Private schools regularly blame inflation for rising fees, yet funding arrangements mean they are largely compensated for cost increases. Their fee-setting power widens the resource gap while feeding back into inflation itself.

The annual rite of the raising of private school fees usually happens in the January school holidays, but this year it has come early.

These fee increases provide a yearly reminder of the claims made in 2000 by the Howard Government’s education minister, David Kemp. Introducing a scheme based on neoliberal values of consumer choice and provider competition, he proclaimed that competition among a growing number of private schools would lead to lower fees as they competed for enrolments.

He got that one badly wrong.

In this country, government funding of private schools is based on a rare, if not unique, form of public-private partnership. Private schools have retained the same autonomy over their admission charges as they had when they were fully privately funded. School authorities alone decide the level of these fees according to their target market. Even to put their child’s name down on the waiting list at some schools, parents may have to pay a non-refundable deposit. As well as the stated tuition fees, families might also be faced with levies and charges for technology, buildings and facilities, camps, excursions, school buses, and particular subjects such as sport and music.

The Commonwealth uses a measure of how much total public funding a school needs for the students it enrols. Based on the advice of the 2011 Gonski Review, this is the Schooling Resource Standard (SRS), which provides the benchmark against which each school’s need is calculated.

Private schools, however, can and do set fees that exceed their SRS; so that the combined effect of their private income and this public funding is to maintain a resources gap between private schools and public schools with a similar student intake.

The Canberra Times recently reported that parents at one of the capital’s most expensive private schools, Radford College, were shocked by the announcement of a 20 per cent increase in 2026 in their annual tuition fees. This was described by the college’s principal as “a precautionary and strategic measure to maintain financial stewardship in an environment of declining government support and rising costs.”

Announcing fee increases to parents is a sensitive matter. Even where this places financial strain on families, parents will be unwilling to remove their child from a school where they are settled and have friends, or to question the reasons for the fee hike. They may also be reluctant to question their own decision to opt for a private school in the first place.

So it is understandable that school authorities frequently seek to attribute fee hikes to some external factor, like the rate of inflation. This is despite the evidence over time that their annual fee increases often exceed the rate of inflation.

They are assisted in composing their announcements to parents by the arcane nature of funding arrangements for private schools in this country. Perhaps school authorities (and, for that matter, governments) feel families have enough to worry about without the additional burden of references to the Consumer Price Index (CPI), the Wage Price Index (WPI) and the Commonwealth’s measure of inflation in schools, formerly called the Schools Price Index (SPI).

Inflation is one of the favourite bugbears school authorities use to justify their fee rises to parents.

But the truth of the matter is that these fee-charging schools actually contribute to the annual rate of inflation.

Here’s how this works. Overall, general recurrent grants from the Commonwealth alone are more than sufficient to cover the teacher salary bill of the private schools sector.

Governments, commonwealth and state, then adjust these grants annually to maintain their real value, by applying an index to the SRS. This index is heavily weighted (75 per cent) by changes in teacher and other staffing expenditures (using the WPI) as well as by changes in the CPI (25 per cent).

This means that schools in the private sector are largely compensated for increases in meeting these costs.

This is a fact often omitted from the schools’ announcements of fee increases to parents.

The capacity to present inflation as a curse is, in its way, a blessing when it comes to communicating with parents about fee rises.

Then we arrive at the point in this cycle where the fee increases set by these schools feed into the general rate of inflation, as felt by consumers in their daily lives. The Australian Bureau of Statistics (ABS) uses the Consumer Price Index to measure change to consumers in the price of a ‘basket’ of goods and services. It takes account of a range of goods and services – housing being one of the most significant – along with food, transport and health and yes, changes in private school fees. The fee increases set by private school authorities thus feed, in turn, into the wage price component of the CPI – for which most schools will be duly compensated over time.

When it comes to explaining indexation to parents, private school authorities have little to fear. There may be one or two who raise questions but they are unlikely to incite a mutiny. It has been the experience of one of the authors of this piece that when it comes to indexation, interest and expertise – a fascination even –  is rarely shared by family, friends or even work colleagues.

To be fair to private school authorities and their lobby groups, there is one motivation for fee rises where they are transparent with parents. They let parents know that they use their schools’ financial advantage to attract teachers and that parents need to understand that they must contribute to maintaining that advantage if they want to ensure that their own children have the supply and quality of teaching they need.

A recent correspondent to the Sydney Morning Herald asked “what’s wrong with parents sending their kid to a high-fee private school they perceive to be a good choice for whatever reason, if they can afford to?”

What’s wrong with it is that these schools use their wealth to attract teachers at the expense of students in schools who need them more, especially given that Australia now has amongst the highest teacher shortages in the OECD.

What’s wrong with it is that governments add taxpayers’ money to this wealth, while public schools that are open to all remain under-funded.

The views expressed in this article may or may not reflect those of Pearls and Irritations.

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