An analysis of Australia's two conflicting trends in school governance and their effectiveness in meeting two major educational challenges is the purpose of this paper. Nationalization, which refers to greater centralization and increased national regulation; and privatization, which refers to decentralization, deregulation, and increased local autonomy, are the two dominant perspectives on school governance. The country's two major educational challenges include the extension of a full, formal secondary education, and the maintenance of teaching quality. A conclusion is that school governance cannot be reduced to simple issues and should include participation in decision making at all levels. A recommendation is made for the development of a comprehensive, unified educational system, with a focus on increased support from higher education for teaching, to meet the nation's two educational challenges. (9 references) (LMI)