Fewer Victorian private schools will lose their longstanding payroll tax exemption than originally thought, with the fee threshold to be increased.

The 2023/24 state budget forecast about 110 non-government schools would lose the exemption from mid-2024, raising $422.2 million for the state across the next four years.

Peak bodies for independent and religious schools have criticised the changes, saying lower-fee schools would be affected.

But Premier Daniel Andrews said that wouldn’t be the case, with the threshold to be higher than the current fee mark of $7500 per year.

“I’m not in a position to confirm what it will finish up at, but it will go up,” he told the budget estimates hearing on Friday.

Mr Andrews said the education minister would consult with the sector on the new threshold, although he expected fewer than 110 schools would lose the exemption.

“Therefore, the revenue and the coverage assumptions that the treasury department have made off the current system will have to be revised,” he said.

Schools should know if they’re still exempt from the tax by September this year, the premier said.

Treasury officials also faced budget estimates, with secretary David Martine saying unemployment would not rise as a result of the $31.5 billion COVID-19 debt repayment plan.

About five per cent of Victorian businesses with a national payroll above $10 million will begin paying an additional payroll tax of 0.5 per cent from July.

Asked if the change would cause businesses to cut staff, Mr Martine said the state’s 3.9 per cent unemployment rate would not rise.

“When you’re taxing businesses there are various variables, there’s profits that you need to think through,” he said.

“One shouldn’t necessarily assume that payroll tax is something that will impact on employees.”

Businesses with a national payroll above $100m will be slugged with an additional 0.5 per cent levy on top of the existing tax rate.

Payroll tax exemptions, such as those for hospitals, charities, local councils, and wages paid for parental and volunteer leave will continue to apply.

Victoria’s COVID recovery plan aims to repay debt incurred during the health pandemic over the next decade.

Treasurer Tim Pallas said job creation was a core focus of the state’s broader economic recovery plan.

“As we began our recovery from COVID, we knew that front and centre in those efforts must be getting more Victorians back to work,” Mr Pallas said.

“Since the economic low point of the pandemic, which was September 2020, employment in Victoria has increased by close to 440,000 jobs.”

He said this equated to a third of total employment growth in Australia over that period.

The Public Accounts and Estimates Committee started its public hearings on the 2023/24 budget on Friday and will run for two weeks.

Mr Pallas handed down his ninth state budget last week, describing it as the most difficult of his career as the Andrews government seeks to rein in mounting debt.

Net debt is forecast to hit $171b by 2027.

Source: AAP