The Turnbull Government’s “Gonski 2.0” school funding policy has made some people very unhappy. Unhappiest of all are the leaders of the Catholic school systems. They claim to have been unfairly targeted, and are talking about broken trust. Supporters and parents are being mobilised through the media, with some articles arguing that fees will “skyrocket” by up to $5,000 per student and that the “working poor” will be hit hardest.

The government has hit back, with education minister Simon Birmingham saying “what we are seeing is a push-back to try to achieve another special deal of some sort”. And today he published a new online estimator showing how much funding each school will receive from the Commonwealth under Gonski 2.0.

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Catholic education leaders oppose this move, with Catholic Education NSW saying: “Catholic education fears [the website] is an attempt by the government to limit the sector’s autonomy (our ability to distribute funds according to our assessment of local need).”

How on earth should the public make sense of this divisive debate? To cut through the noise, we make four observations.

1. Birmingham should stick to his guns.

Gonski 2.0 is good policy in the broad public interest. Under-funded schools will get more money, and the most under-funded schools will get the biggest boosts. This is absolutely the point of needs-based funding.

Removal of special deals and political compromises (not all of which are related to Catholic schools) moves us closer to the aspiration of aligning school funding according to student need.

2. Transparency matters

The federal government will spend $17.5bn on school education in 2017. While independent schools receive their funding directly, government education departments, Catholic systems, and a number of small systems in the non-government sector receive the money as a lump sum and then allocate it to schools according to their own formulas.

Taxpayers – and parents – have the right to understand how these formulas work, and whether they are genuinely needs-based.

Increased transparency within Catholic school funding is desperately needed. A recent leak of an internal review of NSW Catholic schools funding by Kathryn Greiner found that their internal funding allocation model is not always fair, showing that resources are being captured in more populous city dioceses to the detriment of needy rural and remote dioceses.

Catholic system leaders say we should trust them, but this is not good enough. No recipient of public funding is entitled to an opaque arrangement whereby they redistribute funding without explaining how and where.

The new public website increases transparency, but is a somewhat blunt instrument given that it only provides a partial view of school funding. A better approach would have been to create an independent National Schools Resourcing Body, as recommended by the Gonski 1.0 review in 2011 and supported in Grattan Institute’s recent Circuit Breaker report. This would provide adequate checks and balances without adding to confusion. The recent Greiner review seconds this call for an independent authority.

3. To end the funding wars, the formula needs to be reviewed

There appear to be two main issues for the Catholics. The first is the “capacity to contribute” measure, by which non-government schools with students from wealthier suburbs receive less public funding than comparable government schools or non-government schools with students from more disadvantaged areas.

The Catholics argue that it is wrong to assign students the average socio-economic profile of the catchment area in which they live, because their students are on average less well off than independent school students from the same catchment. There is some analysis to back this argument. Indeed, the original Gonski review argued that “work should commence as a priority to develop a more precise measure of capacity to contribute to replace the existing SES measure”.

The second issue is the so-called “system-weighted average” (SWA), whereby the capacity to contribute for non-government systemic schools is calculated using the average SES of all the schools in the system. This has the effect of increasing overall funding to Catholic systemic schools by tens of millions of dollars each year.

For Catholic schools, the SWA approach potentially acts as a counter-weight to the flaws in the SES calculation. If that is the case, removing the SWA (which Gonski 2.0 does) should be accompanied with a review of the formula. Again, this is consistent with the recommendations in Gonski 1.0.

A review of the formula is long overdue. But this does not mean starting from scratch: no formula will satisfy everyone, and the Government should not allow the perfect to be the enemy of the good.

4. Catholic system supporters must stop exaggerating

An outrageous example of this was presented in Sydney’s Sunday Telegraph last weekend. Claiming to present “the latest analysis by the Catholic sector”, the article identified the hardest hit school in Sydney as St Brendan’s Catholic Primary School, with the cost of tuition “forecast to jump by almost $5,000 per year within the next five to seven years”.

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No doubt St Brendan’s is a lovely local school. But it is far from being a typical parish primary school, an argument often used to justify low fees. St Brendan’s is in Annandale, a highly desirable Sydney suburb just kilometres from the CBD and harbour. In fact, it appears to be one of the most advantaged Catholic systemic primary schools in all of NSW, and chosen deliberately so as to inflate the impact of Gonski 2.0.

This type of cherry-picking, combined with a direct-to-parents scare campaign, does the Catholics no favours. In the interests of fairness, it must stop.

Australia is an inch away from achieving real change in school funding, the nation’s oldest and most poisonous debate. The government should listen to the concerns of the Catholics, and ensure that justice is seen to be done. But in turn, Catholic school leaders should recognise the need for increased transparency – and stop using misleading examples.

Peter Goss is program director and Julie Sonnemann is fellow in the School Education Program at Grattan Institute.