Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | Hansard source

I rise to speak on the Higher Education Support Amendment (FEE-HELP Loan Fee) Bill 2010, which seeks to increase the amount of FEE-HELP debt for fee-paying undergraduate students from 120 to 125 per cent of the FEE-HELP loan. FEE-HELP, which is an income-contingent loans scheme, is available to students to cover their tuition costs in higher education. There are currently two types of places available for eligible Australian students at undergraduate level: Commonwealth supported places where the Commonwealth contributes to the cost of students’ units of study and students pay a student contribution amount towards the cost of their units of study, and fee-paying, non-Commonwealth-supported places where students must pay full tuition fees for their studies and where the Commonwealth does not contribute towards the cost of their education but students may be eligible for a FEE-HELP loan to help pay their tuition fees.

The FEE-HELP scheme introduced by the coalition in 2003 operates similarly to HECS-HELP—that is, the student applies when enrolling and then the loan amount is aggregated with all loan balances and automatically repaid to the taxation system once the student earns above a certain income threshold. The loan is heavily subsidised by the government or taxpayers, since students do not pay a commercial rate of interest on their loans and repayment of the loans is contingent on various factors that a commercial loan would not take into account.

To partly recoup that subsidy the government adds 20 per cent to the value of the loan as a loan fee for fee-paying domestic students enrolled in an undergraduate course. The Bradley review into higher education recommended an increase in the FEE-HELP loan fee from 20 per cent to 25 per cent. This recommendation to increase the FEE-HELP loan is in the bill today and partially gives effect to recommendation 37 of the Bradley review. The government estimates that this measure will bring in $17.6 million over the period 2010-11 to 2012-13. That recommendation was based on studies by Professor Bruce Chapman, the architect of the HECS scheme.

The rationale for why the FEE-HELP fee applies only to full-fee-paying students is, we are told, that the loans they take out to cover the costs of their studies tend to be substantially higher than for Commonwealth supported places; therefore, the implicit subsidy is much higher and, hence, so is the desire of the government to recover something. Even with a FEE-HELP fee and even with a FEE-HELP fee increase, as proposed in this legislation, these students, even if treated differently to those in Commonwealth supported places, are still much better off than they would be if there were no FEE-HELP available to them.

FEE-HELP covers those students doing postgraduate studies at university, undergraduate and postgraduate studies at private higher education providers and in the vocational education and training sector, including TAFE, for diplomas and advanced diplomas. If no FEE-HELP existed they would have to take out commercial loans to cover the costs of their education—the situation that exists in the United States, for example.

I would like to remind the House that Professor Denise Bradley, someone who I know and respect, made a suite of recommendations—many of which the coalition are broadly supportive of. But I note that this measure has attracted some degree of concern from the sector. For example, Universities Australia, in their response to the Bradley review, noted they do not:

… see any need to increase the loan fee for FEE-HELP, particularly given the Bradley Review’s broader conclusion that the burden on domestic students should not increase.

Similarly, the Australian Council for Private Education and Training is against the charge as it perceives it will add an additional burden on students and further entrench the inconsistent treatment of students in public and private higher education institutions. However, given that Professor Bradley’s recommendation is an economically responsible measure that seeks to recoup from students while still offering a significant government subsidy toward meeting the costs of their education, I see no reason to oppose this measure. This is particularly so since the measure will only impact on the minority of undergraduate students whose course choices necessitate higher loans and therefore receive a higher subsidy from taxpayers.

I would like to acknowledge, though, that there are a number of anomalies and inconsistencies in the HELP loan schemes that should be closely examined in the future. The HELP system is currently complicated and it treats different students differently by applying different rules to them, particularly with respect to FEE-HELP. For example, VET FEE-HELP remains at 20 per cent. VET FEE-HELP in Victoria has a zero per cent administration fee, as it was removed as part of the skills reform agreement, and the OS-HELP loan fee was removed in the 2009 budget following the government’s acceptance of another Bradley recommendation.

These anomalies are further pronounced when a student has a combined debt in different categories. Higher education researcher and commentator Andrew Norton has pointed out that the duration of a course may not be as important as the total HELP debt actually accrued:

Students who go onto FEE-HELP courses while they still have a HECS-HELP debt will have larger overall HELP debts than students who just do one undergraduate FEE-HELP course.

He suggests that:

… the surcharge should be adjusted to the total existing HELP debt, rather than being based on undergraduate/postgraduate distinctions that entrench unfair anomalies in the system.

Norton calls for a broad review of the HELP scheme and argues for a system that would simplify the different HELP categories and streamline common conditions for all students. The coalition’s consultation with education stakeholders and providers suggests that there is a solid rationale to undertake a comprehensive review of the HELP system. A coalition government would have a closer look at the whole system to see if it could be simplified and improved.

I would now like to talk about another topic while on the subject of FEE-HELP. As of 1 January 2009 public universities have no longer been able to offer full-fee-paying places to commencing domestic undergraduate students, except in certain circumstances. Fee-paying students who are enrolled in a fee-paying place prior to January 2009 are able to continue in their course on a fee-paying basis. Other approved higher education providers can still offer full-fee-paying places. Other approved higher education providers include, for example, theological colleges and natural therapy colleges—of which there are more than 150 operating in Australia.

Now we have the crazy situation under the Australian Labor Party, for example, where a student might just fall short of the score to get into law or medicine and miss out on a HECS supported place, but they can move overseas and pay full fees to get an education. And this works in reverse: where an Australian student is denied the opportunity to pay for their own education but the option is still available to overseas students, denying universities a growing source of additional revenue at a time when universities are feeling the pinch.

The government provided funds for the transition period phasing out full-fee-paying places but at the time this announcement was made several vice-chancellors noted that while the funding was welcome, it fell short of the amount they would otherwise be making by charging full fees. If, as the Bradley review stated, ‘The public-private divide is no longer a sensible distinction’, why does the Minister for Education and the Rudd government insist on such a discriminatory decision?

Feedback that the coalition receives from the sector indicates that it is unclear exactly what private providers mean in today’s world, when many are run by government agencies or public universities, or are joint ventures with them. We note that the Bradley review, in its executive summary, clearly makes mention that the public-private divide is no longer a sensible distinction. The key message outlined in the Bradley review is that a more deregulated system in higher education is necessary in order to increase participation from students from low socioeconomic backgrounds. Specifically, Professor Bradley suggests that we must support a system that allows institutions the flexibility to decide the courses they will offer and the number of students they will admit.

By abolishing full-fee-paying places, the Rudd government directly undermined the capacity of universities to flexibly respond to demand by offering a mix of places. In contrast to Labor, who speak of a stronger education sector that is more independent, only a coalition government will truly deliver on this promise. The coalition understands that, to be competitive, universities must be able to respond in a flexible way to ever-changing circumstances and needs. They must be free to specialise or diversify in a way that they feel will best address their weaknesses, build on their strengths and provide the best benefit to their students.

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