Ann Sudmalis (Gilmore, Liberal Party) Share this | Hansard source

Two days ago we heard the Leader of the Labor Party dramatically railing against the proposed reforms to higher education in Australia. Anyone would think that loans for studying at university were a brand-new draconian action introduced by the Liberal Party. This, however, is far from the truth. The Higher Education Contribution Scheme, HECS, was brought into being by none other than the Labor government under the leadership of Bob Hawke. While over time the system has evolved, the current cohort of university students is probably unaware that this was indeed a Labor initiative. In fact, David Gonski, whose name up until now has been the call to arms for teachers and educators around Australia, has backed this initiative of reform. I quote from News Corp Australia:

THE architect of the former Labor government’s education reforms has backed the Abbott government’s plan to deregulate higher education fees, claiming it will free up funds to make universities “even greater’’ …

Australians are proud of our world-class education system. Education is entirely free for our primary and high school students, and I welcome the students who are in the gallery today. Undergraduate and postgraduate education is available to all Australians with no up-front costs, guaranteeing that no Australian is prevented from going to university and making a difference to their future.

In addition to my 10 years as a high school science teacher, I taught high school in the United States as an exchange teacher and was a volunteer teacher educator in India. It was after my experience in these countries that I learned the true value of our own unique education system right here in Australia. We have a system that ensures equality of opportunity and a chance for every child to attend school, and to attend university if that is their choice.

The reform package before the House today is about cementing the foundations of our world-class education system for years and decades to come. This is not about class warfare, it is not about increasing student debt, it is not about stopping Australians attending university; it is, however, about future sustainability for university education in Australia, and increased opportunities. This bill should not be a plaything of Labor and Greens to run their irresponsible scare campaigns. Without reform, within 10 to 20 years, the HECS-HELP scheme will become entirely unsustainable for any government, and the students in the gallery here today may not be able to attend an Australian university. It is the action of a responsible government to look further than six months into the future and to care about how Australia will look in 10, 20, 30 years, not just at the next election.

The bill contains a substantial set of reforms which will allow Australian universities and higher education institutions to flourish and promote choice and opportunity, including a significant deregulation and expansion of the demand driven funding system to improve flexibility and competition. This includes an extension of the demand driven system diplomas and associate diploma programs that cater to less-prepared or less-confident students; the removal of limits on fees; and extension of funding to private and non-university institutions.

Increasing competition is known by any businessperson to act as a breaking mechanism on price increases. The more supply, the greater the downward pressure on prices. This is the reality for any product as insignificant as confectionery; and it is no different for important products like education. I should know about confectionery price increases and competition, because I produced confectionery for 17 years. These reforms are necessary to avoid Australia being left behind at a time of rising performance by universities around the world, something Universities Australia has repeatedly warned is a danger.

I recently emailed my daughter travelling in Europe about the government's reforms. She has graduated and has two masters degrees. Her response was short and to the point: 'What on earth are they on about? The same thing is happening all over Europe in their universities.' To do nothing would impact on quality and send higher education downwards towards mediocrity. This inaction would let our students down and directly threaten our third largest export—international education—which is valued at $15 billion.

Before I delve into the detail of our package of reforms as a whole, I quote the vice-chancellor of our only university in Gilmore, Vice-Chancellor Paul Wellings, who recently penned an opinion piece in the Financial Review on this very issue. In his well-written article, he says:

The unpalatable alternative of leaving the fee system untouched and just adding to the large cuts imposed by the outgoing government was clearly an option. But this option was disregarded by Pyne in a decision to make the sector more competitive.

…      …   …

… there is a real chance that Pyne's reforms will increase the competitiveness of the sector while maintaining our ability to offer university education free at the point of delivery to all students, irrespective of their social circumstances.

As a member from a regional electorate with a regional uni, if there were to be any adverse changes to higher education under this package you would expect regional areas like mine to be the first to feel the brunt and to say so. The comments quoted here are proof that this reform package will be good for all university students and is being welcomed by those at the coalface. The Regional Universities Network has echoed the sentiment:

The Regional Universities Network (RUN) welcomes the announcement in the Budget of an ambitious program of reform for higher education which recognises the importance of the sector to Australia. The Treasurer and the Minister are to be congratulated for highlighting the important role Universities play in Australia’s future.

It saddens me that in my electorate of Gilmore only three people out of 20 attend university. We have one of the lowest participation rates in the country for higher education. One highlight of this higher education package is the $371.5 million that the government is investing into diplomas, advanced diplomas and associate degrees over three years, which my local students use as a career pathway for a degree. While many young people in Gilmore are reluctant to commit to a university education, often because it means moving to Wollongong, Canberra or Sydney, there are many who are open to the idea of studying through these different pathways.

These reforms offer great choice. Gilmore may be one of the regions in Australia with the lowest university participation, but we are one of the top 30 areas for young people going to TAFE. For the youth of Gilmore, TAFE is where many high school leavers see their chance to gain technical and further education in a way that supports their personal goals and careers. Through this legislation, the government is also giving greater opportunities to those students from the lowest socioeconomic backgrounds, like those in my electorate, through this new program allocation.

We are told by those opposite that university education should be free. Mr and Ms Taxpayer would say that the current system is far from free. However, the proposed reforms result in a revenue-neutral position for the government. We plan to change the indexation of HELP debts from the current consumer price index to the Treasury 10-year bond rate, capped at a maximum of six per cent—which is actually cheaper than a personal loan. We are doing this because, when the government is $300 billion in the red, every dollar borrowed from HECS is another dollar the government needs to borrow from someplace else.

The interest rate on Treasury bonds is much lower than anything available from a commercial lender. I only wish this had been an option for me when I attained the enrolment level for medicine but could not work my three jobs and do the face-to-face study hours required. If the government is going to borrow $30,000 on your behalf, it does so by issuing a bond. And it is only fair that the cost of issuing and maintaining that bond is incorporated into the HELP debt. This change reflects the cost to government of borrowing the money it lends to the students—and nothing more. It is far less expensive than a commercial loan, and our changes will go a long way towards ensuring the sustainability of the HELP scheme. Perhaps if this scheme had been available previously then more of those on the other side of this chamber would have studied commerce or economics, and the disastrous debts such as those we were left with last September would not have happened. I do not recall any election material from last year's election that said they promised to leave such debt. In fact, didn't they promise four years of surplus? Talk about broken promises! Let us keep things in perspective. The challenge of change that has been left to this government is a direct consequence of severe mismanagement by the previous government and the revenue from Mr and Mrs Taxpayer, our family businesses and our international investors. They squandered the money and borrowed more. It is shameful.

Another reform this package incorporates is the introduction of new HELP repayment thresholds. When you have a HELP debt currently, you are required to pay back that debt as additional taxation once you earn over $53,000 a year. Between $53,000 and $60,000, you pay back at the rate of four per cent of your income. The amount you pay back every year as a proportion of your income then increases with your income on a tiered system up to a maximum of eight per cent right up to an income of $99,000. This reform package introduces a new lower level—a two per cent HELP debt payment—and it kicks in at just over $50,000. Let me repeat: the only part of the repayment system is a two per cent HELP repayment threshold, and that is the only change we are bringing in. This is not a brand-new payback system; it has been in place for some time, under governments on both sides of politics. It goes quite some distance towards assisting in timely payback of student debts. We are slightly reducing the payment threshold, but in doing so we are cutting the total payment amount by about half.

It is important to put the changes to HELP into perspective. Australia's HELP debt increased from around $16 billion in 2008 to more than $30 billion in 2013. In the last year alone the government provided about $5 billion in HELP loans alone. This will be $10 billion in 2017. And no-one needs a degree to understand that this is completely unsustainable; money does not grow on trees. This government is reforming the HELP scheme to make it affordable and sustainable and, most of all, a scheme that still looks after the most disadvantaged in our community. Our reforms mean that no student will need to pay a dollar up-front to go to university and no-one will be asked to repay their debt until they are earning at least $50,638 by 2016-17.

Fee deregulation is necessary to ensure that universities can still access the resources they need. Changes in fees will be a direct result of demand and university policy. Some institutions may increase fees, yet other fees may be reduced. Fee deregulation means that providers will be required to compete on price and quality. New competition among providers will keep many fees down. As a former high school science teacher I know that university attendance is often determined by family experiences and aspirations that are set in the early childhood years. The educational experience, the family's expectations and, even more importantly, a person's economic background while growing up may affect potential attendance at university or even the aspiration to attend.

As I mentioned earlier, at the end of my high school years I was accepted to the University of New South Wales in medicine. However, when I looked at the cost of moving from Woodford in the Blue Mountains to Sydney and the cost of texts and other materials, there was no way I could afford such a course, so I accepted a teachers scholarship. I had already given up on the idea of forensics or architecture, having been told that despite my outstanding results the companies did not employ women on cadetships. Thank goodness that attitude has changed. However, with these reforms, students of any gender and any socioeconomic background can choose the course that they are most interested in. They can invest in their own future. We have expanded opportunity horizons, and I am 100 per cent in support as I know from firsthand experience how much a cheap loan would have meant to me.

This package of reforms is about true equality of opportunity for all Australians, regardless of background, disadvantage or gender. Unlike the Labor Party, we believe that reform is more than just robbing Peter to pay Paul, or even robbing our grandchildren of tomorrow for a media grab today for populist expenditure. We on this side believe that for true reform of our universities and higher education sector we need to do more than talk about an allocation of imaginary Rudd dollars for students and universities. We need a plan, we need a vision, and we need a government with the guts to prosecute the reform argument. I remind the House of a simple fact: over the working lifetime of the average university graduate, they are likely to earn more than a million dollars than someone without a degree. Right now, we have a chance to open the door of opportunity to so many more Australians. Let's make the most of our national future and also help our students to make the most of theirs.

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