Mike, how large was the castle at your high school growing up?
I'm afraid I'm at State school boy. There was no castle, you know. I spent a certain amount of time in demountable classrooms. This was in Brisbane in summer, no air con roasting, so nothing like the sort of facilities that we've seen at Scott's College.
From Sports Media, I'm Daniel James. This is seven Am. Mike's second is the national correspondent for the Saturday Paper and a proud State school boy. I asked him an observed question because we're in an observed situation all of our own making the divide between Australia's richest schools and
our poorest keep getting worse. Mike has looked into the void and what he found was a system where rich parents are able to leverage huge tax breaks through charitable donations to their child's school, all in order to build facilities of feudal king would be happy with. It's a practice that goes way back, and many argue is outdated today calls for and overhaul of the charitable giving system
that delivers some kids' castles. It's Thursday, July twenty five. Mike, you've been looking into a big redevelopment plan for Scotts College, a particularly wealthy private school in Sydney's Bellevue Hill. What can you tell me about it?
Yeah, for sure, it's been quite a saga. Back in twenty nineteen in this elite boys school in Sydney announced that it was going to have a new library. And they had a perfectly serviceable, functional library, but they decided it needed to be upgraded for quote contemporary teaching unquote.
So Scott's at Bellevue Hill has just spent almost eighty million dollars on knocking down their library and building a Scottish baronial castle.
The design they went with was made to look like a Scottish castle, you know, with turrets and battlements and all the rest of it. And it was supposed to be opened in twenty twenty one.
It is as gaudy and tacky as those gold open necked Gucci shirts that people wear with the gold chains and everything.
Honestly, talk about ostentatious.
Things didn't quite go to plan, and so all these years later the library is still under construction due to various delays, and apparently it was quite difficult for them to acquire sandstone and slate from Scotland.
Now it's cost the school three times what they thought it originally would, So whoever the project managery should be clearly highly embarrassed at the incompetency going.
If you're going to build a Scottish castle, mate, you've got to have Scottish slate, right, eighty.
Million dollars for a library that is extraordinary by any standard, but particularly Australian standards in twenty twenty four, How did Scott's fund this?
Well, actually it's not that extraordinary, I hate to say, but you know there's a bunch of stories of opulent facilities at elite private schools. You know, these stories are legiant, wealthy parents and alumni kick in money to build these new facilities. Fewer perhaps as conspicuously kitchy as the library at Scots, but you know there's any number of indoor swimming pools, and you know all sorts of sporting facilities and other stuff that they have that are funded through
these tax deductible building funds. So you know, I guess mocking Scots for you know, building this outlandish Scottish castle for their boys seems like pretty easy sport, but really it's not funny. When you decide to donate to a private school you're a wealthy parent or grandparent, or old boy or old girl, you get a tax break for it.
You can claim up to forty seven cents in the dollar because kicking into private school building funds is considered to be a charitable action, and so it attracts what
they call deductible gift recipient status DGR status. So as things stand now, donors to non government schools who are overwhelmingly wealthy parents are benefiting to the tune of some one hundred million dollars per year at the expense of government revenue, which ultimately means other taxpayers, most of whom could never afford to send their children to elite private schools.
We've seen public schools around the country that don't have air conditioning, that don't have grass, they have demountable classrooms, They definitely don't have castles, that's for sure. The inequity is pretty stark. So how is the labor government justifying having such in equity between students, especially when they pride themselves on being the party of the fair go It's.
A very good question, and AI right, the contrast between the elite private schools and state schools is extraordinary, you know, very stark. The Australian Education Union, which represents public school and early childhood and tafe teachers and staff, pointed out in a recent report that you know, while Scott's is building its Scottish Baronial library, elsewhere in New South Wales, state students so taking lessons in demountable classrooms. So that's
one indicator. Another thing that the AEU did in its study, it looked at capital works expenditure in Australian schools and reported that in twenty twenty one, the amount spent by just five elite private schools for the benefit of their ten two hundred and ninety four students was greater than the total spent by three three hundred and seventy two public schools who were trying to educate almost eight hundred
and fifty thousand kids. So eighty two times as much per student on capital works was the way it worked out. The inequity is outrageous and now the Productivity Commission, in a major report to government on how to reform the entire charitable philanthropic sector, has recommended that the tax break for private school building funds should be scrapped.
So will the government act. That's after the break mark. The inequity between government and elite private schools has become increasingly entrenched. It's easy to see when you compair a Scottish castle to a demandable. So how do we get here?
Let me take you back in history, because the Productivity Commission did quite a good job of that in its report. The decision to allow a tax deduction for donating to building funds for non government schools was taken seventy years ago, back in nineteen fifty four. And back then, of course such schools were fewer in number, far less well funded, and of course, back in those days, education was solely
the responsibility of the states. So the decision happened at a time also when there was considerable sectarian divide in the country. There was opposition to government funding for non government schools, and there was even uncertainly about whether the federal government should be involved at all in education. The federal government did get involved, and a decade later the Commonwealth began providing capital funding for non government as well
as government schools. So that was back in the mid sixties. But here's the thing. The tax break advantage of private schools continued. In nineteen seventy, the Commonwealth began giving recurrent funding to non government schools, four years i might add before it started providing recurrent funding to state schools, and still the non government schools kept getting a tax deduction for building funds. So we're in this situation where Australia
has two levels of government funding schools. To a different degree, we have ninety percent of state and territory funding for education goes to government schools, and more than sixty percent of the corresponding federal funding goes to non government schools.
We're talking big bucks here. This year, recurrent funding from the federal government for schools totaled something like twenty nine billion dollars, and only about a third of that, that's eleven point three billion, goes to government schools, notwithstanding the
fact that they educate almost two thirds of students. Catholic schools get about ten billion, and other non government schools, which is where of course the really elite schools tend to be concentrated, they got just over eight billion dollars. And of course, despite all this, the tax deduction for contributing to private school building funds continues despite the fact that the circumstances that pertain seventy years ago no longer apply.
Have there been calls to change this arrangement.
Well, yes they have for a long time, from education unions from others. It was raised by some of the feeder reports at the Gonski Report a decade and more ago. But just last week we found out that the Productivity Commission has recommended it two. Now, this is a major
new report from the Productivity Commission. It went to the whole charitable sector, but it specifically recommended that thousands of charitable funds that benefit private schools there's something like five thousand of them and their wealthy donus should be stripped of their tax deductible status. It found that the building funds that are set up by the non government schools to pay for capital works do not meet the appropriate criteria for charitable activity and they should not be accorded
what they call deductible Gift Recipient or DGR status. The Productivity Commission set out in some detail the criteria that should apply to be registered for DGR status, and they found essentially that the private schools didn't meet any of them. It's as simple as that, to give one example of one of the criteria, No private benefit should attached to charitable giving. But in the case of private schools, what happens is if you give to these building funds, you
get a tax deduction for it. If you pay school fees, you don't get a tax deduction. So what the Productivity commiss found was that there was a trade off going on whereby people were kicking into building funds which gave the kids great facilities, but also meant that they could reduce the fees they charged for access to those facilities.
We're seeing the tax system used to thinly veil middle to upper class welfare in this country. How does the private school's experience compare with other charities.
Well, that's another interesting aspect of this report from the Productivity Commission. They found that other, more needy and more worthy in their view, charitable endeavors miss out under the existing DGI regime. There is something like sixty thousand charities in Australia, but only about forty percent of those have
tax deductible status. And the report explicitly says, and I'll quote it again, the DGR system creates inefficient, inconsistent and unfair outcomes for donors, charities and the community.
So whack.
You know, you could hardly get a more swinging indictment of the current regime. And of course they chose the private schools as the exemplar of all that was wrong. So the nation's five thousand odds school building funds just serve as a case study of the randomness and the incoherence of the current system.
So has the government respondent? What are they going to do with anything?
Well?
I called the Assistant Minister for Competition, Charities and Treasury, Andrew Lee, and asked him about this last week and he said the government was quote open to considering all the report's recommendations, bar one, and that one recommendation that they have said they won't pursue is the recommendation around private school building funds. He said, to quote him, that was in the interim report. We consulted widely on it and we have opted not to pursue that consulted widely.
He's one way of putting it. What does it say that the government won't even consider changes to this?
To be frank, the private school lobby in Australia is a bit like the gun lobby in the United States, it's hugely politically powerful. It is protected by rich, well connected parents who are very keen to protect the privilege of their kids. Furthermore, our politicians come disproportionately from non government school backgrounds, and overwhelmingly both sides of politics send
their own children to non government schools. Despite all this, all the research shows that private schools actually serve to make Australia not only are less equal, but a less well educated society overall. If you look at the international comparisons of educational attainment, Australia has one of the largest gaps in the world between our top achievers who are globally competitive, and the educationally underprivileged who are falling way
behind and falling further behind over time. And those tend to go to state schools in low SS areas, So that's an indictment. I worry also that they also make this country less socially cohesive, because you know, rich kids are cloistered, poor kids are ghettoized, and I fear we're in a vicious cycle whereby middle class parents feel compelled to pay for private schools simply because states rules are so poorly resourced. And yet we see wealthy parents getting
a tax break for building opulent facilities. I'm with the Productivity Commission. I think it's outrageous and it should be scrapped. Indeed, if we're up to me, I would do as they do in some other countries and say, well, you're welcome to have a private school, but if you charge fees, you don't get government money. If you don't charge fees, you get the same resourcing as state schools. So level the playing.
Field, Mike, thank you for your time, great pleasure. Also in the news.
Today, tech billionaire Elon Musk has denied reports that he was planning to donate forty five million dollars US a month to an organization focused on Donald Trump's reelection must The nile comes days after Jay Biden withdrew from the presidential race, with his vice president Krmala Harris now holding
enough delegates to claim the Democratic nomination in August. Musk's organization, America Pack, can receive unlimited donations to put towards an election campaign, circumventing the limits imposed on donations directly to individuals like Trump and according to a report released by KPMG, Australia's fertility rate is the lowest it's been since two
thousand and six, and it is continuing to fall. The report sites increased cost to living pressures and the housing affordability crisis as the main contributing factors for people choosing to have fewer children or no children. KPMG says that there hasn't been such a drop in fertility since the oral contraception pill was introduced to Australia in the nineteen seventies. I'm Daniel James. This is seven am. See you tomorrow.