Governments provide only a small fraction of the capital investment made by Independent schools. Parents contribute the vast majority of capital investment through fees, fundraising and voluntary contributions.

Demand

The steady growth of enrolments in Independent schools has placed heavy demands on capital development such as buildings, grounds and equipment in the sector.

Growth in the sector not only requires new schools, but refurbishing or expanding existing facilities, the replacement of out-of-date materials, and upgrades to equipment to meet changing curricula and expanded courses.

Capital expenditure sources

Most capital expenditure in Independent schools is for buildings and works. Land, buildings and improvements accounted for 80 per cent of the total expenditure. Expenditure on other items such as furniture and equipment accounted for the remaining 20 per cent.

In 2024, capital expenditure in Independent schools totalled $3.89 billion, or an average of $5,220 per student, 95 per cent (approximately $3.70 billion) of which was sourced privately from parental contributions (e.g., fees, donations, fundraising activities), new school loans, etc. Parents can make voluntary payments to school building funds, which are recognised as ‘deductible gift recipients’ for income tax purposes.

The remaining 5 per cent of capital expenditure for non-government schools comes from governments through capital grants programs, state or territory government interest subsidies or loan schemes. The Australian Government grants contribute an estimated 2 per cent of total capital expenditure. The remaining 3 per cent comes from state and territory governments. Access to these grants varies considerably across Australia.

The sector also uses borrowings for capital purposes. In 2024, the net total borrowings of the sector was $5.0 billion which equates to $6,569 per student. This borrowing has increased steadily over the last decade. In 2024, debt servicing for capital purposes accounts for about 1.2 per cent of recurrent expenditure in the Independent school sector.

Australian Government Capital Grant Program

Australian Government capital funding to non-government schools is delivered mainly through the Capital Grants Program which aims to improve infrastructure such as school facilities, particularly for the most disadvantaged students. Block Grant Authorities in each state and territory administer Australian Government capital grants for Independent and Catholic schools. In 2024, capital grants for the Independent sector totalled approximately $98.8 million.

These grants are based on need, with priority given to disadvantaged school communities with the least capacity to raise funds. Most long-established Independent schools receive no capital grants from governments. The extent and quality of their facilities reflect the contributions from families, former students and other donors.