A Victorian Labor MP has privately argued that a policy change stripping private schools of a payroll tax exemption, introduced by his own government, would have “detrimental consequences” for a school in his electorate, despite voting for it in parliament.
Leaked letters, obtained by The Age, reveal that Tim Richardson, member for Mordialloc, lobbied senior ministers to exempt a high-fee private school from the payroll tax, arguing that the tax would be “extremely difficult” for the school and could lead to higher school 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
The independent schools lobby said it was aware that the change to payroll tax had caused “considerable unease” within Labor.
Last year, the state government used its budget to announce 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 then tinkered with the proposed 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.
At the time, Treasurer Tim Pallas said it was “only fair that the highest-fee private schools” contribute.
But Richardson, who is parliamentary secretary for mental health, wrote to Pallas twice and then Education Minister Natalie Hutchins seeking an exemption for Cornish College, arguing it would be “extremely difficult and detrimental to the school community” if it was forced to pay the tax.
In two letters, obtained by The Age, he argued the tax hike could drive up fees and potentially cause students to leave, increasing the burden on the public school sector. He said the school was also concerned that the potential staff cuts would decrease the number of programs offered at the college, and would have a “substantial impact on the mental health and wellbeing programs on offer to support students”.
“I share their concerns about the impacts of the payroll tax changes and ask that you review the requirement that Cornish College pay this tax.”
Meg Hansen, the acting chief executive of Independent Schools Victoria, said the organisation was aware of “considerable unease” within the state government over the payroll tax change, which is due to come into effect in July and will primarily affect schools in Melbourne’s inner east and bayside suburbs.
“Mr Richardsons’s appeal for an exemption for a school in his electorate highlights one of the extraordinary aspects of the tax – tax liability depends solely on the whim of the education minister and the treasurer, using a totally arbitrary definition of ‘high fee’ schools,” Hansen said.
Mordialloc MP Tim Richardson lobbied against Labor’s own tax, saying it would have “detrimental consequences” on the operations of an independent school in his electorateCredit: Paul Sakkal
“Most schools hit by the tax, which has never been imposed on schools in the past and is not imposed in any other state, have had to increase fees paid by parents to cover the cost.
“Last week’s decision by the Victorian government to grant payroll tax exemptions to doctors shows the government is willing to abandon what had been a strongly held position.”
Cornish College, a private co-educational school in Bangholme, which charges more than $15,000 a student, is one of the 52 independent schools, collectively educating about 65,000 students, liable for the tax in five weeks. The number of liable schools will rise to about 70 within five years.
Higher-fee Catholic schools will also be charged the new tax.
Richardson, who voted in favour of the payroll tax change in May last year, said that if the school was forced to pay the tax, it would substantially erode its current surplus.
In the letter, he wrote that “to cover payroll taxes, the college will need to increase enrolment fees and make cuts to staffing and programs. The principal believes this will result in student withdrawals and an increase in enrolments at local secondary colleges and increased educational costs to the government.”
Arguing in favour of Labor’s budget in May last year, when the payroll tax change was introduced, Richardson said the legislation was “important”, “temporary” and put in place “to make sure that we can pay down debt, and that is important”.
Under party rules, Labor MPs are expected to vote with the party or face potential expulsion for crossing the floor.
The opposition’s spokeswoman for early childhood and education, Jess Wilson, said Cornish College’s mental health support programs should not be at risk because the Labor government had failed to manage Victoria’s finances.
“This letter shows that even Labor recognises the dire impact their school tax is having on non-government school staffing, educational and wellbeing programs and educational outcomes.
“It’s simply unfair that parents and school communities are being forced to pay a tax to educate their children, all because Labor cannot manage money.”
The Age sent questions to Richardson on Sunday. In response, a state government spokesperson said the government would continue “working closely with non-government schools on their eligibility”.
“More than 660 non-government schools are currently exempt from payroll tax,” the spokesperson said.
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