Victoria’s top private schools could miss out on millions in state budget hit
The principal of one of Melbourne’s top private schools has lashed “unfair and arbitrary” new tax rules, warning that costs could spike by $7m.
Victoria
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The biggest private schools stand to lose up to $7m a year under a new state budget measure one principal has branded “completely unreasonable”.
Ashleigh Martin, principal of Caulfield Grammar, has written to parents to express concern about the state government’s decision to remove payroll tax exemption from 110 schools with annual fees of more than $7500, raising $421m over the next three years.
It’s expected large wealthy schools will bear the brunt of the changes.
Mr Martin said the removal of the exemption plus the addition of the Covid and mental health levy will see his school’s costs “increase approximately $6-$7m to cover the increased tax and levy”.
Caulfield Grammar, which receives $3.6m in state funds and $17m in federal funds, has a total budget of $102m, of which about $80m is the cost of paying teachers.
Mr Martin said the decision was not preceded by consultation and that it is “presumptive to assume that families can foot the bill for this poorly planned tax and levy increase”.
“Adding additional inflationary pressure to Victorian families with children in independent schools is unfair and arbitrary,” he wrote.
Ivanhoe Girls’ Grammar principal Narelle Umbers said the move was “disappointing” and “frustrating”.
Ms Umbers said the decision to remove the payroll tax exemption for 110 private schools with annual fees over $7500 came as a complete surprise.
“At this point in time, there are no details available to us as to exactly how and on what basis the new tax is proposed to be levied,” she wrote to parents.
“As a school we find this situation disappointing and we appreciate that the nature of yesterday’s announcement and the current lack of clarity around the State Government’s intentions is also frustrating for you, our school families.”
Ivanhoe Girls’ Grammar School charges $30,000 for year 12 and has total revenue of $24 million a year. This includes more than $5m in government funding, mostly from the federal government.
It comes as the decision is expected to impact 25 Catholic secondary schools, costing them each more than $1m.
Catholic Education Commission of Victoria executive director Jim Miles said the move will “contribute significantly to the cost of their children’s education, and unlike government schools, this payroll tax is real money, which will have to be found somewhere”
“We will seek further discussion with the State government as a matter of urgency.”
The Australian Council of Jewish Schools is suggesting the decision will add 4 per cent to the fees of affected Jewish schools. “This is on top of the annual fee increases already imposed on our parents to cover the escalating cost of power, utilities, and materials and increases in staff salaries and wages,” Leonard Hain, executive director, said. “Tuition fee schedules are not an appropriate indicator of wealth or the ability of our schools to meet ever-increasing costs. Over a third of the students attending our schools receive tuition fee assistance, with a growing number of families requesting support during these difficult financial times,” Mr Hain said.
Opposition education spokesman Matthew Bach said: “In yesterday’s budget the Labor Government is punishing Victorian families and students for its own incompetence. This massive new tax take will mean higher school fees for hundreds of thousands of families. I know that – under Labor – Victoria is broke. But punishing hard-working families is no way to try and fix the budget”.
But Daniel Andrews said in the current budget environment, the government couldn’t continue to provide elite schools with a “sweetheart taxation deal”.
“They have had a preferential tax treatment for a long time,” he said.
“They’re running a business, and at the end of the day, I think there are other areas in the budget that are a higher priority if it comes to tax treatments and investments.
“We’ve made that decision, that decision stands, and I’m sure that those schools don’t particularly like that.”
Mr Andrews said for many years the “elite schools” have always been deemed to be considered in a “unique category”.
“They have not been eligible for our other support. They are not low-fee schools, they are very-high fee, elite schools and therefore they are in a very different position,” he said.
“They now have a tax treatment that recognises their profitability and the fact that they are elite in every way, something I’m sure that they would wholeheartedly agree with.”
A government spokesman said it had “an established process for separating low-fee from high-fee independent schools. The threshold will be indexed, and we’ll have more to say about which schools will no longer receive the exemption before the new financial year.”
State’s top private schools targeted in budget hit
The state’s most exclusive private schools will receive a $421m triple hit, with some losing more than $5 million in shock new state budget measures.
Around 110 independent schools will lose an average of $1.2m a year due to the
removal of their payroll tax exemption and the imposition of two new levies.
Schools hand-selected by government ministers will have to pay 5.85 per cent of wages bills of between $10m and $100 million because they will be slugged with Covid and mental health levies as well.
Schools with the biggest wages bills such as Haileybury, Caulfield Grammar and Wesley College are expected to be high on the government’s hit list.
Fifteen per cent of independent schools will lose funds, pressure on many to increase fees.
Overall, the schools will lose $134m in 2024-25, $140m in 2025-26 and $147m in 2026-27.
Around 100,000 students are expected to be impacted by the move, with the wealthier schools bearing the brunt of the cuts.
The decision has blindsided the independent sector and left private schools scrambling to find out if they will be on the government’s hit list.
“Everyone is sweating – are they on the list?” one school insider said.
Michelle Green, chief executive of Independent Schools Victoria, said the cutting of the payroll exemption could lead to some being forced to increase fees.
The government will remove the exemption for “high-fee” schools, which it defines as those that charges annual fees of more than $7,500.
“It assumes that all schools that charge more than $7,500 have the financial resources to weather this shock without cutting services or, alternatively, raising fees,” Ms Green said.
“Either course of action will be a major cause of concern for the growing number of parents who make significant financial sacrifices to send their children to an independent school.
Despite this, state spending on private schools has surged to $1.3b, up from $1.1 billion in 2021-22.
This includes $450m for better facilities for Catholic and independent schools, including new campuses for Holy Trinity Primary School in Sunbury, Kolbe College in Mickelham and a new Catholic primary school in Wollert.
It comes as the Australian Education Union is criticising the Andrews Labor Government for a 2.7 per cent cut in public school funding and TAFE.
“It’s disappointing that the Victorian Government has chosen to cut funding from public schools and TAFE in this year’s budget,” said Meredith Peace, Australian Education Union Victorian branch president said.
The budget also provides funding for nine new schools to be built and 43 upgraded as part of a $1.3 billion education capital package in the State Budget.
Despite continued population growth, the rate of new schools constructed has slowed, with 17 new schools funded in 2019 and 13 in 2021.
However, the state government is still on track to open 100 new schools by 2026.
More than $1.3 billion will be spent on non-government schools, up from $1.1 billion in 2021-22.
From mid 2024 the government will remove the payroll tax exemption for 110 high-free government schools, affecting 15 per cent of these schools, raising $421m by 2027.
Outer suburban families are the big winners, with new schools to be constructed in areas including Clyde North, Packenham, Point Cook and Wollert Central.
Six schools will open in 2025 and three more in 2026.
No new schools will open in regional areas, but 13 country schools will be upgraded.
Future funding is also provided for expansion at Coburg High School, Huntly Primary, Richmond Primary and Saltwater P-9 College.
The measures come as schools continue to miss key performance targets by up to ten per cent, including year three, five and seven numeracy.
Only 50 per cent of students are above the bottom three bands for NAPLAN numeracy in year 9 – less than the 57 per cent targeted for 2022-23.
The per cent of satisfied secondary school parents has also not met targets, dropping to 75 per cent.
The State Government also allocated $24m to plan upgrades at 54 more schools, $321m for essential maintenance and $182m for relocatable buildings for schools at capacity.
Initiatives to attract new teachers will continue, with $74m in this budget and $120m in future years.
The budget also includes a $235m package to help educate children with a disability, including expanding outside school hours care to 30 specialist schools.
Other measures include $47.8m for eight new toy libraries, 10 new bilingual kinders and 150 bush kinders.
Early funding has also been allocated for 50 new early learning centres, with 30 sites announced.
The new early learning centres will start to open from 2025, with four co-located with Eaglehawk North Primary, Moomba Park Primary, Murtoa College and Sunshine Primary. Fourteen more will open in 2026 and 34 more in 2027.
Funding for the free kinder and pre-prep initiatives will not kick in until 2026, with $544m committed and only minimal infrastructure spending in the intervening years. The program will see a transition to 30 hours of pre-prep by 2032.
The budget also allocates $116m to build six new Tech Schools giving 62,000 secondary students access to high-tech education with the schools opening over the next four years, starting the 2025.
Education Minister Natalie Hutchins said: “Every Victorian child deserves a great education – we’re doing what matters for Victorian families, backing our hardworking school staff and improving student outcomes right across the state”.
Schools that could miss out on payroll tax exemption
Melbourne Girls Grammar
Adass Israel School
Lauriston Girls School
Scotch College
Melbourne Grammar School
Trinity Grammar School
St Catherine’s School
Methodist Ladies College
Wesley College
Caulfield Grammar School
Camberwell Grammar School
Carey Baptist Grammar School
Xavier College
Brighton Grammar School
Strathcona Baptist Girls GS
St Michael’s Grammar School
St Leonard’s College
Ruyton Girls’ School
Korowa Anglican Girls’ School
Presbyterian Ladies’ College
Fintona Girls School
Woodleigh School
Loreto Mandeville Hall
Ivanhoe Grammar School
Toorak College
Firbank Grammar School
Camberwell Anglican Girls GS
Tintern Grammar
Haileybury
Ivanhoe Girls’ Grammar School
Genazzano F.C.J. College
Mentone Grammar School
The Geelong College
Mentone Girls’ Grammar School
Eltham College
Yarra Valley Grammar School
Mount Scopus Memorial College
Kilvington Grammar School
The Knox School
Shelford Girls’ Grammar
Peninsula Grammar
Geelong Grammar School
Berwick Grammar School
St Margaret’s School
Sacre Coeur
Lowther Hall Anglican GS
Huntingtower School
Kingswood College
The King David School
St Kevin’s College
Westbourne Grammar School
Billanook College
Alphington Grammar School
Ozford College
Penleigh & Essendon Grammar
The Hamilton & Alexandra Coll
Cornish College
Bialik College
Luther College
Alia College
Siena College
Alice Miller School
Ballarat Clarendon College
Girton Grammar School
Goulburn Valley Grammar School
Ballarat Grammar
Braemar College
Whitefriars College
Leibler Yavneh College
De La Salle College
Star of the Sea College
Gippsland Grammar
Marcellin College
Overnewton Anglican Community College
Oakleigh Grammar
Oxley Christian College
Catholic Ladies College
Melbourne Rudolf Steiner School
Southern Cross Grammar
Presentation College
Beaconhills College
Donvale Christian College
St Paul’s Anglican Grammar School
Our Lady of Mercy College
Bacchus Marsh Grammar
St Columba’s College
Our Lady of Sion College
Balcombe Grammar School
Mater Christi College
St Bernard’s College
Nunawading Christian College
Waverley Christian College
Flinders Christian Community College
St Andrews Christian College
Heathdale Christian College
Plenty Valley Christian College
Academy of Mary Immaculate
Sacred Heart Girls’ College
Our Lady of Sacred Heart Coll
Loreto College
St Joseph’s College
Hillcrest Christian College
Little Yarra Steiner School
Assumption College
Maranatha Christian School
Emmaus College
Mansfield Rudolph Steiner
Mazenod College
Avila College
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