AUSTRALIAN COUNCIL FOR THE DEFENCE OF GOVERNMENT SCHOOLS

PRESS RELEASE 421

STATISTICS, GAPS AND LACK OF ACCOUNTABILITY

The media and focus groups are busy interpreting the limited financial information available on the MySchool website.

Given the funding disparities between the wealthy sectarian schools and public schools, taxpayers are being spared the ‘poor parish school’ rhetoric. The inequities between system as well as wealthy religious schools and disadvantaged public schools are too outrageous to try that one again.

But, although the figures provided are interesting, Australian citizens and taxpayers are still being provided with woefully inadequate information from the private religious sector. Nor is there any certainty that their figures are correct. There is little or no mechanism in place to verify basic enrolment figures. DOGS estimated in 2008/09 that a school’s returns would only be checked once every fifty years!

The bald figures noted by the Age of Friday March 4 2011 are as follows:

‘Nationally, government schools operate on an average of $11,000 per student, while the average is $10,000 for Catholic schools and $13,700 for independent schools.’

These are dangerous figures if the argument is mounted that the Catholic sector can ‘do it more efficiently and economically than the public sector.’ The plain fact of the matter is that, the sectarian sector duplicates public facilities at a ridiculously uneconomic level, and if ALL the figures were analysed,they use much greater levels of resources than the MySchool website suggests.

But then, for almost two generations, the figures have been muddied by lack of transparency and accountability from the sectarian sector.

DOGS make no apology for referring to private religious schools as the sectarian sector, if only for the reason that they select children on sectionalist or sectarian criteria. In the nineteenth century these schools were referred to as ‘the denominational system’ of education. They were rejected as a system that should receive public funding because they failed to educate the vast majority of Australian children to the required standard. Now, billions of taxpayer dollars later, we are back to that position.

The private religious sector tried to prove that their were no more religious than public schools in the 1979 26 day Trial of Facts in the DOGS case. Given their effect on the growth of disadvantage in Australian education in the last 50 years, that could well be the case.

But no amount of double talk can erase the fact that many non-government schools select pupils on the basis of ability to pay fees or religious affiliation.

Gaps in Information on Assets, Endowments and Investments

Angelo Gavrielatos from the AEU , (Media Release 10 March 2011) noted that the funding system is ‘broken’and needs to be ‘fixed.’

The claims by the private sector lobby that public schools always receive more government funding have been proven to be totally false. Australia has now reached the situation where some private schools in wealthy areas are getting more government funding per student than public schools serving low-income communities. He also noted that the data showed that private schools spent twice as much per student on capital works as government schools and

‘That doesn’t even take into account the millions in assets, investment portfolios, foundations and trust funds.’

He is quite right of course. The figures for the sectarian sector are inadequate.

Business Enterprises

No mention is made of the actual business activities engaged in by the sectarian ‘not-for-profit’ education sector. Where will you find for instance, mention of the vineyard and its proceeds set up for the Eltham College?

Nor have the figures engaged in a full analysis of the incremental costs incurred by State Education Departments.

Incremental Costs

These are referred to in the NSW Department of Education and Training Discussion paper: Australian School Funding Arrangements at para 1.4 under the heading The unique costs of government education.

Under the Section the Department notes that there are unique costs that accrue to the public sector due to its legislative responsibility as the úniversal’ service provider. DOGS quote:

When considering the adequacy of school funds, the cost drivers that particularly impact on public schooling are:

1) Scale: Government schools are required to be the ‘first in’ and ‘last out’of any community and this legislative requirement for a large reach imposes its own costs. …( DOGS note that in development areas in Victoria this is not always the case. For example in Mernda there are three sectarian secondary schools and an application for a Muslim Shia school in the area, but, as yet, no secondary school and only on small public primary school sharing facilities with a Catholic school).

2) Selection: Government schools are required to be available to all local students which can have a range of cost impacts…a school cannot refuse enrolment to a student because of their greater educational needs.

3) Magnification of Cost Pressures: Cost pressures faced by all schools can be magnified due to the universal provision required of government systems. For example, teacher shortages…are most acute in sch9ools serving disadvantaged or isolated communities.

4) Regulation: …it is only Government schools …required by legislation to take students and there is little discretion to refuse enrolment.

No mention is made of services for example, curriculum and professional development services provided by public education departments to the sectarian sector.

Development of the Public System into the Waste-Basket System.

In 1964 DOGS predicted that taxpayer funding of the sectarian sector would relegate the public system to the system for the poor and disadvantaged – the rejects of the sectarian sector which entered with gusto into the ‘market economy’, advertising their wares with taxpayer funding.

But the NSW Education Department has finally come up with interesting research in para 3.2. of their submission on the Impact of concentrations of disadvantage. DOGS quote

A student’s socioeconomic background is known to be a strong factor in their level of educational need. Many school funding streams and programs are rightly predicated on this known association.

To date there has been less clear evidence on the effect of many individual students with the same level of disadvantage concentrated in a single school. It is important that the interactions between student and school level variables are adequately explored and understood when constructing a model of school funding…

There follows research on the ‘neighbourhood effect of low SES on performance’, and in ‘nice’ terms analyses what is happening when the socio-economic ‘top’ is creamed off a public school by its sectarian competitor. The effect of school SES on students’ performance is profound and exists across the SES spectrum. It grows stronger from Year 3 to 5 to 7 to 9. The gap in performance for students in the most disadvantaged schools grows over time if they are in a school with a higher concentration of other disadvantaged students.

The above is all good educationese for what we knew all along. Once public funding exacerbated parents desire to ‘buy out’ of the public system into the special privileges offered by sectarian sector - the first class ticket to heaven and the good job - what else did governments and administrators expect?

In the 1960s the cry for the ‘needy’ parish schools educating less than one fifth of Australian students opened the Treasury flood gates to the religious sector.

Now Australians are dealing with an underfunded, potentially residualised system dealing with two thirds of Australian children in the public sector.

Gaps in Information on Taxation Expenditures ( Exemptions. )

There is increasing concern in Australia about the ‘purple economy’, namely the tens of billions of dollars in taxation expenditures incurred by exemptions for so-called’ charitable’ institutions. Not only is Australia lacking a Charities Commission comparable to that in the UK, New Zealand and Canada. There is a deafening silence about this extraordinary burden on the taxpayer and the implications it has for public subsidisation of the sectarian education sector.

In December 2007, with the help of secular organisations and individuals, the Australian National Secular Association (now ANZSA)  published The Purple Economy: Supernatural Charities, Tax and the State by Max Wallace This book was mostly concerned with the history and politics of the tax exemption for religion.

For the latest material on this issue DOGS refer to the Secular Party submission to the Inquiry into the Tax Laws Amendment (Public Benefit Test) Bill 2010 written by John Perkins and Frank Gomez. It strives to detail the costs of tax expenditures for religion. The total figure for exemptions enjoyed by sectarian education systems would be a proportion, albeit a considerable proportion of this.

Charities are eligible for a range of tax concessions, including refunds of imputation credits, income tax exemptions and GST concessions. To be eligible for endorsement as a charity, an organisation must be operated for public charitable purposes. Charitable purposes are: the relief of poverty, sickness, or the needs of the aged; the advancement ofeducation; the advancement of religion; and other purposes beneficial to the community.

Section 116 of the Australian Constitution states that the “Commonwealth shall not make any law for establishing any religion, or for imposing any religious observance, or for prohibiting the free exercise of any religion …” As a result of the 1981 High Court decision on the Defence of Government Schools (DOGS) case, the public funding of any or all religion and religious schools has been deemed permissible under the constitution in spite of the fact that this was the opposite of what the framers of the Constitution intended.

DOGS, along with the rest of Australian citizens, believe that the majority judgement was a political rather than a legal decision. It failed to take into account the intentions of the Founding Fathers as evidenced by the Constitutional Debates and R.G. Ely in his Unto God and Caesar ( MUP) 1976. The dissenting judgement of Justice Lionel Murphy followed the intention of the Founding Fathers, and stands for the future.

Australia is one of only three countries in the world where even the commercial enterprises of religious organisations are granted tax concessions. As to obtaining evidence regarding the extent of the concessions that are available to religious organisations, this is difficult, due to inadequacies in the disclosure regime. These bodies are not required to report the breakdown of their charitable, business or investment activities. This lack of transparency makes it difficult to determine the actual cost of these exemptions.

John Perkins and Frank Gomez however refer to some estimates of the value of these exemptions. These figures were also provided in a previous submission in relation to the Treasury’s review of taxation. They attempt to quantify the magnitude of the revenues and concessions. An estimate of revenue and assets is shown in Table 1.

Table 1 – Revenue and Assets of Churches (2007 estimates)

· Revenue of the 10 biggest churches $47.647 billion (1)

· Estimated collections $2.760 billion (2)

· Catholic Church Assets $150 billion (3)

· Estimated other church assets $217.647 billion (4)

Notes:

(1) 2005 information from BRW article "God's Business" June 2006 + 20%

(2) 10% of estimated Catholic Church revenue

(3) 2005 information from BRW article "God's Business" June 2006 + 50%

(4) Assumes Catholic assets same ratio of total (40.8%) as of revenue.

On the basis of these estimates, Perkins and Gomez provide some estimates of the cost to taxpayers and to governments of the concessions available to religious organisations. Federally, these apply to

· income tax,

· fringe benefits tax,

· the goods and services tax.

· Capital gains tax

State government exemptions cover

· land tax,

· payroll tax,

· stamp duties and

· car registration fees.

Local governments provide exemptions from

· municipal rates. Concessions may also be granted for some

· water and power charges.

We are unable to provide estimates for all these items. However we can provide estimates for direct grants from government, which are another significant cost to taxpayers. These estimates are given in

Table 2.

Table 2 – Estimates of Cost to Taxpayers

$ Million Notes

Income tax lost (at corporate rate ) $ 6.529 billion (2)

Grants for family counselling $64 million (3)

Chaplains in schools programme $30 million (4)

Grants to religious schools (from commonwealth) $5.630 billion (5)

Grants to religious schools (from states) $1.8 billion (6)

Grants for abortion counselling 20 million (7)

Grant for interfaith convention Melbourne 2 million (8)

Grant for Catholic World Youth Day (state & federal) 140 million (9)

Notes:

1. 30% of the estimated revenue

2. Assumes 10% realised CG from asset holdings, property + shares

3. 2005/2006 budget forward estimates

4. One third of $90 million announced over 3 years

5. 2007 Budget Papers (90% of total non-govt of $6.256 billion)

6. SMH article as above estimate of NSW funding x 3

7. Media releases

8. 2007 Budget Papers

9. Govt media + budget

Further estimates of income lost to state and local governments are given in Table 3. The information in these Tables suggests that religious organisations receive ample support via direct grants for many of their activities.

Like perkins and Gomez, DOGS question whether local and state taxpayers should pay higher taxes and rates as a result of extending exemptions to organisations that are already subsidised through direct government expenditure.

Table 3 - Income Lost to State and Local Governments

$ Million Notes

Payroll tax exemptions $473 million (1)

Stamp duty exemptions $418 million (2)

Land tax exemptions $139 million (3)

Rate income lost to councils $ 610 million (4)

Notes:

1. Based on NSW treasury figures X 3 for whole country

2. Pro-rated on above

3. Pro-rated on above

4. Pro-rated on above against Association of Local Councils source

Combining the costs shown in Tables 2 and 3, it can be seen that an estimate of the total cost of concessions to religious organisations in Australia exceeds $31 billion. This is a gross figure and necessarily somewhat speculative.

However it does not include items such as FBT and GST where taxpayers are unable to source data on the value of concessions. But the figure gives some idea of the magnitude of the cost of concessions which arise as a result of the continued adherence to the medieval doctrine of charitable organisations.

More accurate estimates of this kind could be obtained if the information was available, but it is not.

It is standard budgetary procedure that the loss of revenue arising from exemptions, for example those applying to superannuation pensions, to be listed in budget papers. They can be quantified. It is anomalous that no such requirement exists for religious organisations, even those that may be involved in significant business and investment related activities.

Further anomalies occur in relation to the application of the Fringe Benefits Tax and the Goods and Services Tax. As the FBT is exempt to employees who are religious practitioners, eligible employers can provide remuneration packages that are biased substantially in terms of fringe benefits, thereby avoiding any income tax. This device can also create an unwarranted entitlement to social security benefits.

From the above it can be very roughly estimated that the taxation expenditures or exemptions on the assets and income of major religious organisations, including their educational enterprises constitute billions of dollars. It can only be a matter of great concern to citizens and taxpayers that there has to date been no mention of these expenditures in estimation of funding costs of private sectarian education in Australia.

It is to be hoped that the Gonski Committee will make some attempt to fill this gap.

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