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Expenditure: Expenditure on formal education
(b) Total includes local government outlays.
(c) Outlays financed from own resources.
(d) Expenditure and GDP at current prices for each financial year.
Source: Expenditure on Education, Australia (cat. no. 5510.0); and unpublished data, Government Finance Statistics collection.
Source of funding by sector
The three sectors of education - schools, VET and higher education - each receive funding from a number of different sources.
Government schools are almost wholly funded by government, whereas non-government schools receive funding from various sources. State and Territory Governments provided 74% of government funding in 1995-96. The Commonwealth Government provided supplementary funding through a variety of programs to both government and non-government schools (26% of government funding). In addition, the Catholic and independent school systems generate private funds for their schools, mainly through fees and charges but also through church and parish grants and private donations.1 In 1996, 45% of the income of these schools came from private sources.2
The VET sector receives most of its funds from the State and Territory Governments (56% of total income in 1996) although the Commonwealth Government provides the majority of funds for capital works as well as financial support for VET running costs (27% of total income in 1996).3 The private sector also provides funding through service fees (9%), individual student fees (4%) and the provision of ancillary trading services (4%).3
The higher education sector is largely funded by grants from the Commonwealth Government (57% of total income in 1996), contributions from students under the Higher Education Contribution Scheme (12%) and fees from fee-paying overseas and postgraduate students, and other charges (13%). This sector also receives some funds from consultancies, research contracts and other sources (13%), from investments (4%) and from the State and Territory Governments4 (1.4%).
Government and private expenditure
Between 1985-86 and 1995-96 total outlays on education (after adjustment to 1989-90 values) rose 36%. However, prices in the education sector increased less than prices in the rest of the economy. This was a factor in the overall decline of education expenditure as a proportion of Gross Domestic Product (GDP)5 from 5.7% to 5.5% (as expressed in current prices each year). While most education expenditure is incurred by governments, over the last few years an increased proportion has been taken over by the private sector. Government share of total outlays on education during this period fell as a percentage of GDP from 5.4% to 4.9%, while private outlays increased from 0.4% to 0.6% of GDP.
Although the government sector contributed the vast majority (89%) of total outlays on education, between 1985-86 and 1995-96 contributions from private sources increased at a greater rate than public sector contributions. The increased private sector growth (122%) came mainly from private school fees, due to the drift of students to private schools; and from the growth in overseas university student numbers.4 Expenditure on schooling by private households varied according to the type of school attended, with higher costs incurred by pupils at non-government schools (see Australian Social Trends 1997, Government and non-government schools).
In contrast to private source contributions, total government outlays on education rose 30% between 1985-86 and 1995-96 (after adjustment to 1989-90 values). The main growth was in the Commonwealth sector (up 51%), reflecting increased grants to the States and Territories, mainly for tertiary education. Outlays from State/Territory Governments and local governments from their own resources rose by 17%.
The largest proportion of total government outlays on education went to primary and secondary school education. In 1995-96, this comprised 55%. During the same period, higher education attracted 24%, and vocational education and training provided through Technical and Further Education (TAFE) institutions 11% of government outlays on education. The balance was spent on pre-schools, other special education, and student transportation.
However, the distribution of government outlays has shifted over the 10 year period, with an increased proportion allocated to tertiary education and less to primary and secondary school education. Over this period, outlays on tertiary education rose 50% (58% for universities and 38% for TAFE) (after adjustment to 1989-90 values), while the corresponding rise for primary and secondary education was 19%. The substantial rise in funding for universities occurred because of the large increases in Commonwealth-funded university education student places between 1988 and 1995.
How is the money spent?
The majority of funds spent by the government and private sectors on education are used to pay teaching and non-teaching staff salaries in schools, TAFE and universities. In addition, funds are required for support services for students and staff, research activities in universities, cleaning and maintenance of buildings and general administrative costs. Money is also spent on providing new buildings and equipment or upgrading existing facilities.
EDUCATIONAL EXPENDITURE BY SECTOR, 1996
(b) 1995-96 expenditure.
(c) Superannuation for both teaching and non-teaching staff included in total salary costs only.
(d) Superannuation and long service leave for both teaching and non-teaching staff included in total salary costs only.
Source: MCEETYA, 'Summary 1995-96 Finance Statistics' from government section of National Schools Statistics Collection, 1996; NCVER, Australian VET Statistics: financial data, 1996; DEETYA, Selected Higher Education Finance Statistics, 1996.
Government school expenditure
In 1995-96, government school expenditure totalled $12,084 million. In that year, 52% of expenditure by government schools was on teaching staff salaries, and a further 11% on non-teaching staff salaries. The remaining expenditure was on non-salary costs which included other operating expenditure (the costs of goods, services and cleaning) and the provision of buildings and grounds.
Per student school expenditure in 1995-96 was $5,063. It was higher in secondary schools ($6,110) than in primary schools ($4,410) reflecting the greater costs in secondary schools.
Non-government school expenditure
In 1996, non-government school expenditure totalled $5,221 million. As with government schools, the salaries of teachers and other staff was a major category of expenditure (50% and 10% respectively).
Expenditure per student by Catholic schools was 79% of that for independent schools at the primary level and 70% at the secondary level.
Per student expenditure was $7,353 in independent schools, and $4,785 in Catholic schools. The Commonwealth and State/Territory Governments funded some of this expenditure ($2,377 per student for independent schools and $3,344 per student for Catholic schools).
Vocational Education and Training
In 1996, VET expenditure totalled $3,917 million, excluding those services which were financed solely by private providers3. Salaries accounted for 61% of total costs.
There was a significant increase between 1995 (1.8%) and 1996 (3.1%) in total payments to non-TAFE providers for VET, such as commercial training providers. The proportions ranged from 6% in Northern Territory down to 1.3% in Tasmania. Provision of supplies and services absorbed a further 23% of VET expenditure.
The Commonwealth Government provides funding for apprenticeships and traineeships, both as part of its VET in Schools program and its Support for New Apprenticeships program10 (see Australian Social Trends 1998, Workplace training).
In 1996, expenditure of general, recurrent and research funds by higher education institutions in Australia amounted to $7,590 million.4 Of that amount, 34% was accounted for by salary and salary-related expenses for academic staff, and a further 29% for non-academic staff. Depreciation and other expenditure accounted for the final 37%.
In terms of activities undertaken, more than half of total expenditure in 1996 was devoted to academic activities and research (60%). Libraries, student, public and other academic support services accounted for 16% of expenditure, with buildings and grounds accounting for 6%. Expenses relating to administration and other general institution services, plus superannuation costs, made up the balance (18%).
The Commonwealth Government funds a major proportion of research work undertaken by universities. Expenditure on research includes funds spent on large-scale projects involving several institutions, funds allocated to institutions for post-graduate research students, research projects by groups of staff or students, and research by individuals.
In 1997, the Commonwealth Government provided $623.5 million to universities for research activities. Just over one half (52%) was allocated to institutions, 27% went to specific projects and the remainder to individual researchers.9
1 Ministerial Council on Education, Employment, Training and Youth Affairs, 1997, National Report on Schooling in Australia 1995, Curriculum Corporation, Carlton, Victoria.
2 Department of Employment, Education, Training and Youth Affairs, 1998, Non-government Schools Financial Questionnaire Collection 1996, DEETYA, Canberra.
3 National Centre for Vocational Education Research, 1997, Australian Vocational Education and Training Statistics 1996, NCVER, Leabrook, S.A.
4 Department of Employment, Education, Training and Youth Affairs, 1997, Selected Higher Education Finance Statistics 1996, AGPS, Canberra.
5 National Board of Employment, Education and Training, 1992, Education, Training and Employment Programs, Australia, 1970-2001: funding and participation, Commissioned report no. 11, AGPS, Canberra.
6 Commonwealth Treasury, 1990, Budget Statements, 1990-91, Budget paper no. 1, AGPS, Canberra.
7 Higher Education Council, 1997, Eleventh Report to the National Board of Employment, Education and Training on the Operation of Section 14 of the Higher Education Funding Act 1988 and the Higher Education Contribution Scheme, AGPS, Canberra.
8 Commonwealth Treasury, 1997, Budget Strategy and Outlook 1997-98, Budget paper no. 1, AGPS, Canberra.
9 Department of Employment, Education, Training and Youth Affairs, 1996, Higher Education Funding Report for the 1997-99 Triennium, AGPS, Canberra.
10 Department of Employment, Education, Training and Youth Affairs, 1997, Portfolio Budget Statements 1997-98: Budget-related paper no. 1.4, AGPS, Canberra.