Anthony Chisholm (Queensland, Australian Labor Party, Assistant Minister for Education) Share 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.