Transgender students would be able to attend same-sex religious schools and wear the uniform of their choice, and gay and lesbian teachers would be allowed to work at religious schools, under changes mooted to Victorian discrimination laws.
The changes - being proposed by the Greens in a private members' bill to go before the Victorian Parliament soon - would remove the rights of religious schools to discriminate against staff and students based on their sexuality.
The changes would put the parliament on a collision course with church groups, which have opposed even limited changes to current discrimination laws.
The Greens' equality spokesman, Sam Hibbins, is preparing a draft bill that would remove blanket exemptions for religious groups from discrimination laws in relation to schools, under the Equal Opportunity Act.
"Being able to deny a transgender student the right to attend school as their preferred gender or sacking a teacher because they are gay or lesbian is blatant discrimination and must not be sanctioned by Victorian law," Mr Hibbins said.
Under the Greens model, living and identifying as a boy or girl would be enough to qualify a child for attendance at a single sex school.
Mr Hibbins challenged Labor to support the move, pointing out that Premier Daniel Andrews and Equality Minister Martin Foley had repeatedly vowed that "equality is not negotiable".
But Mr Foley indicated Labor would instead push ahead with its own changes to equal opportunity laws.
It plans to return the "inherent requirement test" to the Equal Opportunity Act that it introduced in 2010, and that the Coalition dismantled in 2011. Under that test, religious organisations were required to justify their "need" to discriminate.
Labor says the model balances the rights of religious organisations to conduct their own affairs, while creating a higher threshold for organisations wanting to discriminate based on faith or identity.
"We're committed to rolling back the Libs' roll back of the inherent requirement test, and we're well-progressed on that," Mr Foley told Fairfax.
But these changes too have raised the ire of religious groups.
When Labor announced last year it would put the inherent requirement test back into law, Christian Schools Australia chief executive Stephen O'Doherty dubbed the changes an "ideological attack on religion", and said the organisation would lobby upper house MPs to block the legislation.
Australian Christian Lobby Victorian director Dan Flynn said it could force Christian schools to hire people fundamentally opposed to the schools' objectives.
But Victorian Gay and Lesbian Rights Lobby co-convenor Sean Mulcahy said Labor's changes did not go far enough.
"We've always opposed the religious exemptions in the Act and particularly where they affect young or vulnerable people," he said.
"Studies show that younger LGBTI people have much higher rates of suicide and have much higher rates of mental health issues."
Currently, religious schools have wide-ranging exemptions from discrimination laws, including a clause that allows them to discriminate "to avoid injury to the religious sensitivities of adherents of the religion".
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