Ensuring choice: A mechanism to control non-government school fees

Over the last decade, fees at independent schools have risen by over 50% nationwide, 54% in major cities, and in some instances up to 80%—far outstripping both inflation and wage growth, and creating an affordability crisis for families across Australia. The lack of transparency around non-government school expenditure presently means that funds raised from school fees are often used on significant expenses that neither parents nor government are aware of. This feeds into the uncontrolled year-on-year fee increases.

The taxpayer spends $18 billion per year on funding private schools under the guise of providing ‘educational choice’ to families. But this justification becomes indefensible when that choice is removed unless families take on credit card debt or remortgage their homes to pay for school.

– Blueprint CEO David Cross.

The non-government school sector is not a free market. These schools are not ‘private’ in the truest sense of the word. Any entity that receives such vast quantities of public funds has a responsibility to publicly demonstrate it provides benefit to a broad subsection of society.

Our analysis finds:

• Independent school fees rose by 50% nationwide over the decade ending in 2020, exceeding both inflation (22%) and wage growth (29%). 
• In Sydney and Melbourne, independent school fees increased by 54% from 2010–2019/20. 
• Independent schools are maintaining their enrolment share versus the government and Catholic systems because parents are putting themselves under increasing financial strain to pay for fees.
• One in three parents (32%) with children at non-government schools have resorted to taking on credit card debt, redrawing the mortgage on their home, turning to extended family for help, or seeking loans elsewhere in order to close the gap between stagnating wages and escalating fees.
• Fifteen percent of families are using credit cards in particular to pay for school fees.
• Flush with cash, independent schools are increasingly focused on spending money raised from school fees on projects with no educational purpose, such as superfluous capital works, sporting equipment, and overseas travel. 
• There has been a disproportionate increase in executive salaries at independent schools—with some principals at large, capital-city schools now earning well over $600,000.

In the interest of preserving educational choice, this Blueprint short paper proposes a transparency mechanism to ensure that non-government schools are fiscally responsible, and justify their fee increases to the public (and to parents) in order to receive continued public funding.

To put downward pressure on fee increases and stop exorbitant spending, Blueprint proposes the creation of a statutorily independent ‘Non-government School Transparency Advisory Committee’ by each state government. If schools wish to raise their fees beyond Blueprint’s proposed ‘affordability marker’ (10% above the cumulative rise in WPI or CPI (whichever is greater), indexed to 2010), they must apply to their relevant Committee and justify their proposed fee increases in order to continue to receive public funding.

The very existence of these Committees would result in extensive self regulation. Non-government schools will be more reluctant to spend money earned from fees on superfluous capital works, exorbitant executive salaries, travel, and luxury items if they know they have to publicly defend said expenses to the Committee and fee-paying parents.

This report is the first of our 'short papers' designed to spur public policy debate by proposing policies and reform ideas.