The Catholic sector says Australia’s elite private schools receive an extra $747 million each year under the Government's test of need.

A report by the Catholic Education Commission of Victoria has gone over published data to estimate school wealth.

The report, titled “The need to rethink need: How the Gonski Review got it wrong on funding non-government schools”, points out what it says are “dubious” measurements of school need.

“There are almost 200 non-government schools that raise all of the funding their students are estimated to need from private sources — mostly school fees,” the report says.

“Even though these schools already raise enough private income to reach their resource standard, the Australian Government nevertheless grants them almost $750 million each year.”

The report argues that private schools benefit from public funding that “fuels an arms race” among Australia’s richest schools and increases inequality in the education system.

Stephen Elder, the Executive Director of the Catholic Education Office in Melbourne wants the report to prompt the Schools Resourcing Board to ask hard questions.

“This just isn't about Catholic and Independents, this is about the Government's funding model that gives an entitlement to schools that they don't deserve because they meet the resourcing standard through their own fee income,” Mr Elder said.

“Those schools that are charging massive fees, well in excess of what the student resource standard is, they should be asked to reduce those fees, and they shouldn't get any incentive for Government to charge those fees to the tune of $750 million that would be better off spent in those poor Catholic and Independent schools which the Government has taken money from.”

Commonwealth funding for private schools is determined on a sliding scale depending on their level of need, under a system called the Socio-Economic Status (SES) model.

The Commonwealth contributes 20 per cent of baseline funding for government schools, and a maximum of 80 per cent for non-government schools.

Federal funding for non-government schools reduces depending on the school community's capacity to pay for students' education.

Education Minister Simon Birmingham launched a review to find out if the SES model accurately reflects school wealth.

The Catholic and Independent sectors are divided over the potential changes to school funding legislation,

Senator Birmingham says he has not seen the CECV’s report, but urges “the CECV to constructively engage in the independent review they called for that is examining possible enhancements to the funding model, which currently provides an extra $3.5 billion for catholic schools”.