Let's start with a simple statement with which everyone can agree: education is the key to this country's future. Now, a statement with which large numbers of people will disagree vehemently: private schools are making Australia dumber.

Please discuss. But, before you do, consider this fascinating conundrum.

Over the past decade or so, there has been a significant drift of students away from government schools. At the same time, Australia's educational performance, measured against other countries, has declined.

That latter point was one stressed by Prime Minister Julia Gillard on Feb. 20 at her press conference, held to accompany the release of the so-called Gonski report on school-funding reform.  Gillard spoke of "worrying signs" for Australian education. Over the past decade, she noted, "we've slipped from being equal-second in reading internationally to being equal-seventh, and from being equal-fifth in maths to being equal-thirteenth."

But of the correlation between that decline and the rise of non-government schooling, she said not a word.

This, of course, is hardly surprising, in political terms. Even before the report came out, the opposition (that's opposition with both a big "O" and a little "o") had begun the ritual chants of "class warfare". Any suggestion that the non-government sector — which now educates more than one-third of Australia's children — should get a relatively smaller share of government funding is fraught with danger.

Consider what happened last time a Labor leader dared raise the prospect of directing money away from elite schools, towards under-resourced public education. The year was 2004, and the leader was Mark Latham.

His announced plan to cut funding to 67 of the nation's wealthiest schools was an electoral lead balloon; Kim Beazley dumped it, and dumped on it, as soon as he resumed the ALP leadership from Latham.

And ever since, Labor has stuck with, or, more accurately, been stuck with, the funding model of the Howard Government which, entirely coincidentally for sure, came into being at about the same time as Australia's decline in international educational rankings began in earnest.

So it is not surprising that Gillard did not want to frighten the horses. Instead of a Latham-esque approach, this Labor government has been far more subtle, and it hopes, reassuring. The mantra of Gillard and her schools minister, Peter Garrett, is that "no school will lose one dollar" of funding.

That, of course, is disingenuous, as the release of the Gonski report yesterday made quite clear. Sure, elite schools might not lose funding, but they inevitably will get a smaller proportion of total funding.

Gonski advocates an increase in school funding by state and federal governments of $5 billion. It also advocates a very different model for allocating that money.

As David Gonski put it at the joint press conference yesterday, the new suggested framework would be based on "acknowledging student and school needs in all schools, regardless of sector, and funds an aspirational outcome, rather than just costs."

Nous Group Report "Schooling Challenges & Opportunities",August 2011

To this end, he said, funding would come in two parts. The first would be a standard amount per student. The second component would consist of added loadings, intended to address disadvantage of various kinds.

Smaller and remote schools would attract extra funding, so would indigenous students and those from lower socio-economic backgrounds and students with limited proficiency in English, or a disability.

You can see how this would result in the big city, elite schools getting less in relative, if not absolute terms, because they have fewer poor, black and disabled students.

Gonski continued: "Government schools, special schools and disability loading, in our opinion, should be fully funded. Other non-government sector payments should be based on the anticipated level of a school's private contribution."

Those were careful words, but they were immediately translated in media reports as meaning there would be a means test on private schools.

All of this, of course, depends on the government proceeding with the implementation of the recommendations. At yesterday's press conference, Gillard went on at length about how there would have to be a lot of further "consultation with stakeholders" including the various education sectors, the states, et cetera. She said she was "mindful of Budget sustainability", and added that she was not at this stage going to make "any Budget commitments". She indulged herself with an extended metaphor about the report being like the blueprint for building a car. Not only was the car yet to be built, she said, but even the tools needed to build the car were yet to be made.

And who says Julia Gillard can't sell a policy?

If the launch of Gonski was a bit underwhelming, the substance of Gonski was anything but. And much of that substance, much of what led the panel who carried out the review to their conclusions, came in a report from the Nous Group. The group describes itself as a "values-based" firm that sees the value of its own work as measured in part by its capacity to make a lasting difference. Unusually for a consultant's report, theirs makes for fascinating and pretty easy reading.

It also makes it clear that the contentious statement which began this piece — that private schools are making Australia a dumber place — is not as glib as it might seem.

For a start, bear in mind that the Australian model, in which fee-charging, autonomously-run independent schools are subsidised by the government, is unique among all the developed countries. And those subsidies help make the independent schools sector here unusually large.

Although Australia does reasonably well on average compared with other countries, that average is deceptive. As Nous says, it is made up of a "sizable proportion of schools that are producing very good results, a large number of schools that are not, and a group in the middle that helps balance this out."

And that wide range of outcomes, it says, "goes straight to the heart of the equity issue, as there is a strong relationship between socio-economic status (SES) of a school population and its educational results.

Photo by Mike Bowers

"What is striking is the strong correlation between the performance of a child and the average SES of all the students that attend his or her school. In other countries, including 'high equity' countries like Finland and Canada, such an effect would not be evident. In Australia it is quite pronounced.

"The movement of a bright child from a low SES school to a higher SES school will undermine the quality of the remaining student body in the low SES school. The gain to the child who moves is offset by a loss to his or her fellow students who stay behind. This is how the process of SES and performance stratification is reinforced."

In other words, the Australian system encourages a kind of ghettoisation of schools; the more privileged parents remove their students from the public system, leaving behind a concentration of kids whose educational needs are greater. This, it should be noted, reflects not only on the elite private schools and on the Catholic schools, but also on state selective schools.

Says the report: "…if the schools that can select the students who are likely to do best are allowed to, the schools that cannot choose (mainly the government-sector schools) are left with a student body that is less supportive of good performance for each individual student who remains."

And that is exactly what has happened in this country. Compared with other nations — particularly those whose performance is strongest — Australia has a higher concentration of disadvantaged kids in disadvantaged schools. It has a lower proportion of kids who attend schools where there is a mix of social and economic backgrounds. Fully 60 per cent of the most disadvantaged students are in schools whose SES ranking is below the national average.

"This is higher than in all similar OECD countries, and the OECD average," the report says.

"While Australia performs quite well in relation to the OECD average and to a set of comparable countries, our performance in reading and mathematics has declined since 2000," the report says.

Australia was one of only four OECD countries to have experienced such a decline. Worse, scores usually improve as countries become more wealthy, it said. Yet Australia's decline came against a backdrop of rapid economic growth.

The report charts the drift: more children of well-off, well-educated family backgrounds — "bright" kids — go to independent schools; more "average" kids go to Catholic schools to replace the bright ones who've moved to the independent sector, and disadvantage gets concentrated in the public sector. It's a vicious cycle, says Nous.

"So while the drift continues, it has a compounding effect on disadvantage and underperformance, creating a vicious circle... The important point is that the impact of this concentrated effect is felt not just at the level of student performance, but plays out in teacher morale, community alienation from the local school, and difficulties in attracting good teachers as well as good students. As a school's reputation worsens, so more and more parents send their children elsewhere."

But here's the thing — those bright students from the well-off backgrounds would probably do as well at state schools. Indeed, when the survey controlled for the background of students, there was no significant difference between the educational "value added" of state and private schools.

"Given that Catholic and independent schools tend to produce higher results than governments schools," the report says, "one would expect to be able to demonstrate that the non-government sector adds more value to a student's education.

Photo by Mike Bowers

"In other words, taking a student from a government school with, say, a mediocre record of performance and putting them into an independent school, you would expect to see better results after you've controlled for the effect of the students being with a higher socio-economic cohort. There would be something about the school's intrinsic quality that would make a difference to the student's education outcomes. However, this does not seem to be the case."

So all those middle-class parents who scrimp and save, and in some cases take out loans to send their children to expensive schools are quite possibly wasting their money.

Meanwhile, at the other end of the SES spectrum, where the education ethic is perhaps not as strong, where more resources might make a greater difference, the resources are lacking. This is particularly the case in rural, regional and remote areas.

Now, the flip side of the coin. What happens when there is greater equity in a school system?

The report produces some arresting evidence on that front, too. It actually poses the question: "Is it possible to have school systems that are both highly equitable and high performing?"

And it plots out the international evidence: yes. The best performing school systems in the world, as well as the fastest-improving — in places as diverse as Canada, Korea and Finland — also are marked by higher levels of equity.

We could go on, but the point of Gonski is made: a more equitable system produces better results; a stratified system produces worse results.

Which might actually give some comfort to angsting parents, committed in theory to public education, but troubled about experimenting on their children.

It might also give some ammunition to Prime Minister Julia Gillard and schools minister Peter Garrett, as they face the inevitable onslaught from those who accuse them of preparing for class war. There's a large body of evidence to support the line that equity produces better results. And the real class warriors are the ones fighting for a dumbed-down future.

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Why the Catholic Church doesn’t want to see the Gonski report implemented.

In recent weeks the national and state Catholic education offices have been showing signs they're concerned about the Gonski report.

Dr Michael Furtado works on a social inclusion project aimed at mainstreaming children with disabilities in Brisbane. He is a former education officer at the Brisbane Catholic Education Office who did his doctorate on funding of Catholic schools. He says the Gonski report presents the Catholic system with a serious policy dilemma.

Listen to Dr Furtado's interview with The Global Mail's Stephen Crittenden.