Dollars and Sense: Time for smart reform of Australian school funding

Australia is among the world’s highest-spending countries on schooling. Yet, the educational return on this investment for parents, taxpayers, employers, and students, has deteriorated — despite the expectation of policymakers that increased funding would inevitably improve educational outcomes.

It’s true that money matters when it comes to schooling, but how money is used is what really matters, not how much money is spent. All students and taxpayers would benefit from a more productive school system that delivers greater educational outcomes with the same or fewer resources. To achieve this, we need smarter approaches to funding — grounded in evidence and in market-based principles.

This research paper reviews the state of school funding in Australia, bringing together research from international comparisons based on OECD data sources, Australian school-level data, international research literature, and policy documents. It expored how and why the persistent increases in school funding in Australia have failed to improve educational outcomes. In doing so, potential solutions to the current policy settings are identified.