An independent review has recommended the federal government change the way it funds private schools from one that relies on census data to a system that uses parents’ capacity to pay.

The current methodology, introduced by the Howard government, bases funding on the average socio-economic scores (SES) for the census district a school is located in.

However, the National School Resourcing Board says parental income would be a more reliable measure to determine funding.

‘Capacity to contribute’ would be based on the median income of parents at the school.

‘The report makes it clear this direct measure of parental income can now be used without breaching privacy or requiring the collection of tax file numbers by a school,’ federal Education Minister Simon Birmingham said in a statement on Friday.

‘The report’s recommendations offer the potential to achieve a clearer picture of the capacity of families at non-government schools to contribute to the costs of their children’s education.’

The Turnbull government set up the independent National School Resourcing Board in response to recommendations from businessman David Gonski.

The board recommended the current system stay in place for 2019, and no change be made until at least 2020 to provide funding certainty for schools.

Senator Birmingham said the government would now investigate how to refine the SES methodology and transition to a new system.

National Catholic Education Commission director Ray Collins said the current method was fundamentally flawed, but the new model also raised some questions.

‘Ofparticularconcernisthe impactofanewmethodologyonlong-established,low-feecharging Catholic schoolsinmetropolitanareas,’hesaid.

‘Webelievethereisalotofhardworkahead beforearealisticfundingmodelcanbe achieved.’

The Independent Schools Council of Australia said further work was needed on the new model, especially as it applied at an individual school level.

‘As part of moving away from the current indirect measure of ‘capacity to contribute’, the independent sector must be assured that any direct measure will be significantly more accurate and will be consistently applied to all non-government schools,’ ISCA director Colette Colman said.