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With federation in 1901, the Australian states retained the obligation to fund education. A federal framework gave reason for them to seek standardized approaches across the country. The emphasis was not on content so much as on citizenship, character, and the underpinnings of social democracy, the development of intelligence, faculty, and character. In addition, practical courses ran alongside academic ones, with students effectively streamed into technical, superior, and academic streams by the end of primary Qualifying Certificate, through to the Continuation, and other Certificates.

As the aftershocks of the disastrous 1891 depression settled down, improved economic conditions allowed expansion of the systems. Committees like the Fink Commission in Victoria (through the Education Act of 1901, and the subsequent Teacher's Act) and the NSW Royal Commission on Education (through the Free Education Act 1906), guided the reform of technical education, eliminated pupil teachers, abolished fees in state schools, promoted the building of state high schools, provided for teacher education institutions and registration, extended the compulsory base of education, and the centralization of education under permanent heads.

Though technical education would have to await full implementation until World War II, the cyclic nature of the Australian economy encouraged pragmatism, and militated against a leisured liberal arts tradition. Two major depressions, recurrent recessions, and war made Australians a practical people. The influence of Scots and English thought, influenced by German idealism, was particularly strong in this period, though as the Ascham School in Sydney, and the introduction of Rudolph Steiner and Montessori schools showed variety was a local possibility in the period from 1914.

Montessori became mainstream in New South Wales, and from there influenced Tasmania and South Australia, but made less headway in other states. The Jena school in Germany was a regular stop on Australian tours abroad for educational ideas, those that also filtered into Australia through the medium of journals, and British domination of the book trade. The Kindergarten movement, also German in origin, had been introduced to keep young children off the streets in the 1890s depression, and began to spread in Australia after the return of prosperity in 1906. By 1914, however, due to the period of reform through 1901-1914, children entering Kindergarten could look forward to a complete K-Tertiary education provision in their own country. The growth of a specifically Australian (as opposed to Anglo-Australian) form of patriotism was one outcome of this, as the Australian intelligentsia could now be embraced within Australian institutions. Despite the lack of demand for local authors and other creative talents, it was a trend that reinforced the deliberate attempts of history and social studies curricula to engender concepts of citizenship.

Though education was a state issue, the Commonwealth became more vitally involved in state provision through the two world wars. After both wars, tens of thousands of ex-servicemen had to be retrained to enter into post-war reconstruction society. This was done through Commonwealth funding of technical and university places for returned servicemen. The cohort that emerged from Australian institutions in the early 1950s was, thus, more mature, worldly-wise, and destined to lead Australian social institutions into the 1980s. The new industries encouraged by war also demanded a flow of technically-educated men (and, increasingly, teachers were among the first semi-professionals to begin moving up), the first major step in which was the take over of teacher training by the universities that defined the field of education.

Similar processes were to occur through the 1970s and 1980s with regard to nursing, and through the 1990s with regard to policing, paramedics, business, and other social service areas. Meeting the demand for teachers in a democratic country meant maintaining or elevating the drawing power of the profession, either through social status or financial reward. As society became increasingly consumer-oriented, the two types of reward began to run into one another, relativizing the pseudo-religious roots of the so-called "honourable professions." The pluralization of society, on the other hand, was marked by rising crime rates and the decline of social security in precisely those areas where the state desired cohorts of new teachers to begin work. Increasing the leaving age just meant more uninterested students in school for a longer period of time. Fewer matriculants were offering for an occupation requiring higher levels of knowledge, ever improving teaching skills, for lower relative social and economic return. The phrase "the crisis in education" shown by rising teacher resignation rates, and global transfer of teachers to other parts of the world was to remain a key element of Australian public debate through to the end of the century. Professionalization was thus driven by the destabilization of a rapidly modernized and globalized society. The University of Tasmania took over teacher education as early as 1948 for rational economic reasons and struggled to fit teaching practicums into the academic timetable.

By the late 1950s, the prospect of the baby boom doubling the population of Australia's universities in a very short period of time was beginning to worry Commonwealth and state planners. In 1949, the New South Wales University of Technology was founded at Kensington, to articulate between the burgeoning number of Technical College students and the need for increased numbers of technical professionals to oversee post-War reconstruction. Eventually, renamed the University of NSW, it grew through a pattern of regional expansion and proliferation of degrees, as well as a marketable commodity for educational exports to the expanding economies of Asia, to become one of Australia's largest universities. But this was not enough. From 1954-1957, university enrollments in Australia rose by nearly 30 percent. From 1954, under pressure from the rural vote, the University of New England gained its independence from the University of Sydney, and entered the field of distance education. None of these universities were financially stable, and greater need again was emerging with the rising numbers of students, and academic union militancy over poor wages and conditions.

The Murray Report and the demographic bulge of the period opened a golden age of state funded university expansion. New faculties were added at the newly named UNSW and the major metropolitan universities, and new Universities were founded (Monash, 1958; James Cook (University College of Townsville), 1960; Wollongong University (College), 1962; Macquarie, 1963; Newcastle University, 1965; Flinders University, 1961-1966; La Trobe University, 1964).

Dawkins unified national scheme regularized relationships between the states and the commonwealth with regard to federal leadership over national education policy, as did the "Common and Agreed National Goals for Schooling in Australia" (the Hobart Declaration), which emerged out of the 1989 conference of Education Ministers. The high point of this golden age of university expansion, and of education for democracy was under the Whitlam government, 1972-1975. The Whitlam revolution retained the last remnants of 1960s optimism before the oil shocks of the early 1970s, and the recession budgets of the Fraser government began to function. E. Gough Whitlam broke more than 20 years of conservative, minimalist government style in the Liberal tradition by appealing to the white collar middle classes who had been the most enthusiastic patrons of the university and education sector. While retaining labor union support, he reconceptualized Welfare as the means by which government enriched the life of every citizen. In this sense, government was in loco parentis for the dissolving local communities on which education had been built in earlier years. "Any function or activity," declared Whitlam, "which can be hitched to the star of the Commonwealth grows in quality and affluence. Any function or activity which is financially limited to the States will grow slowly or even decline" (Whitlam, ALP Policy Speech, 1972). The major areas were education, health care, urban planning and social services, with equality of opportunity in each the immediate aim and equality of outcomes as a recognized unreachable benchmark for different social groups. The bold vision was in the end torn down by recession and cultural reaction from a people for whom the social costs were too much too fast. Whitlam still divides the Australian opinion today, as the proponent of the last great cause.

Universities received greatly increased per capita funding for student places. Equal opportunity and affirmative action was entrenched in the public sector well beyond the federal sphere of influence. Official multiculturalism was promulgated and the rights of minorities, especially girls, Aborigines, rural children, migrant children and the physically and mentally handicapped were protected and advanced. Funding for childcare was made available to empower working mothers—a system that existed in moderated form until the early 1990s. At secondary level, the radical experience of South Australia was extended to the federal scene by Peter Karmel through the Australian Schools Commission. The system of government grants to schools was means tested, meaning that more resources flowed to the poorer Catholic schools than to the private grammar schools. More importantly, the beneficiaries of a student generation of free university education remained beholden to the vision of democratic education, a cohort that still fills many of education's senior positions, and resents the swing to a market economy that is transforming social activism into market awareness.

As the century ended, Australians awaited the federal government's final word on whether the recommendation of devolved educational funding, such as a voucher system would be put into place. Elements of devolved budgeting are in place, such as the Howard Liberal Government of Enrollment Benchmark Adjustment (EBA) which facilitates the establishment of non-government schools, and penalizes those public systems which lose market share. The use of the EBA has also provided a way of estimating the scale of movement towards the private system in Australia: in 2000, DETYA estimated that, "the gradual movement of students to the nongovernment school sector has saved the states some $3 billion since 1983" (DETYA, 2000c). The NSW government estimated in 2000 that its public system would be losing some $50 million per year by 2003 to EBA due to the shift towards private schools (NSWDET 2000). In the same year, most states were closing surplus public schools in older suburban areas due to declining numbers of school-aged children and the growth of the private sector. Some tensions, particularly as relates to hiring policies and such issues as corporal punishment, have arisen over the fact that receipt of federal funding requires private schools to comply.

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