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Wednesday, 22 August 2001
Page: 29911

Dr KEMP (Minister for Education, Training and Youth Affairs and Minister Assisting the Prime Minister for the Public Service) (9:31 AM) —I move:

That the bill be now read a second time.

In January this year, the Prime Minister made the most significant set of policy and funding announcements in support of innovation that has ever been made in Australia.

The government's innovation action plan, Backing Australia's Ability, is not some vague set of high-minded pronouncements or an unfunded wish list. It is a well thought out, comprehensive and, most importantly, fully costed and funded package of initiatives that will deliver demonstrable benefits to Australia. It commits an additional $2.9 billion over five years for science, research and innovation, including an additional $1.47 billion to be provided through the university sector. The pay-off from this commitment will be seen for many years to come in Australia's R&D and overall economic performance.

A key principle of Backing Australia's Ability is improving access to postgraduate course work opportunities in our universities in order to further develop Australia's skills base. The resulting initiative, the Postgraduate Education Loans Scheme (PELS), is the primary focus of this bill.

The loan scheme is designed to encourage lifelong learning and to help Australians upgrade and acquire new skills to keep at the forefront of their professions. It will improve access to postgraduate course work study by providing interest-free, income contingent loans similar to HECS. The loans will mean that students will no longer be prevented from participating in postgraduate studies because they are unable to pay the tuition fee up front.

It is expected that the loans provided under this scheme will amount to some $995 million over the next five years and will assist around 240,000 students in their aspirations to undertake further advanced education.

It is the government's intention that this scheme commence at the beginning of the 2002 academic year. The announcement of the scheme in January generated significant interest in the university community and amongst potential students. The hotlines in my department have received many inquiries from students and universities about postgraduate loans. Even the government's most vociferous critics admit that PELS will significantly improve access to postgraduate course work education.

Unfortunately these plans have been jeopardised in this parliament by the action of the opposition and the Democrats in the Senate and their efforts to frustrate the government's legislative program. These actions have created confusion and uncertainty in the higher education community.

Unless this measure proceeds smoothly through parliament this time, there is a real possibility that many thousands of students expecting to have access to interest-free loans in semester 1 of 2002 will be disappointed. I call on both houses of parliament to understand the damage that might be done if there is further unnecessary delay in the passage of this measure and to give it the most expeditious consideration.

The government will commence a formal review of the impact of the postgraduate education loan scheme two years from its date of implementation. Terms of reference will be detailed closer to the time of that review. In the interim, statistical data will be collected on the scheme and will be published annually through the triennium report and the higher education statistics collection, and will include data on the take-up of the scheme—for example, by institution, age, gender, equity group, courses undertaken and fee levels.

The bill will give the minister the discretion to impose a cap on the maximum amount of debt students can accumulate under HECS and PELS. This measure is an important protection that may be necessary to discourage a minority of students building up an imprudent level of indebtedness and to provide a damper on potential fee increases within the sector.

I have made it clear, however, that this provision is simply to provide for a contingency and one the government believes is unlikely to arise. For that reason there is no immediate intention to exercise the discretion provided by the bill. Further, any exercise of the discretion would be through an instrument disallowable in the parliament.

The opposition has signalled that it opposes a single cap that applies to both schemes and may propose an amendment that would restrict the cap to PELS debt only. This means that a student who proceeds to postgraduate course work and takes out a PELS loan would have two debts to manage. This proposal would impose an unreasonable burden on the taxpayer in the form of significantly higher implementation costs for the Australian Taxation Office. It also ignores the objective of addressing students' total indebtedness, not just indebtedness deriving from PELS. Such an amendment would therefore not be acceptable to the government.

Other provisions in the bill will make it easier for universities to operate in an electronic environment consistent with the requirements of the Electronic Transactions Act 1999.

The bill contains two further measures that will add some $40 million to university operating grants over 2001, 2002 and 2003.

The bill increases the Commonwealth's contribution to university superannuation schemes by around $6 million in both 2002 and 2003 so that beneficiaries in the state-Commonwealth jointly funded university super scheme in Victoria can convert the benefit to a lump sum on retirement.

The bill also increases university operating grants by a total of $27.6 million in 2001 to account for the higher than anticipated success rate of universities applying for funding under the Higher Education Workplace Reform Program. I have been particularly pleased with the response of universities to this offer, which shows that the majority have committed to making reforms to their workplace and management practices.

Finally, I would like again to request that all parties act to expedite consideration of this bill. If we are truly concerned with innovation in this country and with ensuring that we have highly skilled people for our industries, then we should give potential postgraduate students certainty about the availability of PELS from the beginning of next year. I am prepared to commit to this objective and I urge members and senators to do likewise.

I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr Horne) adjourned.