See how much more Melbourne, Monash, RMIT, Deakin, La Trobe, Swinburne and Victoria universities will be slugged here

Cash-strapped universities — still reeling from the Covid loss of hundreds of millions of dollars in international student fees — are set to be hit with an extra $265m in payroll tax.

RMIT could be slugged an extra $7m in tax. Picture: Supplied

Victorian universities will be slugged an additional $265m in payroll tax as the State government seeks to recoup more funds from the education sector.

Cash-strapped universities, which are still feeling the loss of hundreds of millions of dollars in international student fees, will be asked to repay the 0.5 per cent mental health levy contribution to payroll tax from mid next year.

The confirmation, which came in budget estimates on Tuesday, has blindsided universities, many of which expected a 2021 deferral of the tax to continue.

The hip pocket hit could cost Monash and Melbourne Universities each $12m a year, RMIT about $7m, Deakin about $5m, and La Trobe, Swinburne and Victoria Universities $2m to $3m.

The state’s eight universities posted a combined deficit in 2022 of $537m.

Melbourne University could be hit with an extra $12m a year. Picture: Supplied

The revelation came during a Public Accounts and Estimates Committee hearing in response to a question from Nationals MP Danny O’Brien.

Tim Ada, secretary of the Department of Jobs, Skills, Industry and Regions, said: the “payroll tax deferrals that were provided by the government to these universities during these pandemic years are due to commence being repaid later this year with another instalment next year”.

This was clarified to mean the end of the financial year, which is mid 2024.

The payroll tax was levied on universities in 2021 to help fund mental health services during Covid.

In September 2021, the state government announced universities will have more time to repay existing payroll tax deferrals worth $130m that were granted in 2020.

“Universities will also be granted further payroll tax deferrals worth approximately $135 million for tax payable for 2021-22,” a statement said.

“These payments will be repaid in two instalments in 2024.”

Premier Daniel Andrews on Wednesday confirmed universities would be forced to pay the additional payroll tax, despite acknowledging the sector was still reeling from a loss of international students.

“They have a deferred liability,” he said.

“I don’t think it’s fair to say that international education has rebalanced back to where it was, it hasn’t yet returned to that.

“So there’s an arrangement in place - they’ll pay more but they will have a little bit longer to do so.

“That’s just being faithful to a payroll tax deferral that they’ve already enjoyed since Covid.”

Swinburne University will also feel tax pain. Picture: Herald Sun

Opposition education spokesman Matthew Bach said: “Following a budget that punishes parents who have chosen to send their children to non-government schools with modest fees, the Labor Government is also punishing universities”.

“Labor is knocking on the door of universities seeking to recoup hundreds of millions of dollars in additional taxes. Unis were smashed through Covid with the loss of international students and many now have deep deficits.”

Higher Education Minister Gayle Tierney dodged questions about the possibility of universities receiving another payroll tax deferral during the hearings on Tuesday.

“The treasurer has determined and made decisions in respect to the deferral process. These are all matters dealt with by the treasurer,” she said.

In 2022, the University of Melbourne received $2.9b in total revenue but had $3.2b in expenses, leading to a $217m deficit. Monash University also pocketed $2.7b in revenue last year but had $2.8b in expenses – leading to a deficit of $113.6m.