Incentives for Parents to Pay for Schooling

Debate about public support of non-government schools can be heated. Some people feel especially offended by the notion that taxpayers’ money is being used to benefit already well-off families. Scott Prasser calls for a more nuanced and balanced understanding of the issues.

The debate about public funding of non-government schools is confusing and misleading, open to misinterpretation and misrepresentations. The confusion partly results from the complexity of funding arrangements, where Commonwealth and state and territory governments have overlapping roles and responsibilities.

But it is also because there is a consistent failure to acknowledge the existence and benefits of the significant private contribution parents volunteer to make by choosing a non-government school.

For forty years, Australian governments have supported parental choice in schooling by providing funding for non-government schools on a needs basis. Funding from the Commonwealth comprises a minimum per capita amount, which recognises a community obligation to support the education of all children, and a needs-based component that reflects wide differences in parents’ capacity to contribute.

Most of the debate in the media on school funding uses partial and selective data to draw attention to the high level of resources enjoyed by a relatively small number of high fee independent schools. The proposition that follows is that no school should have a resourcing level exceeding the funds available to public schools.

This argument fails to acknowledge at least two important facts: that these well-resourced schools are not typical of the diverse non-government school sector; and that 85 per cent or more of the resources in high fee schools come from private contribution, not the public purse.

Parents, not the public, are the major source of funding for independent school students – 58 per cent – and a significant source of funding for Catholic school students – 28 per cent. This compares with a contribution of around 6 per cent from parents and communities for government schools. Parents are also typically the main source of funding for buildings and equipment in the independent sector, contributing more than 80 per cent of the cost. Many long-established independent schools receive no public funding at all for capital works.

More and more families have been willing to make this investment, as shown by the steady growth in non-government school enrolments, from a market share of 21 per cent in 1977 to 34 per cent in 2010. In the same period, independent school enrolments have grown from 4 to 14 per cent of enrolments.

A great deal of research has been conducted into why parents decide to make the considerable investment involved in choosing a non-government school. It is not a decision taken lightly, as it commits a high proportion of household expenditure, especially for middle income families, and often requires significant financial sacrifice. Families at all income levels and from every social group make the choice, particularly at secondary level.

Economic factors are only part of the explanation. More important are values and attitudes, and the value placed by a family on education. By choosing to pay fees, parents are seeking the best schooling experience for their child and making an investment in the future benefits of higher school achievement, broader school experiences and anticipated higher earnings.

The research shows that in school choice, they are more influenced by values, attitudes, community and culture than they are by income and social class.

Parents’ own education levels play a large part in that decision. Better-educated middle-class parents in particular place a high value on education credentials and increasingly demand more influence over the education their children receive.

The private contribution from parents allows non-government schools to operate with a degree of autonomy, free from the strictures of large bureaucratic systems and able to respond more flexibly and innovatively to their local community.

This flexibility and responsiveness is what parents are seeking. By choosing to pay fees, parents have a stronger sense of engagement in the school’s operation and more influence over outcomes. By accepting these private contributions, schools have a higher level of accountability to parents, to do the best by each student.

Balancing this responsibility to fee-paying parents is the accountability to government that comes from accepting public funds. With public resourcing, schools are accountable for meeting national quality expectations and the public purposes of schooling.

School choice, autonomy and accountability are recognised as effective policies for raising achievement levels. Typically students in non-government schools perform at significantly higher levels than students in government schools and these results owe more to the more effective operation of the school, its academic orientation, teacher quality and disciplinary climate, than social background.

Where once the social background of private school students may have been exclusively wealthy and upper class, it is now mixed, thanks to public subsidy. Commonwealth funding has enabled some schools to keep their fees low and to be more accessible to students from low and middle income families. This is where the greatest growth in independent school enrolments has occurred.

The objective of governments in committing substantial resources to schooling is to foster economic growth and social well-being, through a better educated population. Governments are also driven by the need to achieve efficiencies in public spending, especially in the provision of such high cost public services as health and education. They therefore commonly encourage, or even mandate, private contributions from those who can afford it, to alleviate pressures on government outlays. A pattern of combined public and private funding, and service delivery freed from full government control, is becoming more familiar in advanced economies.

Public funding for non- government schools, while not preventing increases in school fees, has led to the expansion and diversification of the sector, extending access and acting as an incentive for greater private investment. This private investment has greatly increased the total resources committed to schooling and raised the quality of Australian education.

This public funding has opened the way for parents from all income brackets and social backgrounds to have access to non-government schooling, if they choose. The result is a high quality education system across the board, greatly increased private investment and savings to the public purse.


Professor Scott Prasser is Executive Director of the Public Policy Institute of the Australian Catholic University.