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Second Reading Speech: Social Services and Other Legislation Amendment Bill 2013

Speeches in Parliament
Lee Rhiannon 18 Dec 2013

Senator RHIANNON» (New South Wales) (13:34): I support the comments of my colleague Senator Rachel Siewert in the way that she outlined both the serious problems with what the Social Services and Other Legislation Amendment Bill 2013 intends to do if it is passed and also the process by which it has been brought forward here. I want to particularly address the issue of start-up scholarships and what the government plans to do with those. Converting these scholarships to loans for university students is just one aspect of this bill that, if adopted, would really result in inflicting hardship on many disadvantaged people. It would increase student debt by about $1.2 billion over the forward estimates.

We already know that student debt has risen by about 30 per cent over the past six years. We already have a problem here, and the government would further compound it. Part of the plan of the federal government to push higher education costs onto individual students really needs to be named for what it is. It is a way of government cutting costs and piling hardship onto people who have a right to go to university and who can contribute enormously to our society, but we know that many of them will be turned off when they start thinking about the debt that they could well incur.

This idea of converting student start-up scholarships to loans was originally a Labor plan. We remember back in April—it was a Saturday—when the former minister, Dr Emerson, brought forward a plan to cut $2.3 billion from the higher education budget, and $1.2 billion of that $2.3 billion was to come from these start-up scholarships being converted to loans. It is good news that Labor has dropped that damaging policy. For achieving that, I pay tribute to the strong community campaign, which has been strongly backed by the Greens, the National Tertiary Education Union and the National Union of Students, and many other organisations have been very vocal and active and have certainly helped bring some change. It is change that we need to continue working for, to ensure that this bad policy does not end up in law.

The clear message here is that we should be working to decrease student debt, not increase student debt. When I have been engaging with people who work in the sector, various university academics and also management, they have shared many worrying stories about what this can mean for students and what is already happening. Again, I have to say at this point how disappointing it was that the inquiry into this aspect of the bill was so rushed. But there was some useful information that I wanted to share with senators because it helps highlight the level of hardship that will result if we go down this track.

There was a report out in July by Universities Australia on students living in poverty and struggling to cope with increasing debt—again, something that signals the real problems that we should have with this legislation. If this $1.2 billion is effectively cut from the higher education budget, it will impact on about 80,000 new students from next year. The policy will drive up student debt even further, particularly—and this is certainly the theme of what I am talking about today—putting more and more of the burden on those who are disadvantaged. The report from Universities Australia estimates full-time students will graduate university with an estimated debt of more than $37,000. The government's damaging cuts will increase that debt by an average of $8,200 or 22 per cent for every student on youth allowance.

For the Greens, this is very troubling. It really is going in the wrong direction to again put this burden on students. In some of the stories I have been told I have heard about students missing classes because they are worried about where they are going to get their income and are looking for second jobs. There are even stories about sometimes going without food or adequate accommodation, which we know clearly impacts on their ability to study.

This is something that the Greens have looked at within specific areas across the country. In the work that I did with my colleague Adam Bandt, the member for Melbourne in the House of Representatives, we identified that in his electorate these cuts will affect an estimated 3,500 students enrolling in the University of Melbourne next year. It is projected that the debt increase in that seat alone will be almost $30 million over the next four years. Again, we have to look at the national figure of $1.2 billion down to specific areas like Melbourne with $30 million over the next four years and then consider what that means for students hoping to start their careers. There has also been some useful and timely information from the National Tertiary Education Union that is worth considering in the context of this debate.

It is worth pausing at this point and putting this in the context of the government's own policy on higher education. They do give great emphasis to accessibility and equity when you dig down into some of the documents. But what we have here in how this policy has been put forward is a real failure to address the affordability of university. That has largely been ignored. If people cannot afford to go to university then that accessibility and equity that so many people in public life pay lip-service to when they come to speak about higher education is not a reality. But we need to ensure that it is a reality.

As I said before, the cost of education and student debt has been increasing, and the government subscribes to the view that students are not averse to debt and that it is not going to impact on their decisions about their higher education pathways. This is something that I heard many times when Labor were in office and now we hear it from the coalition. There is increasing research that is showing that that generalisation about the impact on students is really quite misleading. There have been some very useful studies done in this area. One that I would like to refer to was undertaken in 2003 by Dr Kerry Carrington and Angela Pratt into high school students' assessment of the impact of the cost of a university education. Some of these figures I found very alarming, particularly because of the views of young women. The report found that 41 per cent of lower socioeconomic-status females reported that they believed cost may make university impossible for them. Interestingly, the young men in this study who believed that came in at 34 per cent, compared with the 41 per cent I mentioned of young women. Similarly, 43 per cent of females surveyed from lower socioeconomic backgrounds believed their families could not afford the cost of supporting them through university.

Again, these decisions are very significant and this can really turn young people away at that critical stage of making that all-important decision about going to university. Remember, the people we are talking about here, these young men and women, in the main are from families where nobody has been to university. It is the first time anybody in their family has made that step. It is a big one. They need to be confident that they are not going to incur massive debt. Many people from disadvantaged backgrounds and working class backgrounds do not want to start off life with debt, and these studies are reiterating that. The study concluded that women from lower socioeconomic backgrounds are more sensitive to the cost factors of education and consequently more debt averse than their male counterparts.

This doubt over the whole notion that students are not influenced by the cost of education has been taken up more widely. I want to make reference to another report, because I think we need to put to bed this notion that loading up students with a lot of debt really does not matter. This was research commissioned by the department of education in relation to the federal government's base funding review. This study was called The impact of changes to student contribution levels and repayment thresholds on the demand for higher education. It came out in 2012. The report forecast a reduction in higher education student demand—that is, the number of students—should government policy result in an increase of HECS debt. So there is very clear and very solid research that has been done in this area. The government may wish to claim that the proposed changes to student start-up scholarships will not impact on existing scholarships, that they will not determine their decisions about their future education, but there is more and more evidence that that position is really very deceptive.

It is worth looking again at examples of the different ways in which the HECS-HELP debt is playing out. A student eligible for income support enrolling in a five-year law degree commencing in 2014 who is not in a position to pay his or her HECS up-front will incur a HECS-HELP debt of about $50,000 in tuition fees. Should that young student also elect to take up a student start-up loan for the whole five years of their study they will incur additional debts of approximately $10,000 to their HECS-HELP debt. That means that this student, starting off on a law degree, obviously with great hopes of what their career could hold for them, would graduate with a debt of more than $60,000—in 2013 values—which is 20 per cent higher than the debt of a student who does not take up a start-up loan. This is clearly going to be a deterrent. It is very destructive both because it loads up students with debt and because of the fact that it can deter young people from even choosing to go down the path of obtaining a higher education degree

The provisions of this bill directly target students from disadvantaged backgrounds. We have clearly established that. The only students eligible to convert student start-up scholarships to loans are those eligible for some form of student income support in the form of youth allowance, Austudy or Abstudy. It is worth remembering that Austudy and Abstudy debts are targeted by the provision of the bill that allows for interest to be charged on these debts. So we see again that it is focusing on the most vulnerable cohort of students. That particularly means Indigenous students. That is a huge group of students who will be hit with this increased debt. We do not know how it will play out, but from the research from 2003 and 2012 that I quoted earlier you have to think that Indigenous students would form a large part of those young people who may be deterred from deciding to take on higher education.

The National Tertiary Education Union has concerns about the level of Higher Education Loan Program—this is what is often called HELP. Some students accrue HELP debts in obtaining a university degree. According to the latest budget forecasts, the number of students with a HECS-HELP debt will rise from 448,800 in 2012 to 555,300 in 2016-17. That is an increase of more than 106,000 students, or about 24 per cent. Over the same period, the average level of HECS-HELP debt per student is forecast to increase from $16,000 to $19,500, which is a 21 per cent increase over four years. That burden is being put on the people who are already doing it tough, people who have probably set out on their higher education course with not many people around them who have done similar study. Their brothers and sisters may not have set out on that; their parents may not have gone down that path; and they have taken a big step or they are thinking about taking the big step. Then they start doing the figures, and that is what they come up with.

The latest published data shows that Australian university students currently owe in excess of $26 billion in outstanding HELP debts. The NTEU estimates that the total level of outstanding debt is growing at a rate of some $500,000 per hour and will exceed $50 billion by 2016-17. That becomes very relevant for the Commission of Audit, which we know the government is using to push a very clear agenda. The government estimates that the total value of start-up scholarships will be $342 million over four years. It is interesting to see the referral of the securitising of the level of outstanding HECS debt to the Commission of Audit. It clearly highlights the importance of this level of outstanding debt, that it is a serious policy issue for all of us. The government apparently wants to look at it, but at the same time is ready to increase it mightily. The magnitude of this debt needs to be seen in the light of Commonwealth debt, which is in the order of $175 billion. So Commonwealth government debt is coming in at $175 billion and the government estimates that the total value of start-up loans will be about $342 million over the next four years. That is a very significant part of what we are seeing.

The introduction of this bill, as I have set out, will have a considerable impact on students, particularly those who are most disadvantaged. That is the key takeaway message from that aspect of this legislation. It really is going in the wrong direction. We should have had a new federal government that had the courage to put in place the clear recommendations from the two major reviews that the Labor government initiated—the Bradley review and the Lomax-Smith review—which identified that we needed a very clear increase in base funding. When the Bradley review first came down it identified that there needed to be a 10 per cent increase in base funding and that if that did not occur immediately standards would drop.

We are many years down the track. We have had a further Lowmax-Smith review making very similar recommendations. You can see from the government that they have no intention of following through on those clear recommendations. I acknowledge they were not inquiries by this government, but their recommendations are certainly highly respected and have been welcomed by the sector. They give clear advice on what a wise government, committed to ensuring that Australia is an innovative and well-educated nation as we move further into the 21st century, would do. This can only be achieved by having well-funded universities, where staff are able to take forward the very extensive work that they need to do in research and teaching. That injection of funding was absolutely critical. What we are seeing from the government is that they want to take us down the path of pushing more financial burden onto students rather than doing the right thing and ensuring that the government pay for it.

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