A draft released late last year recommended removing tax concessions for donations to school building funds.
Yarra Valley Grammar principal Mark Merry said there was a growing trend “to slowly but surely defund independent schools”.Eddie Jim
The change would affect primary and high schools from all sectors,but independent schools stand to lose the most,with parents and alumni donating almost $119 million nationally towards school buildings including sports centres,chapels and STEM facilities in 2021.
The move comes on top of substantial fee hikes for many families after the Victorian government for private and Catholic schools earning more than $15,000 per student this year.
Yarra Valley Grammar principal Dr Mark Merry said the proposal was the latest move in a growing trend “to slowly but surely defund independent schools”.
Merry said the school was “doing its level best” to keep fees down and that the removal of tax concessions would slow down work to update the school’s facilities,many of which were built in the 1970s.
Contributions to school buildings have been given deductible gift recipient status since the 1950s,making any donation of more than $2 fully claimable.
The Productivity Commission’s report said the case for deductibility had diminished over time with the considerable expansion of government support for non-government schools. It said there also potential for donors to derive private benefit from donations to schools.
Productivity Commission deputy chair Alex Robson said a number of stakeholders had raised concerns that removing tax deductibility would reduce donations and force schools to increase fees.
But he said the deductible gift recipient system had very little policy rationale and needed a set of principles to guide it into the future.
The Victorian government has rolled back a key budget measure,watering down its proposed school payroll tax hikes.
“We think there’s a role for government support for school infrastructure ... the question is whether this particular policy tool is the best way to do it,” he said.
The Productivity Commission did not recommend alternatives in its draft report,but Robson said it was open to feedback and that it would be up to the federal government whether it adopted the final recommendations.
Submissions on the draft report close this Friday and the final report will be delivered later this year.
Independent Schools Australia chief executive Graham Catt said stakeholders had been blindsided by the report,which they believed had been open to an expansion of philanthropy in schools.
Catt said donations provided about 85 per cent of capital funding for independent schools nationally and the commission had not provided any evidence that donors could derive private benefits from contributions.
Principals were already anxious,particularly in Victoria following changes to payroll tax,he said.
It’s not known how much money schools could lose under the proposed change but the demand for capital works left already-strained principals with few levers to pull,Catt said.
“There’s a massive need for capital works,” he said. “We have growth in student numbers. We’ve got to meet that growth. We’ve got to provide facilities and I think we will see that the burden fall on parents in the form of higher fees.”
Victorian Association of State Secondary Principals president Colin Axup said if the tax concession was removed without any other reference to school funding then it would not be a good step.
“If you change one component of the tax system,there’s potential for a knock-on effect to the whole system,” he said. “School funding is the same.”
Melbourne Archdiocese Catholic Schools executive director Dr Edward Simons said the recommendation put accessible and affordable Catholic education at risk and would add to pressure on fees.
He said families contributed almost 90 per cent – around $2 billion – of the costs for buildings and other capital works for Catholic schools nationwide.
Independent Schools Victoria’s acting chief executive,Meg Hansen,said removing tax deductibility from donations would directly threaten schools’ ability to meet the needs of students in the fastest-growing school sector.
“It would risk adding another burden on families from diverse backgrounds who pay fees from their after-tax income so their children can go to a school that meets their needs,” she said.
Yarra Valley Grammar was wholly funded by donations when it opened in the 1960s and its unit for hearing-impaired students was the first in a mainstream Australian school when it opened – thanks to donors – in the 1970s.
Yarra Valley Grammar School students Gabe,Harry,Gaurvi and Amara with the school’s director of learning support,Rachel Wilson (centre).Eddie Jim
Merry said he was concerned where the next cuts would be. “It’s not too alarmist to say it because we’ve just lost $2 million out of our ability to run a budget here ... because of the payroll tax.
“Now this comes along. You have to ask the question,what’s next?”
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