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Standing Committee on Education and Employment - 21/03/2013

BENNETT, Ms Susan, General Manager, Department of Industry, Innovation, Science, Research and Tertiary Education

HERD, Dr Andrew, Assistant Manager, Department of Industry, Innovation, Science, Research and Tertiary Education

WARBURTON, Mr Mark, General Manager, Department of Industry, Innovation, Science, Research and Tertiary Education

Committee met at 11:40

CHAIR ( Ms Rishworth ): Welcome. I now declare open this public hearing of the House of Representatives Standing Committee on Education and Employment inquiring into the Higher Education Support Amendment (Asian Century) Bill 2013. The Higher Education Support Amendment (Asian Century) Bill 2013 proposes amendments to expand the eligibility for OS-HELP assistance and provide additional incentives for university students to undertake part of their course of study in Asia from 1 January 2014. Amendments are to increase the maximum OS-HELP loan amount for students studying in Asia, introduce a supplementary loan of up to $1,000 for students who undertake intensive study in Asian languages in preparation for undertaking overseas study in Asia, remove the requirements that a student must be enrolled with an overseas higher education institution or at an overseas campus of an Australian higher education provider to be eligible for OS-HELP, extend the eligibility to post-graduate Commonwealth supported students and reduce the equivalent full-time student load that a student must have remaining on completion of the overseas study from 0.5 EFTSL—I do not know if that is an acronym or not—to 0.125.

The committee has received 14 submissions from universities, student bodies and other higher education associations. Today is an opportunity for the committee members to discuss the stakeholders' responses to the bill with the Department of Industry, Innovation, Science, Research and Tertiary Education.

I welcome representatives of the Department of Industry, Innovation, Science, Research and Tertiary Education to today's hearing. Although the committee does not require to you give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. Thank you for your submission. Would you like to make an opening statement and then we can proceed to questions, or if you do not have an opening statement we can go straight to questions.

Mr Warburton : I do not really think an opening statement is necessary. I think the explanatory material with the bill and the submission we gave you cover most things. We are happy to have questions. Just for information: EFTSL is equivalent full-time student load. It is our funding formula. We use that as the basis for funding. We add up the part-timers into equivalent full-timers.

CHAIR: Thank you. I will start with a question and then go to my colleagues. One of the concerns is from Bond University and the Council of Private Higher Education providers. They state that the exclusion of non-Commonwealth supported places from accessing the OS-HELP loans is not compatible with article 13(2)(c), which states:

Higher education shall be made equally accessible to all, on the basis of capacity, by every appropriate means …

Do you believe that the bill is compatible with that? Is there a problem with it?

Mr Warburton : My understanding is that it is compatible with the charter.

CHAIR: Can you elaborate on that.

Mr Warburton : Yes. I should state that I have not received specific advice on it. My initial comments are that there is nothing in the bill that inhibits access to higher education. The bill does not actually discriminate against particular provider types. The OS-HELP program has always been a complement to the other support that the government provides to Commonwealth-supported students. There are a whole set of arrangements in place for Commonwealth-supported students. It is relatively highly regulated. As to the student contributions amounts that they can be charged, there are set maximums. That does not apply to full-fee-paying students, who are charged tuition fees. There are those sorts of students in public providers in tables A and B of the Higher Education Support Act, as well as other private providers, and OS-HELP does not extend to any of those. It complements the other benefits that come with being a Commonwealth-supported student. In the case of full-fee-paying students, the tuition fees that a provider can charge, which can be deferred under FEE-HELP, are much less regulated, so if there are in place arrangements for students to undertake particular units overseas, it is possible for private providers to accommodate some of that. There may be some difficulties in it.

CHAIR: Can I ask another question about the full-fee-paying students who are not just with private providers. One of the objects of the bill is to extend it to postgraduate students. The issue that has come up is that a lot of postgraduate studies are full-fee-paying and therefore the students will not necessarily have access to this. Is that right?

Mr Warburton : That is correct. If you look at the amount of load, the amount of EFTSL, we have in table A providers, public universities, about 60 per cent of that load is fee-paying and 40 per cent of it is Commonwealth supported. This extends it to the 40 per cent that is Commonwealth supported.

Mr RAMSEY: To take that a bit further with the issue of the private providers, you are saying this bill does not make any material difference: that if there is an injustice this compounds it or just extends the existing arrangements but basically puts the private providers outside the loop.

Mr Warburton : Commonwealth-supported places are primarily available to public universities, but it is possible for—and, in fact, there are Commonwealth-supported places outside of public universities—Commonwealth-supported places, if in a national priority area, to be allocated by the minister to what is otherwise known as a private provider. I should be referring to 'non-table A providers', because some of those providers can be public TAFES, for instance. Holmesglen is an example in point. So there are some nursing and teaching places allocated to some non-table A providers, and those providers have access to OS-HELP.

Mr RAMSEY: On another issue entirely, do we have any idea what the cost of this opening up is? I presume it is uncapped?

Mr Warburton : Since the scheme was created, we have had authority to allocate, if you like, up to 20,000 OS-HELP loans. We have never gone anywhere near that.

Mr RAMSEY: What kinds of average levels do we see?

Mr Warburton : A student can get up to two loans. In 2011 we had 5,035 loans. There were about 4,800 students and just fewer than 600 of those went to students in Asian countries.

Mr RAMSEY: So this has been significantly underutilised up until this stage, really, because you have had the ability to offer up to 20,000.

Mr Warburton : That is correct.

Mr RAMSEY: So it is thought that any significant rise as a result of being able to utilise the loan for overseas studies is probably still likely to come under that cap.

Mr Warburton : That is the cap for the allocation, not the loans. In respect of the forward estimates of government expenditure, at the moment we have in them current estimates, if you like. We have long since ceased providing for the full 20,000. We have authority to go there but the forward estimates of each—

Mr RAMSEY: Are based on what has been happening historically.

Mr Warburton : Yes. Now, with this, we have some projected growth in the number of loans.

Mr RAMSEY: Can you tell us what that projected growth is?

Mr Warburton : In 2014 we are expecting to get to around 10,200 loans. There are increases scheduled, so by 2016 we are hoping to be at a bit over 12,400.

Mr RAMSEY: All right. In that vein, what is the average recovery on the loan? I know these have not been pertaining to international studies, of course.

Mr Warburton : That is right. For all of the various HELP schemes—there are five of them—the universities report that the debts the students incur under those all get transmitted to the tax office. Within the tax office, it all becomes part of one accumulated HELP debt. At that point, we can no longer distinguish between the schemes. There was a fair amount of publicity about the level of debt earlier in the year. There is currently around $25 billion, if you add up all of the debts of the students with the tax office. Our estimate of the fair value of that is $19.4 billion. That is an estimate of what that asset is worth to the Commonwealth. Within that, about $6.2 billion will not be recovered. There are lots of different reasons why they will not all be recovered.

Mr RAMSEY: If we get an extra 5,000 of these a year—and that is your best guess at the moment—are they worth $20,000 for each loan?

Mr Warburton : No. There is a maximum amount you can take out on a loan. In the case of an Asian student, if the bill is passed, it will become $7,500. For students going to non-Asian countries it will be $6,250. If students are going to an Asian country they can get up to $1,000 to assist with language studies.

CHAIR: On top of the $7,000?

Mr Warburton : On top of the $7,500.

Mr RAMSEY: Just doing rough sums on the back of envelope, that would be maybe a liability of $35 million a year. Is that right?

Mr Warburton : I will accept your maths.

Mr RAMSEY: I have only done it very roughly, and I have got things wrong before, but not—

CHAIR: But there are currently loans that you can get if you go to Asia, so it is the difference.

Mr Warburton : It depends if you are talking about the total or the additional cost—

Mr RAMSEY: We are talking about a lift from 5,000 to 10,000 across the board, though, aren't we? And I think that would be a good thing. I am not trying to barrel you on it; I am just trying to understand it.

Mr Warburton : Yes, that is correct.

Dr Herd : It is important to note that that 5,000 was in 2011, whereas you are comparing the 10,000 for 2014, and therefore there is some growth to be expected. It is not all due to this.

Mr RAMSEY: Yes. Thank you.

Mr SYMON: I would like to ask about the reasoning behind, firstly, the reduction in the equivalent full-time student load and, secondly, as to whether there is a need to have it. I say that because there have been a couple of submissions that have questioned why it needs to be there, and I would like to hear from the department some of the reasoning behind that.

Mr Warburton : I think the main reason is to do with recovery of HELP loans.

Mr SYMON: Because it is not possible to recover it if that person is overseas.

Mr Warburton : That is right. With this sort of scheme our main worry is that we want it to be used to assist with a person's education. We do not want it to turn into a cheap form of holiday loan. So some of our criteria go to that. Then there is the issue of whether the person is continuing to be committed to living and working in Australia. That is the fundamental reason that we have always had this criteria that when you finish your overseas placement there should be a little bit of study to be completed in Australia.

We have extended the scheme so that they can do work placements as well as study overseas, and it is possible that they could completely segue into living and working overseas. Unless they have a taxable income in Australia, we are not able to recover HELP debts if they do that. We had basically a half full-time year before and we have taken that down 0.125. That is normally equivalent to one unit of study. If you have got eight units in the year, that is one of them. So it is still there, but we have reduced it to what is probably the minimum while still retaining it.

Mr SYMON: And obviously with the intention of ensuring that the Commonwealth has every best chance of a return on its investment.

Mr Warburton : Yes.

Mr SYMON: Investment in our students is in the best interests of our future. From the Commonwealth's point of view that needs to come back through here. Non-traditional progression of studies was raised by the Asian Studies Association of Australia as an issue that may be hindered by this, especially for those students studying part of their course online. From the reasoning you have given me I presume it would not change—whether it is online overseas or online here. If someone is online overseas they are still going to be beyond the reach of paying back their debts.

Mr Warburton : Potentially, yes. It would be possible for that one unit of study to be completed while you were overseas if you were doing it online. That is correct.

Mr SYMON: But, if that were the case, the reasoning behind your last answer takes us to where?

Mr Warburton : That is a slight problem, to be perfectly blunt. You are correct on the reasoning behind the requirement, as I stated. It has the flaw that you identified.

Mr RAMSEY: So you are saying that it is ineffective anyhow?

Ms Bennett : Not ineffective.

CHAIR: It is a blunt instrument to get people to come back.

Ms Bennett : I do not know about a blunt instrument. It would require more people to come back and complete their course here. It may not catch everyone.

Mr Warburton : My view is that, in most cases, it would result in the student completing their course here.

Mr TUDGE: What is the overall objective of the package?

Mr Warburton : This was an element of a broader package which was about encouraging greater engagement with Asia.

Mr TUDGE: Would that objective be assisted if students from non-Commonwealth supported providers had access to these measures?

Mr Warburton : Potentially, yes.

Mr TUDGE: What is the policy rationale, then, for excluding those people?

Mr Warburton : I think that goes back to the statement I made at the beginning. This has always been an add-on for Commonwealth supported students complementing the other benefits that we give them. This scheme has been like that since it was created in 2005. It would require a decision of government to change that. There would be costs involved in it if the loan was extended to a broader range of people and we were going to have take-up. That that is all I can really say on that.

Mr TUDGE: So if I were to summarise, it is historical reasons.

Mr Warburton : And cost.

Mr TUDGE: And cost, despite the fact that it would enhance the achievements of the overall objective.

Ms Bennett : Perhaps I could talk to you about Asia Bound just as something alongside it. I am responsible for the Asia Bound program, which is a new program that was announced in October last year. It is a mobility program to provide grants to students. It is quite different from OS HELP because it is grants, rather than a loan. Because it is a new program, because there is not that history, it will be available for all tertiary students, public and private, VET and higher ed.

Mr TUDGE: Which makes sense.

Ms Bennett : This is a new program.

Mr TUDGE: Why make the distinction?

Ms Bennett : Well, this is a new program and so it has this provision. The OS HELP program is an historic one. In 2005 that is the way it was designed and it has not been changed since then, whereas Asia Bound, which will start in 2013-14, is open to all.

Mr TUDGE: It seems to be particularly anomalous here, where you can now go to an overseas institution to do your study, you no longer need to have go to an Australian institution to do your study, according to the amendments.

Mr Warburton : You are required to be undertaking a course of study as a Commonwealth supported student from an Australian provider. The OS HELP scheme allows you to undertake some of the study required for your course or meet some of the requirements of your course overseas.

Mr TUDGE: Through a non-Australian provider overseas?

Mr Warburton : Not necessarily a higher education provider. One of the things that we are opening up here, while you are meeting the requirements of your—

Mr TUDGE: It is in your submission. It has removed the requirement that student must be enrolled in an overseas college or educational institution at an overseas campus of an Australian higher education provider to be eligible for OS HELP.

Ms Bennett : That can be internships.

Mr Warburton : We are removing the requirement that you be enrolled at an overseas higher education provider. At the moment you have to be undertaking a course of study with a provider in this country. It was the case before that to get a loan while you were overseas you had to be going and doing part of your study with a higher education provider overseas. We have removed that requirement because we were opening up the possibility that you could be undertaking a work placement or a practicum or some clinical training while you were overseas. That activity has to still be a requirement of your course with your provider in Australia but it limited your ability to use the scheme if you had to be enrolled with a higher education provider overseas. If you are doing a clinical placement in a hospital, there is not really any need for you to be enrolled with a provider. If universities in Australia were trying to organise such a thing, we were driving them through a rather strange convoluted hoop where they had to organise the placement and have some notional enrolment at a provider overseas.

CHAIR: So in terms of that more flexibility on what you actually do overseas as part of your course back in Australia, has that been extended to all 0S-HELP or has it just been to those going to study in Asia?

Mr Warburton : All 0S-HELP.

CHAIR: So that amendment in this bill will change it to all OS-HELP, that you can do a clinical placement or something like that?

Mr Warburton : That is correct. The bill is really doing two sets of things. One was specifically oriented to engagement in Asia—the higher rate of payment, the amount to facilitate language studies—and then a set of conditions which applied across the board about eligibility of OS-HELP. We engage with universities. They let us know what is wrong with our arrangements. We have had this on the books as things we thought we could usefully do to improve the scheme generally and it became part of the package.

CHAIR: Can I ask a question about your definition of Asia because this came out the Human Rights Committee. Obviously in the Asian white paper in different sections it was pointed out that there are different definitions of Asia. There is no actual definition of Asia in the bill. Will it be outlined somewhere? Who will make the decision, if there is this differential payment, about where Asia is?

Mr Warburton : The intention is that across these different schemes we will have the one definition of Asia. All the countries are currently listed on the PM&C website. They are countries which the ABS would classify as South-East Asia, North East Asia and southern Asia. So from what could be the broadest definition of Asia they exclude Central Asia—many of 'the stans', so to speak, Armenia, Azerbaijan.

Mr RAMSEY: North of China is off limits. Is that what you are saying?

Mr TUDGE: Russia?

Mr Warburton : Russia is not included and Central Asian countries are not included. We can provide that to the committee.

CHAIR: I wanted to know whether there was a standard definition. It sounds as though you are taking DFAT's destination of Asia. Is that correct?

Mr Warburton : Of South-East Asia, North-East Asia and Southern Asia. We have excluded Central Asia.

CHAIR: Right. And that will be in the guidelines?

Mr Warburton : In the OS-HELP guidelines in our case and they will be the same in AsiaBound.

CHAIR: What technical studies does AsiaBound pick up because one of the concerns was that this was not available for technical studies at TAFE, certificates and things like that. Does your program pick up those areas? We have had a lot in previous submissions about the need for our expertise to go over and work, certainly to send people overseas to work in those more technical areas as well.

Ms Bennett : AsiaBound has funding for about 3,500 students a year, of whom about 500 will be VET students who are with public or private VET providers and also with public and private higher education providers.

Mr RAMSEY: Of the current loans that are going up to $5,000 or so a year, do we know where they are going, the overseas portion?

Mr Warburton : We know that 600 go to Asian countries at the moment. Broadly the vast majority are going to Europe or America at the moment. One of our objectives is to increase engagement with Asian countries.

CHAIR: Thank you very much. If there is any additional evidence you would like to provide you can forward that to the secretariat and you will also be sent a transcript of the evidence you have given here. You can make corrections to grammar or fact. Thank you for appearing here today.

Resolved (on motion by Mr Ramsey)

That this committee authorises publication, including publication on the parliamentary database, of the transcript of the evidence given before it at public hearing this day.

Committee adjourned at 12:10