Schools are able to choose the most suitable staff member based on merit and can focus on how teachers and other staff support the needs of students in the school. Principals do not need to select staff based on cost. The actual differences in staff costs are managed centrally.

The benefits of the standard cost approach include:

• providing certainty for schools in budgeting and planning, as the costs of various positions are known and fixed for the calendar year
• providing a system-wide mechanism to support schools to manage rate variations.

Schools engaging additional temporary staff using targeted funding, equity flexible funding or the per capita allocation need to budget for the positions at standard cost.

Permanent above centrally identified positions (ACIPs) created using any funding source, including school and community funds: permanent positions are costed at standard cost.

The standard cost approach does not apply to:

• casual staff, who are costed at actual cost plus on-costs, whatever the funding source
• temporary staff employed using school and community source funds, who are costed at actual cost plus on-costs.

Standard cost for incremental positions (for example, classroom teacher, school learning support officer or general assistant) is calculated using the previous year’s average salary plus on-costs, plus escalation (escalation reflects annual salary increases as per the Award Agreement).

For positions that are not incremental (such as principal or school administrative manager) the standard cost is the salary for the applicable Industrial Award instrument plus on-costs, plus escalation.

On-costs are the additional costs incurred in employing staff, which include items such as:

• annual leave loading
• payroll tax
• superannuation.

For 2021, on-costs of 18.43% are added for the standard cost of all types of positions.