Senate debates

Monday, 9 November 2015


Education Legislation Amendment (Overseas Debt Recovery) Bill 2015, Student Loans (Overseas Debtors Repayment Levy) Bill 2015; Second Reading

6:16 pm

Photo of Helen PolleyHelen Polley (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Aged Care) Share this | Hansard source

I rise to speak on the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015 and the Student Loans (Overseas Debtors Repayment Levy) Bill 2015. Labor supports these bills, which are the first step towards recovering unpaid HECS debts from Australians living overseas. This will improve the integrity and the fairness of the HECS-HELP system, which, since it was introduced by a Labor government in 1989, has kept university education in Australia affordable.

We regret, however, that the government has taken so long to introduce this measure, which it foreshadowed shortly after the 2014 budget. There is no mystery about the reason for the delay. For most of the past 18 months the government has been preoccupied with its agenda to deregulate university fees and cut funding for student places. Fee deregulation, which would inevitably double or triple the cost of degrees, is fundamentally unfair. It is an agenda that the Australian people have always rejected and which Labor will never accept. As senators know, two deregulation bills have been presented to the parliament and each was rejected in this chamber.

The support for deregulation that the previous Minister for Education and Training, Mr Pyne, assumed to be widespread in the higher education sector has melted away. There is no army of vice-chancellors marching, in lock step, behind the government. If there ever really was such an army, they have now broken ranks to demand that the government scrap its agenda, consult with the sector and start again. Yet deregulation and funding cuts remain on the table. Mr Pyne's successor, Senator Birmingham, has pushed back the scheduled starting date of a deregulated system from 1 January next year to 1 January 2017, but this is only a delay not the abandonment of the government's plans. The reality is that the minister has no alternative, because adhering to the original timetable is now impossible.

Although the government still clings to Mr Pyne's plan, it has sensibly, if belatedly, also chosen to pursue reforms that have bipartisan support. As well as the bills for recovery of HECS debt from Australians overseas, Senator Birmingham has announced measures that Labor would always have supported if they had not been bundled with the two failed deregulation bills. These measures, which will now be legislated separately, are the extension of HECS access to long-term New Zealand residents of Australia, the updating of the Australian Research Council's funding caps, and formal authorisation for changing the University of Ballarat's name to Federation University.

All these things could already have happened if Mr Pyne had not decided to hold them hostage to the success of his deregulation agenda. Indeed, as senators know, Senator Carr has already introduced a private member's bill that would rectify the injustice of New Zealand citizens who are long-term residents of Australia being excluded from access to the higher education loans plan, HELP. That matter could be resolved very quickly if the government joined Labor in supporting this bill.

Labor is certainly willing to work with the government on necessary and overdue reform measures, such as those which will be implemented by the debt recovery bills we are now debating. The HECS-HELP income-contingent loan scheme is the bedrock on which Australia has been able to build a world-class university system. Under this system, any Australian who is capable of obtaining a university degree can do so. It has long been an anomaly, however, that Australians who work overseas can avoid their repayment obligations. As the architect of HECS, Professor Bruce Chapman, and his colleague, Dr Timothy Higgins, had noted:

A conservative estimate of the amount of foregone HECS revenue for the 1989 to 2011 graduate cohorts working overseas is over $400 million …

Until recently, it was assumed that recovering HECS debt from expat Australians would cost more than could be raised. The introduction of income-contingent student loans in the UK and New Zealand, however, has changed that calculation. A substantial proportion of Australians working abroad live in these two countries.

The revenue measures contained in these bills will extend the obligation to repay HELP debts to Australians residing overseas from 1 July 2016. They will be required to self-report their income to the Australian Taxation Office. If their income exceeds the minimum repayment threshold, they will be expected to repay their debt at the same rate as debtors living in Australia. It is estimated that the tax office will recover $26 million over four years. That figure should be understood in the context of the total HELP liability over the same period, which will be $62.7 million.

There will be challenges in implementing this reform. Australian graduates living overseas will have to be made aware of their obligations. In addition, the income contingent loans schemes in the UK and New Zealand are administratively complex. As of 2013, a quarter of the UK's overseas student debts and 60 per cent of New Zealand's overseas debts were in default. And, of course, the government's cuts to the Australian tax office will not make implementing these changes any easier. Despite these challenges however, Labor fully supports this measure which will make the HECS-HELP system fairer and increase revenue.

With this reform, as with the measures the government has agreed to legislate separately from any new deregulation bills, Senator Birmingham appears to be proceeding more prudently than his predecessor. However, he needs to go much further and drop the entire agenda he inherited from Mr Pyne. As we have said, that agenda has obsessed the government for 18 months. It has been a colossal waste of time and energy that would have been better devoted to the real problems facing the university system. It is clear that if a third deregulation package is brought before this parliament it will meet the same fate as the previous two. And it is clear too that there is no support for that agenda in the sector.

The Chair of Universities Australia, Professor Barney Glover, has declared publicly in a speech to the National Press Club that the organisation no longer favours fee deregulation. It is also apparent that the claim the government used for so long to justify its deregulation plans—a supposed funding crisis in universities—convinces no-one. The only funding crisis that ever existed was a confected one created by fear of the government's proposed 20 per cent cut to Commonwealth supported places. This was acknowledged last week by the Vice-Chancellor of the University of New South Wales, Professor Ian Jacobs, who said frankly in a Fairfax Media interview, 'There is no crisis in Australian higher education. Our system is the envy of the world.' Professor Jacobs said the deregulation debate had 'taken the sector down an unhelpful cul-de-sac'. 'We've spent 18 months debating the wrong question,' he said.

Senator Birmingham should accept that reality has unravelled the government's flimsy arguments. He should abandon the discredited planning he inherited from Mr Pyne and start from scratch. Senator Birmingham knows what would happen under a deregulated system. He has the example of the VET sector, which he has acknowledged is plagued by shonky private operators who have undermined the credibility of the system. As the evidence presented to the Senate's inquiry into private VET providers indicates, the shonky providers have dragged down standards luring vulnerable people to enrol in poor quality courses at public expense while traditional public TAFEs struggle to compete. In consequence, Australia's VET FEE-HELP debt is ballooning; and, in many cases, it will become a bad debt as students drop out of courses and get poor-quality qualifications that will not lead to better employment prospects and a high skilled occupation.

It is idle to pretend that the deregulated system the government wants to introduce in higher education would not potentially lead to similar outcomes. Fixing the mess that the VET sector has become will be difficult enough. So why does the government want to create a similar mess in higher education as well? Why does it persist with an agenda that will result in $100,000 degrees and a massive blowout in HECS debts, including bad debt? The government should be intent on preserving the best elements of our university system, which, as Professor Jacobs said, it is the envy of the world—a system that has been able to deliver both high standards and access that is not restricted by the incomes of students or the parents. Acknowledging this is not to pretend that there are no problems in the system, but the problems that do exist will only be made worse by the Pyne-Birmingham plan for deregulated fees and funding cuts.

There is no immediate funding crisis, but universities do reasonably want funding arrangements that will deliver certainty for their future. That is why a Labor government would introduce a Student Funding Guarantee to remove the need for higher fees. We will give universities certainty by legislating the guarantee and indexing its value so that it is not eroded over time. Under our proposal, by 2018, funding would be $2,500 more per graduate place than under the government's plan. We would also recognise that a properly funded university system would ensure not only sufficient places but also satisfactory completion rates. If students drop out before graduation, all they have to show for their university experience is a HECS debt and no degree.

At present, nearly one-quarter of students drop out. In some smaller regional and suburban universities the proportion is much higher. That ought to matter to a government that purports to be concerned about the size of the nations HECS-HELP debt. It is the sort of issue that a minister who says he will consult the sector might be expected to be interested in. But we have heard nothing from Senator Birmingham on this increasingly serious problem—just as we heard nothing on it from Mr Pyne.

A Labor government would work with universities to provide incentives for them to lift completion rates. We would aim to increase the number of students completing their studies by 20,000 a year from 2020. We would restore resources to the sector; regulate TEQSA so that it can properly do its job for maintaining high standards across the system; and establish an independent higher education productivity and performance commission to ensure that graduates meet the needs of the future economy. The government, in contrast, offers universities nothing but the prospect of a funding cut, just as it offers students nothing but the prospect of $100,000 degrees and the taxpayer nothing but the prospect of increasingly unsustainable HECS debt.

Proceedings suspended from 18:30 to 19:30


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