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Wednesday, 26 November 2003
Page: 18007


Senator STOTT DESPOJA (10:21 AM) —I speak on behalf of the Australian Democrats as their higher education spokesperson on the Family and Community Services (Closure of Student Financial Supplement Scheme) Bill 2003 and the Student Assistance Amendment Bill 2003. We are obviously concerned with issues of student income support and of course students. The closure bill winds up the Student Financial Supplement Scheme for youth allowance, pensioner education supplement and Austudy payment recipients, while the Student Assistance Amendment Bill 2003 wraps up the scheme for those who are receiving Abstudy.

The Australian Democrats have repeatedly and consistently expressed concerns about the Student Financial Supplement Scheme—in fact, since its introduction by the former Labor government in 1993. We opposed the introduction of this scheme on the basis that it was not the most equitable way to provide student financial assistance and that it was quite punitive in some of its repayment rates and processes. However, the scheme is now in place and there are thousands of students who rely upon this scheme. The Australian Democrats have thought long and hard about how we would respond to the prospect of the closure of this scheme. We made offers to the government. I spoke to the minister, particularly the advisers in the minister's office, about the possibility of a sunset clause. Many desperate students have been contacting all of our offices—and I am sure that all political offices have received many emails, faxes, phone calls and visits about this scheme. A sunset clause seemed an effective compromise. But the government would not hear of it, not even discuss it and not even contemplate it. We were told very clearly by an adviser, not a minister, that the government were going to deal with it in their own way.

Given that situation, the Democrats will oppose the legislation before us. We recognise that the closure of this scheme, without any sunset clause or assistance to those students, would further disadvantage those students who are already struggling to survive on the government's punitive income support measures. The decision was not made lightly. We weighed up our concerns about the inequitable nature of the scheme, to which I have referred, against the fact that many students receiving support under the scheme have indicated that it is the only way they can complete their studies. It is true to say that the topics of not only student financial support but student income generally have been absent in recent debates about reform of education generally and higher education specifically. They were indeed glaring omissions in the Crossroads process and glaring omissions in the policy and now the legislation that has come out of that process. The Democrats have been among the strongest advocates of improving, even just debating, the student income support measures that we have in Australia today. We have heard ideas from other speakers as to how we could improve student financial support.

The Democrats will be moving around 10 amendments that will give senators the opportunity to vote for changes to student income support measures. Those amendments have been flagged by me over many months. I am sorry they have not been circulated yet, but I have been assured that they will be ready this morning. Many of the issues have been canvassed previously. I am disappointed with the lack of action within the context of the Crossroads inquiry. As other senators have pointed out, this issue is one that students, welfare organisations, academia and staff have been talking about. Not only that but the Australian Vice-Chancellors Committee has been among the first to recognise that student income support is particularly important. Its report Paying their way is one of the few but one of the standout papers that analyses the effect of the lack of student income support on students in Australia today. It also looks at the issues of debt relating to students today. I am disappointed to see that the AVCC is still maintaining support for a scheme that would increase fees and charges by universities through the higher education changes.

But this government has not listened. And I point out, with respect to my colleague Senator Nettle, that it is not falling on deaf ears. Deaf ears are not the offensive ones; it is ears that refuse to listen. I make that point. I do not mean to be churlish, but it is an expression that the deaf community find quite offensive. It is government refusing to listen that is the problem; it is not the deaf ears. I hope that senators take that comment on board.

Our concerns regarding the Student Financial Supplement Scheme stem from the fact that it targets those who are already in the worst financial position. This is highlighted by the difference between the way category 1 and category 2 students are treated under this scheme. Category 1 students are eligible for student income support. Category 2 students are dependent students who are not eligible for any income support because they do not satisfy the parental income or family actual means test. But the so-called adjusted parental income and family actual means tests are below $64,500.

Category 1 students, as many senators would know, can trade in some or all of their income support entitlement for a loan on the basis of a $1 reduction in income support for a $2 loan, capped at $7,000 per annum. The entitlement that is traded becomes part of the loan, so you can see how that leads to quick debt accumulation. The Student Financial Supplement Scheme therefore forces category 1 students who take out the loan to trade away an entitlement for a loan. Category 2 students can take out a loan for $2,000 per annum, but they do not have to trade in an entitlement. This means that category 1 students, who are poorer naturally by virtue of qualifying for income support, give up more. There is also little awareness among students that they are in fact trading an entitlement for a loan. According to one financial adviser:

So many students do not realise they will in effect have to pay back at least two times the value that they gain from the scheme, not to mention CPI. I had one session with a male student who had not long lived in Australia... when I explained that his debt would be $7000 for that year even though he was paid just $3500 more, he just would not believe me ... He was horrified once I proved it to him—he clearly felt cheated and misled by the scheme.

The government argues that the Student Financial Supplement Scheme is fundamentally flawed because of this $1 entitlement for a $2 loan trade-in mechanism. This is one of the key arguments that the government is using for abolishing the scheme. I acknowledge that it is a good argument. The government is right. If student income support measures in this country were better, it would be much easier for some of us to support the bills that are before us today. The government also argues that the Student Financial Supplement Scheme was introduced at a time of high youth unemployment, high interest rates and when there were few commercial loans packages available to students. It is also arguing, I believe, that the latter two points do not apply now.

The government argues that this is another reason why the Student Financial Supplement Scheme should be abolished. The Australian Democrats dispute the argument that commercial loans packages are now readily available to students. Undeniably interest rates have reduced since the scheme was implemented in 1993, and there is a debate that interest rates will go up again soon. But does the government honestly believe that those students who are more likely to take up the Student Financial Supplement Scheme loans—remembering that they are the students in the most dire financial circumstances—would be in a position to easily take up a commercial loan or that a commercial loan would be available to them? Let alone that, how would they be in a position to repay it? Think of the financial disincentives involved in some of those processes. It would be particularly difficult for students who have no credit history or employment history, which is the case for many students.

Another argument from the government for abolishing the scheme is that it is creating high levels of student debt. While the Australian Democrats agree with this argument, it is a hypocritical one because it is pretty much at odds with the government's entire approach to education, higher education and student income support. This government has presided over an almost eight-year period of cost-shifting to students. Over the next couple of days, we will be dealing with legislation that will see this cost shift increase manifestly. Students in public universities in Australia already face fees and charges that are among the highest in the industrialised world. There are students who do not have income support measures, although we know—in Australia and around the world—that student income support is one of the key ways to improve access to higher education participation, especially for disadvantaged groups.

How can this government be so concerned about students trading in a $1 entitlement for a $2 loan, when it has no problem with increasing full fee paying places for undergraduate students in Australia and no problem with forcing interest bearing loans? Let us remember that we are talking about 3.5 per cent real interest, plus CPI, on the loans scheme that we will be debating in the Senate this week. Of course, the government has no problem with continuing to ignore any meaningful, sustainable changes to student income support measures so that students can contemplate not only higher education but also secondary education. If the government were genuinely concerned about student debt, it would not burden students with the continual deregulation of fees at both the postgraduate and undergraduate levels. It would ensure that income support payments were higher, and it would ensure that they were at least enough for students to live on, not woefully below the poverty line as they are in Australia today.

We know that many students are forced to take out these very loans because student income support is so low or because student income support access is so constrained. This is a concern that is shared by student financial advisers around the country. Fiona Leach, from Victoria University, said:

Working in the western suburbs, I see many poor students who would not be able to continue their studies if not for the SFSS, and make an informed choice to use it ... I hate the scheme—

these are her words—

it is insufficient, mean and tricky. But we can't afford to lose it either. What will so many of these students do without it? It is a hard act to play, to defend something that you hate because without it we'll be worse off.

That is exactly how the Australian Democrats feel today. It is a mean, tricky, harsh and insufficient scheme that increases student debt, but it is the best we have under the circumstances. That is the irony, and the government—a government that is also mean and tricky on occasions—has no problem with it.

I know that all the students who have contacted my office, and many others as well—and, believe me, hundreds of students have rung us; hundreds of families actually, with a lot of parents having called us—have pleaded with us not to support the closure of the scheme, because it is their only means of supporting themselves through their study. To those students and their families, we hear your concerns. We will not leave you in the lurch. We will not leave you without protection, and I genuinely hope the Senate will not either.

Earlier this year I asked the minister's office for details as to how many students who take up the Student Financial Supplement Scheme are from low socioeconomic groups or are from rural and regional backgrounds. Also, I wanted to know how many are single mothers. In 2002, 39,892 students accepted the Student Financial Supplement Scheme loans. Of these students, 15.6 per cent were Indigenous, 1.6 per cent were listed as remote, 15.2 per cent were listed as single parenting payment recipients, 12.2 per cent were not born in Australia, and 54.7 per cent—a clear majority of those who accepted the loans—were women. The Democrats cannot emphasise enough our concerns about all those traditionally disadvantaged groups, not to mention students with disabilities. My colleague Senator Brian Greig, from Western Australia, discussed the situation faced by students with a disability. He spoke about it in detail when he made his second reading contribution last night.

Although the Democrats did not support the introduction of this scheme, we will not take it away from those students who now rely on it, 10 years on. We will not do that. We will wait until this government does something meaningful about addressing student income support, and then we will talk about it. We will continue to call on this government to increase student income support payments to above the poverty line. This is a call that is strongly supported by groups in the sector: the Australian Vice-Chancellors Committee, the National Union of Students, the National Tertiary Education Union, the Australian Council of Social Service and the Council of Australian Postgraduate Associations—all of them.

In their position paper on the Student Financial Supplement Scheme, the National Union of Students said:

We condemn the Government for current levels of assistance, where maximum payments are 20 percent below the poverty line for students on Youth Allowance and 39 percent below the poverty line for students on Austudy.

In their submission to the Senate Employment, Workplace Relations and Education References Committee into the higher education funding and regulatory legislation, NUS stated:

It is of serious concern that current levels of income support are a long way below the Henderson poverty line. Research by the Australian Council of Social Services last year concluded that income support levels for students were between 20 and 39 per cent below the poverty line. With income support levels set so low, many students struggle just to provide themselves with the basic necessities of life. Students also face additional expenses associated with their courses which place additional burdens on their financial position. With the cost of textbooks alone taking up $200-$600 a semester, students can spend up to a month's income support payments each semester just on books.

That is from the NUS evidence to the Senate inquiry. I do not need to emphasise again the number of inquiries we have had in this place. I can remember the Price report, for goodness sake, in the House of Representatives in the late 1980s or early 1990s. I was still a student at the time of the Price report. The same recommendations that were in the Price report that were emphasised in consequent Senate and House of Representatives reports have not been implemented—although I do acknowledge that the Labor Party just for a while there, under former minister Peter Baldwin, started to sneak down the age of independence on a gradual basis to between 25 and 22 years of age. But, as soon as 1996 came around and we had a new government, it got knocked up again.

Today we are going to test that again. We are going to test Labor and we are going to test the government on it, and we are going to test others in this place who have disproportionate influence and control over the student sector right now. We are going to find out how they will vote on the issues of the age of independence, the parental threshold and the poverty line and see whether we get parity or increasing rental assistance for those students who are receiving income support, both Austudy and other measures. The Bills Digest for these two bills states:

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.

The very people who are arguably disproportionately benefiting from this scheme are the most disadvantaged: sole parents, partnered women, people with disabilities, Indigenous people and some people from remote and regional backgrounds. We are pulling the rug from under these students today if the government gets support for these schemes being closed down. Using the most recently available statistics, 22 per cent of Austudy recipients and 18 per cent of pensioner education supplement recipients elected to receive the supplement, compared with only five per cent of those claiming youth allowance. This highlights the fact that those in the most dire financial positions take out these loans, and we must continue to ensure that we provide some method of support to these particular students. I do acknowledge that, when I talk about statistics, there has been great difficulty in getting up-to-date statistics on some of the figures. In fact, the Youth Allowance and pensioner education supplement statistics were from June 2002 and July 2003 respectively. I had difficulty getting very up-to-date figures for Abstudy, so I have been relying on annual reports for those.

The bottom line on these schemes is that the most disadvantaged are receiving funds from them and that the scheme was introduced by the former government in a way that we found punitive and inequitable. But, in the absence now of better student income support measures, it is the best that we have for some of these students. Even though it is a completely dodgy rort in which the government makes money out of these poor students who are trading in aspects of their entitlement for loans that are unfair and difficult to pay back, ironically, it is the best that they have. So my message to them on behalf of the Democrats is: we are not going to take it away from you. For the government to not even consider a sunset clause shows just how much they do not care about those particular groups I have mentioned. Today the Democrats will strongly oppose these measures and will test the Senate on its rhetoric in relation to other income support measures today.