Julia Gillard (Lalor, Australian Labor Party, Deputy Prime Minister) Share this | Hansard source

I move:

That this bill be now read a second time.

It is a pity that the debate about student income reform has come to this. May I remind the House of how we reached the point where I am introducing a bill for student income reform that is comparable to a bill that I introduced earlier this year. I think it would weigh on the minds of those on the Liberal and National parties’ side of the parliament to reflect on how we got here.

When the government was elected in 2007, the circumstances were that the participation rate of country kids at our universities was going down; the participation rate of students from poorer backgrounds, from low-SES households, was going down. While this was happening it was an open secret that our student income support system was not working effectively and, in particular, that a significant number of students from upper-income families, families earning more than $200,000 or $300,000 a year, were living at home and getting full youth allowance. These facts were known.

The then Howard government—and obviously many members of today’s opposition were members of the Howard government either as frontbench ministers or backbenchers—took no steps to address this matter. There was no talk then, under the Howard government, of additional steps to assist rural and regional students. There was no talk then, as Peter Costello delivered more than 10 budgets, of allocating an additional $1 billion to student income support. Even though these problems were known, the Howard government had no plan to act, and it is my recollection that at the 2007 election the then Howard government had announced no plan to act.

Consequently, when we were elected in 2007 we recognised that there were significant problems for Australia’s universities, which were underfunded; significant problems with lack of reform in the system, which was ossified; and significant problems with equity and participation in higher education. It was because of these significant problems that the government commissioned the Bradley review, led by a very eminent Australian, Denise Bradley, to advise government on a profound set of reforms to our higher education system. After what was effectively a year-long review, Denise Bradley delivered to government a report that had enough information in it to cause anybody who cared about future productivity, prosperity and equity in this country to be concerned.

In response to that Denise Bradley report, in the May budget this year the government embarked on a landmark set of reforms for higher education. It is correct to say that these are the most transformative reforms, the biggest reforms, to happen to higher education since the Dawkins reforms of the 1980s, when John Dawkins was the Labor government’s Minister for Employment, Education and Training. The scale and magnitude of our reforms cause anything that the Howard government did to pale into insignificance. This is a reform path for our universities for this century. It comes with significant new resources; indeed, more than $5 billion of new investment in our higher education and innovation systems was delivered by this government in the May budget.

Significantly, this puts Australian universities on a growth path. We have set very high aspirational targets for participation in higher education and the attainment of an undergraduate qualification by young Australians. These are 2020 targets that will be difficult for this nation to reach, but we believe they are important if this nation is to have a competitive future in what is a cutthroat world.

These landmark reforms also deliver on a new system of equity for higher education. On this side of the House, we believe it is an offence against decency, against equity, against the Australian ethos of fairness, that if you come from an upper-income household you are many times more likely to go on to university than if you come from a poor family. That is wrong, and we aim to correct it.

We aim to correct it through an integrated set of reforms. That is what our education revolution is about: reforms in early childhood, reforms in schools, reforms in vocational education and training. But we also aim to correct it through these powerful new reforms to Australia’s universities. That is why we have set a target of, by 2020, 20 per cent of the enrolments at our universities being students from low SES backgrounds. It is not because we intend to compromise on quality. We most certainly do not. All of the research tells us that, properly supported, low SES students can achieve at university at the same rate as their counterparts from more moneyed and advantaged backgrounds. We believe they should get that opportunity.

We have consequently not only built growth into the system; we have built growth with equity into the system, including new funding streams to encourage universities to seek the participation of Australians from lower socioeconomic households and to partner with schools in the delivery of systems to support those Australians from school into university.

As we delivered this transformative set of changes to higher education, we announced a better targeted and fairer student income support system. Let us go through the key features of that student income support system. Those key features are contained in this bill, as they were contained in the bill that I introduced before the House earlier this year. Those key features are as follows. The bill enables 150,000 students to receive start-up scholarships, which will, when the system is in full operation, be worth $2,254 a year. This contrasts with the strictly limited scholarship system now, where 21,000 students receive Commonwealth Scholarships.

This bill delivers changes to the family means test rates for the receipt of youth allowance. Those changes are important to enable almost 25,000 families with incomes between just $32,800 and $44,165 to get the maximum rate of youth allowance and a further 78,000 students to receive a higher payment than they otherwise would have received.

This bill enables the delivery of Relocation Scholarships, with an eligibility for $4,000 in the first year. This bill also brings down the age of independence of students progressively over time from 25 years of age to 22 years of age. This will see an estimated 7,600 new recipients of the independent rate of youth allowance. These changes also enable students to keep more of the money they earn without it affecting youth allowance.

It is a better targeted system, a system where we have unashamedly stopped the circumstance where students in metropolitan areas living at home in families earning $200,000 and $300,000 a year got full youth allowance. We have redirected that money to better supporting students who need it the most.

Clearly, as members of the parliament would recall, there was an issue about the transition from the current system to the new system. I acknowledge that that transition issue caused stress and anxiety for a number of students who were on a gap year this year—that is, they had made arrangements to take a year off, seeking to qualify for youth allowance under the old rules, before they could have known about the May budget changes. The government responded to that issue by amending the bill after my consultations with students.

The bill is therefore one that, through the government’s initial own amending, dealt with the transition issue most raised by Liberal and National party members with me—that is, the transition issue that was associated with students on a gap year this year who had made arrangements to take a gap year before the May budget and who needed to move in order to undertake university education. The government had already responded to that.

With that change already in place, the bill went from this place to the Senate. Amendments at that stage were moved by the coalition but were unacceptable to the government on the basis of fiscal prudence and on the basis of equity. On the basis of fiscal prudence, combined these changes would have cost the Commonwealth budget more than $1 billion. This was in circumstances where, I remind people, members who were advocating these changes had actually had the power, when they were in government, to allocate government money to student financing and they had never sought to increase student financing with a new allocation of $1 billion. It did not happen.

I think it would cause Australians—who tend to be wise enough to judge people by what they do rather than by what they say—to think: ‘Why is it that members of parliament who were on the government benches for almost 12 years should suddenly discover the need to invest a new $1 billion in student income support when, over 12 years, they never evidenced an intention of doing that?’ So, on a fiscal basis, these changes by the coalition were unacceptable, particularly when the coalition’s leading spokespeople—the Leader of the Opposition and the shadow Treasurer, for example—frequently said that they were concerned about debt and deficit. In those circumstances, to seek to allocate over $1 billion of money without matching savings was obviously an imprudent thing to do.

Secondly, the propositions of the opposition were not right on equity grounds. To the extent there were matching savings offered—and they were not sufficient to cover the new expenditure—they were permanent cuts to scholarships; cuts that would have taken $700 million in the form of scholarships out of the hands of students, $162 million of it out of the hands of country kids. On an equity basis, we believed that was wrong and, on an equity basis, the amendments were unacceptable because they would have perpetuated the continuation of a system which has seen the participation rates of country kids in Australia’s universities go backwards.

As we know, when the bill was returned to the House of Representatives the government indicated that these amendments were unacceptable. The bill returned to the Senate last night. By the time the bill returned to the Senate the government had, in negotiations with the Greens and Senator Xenophon, further addressed concerns about transition issues. The bill before the parliament brings that agreement to legislative life. It contains the amendments that were agreed with the Greens Party and with Senator Xenophon.

These amendments would have enabled more students to benefit from transition arrangements if they were on a gap year, including students living at home, but there would have been a means test at $150,000 for students living at home. We thought that was a sensible compromise to assist students who made arrangements before the government’s changes became known—a sensible compromise between dealing with equity considerations and having the means test on students living at home. I thank the Greens Party and I thank Senator Xenophon for showing the maturity to deal with this issue and showing the maturity to do it in a budget neutral context, with the change being paid for by a reduction in start-up scholarships in the first year but with start-up scholarships going to their full value of $2,254 in the year after.

When the bill came up in the Senate last night, the first thing that happened is that the Senate did not insist on the coalition’s amendments. It is important, I think, that participants in this debate—the Liberal Party and the National Party—realise that they do not have a majority in the Senate for their amendments. They might be unhappy about that; they probably are. But that is the truth. They cannot get their amendments up.

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