A stand-off between the Albanese Government and the NSW and Queensland Governments over public school funding has been going on for more than a year. The longer it lasts, the more public schools will lose. If it is not resolved, public schools in the two states could lose nearly $40 billion in funding over the next 10 years. Continuing under-funding of public schools will be catastrophic, particularly for disadvantaged students and schools in the two states.

If the stand-off is not resolved, NSW public schools will be under-funded by about $18 billion over the next 10 years. Queensland public schools will be under-funded by about $21 billion. This would be disastrous for the learning outcomes of disadvantaged students and for the many under-resourced disadvantaged schools in the two states.

As a result of the long stand-off, an interim funding agreement with the Albanese Government was reached by both states for 2025. The Australian Government agreed to maintain its funding share at 20% of the Schooling Resource Standard of public schools. The NSW Government agreed to increases its share of funding the SRS from 72.65% in 2024 to 75% in 2025. The Queensland Government maintained its 2024 share of 70.5% for 2025.

It should be noted also that the two governments have been extremely sluggish in increasing their SRS funding share for public schools in the past. The NSW Coalition Government had only agreed to increase its SRS funding share by 1.92 percentage points over six years from 70.63% in 2019 to 72.65% in 2024. Similarly, the Queensland Labor Government had agreed only to increase its share by 1.3 percentage points over the six years from 69.2% to 70.5%.

Both interim agreements for 2025 permitted the state governments to continue special allowances, commonly called accounting tricks, to include non-SRS expenditures as part of their SRS share. NSW could claim capital depreciation and expenditure on the NSW Education Standards Authority up to 4% of the SRS. Queensland could claim capital depreciation and school transport up to 4% of the SRS and it could also claim all expenditure on the Queensland Curriculum and Assessment Authority. All these items are specifically excluded from a long-standing national agreement on how the SRS is measured. Anomalously, state governments are not permitted to claim such allowances in funding private schools.

The continuation of these accounting tricks will cost NSW public schools about $8 billion in lost funding over the next 10 years and Queensland public school about $7 billion. They mean that NSW public schools are actually only funded at 71% of their SRS by the NSW Government in 2025 and at 91% overall. The under-funding for 2025 is estimated at $1.5 billion. Queensland public schools are funded at only 65.8% by the Queensland Government and 85.8% overall. The under-funding is estimated at $2.1 billion for 2025.

By contrast, new in-principle agreements were recently reached between the Albanese Government and the Victorian, Western Australian and South Australian governments. Under the agreements, the Australian Government will increase its funding share to 25% and the states will increase their share to 75% and the accounting tricks will be abolished.

As a result, public schools in these states will be fully funded by 2034, although the details of the phased increase in funding have not been published. The long phase-in period means that public schools will remain under-funded for another nine years. However, there is at least agreement to fully fund public schools without the rorts of the Morrison-era agreements that have defrauded public schools of billions since 2019. These new agreements follow the Prime Ministers pledge in his National Press Club address last month to increase the Australian Government share and abolish the accounting tricks in new funding agreements.

Similar agreements are on offer to the NSW and Queensland Governments. Their refusal to sign up can only be seen as a lack of commitment to public schools and the learning of their students. Minimising future expenditure on public schools appears to be the priority.

Failure to reach new agreements will most heavily impact on disadvantaged students and schools. Money matters in education, especially for disadvantaged students and schools. While there are arguments over how best to spend additional funding, it is not possible to hire extra teachers and non-teaching staff, buy more learning materials and digital resources or to upgrade facilities.

A new study shows that 81% of all NSW students from low socio-educationally advantaged (SEA) families attend public schools and 94% of all schools with over 50% of their students in the lowest SEA quartile are public schools. Nearly one-third of all students in public schools are from low SEA families. In Queensland, 83% of all students from low SEA families attend public schools and 90% of all disadvantaged schools are public schools. One-third of all students in public schools are from low SEA families.

Large proportions of students from low SEA families and other disadvantaged students are not achieving national standards. For example, 64% of NSW Year 9 students of parents who did not complete Year 11 and 51% of students of parents in the lowest occupational group did not achieve the national reading proficiency standard in 2024. In Queensland, 70% of Year 9 students of parents who did not complete Year 11 and 60% of students of parents in the lowest occupational group did not achieve the reading standard. These low SEA Year 9 students are 4-5 years in learning behind their high SEA peers.

Clearly, public schools in NSW and Queensland face an enormous challenge in improving school outcomes for these students. Chronic under-funding means continuing large shortages in human and material resources.

It is imperative that the NSW and Queensland Governments quickly agree to fully fund public schools to improve school outcomes for disadvantaged students and reduce the huge achievement gaps between rich and poor.