Steve Irons (Swan, Liberal Party) Share this | Hansard source

Mr Deputy Speaker, feel free to indulge yourself and make those quotes. I rise to speak on the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015 and the Student Loans (Overseas Debtors Repayment Levy) Bill 2015. As we have just heard from the member for Hughes, this legislation closes one of the well-known loopholes in Australian law. We have heard a lot of speakers talk about fairness. I would say that Australian taxpayers are giving tertiary students a fair go by having a HECS system that allows them to complete their education. Also, most Australian taxpayers would say that the closing of this loophole would be fair enough. And it is fair enough that we have that loophole closed so that taxpayers can be sure to know that the money they have paid with due diligence to the Australian government is being recovered.

I see that a lot of people in this place have a tertiary education, and I must declare that I certainly do not. Unfortunately, I probably was not in a situation to do that when I was at school in what was then the suburb of Deakin. I saw the member for Canberra speak on this bill. She is also an ex-Deakin person. We also had the member for Deakin speak on this bill. I attended Blackburn High School. When I and many of my fellow students at that time left school, we went on to do apprenticeships. We did not have many from my school at that time go on to university. In my seat of Swan—and you did say, Mr Deputy Speaker Broadbent, that a wide-ranging debate was taking place around this bill—there are approximately 1,750 school leavers this year who are graduating from the 19 high schools in my electorate. This is approximately the same number of people who attended Blackburn High School when I was there. So this would be equivalent to the whole school at that time going on to university—and that would have been unheard of in the time that I was at school. As I said before, most students went on to do trades or apprenticeships through other areas or just went straight into the workforce. They may have worked in a retail outlet. I know that many of my friends went straight down to the manufacturing facilities. Many of those facilities no longer exist. I know that the company I worked for had a manufacturing facility that, thanks to the metal workers union, was closed down during the eighties.

Back to my school: there are many people who will graduate in Swan this year who will head off to the many good tertiary education facilities within Western Australia. Curtin University is one such facility and it is based in my electorate. Curtin University has some very good education programs. They outreach to year 10 students through what is called the Curtin LinkUp Program. This is a five-week program that is conducted in either term 2 or term 3 and is taught by Curtin University staff. During that time, the aim is to assist students to make informed selections that will lead them to make better career choices when they head into a tertiary education. They present social things like 'What do university students do for fun?' They give examples of the support services available for university students when they go through tertiary education. They also show them the surroundings by giving them a tour of the facilities. They also teach them what it is like to study when they are at university and what the difference is between attending a high school and a university. At the end of that program, they have a function which celebrates the successes of the students during that five-week period. I congratulate Curtin on their program, which is designed to encourage students, particularly those in some of the lower SES areas within my electorate, to attend university and also to take away the fear of what would be to many a fearful experience, because they do not know about it.

During the time that I did my apprenticeship, I attended Box Hill Technical School. Again, I did not have the joy of going on to university—but my brother did. He became a professional student. I think he graduated eventually from Flinders University in South Australia at the young age of 38, after racking up about five different degrees. He continues to work in the education system. I know that he is still involved at Monash University in Melbourne.

Some of the Swan school and other school graduates might go on to WA's largest university, Curtin, which is, as I said, located in Bentley in my electorate of Swan. Curtin University is looking at a focus program to ramp up their health courses, particularly those at the medical school. The university has now been granted $20 million to go ahead and construct a new school out at their Midland campus. It was great that we were able to grant them that $20 million against strong opposition from the AMA and other areas. Curtin University is also involved in other projects, such as an aquatic centre. The university is fully supportive of having a local aquatic centre based at Manning, in the seat of Swan.

It is great to see that Labor is supporting this bill. I know they have talked about making sure that the moneys can be collected in an efficient way, but I am sure that anything designed by the coalition will be effective and will work—which we did not see in the previous six years under the Labor government. So many of the programs they implemented failed miserably. We could talk about pink batts and the school halls programs as examples. They were all poorly designed. I see that the minister is here. He will make sure that this legislation is implemented correctly and properly and will have an efficient outcome.

This bill, together with the Student Loans (Overseas Debtors Repayment Levy) Bill 2015, will create repayment obligations for Australians residing overseas, specifically those who are classified as non-residents for tax purposes and who have undertaken an Australian government loan while studying or training. The former Minister for Education and Training, Christopher Pyne, introduced the legislation into this parliament to require Australians living overseas to make the same repayments on their student debts as they would do if they were living in Australia. Mr Pyne said the overseas debt recovery and the student loans bills would introduce greater fairness, as I mentioned before. In a media release, he also said:

"As it currently stands, Australians living overseas are not expected to make debt repayments, no matter how high their incomes.

"These Bills will ensure equity and fairness for all Australians with Higher Education Loan Programme (HELP) or Trade Support Loan (TSL) debts, and will help to maintain the stability and security of Australia’s education and training system.

"The same provisions for repayment of debts that apply to those living overseas will apply to those living in Australia. If you are volunteering overseas and earning only a small amount, if you are pulling beers or cutting hair in London for three months you will not be within the scope of these obligations. "However if you're working in a well-paid job overseas you will be required to pay back the cost of the education that you got here in Australia.

"From 1 January 2016, all Australians with current and new HELP and TSL debt who move overseas for six months or more will be required to notify the ATO via the myGov website to facilitate repayments.

"And from 1 July 2017, Australians with HELP and TSL debts who are non-residents for tax purposes will be required to assess their total Australian and foreign-sourced income in order to make income-contingent repayments, starting with the 2016-17 financial year.

"Only graduates earning over the repayment income threshold (currently around $54,000 Australian dollars a year) will be expected to make repayments."

Mr Pyne said the measures are estimated to save more than $25 million between 2015-16 and 2018-19, and more than $150 million over 10 years, in fiscal balance terms.

The Australian Taxation Office will provide a simple online tool to enable debtors to easily assess their repayment income and make repayments.

Mr Pyne also said that, following discussions with the United Kingdom, the Government plans to undertake a pilot data sharing project with the UK to enhance debt recovery. Reciprocal arrangements are also under discussion with New Zealand.

"This initiative will level the playing field and treat people the same no matter what currency their pay comes in," Mr Pyne said.

We heard the member for Canberra talk about exchange rate variations causing problems. But no matter what currency their pay comes in the initiative will level the playing field. Repayment obligations will be applied to all new and existing loans across the five Higher Education Loan Program schemes the government currently operates, as well as to the trade support loans.

The aim of these bills is to create a fairer and more equitable higher education and training loan system and to ensure that the system remains sustainable into the future. Currently, as I said, Australians with a HELP or trade support loan debt who reside in Australia are required to make repayments on that debt once their income exceeds $54,126 per annum. The rate of repayment is currently four per cent of their annual income. As it stands, there is no requirement for Australians residing overseas to make repayments, regardless of how large their income may be.

The architect of HECS, the original higher education loan scheme, Bruce Chapman, estimated in 2013 that the nonrepayment of student loans by Australians living overseas had resulted in a loss of between $400 million and $800 million in revenue since 1989. As the world economy becomes more globalised and our region prospers, it is expected that an increasing number of Australians may seek to work overseas, and that this figure will continue to rise. It is estimated that the implementation of a repayment scheme for Australians residing overseas will save more than $25 million from 2015-16 to 2018-19 and more than $150 million over the 10 years in fiscal balance terms.

Australians earning under the equivalent of the threshold whilst overseas, whether they are working in low-paid jobs, travelling following graduation, taking a gap year or undertaking volunteering missions, will not be required to make the repayments. This bill does not aim to limit the mobility of young Australians once they complete their studies; it simply aims to make sure that those in a position to repay their debt to the Australian government, and by extension to Australian taxpayers, do so. As you mentioned during your speech, Mr Deputy Speaker Kelly, it is about having a fairer system. We hear the word 'fairness' in this place all the time. This bill will make the system fairer.

The implementation of the measures prescribed in the bill is relatively simple. From 1 January 2016, Australians with a student loan debt who move overseas for six months or more will need to register with the Australian Taxation Office. To facilitate the repayments, the ATO will create an online tool with which debtors can provide information on their income and make repayments. The ATO will be responsible for the enforcement of the repayment obligations of Australians living overseas once they have registered as an overseas debtor.

A number of nations already have policies in place that require those with student loans to make repayments when they move overseas. The United Kingdom and New Zealand have reported that a majority of overseas debtors comply with the loan repayment obligations. The United Kingdom reports that around three-quarters of those living overseas with student debt voluntarily honour their repayment obligations. In the case of New Zealand, the percentage of compliance is approximately 70 per cent.

Whilst it is impossible to know what the compliance rates of Australians overseas will be, the government remains hopeful that they will match or surpass those of New Zealand and the United Kingdom. Both the UK and New Zealand have placed an emphasis on self-compliance and voluntary repayments to achieve their successes in this policy area. Likewise, the Australian government will focus on communicating with Australians overseas to inform them of the new requirements and to encourage them to register for repayments and remain compliant.

As the minister noted in his speech, there is a financial incentive for Australians living overseas—the majority of whom will eventually return home—to begin to repay their debt as soon as possible. The alternative, which currently applies to Australians living overseas, is that they have a stale debt that remains unpaid, indexing at CPI annually while they are away. The government is proposing to explore the benefits of increased data exchange and reciprocal agreements with other nations to assist in locating individuals with outstanding student loans who fail to comply with the new requirements. The United Kingdom, a potential candidate for such reciprocal agreements, has conducted trials across Europe to trace debtors and establish contact with them.

Whilst these trials remain in the pilot stage, if effective in recovering student debt, as initial evidence has indicated, they will become a model that the Australian government may follow. In order to keep the costs of implementing this legislation down, and due to the uncertainty surrounding the rates of repayment by Australians living overseas, the government is proposing to keep investment in enforcing compliance modest to begin with. If, as in the case of the United Kingdom and New Zealand, rates of voluntary repayment are high, spending on compliance will remain low, as there will be little return on any investments made in enforcement. However, if Australians living overseas prove to be significantly less compliant, the legislation allows for the compliance enforcement model to be strengthened. I commend the bill to the House.

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