Independent Schools Queensland (ISQ), which represents non-Catholic private schools, released an excellent discussion paper earlier this week prepared by Mikayla Novak on the impacts of broadening the GST to include education. The paper notes that, if GST were applied to school fees, the consequent fee increases would lead to a switch of enrolments from private to State schools. This would come at a high cost to the Queensland Government, at around $360 million per annum, as the Government would now have to cover the bulk of the costs of educating the nearly 23,000 students who would switch to the State system. This point was previously made by Michael Willis in a guest post on this blog earlier this year (see Time for a sensible debate on broadening the GST net).
It is very plausible that there would be many students shifting from private to State schools if the GST were imposed on school fees. It is clear that parents are very sensitive to school fees. Increases in school fees in recent years have seen both a movement from private schools to State schools and from higher-fee private schools to lower-fee private schools, including a shift from higher-fee independent to lower-fee Catholic schools (see this 2013 Courier-Mail report). This is confirmed by recent data from ISQ (see chart below). As I noted in a post last year, one reason Catholic schools can charge lower fees than independent schools is the very favourable funding deal that the Catholic sector secured from the Howard Government (see Catholic schools still benefiting from very favourable funding deal from Howard Govt days).