Private school fee cost rise warning for Catholic and independent schools if DGR status stripped
Parents of students at Catholic and low-cost independent schools would be hit with steep fee rises if the government adopts radical plans to strip the schools’ building funds of their tax deductibility status.
Education
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Parents of low-fee Catholic and independent schools would be hit with higher school fees if the Albanese government doesn’t rule out a radical proposal to scrap tax deductions for donating to school buildings, education leaders say.
The warning follows a Productivity Commission draft report which recommends stripping tax-deductible status for “school building funds”, which are used by private schools for capital works.
Since 1954, contributions to school buildings by parents carry a “DGR” — or deductible gift recipient status — similar to donating to other charities, allowing parents to claw back some of the money donated.
But the Productivity Commission says it should be removed, arguing some other charities — such as animal justice and LGBTQ charities that engage in advocacy — cannot claim the same status and that the system is “poorly designed”.
However Catholic and independent school leaders described the proposal contained in the report Future Foundations for Giving as “a direct attack on faith communities” saying they would put low school fees at risk.
And the Federal Opposition describes the proposal as “catastrophic” with “far-reaching consequences”.
“This proposed school building tax is a direct, ideological attack on independent and faith-based schools and must immediately be ruled out by the Albanese government,” Coalition education spokeswoman Senator Sarah Henderson said.
“This would be catastrophic for low fee-paying non-government schools which depend on DGR status to construct new school buildings and other vital infrastructure.”
Catholic Schools NSW chief executive Dallas McInerney said the recommendation was “a blinkered idea”.
“Catholic Education is an accessible, low-fee option for parents, yet this recommendation would put that very option at risk,” he said.
“It would be a blow for hardworking mums and dads who already save for their child’s schooling only to be told by the government that they’re not allowed to make a tax-deductible investment toward their child’s classroom.
“Removing the tax-deductible status of building funds will simply result in parents carrying more of the financial burden when they already do a lot of heavy lifting.”
Abolishing deductions would affect about 5000 school building funds, of which three quarters are charities.
Across the 11 dioceses in NSW that manage the systemic Catholic schools, a total of $104.7 million in 2022 was raised for capital works via school levies which have DSG status.
If that sum was averaged out across all students in those schools, it would mean families would pay an average extra $465 annually.
National Catholic Education executive director Jacinta Collins the recommendation was “a direct attack on faith communities” and her organisation was “extremely disappointed”.
“For Catholic and other non-government schools, it will add a further financial burden on families who contribute to their school education and are already dealing with significant cost-of-living pressures.”
She said Catholic school families and communities gave nearly 90 per cent of funding required to support school buildings and capital works in Catholic schools.
“In 2021 alone, this investment was about $2 billion in capital projects, with federal and state governments contributing 4.4 per cent and 6.9 per cent respectively.”
The Association of Heads of independent Schools of Australia chief executive Chris Duncan said because government recurrent funding cannot be spent on capital works, schools would struggle to raise funds to meet the elevated demand for low-fee independent schools serving working families.
“This step would seriously restrict schools’ capacity to build new classrooms to meet growing enrolment demand, especially in the many low-fee independent schools serving southwestern Sydney and regional NSW.
“It’s difficult to put a precise figure on how much fees will rise to offset the DGR loss, but it would be a significant burden for families already wrestling with the high cost of living.”
The Productivity Commission will hold public hearings on the issue in Sydney in February, and deliver a full report to the Albanese government later this year.Assistant Minister for Charities Andrew Leigh said he’d be listening closely to the commentary from charities, donors and volunteers and that religious organisations were “anchors in our communities”.
“The Government will carefully consider their reactions to the Productivity Commission’s report,” he said.
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