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Tuesday, 3 May 1994
Page: 5

Senator BELL —My question is addressed to the Minister representing the Minister for Employment, Education and Training. I remind the minister that the government has reportedly described $386 million of outstanding HECS debts as `doubtful debts'. I ask: does this term imply that the government regards students—the borrowers—as defaulters, that they have done something wrong, and that the government is therefore justified in pursuing them? Is the minister concerned that it is women who are less likely to repay their HECS debts because they cannot get jobs at the rate of pay which is the minimum repayment threshold? Will the government revise the assumptions upon which this inequitable scheme is based? Further, can the government rule out any reduction in this year's budget of the threshold at which graduates begin to repay their HECS debts?

Senator SCHACHT —I have to say that the assumption in Senator Bell's question about the validity of HECS is wrong. The Australian Government Actuary report which the press has quoted was commissioned by the Department of Employment, Education and Training in mid-1993. The actuary reported his findings in August 1993 and an estimate of the amount of HECS debt unlikely to be recovered, drawn from the actuary's report, was included in DEET's annual report for 1992-93. Although the government would prefer to recoup all HECS debts, the proportion of debt estimated to be irrecoverable is considered modest, given the nature of the scheme.

  When HECS was introduced in 1989 it was estimated that up to 30 per cent of the debt would not be recovered. Up until DEET commissioned the government's actuary study, insufficient numbers of students had completed their university education and reached the scheme's minimum income threshold for repayment to allow this estimate to be verified. The full value of HECS debts will not be recovered because of an equity feature of the scheme, namely, that individuals are not required to make repayments through the taxation system unless their taxable income in a year reaches an indexed minimum. For 1994 that indexed minimum was $26,403. This is important in ensuring that anyone who has little or no capacity to pay is not required to do so—those in lowly paid or part-time employment; people who have become unemployed or leave the work force voluntarily—for example, for child rearing; and people from disadvantaged backgrounds.

  I emphasise to Senator Bell that, from the very beginning of HECS, it was the government's plan that there would be people who would not pay HECS because they did not reach the minimum level of income, which is $26,000. At the moment, according to the actuary's report, some people have not reached that level, but it is nowhere near the 30 per cent that was first estimated when HECS was introduced. The HECS scheme is working very well. Senator Bell raised a question about what is in the budget. I think he will have to wait until next week to find out whether his curiosity about HECS in the budget is met.

Senator BELL —Mr President, I have a supplementary question. I am relieved to hear of this in-built equity. I wonder why it was necessary to change it once. Why change this in-built threshold equity at all? Will the minister deny that the government is considering lowering it yet again to catch some of those people who, through no fault of their own, do not have employment to reach the minimum repayment threshold? When is the government going to stop changing it?

Senator SCHACHT —Again, I am not going to respond to speculation on what may or may not be in the budget, which is what Senator Bell is having a very good try at doing; and from his perspective I do not blame him. The fact that I say, `Wait until you hear it in the budget' does not necessarily mean that there will be any change at all. We will wait until the budget next week.