Fears parents at independent schools could be charged higher fees, teachers sacked

There are fears Victorian private schools, which face an end to a historical exemption from payroll tax, will be forced to pass on extra costs to parents.

There are fears Victorian private schools, which face an end to a historical exemption from payroll tax, will be forced to pass on extra costs to parents. Picture: Hollie Adams

Parents of students at some Victorian private schools may be forced to pay higher fees or see teachers lose their jobs after the state government announced they will no longer be eligible for a ­decades-long exemption from payroll tax.

The government is expecting to make more than $420m in revenue over the next three years as a result of the announcement in the state’s budget on Tuesday that will see 110 high-fee schools forfeit payroll tax exemptions from July 2024. “This initiative will align the payroll tax treatment of high-fee non-government schools with government schools, and ensure the benefit of this exemption only flows to schools that need support,” the budget papers say.

“Approximately 110 schools, or around the top 15 per cent by fee level, will lose their exemption.”

The change will see revenue of $134.8m raised in the next financial year, followed by $140.3m in 2025-26 and $147.1m in 2026-27.

Independent Schools Victoria chief Michelle Green said the news was a “shock” to members, which include some of the state’s most prestigious institutions like Melbourne Grammar, Melbourne Girls’ Grammar and Lauriston Girls’ School, and was made without consultation.

“It is likely to have a damaging impact on the operations of many independent schools, with the potential to disrupt the education of their students,” she said.

“(The decision) assumes all schools that charge more than $7500 have the financial resources to weather this shock without cutting services or, alternatively, raising fees. ‘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.”

Ms Green said she would be seeking “urgent” talks with the government to understand the rationale behind the decision and to “point out the implications” of it.

About 160,000 students attend independent schools across the state, according to Independent Schools Victoria.

Catholic Education Commission of Victoria chief Jim Miles said he was “deeply concerned” about the news. “This policy may apply to more than 25 of our Catholic secondary colleges in Victoria and could cost these schools upwards of $1m,” he said.

“Our families already 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 government as a matter of urgency.”

Some of the state’s highest fee schools include Geelong Grammar, which charges $46,020 in year 12 fees, Mount Scopus Memorial College which charges $40,860 in year 12 fees, and Lauriston Girls’ Grammar, which charges $39,392 in year 12 fees.

Opposition education spokesman Matt Bach, also a former teacher at Carey Grammar, said the hit to non-government students – which make up about 40 per cent of students – will likely take effect next year.

“What will happen as a result of this is either that schools will be forced to pass on these additional costs in significantly higher school fees or teachers will be losing their jobs,” he said.

Most independent schools pay about 70 per cent of their revenue on to payroll, which means they will be “slugged” with an extra tax bill potentially worth $4m each year, Mr Bach said.

“I've spoken with heads at a number of independent schools that are high fee paying independent schools, none of whom had any idea about this,” he said.

“Labor are arguing they are targeting the rich … you’re actually hitting a whole load of middle Victorian people working their socks off to afford private school fees.”

Mr Bach said the government has not stated what criteria they would use to define a “high-fee” paying school.