Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

I endorse and support the remarks of the member for Kooyong. An article by Susie O'Brien entitled 'Don't use welfare benefits as birth control' in yesterday's Sunday Herald Sun discussed but, unfortunately, did not state my actual position about changes to the Baby Bonus and family tax benefit. In calling for the abolition of the Baby Bonus and a grandfathering of the payment of family tax benefit for those who have more than two children I argue that the money would be more productively spent elsewhere. It would be more beneficial to use the money to help abolish student fees and charges at both the university and TAFE level. Ms O'Brien said nothing about this, so she left out half the story, which is not high-quality journalism.

So, to outline to the House my position in detail, I have formed the view that the euphemistically named HELP should be abolished and we should reintroduce free university education and free TAFE courses. Norway has it and it works for them. We used to have free university education and it worked for us. The theory behind HECS at the time it was introduced was that it would generate money for more tertiary places and that it was reasonable for people who had profited from their higher education to put something back. Whatever the merits of the theory, in practice, it has not worked out that way.

The Howard government essentially flatlined the number of Commonwealth subsidised university places for domestic students between 1996 and 2007. Furthermore, it substantially reduced the income threshold at which HECS cut in so that, instead of it being about affluent professionals giving something back, it has become a burden for quite modest income earners and a yoke around the necks of young students. Nor was this about the government switching resources from tertiary education to trades training. Between 1997 and 2006 the Commonwealth contribution to vocational education and training costs declined by over 20 per cent.

What would it cost to get rid of HECS? In 2010 the Australian government paid about $2½ billion in HECS-HELP payments to universities, and students paid $500 million in upfront payments. This means that $3 billion would need to be paid by government to universities and not recovered from students. For the same reason that it would be desirable to get rid of HECS, it would also be desirable to get rid of student fees and charges in the vocational education and training sector. In 2010 the revenue from students' fees and charges from all students was about $320 million.

So, the total cost of abolishing student fees and charges in both tertiary and vocational education is roughly $3.3 billion. We could find this money by: abolishing the Baby Bonus, which is inconsistent with moving to stabilise our population and costs around $850 million per annum; by abolishing the 38 cents per litre fuel tax credit for the mining industry, which would save around $2 billion each year; and by grandfathering Family Tax Benefit A for third and subsequent children and the Large Family Supplement, that is, continuing to pay them where there is an existing entitlement but not paying them for new children unless they are the first or second child.

The Henry tax review recommended both the abolition of the Baby Bonus and reconsideration of additional payments like the Large Family Supplement. It said:

The Baby Bonus does not reflect the additional direct costs of children at birth, because in effect it includes an element of income replacement. With the introduction of PPL,—

Paid Parental Leave—

the Baby Bonus should be abolished and a small supplementary payment, reflecting the average direct costs of a new born, should be paid over the first three months as part of the per child family payment (including to those receiving PPL).

…   …   …

Additional payments for larger families, including the Large Family Supplement, the Multiple Birth Allowance for children over one year, and higher thresholds for larger families should be reconsidered as the case for these payments is not strong.

I do not think it is appropriate for taxpayers to fund students indefinitely. If we are serious about building skills and being more than a mining boom, one trick pony we should pay for everyone's first three or four post-secondary education years so that everyone with the capacity gets the opportunity to get a degree or other post-secondary qualification under their belt.

As money comes in from phasing out the Large Family Supplement and Family Tax Benefit A for third and subsequent children, I think we should consider forgiving some of the HECS debt that our present generation of young people have been saddled with. I think that we could treat them better than we have done.