If the welcome was cautious and conditional in some quarters, educational historians were still left marvelling at the apparent outbreak of school funding peace. In proposing a sector-blind needs-based school funding system, David Gonski and his colleagues appeared to have fixed on a formula that all sides of this often fractious debate could agree to. When the Liberal premier of NSW, Barry O'Farrell, signed up to help deliver the federal Labor reform, it seemed like Gonski had achieved an unprecedented breakthrough.

And yet, in the 10 years since the Gonski report was published, the problems of Australian education have only worsened. Educational outcomes for Australian school-children continue to decline, and there is a growing correlation between social disadvantage and educational under-achievement. And all that was in evidence even before our schools were hit by the pandemic and all the challenges that have come with it. The hope and optimism generated by the Gonski reforms appear to have amounted to nought. Unless we understand why, we will be in exactly the same position in 10 years' time.

Why have all the expectations raised by Gonski been so sorely disappointed? For many, like Gonski panel member, Ken Boston, the answer is straightforward. Gonski's plan hasn't worked because it hasn't been implemented with any fidelity. Through varying combinations of short-sightedness, cowardice and perfidy, our politicians managed to squander this golden opportunity to advance the national interest.

From the start, Julia Gillard's promise that no school would lose a dollar compromised the reform. Then after performing multiple backflips, Tony Abbott and Christopher Pyne allowed the states to cut their education budgets even while receiving more Commonwealth funding. And the Morrison government has made sure most public schools won't receive their needs-based funding entitlement until well into the 2030s, if ever.

There is truth in all these charges. We are hardly any closer to resourcing schools on the basis of need than we were 10 years ago. In fact, over the last decade, government funding has increased at a much faster rate to independent and Catholic schools than to public schools, even though the overwhelming majority of disadvantaged students are in the public system.

But in pinning all the blame on our politicians we miss a deeper explanation for our educational malaise. There was a contradiction at the very heart of the Gonski report. On the one hand the Gonski report acknowledged that to concentrate disadvantaged children together, in the same schools and classrooms, was to undermine their educational prospects. On the other, it endorsed policy settings that were generating those concentrations - or making them worse.

The Gonski report demonstrated that a young person's experience at school is profoundly impacted by the children who sit beside them in class and the kids they share the playground with. It's a phenomenon education researchers call "peer effects". The trouble with grouping a lot of disadvantaged kids together is that the teacher has less time to give each student the individual attention they need, it becomes harder to generate high expectations and offer a diverse academic curriculum, and lessons are more likely to be sunk by disruptive behaviour. Gonski even pointed to research which indicated that student achievement was more affected by the social background of a child's peers than that of their parents.

But the report didn't join the dots between such problems and possible solutions. The part that highlighted the power of peer effects, and the part on resourcing schools, seemed to be written by two different panels. Despite the rhetoric around needs-based funding, Gonski endorsed the ongoing public funding of even the wealthiest private schools. Today, with the help of taxpayer support, each child in an independent school enjoys an average $8000 advantage in total recurrent funding over their peers in public schools; in Catholic schools students are $2000 ahead. This means private schools can advertise smaller class sizes and a greater variety of curricular and co-curricular offerings, along with flashier buildings and facilities. That in turn helps them recruit students away from the public system, often leaving nearby public schools with very high concentrations of students from highly disadvantaged backgrounds. And that, as the Gonski report showed, and an array of research has confirmed since, has very negative impacts on student achievement.

Not only did the review boost the taxpayer contribution to wealthy private schools, it recommended that private schools be free to increase fees as they pleased. In the words of Geoff Newcombe, the head of independent schools in NSW, Gonski's model allowed "schools to raise private income through fees, donations and fundraising without suffering any penalty through loss of government funding." The result today is that taxpayer funding, combined with growing fee income, provides some schools with sizable resource advantages, helping them attract children from middle and high-income backgrounds, while ever-increasing fees put those schools further and further beyond the reach of low-income families.

READ MORE:

The Gonski report also upheld the right of private schools to apply selection tests and expel challenging students, suggesting only that they "should have welfare policies that seek to find the most appropriate learning environment" for "students who are unable to remain". In other words, under Gonski's recommendations Australian schools would continue to operate on an unlevel playing field, characterised by inconsistent rules and regulations and very different levels of resourcing.

By endorsing these policy settings, the Gonski report helped ensure that our schools would become increasingly defined by either poverty or privilege, thus leaving the root causes of educational under-achievement unaddressed. Today, Australia's school system is the fourth most segregated school system in the OECD. Social disadvantage is more concentrated in our schools than it is in countries like Russia and Tunisia. The impact of peer effects on student performance is as pronounced as ever.

Ten years ago, it was possible to believe that all the compromises contained in the Gonski report were the price that had to be paid to achieve progress. Today, that assessment no longer adds up. The progress has been glacial. The compromises have turned out to be fatal flaws. If we truly want to change our trajectory, and ensure every Australian child has the opportunity to realise their full potential, we have to confront the fundamental structural flaws in our school system that Gonski didn't.