Independent schools contribute $6.6 billion to Victoria’s economy

This analysis also highlights the vital role schools play in supporting students, families and local communities across the state through jobs, infrastructure, international student income, investment and philanthropy.   

By comparison, the economic impact of Victoria’s Independent schools is almost on par with the entire AFL industry, and the sector employs more than three times as many people as the AFL and its clubs combined. These figures underscore the scale and significance of the Independent school sector in Victoria’s economy.  

The Chief Executive of ISV, the peak body representing more than 230 schools in Victoria, Ms Rachel Holthouse, said the new report brings to light, impartial evidence of the sector’s broader contribution to the state.  

“This report celebrates the impact Independent schools make every day,” Ms Holthouse said. 

In addition, the sector saves the Victorian Government around $3 billion annually by educating students who would otherwise require a place in government schools. According to the report, a shift of just five per cent of Independent school students to government schools would add $135 million annually to the State Government’s bills.    

Victoria’s Independent schools now educate more than 165,000 students and enrolments are rising at three times the pace of Government and Catholic schools. On current trends, the Independent sector is set to become the nation’s largest non-government school sector by 2027. 

• $5.3 billion contribution to direct employment
• Victorian Independent schools spend $3 billion each year in teaching and non-teaching salaries
• The sector employs more than 26,000 full time staff (approximately 3 times more than the total number of staff employed by AFL HQ and all the AFL clubs combined – excluding players and umpires)
• There are more than 1,300 overseas students in Victorian Independent schools who contribute annually $40 million in living expenses
• Visitors coming to Victoria to see their children at Independent schools generate $8.7 million in tourism spending each year

• The report also records the social impact of Victoria’s Independent schools, with case studies demonstrating how schools support disadvantaged and at-risk students through tailored programs and flexible learning pathways
• Many schools also make significant contributions to their communities, providing disaster relief, food delivery and crisis support

• Every 5% drop in enrolment could cost Victoria an extra $135 million each year
• If all Independent school students transitioned to government schools, it would cost the state an extra $3.1 billion annually
• The sector helps retain students at risk of dropping out – saving the government an average of $350,000 across a lifetime per individual

Findings from the report also highlight the growing financial pressures from payroll tax. Introduced 12 months ago, the tax negatively impacts more than 60,000 students in 55 Independent schools and has forced fee increases, the cutting of programs and staff reductions. This undermines schools’ ability to operate as high quality educational providers and valued community hubs, threatening their viable and sustainable futures. It also impacts schools’ ability to offer competitive salaries, which is a significant concern to ISV’s Members.

“Only in Victoria are Independent schools taxed on their payrolls. Many schools are now paying more in payroll tax than they receive in government funding, and there is currently no evidence to suggest that these dollars are being reinvested into education,” said Ms Holthouse.

As rising costs drive increases in school fees, more schools will be subject to payroll tax in the coming years, placing additional financial pressure on a further 13,000 Victorian students and their families.

The report highlights the Independent school sector’s essential economic and social role, emphasising the importance of maintaining a thriving sector.