Blanket exemptions allowing religious schools to discriminate against staff and students on the basis of sexuality and gender identity should be repealed, a key report to the federal government has recommended. The long-awaited report from the Australian Law Reform Commission, released on Thursday, says the institutions should be allowed to preference staff in line with their beliefs so long as it is proportionate and “reasonably necessary” to maintaining a community of faith and does not breach existing discrimination laws. The commission said the changes it proposed should be replicated for any future religious discrimination laws, such as those promised by Labor at the last federal election.