It is often argued that the education system should provide each child with equal access to the basic education that includes primary and secondary education. The significant variation of secondary educational outcome across both spatial and socio-economic spectrum in Australia could therefore be seen as a major concern.

This paper aims to decompose the educational outcome at the regional level and understand the variations of the outcome and the driving factors via a structural education production function. The common approach of estimating production function can be difficult to interpret when there is more than one output measure. Nevertheless, a single measure of educational outcome, is often insufficient in reflecting the actual educational achievement of the students or the level of education provision given by the school system.

In this paper, we propose to decompose the multiple educational outcome indicators into three latent measures which are correlated with socio-economic factors, school setup factors and efficiency factors. We jointly estimate the education production process of six different output measures while maintaining the consistencies across different measures. Our result suggests all three factors play important roles in explaining the variations of school based education outcomes, while the social economic factors dominates the societal outcome measures such as tertiary education enrolment rate. The research also reveals the significant differences of the education system efficiencies across regions where some remote areas suffer from both poor education infrastructure and low system efficiencies. The paper also highlights the policy areas where changes can effectively progress the education outcome.