with the calculation and
provision of recurrent funding under either Division 5 of Part 3 or Part 4 of the Act can be
removed.
In addition, the Act is also no longer required to reference relevant arrangements. Relevant
arrangements are the written arrangements between the Commonwealth and an approved
authority relating to financial assistance provided under the Act. Examples include the
National Education Reform Agreement, its associated bilateral agreements between the
Commonwealth and individual states and territories, and the implementation plans of
approved authorities for non-government schools.
Relevant arrangements could, currently, impact the calculation of recurrent funding under
the Act, in relation to such funding provided under Division 5 of Part 3, and Part 4. As
recurrent funding is to be calculated on a consistent and transparent basis for all schools
from 1 January 2018, under Division 2 of Part 3 of the Act, the concept of relevant
arrangement is no longer necessary and does not promote the objectives of Commonwealth
25
recurrent school funding. Accordingly, references to relevant arrangements in the Act are to
be removed.
Overall, this will provide a simpler, consistent and more transparent operation to the Act,
where all schools are able to treated equitably and equally in the calculation of recurrent
funding, and artificial distinctions between schools are no longer maintained.
Conditions on states and territories to receive financial assistance
under the Act
The Commonwealth will seek to further strengthen the linkage between Commonwealth
financial assistance and the implementation of evidence-based reforms to improve student
outcomes. It is imperative that Commonwealth financial assistance for school education is
used to drive better outcomes for students - to this end, the Commonwealth will work with
the states and territories to develop and deliver a new national schooling agreement that will
promote school education reform and help to address declining student performance.
The Bill will stipulate the following keystone conditions of financial assistance on the states
and territories:
that they implement national policy initiatives for school education as agreed by the
Ministerial Council;
that they are party to a national agreement on school education reform;
that they are party to a bilateral agreement with the Commonwealth relating to
implementation of school education reform within their jurisdiction;
that they fulfil their obligations under the national and bilateral agreements; and
that they avoid cost shifting to the Commonwealth, by maintaining their 2017 levels
of schools funding in both the government and non-government school sector.
These conditions will act to bring a clear, coordinated, and national approach to school
education reform across Australia, encompassing both the government and non-government
sectors, and ensuring that school education reform is undertaken on a consistent and
transparent basis.
Reducing command and control of schools
The Bill will amend the Act to remove the requirements for approved authorities for more
than one school to have an implementation plan, and for all approved authorities to have
school improvement frameworks and school improvement plans for their schools.
These requirements in the Act involve excessive Commonwealth control over, and have the
potential for excessive Commonwealth interference in, the operation of schools, this being
properly the responsibility of state and territory governments and the operators of
non-government schools. The school improvement framework and planning requirements
further duplicate existing school improvement arrangements operated by states and
territories and authorities within the non-government school sector.
In addition to this, the Bill will seek to streamline other ongoing policy requirements
imposed on approved authorities and their schools, by better linking these requirements with
the national and bilateral agreements, and national policy objectives, provided in amended
section 22 of the Act. Approved authorities for non-government schools will be required to
work cooperatively with their relevant state or territory government to support the
implementation of national or bilateral reforms in their schools. This will ensure that there is
linked-up, coordinated and consistent expectation on all approved authorities for schools.
26
Analysis of clauses
Item 45 repeals the Preamble to the Act and substitutes it with a new Preamble to the Act.
Item 46 repeals section 3 of the Act (Objects of this Act) and substitutes with a new
section 3).
Items 59 and 60 will insert a new subclause 22(2) and a new clause 22A so as to impose
new policy and funding requirements on states and territories, as conditions of financial
assistance provided to them under the Act.
Item 87 will amend paragraph 81(1)(d) to include reference to the new section 22A; the
Minister will be able to revoke or vary the approval of the approved authority for
government schools for non-compliance by the relevant state or territory with section 22A.
Similarly, item 90 will amend paragraph 108(a) of the Act to include reference to new
section 22A, enabling the Minister to reduce, delay or require repayment of funding under
the Act for a state or territory's failure to comply with section 22A.
Items 106 and 107 will amend section 128 of the Act to change reference in that provision
to the National Education Reform Agreement to the national and bilateral agreements
mentioned in new subsection 22(2).
Items 84 and 85 will amend section 77 of the Act to change the key policy requirements on
approved authorities under the Act.
Item 84 will remove paragraphs (a), (d) and (e) from subsection 77(2) of the Act, as these
conditions are requirements imposed on schools under state and territory laws, and are
redundant in the Act (i.e. to reduce Commonwealth command and control over schools).
Item 86 will repeal paragraph 77(3)(d) as a consequence of the removal of school
improvement framework requirements from the Act.
Item 85 will impose additional policy requirements on approved authorities for
non-government schools, which will work hand-in-hand with the requirements on states and
territories imposed under new subsection 22(2).
Item 92 will repeal Part 7 of the Act, relating to implementation plans of approved
authorities. Requirements to implement reforms will now be imposed on states and
territories through their bilateral agreements with the Commonwealth and regulation. States
and territories must have, and comply with, bilateral reform implementation agreements
under the new subsection 22(2); and approved authorities for non-government schools will
need to co-operate with states and territories in implementing reforms under the new
subsection 77(2A).
As a consequence of the repeal of Part 7 of the Act, items 88, 89, 100 and 104 amend or
repeal provisions in the Act that refer to, or relate to the operation of, Part 7. Item 108 will
repeal item 9 of Schedule 2 to the Transitional Act, which contains transitional
arrangements for implementation plans.
Items 47, 71, 81, and 82 will make amendments to the explanatory text in the Guides in
sections 4, 31 and 66 of the Act, which reflect the funding and policy amendments made to
the Act in Parts 1 and 2 of Schedule 1 to the Bill.
27
Items 48 and 51 repeal a large number of redundant definitions in section 6 of the Act, as a
consequence of the other amendments in Parts 1 and 2 of the Schedule to the Bill.
The definitions of participating school and non-participating school in section 6 defined
schools by reference to the fact that they were schools for which there was an authority
approved under Part 6 of the Act - that is to say, the only schools for which Commonwealth
funding is payable under the Act are schools of approved authorities, and only in relation to
locations and levels of education for which they are approved by the Commonwealth.
Although other provisions of the Act operate to ensure that only "approved" schools attract
Commonwealth funding (for example, section 23 requires states and territories to pass on
funding for non-government schools to the approved authorities for those schools), with the
repeal of the definitions of participating school and non-participating school and the
application of the Act generally to "schools", it is considered prudent to make it clear that
Commonwealth funding is only payable for those schools for which the Commonwealth has
approved an authority, location and level of education. Consequently item 72 will insert a
new clause 31A into Division 2 of Part 3 of the Act to this effect.
Item 56 will repeal section 14 of the Act, which provides for a legislative instrument that
specified participating states and territories; and items 49, 52, 53, 57, 61, 63, 66, 68 to 70,
73 to 75, 78, 97, and 102 will amend provisions (or headings) of the Act that only applied,
or referred, to participating schools, or approved authorities for participating schools.
Item 79 will repeal Division 5 of Part 3 of the Act, which provides for funding for approved
authorities of participating schools during a transition period; and item 80 will repeal Part 4
of the Act, which provides for funding for non-participating schools.
As a consequence, items 50, 54, 55, 58, 62, 64, 65, 67, 76, 77, 87, 94, 96, 98, 99, and 101
will amend or repeal provisions of the Act that refer to, or relate to the operation of,
Division 5 of Part 3 or Part 4 of the Act.
Items 83, 91, and 95 will repeal subsections 73(4), 81(6) and 110(4) of the Act,
respectively, which require the Minister to have regard to any relevant arrangement of an
approved authority when imposing a condition on the approval of the authority, when
revoking or varying an approval of the authority, or when deciding to delay, reduce or
require repayment of funding under the Act.
Items 103 and 105 will amend section 127 of the Act to expand the contents of the
Minister's annual report to Parliament on the operation of the Act. The intention of these
items is to enhance the transparency of Commonwealth schools funding, which will aid in
achieving the objective of equitable, needs-based funding.
Item 103 will clarify that the Minister's annual report can include specifics of financial
assistance paid under the Act for individual schools, as well as the application of that
financial assistance by the operators of individual schools. The intention is that the Minister
will publish comprehensive and detailed information about Commonwealth funding at the
school level, including, for example, a school's base amount and the amount of each of its
loadings; and the relevant factors in the funding calculations for a school, for example, the
school's Commonwealth share, SES score and capacity to contribute percentage.
Item 105 will permit the regulations to expand on the kinds of information that the Minister
must report to Parliament on.
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Note that the Minister is also able to publish information related to Commonwealth funding
under the Act separately from (and potentially more frequently than) the annual report to
Parliament; see, for example, subsection 125(2) of the Act.
Item 109 is a transitional provision that relates to the making of regulations under the Act
after the Act receives the Royal Assent, but before 1 January 2018 (when the rest of the
amendments to the Act commence). This item will commence on the day the Bill receives
the Royal Assent.
Currently, paragraph 22(2)(b) and subsection 77(4) of the Act require that, before
regulations are made for the purposes of section 22 and 77 respectively, the Minister is to
have regard to relevant arrangements of a state or territory in its capacity as the approved
authority for government schools in the state or territory.
These provisions are being repealed and replaced by a new subsection 130(5) (see items 59,
145 and 174) and all references to "relevant arrangements" are being removed from the Act,
with effect from 1 January 2018. New regulations will be made for the purposes of sections
22 and 77, which will reflect the new school education reforms and new intergovernmental
agreements between the Commonwealth and the states and territories. Accordingly, those
regulations will not "have regard to" the current "relevant arrangements". The new
regulations will commence on 1 January 2018, but naturally they will be made by the
Governor-General before 1 January 2018.
It is therefore necessary to "switch off" the current requirements of paragraph 22(2)(b) and
subsection 77(4) for the purposes of making those regulations.
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Part 3 - Miscellaneous technical amendments
Explanation
Number of students at a school
The Bill will repeal those sections of the Act dealing with a school census, and provide that
where the Act describes the number of students at a school, the method for working out that
number must be prescribed in regulations.
These amendments simplify the Act and will allow for more accurate counting of students to
calculate funding entitlements.
School education information
The Bill will amend the Act to provide additional clarity on the information use and
disclosure provisions in the Act. Section 125 of the Act provides statutory authority to the
Minister to use and disclose 'protected information' in accordance with the regulations, and
to publish 'protected information'. Protected information is defined in section 6 of the Act
as any information obtained under or for the purposes of the Act.
Section 125 is intended to be an authorising provision, that is, to provide statutory authority
to the Minister to use and disclose information obtained under or for the purposes of the Act
for specified purposes. It is not intended to otherwise restrict lawful uses or disclosure of
that information. Unfortunately, there has been some confusion about the operation of
section 125 of the Act and the associated section 65 of the Regulation, because of the use of
the term 'protected information'. This term, when used in legislation, normally indicates
that the legislation protects the information in some way, e.g. by making it an offence for
the information to be used or disclosed otherwise than in the limited circumstances set out in
the legislation. The Act does not 'protect' information obtained under it in this fashion, and
is not intended to prohibit use or disclosure of information obtained under it in
circumstances where it would otherwise be lawful to use or disclose the information.
This amendment will change the terminology used in the Act, from 'protected information'
to school education information, to ensure any such confusion does not arise. This
amendment will also make minor drafting changes to section 125, by removing references to
'making a record of' information, as that language is no longer used in the Privacy Act
1988.
This amendment will not extend the capacity of the Minister to use or disclose school
education information, nor extend the definition of what is school education information.
It is proposed to amend section 65 of the Regulation following passage of the Bill to ensure
that it is interpreted consistently with the above changes.
Reviewable decisions
The Bill will amend the Act to provide additional clarity to section 118 of the Act.
Section 118 sets out the decisions under the Act that are reviewable decisions. Broadly, this
enables the relevant person for the decision, for example an approved authority, to request
internal review and review by the Administrative Appeals Tribunal. However, further clarity
can be provided to section 118 on exactly which decisions under the Act are reviewable,
through ensuring that the section reference in column 2 of the table in subsection 118(1), in
combination with the description of the decision in column 1 of that table, are read together
when interpreting which decisions under the Act are reviewable.
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In addition to this, the Bill will also remove the capacity for approved authorities, BGAs and
NGRBs to access internal review of a decision of the Minister to impose conditions on the
approval of that authority or body, or to revoke such approval. However, access to review of
such decision by the Administrative Appeals Tribunal will be maintained.
Prior to the Minister making a decision to either impose conditions on, or revoke, the
approval of one of the authorities or bodies mentioned above, the Minister is required to
adhere to procedural fairness principles. This, commonly, involves the Minister providing a
show cause notice to the affected authority or body, requesting a submission in respect of
the proposed decision and the reasons for that proposed decision. Upon such submission
being received, the Minister will then consider it prior to making any final decision in the
matter.
The Government considers that this robust process, which ensures adequate procedural
fairness is provided to those impacted by certain decisions under the Act, negates the need
for an additional layer of review once a final decision is made. Further, this also assists in
ensuring that external review bodies, such as the Administrative Appeals Tribunal, are able
to be involved in the review of a decision in a more timely manner.
Former approved authorities
The Bill will amend the Act to enable regulations to be made that extend existing
requirements under the Act and the Regulation to former approved authorities, BGAs and
NGRBs. The Act, in combination with the Regulation, imposes various policy and funding
requirements on approved authorities, BGAs and NGRBs. Some of these requirements
relate to the acquittal of Commonwealth financial assistance provided under the Act, the
keeping of records, and provision of information to the Commonwealth.
However, currently requirements under the Act and the Regulation only extend to a person
in relation to the period that person is approved as an approved authority, BGA or NGRB
under the Act. This means that where the approval of an approved authority, BGA or NGRB
is revoked, the former authority or body will still be required to comply with obligations it
accrued prior to the revocation of its approval, but is not required to comply with any
obligations that might accrue, or which can only be discharged, after revocation.
Many obligations on approved authorities, BGAs and NGRBs accrue only at certain points
in time: obligations to provide financial information and acquittals of Commonwealth
funding for a year (sections 34 and 36 of the Regulation) normally accrue in the middle of
the following year; obligations to provide census data (Subdivision E, Division 3, Part 5 of
the Regulation) only arise on a school's census day. There are also obligations which are
only fully discharged at certain points in time: the obligation to keep records for 7 years
(section 37 of the Regulation), for example, or the obligation to provide Commonwealth
auditors with access to records and premises for audit purposes (section 39 of the
Regulation).
The Commonwealth must be able to account for the proper expenditure of financial
assistance provided to approved authorities, BGAs and NGRBs, and ensure that such
authorities and bodies are still required to keep certain records, and make those records
available when required. For example, the Commonwealth may wish to audit the
expenditure of financial assistance, or assess the veracity of information provided to the
Commonwealth as part of the school census process.
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The capacity for certain obligations to continue to apply to former approved authorities has
also been part of previous school funding arrangements, where funding agreements entered
into under the Schools Assistance Act 2008 provided that certain obligations under those
funding agreements survived termination of the agreements.
It should be noted that, of course, a failure by a former authority or body to comply with
these ongoing obligations will not be able to be addressed by varying or revoking its
approval under Part 6 of the Act, or suspending or reducing its future payments under Part 8
of the Act - simply because it no longer holds an approval and no longer receives funding
under the Act. However, where a former authority or body does refuse to comply with these
ongoing obligations, it will be possible to seek recovery of Commonwealth funding
previously paid to the authority or body, via a state or territory, under Part 8 of the Act.
Making regulations
The Bill will amend the Act to clarify the consultation requirements of the Minister prior to
asking the Governor-General to make regulations for the purposes of the Act, where those
regulations affect the ongoing policy or funding requirements of approved authorities for
government schools, or conditions imposed on states and territories for financial assistance
received under the Act.
Currently, subsection 130(5) of the Act imposes a requirement on the Minister to consult
with the Ministerial Council (the committee of the Council of Australian Governments
comprising the Commonwealth, State and Territory Ministers responsible for education)
prior to asking the Governor-General to make regulations for the purposes of the Act.
However, states and territories have requested that this requirement be strengthened, to
require the Minister to not just consult but to also have regard to decisions of the Ministerial
Council, where the regulations in question affect government schools or conditions imposed
on states and territories.
On the other hand, the current subsection 130(5) requires the Minister to consult the
Ministerial Council on all regulations made under the Act, even those that have no impact
on government schools or those that are purely administrative in nature. States and
territories have agreed that such a requirement is unnecessary.
The amendments in Part 3 of Schedule 1 to the Bill will:
impose a requirement on the Minister to have regard to decisions of the Ministerial
Council in relation to regulations that will affect the ongoing policy or funding
requirements of approved authorities for government schools, or conditions imposed
on states and territories for financial assistance received under the Act; and
remove the requirement for the Minister to consult the Ministerial Council on
regulations having no impact on government schools or states and territories.
Analysis of clauses
Item 127 will repeal sections 16 and 17 of the Act and insert a new clause 16 (Working out
the number of students at a school for a year) which will provide for the regulations to
prescribe a method for working out the number of students at a school for a year. It will also
provide that a reference in this Act to the number of students at a school for a year is a
reference to the number worked out in accordance with the regulations.
Because the detailed provisions relating to the method for counting numbers of students at a
school for a year will be put into regulations, a number of amendments need to be made to
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the Act to amend or repeal related provisions and notes: see items 110, 116, 121, 122, 123,
124, 125, 129, 130, 136, 137, 138, 139, 140, 141, 142, 143, and 158.
Items 112 and 113 will repeal the definition of distance education and insert the definition
of distance education student. These items will replace the operation of subsection 10(5)
(repealed by item 121), when a person receives primary education or secondary education
by distance education, and will replicate the operation of that subsection in the definition of
"distance education student".
As a consequence of these amendments, items 118, 128, 131, 132, 133, 134, 135, and 144
amend provisions that refer to 'distance education', so as to instead refer to 'distance
education students'.
Items 114, 120 and 126 are consequential amendments arising from item 127 and will
simplify the definitions of primary education and secondary education to refer to that in
section 15 of the Act (the levels of education that constitute primary education or secondary
education).
Items 115, 119, 165, 166, 167, 168, 169, 170, 171, 172, and 174 will amend section 125
and the definition of protected information to substitute that definition with the term school
education information' and to amend section 125 to reflect this new terminology. These
items will also remove the words 'make a record of' from sections 125 and 130, as
following amendments to the Privacy Act 1988 in 2013 'making a record of' information is
now considered to be incorporated within the concept of 'using' that information.
Items 117, 155, 156, and 157 will ensure that a reviewable decision under the Act is one
referred to in column 1 of the table in subsection 118(1), made under the provision referred
to in column 2 of that table.
Item 146 repeals subsections 81(4), 88(4) and 96(3) of the Act. These subsections currently
provide that, when the Minister decides to vary the approval of an approved authority, BGA
or NGRB (as the case may be), the Minister must be satisfied that the relevant organisation
complies with its basic approval requirements under the approval as varied. This could have
the effect of reducing the Minister's capacity to include conditions on an organisation's
approval that are intended to bring it into compliance with its basic requirements over a
period of time.
For example, if the Minister considers that an approved authority is not a fit and proper
person because of defects in its governance, the Minister should be able to impose
conditions on the authority's approval that are directed at improving its governance - that is,
to bring the authority back into the state of being a fit and proper person over time. There is
an interpretation of subsection 81(4) that the Minister could not impose such conditions
unless the authority will be a fit and proper person immediately on those conditions being
imposed.
These amendments are designed to ensure that the sections of the Act dealing with variation
of approval by imposition of conditions, are able to have their intended operation, and
further assists the Minister in being able to pursue an option of imposing conditions rather
than revocation of approval.
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Consequently, subsections 81(4), 88(4) and 96(3) of the Act are being repealed so as to
clarify that the Minister's capacity to impose conditions of a remedial nature on an
organisation's approval.
Items 159, 163, and 164 will amend sections 120 and 122 of the Act to provide that a
decision made under paragraph 81(a), (b) or (d), or subsection 88(1) or 96(1) of the Act -
that is, a decision to vary or revoke the approval of an approved authority, BGA or NGRB -
is not subject to internal review under section 120, but is reviewable by the Administrative
Appeals Tribunal under section 122.
Items 160, 161, and 162 amend section 120 to clarify who must carry out an internal review
of a decision - the Secretary personally, or another person delegated the power to make the
original decision.
Item 176 is a savings provision that ensures that decisions made before 1 January 2018
continue to be subject to review provisions and processes that were in force before that date.
Item 147 will insert a new clause 96A in Part 6 of the Act. Clause 96A will ensure that the
regulations can extend existing requirements of approved authorities, BGAs and NGRBs
under the Act and the Regulation to former approved authorities, BGAs and NGRBs. These
will be termed continuing requirements under the Act. Items 111 and 149 are a
consequential amendment arising from the insertion of clause 96A.
Item 175 will repeal and substitute subsection 130(5) of the Act. This item will ensure that
where proposed regulations will affect the ongoing policy or funding requirements of
approved authorities for government schools, or conditions imposed under sections 22, 22A
and 24 of the Act on states and territories for financial assistance received under the Act, the
Minister must not only consult with the Ministerial Council, but must also have regard to
decisions of the Council prior to the Governor-General making those regulations.
Item 145 will remove the regulation-making related consultation requirement in sub-
section 77(4) of the Act that will become redundant with the amendment to sub-
section 130(5) made by item 174.
Items 148, 150, and 151 amend sections 108 and 109 of the Act to clarify that action can be
taken under section 110 of the Act (to delay, reduce or require repayment of funding under
the Act) in circumstances where the Minister "is satisfied" that there has been relevant non-
compliance with the Act, or that an overpayment or recoverable payment has been made.
Currently, these provisions do not require the Minister to be satisfied of the circumstances
giving rise to the power to delay, reduce or require repayment of funding under the Act;
there is an argument that where relevant non-compliance with the Act has occurred, or that
an overpayment or recoverable payment has been made, as a matter of objective fact, the
power to delay, reduce or require repayment of funding under the Act is enlivened, without
the need for the Minister or his or her delegate to turn their mind to the issue. The
amendments are intended to clarify that the power to delay, reduce or require repayment of
funding under the Act can only be utilised when the Minister or his or her delegate is
satisfied, on a reasonable evidentiary basis, that relevant non-compliance with the Act has
occurred, or that an overpayment or recoverable payment has been made.
Items 152, 153 and 154 are minor stylistic amendments to that language of subsection
109(4), to change the tense in that subsection.
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Item 173 amends subsection 129(3) to provide that the Secretary can delegate his or her
powers under the Act to any APS employee in the Department, and is not restricted to
delegating to SES employees in the Department.
The Minister's and Secretary's capacities to delegate their power in section 129 of the Act
also relate to their powers under the Regulation (see definition of this Act in section 6 of the
Act). Currently, the Minister is able to delegate his or her powers under the Act and
Regulation to any APS employees in the Department (see subsection 129(1)). However, the
Secretary can only delegate to SES employees.
There are a number of the Secretary's powers under the Act and Regulation that are of a
routine administrative nature - for example, to allow a period longer than 30 days for
lodgement of an application for internal review (subparagraph 120(2)(c)(ii) of the Act); and
to allow a period longer than 7 days after a census day for lodgement of census information
(paragraph 46(5)(b) of the Regulation). It is appropriate that these powers (which are
generally beneficial to approved authorities) be exercisable by officers of the Department
below the level of SES employees.
Consequently, the capacity of the Secretary to delegate his or her powers under the Act and
Regulation is being aligned with the capacity of the Minister to delegate his or her powers.
35