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Wednesday, 3 December 2014
Page: 14048

Mr PYNE (SturtLeader of the House and Minister for Education) (10:53): I move:

That this bill be now read a second time.


Today I introduce the Higher Education and Research Reform Bill 2014 to secure the passage of essential reforms to higher education and research, which have at their heart Australia's future economic security and opportunities for students.

This bill implements reforms to higher education and research announced in the 2014-15 budget, which seek to spread opportunity to more students, especially disadvantaged and rural and regional students; equip Australian universities to face the challenges of the 21st century; and ensure Australia is not left behind by intensifying global competition and new technologies.

Naturally, I am disappointed about the outcome of the Higher Education and Research Reform Amendment Bill 2014, which was defeated yesterday in the Senate following a sustained, baseless and irresponsible scare campaign.

We should all be disappointed. That bill, in amended form, would have shown the worth of our democratic process, representing, as it did, the outcome of many months of consultation and negotiation on the detail of the reform package.

I am therefore introducing a new bill, the Higher Education and Research Reform Bill 2014, which preserves essential elements of the government's higher education reforms with the following changes:

The government has withdrawn the proposal to change the indexation to the 10-year Treasury bond rate. I accept that there were concerns about the impact of the previously proposed measure on some graduates, including those who take time out of the workforce to raise children or for other reasons, and those who work in low-paid employment. Senator Day and others argued cogently for this change, and we have responded to their concerns.

I have also listened carefully to Senator Madigan's arguments for a pause on HECS indexation for primary carers of a child under five. This bill, the Higher Education and Research Reform Bill 2014, contains this measure. It will provide real benefits for new parents.

This bill also provides for a structural adjustment fund to assist universities to transition to a more competitive market, particularly those in regional areas.

The bill also introduces a new scholarship fund within the Higher Education and Participation Program for universities with high proportions of low-SES students.

The bill will also guarantee that domestic students' fees are lower than international students' fees.

Through returning the indexation rate for HECS debts to CPI, providing the indexation pause for new parents and abolishing the unfair loan fees imposed on some students but not others, this reform bill makes the HECS system fairer and more generous. Through the provision of support—for the first time—for all Australian undergraduates, wherever they study, in diploma courses through to bachelor degrees, we will be supporting far more students than ever before. The reform bill spreads the money slightly thinner so as to spread opportunity much wider.

Through freeing up our universities, we will enable them to offer students the very best education they can, and HECS guarantees that this will remain affordable and accessible for all. In fact, the Commonwealth Scholarships will support tens of thousands of disadvantaged students to go to university. This is not just a budget measure. This is great reform. It is some of the most important reform in generations.

I am, of course, open to further negotiations with members and senators on the details of the bill. Contrary to some of the irresponsible negative commentary from those opposite, the government has been consulting extensively before and since budget night and has demonstrated already our bona fides in responding to constructive, positive suggestions.

The government has made the changes I have mentioned to its proposed reforms because it has listened carefully to the views of those in the higher education community—universities, non-university higher education institutions, students, their parents, employers and professional organisations.

I have taken careful account of the recommendations of the Senate Education and Employment Legislation Committee following its inquiry into the Higher Education and Research Reform Amendment Bill 2014.

I have consulted with members and senators, who have relayed the views of their constituents as well as their own thoughts on the proposed reforms.

I have said many times that I was prepared to make changes to the reform package to secure its passage through the parliament.

I believe that these reforms are nothing short of essential to the wellbeing of Australia's future economy. Without them, Australia simply will not prosper.

I am not alone in this view. This has been the clear message from higher education institutions across the country.

It is what they want.

It is what universities, TAFEs and colleges know isneeded for the future of higher education and for the future of our country.

Universities Australia, the Australian Technology Network, the Innovative Research Universities, the Regional Universities Network, the Group of Eight, TAFE Directors Australia, the Australian Council of Private Higher Education and Training and the Council of Private Higher Education have all supported the government's reforms, with amendments.

As Universities Australia said:

Either the status quo of ongoing inadequate investment or further cuts without deregulation will condemn Australia's great university system to inevitable decline, threaten our international reputation and make it increasingly difficult for universities to meet the quality expectations of our students

Overview of the reforms

The Higher Education and Research Reform Bill 2014 does not contain any tricks. It is much the same as the bill I introduced a few months ago which was yesterday defeated in the Senate, with the important amendments I outlined just a moment ago.

As such, this bill has the same objectives as its predecessor. It provides a basis to transform Australia's higher education system and allow it to be the best in the world.

There are four key elements.

Spreading access to higher education

This bill will expand access to higher education by removing current limits on Commonwealth supported sub-bachelor places. Any Australian student who wishes to study an accredited undergraduate qualification will be able to do so with Commonwealth support.

We will no longer discriminate against students who seek to enrol at private universities and at non-university higher education institutions, including TAFEs.

We are also providing unlimited places for diplomas, advanced diplomas and associate degrees—pathways into higher education for less-prepared students, and qualifications for jobs in their own right.

This government believes that engineering technologists, paralegals and construction managers are as deserving of taxpayer support to undertake their training as engineers, lawyers and architects.

This reform allows an additional 80,000 students each year to receive Commonwealth subsidies by 2018. This will include more people from disadvantaged backgrounds, from rural and regional communities and those who need extra assistance to complete their studies.

Member institutions of the Council of Private Higher Education (COPHE) have confirmed that 'whatever they receive in Commonwealth support for students will be passed on to students' through reduced tuition fees.

Equitable access will be further supported through the new Commonwealth Scholarship scheme. The Commonwealth Scholarship scheme will provide what is likely to be the largest scholarship support in Australia's history for students from disadvantaged backgrounds, which will enable many students from rural and regional Australia to get the education that they wish to have. These scholarships will assist students with the cost of tuition fees and also with the cost of living, textbooks and materials.

Fee deregulation

Second, the bill gives institutions flexibility in how they set their fees.

The government does not believe it should tell institutions how much they can charge for a course. Government control of fees means that institutions are operating with one arm tied behind their back.

The government does not have adequate information about how much it costs an institution to deliver a course, so why should it dictate the price?

No other business in Australia would stand for this degree of interference.

The government wants universities and other higher education institutions to compete with each other, including on price. We want each institution to be accountable to students for the type and quality of courses they offer. They need to deliver what students and employers want.

When higher education providers compete, students win. They win on:

the range of courses offered

the quality of teaching

other student support


value for money.

Fee deregulation is essential to drive greater competition, innovation and quality. It will enable our institutions to set their own direction, serve their students and communities as well as they can, and compete with the best in the world.

And the bill provides this flexibility without reducing access or affordability. Every Australian student will continue to be able to defer their tuition fees through HECS so they do not have to pay a cent up-front or pay a cent back until they are earning more than $50,000 each year.

A fairer higher education system

This brings me to HECS.

HECS is critical to ensuring that no student is denied the benefit of a higher education. Providing assistance to students through HECS comes at a cost. This year the government is providing more than $5 billion in HECS loans, and this will increase to $10 billion in 2017. The government sought to introduce a fair interest rate on loans to alleviate taxpayers of some of this cost burden. However, as I indicated earlier, I have removed this proposal from the package, and as a consequence it is not contained within this bill. HECS indexation will continue to be based on the CPI.

As I have indicated, the bill also reflects Senator Madigan's proposal to freeze interest charges for the primary carers of a child under five. This family-friendly proposal joins with Senator Day's proposal in taking us back to CPI for indexation of HECS debts, and goes further. It provides a wholly new benefit to graduates caring for young children.

Again, the important thing is, HECS is here to stay, so no Australian student need ever pay a cent up-front for their higher education course.

Our HECS system is the envy of the world—introduced by the Hawke-Keating government, in fact. But one thing that is clearly wrong with the student loan system is the 25 per cent additional fee that is imposed on students who choose to study in a non-Commonwealth supported place, and the 20 per cent on students studying with the support of VET FEE-HELP.

So the government is acting to make the system fairer by removing inequities in the treatment of students and institutions under the HECS scheme. Consistent with the budget announcement, the bill removes the 20 per cent loan fee for VET FEE-HELP and the 25 per cent loan fee for FEE-HELP. These loan fees are an unfair cost on those students who are not receiving a Commonwealth subsidy.

Removing the loan fee makes the system fairer and will simplify and improve the consistency of loan arrangements for students and institutions.

It will also remove price inequity between public universities and other institutions. It will particularly benefit students who elect to undertake higher-level courses at institutions such as TAFEs.

Over 80,000 students undertaking vocational education and training and 50,000 higher education students will benefit each year from the removal of the loan fee. In 2013, the average cost of these per student was around $1,600 for VET FEE-HELP and $2,600 for FEE-HELP.

The lifetime limits on all HECS schemes are also being removed as they result in students paying up-front costs which can provide a significant barrier to access. As a result of this change, no student will need to pay their fees up-front in order to access higher education.

A strong competitive research system

Lastly, the government is committed to ensuring that Australia has a strong, competitive research system.

As part of the higher education reform package the government will invest $11 billion over four years in research in Australian universities, including $139 million for the Future Fellowships scheme and $150 million in 2015-16 to continue the National Collaborative Research Infrastructure Strategy.

Labor left funding cliffs for both of these vital research programs.

The government's commitment to ARC funding for Future Fellowships means that ARC funding is increased by this bill well above what was proposed by the previous government in the forward estimates.

Consequences of the b ill not passing

For our universities, the funding system will continue to operate like a straitjacket. There will be little scope or incentive for them to develop and market new and innovative courses to Australian students; much less the capacity for them to shine internationally if this bill is not passed.

Australian universities will be forced to deal with the continuing instability and uncertainty of the current funding system. If evidence of this is needed, look no further than the $6.6 billion of cuts that Labor announced from 2011. This is hardly the way for Australia's third biggest export industry to run.

And let us not forget that what Labor did not cut, they left unfunded. If the bill does not pass, the Future Fellowships scheme will cease, and many of our best researchers will be forced to leave. The National Collaborative Research Infrastructure Strategy will cease, putting 1,500 researchers out of a job. The loss of these two programs alone will do irreparable damage to our capacity to support high-quality research.

For the higher education activities of our TAFEs and private colleges, we will be closing the door in their face.

If the bill is not passed, students will continue to be locked out of pathways qualifications—qualifications which, as identified by Dr Kemp and Mr Norton in their review of the demand-driven system, have a significant impact on the dropout rates of students with low ATARs.

If the bill is not passed, 80,000 Australian students a year will miss out on receiving Commonwealth support to study.

And if we do not pass this bill, we will forgo the largest scholarship scheme for disadvantaged students that Australia has ever seen.

Conclusion no credible alternative

So the Australian parliament again has an opportunity to support some of the greatest higher education reforms of our time, and it is clear that there is no credible alternative.

As Mike Gallagher, one of the most experienced figures in Australian higher education policy, has said:

The 2014 higher education budget reforms are necessary. They are logical, coherent, sustainable, equitable and inevitable … My guess is that the detractors of micro-economic reform in Australia's higher education industry will find themselves on the wrong side of history in resisting efficiency improvement and innovation, as they will be in opposing the redistributive measures of the package and, curiously, supporting socially regressive subsidies from general taxpayers to more advantaged segments of the community.

The Higher Education and Research Reform Bill 2014 will allow our higher education system to be the best in the world. It will ensure that future generations of Australians can get a world-class education to support them in the jobs of the future. It will provide the backbone of our future economy.

I urge members and senators to support the bill and I move:

That the debate be adjourned.