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Thursday, 11 September 2003
Page: 19835


Mr SIDEBOTTOM (10:40 AM) —I rise to speak in this cognate debate on the Family and Community Services (Closure of Student Financial Supplement Scheme) Bill 2003 and the Student Assistance Amendment Bill 2003. The Student Financial Supplement Scheme was introduced by Labor in 1993 in response to student demands for additional financial support to help them undertake their studies, especially in the climate of high interest rates then, and when commercial loan packages were available for students. The Student Financial Supplement Scheme provides a voluntary loan whereby eligible category 1 tertiary students trade in $1 of their income support for a $2 loan up to a maximum of $7,000. Category 2 students are those dependent young people not receiving youth allowance as a result of their parental income or family actual means test and whose family income is below a prescribed threshold that is less than $64,500 for 2003.

Category 2 students are able to apply for a loan of up to $2,000. For those category 1 students taking a loan, the income support traded in becomes part of the loan, all of which is repayable. Students can make voluntary repayments on the Student Financial Supplement Scheme loan at any time after they begin receiving a loan and receive a 15 per cent repayment bonus for doing so. However, students do not have to commence repaying a loan until after the end of the contract period, and then only when their income reaches average earnings. The contract period ends on 31 May of the fifth year after their loan is paid. 7.6 per cent of loans are partially or fully repaid voluntarily, I believe, in the first five years. The government asserts that its proposal to close the scheme is in response to increasing levels of bad and doubtful debt and reduced take-up of loans. Further, the government claims a study by the Australian Government Actuary has estimated that more than 50 per cent of total loans may never be repaid.

Since the introduction of Youth Allowance in 1998, the take-up of this scheme has declined by one-third, yet it should be pointed out that 40,000 students made use of the scheme in 2002. This amendment bill seeks to close the Student Financial Supplement Scheme to new loans from 1 January 2004, and we on this side oppose this amendment and have moved an alternative amendment. The Student Financial Supplement Scheme provisions have been retained in the Social Security Act 1991 to provide existing and previous loan customers, officers managing the scheme and review bodies immediate access to the relevant legislative provisions. The repayment provisions of the scheme will continue to apply. The scheme is still attractive to students, particularly those in immediate need. That is its great benefit—to those students in immediate need.

I think there is enough evidence on the public record that there are many students in need and many students in immediate need. You would not mind so much if the scheme could be replaced by greater enhancement of student financial incentives and student financial assistance but such is not the case under this government, and that is the point at issue here. There is no replacement and people are still in considerable financial need. There is strong support amongst those who rely on this loan scheme for its retention as a voluntary option for students. That has been evidenced again on the public record, both by students themselves and by the Australian Vice-Chancellors Committee in a number of its reports.

Despite concerns about the operation of the scheme, we on this side and many of those who benefit from it believe the government's proposal to abolish it in its entirety is not warranted. Indeed, it appears it is very much the application of a hammer to crack a nut. It is the view of this side of the House that, with greater information and education surrounding this scheme and greater finessing of its administration, the scheme can be retained and some of its rough edges, so to speak, and challenges can be ironed out. Forty thousand students per year still make use of the scheme. That is a lot. The government is not proposing any replacement scheme, as I mentioned earlier, or additional financial assistance to students in its absence. Thus, that is its need. As I say, you would not mind so much if there were a replacement or alternative for it for those particularly in immediate need.

Government concerns about bad debts appear to be overstated. That is not denying that there is an issue with that but it is our belief that, with greater finessing and greater educative processes surrounding this loan scheme, those bad debts can be recovered and certainly reduced in the future. Information provided to Labor about loan acceptances and amounts outstanding indicate almost half the total value of the loans which have matured between 1993 and 1997 have indeed been repaid. We accept that that is not good enough, but they have been repaid and this can improve.

As outlined by the shadow minister for education in this House, Jenny Macklin, concerns about the scheme would be better addressed by providing improved information for students about its operation and/or reforming the structure of the scheme to change the income support trade-back amount and improve incentives for voluntary repayment. As part of its Aim Higher education package, Labor has announced it would oppose the closure of the scheme and, indeed, that was announced and is contained within the amendment moved by the shadow minister for education, the member for Jagajaga.

Funds generated from the scheme remaining open have indeed been committed in our innovative Aim Higher education package to provide greater assistance to Austudy allowance recipients, worth up to $90 a fortnight for over 15,000 people, and to reduce the age of independence for youth allowance for students—that is, recipients—from 25 years to 24 years on 1 July 2004, then to 23 years from 1 July 2006, worth up to $310 a fortnight for around 12,000 people.

The Labor Party, most of those people participating in the scheme, many students and their families and, indeed, higher education institutions and their administrators believe that, on merit and on balance and without the alternative of such a scheme, this scheme should continue, given the fact—and we accept that—that there can be greater finessing of the administration and greater information surrounding it, as outlined in the shadow minister's amendment.

This is not the only amount of financial assistance to students that this government is looking to abandon. In actual fact, if we look at the current 2003-04 budget in Family and Community Services, there are punitive cuts outlined which will affect the ability of students, particularly struggling students, to gain financial assistance to help them invest in their future, get them through their courses and steer them away from what is going to be—as the alternative—the longer term need for social security.

I note that the community services budget showed total cuts amounting to $664 million over the forward estimates—$217 million more than the government had committed to new spending measures. Whilst we accept savings measures enhance compliance to ensure benefits only go to those entitled—and rightfully so—other measures, such as the cuts to the pensioner education supplement, will reduce support for people trying to enhance their skills and education, just like the Student Financial Supplement Scheme that exists now and the attempts to close it.

The pensioner education supplement cuts will leave sole parents in particular, disability pensioners and carers who study up to $350 per year worse off by denying this benefit in the break between academic years. It may not seem a lot of money to people who receive an income similar to ours or even a little lower, but $350 means a lot to people who are struggling, living marginally or below. For this government to contemplate cutting this really shows how miserly, mean and mean-spirited it can be.

For many pensioners, particularly those with disabilities, study costs already outweigh the $31 per week of the pensioner education supplement. The pensioner education supplement savings, which, as outlined in the budget forecast, amount to $36.2 million over four years, are mean-spirited and will almost certainly lead to many pensioners abandoning study completely, just as the attempt to close the Student Financial Supplement Scheme will put more and more pressure on students without any other alternative means to forgo their studies or, indeed, to suspend them. In some cases, they just give up.

The pensioner education supplement was introduced by Labor in the 1980s. We have a commitment to it and we will fight hard in this place—and in the Senate when the time comes—to retain this important and helpful scheme. But, so that you do not think that here is another whingeing opposition member bringing up a point of financial clarity for the government, I would like to share with you an email that was sent to me by one of my constituents off their own bat, in fact informing me of the proposal to cut the pensioner education supplement. It is relevant: it is the same department, working with the same budget. I will talk about the constituent just as `Robyn'. The email reads:

Dear Sid

I am a full time student studying a Bachelor of Tourism with the University of Tasmania at the North-West Centre—

a study centre which is almost like a campus of the University of Tasmania, with support from the Commonwealth, and I must congratulate both sides on their support for this campus in order to help increase retention rates from year 12 to tertiary education in my beautiful neck of the woods—

and currently achieve distinctions.

I am also a single mother who greatly appreciates any assistance—

this is not a moaner; this is someone who is grateful for the assistance—

from the government to help with my studies.

However, I am greatly concerned with the proposed reductions of the Pension Education Supplement. As a result of any reductions I will no longer be able to continue my studies and be forced to rethink my goals of being able to fully support myself.

I have no other access to funds to assist me with my studies and rely on them greatly.

If I were to not complete my studies and depend on partial or full government assistance then I will be a greater liability to the government and to the nation state.

The Pension Education Supplement assists me in many ways:

Baby-sitting fees

After school care

Transport to and from uni

Photo copying

Textbooks

Internet access research for assignments in the evenings

Stationery

Registration fees

There are many things I already go without so that I can support my daughter and myself ...

She lists a number of these. She goes on:

I don't smoke and I don't drink. Even with all these `do withouts' it is still a struggle to make ends meet.

I am an intelligent woman who can give back to the State in the long term if it can assist me in the short term.

That, colleagues, is the whole rationale behind providing financial assistance to students. Whether it be through the Student Financial Supplement Scheme or the Pensioner Education Supplement Scheme, that is what we are here about: to support these people in order to allow them to invest in their future and hence invest in our country and our communities. But when you talk about it in this place it is never seen an investment; it is a seen as a cost—the economic bottom line. It is always a cost. That is what we talk about. We do not talk about people like Robyn who make it real; we talk about the bottom line and the cost. Of course we must be accountable; that is only right. Taxpayers must know that we have an efficient and effective way of administering taxpayers' funds. But if we can finesse that administration and better inform those people who are engaging in these activities then we must. But in the end we are about investing in people and them investing not only in themselves but in our community. In the long term it must benefit us all; it must benefit the taxpayer.

That is why we are moving our amendment to maintain the Student Financial Supplement Scheme in recognition of the hardship faced by struggling students and their families and to reduce the age of independence for youth allowance from 25 to 23. The implications of that reduction are quite profound. How that ever slipped through this House and then slipped through the Australian community I do not know to this day. I do not think people really understood the implications of having their children dependent on them to the age of 25. It is quite extra-ordinary. But, of course, we had a plethora of these types of bills bombarding the community. Now people are almost bombarded into accepting things. They are desensitised and depersonalised. The spin that goes with it is spinning out of control. It is no wonder some people now are talking about when we can put the brakes on and start to have a look at what type of community we really want. We want a community where we invest in education and in people, not just see them as a cost all the time.

We on this side also want to extend rent assistance to Austudy recipients. It seems to be a question of equity: why wouldn't you? Again it is an important incentive to continue their education and thus invest in our community. We want to provide meaningful information to students on how the supplement compares to commercial loan products, including the full range of effective interest rates applying to the supplement.

I would like to conclude with what I think is one of the best summaries of this whole issue—and I do recognise, and I have said this before, that there are some rough edges on this scheme and they need to be ironed out; I accept that—from the Bills Digest, which, to be fair, presented this issue very well. I certainly gained from reading it. I would like to finish with some of the comments from that. It says:

The reactions to the closure of the scheme ... vary on the value of the scheme itself but generally support the need for enhancements to student income support especially if the scheme is closed. In the absence of any enhancements those students who still use the scheme will have one less income support option available to them. Students who cannot readily access part-time work may be particularly affected. They may be parents—

such as Robyn—

people with disabilities, those living in regions of low employment opportunities—

particularly where I come from—

or those studying courses with high levels of contact hours. The proportion of students receiving Austudy Payment, Pensioner Education Supplement or Abstudy who take out loans appears to be rather higher than is the case for recipients of Youth Allowance. These students are more likely to be parents (sole or partnered), people with disabilities or indigenous people than are Youth Allowance students.

We should retain this scheme, soften the rough edges and look at other means of enhancing the financial support of our students so they can invest in themselves and in the future of our community.