The early 18th century colonies, then the states, developed the first school systems across Australia. However, no mention was made about schools or the cost of funding them in the Constitution at Federation in 1901. It appears that the founding fathers did not want to upset the status quo by interfering in the already established educational policies of the states and so education was assumed a residual state and territory responsibility.

Prior to the Second World War, a number of newly-established educational bodies, including the Australian Education Council (AEC), the Australian Teacher’s Federation (ATF) and the Headmasters Conference of Australia (HCA) lobbied the federal government for some commitment to funding for education. But despite the establishment of the Commonwealth Education Office (CEO) in 1945 which oversaw the distribution of post-war assistance to war veterans with technical, industrial and university allowances, the managing and funding of public schools remained the sole responsibility of the state and territory governments until the 1960s. Catholic and other non-government schools managed and funded their own systems through church resources, fees, donations and bequests etc.

The CEO was downgraded in the 1950s and the Department of Education and Science was established in 1963. Commonwealth funding began in a small way in 1964 with science grants to all secondary schools. An emerging awareness of the importance of student access to good literature resulted in Commonwealth library grants next.

Recurrent Commonwealth funding for both government and non-government schools began in the 1970s. The Federal Government established the Schools Commission to formalise the distribution of funds.

Funding was originally based on three principles: to achieve the highest standard for public schooling; to achieve a Community Standard for all schools; and to create greater equity in educational outcomes among all children by additional funding for those with special needs and the disadvantaged, including Indigenous children.

Programs for Commonwealth funding for schools have undergone many changes and been known by many names over the past four decades. Successive governments have made minor and major changes as they struggled with differing ideologies and agendas, including those of the states and territories who were not always in political lockstep.

The department in charge of implementing the various policies has also undergone many names. The Department of Education, Science and Training (DEST) established in 1963 became the Department of Employment, Education and Training (DEET) in 1987. It was renamed DEST in 2004 and this year the new Labour Government renamed it the Department of Education, Employment and Workplace Relations (DEEWR).

Currently, the Australian Government spends around $2 billion annually (9 per cent of total cost) on funding state schools. The other 91 per cent (around $23 billion) comes from the states and territories. The Australian Government is the main source of public funding for the non-government sector. Funding for non-government schools is calculated using the Socio-Economic System (SES), introduced in 2001 by the previous Federal Liberal Government.

The SES is based on the socio-economic status of each independent school’s community. This involves linking students’ address data to the Australian Bureau of Statistics (ABS) census data to obtain a measure of the capacity of the school community to support its school. Schools with SES scores of 85 and below are funded by the federal government at 70 per cent of the Average Government Schools Recurrent Costs (AGSRC) which is the proportion of the calculated cost of educating a child in a government school. Schools with scores of 130 or above receive 13.7 per cent of this cost and schools with scores between 85 – 130 are funded on a continuum.

The new Labor Government says it will maintain the SES formula for the current quadrennium but review it for the future.