A child in either a Catholic school or any other independent school (private schools don't have to be religious based) still pay the same money towards a place in a public school but don't use the spot, so do not cost the government that money to educate them.
The funding an independent school receives is LESS than what it costs the government to educate that same child in the public system.
So it actually SAVES the government money by keeping as many kids in private schools as they can - as they have to contribute LESS money towards the "free" education that EVERY Australian child is entitled to.
Apparently, the government could NOT AFFORD to educate every child in the education system.
As for uni money being redirected towards any schooling - if the kids aren't qualifying to even go to uni - what's the point of having uni?
It's like when they bought in free uni - good in theory, but they soon worked out it wasn't the cost that was stopping most people from getting in - it was the level of education - so they refocused and redirected the money to make more people capable of even applying for uni.
As for singling out Catholic Schools in your OP - Catholic schools are the biggest non state educators in Australia - that might be why they have been targeted for extra funds.
If staying in Private school became unaffordable and all children left the private system to go public - that would impact on the *cough*quality*cough of public education significantly.
The public system is at capacity now - so where are they going to put all the kids and how are they going to educate them if they leave private schools?
Some people can go their whole lives and never really live for a single minute.
