WEBVTT - Why Labor supports private school tax breaks 0:00:00.600 --> 0:00:04.520 Mike, how large was the castle at your high school 0:00:04.840 --> 0:00:05.360 growing up? 0:00:08.200 --> 0:00:11.119 I'm afraid I'm at State school boy. There was no castle, 0:00:11.600 --> 0:00:13.640 you know. I spent a certain amount of time in 0:00:13.720 --> 0:00:17.080 demountable classrooms. This was in Brisbane in summer, no air 0:00:17.120 --> 0:00:21.639 con roasting, so nothing like the sort of facilities that 0:00:21.680 --> 0:00:25.240 we've seen at Scott's College. 0:00:25.880 --> 0:00:35.000 From Sports Media, I'm Daniel James. This is seven Am. 0:00:35.240 --> 0:00:38.240 Mike's second is the national correspondent for the Saturday Paper 0:00:38.240 --> 0:00:41.000 and a proud State school boy. I asked him an 0:00:41.000 --> 0:00:44.559 observed question because we're in an observed situation all of 0:00:44.600 --> 0:00:48.320 our own making the divide between Australia's richest schools and 0:00:48.360 --> 0:00:52.240 our poorest keep getting worse. Mike has looked into the 0:00:52.320 --> 0:00:54.520 void and what he found was a system where rich 0:00:54.600 --> 0:00:57.880 parents are able to leverage huge tax breaks through charitable 0:00:57.880 --> 0:01:01.200 donations to their child's school, all in order to build 0:01:01.200 --> 0:01:04.640 facilities of feudal king would be happy with. It's a 0:01:04.640 --> 0:01:08.240 practice that goes way back, and many argue is outdated 0:01:09.160 --> 0:01:12.000 today calls for and overhaul of the charitable giving system 0:01:12.240 --> 0:01:31.640 that delivers some kids' castles. It's Thursday, July twenty five. Mike, 0:01:31.800 --> 0:01:35.440 you've been looking into a big redevelopment plan for Scotts College, 0:01:35.680 --> 0:01:39.240 a particularly wealthy private school in Sydney's Bellevue Hill. What 0:01:39.319 --> 0:01:40.360 can you tell me about it? 0:01:41.040 --> 0:01:47.160 Yeah, for sure, it's been quite a saga. Back in 0:01:47.200 --> 0:01:50.840 twenty nineteen in this elite boys school in Sydney announced 0:01:50.880 --> 0:01:55.480 that it was going to have a new library. And 0:01:55.760 --> 0:01:59.520 they had a perfectly serviceable, functional library, but they decided 0:01:59.560 --> 0:02:03.440 it needed to be upgraded for quote contemporary teaching unquote. 0:02:03.760 --> 0:02:07.640 So Scott's at Bellevue Hill has just spent almost eighty 0:02:07.640 --> 0:02:12.560 million dollars on knocking down their library and building a 0:02:12.680 --> 0:02:15.040 Scottish baronial castle. 0:02:16.120 --> 0:02:18.560 The design they went with was made to look like 0:02:18.720 --> 0:02:22.359 a Scottish castle, you know, with turrets and battlements and 0:02:22.400 --> 0:02:24.200 all the rest of it. And it was supposed to 0:02:24.240 --> 0:02:25.600 be opened in twenty twenty one. 0:02:26.400 --> 0:02:32.400 It is as gaudy and tacky as those gold open 0:02:32.480 --> 0:02:35.880 necked Gucci shirts that people wear with the gold chains 0:02:35.880 --> 0:02:36.280 and everything. 0:02:36.280 --> 0:02:38.720 Honestly, talk about ostentatious. 0:02:39.360 --> 0:02:42.080 Things didn't quite go to plan, and so all these 0:02:42.160 --> 0:02:44.920 years later the library is still under construction due to 0:02:44.960 --> 0:02:48.560 various delays, and apparently it was quite difficult for them 0:02:48.600 --> 0:02:52.400 to acquire sandstone and slate from Scotland. 0:02:53.120 --> 0:02:56.840 Now it's cost the school three times what they thought 0:02:56.840 --> 0:02:59.720 it originally would, So whoever the project managery should be 0:02:59.760 --> 0:03:03.520 clearly highly embarrassed at the incompetency going. 0:03:03.840 --> 0:03:05.560 If you're going to build a Scottish castle, mate, you've 0:03:05.560 --> 0:03:09.200 got to have Scottish slate, right, eighty. 0:03:08.960 --> 0:03:13.760 Million dollars for a library that is extraordinary by any standard, 0:03:13.800 --> 0:03:17.760 but particularly Australian standards in twenty twenty four, How did 0:03:17.800 --> 0:03:18.720 Scott's fund this? 0:03:19.440 --> 0:03:22.480 Well, actually it's not that extraordinary, I hate to say, 0:03:22.520 --> 0:03:25.560 but you know there's a bunch of stories of opulent 0:03:25.639 --> 0:03:29.000 facilities at elite private schools. You know, these stories are legiant, 0:03:29.520 --> 0:03:33.200 wealthy parents and alumni kick in money to build these 0:03:33.240 --> 0:03:37.720 new facilities. Fewer perhaps as conspicuously kitchy as the library 0:03:37.760 --> 0:03:40.040 at Scots, but you know there's any number of indoor 0:03:40.040 --> 0:03:42.880 swimming pools, and you know all sorts of sporting facilities 0:03:42.960 --> 0:03:45.840 and other stuff that they have that are funded through 0:03:45.920 --> 0:03:50.160 these tax deductible building funds. So you know, I guess 0:03:50.480 --> 0:03:53.760 mocking Scots for you know, building this outlandish Scottish castle 0:03:54.480 --> 0:03:56.880 for their boys seems like pretty easy sport, but really 0:03:56.920 --> 0:04:00.280 it's not funny. When you decide to donate to a 0:04:00.320 --> 0:04:04.000 private school you're a wealthy parent or grandparent, or old 0:04:04.080 --> 0:04:06.680 boy or old girl, you get a tax break for it. 0:04:06.920 --> 0:04:09.120 You can claim up to forty seven cents in the 0:04:09.160 --> 0:04:12.720 dollar because kicking into private school building funds is considered 0:04:12.760 --> 0:04:15.800 to be a charitable action, and so it attracts what 0:04:15.880 --> 0:04:20.360 they call deductible gift recipient status DGR status. So as 0:04:20.400 --> 0:04:23.800 things stand now, donors to non government schools who are 0:04:23.880 --> 0:04:27.480 overwhelmingly wealthy parents are benefiting to the tune of some 0:04:27.640 --> 0:04:30.520 one hundred million dollars per year at the expense of 0:04:30.560 --> 0:04:34.680 government revenue, which ultimately means other taxpayers, most of whom 0:04:34.680 --> 0:04:38.240 could never afford to send their children to elite private schools. 0:04:38.800 --> 0:04:41.640 We've seen public schools around the country that don't have 0:04:41.720 --> 0:04:45.240 air conditioning, that don't have grass, they have demountable classrooms, 0:04:45.839 --> 0:04:48.400 They definitely don't have castles, that's for sure. The inequity 0:04:48.520 --> 0:04:51.880 is pretty stark. So how is the labor government justifying 0:04:51.960 --> 0:04:55.119 having such in equity between students, especially when they pride 0:04:55.120 --> 0:04:58.200 themselves on being the party of the fair go It's. 0:04:58.080 --> 0:05:01.960 A very good question, and AI right, the contrast between 0:05:02.080 --> 0:05:05.599 the elite private schools and state schools is extraordinary, you know, 0:05:06.040 --> 0:05:10.520 very stark. The Australian Education Union, which represents public school 0:05:10.560 --> 0:05:14.000 and early childhood and tafe teachers and staff, pointed out 0:05:14.000 --> 0:05:16.719 in a recent report that you know, while Scott's is 0:05:16.760 --> 0:05:20.320 building its Scottish Baronial library, elsewhere in New South Wales, 0:05:20.600 --> 0:05:25.159 state students so taking lessons in demountable classrooms. So that's 0:05:25.200 --> 0:05:29.080 one indicator. Another thing that the AEU did in its study, 0:05:29.120 --> 0:05:32.520 it looked at capital works expenditure in Australian schools and 0:05:32.560 --> 0:05:35.720 reported that in twenty twenty one, the amount spent by 0:05:35.800 --> 0:05:39.000 just five elite private schools for the benefit of their 0:05:39.440 --> 0:05:42.960 ten two hundred and ninety four students was greater than 0:05:43.000 --> 0:05:46.920 the total spent by three three hundred and seventy two 0:05:46.920 --> 0:05:50.239 public schools who were trying to educate almost eight hundred 0:05:50.240 --> 0:05:53.560 and fifty thousand kids. So eighty two times as much 0:05:53.600 --> 0:05:56.279 per student on capital works was the way it worked out. 0:05:56.720 --> 0:06:05.000 The inequity is outrageous and now the Productivity Commission, in 0:06:05.040 --> 0:06:07.279 a major report to government on how to reform the 0:06:07.440 --> 0:06:12.240 entire charitable philanthropic sector, has recommended that the tax break 0:06:12.240 --> 0:06:15.320 for private school building funds should be scrapped. 0:06:18.040 --> 0:06:32.760 So will the government act. That's after the break mark. 0:06:32.839 --> 0:06:36.120 The inequity between government and elite private schools has become 0:06:36.160 --> 0:06:39.200 increasingly entrenched. It's easy to see when you compair a 0:06:39.240 --> 0:06:42.600 Scottish castle to a demandable. So how do we get here? 0:06:43.000 --> 0:06:45.160 Let me take you back in history, because the Productivity 0:06:45.160 --> 0:06:47.480 Commission did quite a good job of that in its report. 0:06:47.880 --> 0:06:51.039 The decision to allow a tax deduction for donating to 0:06:51.080 --> 0:06:55.000 building funds for non government schools was taken seventy years ago, 0:06:55.120 --> 0:06:57.640 back in nineteen fifty four. And back then, of course 0:06:57.680 --> 0:07:01.360 such schools were fewer in number, far less well funded, 0:07:01.640 --> 0:07:04.560 and of course, back in those days, education was solely 0:07:04.600 --> 0:07:08.159 the responsibility of the states. So the decision happened at 0:07:08.160 --> 0:07:11.400 a time also when there was considerable sectarian divide in 0:07:11.440 --> 0:07:14.560 the country. There was opposition to government funding for non 0:07:14.560 --> 0:07:17.600 government schools, and there was even uncertainly about whether the 0:07:17.640 --> 0:07:20.720 federal government should be involved at all in education. The 0:07:20.760 --> 0:07:23.480 federal government did get involved, and a decade later the 0:07:23.520 --> 0:07:28.320 Commonwealth began providing capital funding for non government as well 0:07:28.320 --> 0:07:30.640 as government schools. So that was back in the mid sixties. 0:07:31.040 --> 0:07:33.720 But here's the thing. The tax break advantage of private 0:07:33.760 --> 0:07:38.520 schools continued. In nineteen seventy, the Commonwealth began giving recurrent 0:07:38.600 --> 0:07:42.160 funding to non government schools, four years i might add 0:07:42.240 --> 0:07:45.600 before it started providing recurrent funding to state schools, and 0:07:45.680 --> 0:07:48.480 still the non government schools kept getting a tax deduction 0:07:48.680 --> 0:07:52.400 for building funds. So we're in this situation where Australia 0:07:52.480 --> 0:07:55.559 has two levels of government funding schools. To a different degree, 0:07:55.600 --> 0:07:58.400 we have ninety percent of state and territory funding for 0:07:58.520 --> 0:08:01.480 education goes to government schools, and more than sixty percent 0:08:01.600 --> 0:08:05.320 of the corresponding federal funding goes to non government schools. 0:08:05.600 --> 0:08:08.640 We're talking big bucks here. This year, recurrent funding from 0:08:08.680 --> 0:08:12.480 the federal government for schools totaled something like twenty nine 0:08:12.560 --> 0:08:15.840 billion dollars, and only about a third of that, that's 0:08:16.040 --> 0:08:20.000 eleven point three billion, goes to government schools, notwithstanding the 0:08:20.000 --> 0:08:23.160 fact that they educate almost two thirds of students. Catholic 0:08:23.200 --> 0:08:26.360 schools get about ten billion, and other non government schools, 0:08:26.360 --> 0:08:29.400 which is where of course the really elite schools tend 0:08:29.400 --> 0:08:32.400 to be concentrated, they got just over eight billion dollars. 0:08:32.920 --> 0:08:36.560 And of course, despite all this, the tax deduction for 0:08:36.720 --> 0:08:40.800 contributing to private school building funds continues despite the fact 0:08:40.800 --> 0:08:44.720 that the circumstances that pertain seventy years ago no longer apply. 0:08:45.440 --> 0:08:48.439 Have there been calls to change this arrangement. 0:08:48.200 --> 0:08:50.680 Well, yes they have for a long time, from education 0:08:50.880 --> 0:08:53.480 unions from others. It was raised by some of the 0:08:53.480 --> 0:08:56.240 feeder reports at the Gonski Report a decade and more ago. 0:08:56.679 --> 0:08:58.760 But just last week we found out that the Productivity 0:08:58.800 --> 0:09:02.079 Commission has recommended it two. Now, this is a major 0:09:02.120 --> 0:09:05.120 new report from the Productivity Commission. It went to the 0:09:05.160 --> 0:09:09.200 whole charitable sector, but it specifically recommended that thousands of 0:09:09.320 --> 0:09:12.440 charitable funds that benefit private schools there's something like five 0:09:12.520 --> 0:09:15.480 thousand of them and their wealthy donus should be stripped 0:09:15.559 --> 0:09:18.600 of their tax deductible status. It found that the building 0:09:18.600 --> 0:09:20.720 funds that are set up by the non government schools 0:09:20.760 --> 0:09:23.920 to pay for capital works do not meet the appropriate 0:09:23.960 --> 0:09:27.920 criteria for charitable activity and they should not be accorded 0:09:28.080 --> 0:09:32.240 what they call deductible Gift Recipient or DGR status. The 0:09:32.280 --> 0:09:35.880 Productivity Commission set out in some detail the criteria that 0:09:35.920 --> 0:09:39.600 should apply to be registered for DGR status, and they 0:09:39.640 --> 0:09:42.280 found essentially that the private schools didn't meet any of them. 0:09:42.640 --> 0:09:45.240 It's as simple as that, to give one example of 0:09:45.320 --> 0:09:48.319 one of the criteria, No private benefit should attached to 0:09:48.400 --> 0:09:51.160 charitable giving. But in the case of private schools, what 0:09:51.200 --> 0:09:53.960 happens is if you give to these building funds, you 0:09:54.000 --> 0:09:56.800 get a tax deduction for it. If you pay school fees, 0:09:56.840 --> 0:09:59.680 you don't get a tax deduction. So what the Productivity 0:09:59.679 --> 0:10:01.640 commiss found was that there was a trade off going 0:10:01.640 --> 0:10:05.079 on whereby people were kicking into building funds which gave 0:10:05.160 --> 0:10:07.960 the kids great facilities, but also meant that they could 0:10:08.000 --> 0:10:11.359 reduce the fees they charged for access to those facilities. 0:10:11.720 --> 0:10:16.240 We're seeing the tax system used to thinly veil middle 0:10:16.280 --> 0:10:19.720 to upper class welfare in this country. How does the 0:10:19.760 --> 0:10:23.360 private school's experience compare with other charities. 0:10:23.640 --> 0:10:26.400 Well, that's another interesting aspect of this report from the 0:10:26.400 --> 0:10:31.040 Productivity Commission. They found that other, more needy and more 0:10:31.080 --> 0:10:34.520 worthy in their view, charitable endeavors miss out under the 0:10:34.559 --> 0:10:38.520 existing DGI regime. There is something like sixty thousand charities 0:10:38.520 --> 0:10:40.920 in Australia, but only about forty percent of those have 0:10:41.040 --> 0:10:44.760 tax deductible status. And the report explicitly says, and I'll 0:10:44.840 --> 0:10:49.600 quote it again, the DGR system creates inefficient, inconsistent and 0:10:49.760 --> 0:10:52.760 unfair outcomes for donors, charities and the community. 0:10:53.160 --> 0:10:53.800 So whack. 0:10:54.040 --> 0:10:56.600 You know, you could hardly get a more swinging indictment 0:10:56.640 --> 0:10:59.319 of the current regime. And of course they chose the 0:10:59.640 --> 0:11:02.839 private schools as the exemplar of all that was wrong. 0:11:03.440 --> 0:11:07.680 So the nation's five thousand odds school building funds just 0:11:07.760 --> 0:11:10.040 serve as a case study of the randomness and the 0:11:10.080 --> 0:11:11.920 incoherence of the current system. 0:11:12.200 --> 0:11:14.760 So has the government respondent? What are they going to 0:11:14.800 --> 0:11:15.480 do with anything? 0:11:15.840 --> 0:11:16.080 Well? 0:11:16.280 --> 0:11:20.080 I called the Assistant Minister for Competition, Charities and Treasury, 0:11:20.200 --> 0:11:23.120 Andrew Lee, and asked him about this last week and 0:11:23.240 --> 0:11:26.480 he said the government was quote open to considering all 0:11:26.480 --> 0:11:31.040 the report's recommendations, bar one, and that one recommendation that 0:11:31.080 --> 0:11:34.280 they have said they won't pursue is the recommendation around 0:11:34.320 --> 0:11:37.440 private school building funds. He said, to quote him, that 0:11:37.559 --> 0:11:40.360 was in the interim report. We consulted widely on it 0:11:40.440 --> 0:11:43.800 and we have opted not to pursue that consulted widely. 0:11:43.920 --> 0:11:46.560 He's one way of putting it. What does it say 0:11:47.160 --> 0:11:49.600 that the government won't even consider changes to this? 0:11:50.280 --> 0:11:52.839 To be frank, the private school lobby in Australia is 0:11:52.880 --> 0:11:54.880 a bit like the gun lobby in the United States, 0:11:55.240 --> 0:11:59.160 it's hugely politically powerful. It is protected by rich, well 0:11:59.200 --> 0:12:02.040 connected parents who are very keen to protect the privilege 0:12:02.040 --> 0:12:06.199 of their kids. Furthermore, our politicians come disproportionately from non 0:12:06.200 --> 0:12:10.080 government school backgrounds, and overwhelmingly both sides of politics send 0:12:10.120 --> 0:12:13.920 their own children to non government schools. Despite all this, 0:12:14.280 --> 0:12:17.680 all the research shows that private schools actually serve to 0:12:17.679 --> 0:12:20.240 make Australia not only are less equal, but a less 0:12:20.280 --> 0:12:23.480 well educated society overall. If you look at the international 0:12:23.520 --> 0:12:27.760 comparisons of educational attainment, Australia has one of the largest 0:12:27.760 --> 0:12:30.959 gaps in the world between our top achievers who are 0:12:31.120 --> 0:12:36.000 globally competitive, and the educationally underprivileged who are falling way 0:12:36.160 --> 0:12:39.480 behind and falling further behind over time. And those tend 0:12:39.520 --> 0:12:43.040 to go to state schools in low SS areas, So 0:12:43.559 --> 0:12:46.719 that's an indictment. I worry also that they also make 0:12:46.720 --> 0:12:49.960 this country less socially cohesive, because you know, rich kids 0:12:49.960 --> 0:12:53.360 are cloistered, poor kids are ghettoized, and I fear we're 0:12:53.360 --> 0:12:57.199 in a vicious cycle whereby middle class parents feel compelled 0:12:57.240 --> 0:13:00.360 to pay for private schools simply because states rules are 0:13:00.360 --> 0:13:03.280 so poorly resourced. And yet we see wealthy parents getting 0:13:03.320 --> 0:13:06.880 a tax break for building opulent facilities. I'm with the 0:13:06.880 --> 0:13:12.720 Productivity Commission. I think it's outrageous and it should be scrapped. Indeed, 0:13:12.720 --> 0:13:14.720 if we're up to me, I would do as they 0:13:14.760 --> 0:13:17.640 do in some other countries and say, well, you're welcome 0:13:17.640 --> 0:13:20.319 to have a private school, but if you charge fees, 0:13:20.320 --> 0:13:23.280 you don't get government money. If you don't charge fees, 0:13:23.360 --> 0:13:26.480 you get the same resourcing as state schools. So level 0:13:26.520 --> 0:13:27.240 the playing. 0:13:26.920 --> 0:13:46.080 Field, Mike, thank you for your time, great pleasure. Also 0:13:46.160 --> 0:13:46.880 in the news. 0:13:46.679 --> 0:13:50.320 Today, tech billionaire Elon Musk has denied reports that he 0:13:50.440 --> 0:13:53.040 was planning to donate forty five million dollars US a 0:13:53.080 --> 0:13:57.760 month to an organization focused on Donald Trump's reelection must 0:13:57.800 --> 0:14:00.320 The nile comes days after Jay Biden withdrew from the 0:14:00.320 --> 0:14:03.880 presidential race, with his vice president Krmala Harris now holding 0:14:03.960 --> 0:14:09.040 enough delegates to claim the Democratic nomination in August. Musk's organization, 0:14:09.160 --> 0:14:12.520 America Pack, can receive unlimited donations to put towards an 0:14:12.559 --> 0:14:16.720 election campaign, circumventing the limits imposed on donations directly to 0:14:16.760 --> 0:14:21.800 individuals like Trump and according to a report released by KPMG, 0:14:22.360 --> 0:14:25.400 Australia's fertility rate is the lowest it's been since two 0:14:25.480 --> 0:14:28.760 thousand and six, and it is continuing to fall. The 0:14:28.840 --> 0:14:31.680 report sites increased cost to living pressures and the housing 0:14:31.720 --> 0:14:35.680 affordability crisis as the main contributing factors for people choosing 0:14:35.680 --> 0:14:39.880 to have fewer children or no children. KPMG says that 0:14:39.880 --> 0:14:42.280 there hasn't been such a drop in fertility since the 0:14:42.360 --> 0:14:46.120 oral contraception pill was introduced to Australia in the nineteen seventies. 0:14:47.120 --> 0:14:53.200 I'm Daniel James. This is seven am. See you tomorrow.