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National Redress Scheme: does joining put government financial assistance at risk?

At national school law conferences last year, David Ford noted that it was not clear whether Australian Government financial assistance could be used to meet the costs associated with belonging to the National Redress Scheme or to making payments under it without putting the receipt of ongoing financial assistance at risk. He also noted that, under state legislation, it was difficult to know with any certainty whether joining the Redress Scheme and making payments pursuant to it could cause a school to operate for profit and therefore put its government funding at risk. Looking at the NSW legislation – the infamous section 83C – one could argue that joining the Scheme and making payments pursuant to it were part of the school’s operations. However, the NSW Guidelines issued in December 2018 and again in June 2019 said nothing about the Scheme and, on their face, suggested that joining the Scheme, which is voluntary, and then making payments which, although not voluntary once the school is in the Scheme, are in a sense also voluntary, would cause the school to operate for profit.

David concluded that it would be a very brave government that would threaten to remove a school’s funding just because it had joined the Redress Scheme, particularly given that the states have all joined the Scheme and that the Australian Government and the Scheme Operator have been encouraging institutions, including schools, to join. Finally, late last year, the NSW Government decided that it does not want to be that brave.

To support non-government schools’ participation in the National Redress Scheme, the NSW Minister for Education and Early Childhood passed a new Regulation 10A, which came into force on 11 October 2019. This regulation allows non-government schools to make redress payments without contravening the not-for-profit provisions of section 83C of the Act provided they can demonstrate that government financial assistance was not used to make redress payments. This reflects the position at the federal level and allows schools to make redress payments from their reserves, assuming that they have spent all their government funding on normal recurrent expenditure.

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