By Robyn Grace
Private schools hit by the Victorian government’s impending changes to payroll tax have increased annual fees by an average of 6.44 per cent – and analysts warn there is worse to come when the levy kicks in from July.
Families at the state’s most expensive private schools face hikes on average 1.09 per cent higher than those at schools not subject to payroll tax, as campuses earning more than $15,000 per student scramble to recoup revenue lost under the government’s controversial move.
The increase exceeds the national average for private school fee rises, which at 5.85 per cent is this year higher than inflation, according to the annual Edstart School Fees Report, which analyses fee data at 703 independent and Catholic schools across Australia.
Overall, fees at Victorian private schools rose by an average 5.81 per cent, 1.21 per cent more than last year. Median fees sit at $12,046 per annum.
Edstart chief executive Jack Stevens said Victoria’s increases were lower than expected, given the changes to payroll tax, coupled with pressure from inflation and rising staff wages. But he didn’t expect it to last.
“It’s going to be hard for schools to sustain that, especially with the payroll tax impact, the full force of that hitting next year,” he said. “And I don’t think anyone sees upward pressure on teacher wages going away anytime soon, just given how much shortage there is in the system.
“I would say that there’s certainly going to be a lot of upward pressure on fees next year. But for now, parents are getting a pretty good deal.”
Education consultant Paul O’Shannassy said if fees continued to increase, there could be a tipping point in the Victorian market where families may opt for government schools in the lower year levels and save expensive private schooling for the senior years.
“I’m starting to see more people ask about government schools,” he said. “When it’s $44,000 to get to Wesley, psychologically, practically, it’s very different to $37,000 … I think we’re not far away from a perfect storm, where people are starting to say, ‘hang on a minute’.”
A spokesperson for Independent Schools Victoria said further fee rises were inevitable when the government’s payroll tax changes came into full effect next year.
“Schools are doing all they can to minimise the impact of the tax on families, at a time when all schools face rising operating costs due to inflation and pressure for increased staff wages,” they said.
Geelong Grammar is the country’s most expensive school, with fees exceeding the $50,000 mark for the first time in Australia, but NSW claims all other spots in the nation’s top 10 most expensive schools. There is a $5918 difference between Geelong and Victoria’s second most expensive school, Wesley College.
The nation’s highest average fee rise was 10.08 per cent in the ACT, while the lowest was 2.96 per cent in South Australia.
Schools with annual fees below $10,000 had significantly lower average increases than more expensive peers. Edstart said these schools had experienced the largest enrolment growth over the last five years.
An analysis by The Age earlier this month showed the cost of putting a child through prep to year 12 has climbed to more than half a million dollars at Victoria’s most expensive private schools.
But education economists say many private schools can afford to absorb extra costs, given they remain over-funded by millions of taxpayer dollars and often return healthy surpluses.
The state government removed the exemption to payroll tax for some schools in its 2023 budget. The tax was originally planned to contribute $420 million to the state’s COVID-19 debts, but will deliver about $100 million less after the government lifted the threshold from $7500 to $15,000 income per student in June.
Sixty independent and Catholic schools were initially selected to pay the tax, but the government backflipped again in August, adjusting the rules so any school that crossed the threshold would be subject to the levy.
Analysis by the Parliamentary Budget Office in October showed 18 more schools – including a specialist campus – are in line to be hit with the tax by 2029.
EdStart data is based on tuition fees and all additional mandatory levies.
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