Andrews government to backtrack on controversial schools tax

After fierce backlash from Catholic and private schools, Daniel Andrews says the government will revise plans for a controversial schools tax.

The Andrews Government is facing a potential multi-million dollar budget blackhole as it plans to wind back its controversial schools tax.

The move could rip tens of millions of dollars from the budget which was expected to raise $420m by removing the payroll tax exemption for about 110 non-government schools.

But following a fierce backlash from Catholic and private schools Daniel Andrews said on Friday the government would revise its initial plans.

“I’m not in a position to confirm what it will finish up at, but it will go up,” he told the parliament’s Public Accounts and Estimates Committee.

“There will be less than 110 schools...and the overall revenue that is derived from this measure will almost certainly be less than what is forecast.”

The Catholic Education Commission of Victoria (CECV) on Wednesday wrote to Labor MPs on behalf of its 21,000 students and 40,000 parents, pleading with them not to proceed with plans.

Daniel Andrews says Education Minister Natalie Hutchins will soon be in a position to announce the threshold. Picture: David Geraghty

The removal of the payroll tax exemption was expected to cost high-end schools up to $7m a year and add about $1000 to annual fees.

The backlash engulfed the Labor caucus this week as government MPs were bombarded with concerns from schools in their electorate.

As the Andrews government dug in on the tax, education minister Natalie Hutchins came under significant internal pressure amid concerns Labor had failed to consult with the industry.

Tensions worsened when the Opposition seized on comments from Ms Hutchins in parliament that she wasn’t aware of schools with a payroll of $10m, despite more than 60 independent schools in this category.

One Labor MP, who asked to remain anonymous, said they supported the principle of the tax but it was rolled out poorly.

“The way in which the measure was developed and communicated could have been done alot better to say the least,” they said.

“Under James Merlino this would never have happened.

“It will keep being a sensitive issue for caucus members because it’s going to affect perceptions in aspirational households.”

The Opposition has vowed to repeal the tax if elected to government, and shadow education minister Matt Bach said the government should do the same.

“Hardworking Victorian families and independent schools shouldn’t be left to pay for the incompetence of the Andrews Government,” he said.

Michelle Green, chief executive of Independent Schools Victoria, said schools remained deeply concerned about the government’s plan,.

“We believe that the government still does not understand the unintended consequences for schools of what it’s doing,” she said.

“The Premier talked of consultation with independent schools before the learning tax policy is finalised – we welcome his offer of dialogue, and we are ready for discussions with the Premier, Treasurer and Minister for Education.”

A government spokesperson said: “as highlighted in the Budget, the Minister for Education and Treasurer will determine the fee threshold for high-fee, non-government schools that will no longer receive an exemption from payroll tax, in consultation with the sector.”