Value for money? The princely salaries of private school principals.

While public school funding lags behind, private school principals earn up to four times as much as their public school counterparts. Alexia Adhikari And Morgan Harrington Report.

The average salary of a principal at an elite private school in Sydney is about $687,000 a year. At least four receive a salary and benefits worth over $900,000, and one of them earns over $1 million a year.

Finding this out required a leak of confidential data, because despite their high levels of subsidy, private schools in most parts of Australia are not required to tell anyone how much they pay their principals. The Australian Charities and Not-for-profits Commission’s reporting requirements come close, but do not require schools to disclose how much they pay individual staff in specific positions.

While $600,000 is a rough estimate, it is much more than NSW public school principals earn. Their salaries – published by the NSW government – range from $140,000 to $216,000 per year. Seek estimates that the average salary of a school principal in Australia is between $165,000 and $185,000 per year.

This wage gap is symptomatic of the growing inequality between the haves and the have-nots in our education system.

Funding for private schools has increased fivefold, while public schools have stagnated

NSW Education Report

The New South Wales government will soon release the results of its review of section 83C of the Education Act 1990 (NSW), which sets out what private schools can and cannot do if they want to operate as a not-for-profit organisation (which most do). The law requires that, as a condition of receiving public funds, all remuneration packages “must be necessary for the operation of the school, not more than fair market value and not otherwise unreasonable”.

How can $600,000 be considered “fair market value” when the public school principals they “compete” with do the same job at a comparable institution for much less money?

These exorbitant salaries could only be considered “fair market value” if private schools existed as a separate “market” from public schools. But if that were the case, then education would be a private, for-profit market and there would be no reason to give private schools hundreds of millions of dollars in public money, right?

The myth of market forces

If education is a market and elite private schools simply offer a better product that costs more (including executive salaries), then their educational outcomes should be better. But it’s not that simple.

Last year, many private schools that charge relatively low fees performed as well as or better on the HSC than schools that charge fees over $20,000. Two public schools that cannot pay their headteachers as much as private schools managed to move up 200 places in the HSC rankings.

A quick look abroad also shows that salaries are not related to educational outcomes. Finland has a world-renowned public education system with almost no private schools. Finland’s headteachers earn less than their counterparts in Australian public schools, and Finland spends less per secondary student compared to Australia. Yet Finland consistently has some of the best educational outcomes in the world.

At the other end of the scale, Luxembourg pays its public school principals more than any other country in the OECD, but ranks only 31st (out of 41) in terms of educational attainment. Clearly, exorbitant salaries and school fees do not lead to educational outcomes, making the claim that they are “necessary for the school to run” difficult to justify.

Transparency needed

New South Wales Education Act states that private schools receive public funding “for the benefit of the school”. If private schools are to continue to receive taxpayer money, they must disclose how much they pay their principals.

The New South Wales government could adopt the Queensland government’s policy of requiring private schools to submit annual reports to the state parliament that include details of salaries paid to teachers. New York state has a similar policy of reporting principals’ salaries on tax returns. Even in the United Kingdom, known for its elite private school culture, the salary ranges of high-earning staff must be reported to remain tax deductible.

Breeding grounds of inequality

What message is being sent to students by the huge pay gap between public and private school principals? That the principal of a public school is not as good or does not work as hard? Or that the principal of a private school cannot be very good unless he or she makes several times more than everyone else.

One must also ask why it costs three times as much to recruit a headmaster to run a private school.

What is happening in this part of the “market” that makes it so difficult or unattractive that such a high salary is required to attract a principal? Perhaps it is the reports of sexual assault, bullying and a toxic work culture that would be scandals if they were not so common. Or perhaps the fish stinks from the head and we should hold these overpaid leaders to account.

Paying the head of a private school $600,000 is not about education; it is about distributing taxpayer-funded profits to the people who oversee these hotbeds of inequality.

Cranbrook and the private school “arms race.” How far has the financing of elite schools gotten out of control?