‘Difficult to comprehend’, Victorian school slams new bill to cost millions

One Victorian school estimates the cost of paying payroll tax will be close to $7m, after a surprise announcement in the state’s budget.

MELBOURNE, AUSTRALIA - NCA NewsWire Photos - MAY 24, 2023: Premier Daniel Andrews takes a tour of Monash Tech school before speaking at a press conference at Monash University. Picture: NCA NewsWire / David Geraghty

One Victorian private school principal estimates the cost of footing the bill of payroll tax could be up to $7m, as associations continue to criticise the surprise budget revelation that some non-government schools will no longer be exempt from paying it.

The state’s Treasurer Tim Pallas revealed in his latest budget on Tuesday about 110 schools will be affected, which is expected to make $420m in revenue over the next three years.

Despite repeated requests from the media, the state government did not release the list of schools by deadline.

Caulfield Grammar principal Ashleigh Martin told parents in a note on Wednesday morning it was “difficult to comprehend” the Andrews government did not consult with the sector about the decision.

“With the previously exempt payroll tax of 4.85 per cent, plus the Covid impact and mental health levies estimated to total 1 per cent, initial analysis suggests Caulfield Grammar School’s costs will increase approximately $6-7m annually to cover the increased tax and levy,” he said.

“Considering the material impact on independent schools, it is difficult to comprehend that no consultation occurred prior to the announcement. To expect independent schools to be able to budget for such an unanticipated cost burden, by July 2024, is completely unreasonable.”

Amid high inflation and high demand for mental health support, the decision will put further “strain” at an already ”precarious” time, Mr Martin said.

“It is presumptive to assume that families can foot the bill for this poorly planned tax and levy increase,” he said. “Adding additional inflationary pressure to Victorian families with children in independent schools is unfair and arbitrary.

“The instability these changes will have on independent schools and families could lead to further strains on the already stretched government school sector.”

On Wednesday, Premier Daniel Andrews said the state’s lower-fee Catholic and independent schools received “substantial support”, with $450m for a grants program to build better facilities.

“The schools you are talking about though (higher fee private schools), have never been eligible for those programs,” he said. “They have had a sweetheart taxation deal.

“In the current budget environment, we cannot afford to continue that.”

Independent Schools Victoria chief executive Michelle Green said the comments were “disturbing”.

“The Premier and Treasurer both described the schools as businesses, suggesting they were run for profit,” she said.

“This totally mischaracterises what they do and the contribution they make to the community by educating a growing number of young Victorians from all social-economic backgrounds. They educate close to 160,000 students.” She also slammed the government’s failure to consult with schools about the decision.