The claims

As the citizenship crisis continues to claim scalps, the federal seat of Bennelong has become the next battleground in the fight for parliamentary numbers.

Voters in the Sydney electorate head to the polls on December 16, the result of Liberal MP John Alexander resigning over concerns he may have held British citizenship.

Challenging him for the seat is former NSW premier Kristina Keneally, the candidate for Labor.

The two parties have clashed over the issue of schools funding, with each offering an alternative view of Ms Keneally's record in government.

In a tweet on November 19, Federal Education Minister Simon Birmingham referred to "Keneally's schools cuts", and in the Senate on December 4, he said that Ms Keneally "as premier was happy to cut $318 million out of New South Wales schools. Sanctimonious, they [Labor] are arguing for school funding, but their candidate, the former New South Wales premier, was happy to rip money out of their schools".

But Ms Keneally rejected the charge during a November 23 press conference when a journalist said education funding had been "slashed" while she was premier. She said:

"Look at the Productivity Commission official figures. Look at the budget. They clearly show education funding increased in every key area under my government."

So did schools funding increase or decrease under the Keneally government?

RMIT ABC Fact Check investigates.

The verdicts

Ms Keneally is wide of the mark but there is more to the story than Senator Birmingham claims.

The only NSW budget handed down while Ms Keneally was premier was for the 2010-11 financial year, and the only budget figures Fact Check could find in support of Ms Keneally's claim were so-called "nominal" figures, not adjusted for inflation, for overall education funding.

Three experts contacted by Fact Check agreed that adjusted or "real" figures more faithfully represent funding changes over time.

Applying the inflation figure used in the budget papers, NSW Government funding for education as a whole decreased by 2.5 per cent in real terms in 2010-11.



Senator Birmingham and Ms Keneally both pointed to data from the Productivity Commission, which publishes schools funding figures in nominal and real terms, using an inflation index for government finances.

While the nominal figures show a 2.3 per cent increase in state government funding for schools in 2010-11, in real terms this was a decrease of 2.8 per cent, or $318 million.

However, Senator Birmingham's claim that this amounted to "ripping money out of schools" is unjustified.

Experts contacted by Fact Check said figures for a single financial year should be used with caution because of timing mismatches between funds being allocated and spent, and because school budgets run over calendar years.

The real decrease in NSW schools funding in Ms Keneally's sole budget year as premier came after a larger than usual increase in real terms in 2009-10.

Using data for different time periods, or using a different measure for inflation, would produce a different result.

And experts said school students in NSW at the time benefitted from higher federal funding in real terms.

Taking charge

Ms Keneally said her claim was supported by "the budget". Governments set their spending priorities for the year with the annual budget, which for NSW is usually delivered in June.

Ms Keneally was the fourth consecutive NSW Labor premier since 2005.

However, her government lasted just under 16 months — from December 4, 2009 to March 28, 2011.

That means she only delivered the 2010-11 budget as premier. Before that, she was a minister but did not hold any education portfolio.

Senator Birmingham's tweet referred to Federal Labor Leader Bill Shorten defending Ms Keneally on the basis of education spending in the last two years of her government.

However, Fact Check considers it appropriate to focus on her sole budget year.

Dr Glenn Savage, a senior lecturer in education and public policy with the University of Western Australia, told Fact Check that it's hard to say how much influence Ms Keneally would have had other than as premier.

"It's difficult to give Keneally credit for spending outside of the budget for which she was directly responsible," he said.

It's a view shared by Associate Professor Chris Ryan, who heads the education economics program at Melbourne University's Institute of Applied Economic and Social Research.

He told Fact Check that budgets are an opportunity for the current government to make "new" spending decisions, which can include choosing to continue initiatives started by the previous government.

"I think they're all active decisions for the next government," he said.

What does the budget say?

To find the most appropriate NSW budget figures, Fact Check consulted David Hayward, a Professor of Public Policy at RMIT, who said that funding contributed by the Federal Government needed to be taken into account in order to arrive at a figure for NSW education spending.

Budget Paper 2 shows total government spending in NSW on all areas of education, excluding capital expenditure.

It covers, for example, vocational education and training, and it combines funding from the federal and state governments.

Separately, it shows funding provided to the state by the Commonwealth, which Fact Check has subtracted.

And to work out how the state contribution changed, Fact Check has used actual figures published in later budgets, not estimates published in the year concerned.

The actual figures relevant to the claim are found in the 2011-12 and 2012-13 budgets.

The figures are not adjusted for inflation, but Professor Hayward noted that the budget contains the previous year's inflation rate.

The 2011-12 budget shows that inflation in 2010-11 was 3.8 per cent.

The unadjusted figures show that the NSW government's education spending increased by $133 million, or 1.3 per cent, in Ms Keneally's budget year.



Education spending, NSW budget Year Total spending ($m) Federal contribution ($m)* State contribution ($m) Annual change in state contribution ($m) 2010-11 12,162 2,056 10,106 133 2009-10 11,955 1,982 9,973

Source: NSW Treasury, Budget Paper 2 (2011-12 and 2012-13); (Credit: RMIT ABC Fact Check)

* Comprises Specific Purpose Payments and payments for National Partnerships, including vocational education

The budget does not provide this level of detail specifically in relation to schools funding.

Budget Paper 3 shows how much money the NSW education department spent on schools but does not make clear what contributions came from the state or federal government, so Fact Check has not used these numbers.

And these departmental statements only provide estimates for spending in earlier years, not actual figures.

Checking the commission's figures

Both parties mentioned figures from the Productivity Commission when making their claims.

Ms Keneally said "look at the Productivity Commission official figures" and Senator Birmingham's tweet referred to Table 4A.7 in the commission's Report on Government Services 2017.

This annual publication shows how much the NSW government spends on school education, both in aggregate and per student (for government schools only).

The commission's data comes from a mix of unpublished data sourced from the National School Statistics Collection and directly from state and territory governments.

The table identified by Senator Birmingham, Table 4A.7, shows "real recurrent expenditure" by the NSW government on government and non-government schools.

These "real" figures take inflation into account.

The table shows state spending for 2010-11, the Keneally budget year, was $318 million lower than the previous year. This equates to a 2.8 per cent drop.

Professor Hayward told Fact Check that figures for a single year should be treated with caution, because they may miss spending carried forward into other years.

"The department may have received funding this year but spent it the next year," he said, noting that this could be one reason why spending was sometimes unusually low or high from one year to the next.

Dr Jim McMorrow, the former Deputy-Director General of the NSW Department of Education, told Fact Check that the accounting method used by the commission may not always attribute the funding to the years in which it was actually received.

He warned against interpreting the figures too narrowly because "school expenditure in practice is based on calendar years, rather than financial years".

To account for this he suggested averaging out the financial year figures, which would result in "a small increase each year".

The commission's figures show that in real terms schools funding rose by 3.7 per cent in 2009-10 and by 5.8 per cent in 2011-12.



The effect of inflation

While Senator Birmingham's tweet linked to a table citing "real" figures, the report also contains "nominal" ones.

The commission told Fact Check: "Real expenditure data converts the raw or 'nominal' financial data to 'real' dollars so that comparisons over time are not affected by inflation."

In other words, real figures take into account the increase in costs for a particular basket of goods and services.

The commission's nominal figures tell a more favourable story for Labor.

They show that schools funding in 2010-11 increased by $228.6 million, or 2.3 per cent.



The story is the same for the per student data. These figures, only available for government schools, show that in nominal terms per student funding increased by 1.4 per cent, while in real terms it shrank by 3.6 per cent. This amounted to about a $500 decrease per student.

In calculating its real figures, the commission applied an index produced by the Australian Bureau of Statistics, called the General Government Final Consumption Expenditure deflator.

Dr Ryan and Professor Hayward agreed this was a reasonable deflator to use.

Dr McMorrow said he would choose a deflator based on the Education Wage Price index, as the bulk of recurrent spending in schools is on salaries.

Using the commission's deflator instead "may not have any effect, but it's not the one I would use," he said.



Another option is the ABS Consumer Price Index for Sydney, which the state budget uses to measure inflation.

According to the 2011-12 budget, the inflation rate for Ms Keneally's budget year was 3.8 per cent.

Applied to the budget figures, Fact Check calculates that NSW government funding for education as a whole decreased by 2.5 per cent in real terms in 2010-11.

Picking the right figures

Dr Savage said that because real figures attempt to account for inflation, "[a]n argument can be made … that the [real] Productivity Commission figures provide a more accurate portrait" than the budget's nominal figures.

And Dr Ryan said he would favour real figures over nominal ones: "You're not comparing like with like if you're just talking about nominal figures."

"If you're looking at people who are making claims about the value of something they've done, then that's got to be in real terms."

He said that while larger increases in expenditure can constitute a real increase as well, when it comes to smaller increases such as a few per cent a year, "you've got to be much more careful about that."

Professor Hayward agreed that inflation must to be taken into account, otherwise, he said, someone can argue that spending "one dollar today and a dollar two cents tomorrow" is an increase, even when costs are rising.

"If the amount being spent in real terms per person is falling, well that's clearly a decline," he said.

What about federal spending?

From the perspective of school students, whether or not they suffered a decrease during Ms Keneally's tenure depended on the level of combined federal and state funding.

Emeritus Professor Brian Caldwell, from the University of Melbourne, points out that federal funding increased over that period.

"For as far back as I can remember, the four-year forward estimates by federal governments have always shown a significant increase beyond inflation," he said.

Indeed, the inflation-adjusted figures from the Productivity Commission show that in 2010-11 federal funding for NSW schools increased by 4.1 per cent from the previous year.

Dr Savage said that while there was a lot of extra federal money coming into the states and territories during the time Ms Keneally was in office, it's impossible to say how much she can take credit for.

Because "all system leaders would have been seeking to get the best deals from the federal government," he said.

"I think the best we can do is to look at state budget allocations".

Louise Watson, a Professor of Education from the University of Canberra, said the Keneally government could take some credit for federal funding secured under a National Partnership Agreement.

In order to receive this funding, she said, "each state government had to make a budgetary commitment regarding what their own contribution would be (from state coffers) towards the National Partnership".

She notes, however, that these agreements do not cover general recurrent funding for schools, "which is still the largest proportion of Commonwealth funds".

Sources