James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

I present the explanatory memoranda and I move:

That these bills be now read a second time.

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

Leave granted.

The speeches read as follows—

Today I introduce the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015. I will also be introducing the Student Loans (Overseas Debtors Repayment Levy) Bill 2015.

Together, these Bills create an overseas repayment obligation for Australians who have taken advantage of the Government's generous income-contingent loans. This includes Higher Education Loan Programme (or HELP) loans and Trade Support Loans.

The new Bills are, at heart, about ensuring equity and fairness for all Australians with HELP or TSL debts, and about maintaining the stability and security of our education and training systems.

I first announced this new measure on 2 May 2015 in advance of its inclusion in the 2015–16 Budget.

Under the current system, Australians overseas are able to make voluntary repayments to the Australian Taxation Office but are not under any legal obligation to repay their debt to the Australian taxpayer.

Now, for the first time, Australians who live and work overseas will be required to pay back the same amount of their HELP or TSL debt as they would if they were living and working in Australia. This is a matter of equity. It is also a matter of sustainability, ensuring the quality of future education in Australia, and being one of the reasonable measures needed to maximise the repayment of debts to the taxpayers while preserving the income-contingent nature of our student and trade loans.

The measure will save more than $25 million from 2015–16 to 2018–19 and more than $150 million over 10 years in fiscal balance terms.

The repayment system will uphold the income-contingent nature of our student loans system – a system that is the envy of the world – by only requiring those who earn above the minimum repayment threshold to make the repayments they would have to make if they were in Australia.

This year, HELP and Trade Support Loan debtors in Australia only begin to repay their debt when they earn over $54,126 per annum, after which borrowers pay 4 per cent of their income towards their debt.

Under our proposed higher education reforms, there would be a new minimum repayment income threshold of $50,638 in 2016–17, and the new minimum repayment would be 2 per cent per year.

Australians living overseas would only begin to repay their debts when their income reaches the equivalent amount.

It is important to remember that this measure involves the repayment of a debt that a person has willingly undertaken in order to pay for their education and training. It will reduce a person's HELP or Trade Support Loan debt over time, and will in most cases eventually reduce that debt to nil.

This change is fair for the individual and the taxpayer and is expected to improve Australia's balance sheet by more than $150 million over the next ten years. The repayment obligation for Australians living overseas will commence on 1 July 2017 based on income from the 2016–17 financial year.

For many young Australians, heading overseas in the years following graduation is an ambition, whether as a gap year, a working holiday, or as an upward step on the career ladder in their chosen field.

Some will remain overseas forever. Many others – the majority, in fact – come back to a stale debt that has been indexed at CPI rates every year they were away, when they could have been reducing it.

Let me be clear. If you are volunteering and earning only a small amount, if you are looking for work and struggling to make ends meet, if you are pulling beers or cutting hair in London for three months and earning only modestly while saving for the next European adventure, you will not be within the scope of these obligations.

But if you're working in a well-paid job overseas – if you're a banker on Wall Street, for example, or an engineer in Dubai or a lawyer in London – you ought to pay back the cost of the education that you got here in Australia.

This is the way it works in many other countries already. We are joining these countries in making this sensible change to improve the equity and sustainability of our loan schemes.

I am also pleased to say that this measure has strong support in the community, the higher education sector and, I believe, across both sides of politics.

The Senate Education and Employment Legislation Committee issued a report late last year on the Higher Education and Research Reform Amendment Bill 2014, including a formal recommendation that "the government explore avenues to recover HELP debts of Australians residing overseas."

Professor Bruce Chapman, the architect of HECS when it was first introduced over 25 years ago, has argued for this measure to be implemented.

There are also many others who have called for this change, including a range of people in the higher education sector.

Belinda Robinson, Chief Executive of Universities Australia, has said that "[t]his is a welcome move by the Government in improving the fairness and sustainability of the student loans scheme … there is no obvious reason why obliging Australian graduates living overseas to repay their HELP debt shouldn't be adopted in Australia."

And in response to my announcement of this measure in May this year, the Opposition signalled that it is willing to "suppor[t] measures that work to protect fairness and integrity in universities, including the HECS system."

But while there is strong support for this change, no government has ever tackled this before – it's been put in the too-hard basket.

This new legislation remedies this deficiency in our student loan and training loan schemes.

The Education Legislation Amendment (Overseas Debt Recovery) Bill 2015 comprises five schedules.

Schedule 1 amends the Higher Education Support Act 2003, and Schedule 2 amends the Trade Support Loans Act 2014, to create an obligation for HELP and Trade Support Loan debtors to repay their debt based on their total Australian and foreign-sourced income, known as their worldwide income. This is only if the debtor is earning more than the equivalent of the Australian minimum repayment threshold.

Schedule 3 of the Bill amends the Higher Education Support Act 2003 to allow the Department of Education and Training to access the Tax File Numbers of students in order to improve the efficiency of data exchange with the Australian Taxation Office, and to improve data quality. This merely extends administrative processes already in place with the Trade Support Loans, providing consistency across the loan schemes. It will enable more effective administration of overseas debt recovery as well as HELP more broadly.

Schedule 4 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 is necessary to support potential reciprocal cooperation on debt recovery in line with good international practice. The Government intends to explore such reciprocal arrangements with other countries, starting with New Zealand and the United Kingdom, countries with which we have already established a constructive dialogue on these issues.

Schedule 5 amends the Income Tax Assessment Act 1936 and Income Tax Assessment Act 1997 to ensure that, consistent with the treatment of repayments made in Australia, repayments made from overseas cannot be claimed as a tax deduction in relation to expenses for self-education.

In conclusion, let me say I am very proud that this Government has taken the initiative to once again level the playing field and treat people the same whether their pay comes in dollars, pounds, euros, yen, yuan, or some other currency.

Together, the two Bills will contribute to ensuring the equitable repayment of HELP and Trade Support Loan debts by all Australians who have them, and to securing the future of higher education and training in Australia.

Today I introduce the Student Loans (Overseas Debtors Repayment Levy) Bill 2015.

This Bill will require Australians living overseas who have a Higher Education Loan Programme or Trade Support Loan debt to repay their loans in line with the obligations that apply to Australian based debtors. Repayment obligations will only commence once the individual reaches the minimum repayment threshold. This Bill will strengthen both the legislative basis for the programme and the capacity of the Australian Taxation Office to collect this debt through the current tax administration arrangements.

Debate adjourned.