John Faulkner (NSW, Australian Labor Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

Higher education is central to achieving this Government’s vision of a stronger and fairer nation. The Government is proposing a landmark reform agenda for higher education and research that will transform the scale, potential and quality of the nation’s universities and open the doors to higher education to a new generation of Australians. This Bill is a key component of the reform agenda.

It proposes wide ranging reforms to student income support to create a fairer system and increase support for those who need it the most, making higher education more accessible.

The reforms made by this Bill are in response to the Review of Higher Education conducted by Emeritus Professor Denise Bradley AC. The final report from the Review noted that income support and other financial assistance are critically important to attract financially disadvantaged students into higher education and keeping them there.

The Bradley Review found that the number of students on income support studying in higher education had declined from around 160,000 in 2001 to 148,000 by June 2007 and that the take-up rate in the student population had declined from 41 per cent to 33 per cent in the same period.

It is critical to ensure that income support arrangements for students effectively operate to assist students from Low Socio-Economic Status (SES) backgrounds if Australia is to achieve the ambitious education outcome targets set by the Government that:

• by 2025, 40 per cent of 25 to 34-year-olds will hold a bachelor degree or higher; and
• by 2020, 20 per cent of higher education enrolments at undergraduate level should be people from low SES backgrounds.

By supporting increased participation in education and training, the reforms will improve future workforce participation, skill and productivity levels throughout the community. The reforms will assist in building labour force capacity for qualified employees in high demand occupations.

Of course, the key to improving the participation of low SES Australians in tertiary education begins much earlier as part of the Government’s commitment to a strong and innovative life-long education system. That is, it starts with universal access to early childhood education, enrolment and regular attendance during the compulsory school years, the provision of quality teaching - matched by achieving quality educational outcomes including the attainment of Year 12 or equivalent qualifications. Most importantly, it includes coaching and encouraging the aspirations of all young people, but particularly low SES Australians, to believe that they can go into university education and take advantage of the opportunities this unfolds.

Clearly, to support these aspirations young people must have the financial means to support themselves while they are building their human resource capital. And it is this issue that this Bill considers.

The Bradley Review found that student income support arrangements were poorly targeted. Assistance provided through Youth Allowance was not going to those students most in need. The reforms will increase access to, and better target, income support for students who need it most, through a fairer and more equitable allocation of existing resources.

Each of the recommendations for reforming student income support arising from the Bradley Review has been adopted by the Government. This Bill implements the recommendations that require legislation. The principal measures in the Bill were announced in the 2009-2010 Budget.

In the package of proposals we are:

• relaxing the Parental Income Test threshold from 1 January 2010 for dependants under Youth Allowance and ABSTUDY, from the current $32,800 up to $44,165 for maximum payment.
• This means an extra 68,000 students become eligible for income support payments and higher payments for 34,600 students receive higher payments.
• raising the parental income cut-off point for a family with one child aged 18 and at home from around $58,000 to almost $76,000, and for a family with two children aged 18 and 20 at home from around $62,000 to around $108,000.
• progressively lowering of the age of independence for Youth Allowance and ABSTUDY from the current 25 years to 22 years by 2012, commencing with 24 years in 2010.
• increasing the personal income test threshold from 1 July 2012 from the current $236 to $400 per fortnight, which will allow around 60,000 students who work part time to earn more before their payments are reduced.
• creating a new annual Student Start up Scholarship as an entitlement for all university students for every year that they receive student income support.
• This new Scholarship will benefit 146,600 students in 2010 and 172,600 students by 2013, helping them with the costs of text books and specialised equipment in each year of their course.
• introducing a Relocation Scholarship of $4000 in the first year and $1000 in later years to assist thousands of university students with the costs of relocating to study.
• This will be of particular benefit to dependent rural students who have to move away from home to study at university and to independent students disadvantaged by personal circumstances.
• and tightening the Workforce Participation Criterion for Independence to better target student income support to those who need it most.

The reforms are roughly cost neutral over the forward estimates. The costs are fully offset by improved targeting of Youth Allowance and ABSTUDY and the conversion of funding from other programs affected by the reforms, including the existing Commonwealth Scholarships Program and savings from Family Tax Benefit – Part A (FTB) due to the anticipated migration of some young people from FTB to Youth Allowance or ABSTUDY.

The measures of this Bill particularly benefit students who have to move away from home to study, rural and regional students, and students from low socio economic backgrounds.

The first measure in the Bill is changes to the independence criteria for youth allowance.

The age at which a person is automatically independent is changing from 25 to 22 years. This change will be phased in, so that the age of independence will be reduced to 24 years in 2010 years, 23 years in 2011 and 22 years in 2012. This change means that more young people will be eligible for youth allowance, and many existing youth allowance recipients will receive a higher rate of payment. The age of independence was increased from 22 years to 25 years by the Howard Government in 1998, with a commitment in the legislation by the then Government to progressively reduce the age over time. After 11 years, this Government is delivering on the legislative commitment.

As recommended by the Bradley Review, these reforms will be largely funded by tightening the workforce participation criteria for independence under Youth Allowance and ABSTUDY so that only those students who are genuinely independent can claim assistance. This will mean working part-time will not be considered to establish independence from parental support.

The Bradley Review found that, as a result, many students were receiving support in this way when they were not actually independent of their families or when they came from upper income families. The Bradley Review, for instance, found that 36 per cent of students who were living at home and were receiving youth allowance through having been considered ‘independent’ were from families with incomes above $100,000 and 10 per cent from families with incomes above $200,000.

The reforms will ensure that support is targeted to students genuinely in need of assistance. No person who is currently independent because of workforce participation will be affected by this change. Nor will any person who finished secondary school in 2008 and took a year off study before commencing university in 2010, if the person lives away from home to study.

Under the previous system, the parental income test was so low that many students sought to gain access to student income support as independent Youth Allowance recipients.

Under the Government’s new arrangements many people who are currently undertaking a gap year will be automatically eligible for support as dependent students.

The second measure in the Bill is changes to the income test for youth allowance and austudy to increase the level of support for students, apprentices and young job seekers.

From 1 January 2010, the annual Parental Income Test threshold for dependent youth allowance recipients to get the maximum rate of youth allowance will increase from $32,800 to $44,165. More young people will be entitled to youth allowance, and many people already receiving youth allowance will receive a higher rate of payment.

The parental income reduction for youth allowance will change from a taper rate of 25% per person, to a family taper of 20%. This measure reduces the effect of parental income on a youth allowance recipient, particularly where the same parental income applies to multiple recipients in a family. The point at which a person’s parental income will disentitle them from youth allowance will be substantially raised.

Additionally, the personal income free area for youth allowance and austudy students and new apprentices will rise from $236 to $400 per fortnight from 1 July 2012. Students and Australian Apprentices will therefore be able earn up to $400 per fortnight without having their payments reduced. The increased free area will also be indexed to the Consumer Price Index.

The third measure in the Bill is the provision of new scholarships for students.

All students receiving youth allowance or austudy while undertaking an approved higher education course will receive a student start-up scholarship. In 2010, the scholarship will be $1,127 for each six months of study, totalling $2254 for the year.

In addition to the student start-up scholarship some students receiving student income support will receive a relocation Scholarship to assist with the cost of relocating for study. The scholarship will be $1,000 per year, and $4,000 for a student’s initial relocation.

The value of the new scholarships will be indexed from 2011.

The government will be providing equivalent scholarships to students under the Veterans’ Children Education Scheme, the Military Rehabilitation and Compensation Education and Training Scheme, and the ABSTUDY Scheme.

The fourth measure in the Bill is exempting merit and equity based scholarships from the income test under social security and veterans’ entitlements legislation. These scholarships will be exempt to a threshold of $6,762 per year. The threshold will be indexed. This measure will increase the entitlement to income support for students receiving scholarships, and provide an incentive to individuals and organisations to fund scholarships for students.

Overall, many students will benefit from the measures in the Bill. One key group is rural and regional students. Rural and regional students who attend university away from home are likely to be the key beneficiaries of the student start-up and relocation scholarships. Rural and regional students will also benefit from the increased parental income threshold and the sharing of parental income with siblings. Accordingly, the measures in the Bill will make higher education more accessible for rural and regional students.

The Bill also amends the social security law and veterans’ entitlements law to facilitate the measures and make amendments of a technical nature.

The Governments changes to Student Income Support will create a fairer system that will direct support to the students who need it most.

Debate (on motion by Senator Faulkner) adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.