Class is in session, and a maths test is coming up


When the heads of the Catholic and independent school systems in NSW left a private meeting with the Prime Minister, Julia Gillard, the Education Minister, Peter Garrett, and a posse of NSW backbenchers on Wednesday morning, they were well pleased.

Gillard had promised them a more ''stable'' system to determine the annual increases in federal funding for all schools - replacing the present method applying to private schools that sees wild fluctuations.

The immediate problem for NSW private schools is this year's precipitous drop in their annual federal funding increase to just 3.9 per cent and the likelihood of an even more alarmingly low indexation figure next year (probably one with a two in front of it) when massive cuts by state governments, particularly the O'Farrell government, flow through into the calculations.

Gillard promised the state cuts would not be allowed to ''feed into the way we fund schools''. Federal funding would be disconnected from state government cuts, and the private school providers were given the clear impression this separation would happen before the NSW funding freeze hits in the middle of next year.

''We are cautiously very optimistic the commonwealth will find a way to disconnect their funding from the state cuts,'' said the Bishop of Parramatta, Anthony Fisher, who attended the meeting.

''She told them we are not going to let them get dudded,'' was how one backbencher at the meeting summed it up.

Labor and the private school lobby haven't always been the best of friends. Mark Latham's so-called ''private schools hit list'' in the 2004 election campaign left a legacy of mistrust.

And the Gonski reforms had the real potential to reopen old wounds, given the recommendation for a single system to determine annual funding increases to replace the present method.

The present system might be delivering low increases to private schools this year, but over time, according to public school advocates, it has worked to their relative advantage.

Public discussion of school funding often focuses on the dollar figure in a given year, but the experts - the state and federal officials who negotiate the complex deals and the schools administrators that have to work with the results of those deals - always look at how the annual increase is derived. That's because over the last four-year deal, federal spending has increased by 50 per cent. Over the past decade it has doubled. The long-term average annual increase is 6 per cent. Lower indexation rates can quickly erode the real value of what might look like big upfront sums.

What the private school representatives may not have known as they left the meeting is that federal cabinet - in many discussions since July - has been looking for ways to constrain the long-term costs of the expensive spending increases recommended by Gonski.

By 2020, when the new system is to be fully phased in, the additional cost is estimated at $6.5 billion a year.

With pressure growing on the Gillard government to explain how it will pay for the massive long-term costs of its education and disability reform plans, the Herald has learned it is set to propose a ''stable'' indexation figure lower than the historical average of 6 per cent, and much lower than recent increases of 8 per cent or more. A figure of about 5 per cent looks likely. That would mean that instead of the 50 per cent increase in funds over the past four years, federal spending would increase by something like between 25 and 27 per cent over the next four.

(As it searches for ''lower cost'' ways of funding its reform, the government is also proposing to ease the budget pain of Gonski by ''rolling in'' money earmarked for new national partnership agreements with the states, which could amount to $1.6 billion over the next four years and about $3 billion over the next six. The federal government argues the partnership agreements - part of Kevin Rudd's grand plan to reform federalism and end the ''blame game'' - were always one-off deals that were meant to finish. The states say they have become essential to the delivery of some services and the premiers insisted on a special negotiation on the issue when they last met the Prime Minister at COAG.)

The Coalition had been expecting that Labor would have to impose a lower indexation figure, and had designed its political response strategy to the Gonski report around it.

Its education spokesman, Christopher Pyne, has said an Abbott government would stick with the present system and has repeatedly challenged the Gillard government to commit to indexation of at least 6 per cent.

A lower figure, he has said, would amount to cuts, in real terms, for private schools over time. It would mean parents would have to make up the difference by paying higher fees.

However, the shock announcement by the NSW government of a spending freeze and the unexpectedly low indexation figure for private schools this year have rather spoiled his argument.

In fact, Bishop Fisher now says if the Coalition wants to stick with the present system of indexation, it should find a way of supplementing it in years when it delivers unusually low increases, or at least find a way of evening out the peaks and troughs which make it so hard for educators to plan ahead.

And Bishop Fisher seems resigned to the idea that a ''stable'' indexation figure under the Gillard government would not be as high as private schools have enjoyed in recent times.

The conservative state governments have cruelled the already complicated argument the federal Coalition was trying to make.

In the process, they might just make it easier for the Gillard government to fund the Gonski reforms in a way that is less likely to blow a long-term hole in the budget.

But as Bishop Fisher points out, until we know for sure exactly how much money both federal and state governments can put on the table, it is impossible to assess the real impact on the education of children in either government or private schools.

This story Class is in session, and a maths test is coming up first appeared on The Sydney Morning Herald.