I went to private schools when I was a kid and from what I saw there did seem to be a correlation between how much parents paid and the quality of the education. That more expensive schools provide better education should not be surprising since schools that are driven by profit have more incentive to provide better education. However, even though the environment may be right for a kid to succeed in school, ultimately it depends on the determination and work ethic of the kid himself. I have heard many stories of kids going to expensive schools but failed because they were distracted by parties, alcohol, or sports.
A recent article in The Age states that private school fees are rising greater than the rate of inflation in Melbourne (See High Price of Staying Private).
The private schools are blaming this rise in private school fees on reducations in government funding and the rising costs of teachers (driven mainly by rising teacher salaries in public schools). Many parents I know who bring their children to private schools are up in arms about the price rising, claiming that the government should provide more funding to private schools. One particular parent said, "If I choose to send my child to a private school, why should I have to pay more?"
I personally don't see why these parents are complaining. A private school is a private school, and hence government ideally should not be interfering with it. A private school is allowed to set whatever fee it wants simply because it is private. If the government were to dictate prices, then it would hardly be a private school. Can you image if the government suddenly raided the boardroom of BHP and demanded that they change the price of their iron ore exports? Could you imagine if government took control of all private enterprise and ran them? It has happened before in many countries and it has not worked well. When government controls private enterprise, it is called communism.