Senator PATTERSON (Minister for Family and Community Services and Minister Assisting the Prime Minister for the Status of Women) (8:42 PM) —We will not be supporting the amendments. From 2005, to receive funding under the Higher Education Equity Program higher education providers must offer their own scholarships to complement the new Commonwealth learning scholarships, which are targeted to students in financial hardship. While guidelines for the Higher Education Equity Program have not been finalised, higher education providers will have the flexibility to determine how to deliver these equity scholarships. This means that equity scholarships can be delivered in a manner that would make them exempt under legislation currently before us—that is, by offering scholarships as non-discretionary payments that pay or waive a student's fees or student contribution amounts. The government recognises that students cannot use their non-discretionary fee-pay or waiver scholarships to meet their current needs. That is why the government has put forward legislation to exempt these types of scholarships from the social security and veterans' entitlements income test.

The social security system aims to treat people equitably—that is, people with similar means should receive the same level of support. Higher education providers could decide to offer equity scholarships as discretionary cash payments. That is a matter for them to decide. If equity scholarships paid as cash were exempted from the income test, this would mean that students receiving these scholarships would be better off than students who receive cash from other sources, such as work. In a needs based social security system we do not believe this would be fair.

In addition, youth allowance and Austudy recipient have access to a generous free area before their payments are affected. A single student can have income of $236 per fortnight or $6,136 a year before the payment is reduced. Income over this amount gradually reduces a student's payment at a tapered rate. Youth allowance and Austudy recipients have access to an income bank of up to $6,000. The combination of the income free area and the income bank means that in most situations a student receiving additional income, such as a cash scholarship, will not be affected under the income test. In situations where a cash scholarship does reduce a student's payment, they will always be better off than a student without extra assistance. It is for these reasons that we will not be supporting the Democrats' amendments.

Question negatived.