Tim Storer (SA, Independent) Share this | Hansard source

I welcome the opportunity to speak in this chamber in support of the proposed change to the student loan system through the Higher Education Support Legislation Amendment (Student Loan Sustainability) Bill. After much consideration I have come to the view that the lower loan repayment threshold is preferable to other higher education cuts. I doubt that future students entering tertiary education would appreciate fewer opportunities and perhaps a lower quality education than those who are already reaping the benefits intellectually as well as financially from their time at university.

If the savings from this measure, estimated by the government to be $231 million, are not legislated, the money will have to come from elsewhere in the education budget. At a time of growing debt and with the budget struggling to return to balance, it is important that this bill rein in the rising costs to government of HELP loans. Total HELP lending is growing rapidly, and I agree with the need for repayments to keep pace with HELP lending growth. Those who are reasonably able to pay off their HELP loans should do so to avoid the student loan system becoming unsustainable for future generations and to avoid our loan systems becoming unnecessarily costly to taxpayers, as the Grattan Institute argued in its submission to the Education and Employment Legislation Committee.

We should also take into account the point raised by Grattan, that HELP's largest cost to the taxpayer is debt not expected to be repaid. In 2012, HELP debt was $25 billion, whereas today it is $55 billion. Of that $55 billion, nearly $20 billion is doubtful debt. The evidence is significant, however. On its own, it's not sufficient reason to vote for the bill. Fortunately, this bill does a good job, in my view, in balancing economic sustainability with fairness to students and to those repaying student loans.

I have decided to accept the readjustment of the current repayment pathway. Growing slowly upwards from a fair one per cent repayment rate for those earning $45,000, this legislation offers a smoother repayment process. Those earning between $57,000 and $98,000 will see considerable benefit, and high-income earners will pay their fair share as well. The legislation will couple lower repayment rates across the board for the vast majority of lower- and middle-income earners with smoother incremental rises. That will give significant relief to many, at the same time as increasing the amount of loans that are ultimately repaid. For example: under the current system, from 1 July this year someone on an annual income of $58,378 would face a repayment rate of four per cent. By contrast, if this bill were passed we would see the same person pay a repayment rate of 2.5 per cent. That is a saving of $876 for that individual per year.

I would also like to draw greater attention to the fact that those struggling to pay off their HELP loan do have the option to defer their repayments or to set up a repayment plan that would provide appropriate relief. As I understand it, the vast bulk of those who apply for hardship relief are successful. The hardship provisions provide a responsible safety net to ensure that this bill does not apply undue burden on those in hardship. I support efforts to increase the visibility of the hardship arrangements so that those who need relief get it. I would encourage my fellow senators to consider the hardship provision when weighing up the impact that the lower repayment threshold might have.

Overall, the economic sustainability of the student loan system needs to be balanced with fairness to students, and this bill achieves that balance. With regard to the amendments put forward by Senator Bernardi: I too agree that public and private universities should be treated fairly. His amendments would level the playing field for student access to both private and public universities. The current 25 per cent fee for students at Torrens University Australia in my home state of South Australia, Bond University, the University of Notre Dame Australia and the University of Divinity should be scrapped. One strong reason to vote for the Australian Conservatives amendments is that they would encourage fairer access to students across the board to attend programs that are best fit for them.

It seems to me that the current 25 per cent fee could act as a disincentive for some students when weighing up whether to apply to a private university. A consequence of removing the fee could be that more eligible candidate students, and from less affluent backgrounds, for example, might choose to apply to private universities if they felt that those programs would give them most benefit. I would encourage my fellow senators to vote for the Australian Conservatives amendments on the grounds of fairness—primarily for our students but also for educational providers.