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.
But the Catholic sector has complained that this method isn't fair to them.
They argue that many of their students are from less affluent families who live in wealthy postcodes. These families, they say, make big financial sacrifices in order to send their fees.
But because they live in posh areas, the Government assumes their schools need less help.
The National School Resourcing Board says parental income would be a more reliable measure to determine funding.
Federal Education Minister Simon Birmingham says the report will allow parental income measures to be used without breaching privacy or requiring the collection of tax file numbers.
"Recent data matching capabilities within government make it possible now, which was not possible previously, to use an income matching the approach instead. Clearly an income matching approach would, in many instances, provide a more precise measure of a school community's capacity to contribute than average centre data may do so."
