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A leading schools funding expert says state and federal governments must audit Catholic Schools NSW to ensure no taxpayer money has been funnelled into political donations amid revelations the education body is embroiled in an explosive corruption inquiry.
Trevor Cobbold, a former Productivity Commission economist and national convenor of public schools advocacy group Save Our Schools, said the Australian Charities and Not-for-profits Commission should investigate Catholic Schools NSW, a registered charity.
The state’s anti-corruption watchdog is examining whether Catholic Schools NSW struck a secret agreement to hire Liberal Party operatives who then used their consulting fees to bankroll a major branch-stacking scheme.
The Independent Commission Against Corruption (ICAC) has confirmed influential chief executive of Catholic Schools NSW Dallas McInerney was a focus of its broader investigation into the links between hard-right Liberals and fugitive Sydney property developer Jean Nassif.
McInerney, a right-wing Liberal powerbroker, has stood aside from his role at Catholic Schools NSW pending the inquiry, which starts on July 27. He has also resigned from his board position on the state government’s NSW Education Standards Authority (NESA).
The ICAC inquiry, known as Operation Rosny, will allege that Catholic Schools NSW – the governing body for 600 diocesan Catholic schools – made undeclared political donations exceeding legal caps under a scheme authorised by McInerney.
Cobbold said data showed that in 2024, NSW Catholic schools received $3.8 billion from the Commonwealth and NSW governments, accounting for almost 80 per cent of the sector’s income.
Catholic Schools NSW distributes state and federal funding each year for the diocesan school system. It also raises more than $550 million in school fees and $100 million from other sources, such as investments.
“We need to determine whether the donations are out of private income of Catholic Schools NSW or are from government funding,” Cobbold said.
Former school principal and education analyst Chris Bonnor also backed an audit of how taxpayer funds had been spent in light of the ICAC allegations.
Bonnor said there appeared to be a broader problem of accountability in determining how government funding was spent in Catholic or independent schools.
“After this saga goes away, what’s going to change? Nothing, until there is a clamour for similarly funded schools to have the same level of accountability,” Bonnor said.
He said non-government schools used parent fees as justification for having substantial flexibility on how they operated.
“Back in the mid-’70s, when private school funding was put on a reasonably predictable pathway, you could justify it because it came from private sources,” Bonnor said.
But a broader range of independent and Catholic schools now received significant federal government funding, he said.
“The funding has gone up, and the regulations have not,” Bonnor said.
The Commonwealth Department of Education refused to answer if it had taken any action in relation to the ICAC allegations.
A spokesperson said, “it would be inappropriate to comment on any matter currently subject to an inquiry”. A NESA spokesperson said: “As these matters are the subject of an ICAC investigation we are unable to provide comment.”
Cobbold said the Australian Charities and Not-for-profits Commission should also examine whether Catholic Schools NSW had broken any of its guidelines.
“Registered charities cannot donate money to political parties or candidates. Under the ACNC guidelines, doing so gives rise to a ‘disqualifying political purpose’ which can result in the charity losing its official registration and tax status,” Cobbold said.
“The ACNC should investigate whether its guidelines relating to donations to political parties or candidates have been breached.”
A spokesperson for the charities regulator said: “The ACNC is aware of the NSW Independent Commission Against Corruption (ICAC) investigation of claims in relation to Catholic Schools NSW Limited. We also note the resignation of Mr McInerney from his position as chief executive officer of Catholic Schools NSW.
“The ACNC will monitor the ongoing ICAC investigation.”
The ICAC hearings will also investigate whether Liberal operatives Christian Ellis, Robert Assaf and Jeremy Greenwood “solicited or accepted political donations, including from prohibited donors” in amounts that were not declared and exceeded donation caps.
Investigators are also examining the actions of Charles and Jean-Claude Perrottet, brothers of former NSW premier Dominic Perrottet.
Of the 10 people named by the ICAC as persons of interest, four have clear links to Catholic Schools NSW via lobbying, contracting work or permanent employment.
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Alexandra Smith is a senior writer and former state political editor of The Sydney Morning Herald.Connect via X or email.From our partners
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