Mehreen Faruqi (NSW, Australian Greens) Share this | Link to this | Hansard source

by leave—In relation to the Trade Support Loans Amendment Bill 2023, I move Greens amendments (1) and (2) on the sheet 1976 together:

(1) Clause 2, page 2 (table), omit the table, substitute:

(2) Page 26 (after line 6), at the end of the bill, add:

Schedule 2 — Abolishing indexation and raising minimum repayment income and repayment amount

Part 1 — Abolishing indexation

Australian Apprenticeship Support Loans Act 2014

1 Section 5 (definition of AASL debt indexation factor )

Repeal the definition.

2 Section 5 (definition of index number )

Omit "33", substitute "99A".

3 Section 30 (paragraph (a) of the paragraph beginning "In stage 1")

Repeal the paragraph.

4 Subsection 31(1)

Omit all the words before the method statement, substitute:

(1) A person's former accumulated AASL debt, in relation to the person's accumulated AASL debt for a financial year, is the amount worked out using the following method statement.

5 Sections 32, 33 and 34

Repeal the sections.

6 Subsection 99(5) (note)

Repeal the note, substitute:

Note: See section 99A for the definition of index number.

7 After section 99

Insert:

99A Index numbers

(1) The index number for a quarter is the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of that quarter.

(2) Subject to subsection (3), if, at any time before or after the commencement of this Act:

(a) the Australian Statistician has published or publishes an index number in respect of a quarter; and

(b) that index number is in substitution for an index number previously published by the Australian Statistician in respect of that quarter;

disregard the publication of the later index number for the purposes of this section.

(3) If, at any time before or after the commencement of this Act, the Australian Statistician has changed or changes the index reference period for the All Groups Consumer Price Index, then, in applying this section after the change took place or takes place, have regard only to index numbers published in terms of the new index reference period.

8 Application of amendments

The amendments of the Australian Apprenticeship Support Loans Act 2014 made by this Part apply in relation to the financial year starting on the first 1 July occurring on or after the commencement of this Part and each later financial year.

Part 2 — Raising minimum repayment income and repayment amount

Australian Apprenticeship Support Loans Act 2014

9 Section 3 (paragraph beginning "When the person's")

Repeal the paragraph, substitute:

When the person's income reaches the minimum repayment income and the person has finished repaying any debt under the Higher Education SupportAct 2003 and certain other income-contingent loan schemes, the person must start repaying Australian apprenticeship support loan debt.

10 Section 5

Insert:

median wage has the meaning given by section 47AC.

11 Section 5 (definition of minimum repayment income )

Repeal the definition, substitute:

minimum repayment income has the meaning given by section 47AB.

12 Section 5 (definition of repayment income )

Repeal the definition, substitute:

repayment income has the meaning given by section 47AA.

13 Section 39 (paragraph beginning "Australian apprenticeship")

Repeal the paragraph, substitute:

Australian apprenticeship support loan that is paid to a person must be repaid. Once the person's income exceeds the minimum repayment income and the person has finished repaying any debt under the Higher Education SupportAct 2003 and certain other income-contingent loan schemes, the person must start repaying debt in relation to Australian apprenticeship support loan.

14 Subsection 46(1) (definition of applicable percentage of repayment income )

Omit "section 154-20 of the Higher Education Support Act 2003", substitute "section 47D".

15 After section 47

Insert:

47AA Repayment income

(1) A person's repayment income for an income year is an amount equal to the sum of:

(a) the person's taxable income for the income year, disregarding the person's assessable FHSS released amount (within the meaning of the Income Tax Assessment Act 1997) for the income year; and

(b) the person's total net investment loss (within the meaning of the Income Tax Assessment Act 1997) for the income year; and

(c) if the person:

(i) is an employee (within the meaning of the Fringe Benefits Tax Assessment Act 1986); and

(ii) has a reportable fringe benefits total (within the meaning of that Act) for the income year;

the reportable fringe benefits total for the income year; and

(d) the person's exempt foreign income for the income year; and

(e) the person's reportable superannuation contributions (within the meaning of the Income Tax Assessment Act 1997) for the income year.

(2) The person's exempt foreign income is the total amount (if any) by which the person's income that is exempt from tax under section 23AF or 23AG of the Income Tax Assessment Act 1936 exceeds the total amount of losses and outgoings that the person incurs in deriving that exempt income.

(3) For the purposes of subsection (2), disregard any capital losses and outgoings.

47AB Minimum repayment income

The minimum repayment income for an income year is the median wage.

Note: See section 47AC for the definition of median wage.

47AC Meaning of median wage

(1) The median wage for an income year is 52 times the amount set out for the most recent month of August before the start of the income year under the headings "Weekly earnings—Total" in a document by the Australian Statistician entitled "Employee earnings".

(2) If at any time (whether before or after the commencement of this section), the Australian Statistician publishes the amount referred to in subsection (1):

(a) under differently described headings (the new headings); or

(b) in a document entitled otherwise than as described above in subsection (1) (the new document);

then the median wageis to be calculated in accordance with subsection (1) as if the references to:

(c) "Weekly earnings—Total"; or

(d) "Employee earnings";

were references to the new headings and/or the new document, as the case requires.

(3) If:

(a) the Australian Statistician published the amount (the later amount) referred to in subsection (1) for a month of August; and

(b) the later amount is published in substitution for such an amount for that month that was previously published by the Australian Statistician or that was applicable because of subsection (7);

the publication of the later amount is to be disregarded for the purposes of this Act.

Determination of amount by Minister

(4) If the Australian Statistician has not published the amount referred to in subsection (1) for a month of August before the end of the first 31 March after that month of August, the Minister may, by legislative instrument, determine an amount for that month of August.

(5) In determining an amount for a month of August under subsection (4), the Minister must make a genuine attempt to determine the amount accurately, taking into account all relevant evidence available to the Minister.

(6) If the Minister determines an amount for a month of August under subsection (4), the Minister must, as soon as practicable, cause to be published, on the Department's website, a statement of reasons explaining the basis on which the Minister determined the amount.

(7) If the Minister determines an amount for a month of August under subsection (4), the amount referred to in subsection (1) for that month is taken to be the amount determined in the instrument under subsection (4) for that month.

Note: The median wage for the first income year to start after that month of August will be 52 times the amount that is taken to be the amount referred to in subsection (1) for the month.

16 After Subdivision AA of Division 4 of Part 3.2

Insert:

Subdivision AB — Amounts payable to the Commonwealth

47D Amounts payable to the Commonwealth

The amount that a person is liable to pay under section 46, in respect of an income year, is an amount equal to so much of the person's repayable AASL debt for the income year as does not exceed the percentage of the person's repayment income that is applicable under the following table:

47E Publishing indexed amounts

(1) The Minister must cause to be published in the Gazette, before the start of an income year:

(a) the minimum repayment income; and

(b) the amounts referred to in the second column of items 1 to 15 in the table in section 47D;

for that income year.

17 Application of amendments

(1) Subject to subitem (2), the amendments of the Australian Apprenticeship Support Loans Act 2014 made by this Part apply in relation to the 2024-25 income year and later income years.

(2) The Minister must cause to be published the information required by section 47E of the Australian Apprenticeship Support Loans Act 2014, as inserted by this Part, before the start of the 2024-25 income year.

These amendments do two things. Firstly, they abolish indexation on trade support loans to prevent these loans becoming a debt trap. With student and training debts expected to rise by 15 per cent in just two years of the Labor government, this amendment is necessary to prevent the debt crisis from becoming even worse. I have to say, my heart really breaks for the many who will suffer the long-term effects of soaring student debt. People are already being locked out of the housing market, denied personal loans and are rethinking dreams of further study because they are being crushed by student debt, and things will only get worse because Labor is not acting on this.

I did hear the minister say something along the lines of 'it would not be appropriate to remove indexation on these loans as they are part of an overall bigger system of loans'. Well, Minister, I say to you: you are in government and the best thing to do would be to scrap indexation on all loans, because the system that you talk about is utterly and thoroughly broken. Better still, just make TAFE and university free and wipe student debt. But in the meantime, at least let's start here, when we have an opportunity today to relieve some of that pressure.

The second amendment raises the minimum repayment income for those loans to the median wage, which is currently $65,000 annually so that people only have to start repaying their loans once they are earning a decent income. This is an important measure to ensure that people on those lower incomes are not spending money on student debt, money that they so desperately need for bills, for rent, for food, for medicine. It is a cost-of-living relief measure.

Perin Davey (NSW, National Party, Shadow Minister for Water) Share this | Link to this | Hansard source

The Liberals and Nationals will not supporting these amendments. The coalition supports the bills and the expansion of trade support loans to the new Australian Apprenticeship Support Loans scheme as outlined in the bills. The intention of these bills—to expand access to cost-of-living supports to Australians as they undertake training and to help them complete their courses—is admirable, but we recognise that this support must be targeted and temporary. We believe that, once workers are in a position to start paying back their loans, they should do so. We cannot support the abolition of indexation on these loans, because that provides a perverse incentive for people not to repay them as quickly and efficiently as possible. Australians receive this support because, as a community, we have made the choice to help support the aspirations of those looking to take on a new skill. This is not a cost-free exercise, and policies that provide support must be sustainable.

I also note that the quantum of the loans under this scheme will be much, much lower than that experienced by many university students. It is not adequate to draw a direct link to the HELP system. Further, given record low unemployment and the high demand for skilled workers, graduates who qualify for these loans will overwhelmingly find employment rapidly, and only once they've got the employment will they be required to pay the loans back. We're very comfortable with the existing settings in this bill, and we don't believe that the new approach to delaying the repayment of these supports, as suggested by the Greens, is appropriate. We know that support provided by the Australian Apprenticeship Support Loans will make a difference to the lives of students, but, equally, we know that once they have a skill they'll be on the right path to great job opportunities and a prosperous future. We support the existing settings in the bills and do not support these amendments.

Anthony Chisholm (Queensland, Australian Labor Party, Assistant Minister for Education) Share this | Link to this | Hansard source

The government will also not be supporting the amendments proposed by Senator Faruqi. I thank Senator Faruqi and Senator Davey for their contributions on this. As it did for the second reading amendment, the government notes that trade support loans are a small subset of the student and training loans offered by government, all of which are repaid on the same income-contingent basis. It would be inappropriate to treat trade support loans differently to other loans, and, as a result, the Trade Support Loans Amendment Bill is not the appropriate forum to make substantial changes to that approach to student debt. Any changes to the current system of indexation of student debt should be considered on the whole and particularly in the context of the Australian Universities Accord, the National School Reform Agreement and the wider reform agenda that the government has so that the cost, the broader policy context and the long-term effects and consequences can be taken into consideration for such a substantial change.

Recipients repay their income-contingents loans through the tax system and do not need to begin making repayments until their income exceeds the minimum repayment income. These repayments do not change on the basis of the size of the debt—only on the basis of the income received. The intention of this system is to protect students from burdensome repayment obligations by basing repayments on students' capacities to repay rather than on the total value of their debts. This leads to significantly slower repayment rates than would occur at commercial rates, and it ensures that students are protected from the financial pressures of fixed-term repayments and the risk of default. Further, on successful completion of their qualification, recipients will receive a 20 per cent discount on their total loan. This provides an incentive for recipients to complete their qualification as well as reduce their total loan amount, enabling more people to study as a result.

Claire Chandler (Tasmania, Liberal Party, Shadow Assistant Minister for Foreign Affairs) Share this | Link to this | Hansard source

The question is that the Australian Greens amendments on sheet 1976, moved by Senator Faruqi, be agreed to.