In an unusual intervention, Education Minister James Merlino forced Melbourne Girls' College to enrol 12 students it had initially rejected, including residents of the nearby North Richmond public housing estate.
The case highlights issues around the gentrification of public schools with booming enrolments and the impact on poorer students' access to a good education.
Richmond MP and Planning Minister Richard Wynne said he had fought with the school and Education Department for a decade to ensure students in nearby public housing were able to attend the popular school.
But last year, for the first time, he asked the Education Minister to intervene.
"They are purposefully excluding students who ought to have the opportunity to get a first class public education," he said.
"A publicly funded high school must be accessible, but particularly for young women out of our public housing towers. It's an opportunity for them to get a first-class education, to go to university and get high quality career."
He said an informal arrangement meant the school must provide girls who live south of Victoria Street with automatic entry if they wanted to attend.
But principal Karen Money denied the school excluded students in public housing, and said there was no informal arrangement. She criticised politicians for interfering in the school's enrolment processes.
"We have a substantial number of students from the Richmond and Prahran public housing flats," she said.
Students who lived outside the school's zone were selected based on their response to four questions designed to measure their leadership skills, and their postcodes and backgrounds were not taken into account, she said.
The school was grappling with its popularity, she said, and in coming years might need to stop accepting students from outside the zone due to strong local demand.
The towering North Richmond public housing estate is one of the largest in Australia and is located about two kilometres from the Richmond school, but it is technically outside its zone, as the towers are about 500 metres closer to Collingwood College on Hoddle Street.
The estate is home to many Vietnamese, East Timorese and Chinese migrants.
The situation "smacks of elitism", according to Yarra councillor Stephen Jolly, whose daughter recently graduated from the school.
He said diversity and inclusiveness was the key to a successful public school. "We are not going to allow those poor kids, black and Asian kids, to be cut out," Mr Jolly said.
Victoria University adjunct professor Richard Teese said schools in gentrifying areas were are under pressure to differentiate and select in order to survive.
"Schools experience a lot of tension in their role, because on the one hand they are expected to recruit blind to background but on the other hand if they don't make a special effort for middle class parents, then those parents may take their custom elsewhere."
Victorian Association of State Secondary Principals president Judy Crowe – who was principal of Melbourne Girls College for 12 years – said the school never excluded students because they lived in public housing.
"The pressure on enrolment made this very complicated, especially when MGC wasn't the closest government school. The school has a strong record of accepting people in public housing."
An Education Department spokesman said that, due to a misunderstanding, some students living outside the school's enrolment boundary were not offered places when they should have been.
"Due to high demand from students residing outside Melbourne Girls' College's enrolment boundary, the school was unable to offer places to all students seeking to enrol," he said.
The Andrews government hopes its new Richmond High School, slated to open in 2018, will alleviate enrolment pressures in the area.
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