Catholic schools in Australia are to profit to the tune of $85 million (Pounds 31m) following the re-election of John Howard’s conservative government.

Mr Howard, who clung to power with a much reduced majority, has said the controversial “enrolment benchmark adjustment” (EBA)scheme would continue - despite protests from state schools that the policy is costing them millions of dollars a year.

Under the EBA when a student transfers to the private sector - which is mainly Catholic - federal funding for state schools is reduced by $1,400. The Labor party had promised to scrap the policy if it were elected.

Since its introduction following Mr Howard’s first election win in 1996, enrolments in government schools have increased, but private-school numbers have grown even more rapidly.

This year, as a result, state schools lost $12m in federal grants. By 2001, the EBA will have cost them more than $120m, even though the state sector will have 73,000 more students.

Sharan Burrow, president of the Australian Education Union, urged Mr Howard to give a commitment to state education from pre-school to university. Ms Burrow called for the appointment of an education minister who “will turn around the hostility to public education which characterised the first term of this government.

“Strengthening public education, not privatisation, must be the first priority,” she said.

Mr Howard is also now preparing to introduce a goods and service tax which, while it will not apply directly to school fees, will add 10 per cent to the cost of textbooks, stationery and uniforms.

Among his pre-election promises, Mr Howard committed his Government to spending an extra $110m on literacy and numeracy.