Labor MPs want payroll tax exemption for private schools in their electorates

A growing list of Labor MPs privately lobbied for elite schools in their electorates to be exempt from a payroll tax, despite voting for it in state parliament.

Newly released letters show Employment Minister Vicki Ward and Box Hill MP Paul Hamer wrote last year to Treasurer Tim Pallas seeking exemptions for some of the state’s top private schools – including Presbyterian Ladies’ College (PLC) – over concerns the new tax rules could drive up school fees.

Ward sought an exemption for two schools in her seat, Eltham College and Catholic Ladies College, where she was a student and graduated in 1986.

Premier Jacinta Allan (centre) with ministers Vicki Ward and Ben Carroll, who both raised concerns about the impact of Labor’s tax changes on their local private schools.Credit: Jason South

“As a past student, I know first-hand that this is not a school for the elite, but one where parents work hard to send their daughters, seeking an education that is focused on empowering and supporting girls as well as instilling a strong sense of social justice,” Ward said.

Hamer sought an exemption for Kingswood College and PLC, which charges up to $38,000 a year in tuition fees and counts former federal cabinet minister Kelly O’Dwyer, opera singer Dame Nellie Melba and former lord mayor of Melbourne Sally Capp among its alumni.

In his letter, Hamer argues PLC has “modest facilities” and that the school’s master plan for a new sport, aquatic and fitness centre with a 50-metre pool had been “humble” and funded within its own means.

“I write to you asking what supports or exemptions may be available for this wonderful local school in my community. I thank you in advance for your consideration of PLC’s concerns,” Hamer wrote.

The released correspondence also includes a letter from Victorian Education Minister Ben Carroll from 2023, while he was public transport minister, highlighting concerns raised by Penleigh and Essendon Grammar School in his electorate about the lack of consultation from the government.

The letters, released to the opposition under freedom-of-information laws, come three months after The Age revealed the contents of a leaked letter from Mordialloc MP Tim Richardson, who also pushed for a private school in his electorate – Cornish College – to be exempt from payroll tax. He argued the tax would be “extremely difficult” for the school, and could lead to higher fees and job cuts.

Labor MP Tim Richardson (left) has written to Treasurer Tim Pallas (right) twice asking for a private school in his electorate to be exempted from the payroll tax.Credit: Paul Jeffers

A fifth letter, from Bendigo West MP and Speaker Maree Edwards, forwarded local concerns to then education minister Natalie Hutchins but did not seek an exemption for any school.

The appeals from Labor MPs came in the weeks after last year’s budget, when Pallas announced Victoria’s highest-fee non-government schools would be stripped of a longstanding payroll tax exemption in an effort to raise $420 million to help pay down the state’s debt.

Under pressure from private schools and parents, the government later tinkered with the threshold, walking the tax back slightly so that it would only be imposed on schools with annual fees of $15,000 or more, bringing in $100 million less for the government.

Rachel Holthouse, chief executive of Independent Schools Victoria, said it was clear from the letters that Labor MPs share concerns about the government’s tax policy and again called for it to be axed.

“We know unease about the tax is shared by members of cabinet,” Holthouse said.

“We continue to urge the government to reconsider this tax, which doesn’t apply in any other state and which no government school is required to pay.”

Ward, Hamer and the premier’s office were contacted for comment. A government spokesperson said: “We listened closely to schools on this policy – 92 per cent of non-government schools have retained their payroll tax exemption and only Victoria’s highest-fee schools are subject to payroll tax.

“As every government school in Victoria pays payroll tax, it is fair that the highest-fee private schools also contribute.”

Victoria initially planned to target about 110 schools but altered the policy to target large higher-fee schools. While Eltham College, Cornish College, Penleigh and Essendon Grammar School, Kingswood College and PLC will pay the tax this year, Catholic Ladies College was granted an exemption due to its fees falling below the threshold.

Hamer, Ward, Richardson and Carroll all voted in favour of Labor’s budget bill in May last year, when the payroll tax change was introduced. Under party rules, Labor MPs are expected to vote with the party or face possible expulsion for crossing the floor.

Opposition education spokeswoman Jess Wilson promised to repeal the tax if the Coalition was elected in 2026.

“This correspondence shows Labor MPs, including the current minister for education, understand how damaging and unfair their schools tax is on students and families,” she said.

“Ben Carroll has the power to reverse the very tax he raised concerns about only last year, but he clearly doesn’t have the authority to do so.”

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