Across Europe a variety of 'settlements' have been established with regard to the legitimacy of public (government) education, private education and public support for private (non-government) education (Euridice, 2000). These settlements display a number of different 'solutions' to the issues of equity, inequality and cultural difference and depend for their legality and legitimacy on the twin principles of the right to education and freedom in education (Euridice, 2000). Using the theoretical work of Touraine(2000)with regard to diversity and communities of difference and Sen (1995, 1999) with regard to inequalities and capabilities in the European context and the work of Pusey (2003) regarding Middle Australia, Reid and Thomson (2003) regarding the public curriculum and Bates( 2003) regarding communities of learning in the Australian context, this paper explores the policy implications of changed social alignments and the claims of newly aspirant classes with regard to the public/private divide. It argues that instead of being driven by policies based upon the reproduction of local or national communities or by policies associated with laissez faire economics, public education should be (re) constructed on an acceptance of diversity and with recourse to a principle of unity (Touraine,2000). Only on such principles can policies that address issues of equity, diversity and community be built and schools that develop appropriate 'capabilities'(Sen, 1995,1999; Nussbaum 2000) and social capital (Putnam, 2000, 2002) be constructed. The policy implications of adopting such a position are explored and contrasted with the emergence of both state sponsored 'vocational' schools and what Sergiovanni calls 'covenantal' schools.