Whatever their beliefs, religious or otherwise, NSW taxpayers can rightly be outraged by allegations that some Catholics within the Liberal Party used funds intended to educate children within their own school system to further their personal internecine political ends.

The Independent Commission Against Corruption’s inquiry into Liberal Party factionalism and lobbying in NSW politics has traced a money trail used to undermine democratic processes. The head of Catholic Schools NSW and right-wing power broker, Dallas McInerney, stands accused of funnelling $165,000 of his organisation’s funds in undeclared political donations to factional colleagues seeking to recruit conservatives as members in the belief that Christian values were disappearing from society.

Moreover, it has heard that at least two staff members working for Catholic Schools NSW spent some of their time on political work; one is accused of devoting more time to political work to than the job for which he was ostensibly employed.

Catholic schools in NSW receive nearly $4 billion a year from the Commonwealth and NSW governments, accounting for almost 80 per cent of the sector’s income. Catholic Schools NSW, the governing body for 600 schools, distributes annual funding through its diocesan school system. It also raises some $550 million from school fees.

The High Court in 1981 held that federal support of non-government schools operated by religious organisations did not breach the Constitution when funding was for ordinary educational purposes. The Catholic Church in Australia has gladly accepted the money without ever opening their books to properly provide taxpayers a clear idea of what happens to the funds.

Few countries are as willing to provide such generous funding to religious schools, and the Vatican regards Australia’s system as the gold standard. Australia’s Catholic leaders, who have significant political influence, have guarded it carefully.

Unlike government schools, which must remain politically neutral, Catholic priests and principals are free to advocate for particular parties and have done so when they have detected threats to their funding or their freedom to decide how it’s spent.

The lack of accountability has long been a sore point for politicians. But they fear political consequences if they call it out, or attempt change the rules to require private schools to explain how this multi-billion dollar handout is spent.

Australia has always had an inclusive approach when it came to the separation of church and state, that delivered religious freedom, religious fairness and state neutrality, but we now have a real example of government funding being used for political purposes.

In her opening statement, counsel assisting the commission, Peggy Dwyer SC, said it was not suggested that Catholic Schools NSW as a body was responsible for McInerney’s alleged actions, or that its board members were aware of them.

But the buck must stop somewhere.

The ICAC hearings are exposing a worrying abuse of the system and an ethical failure by our political and religious leaders. This lapse is made all the more egregious at a time when so many public schools are struggling with under-resourcing.

ICAC will deal with the Liberals. Meanwhile, the Catholic School system continues to be gifted an enormous lump sum with little accountability. ICAC shows the time has come for Catholics to be transparent about what they do with other people’s money.