Olympic-sized swimming pools and in-house baristas at private schools will continue to be financed by public subsidies after the Labor Government said a flat-no this week to calls to remove tax breaks on building funds. Morgan Harrington with this perspective.
Private school In 1962, St. Brigid’s Primary School in Goulburn needed a new toilet block. The school was overcrowded, with 84 students in a single kindergarten classroom.
Like all non-government schools at the time, it didn’t receive any public funding. It couldn’t afford the cost of building the toilets, which it needed to meet NSW Government heath requirements, so it shut, along with five other Catholic schools in the area.
The 2,000 students were forced into a public school system with space for 640.
Although the “Goulburn Schools Strike,” as it came to be known, was not immediately successful, the election of the Menzie’s Coalition government in 1963 saw the Commonwealth begin to provide financial aid to non-government schools.
A lot has changed since then.
“The recommendations to withdraw the Deductible Gift Recipient (DGR) status of building funds & for religious & ethics education in government schools is a direct attack on school & faith communities” https://t.co/8MfXGvYl4p
— Daniel Ang (@DanielAngRC) July 18, 2024
In the five years to 2022, private schools in NSW spent an estimated $1.5 billion on capital projects. Building funds, which parents are encouraged to donate to, are given the tax deductible status by the Commonwealth.
But, in a report released last week, The Australian Productivity Commission has called for these building funds to be stripped of their tax deductible status because there is a “material risk that donors could convert a tax‑deductible donation into private benefits.”
The response from the Albanese Government has been swift and unequivocal. Andrew Leigh, the Assistant Minister for Competition, Charities and Treasury, has said that the proposed changes “are not being considered.”
Despite the commentary, the proposal to remove the tax-deductible status of private school building funds is not ‘radical’. The expanding gap between our public and private schools epitomises Australia’s increasing inequality.
The solution is simple: the $100 million in tax revenue foregone every year to private schools through their tax-deductible building funds could be redirected to improving schools that need it the most. How else will we ensure that all young Australians get a fair go?
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Editor: The case to justify tax breaks for private school building is not a strong one. Here, Morgan Harrington and Alexia Adhikari reveal some of the more blatant vanity projects being subsidised by the public.
Over the nine years of Coalition government public funding was skewed towards the private school system to the relative disadvantage of public schools. This has given rise to an outcry over the injustice of cross subsidies. Although, here we break down how the system actually works – on a per student funding basis, which benefits new and smaller private schools and takes the burden off the public for school funding.
That said, the DGR subsidies to the wealthy private schools remains hard to justify, as even many advocates of the independent school system privately admit.
Cranbrook and the private school “arms race”. How far is elite school funding out of whack?
Morgan Harrington is the Australia Institute’s Postdoctoral Research Manager, a social researcher with diverse experience within and beyond academia. He has worked across Indigenous Australia, including with Aboriginal land councils and at the Australian National University’s Centre for Aboriginal Economic Policy Research.