Alannah Mactiernan (Perth, Australian Labor Party) Share this | Hansard source

There is little doubt that the new university fee and loan repayment structures will see debt levels for students doubling, or trebling, putting the quest for higher education out of reach for many. I have no doubt that this is no great worry to the Prime Minister and to Minister Pyne who, at their heart, believe that education is a positional good and, just as when you make a lot of money you get to buy the Maserati or the Alfa, so too, an elite education should be the preserve of those, fundamentally, who have had the opportunity to do well financially. They are not motivated, and I think that has been recently described by Maxine McKew, in her new book on education, as the view that education is a positional good, which is a view embraced by Minister Pyne. This is not, of course, an egalitarian spirit, but these are not people who are motivated, fundamentally, by the quest for a quality of opportunity, but rather they are hankering after the hierarchies of the old world.

On any analysis, whether we are talking about universities from the Group of Eight—the elite universities—to the National Tertiary Education Union, there is agreement that fees will need to go up by around 30 per cent, just to make up for the cuts made in this budget to the universities, and particularly the massive per capita cuts to the Commonwealth supported places. So the per capita payment that currently is made to each student is going to be significantly cut. That figure, for some degrees—again, this is just the increase that will be necessary to cover the cut in the Commonwealth supported place per capita payment—is going to be closer to 60 per cent. Take a look at some of the areas. In engineering, an area where we should be encouraging our young people, we have seen the Commonwealth contribution cut by 28 per cent, increasing student fees by 54 per cent. In nursing, an area where we are importing vast numbers of people because we do not have enough nurses, the Commonwealth is cutting their contribution by 8.5 per cent per annum and increasing student fees by 18.5 per cent. With agriculture, they are going to a great extent to try to encourage people to get into it because it is recognised that there is a chronic shortage of professionals in this area that is hampering the ability of the agricultural sector to seize the opportunities that are being presented by emerging new markets. But, bizarrely, in agriculture we are seeing the contribution of the Commonwealth being cut by 15 per cent and an increase in student fees of 37 per cent. Yet at the same time we are acknowledging that we need to attract more people into this sector, because it has traditionally not been a well-paid sector.

Interestingly, in the performing arts my electorate arguably has the best performing arts academy in Australia. We see cuts being made there of 23 per cent and an increase in student fees of 45 per cent. I think the visual and performing arts will increasingly become something that can be engaged in only by people who have wealthy parents.

The universities will now receive less for every student. To cover that we have fee deregulation. It is interesting that the minister makes much of the support for fee deregulation that comes from the Group of Eight universities. It is true that in the current funding environment, with $6 billion worth of cuts to higher education, there are universities that believe they need to be able to charge more to build their reputation. But we know that this way of doing it, through deregulation, will come at the expense of the rest of the sector and at the expense of the principle of merit-based access. This is a betrayal of the very notion that underpins what it is to be Australian: the notion that your ability and your effort, and not your birth, determine your ability to succeed.

Not everyone from the Group of Eight universities is blind to this. To quote Professor Kwong Lee Dow, former vice-chancellor of the University of Melbourne: 'Most universities will raise fees, at least to offset their loss of income from government subsidies. Many will go further to boost the total level of income they receive to above 2014 levels. Either way, higher education loan program debts will balloon.' The vice-chancellor of the University of Sydney, Professor Michael Spence, warned that fee deregulation risked pricing the middle-class families out of tertiary education. He said, 'It's the ordinary Australians that I think aren't getting enough of a guernsey in this conversation.'

But not even the Group of Eight universities, who are supporting deregulation, support the restructuring of the loan repayment system. Let me quote a few here. The vice-chancellor of the University of Adelaide, Warren Beddington, said, 'Aspects of the change are unworkable and unduly harsh. The compounding interest here means that we might deliver debts to students of $70,000, $80,000 or $100,000, and no-one here wanted that.' Likewise, the University of Queensland's Vice-Chancellor, Professor Peter Hoj, revealing that the budget would cost his university at least $60 million and hurt students, said:

I am generally concerned about the changes to the loan repayments. I do think that was very unexpected and I think that this is one of these things that really make the cuts to the Government funding for students sting more than we had anticipated.

So not even his friends in the Group of Eight will come out and support this massively unfair way in which the loan repayment system has been restructured.

Let us talk about this. There are three prongs to this restructuring: firstly, the reduction in the repayment threshold from $53,000 down to $50,000; secondly, and more importantly, the move from CPI indexation to a bond-rate indexation—this is capped at six per cent but the modelling shows that the most likely outcome over the long term is around five per cent; and, thirdly, the introduction of compounding interest. If we look at those three brought together, and the impact of higher fees and then the restructure, we see that the total interest obligations could increase by between 300 per cent and 700 per cent, and we could see overall debt levels double.

Universities Australia have modelled various scenarios that compare existing HECS obligations with those which will be experienced by students from next year on. Let us take a medium-fee scenario. We will take a nurse, so we are taking a pretty standard sort of scenario here. Under the current regime, with the CPI funding and current fee levels, a graduate nurse would expect to be paying, over the course of her loan, less than $4,000 in interest. Under this new regime—and taking a pretty modest scenario of a nurse who continues to work full time until such time as her HECS debt has been completed—that nurse will be paying now, in interest alone, between $14,000 and $26,000, depending on the actual bond rate. So, even with a bond rate of four per cent, that is a 300 per cent increase just on the interest charges. That is for a graduate nurse. If we see this compounding—particularly for women, who, in most instances, will take time out to have a family—in the case of that same nurse, if she works for six years full time and then goes on to part-time work, that increase in the interest rate will be 400 per cent: it will go up to $20,000. So the interest for her would go from less than $4,000 to $20,000 or, indeed, with a bond rate of five per cent, around $30,000. So, again, the interest charged will be more than doubling the debt. Likewise, an engineering graduate who is lucky enough to get a job will see their interest charges go from around $9,000 to between $37,000 and $78,000. And that is on, as I say, a modest fee trajectory.

We already see that banks and lending institutions are beginning to ask applicants for housing loans about their HECS debt. That indicates that students are going to have to really be considering very seriously the amount of debt that they are accruing.

Not as well known as the impact this is going to have on new students is the impact of the elevated and compounding interest rate that will apply retrospectively to over a million Australians and, indeed, to nearly 110,000 Western Australians with massive HECS debts, be they current or former students. So this is not just going to apply to students now and going into the future, from next year on; in fact this applies to over 110,000 Western Australians who entered into their degrees thinking that they were signing up to a regime of a CPI indexation. About half of those Western Australians have debts of $30,000 or more.

I had a letter from a young Western Australian, Georgina Ker, a 32-year-old, in my electorate. She has been out of the workforce for five years raising a family and is now going back in. She has short-term contracts and, indeed, an income level just above the repayment threshold. She is now facing a vast escalation of her liabilities because of this change of regime—a regime that she had no reason to expect would happen. It is a travesty. As consumer law specialist Dr Jeannie Marie Paterson said, 'It's akin to banks forcing mortgagees onto a flexible interest rate.' So here we have 110,000 Western Australians, over a million Australians, who suddenly have seen not just the goal posts shifted but, in many cases, just cut out from under them.

There has been this profound change in the way of the repayment regime that is applying retrospectively. We know Minister Pyne does not think that is right. He told the parliament in 2010:

… it is a fundamental principle of law and regulation that if someone relies on the laws and regulations at the time, they should be able to rely on those laws into the future. They should not have the goalposts changed on them in the middle of that reliance.

I want to make a brief reference to the provision just to publicly owned or not-for-profit institutions to the provision of for-profit private providers. Professor. Greg Craven said today:

Everyone knows that this gravy train will end up pulling into the Ma and Pa Kettle business academy and that non-universities that have nothing like the funding requirements of Australia's national intellectual powerhouses.

And he calls on the government to defer it, ditch it or discombobulate it and take the opportunity to reduce the cuts where they matter.

So we are taking money out of established Australian universities to fund the Ma and Pa Kettle business academy. How on earth can we justify that as part of making our higher education system stronger and more capable? We do need to be really focused on this. What we are doing is going to have profound impact on the future of higher education in Australia, on the future of our community. Can we at least call upon the Minister for Education to read the words today of Vice-Chancellor Craven and ditch the funding to these for-profit organisations who will be fundamentally driven by preserving shareholder value, who will not be driven by furthering the interests of Australia or by ensuring that we have a highly educated population?

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