Choosers and Losers: The Impact of Government Subsidies on Australian Secondary Schools

For over three decades, government subsidies have been a major source of funds for private schools in Australia. Private schools now enrol more than one-third of all students. Analysing administrative and participation data, we find that Australian private schools have used government subsidies to increase the quality of their services (that is, to reduce student:teacher ratios) rather than to reduce their fees. As a consequence, the socio-economic composition of private schools has remained above average while a higher proportion of public school students now come from low socio-economic status (SES) backgrounds. The data suggest that Australia's government funding scheme is ineffective in facilitating access to private schools for students from lower socio-economic backgrounds and has undermined the viability of public secondary schools.