Australian schools could get an extra $16 billion – but only if states reach a deal with Jason Clare by the end of September

The federal government has offered states a new funding agreement that would provide an extra A$16 billion for Australian schools, starting next year.

It sounds good, but Education Minister Jason Clare has made it clear the offer will lapse by the end of September if states and territories don’t sign up to it.

The Northern Territory signed up in July, just before its recent change of government. Western Australia signed up on Tuesday.

Clare is standing his ground, warning “stubborn” state and territory governments risk missing out entirely on the new money if they don’t agree.

How does the agreement work?

The federal government released details of the new agreement at the end of July.

It is due to replace current arrangements from January 1 2025. It requires states and territories to do specific things to improve student outcomes. In return, they get increased federal funding for schools.

The proposed new agreement would run for ten years.

Read more: There's a new 10-year plan for Australian schools. But will all states agree to sign on?

What’s in the new agreement?

There are three important components to the new agreement.

First, there are phonics (reading) and numeracy checks in early primary school school to identify students who need more help. There are ongoing concerns that once students start to fall behind, it’s much harder to catch up.

Second, there is money to connect schools and services which support student mental health. This likely means increasing access to psychologists, counsellors and mental health workers, although the details about how this might work are limited.

Third, the proposed agreement will focus on teacher and school leader (which includes principals and deputies) wellbeing. This follows research, such as our own, which shows this is a significant problem in schools, which are facing high levels of teacher burnout, mental health issues and resignations.

Our 2023 report asked whether school leaders seriously considered changing their jobs. More than 1,250 (or 55% of participants) said yes.

This is the first time a national schools policy has singled out teacher and principal wellbeing as an issue. It’s also essential if we are going to see significant change in student wellbeing, which has been a source of growing concern over the past few years.

So why aren’t all states and territories signing?

They’re not happy with the deal.

The federal government has offered to increase its contribution to funding government schools from 20% to 22.5% of the Schooling Resourcing Standard. This is the estimated cost of educating students to an adequate level.

Remaining jurisdictions say this is not enough to run their schools and want this amount increased to 25% before they sign. They have been holding firm to this position since the beginning of the year.

Both sides feel they have a case.

A May 2024 review by the National School Resourcing Board found the current indexation arrangements for school funding are suitable.

Meanwhile, states are looking at the fine print. For example, the current funding agreement for New South Wales says the state government will provide “at least 75% of the [Schooling Resource Standard] by 2027”. But it does not commit NSW to do more – leaving the state government to argue the federal government should contribute 25%.

What happens now?

We are in the middle of a standoff. September is now here, and Western Australia joining the Northern Territory in signing the agreement adds to the pressure.

There’s little to suggest either Clare or his unsigned state and territory counterparts are willing to shift their positions at the moment.

It is not an realistic option for the federal minister to strike individual deals with those who are holding out. The Australian Education Act requires states and territories to commit to national agreements as a condition of getting federal money. It would also make a mockery of having “national goals” for education.

There has also already been a 12-month extension to the current agreement (which was due to expire at the end of 2023).

So the need to reach a deal – and start implementing these crucial improvements for schools – only continues to grow.