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Thursday, 30 October 1997
Page: 8416

Senator STOTT DESPOJA(9.37 a.m.) —I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The Australian Democrats believe that education should be available and accessible to all Australians, regardless of gender, age, health, background, racial or ethnic origin or place of residence. A distinction between part time and full time scholarships in our taxation laws imposes a restriction on the availability and accessibility to education.

We also believe that education is a lifelong process and all education is of value. We believe education has an increasingly important place in a rapidly changing and multi-dimensional world. These changes and dimensions require human beings to adapt and confidently deal with the new circumstances through improvisation and an understanding of change. So it is in this context that scholarships are available to assist and reward the developments of a person's talents. The benefits of this talent can be in art work, new ideas, a new angle to an old theme or an achievement, and the list of possibilities goes on.

The history of the taxing provision provides an interesting insight into what the scholarship exemption was supposed to achieve. In 1950, the Spooner committee reported to the Treasurer at the time, the Right Honourable A.W. Fadden. The terms of reference of the committee were to examine the desirability of exempting scholarship income from taxation. At the time, England and New Zealand exempted scholarships from tax.

The committee concluded that payments in the form of `awards to enable students to pursue a course of study' should be exempt, while payments in the nature of remuneration for present and future services and living allowances should be taxed. The committee proposed an amendment to section 23 of the Income Tax Assessment Act 1936, and the words they suggested are informative. They suggested the section should be amended to exclude tax on:

. . . the income arising from a fellowship, scholarship or bursary held by a person receiving instruction at a university, college, school or other educational establishment.

Since that time, the education sector has undergone considerable change. The attacks by both the former government and the current government are eroding the sector and moving the divide between educational purposes and industry purposes closer together. This blending of purposes was well illustrated by the Debate over the amendments to the Tax Laws Amendment Bill (No. 1) 1997, which removed the `rendering services' criteria from the full time scholarship provisions. That provision was modified by my amendments to the rendering services requirement and make sure full time scholarships were tax free. On this occasion it was notable that the Democrat's amendment was supported by all the other parties in the Senate.

At the time, the concern was only about full time scholarships. However, part-time scholarships are not covered by that provision, and if they satisfy all other aspects of that provision they will be taxed as the provision now stands. This is an unfortunate distinction, and this Bill will address that distinction by extending the exemption from taxation to part-time scholarships which satisfy all the same criteria as tax exempt full time scholarships. This Bill proposes an amendment which abolishes the distinction between full time and part-time scholarships and makes all scholarships which satisfy the other criteria in the existing provisions tax free. That is, any scholarship, bursary or other educational allowance or educational assistance received by a student receiving education at a school college or university will be exempt from tax as long as there an educational purpose involved and there is no condition that the student will enter into employment.

Following the amendments to the tax status of full time scholarships I sought a response from the Government about part-time scholarships. Question No. 296 lodged by me on 19 August 1997 and reported by the Senate Employment Education Training and Youth Affairs Legislation Committee asked:

What is the status of postgraduate scholarships made to part-time students? Is the Government concerned that there may have been an oversight made in relation to tax on part-time scholarships?

The Government's response was:

Part-time Australian Postgraduate Awards (with Stipend) are available to students who have been successful in gaining an award and who can demonstrate heavy care commitments or a medical condition precluding full time study.

Part-time scholarships are not exempt from tax under the provisions of the Income Tax Assessment Act. The part-time rate is set so that, after tax has been deducted, it is equivalent to 50% of the full time stipend.

There has been no oversight in relation to tax on part-time scholarships.

This response deals with a particular kind of scholarship known as Australian Postgraduate Awards. There are any number of other scholarships which will satisfy the requirements of the Income Tax Assessment Act 1936, but fail only because they are part-time. But, this response fails to address the broader issues raised by the different tax status of part and full time scholarships. It is these differences which make this Bill an important measure to redress injustice by identifying and remedying inequalities and barriers to participation in our education system. We want the best, so we must make sure the best people are chosen.

Scholarships are provided to talented people to assist them to develop their talents. This has benefits for the individual, but it has a broader purpose which contributes directly to our community. We recognise this benefit by providing tax free full time scholarships. The same recognition should apply to part-time scholarships. This has been recognised in part for Australian Postgraduate Awards by increasing the amount of the half scholarship to take into account the taxation effect. This recognition is welcome, and supports the contention the existing scheme is an anomaly which should be remedied. This is reason enough to make the amendment set out in this Bill.

However, and more importantly, this anomaly in the taxation legislation discriminates against part-time scholarship holders. The discrimination arises from the fact that a person receiving a part-time scholarship, who receives any further income and/or benefits based on the income they declare for taxation purposes, will be treated differently from a person who receives a full time scholarship.

This is best illustrated by example. Liz Darley is the recipient of a part-time Australian Postgraduate Award which she received on the basis of merit at the University of Western Sydney, Hawkesbury. She needed to take this scholarship on a part-time basis so that she could care for her two small children. The unfairness in this case arises from Liz being denied access to child care assistance and her family payment reduced because of her scholarship (and other) income. I want to quote her words:

The problem I have is that full time scholarships are not taxed and therefore regarded as non-taxable income; no group certificates are issued, and other benefits such as child care assistance and home child care allowance are not affected by the stipend. However, part-time scholarships are regarded as taxable income. This affects the amount of child care rebate I am entitled to, as well as home child care allowance, and also means that if I undertake any extra work (such as teaching and tutoring) this work gets added to my scholarship as taxable income. A person on a full time scholarship does not have to declare their scholarship as income, so any extra income they make is considered as their only income. If I make $5 000 on top of my scholarship of $8 253, then my taxable income is $13 252. If I took a full time scholarship of $15 000+, then my taxable income would be $5 000. I think you would agree this is inequitable.

This is a particular concern for women who make up a significant proportion of scholarship holders and a structural barrier to participation in higher education. Structural barriers in the education sector mean that talented people are excluded for reasons other than merit, such as gender, age, disability, ethnicity, etc.. For this reason alone, structural barriers must be removed to ensure our most talented students are provided with the opportunities to develop and express their special talents. Removing the distinction between part-time and full time scholarship taxation, which this Bill does, is a step in the right direction.

Liz's case also highlights other inequalities in the higher education sector which future legislation affecting the higher education sector and many other sectors must address—structural barriers to women's participation in the education system.

The UN Fourth World Conference, Women's Platform for Action considered women in education as one of the twelve critical areas of concern addressed by the conference. Women's access to vocational training, science and technology and continuing education was specifically targeted in the list of actions to be taken by governments. This Platform of Action was agreed to by the former Labor Government, and the present Coalition Government has stated that it intends to uphold its commitments under the Platform.

The Government's commitment to abolishing structural barriers is doubtful and may be illustrated by an example. In May 1993 the then Minister Assisting the Prime Minister for Science and the Minister for Science and Small Business established the Women in Science, Engineering and Technology (WISET) Advisory Group to advise on strategies to improve women's participation in science, engineering and technology careers and education. The WISET Advisory Group prepared a report in the form of a discussion paper in May 1995 setting out some of the barriers facing women in science, engineering and technology.

Unhappy with the lack of response from the previous Government I asked the Coalition Government how they proposed to respond to the Advisory Group report. In response to a Question on Notice No. 447 dated 24 March 1997 the Minister for Science and Technology stated that the Advisory Group report would not be responded to because the "recommendations are more relevant to the outlook of the previous Government". Instead, the Government intends to pursue women's representation in science, engineering and technology areas by creating a "broad, positive environment in which all Australians have the maximum opportunity to achieve their potential". This includes the provision of non-gender specific scholarships and awareness programs in relation to science, engineering and technology areas.

This response fails to recognise the systemic issues of discrimination identified in the Advisory Group report and will ensure that women in science, engineering and technology areas continue to face individual experiences of discrimination, and that women will not have equal access to representation in the science, engineering and technology community as a right . Unhappy with the response to Question No. 447 I asked a further Question on Notice No. 687 dated 7 July 1997. The Minister responded that the Government "is not aware of any structural barriers to women participating in science, engineering and technology careers" even though the Government has examined the WISET report. Does this mean the Government has rejected the WISET report?

Since that time the Australian National University has received the Burton Report which identifies a range of (similar) structural barriers to women's participation in a non-science section of the University. Clearly, there is a problem here and the Government, and former Government, are trying to ignore the issues.

This Bill provides the Government with an opportunity to meet their international commitments and remove a measure which, as in Liz's case, specifically disadvantages women with small children participating in the higher education sector.

The costs of this proposal will be minimal and the outcomes in terms of equity are significant. I commend this Bill to the Senate as a measure directed at assisting talented Australians to achieve their full potential in a world where the benefits of highly educated persons are central to job creation and wealth for all Australians.

Debate (on motion by Senator Calvert) adjourned.