Kerry O'Brien (Tasmania, Australian Labor Party) Share this | Hansard source

Unfortunately, I have to say that Senator Birmingham had better ask his staff to have another look at the facts that they based his submission on, because they got so much wrong. Just as this debate has been characterised by misunderstandings, misrepresentations and ignorance, so has the coalition position in relation to the Social Security and Other Legislation Amendment (Income Support for Students) Bill 2009. It was not always so. Last year the then shadow education minister, Tony Smith, panned the system that the opposition now seeks to support, when he said:

Overall, the evidence seems to suggest that it has become too easy for students from affluent backgrounds to qualify and too difficult for students from modest backgrounds.

He further agreed with the government’s approach when he said:

This means that students from a family earning an average weekly income cannot effectively go straight from school to university and be supported. It particularly disadvantages many students—particularly those from the country—who have to leave home to study …with many of them taking a year off to earn enough money to qualify for independence for Youth Allowance and possibly not retuning.

That is what he told the Australian Liberal Students Federation federal council on 7 July last year. Of course, the government does agree. In fact, we know that 30 per cent of kids who take a gap year do not end up going on to university. That is why under the new system many students will be able to access support immediately under a higher parental income test, rather than having to wait 18 months to prove their independence.

The propositions which are to come before this chamber arising from the Senate committee report, frankly, will do very little to redress the disadvantage situation that exists at the present time under the former government’s legislation. What the Bradley report found was that many students from affluent backgrounds were able to make arrangements under one of the criteria laid down in the legislation—welfare legislation, I might say; social security legislation—entitling the student the benefit of taxpayer support. The three provisions in the legislation that might be targeted to avoid the consequence of parental income tests and parental asset tests are for a student to establish that they are independent. There are some other grounds, but for the purpose of this debate they are the most important ones. What the government is targeting is the measure that has been used very successfully by students from very affluent backgrounds.

The Bradley report found that students from families with incomes of $150,000, $200,000, $300,000 per year were, by earning an amount of money within 18 months—which I think currently stands at about $19,532 but which has been indexed over time—were able to establish that they were independent. That did not actually require them to move away from home. The Bradley report found that a great many students actually did not move away from home, yet established independence and received taxpayer support, even, in a substantial percentage of cases—I think it was about 36 per cent of cases—where the parental income was over $100,000; and a very significant amount, around 10 per cent of cases, when the parental income was over $150,000 and approaching $200,000.

This is hardly the sort of measure that would indicate that it was operating in the best interests of the taxpayer, and certainly not in the best interests of students from disadvantaged backgrounds, because at the same time, under the current legislation, the assistance started to phase out where parental income was a princely $32,000 approximately at the rate of 25c in the dollar beyond that. The Deputy Prime Minister proposes a system where the parental income threshold increases to $44,000 approximately, where the taper, as they call it—the rate at which the benefit declines—has been reduced from 25c to 20c in the dollar. The result of that is to dramatically extend the parental income thresholds where some benefit is payable. In addition, some other measures are being introduced which provide more widespread benefits to students, particularly those who need to move away from home, and that generally applies to students from rural and regional backgrounds but also applies to students from some cities who need to move to another city to study the course of their choice.

Initially, the attack on this measure was from that cohort of students who was currently undertaking a gap year—that is, the students had finished their studies in 2008, they were working through 2009, intending to start university in 2010 and targeting that magical figure of $19,532 as the loophole, if I can call it that, which they needed to jump through to access youth allowance support for their studies. What I think was erroneously referred to by Senator Birmingham, who preceded me, as an extension of the benefit only for remote students is actually a proposal of the Deputy Prime Minister for those students who need to live away from home under the tests currently laid down in the legislation—that is, they must attend a university which is at least 90 minutes by public transport from their place of residence. Those students would still be able to access the independence test measure. That means that the government has extended the cost of the package which was, when it was first envisaged with a number of changes which are encapsulated and which were set out in evidence before the Senate committee, essentially a revenue-neutral and cost-neutral package. With this measure the government has extended the cost and, by doing that, adjusted some other measures contained within the package. For example, one of the other improvements to the system that the government is proposing is to extend the income threshold available to students—that is, the amount of money they can earn within a fortnight before their benefit is affected. The proposal was to extend it from $236 to $400. The other measure included in the original package was the reduction of the age at which independence was automatically determined coming down from 25 to 22 years. The result of those additional costs that the gap year measure that the Deputy Prime Minister announced, if I can call it that, is to phase in at a slower rate those two new improved benefits for students in their ability to earn income or be deemed independent under this bill now before the Senate.

The government has been keen to deal with the inequity that the current legislation and its implementation has led to—that is, excluding young people from families with average or lower than average incomes and permitting access to a welfare benefit for higher income families because they are able to organise their affairs, get work or live in an area where there is plenty of work to enable them to earn the magical figure and be assessed as independent, even though they did not have to leave home. The government has come up with a measure which will benefit, it is estimated, 68,000 additional students as being eligible for the dependent youth allowance benefit. That is, without establishing independence, approximately 68,000 more students next year would be eligible to go straight to uni with the youth allowance benefit, no gap year, no requirement to take time out of university, less risk of those students not completing a university degree and making university accessible to many more students from lower income families. In addition to that, it is believed that approximately 36,000 students would gain a greater benefit under the government’s proposals than would currently exist for them under the existing legislation of the coalition. That means that over 100,000 students would be better off under this legislation than they would be under the existing legislation.

Of course, when you make changes there are people who are not better off; some people will be worse off. A family, despite the thresholds increasing substantially, still with an income at a higher level—bearing in mind that under the previous system without independence all benefits would have ceased at a parental income threshold of $79,000—now with two children at university can earn up to $140,000 if they have two students living away from home and can still get substantial benefits. Those benefits include, for example, a start-up cost benefit of $4,000 per annum for each student to assist them to move away from home in the first year of university. That benefit reduces to $1,000 in subsequent years, the higher benefit being structured to assist with the initial costs of moving away from home and the initial set-up costs of any such arrangement.

I travelled with the Senate inquiry extensively through Western Australia, South Australia, Victoria, New South Wales, Queensland and here in the ACT taking evidence on this matter, and there were parents with two children who would be at university at the same time and who had incomes under $100,000 who would be very much better off under this legislation than they would have been under the other legislation—without the need to establish independence, or for both students to take a gap year under the current legislation if the work is available.

The other thing that seems to be forgotten in this debate is that when people are focusing on the ability to earn the $19½ thousand in a gap year, everyone assumes that in the current economic circumstances things will be the same as they may have been in the boom, and that the work availability will mean that in some cases people will just as easily be able to earn the $19,532. I think what the Senate inquiry has established, as far as I am concerned, is that there are many parts of this country where it will be far from easy to earn $19,532, and to do that, let alone to establish real independence, would require the young person to move away from home.

But if you look at the evidence we took, I am mindful of our experience when we were in Townsville last week—last Tuesday, as a matter of fact—where we had principals from Charters Towers, Ayr, the north coast of Townsville and Ingham. They all agreed that the majority of the parents in those schools would come from lower income groups. When we tested it, and when I spoke to them afterwards, it was very clear that many of the students in those schools would be the beneficiaries of the new legislation. But, of course, that is not what they had been given to understand. The story that is being spread by those who perceive that they are disadvantaged by this, or by those who do not understand it, is convincing people who are really beneficiaries of the new system that the new system will not be good for them.

That is the problem we have. There are a lot of people whom I have encountered from various walks of life in my own constituency and on this inquiry who have a view of the legislation which is quite disconnected from the reality of the legislation. When they are brought to understand it, they really are saying, ‘Why didn’t we know this before?’ The problem the department indicated is that they cannot sell the legislation and the benefits of it until it is actually passed.

What we have seen, in some cases, is a somewhat hysterical campaign—but I would not want to categorise people as hysterical on the basis that they somehow, with all of the facts before them came to wrong decision and became hysterical about it. What I am really saying is that people have been misled, they have misunderstood the legislation and, when they assess it, in many cases they find that they are not badly off at all, that there are significant benefits and what the government is putting forward is a system which will actually benefit the people that we would want a welfare legislation measure to benefit—that is, low-income and middle-income families right throughout Australia.

The other reality is that in regional Australia students need to move away from home to study. Looking at the material that the department provided for us, there are a great many people from regional Australia who already use the system. I believe, given a chance to operate, there will be a great many more who will benefit from this. The fact is that if you move away from home, the youth allowance benefit is higher. As I said earlier, there are start-up benefits for those who do move away from home of $4,000 in the first year and $1,000 in each subsequent year. There is also the youth allowance—that may reduce depending on the family income—and there is also rent assistance on top of that. So, significant benefits are still available for students. The important thing is that for many of them there is no need to take a gap year; because of the increased parental income thresholds, many of those students will be able to finish high school this year and start uni next year if this legislation is passed.

On the basis of departmental advice we say that approximately 100,000 students will be better off under this legislation. I think there may be a quarter of that number who are not better off, and who are, in fact, worse off. I think with the changes that the Deputy Prime Minister announced, which deal with the so-called 2009 gap year students, the reality is that an additional 4,700 of those students will benefit from the extension of the definition of ‘independent’ which allows them to earn that $19,532 and qualify as independent. The Deputy Prime Minister listened to the student community and parents who had concerns about the plans those students had made. The government has made the decision that those students should not be effectively disadvantaged by the change of the system after they had actually made the decision to take the gap year. That has been attended to, but only for those students who need to move away from home, because, frankly, the disadvantage for students who do not need to move away from home is far less, if anything at all. If those students who do not need to move away from home are from a higher income family, they will have the benefit of parental support and also the benefit of the ability to work part time, as many would in any case in that university setting. That is clearly the evidence that we have received from right around the country.

The important thing that we should take from the assessment of this legislation in this debate is that it is, I suppose, all right to say that sometimes we play politics with these issues. But the reality here is that we have an opportunity to help many, many more young people go straight from school to university. Many of those will be in regional Australia and many of those will receive higher benefits because of the changes that this government is making. What we will stop is a lot of people, particularly in the cities, who do not need to move away from home and who have access to work in any case, having access to these benefits any longer where their parental incomes are high. There are other things that no doubt need to be done, but one of the big problems that I have with the coalition’s approach on this issue is this: they were in government for nearly 12 years, they talked about disadvantage in regional Australia but, when it came down to it, you had to skate through this loophole in the legislation to get a benefit and if you did not, you were on your own. Now it is all too hard and they want to blame this government for their own failings.