Old private school loan scheme costs government $122m over five years

This was published 3 months ago

Old private school loan scheme costs government $122m over five years

Facebook has banned the sharing or viewing of our news articles on its platform. For independent journalism straight from the source, download our app and sign up to our newsletters.

The NSW government has spent more than $122 million helping private schools pay off loans for building projects over the past five years, under its obligations to a funding scheme that was discontinued almost a decade ago.

The money is a legacy of the old NSW interest subsidy scheme, which began in 1965 to help non-government schools construct new buildings. It was closed to wealthy private schools on fairness grounds in 2004, before ceasing for all non-government schools in 2012.

However, some of Sydney's wealthiest independent schools – including Wenona School, Ravenswood School for Girls and Shore School in the northern suburbs – were still benefiting from subsidies last year because the government agreed to honour all loans for a maximum of 20 years.

The Mabel Fidler Building at Ravenswood.

The Mabel Fidler Building at Ravenswood.Credit:

Data obtained by the NSW Teachers Federation under freedom of information laws reveals that, while the annual bill has diminished over time as loans are paid off, the scheme continues to cost millions each year and will be paid out until 2031.


The scheme cost $16 million in the 2018-19 financial year and some private schools reaped more than $200,000 each.

It comes on top of new capital funding programs for independent schools. The NSW building grants assistance scheme, which replaced the subsidy scheme, provides targeted funding for works in non-government schools with greatest need, particularly in high-growth areas.

The state government spent $136.6 million on building grants between 2014 and 2019, bringing its total spend on non-government school capital works to about $260 million over the five years.

About $74 million went to subsidies for Catholic schools, while $1.1 million was spent paying the interest on loans taken out by some of Sydney's wealthiest independent schools before 2004.

Education department data shows Wenona School was subsidised $377,184 in the five-year period, while Ravenswood School for Girls received $230,816. SCEGGS Darlinghurst was subsidised $170,402 and Shore School for $146,809.

Kambala, Kincoppal-Rose Bay, The Scots College, Hills Grammar, St Aloysius' College, St Andrew's Cathedral School, Moriah College, Knox Grammar School, Trinity Grammar School, Barker College and The King's School also continued to receive thousands in run-off interest subsidies more than 10 years after the scheme officially excluded high-fee schools.


Many of those schools have pursued multi-million dollar building projects, including a STEM hub at Wenona and sports centre at Shore. Most have paid off their loans, but Wenona, Ravenswood and Shore were subsidised $89,644, $30,835 and $13,719 respectively in the 2018-2019 financial year, according to the data.

School funding expert Lyndsay Connors, who held senior policy positions at state and Commonwealth levels, said the subsidy scheme had left a long legacy of inequality as wealthier schools could take out bigger loans. "The more a school could afford to borrow, the more it benefited from this scheme," she said.

"[It] was a way of using public funds to enable private schools to increase their enrolments, while also increasing the assets of their owners. The quality of their buildings, compared with public schools, is a major marketing strategy."

An education department spokesman said all subsidy commitments would be honoured until the pre-determined end date, but that the future cost of the scheme could vary.

"As the cost of the [interest subsidy scheme] is dependent on interest rates, future years projections may not be accurate. However, due to interest rates being relatively low in recent years, many loans have been and are being paid out early," he said.

Of the $16 million spent on subsidies in 2018-19, $10 million went to Catholic schools and the remainder was spread across 141 private schools. The department did not provide a breakdown of the Catholic school subsidies.

Lakes Grammar, Wollondilly Anglican College, Thomas Hassall Anglican College, Al Faisal College, Shellharbour Anglican College, Penrith Anglican College and Rouse Hill Anglican College were each subsidised more than $200,000. Their five-year interest subsidies total more than $1.5 million each.

Some schools receiving subsidies have also received targeted funding under both state and federal government capital grants schemes. Al Faisal received $16 million, Rouse Hill received $5 million and Wollondilly received $800,000 under the state government capital grants scheme in the 2019-20 financial year, on top of interest subsidies.


St Scholastica's College at Glebe received $8 million from the federal government for an arts centre over 2019 and 2020, while Lindisfarne Anglican also received $6.5 million in federal capital funding. Both receive interest subsidies.

NSW Teachers Federation president Angelo Gavrielatos said it was tantamount to "double and triple dipping".

"We now learn that a scheme that was supposed to have been shut down more than a decade ago, a scheme designed to assist private schools pay off their loans, continues to operate having transferred [millions of] dollars to private schools. ... We are talking about some of the wealthiest schools in the state," he said.

"While the list of urgent maintenance, refurbishment and upgrades of public schools continues to grow ... so too does the state and federal government's commitment to the capital portfolios of private schools. It is offensive.”

The education department spokesman said capital grants funding had prioritised new schools and developments that catered to increased student enrolments. "Many of the schools identified above as receiving funding through the [grants scheme] are high-growth schools or in the high-growth areas," he said.


Chief executive of the Association of Independent Schools of NSW Geoff Newcombe said the government gave the independent school sector capital funding support because it was a partner delivering education for the state's students.

"Successive governments have relied on non-government schools to create places for one-third of new enrolments each year. Over the past five years, almost all the growth in non-government school enrolments has been in the independent sector," Dr Newcombe said.

He said the government's most recent capital works funding assistance had helped build eight new schools and expand 15 existing schools in growth areas.

"This will create new places for an additional 25,000 students over the next five years," he said.

Start your day informed

Our Morning Edition newsletter is a curated guide to the most important and interesting stories, analysis and insights. Sign up here.

Most Viewed in National