WEBVTT - This castle is tax deductible 0:00:00.600 --> 0:00:04.520 Mike, how large was the castle at your high school 0:00:04.800 --> 0:00:05.360 growing up? 0:00:08.200 --> 0:00:11.080 I'm afraid I'm at State school boy. There was no castle, 0:00:11.600 --> 0:00:13.600 you know. I spent a certain amount of time in 0:00:13.640 --> 0:00:16.759 the demountable classrooms. This was in Brisbane in summer, no 0:00:16.880 --> 0:00:21.520 air con roasting, so nothing like the sort of facilities 0:00:21.520 --> 0:00:25.240 that we've seen at Scott's College. 0:00:25.840 --> 0:00:29.360 From Swarts Media, I'm Daniel James. This is seven. 0:00:29.120 --> 0:00:37.919 Am, Mike's second is the national correspondent for the Saturday 0:00:37.920 --> 0:00:40.920 Paper and a proud State schoolboy. I asked him in 0:00:40.920 --> 0:00:44.440 an observed question because we're in an observed situation all 0:00:44.479 --> 0:00:48.080 of our own making the divide between Australia's richest schools 0:00:48.200 --> 0:00:52.159 and our poorest keep getting worse. Mike has looked into 0:00:52.159 --> 0:00:54.240 the void and what he found was a system where 0:00:54.320 --> 0:00:57.400 rich parents are able to leverage huge tax breaks through 0:00:57.440 --> 0:01:00.920 charitable donations to their child's school, all in order to 0:01:00.920 --> 0:01:04.520 build facilities of feudal king would be happy with. It's 0:01:04.560 --> 0:01:07.640 a practice that goes way back, and many argue is 0:01:07.680 --> 0:01:12.160 outdated today calls and overhaul of the charitable giving system 0:01:12.240 --> 0:01:14.160 that delivers some kids' castles. 0:01:18.080 --> 0:01:22.120 It's Friday, April eight eight. This episode was originally published 0:01:22.200 --> 0:01:23.240 in July last year. 0:01:26.480 --> 0:01:29.520 Mike, you've been looking into a big redevelopment plan for 0:01:29.600 --> 0:01:33.839 Scotts College, a particularly wealthy private school in Sydney's Bellevue Hill. 0:01:34.240 --> 0:01:35.400 What can you tell me about it? 0:01:36.120 --> 0:01:42.200 Yeah, for sure, it's been quite a saga. Back in 0:01:42.280 --> 0:01:45.920 twenty nineteen in this elite boys school in Sydney announced 0:01:45.920 --> 0:01:50.560 that it was going to have a new library. And 0:01:50.800 --> 0:01:54.640 they had a perfectly serviceable, functional library, but they decided 0:01:54.640 --> 0:01:58.520 it needed to be upgraded for quote contemporary teaching unquote. 0:01:58.800 --> 0:02:03.000 So Scott's Review Hill has just spent almost eighty million 0:02:03.040 --> 0:02:08.400 dollars on knocking down their library and building a Scottish 0:02:08.800 --> 0:02:10.079 baronial castle. 0:02:11.160 --> 0:02:13.600 The design they went with was made to look like 0:02:13.760 --> 0:02:17.440 a Scottish castle, you know, with turrets and battlements and 0:02:17.440 --> 0:02:19.280 all the rest of it. And it was supposed to 0:02:19.280 --> 0:02:20.639 be opened in twenty twenty one. 0:02:21.480 --> 0:02:27.440 It is as gaudy and tacky as those gold open 0:02:27.560 --> 0:02:30.919 necked Gucci shirts that people wear with the gold chains 0:02:30.960 --> 0:02:31.320 and everything. 0:02:31.360 --> 0:02:33.799 Honestly, talk about ostentatious. 0:02:34.440 --> 0:02:37.120 Things didn't quite go to plan, and so all these 0:02:37.200 --> 0:02:39.959 years later, the library is still under construction due to 0:02:40.040 --> 0:02:43.639 various delays, and apparently it was quite difficult for them 0:02:43.680 --> 0:02:47.440 to acquire sandstone and slate from Scotland. 0:02:48.200 --> 0:02:51.880 Now it's cost the school three times what they thought 0:02:51.880 --> 0:02:54.840 it originally would. So whoever the project managery should be 0:02:54.880 --> 0:02:58.560 clearly highly embarrassed at the incompetency going. 0:02:58.880 --> 0:03:00.640 If you're going to build a Scottish arsele mate, you've 0:03:00.639 --> 0:03:04.320 got to have Scottish slate, right, eighty. 0:03:04.040 --> 0:03:08.840 Million dollars for a library that is extraordinary by any standard, 0:03:08.880 --> 0:03:12.799 but particularly Australian standards in twenty twenty four, how did 0:03:12.840 --> 0:03:13.800 Scott's fund this? 0:03:14.480 --> 0:03:17.560 Well, actually it's not that extraordinary, I hate to say, 0:03:17.560 --> 0:03:20.639 but you know there's a bunch of stories of opulent 0:03:20.720 --> 0:03:24.160 facilities at elite private schools. You know, these stories are legiant, 0:03:24.600 --> 0:03:28.240 wealthy parents and alumni kick in money to build these 0:03:28.280 --> 0:03:32.799 new facilities. Fewer perhaps as conspicuously kitchy as the library 0:03:32.800 --> 0:03:35.080 at Scots, but you know there's any number of indoor 0:03:35.120 --> 0:03:37.920 swimming pools and you know all sorts of sporting facilities 0:03:38.040 --> 0:03:40.920 and other stuff that they have that are funded through 0:03:41.000 --> 0:03:45.200 these tax deductible building funds. So you know, I guess 0:03:45.520 --> 0:03:48.840 mocking Scots for you know, building this outlandish Scottish castle 0:03:49.520 --> 0:03:51.960 for their boys. Seems like pretty easy sport, but really 0:03:51.960 --> 0:03:55.320 it's not funny. When you decide to donate to a 0:03:55.360 --> 0:03:59.120 private school, you're a wealthy parent or grandparent, or old 0:03:59.120 --> 0:04:01.720 boy or old girl, you get a tax break for it. 0:04:01.960 --> 0:04:04.200 You can claim up to forty seven cents in the 0:04:04.240 --> 0:04:07.800 dollar because kicking into private school building funds is considered 0:04:07.840 --> 0:04:10.880 to be a charitable action, and so it attracts what 0:04:10.920 --> 0:04:15.440 they call deductible gift recipient status DGR status. So as 0:04:15.440 --> 0:04:18.880 things stand now, donors to non government schools who are 0:04:18.920 --> 0:04:22.560 overwhelmingly wealthy parents are benefiting to the tune of some 0:04:22.680 --> 0:04:25.560 one hundred million dollars per year at the expense of 0:04:25.640 --> 0:04:29.680 government revenue, which ultimately means other taxpayers, most of whom 0:04:29.760 --> 0:04:33.279 could never afford to send their children to elite private schools. 0:04:33.880 --> 0:04:36.720 We've seen public schools around the country that don't have 0:04:36.760 --> 0:04:40.280 air conditioning, that don't have grass, they have demountable classrooms. 0:04:40.920 --> 0:04:43.479 I definitely don't have castles, that's for sure. The inequity 0:04:43.560 --> 0:04:46.919 is pretty stark. So how is the labor government justifying 0:04:47.040 --> 0:04:50.680 having such inequity between students, especially when they pride themselves 0:04:50.680 --> 0:04:52.200 on being the party of the fair. 0:04:52.000 --> 0:04:55.599 Go It's a very good question, and you're entirely right. 0:04:55.760 --> 0:04:59.479 The contrast between the elite private schools and state schools 0:04:59.640 --> 0:05:03.520 is ex straordinary, you know, very stark. The Australian Education Union, 0:05:03.920 --> 0:05:07.680 which represents public school and early childhood and Tafe teachers 0:05:07.680 --> 0:05:10.800 and staff, pointed out in a recent report that you know, 0:05:10.880 --> 0:05:14.560 while Scott's is building its Scottish Baronial library, elsewhere in 0:05:14.600 --> 0:05:19.240 New South Wales, state students so taking lessons in demountable classrooms. 0:05:19.640 --> 0:05:23.560 So that's one indicator. Another thing that the AEU did 0:05:23.560 --> 0:05:26.000 in its study, it looked at capital works expenditure in 0:05:26.040 --> 0:05:29.760 Australian schools and reported that in twenty twenty one, the 0:05:29.839 --> 0:05:33.320 amount spent by just five elite private schools for the 0:05:33.320 --> 0:05:37.400 benefit of their two hundred and ninety four students was 0:05:37.480 --> 0:05:41.400 greater than the total spent by three three hundred and 0:05:41.480 --> 0:05:44.800 seventy two public schools who were trying to educate almost 0:05:44.800 --> 0:05:48.239 eight hundred and fifty thousand kids. So eighty two times 0:05:48.240 --> 0:05:50.760 as much per student on capital works was the way 0:05:50.760 --> 0:05:58.760 it worked out. The inequity is outrageous. And now the 0:05:58.800 --> 0:06:01.760 Productivity Commission, in a major report to government on how 0:06:01.800 --> 0:06:06.599 to reform the entire charitable philanthropic sector has recommended that 0:06:06.640 --> 0:06:09.920 the tax break for private school building funds should be scrapped. 0:06:13.120 --> 0:06:27.840 So will the government act that's after the break mark. 0:06:27.920 --> 0:06:31.200 The inequity between government and elite private schools has become 0:06:31.200 --> 0:06:34.279 increasingly entrenched. It's easy to see when you compair a 0:06:34.279 --> 0:06:37.679 Scottish castle to a demandable. So how do we get here? 0:06:38.080 --> 0:06:40.200 Let me take you back in history, because the Productivity 0:06:40.200 --> 0:06:42.520 Commission did quite a good job of that in its report. 0:06:42.920 --> 0:06:46.120 The decision to allow a tax deduction for donating to 0:06:46.120 --> 0:06:50.080 building funds for non government schools was taken seventy years ago, 0:06:50.160 --> 0:06:52.720 back in nineteen fifty four. And back then, of course 0:06:52.720 --> 0:06:55.640 such schools were fewer in number, they were far less 0:06:55.680 --> 0:06:58.479 well funded, and of course, back in those days, education 0:06:58.720 --> 0:07:02.320 was solely the response disability of the states. So the 0:07:02.360 --> 0:07:05.200 decision happened at a time also when there was considerable 0:07:05.240 --> 0:07:08.800 sectarian divide in the country. There was opposition to government 0:07:08.800 --> 0:07:12.040 funding for non government schools, and there was even uncertainly 0:07:12.040 --> 0:07:14.520 about whether the federal government should be involved at all 0:07:14.520 --> 0:07:17.720 in education. The federal government did get involved, and a 0:07:17.760 --> 0:07:22.600 decade later the Commonwealth began providing capital funding for non 0:07:22.640 --> 0:07:24.760 government as well as government schools, So that was back 0:07:24.800 --> 0:07:27.600 in the mid sixties. But here's the thing, the tax 0:07:27.640 --> 0:07:31.760 break advantage of private schools continued. In nineteen seventy, the 0:07:31.920 --> 0:07:36.320 Commonwealth began giving recurrent funding to non government schools, four 0:07:36.400 --> 0:07:39.239 years i might add before it started providing recurrent funding 0:07:39.280 --> 0:07:42.440 to state schools, and still the non government schools kept 0:07:42.480 --> 0:07:46.000 getting a tax deduction for building funds. So we're in 0:07:46.000 --> 0:07:49.840 this situation where Australia has two levels of government funding schools. 0:07:49.840 --> 0:07:52.440 To a different degree, we have ninety percent of state 0:07:52.480 --> 0:07:55.440 and territory funding for education goes to government schools, and 0:07:55.520 --> 0:07:59.120 more than sixty percent of the corresponding federal funding goes 0:07:59.160 --> 0:08:02.320 to non government store We're talking big bucks here. This year, 0:08:02.720 --> 0:08:06.560 recurrent funding from the federal government for schools totaled something 0:08:06.680 --> 0:08:10.320 like twenty nine billion dollars, and only about a third 0:08:10.360 --> 0:08:13.880 of that, that's eleven point three billion, goes to government schools, 0:08:14.280 --> 0:08:17.400 notwithstanding the fact that they educate almost two thirds of students. 0:08:17.880 --> 0:08:21.400 Catholic schools get about ten billion, and other non government schools, 0:08:21.440 --> 0:08:24.400 which is where, of course, the really elite schools tend 0:08:24.480 --> 0:08:27.480 to be concentrated. They got just over eight billion dollars 0:08:27.960 --> 0:08:31.600 and Of course, despite all this, the tax deduction for 0:08:31.800 --> 0:08:35.840 contributing to private school building funds continues, despite the fact 0:08:35.880 --> 0:08:39.760 that the circumstances that pertain seventy years ago no longer apply. 0:08:40.520 --> 0:08:43.080 Have there been calls to change this arrangement. 0:08:43.240 --> 0:08:45.760 Well, yes they have for a long time, from education 0:08:45.920 --> 0:08:48.560 unions from others. It was raised by some of the 0:08:48.559 --> 0:08:51.280 feeder reports at the Gonski Report a decade and more ago. 0:08:51.720 --> 0:08:53.840 But just last week we found out that the Productivity 0:08:53.840 --> 0:08:57.080 Commission has recommended it too. Now, this is a major 0:08:57.160 --> 0:09:00.079 new report from the Productivity Commission. It went to a 0:09:00.240 --> 0:09:04.240 whole charitable sector, but it specifically recommended that thousands of 0:09:04.360 --> 0:09:07.480 charitable funds that benefit private schools there's something like five 0:09:07.559 --> 0:09:10.560 thousand of them and their wealthy donus should be stripped 0:09:10.640 --> 0:09:13.640 of their tax deductible status. It found that the building 0:09:13.679 --> 0:09:15.800 funds that are set up by the non government schools 0:09:15.800 --> 0:09:19.000 to pay for capital works do not meet the appropriate 0:09:19.040 --> 0:09:23.000 criteria for charitable activity and they should not be accorded 0:09:23.120 --> 0:09:27.320 what they call deductible Gift Recipient or DGR status. The 0:09:27.360 --> 0:09:30.960 Productivity Commission set out in some detail the criteria that 0:09:30.960 --> 0:09:34.679 should apply to be registered for DGR status and they 0:09:34.679 --> 0:09:37.400 found essentially that the private schools didn't meet any of them. 0:09:37.679 --> 0:09:40.280 It's as simple as that, to give one example of 0:09:40.360 --> 0:09:43.400 one of the criteria, no private benefit should attached to 0:09:43.480 --> 0:09:46.200 charitable giving. But in the case of private schools, what 0:09:46.240 --> 0:09:49.040 happens is if you give to these building funds, you 0:09:49.080 --> 0:09:51.880 get a tax deduction for it. If you pay school fees, 0:09:51.920 --> 0:09:54.839 you don't get a tax deduction. So what the Productivity 0:09:54.840 --> 0:09:56.679 Commission found was that there was a trade off going 0:09:56.720 --> 0:10:00.040 on whereby people were kicking into building funds which the 0:10:00.360 --> 0:10:03.319 kids great facilities, but also meant that they could reduce 0:10:03.360 --> 0:10:06.440 the fees they charged for access to those facilities. 0:10:06.760 --> 0:10:11.319 We're seeing the tax system used to thinly veil middle 0:10:11.320 --> 0:10:14.760 to upper class welfare in this country. How does the 0:10:14.800 --> 0:10:18.880 private school's experience compare with other charities. 0:10:18.679 --> 0:10:21.440 Well, that's another interesting aspect of this report from the 0:10:21.440 --> 0:10:26.120 Productivity Commission. They found that other more needy and more 0:10:26.120 --> 0:10:29.600 worthy in their view, charitable endeavors miss out under the 0:10:29.640 --> 0:10:33.559 existing DGR regime. There is something like sixty thousand charities 0:10:33.559 --> 0:10:36.000 in Australia, but only about forty percent of those have 0:10:36.120 --> 0:10:39.839 tax deductible status. And the report explicitly says and I'll 0:10:39.880 --> 0:10:44.640 quote it again. The DGR system creates inefficient, inconsistent and 0:10:44.800 --> 0:10:47.839 unfair outcomes for donors, charities and the community. 0:10:48.200 --> 0:10:48.839 So whack. 0:10:49.080 --> 0:10:51.640 You know, you could hardly get a more swinging indictment 0:10:51.679 --> 0:10:54.360 of the current regime. And of course they chose the 0:10:54.720 --> 0:10:57.880 private schools as the exemplar of all that was wrong. 0:10:58.480 --> 0:11:02.720 So the nation's five thousand odds school building funds just 0:11:02.800 --> 0:11:05.120 serve as a case study of the randomness and the 0:11:05.160 --> 0:11:07.000 incoherence of the current system. 0:11:07.240 --> 0:11:09.800 So has the government respondent? What are they going to 0:11:09.840 --> 0:11:11.160 do with anything? Well? 0:11:11.320 --> 0:11:15.120 I called the Assistant Minister for Competition, Charities and Treasury, 0:11:15.280 --> 0:11:18.160 Andrew Lee, and asked him about this last week and 0:11:18.280 --> 0:11:21.520 he said the government was quote open to considering all 0:11:21.520 --> 0:11:26.080 the reports recommendations, bar one, and that one recommendation that 0:11:26.120 --> 0:11:29.360 they have said they won't pursue is the recommendation around 0:11:29.400 --> 0:11:32.480 private school building funds. He said, to quote him, that 0:11:32.600 --> 0:11:35.440 was in the interim report. We consulted widely on it 0:11:35.480 --> 0:11:37.439 and we have opted not to pursue that. 0:11:37.800 --> 0:11:41.120 Consulted widely is one way of putting it. What does 0:11:41.160 --> 0:11:44.679 it say that the government won't even consider changes to this? 0:11:45.360 --> 0:11:47.920 To be frank, the private school lobby in Australia is 0:11:47.960 --> 0:11:49.920 a bit like the gun lobby in the United States. 0:11:50.280 --> 0:11:54.240 It's hugely politically powerful. It is protected by rich, well 0:11:54.240 --> 0:11:57.079 connected parents who are very keen to protect the privilege 0:11:57.120 --> 0:12:01.000 of their kids. Furthermore, our politicians come to disproportionately from 0:12:01.080 --> 0:12:04.920 non government school backgrounds, and overwhelmingly both sides of politics 0:12:04.920 --> 0:12:09.000 send their own children to non government schools. Despite all this, 0:12:09.360 --> 0:12:12.760 all the research shows that private schools actually serve to 0:12:12.760 --> 0:12:15.320 make Australia not only are less equal, but a less 0:12:15.320 --> 0:12:18.520 well educated society overall. If you look at the international 0:12:18.559 --> 0:12:22.800 comparisons of educational attainment, Australia has one of the largest 0:12:22.840 --> 0:12:26.040 gaps in the world between our top achievers who are 0:12:26.160 --> 0:12:31.040 globally competitive, and the educationally underprivileged who are falling way 0:12:31.240 --> 0:12:34.520 behind and falling further behind over time. And those tend 0:12:34.559 --> 0:12:38.080 to go to state schools in low SS areas, So 0:12:38.600 --> 0:12:41.760 that's an indictment. I worry also that they also make 0:12:41.760 --> 0:12:45.040 this country less socially cohesive, because you know, rich kids 0:12:45.040 --> 0:12:48.400 are cloistered, poor kids are ghettoized, and I fear we're 0:12:48.440 --> 0:12:52.240 in a vicious cycle whereby middle class parents feel compelled 0:12:52.280 --> 0:12:55.400 to pay for private schools, simply because state schools are 0:12:55.400 --> 0:12:58.360 so poorly resourced, and yet we see wealthy parents getting 0:12:58.360 --> 0:13:01.960 a tax break for building opulent facilities. I'm with the 0:13:01.960 --> 0:13:07.720 Productivity Commission. I think it's outrageous and it should be scrapped. Indeed, 0:13:07.760 --> 0:13:09.760 if we're up to me, I would do as they 0:13:09.800 --> 0:13:12.679 do in some other countries and say, well, you're welcome 0:13:12.720 --> 0:13:15.360 to have a private school, but if you charge fees, 0:13:15.400 --> 0:13:18.320 you don't get government money. If you don't charge fees, 0:13:18.400 --> 0:13:21.559 you get the same resourcing as state schools. So level 0:13:21.559 --> 0:13:22.280 the playing. 0:13:22.000 --> 0:13:41.120 Field, Mike, thank you for your time, great pleasure. Also 0:13:41.200 --> 0:13:44.200 in the news, the company behind the Bertuda Advocate has 0:13:44.200 --> 0:13:47.640 been running a podcast strategy for Prime Minister Anthony Alberinsi. 0:13:47.760 --> 0:13:50.960 The ABC is revealed. While a spokesperson of Labor said 0:13:50.960 --> 0:13:53.880 they have not paid content creators, they did confirm they'd 0:13:53.880 --> 0:13:56.920 ask them a teena media to provide advice on what 0:13:57.000 --> 0:14:00.280 podcast the Prime Minister should go on. Podcast appearances been 0:14:00.320 --> 0:14:03.480 a key part of Anthony Alberanesi's re election campaign in 0:14:03.520 --> 0:14:07.559 a bid to appeal to younger voters, and the detection 0:14:07.679 --> 0:14:10.400 of two chemical compounds on a giant planet one hundred 0:14:10.400 --> 0:14:13.200 and twenty four light years from Earth, are the strongest 0:14:13.240 --> 0:14:16.319 evidence to date of life beyond our Solar system. According 0:14:16.360 --> 0:14:19.840 to scientists, observations of a planet known as K two 0:14:19.880 --> 0:14:22.960 eighteen B appear to show chemicals that on Earth are 0:14:23.000 --> 0:14:26.160 only known to be reduced by life. The compounds were 0:14:26.200 --> 0:14:30.080 detected using the James Webs based telescope, with a scientist 0:14:30.120 --> 0:14:32.960 responsible for the discovery saying they now must question whether 0:14:33.000 --> 0:14:36.160 the signal is real and what it means if it is. 0:14:37.440 --> 0:14:43.760 I'm Daniel James. This is seven am. Enjoy your Easter break.