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Thursday, 11 September 2003
Page: 19832

Mr MOSSFIELD (10:27 AM) —I rise to oppose the Family and Community Services (Closure of Student Financial Supplement Scheme) Bill 2003 and the Student Assistance Amendment Bill 2003 and to support the second reading amendment moved by the Deputy Leader of the Opposition. The Student Financial Supplement Scheme was introduced in 1993 in response to student demands for additional income support to help them undertake their studies. The way the scheme works is that, if a student receives Austudy or youth allowance, they can trade in an amount of up to $3,500 in order to receive a loan to the value of twice what they trade in, up to a maximum of $7,000. Repayments are discretionary for the first five years. You can, of course, if you want to, pay the loan off over that period but, after that, the loans are repaid through the taxation system in a manner similar, though not identical, to the HECS system.

If a student is not eligible for Austudy or youth allowance because of the family means test involved with both of these systems, then a loan of up to $2,000 can be obtained, which of course is subject to the same repayment process. This is a system of income support that has helped thousands of young Australians access tertiary education, and now the government wants to close it down. In his tabling speech, the Minister for Children and the Youth Affairs, the member for Richmond, indicated the reasons for closing the system, which included a fall in the take-up rates of the system, bad and doubtful debts and the availability of commercial loans at commercial rates.

At the time the scheme was introduced, some 10 years ago, it was nearly impossible for a student to obtain a bank loan, particularly for a small amount of only a few thousand dollars. This system filled that void. In his speech, the minister said:

Today students have access to commercial loans at competitive interest rates ...

This government do not believe in giving students interest-free loans, indexed only to the CPI. They believe that students should be paying commercial interest rates to the private banks. The minister said that the bad and doubtful debt rate could be as high as 56 per cent. Three minutes later, when introducing the second of these bills, he said the rate of bad and doubtful debt was as high as 84 per cent. According to the government, this is another reason to shut the system down.

There are a number of points to be made on this. Firstly, these are income contingent loans and, much like HECS, there is no requirement to repay them unless and until the graduate reaches a certain income threshold. If the loans are not being repaid then the reason is that the graduate is simply not earning enough money to pay back the loan. The minister would have somebody in this situation beholden to a bank and forced to repay regardless of their capacity. Such a system would leave more students vulnerable to financial stress than the current system. Secondly, the government has never been backward in coming forward in forcing people to repay a debt to the Commonwealth. Tax returns are taken, the baby bonus is raided and legal action is taken in order to recover debts to Centrelink. If there is a debt, the government will, more often than not, take its pound of flesh. If there are debts not being repaid under this system then there is good reason for this.

Another reason given for the need to close this system down is the falling number of students accessing it. Again, I refer to the minister's speech—he pointed out that, since 1999, when the common youth allowance was introduced, the number of students accessing the supplementary loan system has fallen by one-third. Although the number of those accessing the scheme has fallen, quite frankly it is still providing a service. There are still over 40,000 students each year who take up the scheme. That means 40,000 students are helped by this scheme. So why do away with it?

In September 2001, the Australian Vice-Chancellors Committee published a report called Paying their way: a survey of Australian undergraduate university student finances 2000. I urge members to get a copy of this report—it makes for some very interesting reading. Over 34,700 students right across Australia were surveyed and it follows on from surveys conducted in 1974, 1979, 1984 and 1991. The executive summary of the report regarding this particular scheme says:

Students were very positive about the financial supplement loan scheme.

The report goes on to quote from some of the student survey returns. Students say:

University loan scheme is great.


If I was not able to receive the supplementary loan I would not be able to attend uni.

Another student comments:

Could not have done this course without the assistance of the $8,000 government loan.

The numbers may have dropped off, but the system is still extremely valuable to those who access it. That number, as I have said, is just over 40,000 each year. The full report makes a couple of interesting points not covered in the executive summary. Firstly, it says:

The deferred income-contingent character of repayments reduces the risk associated with acquiring debt.

Of course, that is not what the government are interested in. As I have said, they want students exposed to the market and paying commercial interest rates, regardless of their capacity to repay. Another important point is made in the context of the government's argument about falling numbers of students accessing this particular scheme. The report says:

In their comments a number of students asked for the introduction of a scheme like the financial supplement loans. There may be a need to publicise its availability.

Quite clearly, a lot of students are not aware of this loan, which may be one of the reasons that there is not such a high take-up. The numbers have fallen, but that may be because the government has done little to promote the scheme. If more students knew about it then maybe more students would access the benefits that the scheme offers.

Of course, this scheme is not for everybody. I will not argue that, as it stands, the scheme is perfect. No scheme ever is. But, for many students—40,000 each year—the scheme is a valuable one that helps them obtain a university degree. This is simply one of what should be many options that enable young Australians to access our tertiary education institutions. If there are perceived problems with the scheme then make changes and improvements—do not simply abolish it and leave up to 40,000 students without this option. The government has no plan for these students. No replacement scheme is being put in place here. It is simply one more option being removed from the table and one more obstacle being placed in the path of those without the finances to pay. A 30 per cent increase in HECS, loans at commercial rates and up-front $100,000 degrees—that is what this government is all about when it comes to our university system. Unless you can pay, and pay through the nose, you will not get into university.

The Vice-Chancellors Committee report highlights another problem facing current students. In 1984 just under 50 per cent of full-time students worked during the semester. In the latest survey that figure had increased dramatically to 72.5 per cent. The cost of living and the assistance provided by government mean that more and more students are forced to work and study. This is having a detrimental effect on grades and students' ability to perform well in their chosen courses. Nearly 30 per cent of respondents claimed that they were forced to miss classes, either frequently or sometimes, due to their paid employment. We are talking about over 130,000 students being forced to miss classes because there is not enough financial support available to them and they have to take one and sometimes two jobs just to make ends meet. That cannot be good for educational outcomes in the longer term.

Again I would like to quote some of the students' comments from that survey. They say:

It is hard for me to be as committed to my university work as I would like to be. Mainly because I find work commitments a burden, but it is essential for me to work in order to attend school.

Another student says:

I am working so I can afford to study, but working drastically affects my attendance and revision. It feels like my job is full time and university is casual.

This is not a good outcome. Another says:

My university marks suffered because I had to work late nights and hours to supplement my youth allowance. I get the full benefit—I don't know how other students cope!!

With the cost of living on the rise and government support for students not covering these costs, students are forced to work and in doing so their education suffers. The loan scheme that the government is trying to abolish with these bills is one small option for many students that allows them to access university and helps to alleviate the financial burden that they face. The arguments it has given for its abolition simply do not stand up. The minister said in his tabling speech that the system was administratively cumbersome. That may be so. The answer is to streamline the administration; not to simply abolish it. He said bad debts meant that a lot of loans would never be repaid, but the loans are income contingent like HECS. It is not as if people simply are not paying—and let us not forget that this government is always quick to recover debts to the Commonwealth regardless of circumstances.

The minister said that students have access to commercial loans at commercial rates so there is no need for a government scheme like this. Wrong. Commercial loans at commercial rates increase a student's debt far more than any government loan and create financial stress when repayments are forced regardless of capacity. Fewer people are accessing the system—again, this is not a reason to shut it down. Over 40,000 students still access it and more probably would if they knew it existed. Finally, closing the scheme serves no purpose other than to make it tough on the disadvantaged to access tertiary education. Therefore I will be opposing these measures, as will be the Labor Party, and I support the amendment moved by the Deputy Leader of the Opposition.