Opinion piece: Why GST on private schools shouldn’t be on Chalmers’ roundtable agenda

This article was first published in the Australian Financial Review on 20 July 2025.

Productivity in the education sector is vitally important, but it cannot become an excuse for taxing school fees.

The prime minister and treasurer have put Australia’s productivity at the centre of the government’s second-term agenda. Citing a policy inheritance of falling productivity rates, Treasurer Jim Chalmers has identified the issue as “one of the biggest challenges facing our nation”.

The issue is more than statistics; behind falling labour productivity, there are workers either doing more for less, in a static wealth position or without upskilling opportunities. The human impact of low productivity hits households and families, while efforts to reverse recent declines can benefit individual wellbeing and self-worth, not just take-home pay.

For a range of reasons, parents are voting with their feet (or their children’s enrolment) and seeking an alternative.

The Productivity Commission has been tasked with the initial exploratory work, identifying 15 priority reform areas to be examined via five separate inquiries, including building a skilled and adaptable workforce, with a focus on improving school student outcomes.

It has rightly focused on classroom-based solutions, namely “improving access to high-quality, accredited curriculum and lesson planning materials”. In doing so, the commission has gone straight to the best research, which shows the potency of quality curricula and supporting collateral. It might have chanced its hand and oriented schools away from the endlessly changing and confusing national curriculum in favour of the NSW curriculum, which eschews themes and concepts for content and knowledge, but not this time. 

A GST on school fees has little, if anything, to do with productivity.

Nowhere in the government’s brief or the Productivity Commission’s work is there guidance to consider making school education more expensive, restrictive, or even monopolistic. That hasn’t stopped several grievance-tinged policy advocates rushing to share their productivity solutions that would do just that, via their call for the GST to be extended to non-government school fees.

In a classic case of a solution in search of a problem, the Australia Institute and others are calling for school fees charged by non-government schools to be subject to the GST. This is no doubt inspired by the UK Labour government led by Sir Keir Starmer, which recently applied the VAT to private school fees with devastating consequences.

Since the VAT was applied to school fees (tuition and boarding) in January 2025, at least 44 private UK schools have announced their closure, leading to the disruption of almost 6000 children’s educations.

Predictably, the policy missed its projected revenue target, but squarely hit an ulterior target – the success of non-government schools and parental choice. In fact, the UK government’s own modelling anticipated a shift in enrolments back to government schools. 

Is this the motivation behind those who seek to import Starmer’s failure to Australia?

A GST on school fees has little, if anything, to do with productivity. It is old-fashioned ideology dressed up as high policy principle, with embarrassingly thin arguments and logical fallacies – such as that extra GST revenue is required to better fund public schools – when those proposing the change know the enrolment shift will only add pressure to the public schools they champion.

Ironically, the call for GST on school fees is coming from those policy quarters that typically rail against regressive taxes or policies that negatively impact lower socio-economic voters. This is ironic because most of the recent growth in non-government schools has been in low-fee Catholic and Christian schools, drawing from working families making big sacrifices.

The high tax addicts know that policy can be a wrecking ball. Their advocacy comes at a time when public education is under significant pressure in Australia, particularly in New South Wales, where there is a once-in-a-generation exodus from the government sector to non-government schools – Catholic, Christian, and independent.

For a range of reasons, parents are voting with their feet (or their children’s enrolment) and seeking an alternative.

So alarmed by this trend is the NSW Secretary for Education that he recently told the ABC that Australia needs to adopt a model of single provider schooling, the government system.

History has shown us that regressive taxes and monopolies are enemies of productivity. Thankfully, the Productivity Commission is looking elsewhere for solutions for Australian schools.