If you want to study theology they'll care, otherwise you're good. They'll never even know when they're looking at the number that gains you admission in the first place. If you meet the ATAR cutoff no one cares if you failed a course. It will just be annoying to look at when you get the certificate that has all of your subjects and results on it (I have to look at catholic studies, so it could be worse). And as to the person questioning why you go to a catholic school of you don't want to study religion, there are multiple things you have to take into account when you choose a school. Personally I'm happy where I am, and that happiness is worth sitting through a couple of catholic studies classes a week. It's clearly not affecting OP too much either, since they don't study for it and it won't count toward their ATAR.