Tuesday, 21 March 2023
Education Legislation Amendment (Startup Year and Other Measures) Bill 2023; Second Reading
Paul Fletcher (Bradfield, Liberal Party, Shadow Minister for Government Services and the Digital Economy) Share this | Link to this | Hansard source
Benjamin Franklin said that an investment in knowledge pays the best interest, and on this side of the House we certainly agree with that proposition. Growing our economy and encouraging the development of new businesses is at the heart of the coalition's vision for Australia's future, and we certainly believe that investment in education has an important role in driving our economic future. Startups and other entrepreneurial activity play a very important role in our economic vision for Australia, and they will make a major contribution to our nation's economic growth. On this side of the chamber, we understand what it takes to start a business. On this side of the chamber, we understand when government can help a business and when it should get out of the way. And on this side of the chamber, we have a proud track record of delivering real and effective support for startups, for small business, for entrepreneurs, for business incubators and for accelerator programs.
In our government's 2014 budget, the then Abbott government introduced the Entrepreneurs Infrastructure Program, which provided $494.2 million over five years for the commercialisation of goods, job creation and lifting the capability of small business. Funding through this program has been used to assist a wide range of initiatives, including the development of tourism, small businesses and startups. How has Labor responded? In its budget brought down in October 2022, there was a measure entitled 'Government Spending Audit—Industry and Science Portfolio—efficiencies', which included cuts of $197.7 million over four years to the Entrepreneurs Infrastructure Program, representing around 75 per cent of that program's funding. This government should be judged by their actions, and these actions demonstrate they don't attach much priority to supporting entrepreneurs.
One of our other significant achievements in government was the $2.2 billion university research commercialisation package. That package included five key strategic and targeted investments to drive our reform agenda: $243 million for the Trailblazer Universities Program, to boost research and development and drive commercialisation outcomes with industry partners; a $150 million capital injection to expand the CSIRO Main Sequence Ventures program, which backs startup companies; $296 million for 1,800 industry PhDs and over 800 new fellowships; the creation of a new intellectual property framework for universities, to support greater university industry collaboration and the uptake of research outputs; and $1.6 billion over 10 years for Australia's Economic Accelerator, a new stage-gated competitive funding program to help university projects bridge the so-called valley of death on the road to commercialisation. On this side of the House we have consistently demonstrated our support for entrepreneurs, for people who take a risk, commercialise the fruits of scientific research and generate jobs and economic activity.
Certainly there is an important role for education in all this. In the $2.2 billion package I have already mentioned, we had a significant focus on our national priorities outlined in our Modern Manufacturing Strategy—strengthening Australia's sovereign capability, securing supply chains and investing in the skills and world-class research needed by our manufacturing businesses. It is crucial that we fund the links between research and industry, and it's crucial we have a long-term strategy. Unfortunately, we've seen this Labor government, by contrast, scrap the careful strategic thinking adopted by the previous Liberal-National government. They've replaced it with the National Reconstruction Fund, but it's very clear this is simply a slush fund for Labor election commitments.
The bill before the House would add to the existing HELP scheme for students, ostensibly to support their participation in accelerator and incubator programs at tertiary institutions. But this bill is riddled with many programs. To start with, the underlying purpose of the new SY-HELP scheme is very vague. It is not at all clear whether the aim of the program is to build a pool of skilled entrepreneurs or to create more firms. We know that 90 per cent of startups exit or fail to grow. In light of these facts, the purpose of the SY-HELP program should be clearly defined. It's very important that students considering entering this startup-year program do so with their eyes wide open, understanding the real risks present in being involved in such a program.
It's also worth pointing out that incubator and accelerator programs are already a feature at many of this country's universities. It is unclear how the SY-HELP program is to be distinguished or differentiated from those existing incubator and accelerator programs. There is, under the arrangements contemplated, the real likelihood that universities will now be incentivised to discontinue their free-of-charge incubator and accelerator programs, and shift much, or indeed all, of the cost of participating in those programs onto students. That is compounded when we consider the real risk that I've already mentioned that students who enter the program may find the outcomes are much less than they've been led to believe by reason of the fact that, as I've mentioned, a very high proportion of startups exit or fail to grow.
What is certain, though, is that participants in this scheme will exit it with considerably more debt. It's certainly true that, as a scheme, HECS has worked effectively to give students access to education, with its proven income-enhancing power, and to allow the cost of education to be repaid over time through an income-contingent loan. But whether participating in a startup or accelerator program would deliver the same benefits for most students is quite uncertain. What is certain is that today's high rates of inflation are leading to sharp increases in student debt. For example, on 17 March, the Australian reported, in an article entitled 'Debt bomb for uni students', that Australia's three million university graduates faced a $4.5 billion increase to student debt due to a high rate of indexation linked to high inflation. The National Union of Students reports that school leavers struggling with high rent and food costs are dropping out of their degrees or swapping study time for paid work.
These are serious issues for potential participants in the SY-HELP scheme to consider, as their exposure could be quite significant. The bill provides that students may access two separate SY-HELP loans of up to $11,800 each. That, of course, is a total of $23,600. A student with $50,000 of HECS debt before they commence the SY-HELP scheme could then see their debt rising by more than 40 per cent additionally. This comes at the same time that the Albanese Labor government has decided to discontinue the coalition's 10 per cent upfront discount on HECS fees. This is a very short-sighted decision by the Albanese Labor government. When in government, the coalition had a strong focus on helping students to pay down their debt as quickly as possible. It's disappointing that we don't see the same focus from the current government.
Let me turn to some of the questions which arise about how the funding under the SY-HELP scheme will actually be delivered. Stakeholders like Universities Australia and the Group of Eight point out that $11,800 is not sufficient to cover the cost of delivering a full-year program, and the bill does not give any indication of the way in which funding may or may not flow on to students in Startup Year programs. It's possible that the $11,800 funding will go directly to the providing institution. But, if this loan is also meant to contribute to the cost of initial capital to support a startup getting going, then this in turn decreases the amount of money available to the providing institution for delivery of the program. Conversely, if the money goes directly and exclusively to the providing institution, then that, of course, will not assist cost-of-living pressures faced by students.
The coalition would also make the point that it is good practice with a new and untested program like this to start with a pilot. Many stakeholder groups have also recommended that what should be done here is to start with a pilot. Unfortunately, that sensible recommendation has been ignored. Instead, the Albanese Labor government has chosen to haphazardly roll out this scheme to 2,000 students across a number of different providers. Many questions remain unanswered. How will these 2,000 students be selected? How will the providing institutions be selected? There's a conspicuous lack of clarity here. Many issues, we are told, will be dealt with in the SY-HELP guidelines, and it's not clear whether these will be disallowable instruments, allowing parliament to have an appropriate level of scrutiny.
It's also unclear exactly what feedback the government has received on this proposed new program during the six-week consultation process it conducted last year before the bill was drafted and introduced. The Department of Education, for example, conducted a student survey to seek the views of current students and recent graduates on the proposed design of the Startup Year program. However, neither the results of the survey nor submissions received in the consultation process have been published on the relevant departmental websites. That does raise some obvious questions as to why the government has chosen to conceal the submissions it has received and the results of the survey. In particular, it raises questions about whether the consultation process suggested significant flaws with the model the government is taking forward. There are many obvious gaps in the bill itself. There's no assurance for students or tertiary education providers and no guidance for young entrepreneurs, and it's unclear how this fits into a plan for our nation's future.
On this side of the House, we believe that the Albanese Labor government should return with a serious reform proposal rather than this half-baked idea—one that actually benefits students, strengthens the economy and supports our education sector. Sadly, this bill does none of these things as it stands. It is just another half-baked idea from a half-baked government.
Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source
Is the amendment seconded?
Melissa McIntosh (Lindsay, Liberal Party, Shadow Assistant Minister for Mental Health and Suicide Prevention) Share this | Link to this | Hansard source
I second the amendment and reserve my right to speak.