Gai Brodtmann (Canberra, Australian Labor Party, Shadow Parliamentary Secretary for Defence) Share this | Hansard source

I have stood in this House many times before to stress the importance of a good education—the importance of educating our young people so that they can have the best chance of success, and, in some cases, so that they can build themselves a better life and escape intergenerational disadvantage and poverty.

This is an issue close to my heart, because, as many members will know, accessing an education helped me and my sisters escape a cycle of disadvantage. Thanks to Gough Whitlam's reforms we were able to escape that cycle of poverty that was experienced by my mother, a single mother, by my grandmother before her, and by my great-grandmother before her. Many people in this House know my background, with three generations of what I call a working-class matriarchy—three generations of cleaners. My great-grandmother was a cleaner in the western district. My grandmother was a cleaner. She cleaned three facilities in Melbourne. My mother, thanks to my father leaving us when I was 11, and with not much money in the bank, also ended up cleaning in the latter part of her career.

Thanks to education, my sisters and I have managed to escape the cycle of disadvantage. It was thanks to education that I escaped that intergenerational cycle of poverty and lack of choice that my great-grandmother, my grandmother and my mother experienced as a result of having to leave school—at 11, I think, in the case of my great-grandmother, at 12 or 13 in the case of my grandmother and at 15 in the case of my mother. I am incredibly proud of what my sisters and I have been able to achieve. Meg, my middle sister, has a Bachelor of Science with honours from Monash University. She is a former AIDS researcher and now a winemaker, and she is Australia's first female Master of Wine. My little sister, Amy, is a neurologist. She has a medical degree and a PhD from the University of Melbourne, is one of the world's most respected stroke researchers and just recently managed to secure a very significant multimillion dollar research grant from the National Health and Medical Research Council. I am very, very proud of her and of Meg—I am very proud of my sisters.

Education has the power to transform lives. I think that our story underscores that. I know this and the Labor Party knows this. That is why Gough Whitlam abolished university fees and gave a generation of Australians access to a free education. I had the great fortune of having access to a free education for my first degree, as did my sisters. Like so many Australians and so many Canberrans, I was the first person on either side of my family to be educated. I was the very first person in my family to go to university, and I felt very privileged and honoured to be that first person and very humbled as a result of that.

Access to education is vitally important to Labor. As you know, Gough Whitlam introduced free education in the seventies, and in the eighties we tweaked that. In the eighties, under Bob Hawke, we set up the Higher Education Contribution Scheme, or HECS, allowing more students to gain access to higher education, no matter what their background. I have to confess: I was opposed to HECS when it first came out. I was union president of RMIT, I was involved in the National Union of Students and I was part of the NUS delegation that went to our ALP conference, which was held in Tasmania then. I was one of the thousands of students out the front of our national conference opposing and campaigning against HECS.

But I am now older and wiser and I now understand the benefits of HECS. Thanks to HECS, enormous opportunities were opened up for people to access higher education and vocational education. Thanks to HECS, the participation rate figures, from memory, went from about five or 10 per cent when I was undertaking my first degree to about 30 or 40 per cent. That is thanks to HECS—it really did open up opportunities. The HECS system, or the HELP system, is the foundation upon which Australia has been able to build one of the world's best university systems while ensuring that any Australian who is capable of doing so can get a university education. It really has opened up opportunities. That first step of free education that Gough Whitlam introduced was a great first step, and HECS built on that strong foundation and opened up higher education and vocational education to even more people.

In recent years, the number of students in higher education has surged. HECS expenses are forecast to almost double in three years from $2.3 billion this year to $4.4 billion in 2017-18, according to estimates by the Department of Education and Training. So the Labor Party welcomes any measure that aims to strengthen the HECS system and make it more viable and more sustainable. These measures aim to make the system fairer by ensuring that all students here and abroad contribute to their HECS debt once they are earning an income of beyond $53,000 in the 2016-17 tax year.

Currently, as you know, only people living in Australia are paying off their HECS debt. Currently, HECS debtors who live overseas are not specifically exempt from repaying, but, because the Australian Taxation Office has no international jurisdiction, anyone not paying tax in Australia is not required to repay their debt. While most expatriates do return to live in Australia, particularly when they get to that child-rearing age and want to bring their kids home or come home to have babies, be near their families and return to the great country that is Australia—return to the environments they were living in when they grew up and enjoy the great lifestyle that this great country offers to children—it is estimated that around 20 per cent, however, do not. As a result of that, they do not pay back their debt. This is not only unfair; it is also a burden on those students who do pay back their debt. I have a number of former students working with me—fantastic young women working in my office—who have HECS debts and are gradually, each year, paying them off. I know they have a certain beef with the fact that these expats overseas are not paying back their debt and that, in a way, they are bearing the burden of that. They are doing the right thing and paying their debt back. At the same time as paying back their HECS debts, they are trying to save up for mortgages, weddings and overseas trips, while those who are living overseas are oblivious to the fact that they have to pay back their debt—they are just not doing it; they are not contributing to the system. It is unfair. It also means that an estimated $400 million in revenue has been forgone for cohorts graduating between 1989 and 2011.

While we welcome these measures to get these people paying back their debt, which, as I say, aims to strengthen the integrity of the HECS system, there are some very real challenges in implementing this measure, and I want to outline those now. I understand that, from 1 January 2016, all HECS debtors who exit Australia and intend to go overseas for more than six months will be required to register with the ATO. Debtors who are already overseas at this time will have until 1 July 2017 to register with the ATO. Payments will be required from 1 July 2017, when overseas debtors will need to self-assess income received in the 2016-17 financial year and submit details of their foreign sourced income. It is expected that the self-assessment will be due by 31 October each year, in the same way as Australian resident tax returns—it links up with when your annual tax is due. Returns will be submitted and payments made through the myGov website.

This process will face a number of challenges, and one of them is building awareness amongst students and former students of their obligations. Quite often these people go overseas, find great jobs, fall in love and decide to stay away; they are quite often oblivious to the fact that they have a HECS debt. As I mentioned earlier, this legislation requires payments to be made from July next year—that does not allow a lot of time for the government to market these changes to Australians living overseas. How does the government plan to build awareness of these changes? That is one of the questions I ask.

This proposal also puts added pressure on the ATO, which has suffered thousands of job cuts since this Liberal government came into office. So, firstly, how is the government going to let these Australians know that they have an obligation to pay back their HECS debt? Secondly, will the government be reinstating some of the jobs in the ATO to administer this measure? It is not just the job cuts that are of great concern—and we are talking thousands of job cuts, not just in the ATO, which have had a huge impact on Canberra. This government has cut 8,500 jobs in Canberra since it came into office, and that has had a huge impact on the local economy and on commercial office space. There are a lot of empty offices around Canberra at the moment.

I ask not just about whether the government is going to reinstate these jobs so that it can implement this measure effectively but also about where it is going to locate them. This government has a great commitment, in my view, to work against Sir Robert Menzies' legacy and against his vision to have Canberra as the national capital. Essentially, this government wants to put the bureaucracy out into every part of Australia, completely overlooking the vital role that Canberra plays as the nation's capital. So, first up: are you going to introduce more jobs to implement these measures and, secondly, are you going to locate them in Canberra, which is vitally important?

This legislation is complex to administer, and we must ensure that this measure actually raises more than it costs. That has been the major barrier to implementing this type of measure in the past. This legislation reflects similar changes in New Zealand, Britain, Sweden and Canada, who have all moved to collect debts from students living overseas. Lessons can be learned from these countries, which have faced significant administrative challenges. As of 2013, a quarter of England's overseas student debtors were in default, while 60 per cent of overseas debtors in the New Zealand system have overdue payments. This is a challenge that the ATO will face and that the government will need to monitor closely.

I am also keen to hear how the government plans to deal with people whose plans change while they are overseas. Will a change of mind be a valid excuse for those who do not supply their information to the ATO? I know this is a concern that Andrew Norton, the Higher Education Program Director with the Grattan Institute, has raised. He has also raised concerns around how much debtors will pay. It gets back to that point. They are overseas, they are possibly oblivious to the fact that they have a debt and they are possibly oblivious to how much debt they actually have. There is also the issue of whether there will be a fixed Australian dollar rate to repay. Andrew Norton has said:

Presumably there will have to be some $A value fixed in regulation to provide some certainty in advance as to thresholds. Debtors need to know roughly how much they will need to set aside for their repayment. However, given fluctuations in the $A there will still be some uncertainty about how much it will cost them in their local currency when the time comes to transfer the money. Debtors will be hoping that the $A stays low; bad luck if you are a HELP debtor during the next commodity price boom.

All of these challenges need to be taken into account by the government and they must not become a liability. As a result of this bill, the tax office is expected to recover $26 million over four years. This should be considered within the context of a HECS loan total which is projected to be at $62.7 billion by the end of the same period. The government has said that this legislation will save more than $150 million over 10 years in fiscal balance terms, but the challenge is to collect repayments in a cost-effective way. It is expected that up to 46,000 Australians living and working overseas will be affected, with around 38,000 expected to make repayments. As I said at the start of my speech, that will go some way to strengthening the integrity of the HECS system and making it fairer. There has also been some research to suggest that graduates are staying overseas to avoid paying off their debts. That has certainly been suggested by news reports in New Zealand: New Zealanders are coming across the ditch and never returning so that they do not have to pay off their loan.

By ensuring that overseas graduates pay back their loan whilst abroad we are increasing the chances of attracting home our talented expatriates. So there are many benefits to this legislation, but at the same time there are significant challenges. The Labor Party know and understand that, yes, introducing legislation can be challenging at times. But this is designed to achieve a fairer and more sustainable HECS system. We understand the value of education and the value of making sure everyone can access our world-class education system, no matter how much their parents earn.

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