Ben Morton (Tangney, Liberal Party) Share this | Hansard source

I rise to speak on the Higher Education Support Legislation Amendment (Student Loan Sustainability) Bill 2018. At its core these amendments ensure the sustainability of our student loan system, recognised as one of the most generous in the world. The bill introduces a new set of repayment thresholds for student loans, changes indexation arrangements for repayment thresholds, amends the order of repayment of some student loan debts and introduces a combined lifetime loan limit for taxpayer funded student loans. I support these amendments because I understand the importance of a tertiary education and want to ensure future generations have the same opportunity I had. Like the previous speaker, I was the first in my family, and one of only a handful at my high school, to go to university. It was a privilege to receive my university education with no up-front cost. My student loan was funded by people like my brothers, who work in the construction industry, and my family members, who work hard in their small business and who didn't go to university but paid taxes to give me the opportunity to borrow from them, the taxpayer, through the government to better myself and get the education. The privilege of receiving that student loan came with a responsibility for me to repay it.

Unfortunately, under the current system some students will never accept the responsibility of repaying their taxpayer funded student loans. They are happy to accept the student loan provided to them by the hardworking Australian taxpayers but have not repaid it. As of 30 June 2017 only $35.9 billion out of the total debt of $55.4 billion will likely be repaid. I absolutely support these amendments, which I believe will ultimately reduce the debt load. However, I believe that for the long-term sustainability of the system we will need to go further. I was pleasantly surprised by the contribution from the Labor member for Bruce, who last year spoke about the importance of debt recovery from the states. To be very clear, this would not be a death tax. As the member for Bruce said, it is simply:

… requiring HELP debts to be repaid, just like tax or social security debts …

I agree that there is a strong policy case to look at the option of recouping student debts from certain estates. I believe those who enter into student loan agreements do so freely. There needs to be an understanding that these loans are from the Australian taxpayer and must be repaid. It would be my absolute pleasure to work with the member for Bruce on further measures in a very bipartisan way.

It remains our intent to ensure Australians who have not gone to university are not unfairly bearing the costs of those who have not repaid their loans. In the same way, those who have had the opportunity to attend university and have diligently paid off their loans should not be made to bear the cost. We must continue to work on this issue. It is all about fairness. The reality is that taxpayer funded student loan repayments have not kept pace with lending growth. Since 2009 funding for Commonwealth supported places has grown at twice the rate of the economy, and from 2011 to 2017 the level of new debt not expected to be repaid increased from 16 per cent to 25 per cent. It is a serious concern that, according to the 2016 Australian National Audit Office estimates, on its current trajectory, by 2024-25 outstanding HELP debts will total $192.5 billion and almost 30 per cent—$55 billion—will not be repaid. Imagine the differences that $55 billion would make if invested in our education system or other government services.

We need to take action now the ensure that our higher education system is sustainable. Announced in MYEFO, these policy measures will replace the previous legislative proposals from the 2017-18 budget. I supported the previous reforms and I was disappointed they were voted down in the Senate.

We all have skin in this game of education, whether it be as a former, current or future student, a parent, a taxpayer, an educator, as administrators or, ultimately, as employers in business or service providers in every corner of Australia. The new amendments propose that from 1 July 2018 there be a lower minimum repayment threshold of $45,000 at a one per cent repayment rate. There will be smaller incremental rises in thresholds and repayment rates up to a top threshold of $131,989, at which 10 per cent of income is repayable. The minimum repayment threshold is $10,000 less than the current threshold of $55,000.

This repayment threshold will then be indexed according to the consumer price index rather than the average weekly earnings. This change is consistent with recommendations from both the National Commission of Audit in 2014 and the Grattan Institute. This change in indexation is important to ensure that those who have dropped out of the repayment streams as the thresholds rise faster than their income growth are brought back in and are repaying their student loans sooner. This will ensure repayment requirements are adjusted in line with the cost of living.

Other key changes come in the form of student thresholds for the Student Financial Supplement Scheme, which will be brought into line with the HELP repayment thresholds from 1 July 2019. This is to improve rates of repayment by replacing the three-tier threshold approach applied to Student Financial Supplement Scheme repayments with a new HELP threshold. This change ensures the HELP debt takes priority over other student loan debts.

Finally, there will be an introduction of new combined loan limits on how much students can borrow under taxpayer funded student loans to cover their tuition fees. The combined limit is $150,000 for students studying medicine, dentistry and vet science courses and $104,440 for other students. These limits would be sufficient to cover the study of even the most expensive courses for almost nine years as a Commonwealth supported, taxpayer supported student. The loan limit is not new, but it will now apply to HECS-HELP as well as students accessing the FEE-HELP, VET FEE-HELP and VET student loans.

But these amendments are all about fairness. Income contingent loans, the basis of our taxpayer funded student loan system, were introduced as an answer to maintaining access and equity as well as providing less of a burden on the taxpayer. From inception, the repayment threshold was never set according to an optimum economic model or theory. It was purely driven by a sense of fairness. I'm proud that this government is making changes to ensure that there is real fairness in student loans. It is not fair to take a loan from the taxpayer to further yourself, to better yourself, and then not pay that loan back to the taxpayer, because taxpayers are people like my brother and my family members, who work hard in small business, who have never been to university, who have worked hard and paid their taxes to give me that opportunity. If I was to take from them a loan in order to get an education but then not to pay that back, that would be robbing future societies and generations of the opportunity that I've had.

It is not fair that everyone who's paid off a taxpayer funded student loan in full, like I have, should shoulder the burden of those students who have chosen not to. The failure of some students to pay their loans makes our education more expensive for everyone. Taking a student loan from hardworking taxpayers and not repaying it is taking a free ride. But let's not forget that students currently only pay an average of 42 per cent of the cost of their degree. The rest is already subsidised by the taxpayer.

When we're talking about student loans, we're not talking about students borrowing the total cost of their entire education. As I said, 42 per cent of their degree, on average, is funded through student loans—the rest by the hardworking taxpayers in Australia. Research from the Grattan Institute indicates that the split for average contributions would move to 64 per cent government and 36 per cent student if we take into account debt that would probably not be repaid, and this is unsustainable.

I congratulate Minister Birmingham on these new amendments. Unfortunately, those opposite and a select group of education institutions have chosen to cloud and misrepresent this critical debate. Labor's Treasury spokesman called the measures an attack on one of the sources of Australia's long-term prosperity. Well, the shadow Treasurer is right about one thing: education is a source of Australia's long-term prosperity. This government's approach to student loan repayments is consistent with intergenerational equity. It is consistent with ensuring university education will be sustainable in the long term. This is a responsible suite of reforms and is in stark contrast to the brash approach from the Labor Party, who, when they were last in government, announced $6 billion worth of cuts to the higher education support sector.

We cannot afford to be complacent and risk jeopardising opportunities for future generations of students, who will also want to access student loans that remove all up-front fees from higher education. The time to change is now, and the opposition's position on this legislation only puts the entire system in jeopardy. I would like all Australian kids to have the opportunity I had, the opportunity to go to university at no up-front cost. But if we don't have a sustainable system, we won't have that opportunity in the future.

We need to ensure that our system can respond to the impact of the tremendous expansion in student numbers. Over the last quarter of a century, private education student numbers grew at more than three times the rate of the population as a whole. This growth has imposed significant costs on taxpayers. The astounding thirst for education has been enabled by the demand driven system in recent years.

It has also been driven by the reality that a post-school qualification remains one of the best investments an individual can make. University graduates enjoy consistently higher employment and incomes than those who only complete high school. Our higher education system is exceedingly successful and has an excellent reputation, both here and overseas. Tertiary education now spans a competitive market, where providers are more numerous, more diverse and more commercially oriented than they ever were before. Education is one of our most successful exports and is a significant source of income for our universities. In 2016 education export income reached its highest level ever at $21.8 billion.

This legislation lays out achievable reforms that can safeguard the position of the education sector for the future. We cannot underestimate the importance of a sustainable student loan scheme. It brings certainty to the sector, which has been unanimous about the need for change and has been left waiting long enough. The Australian taxpayer student loan scheme remains one of the most successful public policy innovations ever, ensuring a vibrant education export industry, support for student career aspirations and a skilled workforce for our industry.

Where this legislation does have a financial impact on students, we will implement changes in a way that is gradual, fair and appropriate. These reforms ensure our high-quality tertiary education system can grow while meeting the global challenges it will increasingly face. It guarantees that students will continue to have access to higher education, irrespective of their background or financial means. These amendments, in line with the broader government plans, will deliver $1.2 billion in savings over the next two years.

In the lead-up to last year's budget the Prime Minister said:

… we call on the other parties … to support us in bringing the budget back into balance. It is a responsibility that weighs heavily on the shoulders of every single member of the house and—

in particular—

… the Senate …

This government has made substantial progress, with MYEFO showing this year's federal deficit has improved by $5.8 billion compared to forecasts in the May budget. Education savings are an essential part of this broader budget strategy.

Frankly, we're all in this together. Taxpayers, whose support means that no-one must pay up-front course fees, will get a better deal knowing that the Turnbull government is looking after them and making sure their investment is repaid. Our taxpayer funded student loan scheme was not designed to facilitate a lifelong limitless cash pool for students who choose not to pay back their student loans.

Taxpayer generosity should not be taken for granted. The measures in this bill were designed with fairness and sustainability at their core. Commonwealth financial assistance through taxpayer funded student loans still means that no student will need to pay one cent up-front for their higher education. But students cannot take this assistance for granted. Taxpayer funded student loans must be repaid to ensure that the system is sustainable and is available for future generations.

These amendments are about fairness. These amendments are about someone entering into a loan. These are amendments about making sure that people who enter into a loan repay that loan. To think that there is opposition to a situation where you're asking someone to pay back a loan that they've entered into means that my mind boggles. This is about fairness; it's about fairness for the taxpayer that funds these loans and it's also about ensuring that more and more students can have the opportunity that I've had in receiving an education with no up-front fees. I hope that more students can have the same opportunity that I've had as well. Thank you.

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