Anne Ruston (SA, Liberal Party, Minister for Families and Social Services) | Hansard source

I thank all senators for their contributions on the Family Assistance Legislation Amendment (Extend Family Assistance to ABSTUDY Secondary School Boarding Students Aged 16 and Over) Bill 2019. I particularly thank Senator Siewert for her ongoing engagement in the process of trying to make sure that we better the opportunities offered via government initiatives for our First Australians.

This bill is being introduced to implement a measure announced as part of the 2019-20 budget. In the budget, the government announced that it would extend family tax benefit to the families of Abstudy students who board, away from home, to attend secondary school. It intends to remove the existing perverse incentive for Indigenous boarding students to drop out of school at the age of 16.

Under current arrangements, once an Abstudy boarding student turns 16, they no longer attract family tax benefit. This creates a perverse incentive for families to retain the benefit by removing their child from boarding school. This is a policy anomaly that is not aligned with supporting Indigenous students to complete year 12. Many remote communities do not have secondary schools, so boarding is frequently the only option for children to go to secondary school. However, Aboriginal and Torres Strait Islander boarding students are disproportionately dropping out of education at around the age of 16. Data from Human Services shows that the number of Abstudy boarding students drops by approximately 60 per cent between the ages of 15 and 17.

The Prime Minister's 2019 Closing the Gap address to parliament emphasised that, for Indigenous students in remote and very remote areas, access to quality education can be a lifeline to future prosperity and wellbeing. This statement echoed the views of the House of Representatives Standing Committee on Indigenous Affairs in its 2017 report on Indigenous education, which stressed the importance of education but found room for improvement in the support of Indigenous boarding students.

Amendments introduced in this bill will build on the 2018-19 budget measure '50 years of ABSTUDY', which provides $38.1 million over five years to improve assistance for Indigenous secondary students who need to study away from home, including better, fairer and more flexible travel provisions and portability of Abstudy benefits if students change schools. This bill will extend family tax benefit to eligible secondary students aged 16 and over who receive Abstudy assistance to study away from home. We hope these changes will commence on 1 January 2020, subject, obviously, to the passage of this bill.

Extending family tax benefit to Abstudy boarding students is consistent with broader tax benefit rules. It aligns with recommendations in the 2014 Forrest review: creating parityreport. The Forrest review recommended that Indigenous families with children at boarding school have access to family tax benefit until students finish year 12, in recognition of the costs incurred by families of having children at boarding school. Currently, families of Indigenous boarding students under the age of 16 are generally eligible for both Abstudy and family tax benefit. Abstudy for these students is paid directly to the school and boarding provider to cover tuition and boarding costs, and family tax benefit is paid to the family to help them with the costs of keeping the child at school. Families rely on family tax benefit to meet costs like daily incidentals while children are away at school—clothing, toiletries, medicine, pocket money et cetera—as well as living costs when they are at home during the school holidays.

Once the student turns 16, family assistance legislation precludes Abstudy students from receiving family tax benefit, leaving families with no assistance for the cost of everyday essentials for their child. The loss of family tax benefit when boarding students turn 16 is a significant drop in income for support families; it can be as high as $6,900 a year. This contribution to financial pressure for families at a critical stage in a young person's education creates a disincentive for families to continue sending their child away to school and attain year 12 qualifications. If these young people drop out of school early, they are in a much, much weaker position to transition to work in adulthood.

Modelling that we've undertaken using a priority investment approach shows that Abstudy students who stay in boarding school for senior school are less likely to need income support in the future. On average, within five years of leaving school Indigenous young people who study in year 11 as boarding students are projected to have income support costs that are 38 per cent lower than those of their peers who leave school earlier.

Changes introduced by this bill will mean that from 1 January—subject to the passage of the bill—families of Indigenous boarding students will stay in the family tax benefit system until their child reaches the end of secondary school. Eligible families of boarding students aged 16 and over can receive both Abstudy for school and boarding fees and family tax benefit to assist them with the costs of raising their child. These improved payment arrangements will better reflect the needs of remote Indigenous families with children studying away from home. The families of more than 2,000 Indigenous secondary school students will benefit from these changes.

Through these changes, the government is delivering an additional $36.4 million in support over the next four years. This investment will contribute to increasing the proportion of Indigenous students who complete year 12, improving their work prospects and lifetime wellbeing, and reversing the potential costs to the community that come with long-term unemployment and welfare dependency. In summary, this bill allows for the implementation of measures that will extend family tax benefit to the families of Abstudy students who need to board away from home to attend secondary school. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.