Amanda Rishworth (Kingston, Australian Labor Party, Shadow Parliamentary Secretary for Health) Share this | Link to this | Hansard source

Today I rise to speak on the Education Legislation Amendment (Overseas Debt Recovery) Bill and the Student Loans (Overseas Debtors Repayment Levy) Bill 2015. The bills, as the former education minister explained in his second reading speech, together will create an overseas repayment obligation for Australians who have taken advantage of the Commonwealth government's income contingent loans, including both Higher Education Loan Program, or HELP, loans and HECS loans, together with trade support loans.

Labor supports efforts to improve the integrity of our HECS system, which has ensured that university has been affordable and accessible, with wider access, since 1989. Indeed, the HECS-HELP system has been the bedrock on which Australia has been able to build one of the world's best university systems while ensuring that any Australian who has the capacity and is capable of doing so can get a university degree. Therefore, Labor will support this measure that will from 1 July 2016 extend the HECS-HELP repayment framework to debtors residing overseas. As a consequence of this bill, HELP debtors residing overseas for six months or more will be required to make repayments on their HELP debt at the same repayment rates as debtors in Australia if their worldwide income exceeds the minimum repayment threshold.

Labor understands that living and working abroad is an enriching and important experience and one that should be encouraged. However, there has been a question for a number of years around the fairness of the HECS-HELP scheme in that those working overseas have not been required to meet their HECS repayment obligation while those living in Australia have.

It has long been argued that those working overseas should have the same obligations as those living here in Australia. As it stands, this bill is expected to affect 46,000 Australians living and working overseas, with an estimated 38,000 expected to make repayments on their student debt. This will equate to approximately $26 million over four years. Over the forward estimates, the bill is anticipated to save the Commonwealth about $150 million.

The government has been talking this savings measure up, but it is important to put it in context. This is a modest amount compared to the $62.7 billion that is expected to be needed to be repaid by the end of the same period. Nevertheless, the opposition supports identifying genuine budget savings, and this is one that we will support. Labor supports this legislation because it takes a responsible approach to budget savings and, importantly, the integrity of our income-contingent loan system.

The Higher Education Contribution Scheme was a world first—a Labor government reform that ensured a university education was affordable for all Australians. Since 1989 the HECS system has enabled students to borrow the price of their degree from the Commonwealth, the cost of which is borne by the taxpayer until the student's or graduate's income reaches the repayment threshold, at which time involuntary payments are made through the tax system. This program allows every Australian, even the most disadvantaged in our community, to enrol in, attend and graduate from university without having to meet the costs of their tuition up-front.

HECS has enriched Australian society by not only giving more and more students access to an affordable education but enabling more students to attend university. Since the late eighties Australia has benefitted from the input of these students unleashing the intellectual and innovative capabilities that have helped build Australia's industries and jobs. Credit needs to go to former Labor governments that focused on building one of the best university systems and ensuring everyone has the opportunity to get a university degree.

While this is an important measure that looks at the integrity of our HECS system, the side effect of one of this government's other agendas—namely, their deregulation and $100,000 degree plan—will be the impact on the sustainability of the HECS-HELP income-contingent loan scheme. It is important to recognise that, if fees under a deregulated system go the way that is anticipated—and that is not just what the Labor Party has said; it is what independent modelling has shown—HECS and HELP debt could skyrocket significantly. The Liberal Party's plan for deregulation could put the sustainability of the HECS-HELP loan scheme under enormous pressure, meaning that many people will not be able to pay back what will be simply massive amounts of debt. That will leave the taxpayer vulnerable to holding and copping that bad debt.

This is something that those on the other side have not given proper thought to. They have said that they want to deregulate the system and see a significant increase in fees. While we have focused on and discussed the impact that that would have for students, it also would have a massive impact for the HECS-HELP debt scheme. It is important to recognise that, potentially, the sustainability of that scheme will be threatened when we see the debt that students have to take on skyrocketing significantly.

Previously, there was concern about chasing HELP and HECS debt from overseas because of the view that it was likely to cost more than it was to raise. However, with the advent of income-contingent loan schemes in the United Kingdom and New Zealand, where a good proportion of Australians work and reside, this landscape has changed significantly. However, there are still considerable challenges with the implementation of this measure. It is important to note that the challenges will be significant, not least making Australians currently living overseas aware of their obligations and dealing with Australians who change their plans and decide to work in a foreign country while travelling overseas. Ensuring that those individuals understand their obligations and the changes will be an important challenge and something the government will have to consider in the implementation of this measure.

The changes that have been observed in both New Zealand and the UK with regard to chasing overseas debtors have shown that, as of 2013, one quarter of England's overseas student debtors were in default, while 60 per cent of New Zealand's overseas debtors had overdue payments. The overseas examples indicate that there are problems with recovering debt, and the government will certainly have to turn their attention to how they will implement this measure. The government will have to ensure that Australians currently living overseas who continue to be covered by this scheme are made aware of their obligations and that Australians who do change their plans recognise their obligations.

However, despite the challenges that will be faced in the implementation of this legislation, Labor will support this package that is aimed at improving the integrity and fairness of the HECS-HELP system. While this bill will make a modest saving, we recognise that it is a saving nonetheless. Labor takes a responsible attitude to decent savings that are about fairness and are in the interests of the Australian public.

Matt Williams (Hindmarsh, Liberal Party) Share this | Link to this | Hansard source

I rise to support Education Legislation Amendment (Overseas Debt Recovery) Bill 2015. I am pleased to acknowledge the comments made by the member for Kingston about the Labor Party supporting this bill and noting the savings that this will generate and the fairness involved in this bill—because that is the case.

The Higher Education Loan Program, or HELP, is a wonderful scheme. We all know that education is such an important enabler in community and it helps in many ways. It helps productivity, which is something that we are very focused on. We also know that a more educated workforce is better able to adapt to the challenges that our economy and businesses face on a daily basis. Innovation is one of the key things that education does help out with through the skilling and knowledge it generates. We all know the Prime Minister's background in innovation through OzEmail and other ventures. His experience with OzEmail was as a 16-year-old in a garage, but it ended up as a very successful company. It was based on innovation.

Tertiary education, while not the best avenue for all people, has been a wonderful pathway for a great many Australians. We need to ensure that we develop a system that fosters support and learning for students who can then pay their debt when they are in a position to do so. That is crucial. As former Prime Minister, Paul Keating said:

There is no such thing, of course, as “free” education. Somebody has to pay. In systems with no charges those somebodies are all taxpayers. This is a pretty important point: a “free” higher education system is one paid for by the taxes of all, the majority of whom haven’t had the privilege of a university education.

As he says,

Ask yourself if you think that is a fair thing.

That is why this bill is important. It ensures that the playing field is even and people who receive this service make good on their pledge to pay the money back when they can support themselves.

I have worked for the state government overseas in Europe and I know that there are thousands of Australians over there who work and live in Europe, as they do all around the world. Many of these expat Australians had a debt from their university days, but they were not paying it back. We agree that is not right and fair. There is currently no legal obligation for people with a HELP debt residing overseas, and who are nonresidents for taxation purposes and not required to submit a tax return, to repay their HELP debts. It is estimated that, as a result, between $400 and $800 million in revenue has been foregone since the commencement of the scheme in 1989. We would all agree that that is a significant amount and so this issue needs to be addressed. This bill is addressing it.

This proposal is simply imposing the same HELP repayment obligations on Australians living overseas as currently apply to those who remain in Australia. For example, a banker earning substantial income overseas will be required to repay their HELP debt; however, a backpacker earning little or no income, or earning below the minimum repayment threshold, will not be required to make any repayments. Recovery of overseas debts is already an integral part of student loan schemes operated by a number of other countries around the world, including the UK and New Zealand. This is not something that is new. It has been done successfully by other countries and will now be done successfully by Australia.

It is estimated that these bills will generate savings of more than $25 million between 2015-16 and 2018-19, and more than $150 million over 10 years. From 1 January 2016, all current and new Australians with HELP and TSL debts who move overseas for six months or more will be required to register with the ATO via the myGov website. As I mentioned, other countries have been successful in executing and implementing this sort of process to recover such debts. The UK has advised that around three-quarters of its overseas debtors voluntarily enter into and comply with repayment arrangements. New Zealand has found that, once contacted, its overseas student loan debtors have a compliance rate of around 70 per cent—some good case studies there.

The proposed approach will minimise complexity by placing a strong emphasis on self-compliance. There have been targeted communications to cover off issues that may be raised. The coalition is proposing real reform for the tertiary sector which will help universities perform better, delivering a better service to students who then will be better armed to face the challenges of this century.

In closing, I just want to make the point that the bill will right a wrong that has slipped through the system for a number of years and will ensure that the playing field is even. If you earn $100,000 in Australia, London, New York or wherever, you will have to pay your debt to the government. This bill will ensure that happens. I commend it to the House.

Joanne Ryan (Lalor, Australian Labor Party) Share this | Link to this | Hansard source

I too support the Education Legislation Amendment (Overseas Debt Recovery) Bill and the Student Loans (Overseas Debtors Repayment Levy) Bill 2015, but I do so with some reservations. By creating an overseas repayment obligation, it is expected that these bills, as they stand, will affect 46,000 Australians who live and work overseas, with the expectation that 38,000 of these Australians will make repayments to their current student debts. It seems a reasonable thing to put forward and, reasonably, we on this side are therefore supporting it. The debts are owed by Australians who have accessed the Commonwealth government's income contingent loans, which include HELP loans, HECS loans and now trade support loans. Because Labor has always stood up and supported education administration, and because this seems reasonable, the opposition is supporting the passage of these bills.

The government anticipates that these bills will save an estimated $150 million over the 10-year forward estimates, $26 million over the next four years. The mathematics in that is interesting. I can only assume that the mathematics has been done on existing HELP or HECS loans, because I am sure the figure would be much higher if it had been calculated based, projecting forward, on the $100,000 degrees that the government seems intent to introduce into this country. On the one hand, this legislation seems a reasonable thing, but I would take the time to make that point. It seems sensible to put these measures in place, but it rings alarm bells for me that the government should be planning to recover debts from people who are going to travel overseas when we know the government also has plans for students to incur an extraordinary level of debt to access their education. What has been very clear to me, throughout the last two years when we have been talking about the deregulation of universities, is that the government's plans would ultimately lead to $100,000 degrees for Australian students and therefore $100,000 debts for Australian students. It seemed to me, and I recall saying, 'If I were a 20-year-old looking at a future like that, I would probably look to going overseas.' So it is probably sensible that we are looking to recover that debt if we are intending to harness our young people to such huge debt, because for them it would have been sensible to take a few years and go overseas and build their career and not to have to think about the debt back at home. So covering that loophole is probably sensible. But I think the government does understand—they certainly do need to understand—that, from this side of the chamber, there is an absolute, absolute 'No' to that notion of $100,000 degrees, there has been an absolute 'No' to it in the Senate twice, and there is an absolute 'No' to it from the Australian public.

The notion that it is right and reasonable for Australians, regardless of where they are living, to be required to repay their students loans once they meet the income payment criteria is reasonable. In the past, most Australians' attitude has been—we have always thought—that young Australians will travel, whether as backpackers, or to visit family in other countries—for example, young people from my electorate travelling to Italy and catching up with uncles and aunts they have not seen for 20 years, or people travelling back to England, or the US—or just to explore the world. Australians are great travellers, and in the last 40 years we have also learnt to be great workers in other countries, with many Australians building careers and getting valuable experience overseas, whether in commerce or in mining or in other areas of work; Australians are often now travelling overseas for that. But I think there has always been an assumption—and it is taken up in popular culture—that Australians, ultimately, inevitably, come home. One is reminded of some famous Australians still calling Australia home. We have that tradition or that belief that Australians will go and get their experiences, but they will come home. We have been fairly assured that, when they come home successfully after having worked overseas, they will re-engage in the workforce here and will re-engage in repaying that debt. What the government is suggesting now—and I am not suggesting that they are wrong—is that perhaps we should be recovering that debt sooner. I do not have a problem with us seeking to do that, as long as the debt we are putting on our young people is reasonable debt and as long as their education has not sent them scurrying from the country hoping not to have to repay it. Part of that, too, reflects a changing world—a changing world where our young people are not necessarily going to return home. So I think, therefore, that this is sensible. I think asking Australians living and working overseas to repay their loans has long been argued as being fair and equitable, and it is reasonable.

On this side we also understand the importance of university education being affordable to all Australians, as I have said. That has long argued by Labor, and it is worth making that point in this discussion today. So, whilst we have this legislation before us, with the Turnbull government seeking fairness and equity in the repayment of Commonwealth student loans, we also need to be absolutely clear that the fairness test has to be applied to what debt people are going to take on.

Like the member for Kingston, I note the New Zealand and the UK experiences, in that these systems are being trialled by some of our neighbours, with some success. However, I still do have some concerns that a compliance of 70 per cent implies a default of 30 per cent, and that we need to look carefully at the communication strategies: we need to look very carefully at ensuring that our young people who are involved in this get the information in a timely way and understand their obligations. We need to ensure that this is tracked through to make sure that we do not end up with default rates of 30 per cent, to ensure that we are not chasing young Australians and that we are not putting any barriers to returning to this country in front of our young people because they have done that. So communication strategies are absolutely critical.

The revenue that this legislation seeks to ensure comes back to Australia, as I have said, also needs to be seen in these terms: that, in this space and time, right now, we are talking about HELP and HECS debts that are perceived by the Australian public to be reasonable, and therefore it is perceived to be reasonable to ask people, even while they are working overseas, to begin to repay that debt if they have met the threshold. But it is imperative that we bear in mind that, whenever we are talking about higher education in this place, in the current state, we are talking about a government that is hell-bent, it seems, on introducing a system of higher education that is Americanised to the point where young people, like the people in my electorate, may be locked out of higher education. That would be a very, very sad state of affairs for Australia. It goes to the very heart of who we think we are. It goes to the very heart of who we want to be in the future. We want to make sure that, in this country, access and equity are at the forefront of our thinking.

So I support the legislation, but I do so with those reservations, and I do so with a clear warning: that it is my understanding of this government's plans that, while it is seeking to close this loophole, that is perhaps in preparation for another pursuit of its unfair agenda of putting $100,000 debts on the young people in this country so that they can secure their future.

Luke Howarth (Petrie, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015 and cognate bills. I say that with pleasure. This bill will ensure Australians living overseas will have the same obligation to repay their university loans as people living and working throughout Australia. There are almost 4,000 university students in my electorate of Petrie and more than 60,000 taxpaying families. It is simply not fair that they are footing the bill for university graduates who are living and working overseas and therefore are not repaying their university debts. For those debtors the bill creates an obligation to make repayments on their HELP and TSL debts based on their total Australian and foreign sourced income—that is, their worldwide income. This will be imposed as a levy through the Student Loans (Overseas Debtors. Repayment Levy) Bill 2015. It is important to mention that only those debtors living overseas and earning above the minimum HELP and TSL repayment thresholds, which is $54,126, will be required to make payments toward their HELP and TSL debts. Repayment rates and thresholds will mirror those applying to debtors residing in Australia.

My father always taught me to repay my debts. It is an important principle and it teaches responsibility. He always said, 'Don't have debt hanging over your head.' Some students have had the privilege of an Australian education and are doing well overseas, to their credit, and some of them are repaying the debt, but some are not. I say to them: it is the right thing to do; it is the ethical thing to do to repay your debt, because someone else has to repay it if you do not. By not repaying their university debts, Australians living and working overseas are avoiding this responsibility. Importantly, Australian taxpayers are footing the bill, whether they pay income tax in Australia or whether they pay company tax through a company that makes a profit. The Australian government and the people who give us our funds are left to pay someone else's debt, and that is not right.

I have spoken to university graduates in my electorate of Petrie and they tell me that, until about a year and a half ago, it was difficult for them to find out what their actual HECS debt is. They would make a few calls and would be put through to five, six or seven different departments to try to find out what their debt is. It was difficult. From what I understand, this is a lot easier. They can now access an exact figure very easily through myGov, which has made the whole process much simpler and comprehensible. There is no reason why Australian graduates living and working overseas should be unaware of their HECS debt.

Some of the best universities in the world are in Australia. In fact, some of the best universities in the world are in Queensland, in my home state. There are universities like Queensland University of Technology and the University of Queensland. The Higher Education Contribution Scheme, or HECS, is one of the fairest systems in the world—we know that. Since its inception 26 years ago, HECS has become an integral part of the Australian higher education system, and rightly so. It allows students to pay their share of the cost of their education over time, depending on their income. By doing so, HECS facilitates the education sector's continuing expansion, even in an era of budget constraint. Basically, it means that university is accessible and affordable for all Australians. I will come back to that in a minute. For students sitting in the gallery and so forth, it means that university is accessible and affordable for all Australians.

I find it appalling that members on the other side of the House and their union comrades would try to stifle the hope of young Australians by telling them: 'You'll never be able to afford tertiary education.' This is incorrect. It is not true. Every Australian, no matter their circumstances and no matter where they live in this country, will be able to afford to go to university right now and well into the future. I ask those opposite: do you not want our young people to go to university? Do you not want the year 12 graduates of 2015, who will be finishing in the next few months, to consider a tertiary education? You probably do not, because, honestly, I cannot think of any other reason why the Labor Party would be peddling such misconceptions.

On this discussion today, we have already heard the member for Kingston and the member for Lalor talking about $100,000 degrees. I say to those opposite: we know that the government contributes 60 per cent of university education and 40 per cent goes to HECS at the moment. That means that for a student who has a $50,000 degree—whatever it might be—$35,000 is paid by the taxpayer. I am not sure that people in the gallery are aware of that. The federal government currently pays 60 per cent of all university fees. That means that students have a 40 per cent fee to pay. If they cannot afford to pay that fee, they can HECS it. They do not have to pay it until they are earning over $54,126. That is quite reasonable. Some students whose families can afford to pay the bill up-front do so.

We heard from the member for Kingston and the member for Lalor this morning that degrees will go up to $100,000 and that no-one will be able to afford to go to university. I say, 'Hang on, the government pays 60 per cent of the bill and we were left with a huge debt and deficit disaster after six years of Labor. We had no debt under John Howard and then it went through the roof under Rudd, Gillard and Rudd. Why on earth would it be in the federal government's best interest to ensure that our costs go up as well?'

That is what they are saying: they are saying that under our deregulation plans, and other things, university fees will go through the roof and students, such as those in the gallery today, will not be able to afford to go. But what they are forgetting to mention is that the government pays 60 per cent of the bill. So why would it be in our best interests to make sure that bills go up. I know that the member for Canberra will be the next speaker, and I would ask her to think about that, too, before she mentions $100,000 degrees, like the rest of the Labor Party have been doing on this bill and over the last couple of years on this issue.

I believe that this government does have a long-term vision for our higher education sector, and we are working to ensure that it is of a world-class standard and that we have institutions that continue to be institutions of choice, not just for domestic students but also for international students. Our HECS system is one of the best and fairest in the world.

But what is not fair is that university graduates who are working in Australia are paying off their debts while graduates working overseas are not. This is not fair to Australian taxpayers and it is not fair to graduates who are doing the right thing in repaying their loans. So I support this bill, because I support the notion of personal responsibility and I support the hard-working taxpayers in my electorate and throughout Australia.

We have fantastic educational opportunities in Australia. I have travelled around the world with my family. I have been fortunate to have had the opportunity to travel to Europe, to the States and to other places, and every time I come back to Australia I know that we live in the greatest country in the world. It is a wonderful country. If you were born in Australia now or are about to start primary school at a state school in Queensland or elsewhere in Australia, we know that you will receive a great education, especially when your parents and your family spend time with their kids doing a bit of reading with them and talk to them—it takes just a few minutes each day. A little bit of reading really helps students do well. It helps them to read and write and communicate when they have finished school. It is the same with our high schools.

That is why I have been very pleased that the federal coalition government has been contributing record funding over the past couple of years and will be doing so over the next couple of years and beyond. In relation to Gonski, I think there is a nine per cent increase alone this year in Queensland. Every year, despite what you hear from those opposite, the dollar figure for education funding goes up. We know that teachers, school autonomy and principals also make a big difference in our schools. I want to take this opportunity to thank the teachers and the principals in my electorate of Petrie for the work they do in educating our students, our young people, preparing them as they go through primary school and then into high school. I want to say to every students who is about to finish year 12 this year that you have great opportunities in this country. You can go on to university and pretty well achieve whatever it is that you want to achieve. You can go to university. Despite what we hear from those opposite, and from some others, about higher education bills, we have a wonderful HECS system in this country. You can go to university and get the degree you want and get into the career you want to follow. But it might not be university; it might be a trade. We know that being a tradie is a great career. I came from a trade background before I came in here. The coalition government also now has Trade Support Loans, which this bill will also apply to.

Michael Sukkar (Deakin, Liberal Party) Share this | Link to this | Hansard source

Hear hear!

Luke Howarth (Petrie, Liberal Party) Share this | Link to this | Hansard source

Yes, Member for Deakin, you are darn right. It is a great opportunity for people. It helps them as they go through their trade and become a carpenter or a plumber or one of the other trades that millions of people throughout Australia wish to pursue.

I will take this opportunity to say to students that you have wonderful opportunities in this country. If you live in the electorate of Petrie, or anywhere in Australia, you can achieve what you want to achieve. As you move from primary school into high school do the very best you can. There are people around you who love you—your parents and your family. The teachers and principals in these institutions want to see you do well. As a government we, too, want to see you do well. We believe that you can achieve the goals you want to achieve and you can pursue the career you want to follow.

I speak on this bill with pleasure. I support its implementation. I think it is great that the Labor Party is also supporting the bill, but I would ask them to encourage students not to be fearful of attending university, but to know that every student in this country can attend university. We have one of the most wonderful HECS systems in the world, which I support.

Gai Brodtmann (Canberra, Australian Labor Party, Shadow Parliamentary Secretary for Defence) Share this | Link to 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.

Michael Sukkar (Deakin, Liberal Party) Share this | Link to this | Hansard source

It is great to follow the member for Canberra, who spoke a little bit about her experiences at university, being a great product of the Deakin electorate and one of our very proud products, so it is wonderful to follow her and speak in a similar vein on the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015.

I, in many respects, will echo some of the comments made by the member for Canberra. This is a very logical, very fair and very reasonable change. At the moment, those people who have had the benefit of a world-class Australian education, subsidised by taxpayers through the HELP or, when I went through university, the HECS loan system, are people who have benefited from that taxpayer support. We should always expect that those people who leave Australia to work or travel—it is a rite of passage for many people to do that after university—not be, in effect, exempted from repaying their HECS or HELP debt. But at present, if a person is not a tax resident of Australia and therefore not required to lodge an Australian tax return, there is no mechanism for the Australian Tax Office to compel or require that person to make the mandatory HELP or HECS repayment obligations. This legislation fixes that. This legislation simply says, 'If you are somebody who has HELP debt, you have left Australia, you are working and you are earning over the required threshold, which is $54,000 or thereabouts, we will now ask of you that you meet those HELP repayments in the same way that people who have a HELP debt do when working in Australia.'

My background, before I came into parliament, is as a lawyer. I have many friends—friends from university and colleagues in my law firm—who followed a bit of a rite of passage and went to work in London, New York, Hong Kong or Singapore. Inevitably, those people did not repay their HELP debt for the period of time that they were not working in Australia. Some of them have not returned and some of them are unlikely to ever return, and they have not been repaying their HELP debt. But somebody like me, who has worked in Australia for their whole life, has done that and has paid that back.

Every single day and every pay cheque, I looked at my HECS debt being slowly taken out. I was never grumpy and I was never disappointed with that, because I would not have been in my job and I would not have been earning the salary that I was were it not for the world-class education that I received at university. It was subsidised by taxpayers. Let us remember, the HECS system, as I went through it, was the best loan that any of us would ever get in our lives. I was grateful every single day to the Australian taxpayers for funding that education, so I was never angry when I saw that repayment coming out every pay cheque.

Similarly, we believe and evidence suggests that self compliance with these changes will be remarkably high. Evidence from Canada and the UK suggests that anywhere from 70 to 75 per cent of people will automatically comply with a requirement that they now register. We will communicate with them that, once they register, they can voluntarily repay their HECS or HELP debt. That is an extraordinarily high percentage: 70 to 75 per cent. I would expect—and call me parochial—that Australians would probably exceed those numbers, because we have an absolute sense of duty and fairness to Australia. I am confident that Australian people who have a HELP debt, who are working overseas and who are earning over that threshold of $54,000 a year will feel that obligation and will voluntarily comply with their requirement to now repay their HELP debt. Because let us remember, they would not be there in many cases were it not for the education that taxpayers in this country subsidised for them.

Now, the member the Canberra raised a number of very relevant questions around process: how do we contact these people, how do we ensure that people who are subject to repayments are aware of their obligations, how do we make it as easy as humanly possible for those people to meet those obligations and how do we make a very clear process to determine the $54,000 threshold in Australian dollar terms and how that relates to foreign currencies in other jurisdictions? I am very confident that the minister, the ATO and the department will be able to work these things through in a sensible way, because this is really not about going to the four corners of the world and trying to shake money out of people's pockets.

That is not the way and that will not be the way happens, because it will be a fundamental requirement we keep the costs of enforcing these rules low. That is because, as the modelling suggests, these changes will have a net impact of about $150 million over 10 years. Inevitably, and it is not an insignificant amount of money, we would not want to be spending too much money to chase that down. We will be largely relying on good communication with those people and self compliance from them. As I said, the evidence from Canada and the United Kingdom is heartening and I am very confident that Australians will not shirk their responsibility.

This is an issue of fairness. The HELP debt system now has accumulated debts in the order of $60 billion. Inevitably, the government will not collect all of that. There is an embedded loss, in effect, to the government for a range of reasons. There are people who have undertaken study and never reached the $54,000 threshold or whatever the threshold may be indexed to be over time. Obviously, that HECS debt will never be repaid, because that person has never met the threshold. Who wears that cost? Well, taxpayers wear it. As a society who values fairness, we would not to make life unduly difficult people who are not earning a sufficient salary to make repayments.

That just highlights why this change is so important for people who are, in many cases, in very well-paid professions and jobs—and I spoke about many of my former university friends and colleagues, who are working in law firms, accounting firms or investment banks overseas—and earning fantastic money. I know they will rise to the challenges of their obligations to repay their HECS debt, because each and every one of them would not be in that role, would not be in that job or would not have the career that they have were it not for this education system and the funding of their education by taxpayers through the HECS or HELP system.

Similarly, if you are a student who is undertaking the rite of passage that many people take—taking a gap year or, in the case of some people I know, taking a gap three years—good luck to you, I say. They are not earning a very high income or any income at all. They will not be required to repay because they will never be earning the $54,000 threshold. Those people will not be impacted. I stress that those people will go about their business and, hopefully, once they have got that travel out of their system, they will come back to Australia and will start repaying that debt.

One other thing to think about here is people who leave Australia to work and, in many cases, earn fantastic salaries who never return. In a sense, these changes will ensure that we get that money back, which we would never have got. That forms part of the $150 million over 10 years. But there are also many people who will inevitably come back, whether it is after two years, three years, five years or 10 years. They will come back to an accumulated HECS or HELP debt that has not changed at all. One of the beauties of our system is that you make small repayments over time. I think those people will look back and think, 'I wish I had just chipped away at that over the last two, three, five or 10 years, rather than coming home and having this accumulated HECS debt that has been indexed to CPI, which I have not actually chipped away at all.' From a purely practical perspective I think there are many people who, as I have said, will voluntarily enter this scheme, will voluntarily report their income to the ATO and will ensure that those payments are made.

For those who are recalcitrant, who become aware of these changes but blatantly refuse to submit to repaying their HELP or HECS debt, the ATO has a range of powers available. The ATO is very sensible in exercising those powers. As a former tax lawyer myself, I think the ATO can be unfairly maligned at times, because it does take a fairly practical approach to these things. If there is an individual who is blatantly refusing to meet these requirements, even though they are earning over the $54,000 threshold, the ATO has a range of powers to ensure that penalties are applied—penalties that in many cases will be referable in percentage terms to the debt that they owe the Commonwealth.

There are more punitive measures, like orders that would stop somebody from departing Australia, if they were to return for a short period of time without submitting to those rules. So there is a stick, in a sense. The ATO does carry that stick, but I am very optimistic that that will be the exception, not the rule. I think that, as with the experience of the UK and Canada, as I have said a couple of times, we will see voluntary compliance here. People will understand the inherent fairness and equity of these changes and will submit to ensuring that they repay their HELP and HECS debt, in a sense to meet their obligation but also to thank the Australian taxpayers for subsidising their education. We should never, ever forget that.

As Australians we talk a lot about rights: 'I have a right to this, I have a right to that and I have a right to the other.' In fact, we do not have a right to any dollar of another taxpayer's money, but as a society we have chosen to help those people. There are public policy reasons why we want a great education for everybody. We want an absolutely great education for everybody. But, as a consequence of that, when you have accepted a loan from the taxpayer, you submit to repaying that when you are able to do so. Therefore, if they are earning over $54,000 in another jurisdiction, I am confident that Australians will meet those obligations in droves.

I am certain that these rules will remain very uncontroversial, as they are. I am pleased to see that they have bipartisan support and I think that indicates how reasonable and sensible they are. As somebody who, like most people in this House, was blessed with a tertiary education funded by the taxpayers, and having many friends in that situation, I know the gratitude that those people have to the Australian government and Australian taxpayers for their tertiary education and I know that they will have no problem in meeting the obligations of the overseas debt recovery bill.

It is great to speak in favour of this. Let's just make it happen, get it going and, more importantly, let's assist the ATO in any way we can to make this process as seamless as possible. We do not want to make this difficult for people; we want it to be easy. A government should make it easy for people to repay money. I am confident that we will do that, and I commend the bill to the House.

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, thank you for the opportunity to speak on this very important bill, the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015. University degrees and tertiary qualifications are a key to a much better life. All of us in this chamber have had some tertiary education, whether it is in the school of hard knocks, a sandstone university, a TAFE college or on-the-job training. We have all benefited from tertiary education. In Australia we are blessed with a very generous scheme to facilitate that. The HELP scheme, whether it is in the form of the HECS debt, the VET FEE-HELP, the OS-HELP, the SA-HELP or any of the other schemes, is very generous. It is provided by the taxpayers of Australia to young or middle-aged Australians who want to better themselves and add value to our nation. But we do have a demand driven system that has increased the number of graduates by half a million.

When I went to university, the number of university places was capped, and our generation benefited from the government funding 100 per cent of the costs of a university degree. But that meant the number of students able to attend was vastly smaller than now.

As well as the expansion in the number of places, the loan system has allowed more people to attend university by getting up-front help from the government. But being allowed to repay their Higher Education Contribution Scheme debt at a deferred time, when they are earning money, has had consequences for the taxpayers of this country. It has been very generous. However, due to a lack of will and sometimes because we have let it slide, as a nation we have now accumulated a debt of just over $30 billion. That estimate of what has been lost by not claiming back the various HELP debts is not a small number—it is a huge number—and the initiative behind this legislation is to recover some of that debt.

Until the legislation is passed, former students with such loans who are overseas at the moment have no legal obligation to declare or repay their debts whilst they are overseas. In fact, some of them have gone overseas for their careers and never paid anything back. So, on behalf of the Australian taxpayer, we really need to put in place a system where that money will be recovered.

This legislation means that, between now and 2018-19, at least $25 million a year will be recovered. It may be more. That is $150 million over 10 years. It is estimated that since 1989, when HECS was first introduced, $800 million has been lost to the Australian taxpayer. So we really do need to get on top of this issue.

Travel and Australians are synonymous. We are great explorers. We come from down under but we go everywhere around the world. I do not know of any nation that has had as many young people—including now mature-age, middle-aged and senior people—travel the world. I think it comes from the fact that it takes so long to get over there that, when you get there, you travel extensively. It is a rite of passage for young people, whether it is in their gap year before university or, in my case, in our generation, after finishing university or your trade and other certificates. We want that to continue, but we cannot afford to have this huge accumulation of debt just sitting there without a system in place to recover it.

I will say a few words about the technical nature of the legislation. This legislation means that five schedules of previous acts will be amended, including the Higher Education Support Act and the Trade Support Loans Act. The amendment of the Higher Education Support Act will allow the Department of Education and Training to get tax file numbers from the tax office. Overseas, similar systems will be in place. The amendment of the Taxation Administration Act will allow officials to give taxpayer contact and income information to foreign countries or parts of foreign countries, and this will be quid pro quo. It will work with the United Kingdom and with New Zealand. This legislation amends those acts to allow our tax office to give information to those countries. It also amends the Income Tax Assessment Acts of 1936 and 1997 so that HELP debts and trade support loan debts are not allowable tax deductions. Those are the amendments that will be put in place.

As I said, we as a nation have benefited from thousands—in fact, millions—of our citizens who have travelled the world. They have learnt from overseas cultures, set up contacts, had business experience, done further higher learning and broadened their minds through travelling. There are all sorts of benefits, and I do not want those to stop. Australia soaks up so many initiatives from overseas. We pick up all sorts of new technologies and we apply them more quickly than most other nations. The spheres of education, business, economics, engineering, architecture and the humanities all benefit from overseas experience. But this bill is morally justifiable. It is not hard for people to start paying back their debt once they are earning over $50,000, a good income. We make the citizens that stay here and work and do not travel do that, so we should apply that to those who are overseas, particularly since I know that some of my younger colleagues went from university and used their Australian qualifications to get jobs in New York and in London, in the markets, in the city, on Wall Street. They can certainly cope with repaying their debts. But, if we do not have a system in place, it will not work.

We know from the UK experience that this works quite well. They have had trials with Sweden and the Netherlands, and they get 75 per cent of people paying back their debts voluntarily once they are registered. As I said, this agreement starts off working with the UK and New Zealand, but over time we hopefully will expand it to other countries where Australians with HECS debts work.

I think anyone who argues against this bill does not have the Australian taxpayer in mind. It is pretty straightforward. It is pretty transparent. We need to address this $30 billion worth of accumulated debt. We are very generous as a nation, and I want that to continue. But the issue at hand is very pressing because we have a trajectory of debt that will reach $660 million if we do not address this. We have addressed the debt trajectory that the nation faces; we have halved it. There is no plan from the other side. This is our initial manoeuvre to recover a huge HECS debt, loans that Australians have benefited from, and no-one should object to this bill. I commend the bill to the House.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I am pleased to rise to speak on the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015 and the Student Loans (Overseas Debtors Repayment Levy) Bill 2015. The fundamental principle behind the Education Legislation Amendment (Overseas Debt Recovery) Bill is that nothing is for free, including university education. It often amazes me when I hear many students stand up and say, 'We should have free education.' Someone has to pay. Someone has to pay the wages and salaries of the lecturers and someone has to pay for the builders that create the lecture halls, for the furniture in those lecture halls and for the electricity to keep the lights on. At the end of the day, somebody has to pay.

We have perhaps one of the most generous education systems in the world. We now enable anyone that wants to back themselves to get to university without paying one single cent up-front. Any Australian citizen that wants to back themselves and that thinks they can benefit by going to university can do so without paying one cent up-front. All we ask them, at the moment, is to repay on average less than half of that amount, with the taxpayer paying the other half. This is a more than fair system.

This is why I must comment on a few of the statements made by members of the opposition during this debate, where they have rabbited on about a scare campaign on so-called $100,000 degrees. I would ask those members to have a close look at themselves and think about the damage that they are potentially doing. We are all entitled to come here and talk about things to give us some type of political advantage or to raise points that we think are relevant, but to come into this chamber and spread what you know are deliberate falsehoods about $100,000 degrees, when that has the potential to do damage and to scare young people and deter them from going to university, is an absolute disgrace. That is the standard of the debate that we are getting from the opposition—an absolute disgrace for their own political advantage trying to scare young people of Australia and deter them from going to university. I would ask them, before they come in and continue with this outrageous scare campaign, to have a good look at themselves and consider the damage that they are doing. What also amazes me is that those who create these scare campaigns about student debt seem to have no worries about running up deficit after deficit after deficit, spending money that this nation does not have and running the entire nation into hundreds of billions worth of debt, which everyone is going to be forced to pay off in the future. The hypocrisy on this issue is outrageous.

We do have, and have had, one loophole in our legislation asking some of our students to make a contribution and to repay the debt and costs that they incurred through obtaining their university degree—that is, if you went overseas and you earned income overseas, then you did not have to make any contribution. It has been estimated that since 1989 some $800 million worth of revenue has been lost by the Australian taxpayer. This $800 million loss should not have happened in the past, but we need to put steps in place now to make sure that it does not happen in the future. While the future is uncertain—no-one knows what industries will be successful and no-one knows what new technologies or new innovations we will come up with—one thing that we can be sure about is that in the future the Australian economy will be more integrated with the world economy than ever before.

We need to remember that 98 per cent of the world's economy lies beyond Australia shores. The opportunities for young Australians today to travel and work overseas are unheralded in our nation's history. We have free trade agreements with China, Japan, South Korea and the recent TPP involving 12 countries. The opportunities for young Australians who obtain their degree here in Australia and travel overseas to get a job have never ever been greater in our nation's history. Therefore, it is only fair that we ask them that if they earn above a certain threshold—currently, around $50,000 each year—then they help contribute to the expenses that were incurred in giving them the advantage of a degree. It is simply a fair system. I do not see how anyone could argue against it.

The other point that needs to be made is that when Australians work in many overseas countries they are paying a much lower rate of personal income tax than they would in Australia. So we need to be very careful here in Australia. It is all very well to say that we want to raise taxes to pay for some harebrained scheme that may come up in government, but we already have a top rate of personal income tax approaching 50 per cent. In other countries, that is as low as 15 per cent and in some countries there are no taxes at all. If we are going, as the Australian taxpayer, to subsidise 50 per cent of university fees for many students, then this is an only fair system. We need to be careful. If we continue to do this—if we continue to have such big differences between personal tax rates here in Australia and the personal tax rates overseas—we risk damaging our economy and collecting less tax revenue in total. I will leave my comments there. This is sensible bill, it is a fair bill, and I commend it to the house.

Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

I thank the member. I would like to make some quotes on artworks, but I will not today.

Steve Irons (Swan, Liberal Party) Share this | Link to 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.

Luke Hartsuyker (Cowper, National Party, Deputy Leader of the House) Share this | Link to this | Hansard source

I appreciate the opportunity to thank members who have spoken on the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015 and the Student Loans (Overseas Debtors Repayment Levy) Bill 2015. Together these bills create an obligation for Australians, who have received the benefit of one of the government's most generous income-contingent student loans, to make repayments while living overseas. This includes both the Higher Education Loan Program and Trade Support Loans.

For the first time all Australians, regardless of where they live and work, will be required to make repayments on their HELP or Trade Support Loans debt. Overseas debtors will only be required to make the same repayments based on income they would have to make if they were in Australia. Australians who are volunteering overseas, who are looking for work, or who are earning only a modest amount while they travel, will not be required to make repayments. However Australians who are living overseas and earning a good income should pay back Australia for the high-quality education that they have received.

The proposed legislation includes two bills. The Education Legislation Amendment (Overseas Debt Recovery) Bill 2015 will amend the Higher Education Support Act 2003 and the Trade Support Loans Act 2014 to create the arrangements that underpin the operation of the scheme. The Student Loans (Overseas Debtors Repayment Levy) Bill 2015 will strengthen the legislative basis for the program and improve the capacity of the Australian Taxation Office to collect these repayments through the current tax administration arrangements. Under the proposed legislation, from 1 January 2016, HELP and TSL debtors who move overseas for six months or more will be required to notify the ATO of their absence. From 1 July 2017 debtors will be required to repay their loans based on the income they earned in the 2016-17 financial year.

The Education Legislation Amendment (Overseas Debt Recovery) Bill 2015 also includes minor amendments to the Higher Education Support Act 2003 to allow the Department of Education and Training to access tax file numbers. This is merely an extension of processes currently in place for Trade Support Loans and will allow the ATO and the Department of Education and Training to effectively administer overseas debt recovery and HELP more broadly.

The bill also amends the Taxation Administration Act 1953 to allow the sharing of protected tax data with overseas jurisdictions for the purposes of student loan debt administration. This amendment is necessary to support potential reciprocal arrangements with other countries on student loan debt recovery. The government is already making good progress with New Zealand and the United Kingdom in exploring potential data-sharing arrangements to support the scheme. The Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 are also amended to ensure that repayments made by overseas debtors are not allowable self-education expenses and cannot be claimed as a tax deduction. This is consistent with the treatment of HELP and TSL repayments made in Australia.

This is groundbreaking legislation and, not only will preserve our income-contingent loan schemes for students and apprentices, but will improve them by making them fairer for all Australians, regardless of where they live. This change is fair both for the individual and for the taxpayer. Overseas debt recovery is expected to save more than $25 million from 2015-16 to 2018-19 and more than $150 million over the next 10 years in fiscal balance terms. Not only that, it will contribute to the sustainability of the government's generous income-contingent loans which are available to students and apprentices and are the envy of the world.

This government is fully committed to maintaining our world-class student loan schemes and is doing all that it can to ensure that they remain sustainable. Higher education and training are vital tools to create innovation in our workers and in our economy. The government recognises the importance of our loan schemes in supporting equal access to higher education and training for all Australians which leads to greater workforce engagement. Australia needs a higher education and training system that fuels innovation, drives productivity and gives students the skills they need for future success. The government will support higher education, training and research so that we can grasp the opportunities presented by new industries and create a more innovative and more productive Australia.

Overseas debt recovery is just one of a number of measures we have been seeking to implement to strengthen HELP. In this context the government are pleased that the opposition are also supporting this measure by recognising the fairness and sense in asking overseas debtors to repay their student loans on the same terms as people who stay on these shores. As the member for Lalor said, this initiative of the government is 'fair and equitable, and it's reasonable'. I thank the member for Lalor for her comments. While supporting this bill unanimously, opposition speakers have noted that there will be complexity in implementing this measure, and ensuring individuals understand the changes will be an important challenge. The government know that, which is why we are putting in place a communication strategy that will make the new requirements very clear to people. It is why we are providing a simple interface for repayment and it is why we are backing it up with targeted compliance efforts. It is also why we are exploring reciprocal arrangements with countries such as New Zealand and the United Kingdom to support the recovery of these debts.

In conclusion, let me say how proud I am that this government has taken action to collect these overseas debts. These bills will ensure equitable repayment of student loan debts by all Australians and contribute to the long-term sustainability of our world-class loan schemes. This is an important step forward in the government's agenda to secure the future of Australia's higher education and training system. I commend these bills to the House.

Question agreed to.

Bill read a second time.