Monday, 9 November 2015
Education Legislation Amendment (Overseas Debt Recovery) Bill 2015, Student Loans (Overseas Debtors Repayment Levy) Bill 2015; Second Reading
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
I rise today to speak to the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015. The bill before the chamber will increase the capacity of the government to collect outstanding debts from the Higher Education Loan Program and the Trade Support Loans program from those living, working and travelling overseas. According to the May budget, this bill is expected to raise approximately $26 million over the next four years.
Personally, I am pretty sceptical about the ability of this measure to raise even the pitiful amount of revenue that has been projected, requiring, as it does, the self-registration of foreign residents and overseas travellers. Even with the punitive regime that this bill requires, with the tax office potentially hovering over anyone who fails to sign up before going on a backpacking trip around South America or South-East Asia, I have much less hope than the government at the revenue-raising possibilities involved here. However, even if these projections of potential revenue turn out to be correct, the Greens would not support this bill. Not only is it evidence of a government with distorted priorities but it is poorly crafted and it contains some serious procedural problems that we will seek to amend.
The first reservation that the Greens have with this bill is the requirement that those with existing HELP or TSL debt who are intending to travel overseas for more than six months after the commencement of the bill have only up to seven days to register with the Australian Taxation Office. Failing to comply with this would amount to a failure to comply with the Taxation Administration Act, with a roughly equivalent punishment. Additionally, foreign residents with assessed worldwide income above the repayment threshold must pay an amount equivalent to the repayment that they would make if they were an Australian resident. The government has entirely put the onus on the individual to not only be aware of their responsibilities in this bill but also assess whether they are in fact over the assessable worldwide income. It is a bit onerous to expect people living overseas to keep up to date with the happenings in Australian politics.
These measures place a huge burden of awareness of their responsibilities on foreign residents and travellers. Given the weight of the failure to comply with these responsibilities and the seriousness of the potential penalty—I understand it to be up to 50 penalty units—the Greens believe that this would be better served by creating or altering currently existing mutual tax agreements that we have with other nations. Half of Australia's university graduates working overseas are in only five countries. It is 60 per cent of graduates if we include Hong Kong and China. Identifying and receiving payment from these individuals via tax treaties would be a far fairer and more effective method of getting this money, should the government choose to pursue it. It would certainly be fairer at least than requiring the individual—many of whom would not know about this reform—to register with the tax office and then, in turn, requiring the commissioner to follow up on all of these foreign residents around the world. It sounds like a hugely onerous exercise for all involved. The Greens do understand the difficulties of altering existing tax treaties with other nations, so I will be moving a second reading amendment to this effect. The government should, at least, investigate the feasibility of this course of action before proceeding with this new tax regime.
A second problem that the Greens have with this bill is that it violates the no-retrospectivity principle. When current foreign resident HELP and TSL debtors moved and began their lives working overseas, they did so with the understanding that no mandatory HELP or TSL repayments would be required—at least that has always been the arrangement that has operated in this country. So for many, especially those at the middle of the income range or right at the edge of the repayment threshold, they would have made major life, family or financial decisions within a specific budget. I think we all recognise that a university qualification is not necessarily a ticket to riches. Indeed, many people at the point of the repayment threshold are still living in financially difficult positions. That is particularly the case overseas. Requiring them to now repay their debt, which could be upwards of $2,000 per annum, may cause instances of financial stress. It is concerning when that is being applied to people who do not anticipate that coming down the line.
The Greens' committee stage amendment would mean that all foreign residents with current HELP and TSL debt accrued prior to the commencement of this bill—should it pass today—would be exempt from their income assessment and repayment requirements. Only HELP and TSL debt from courses enrolled in after the date of beginning would be relevant for current foreign residents. Given the benefit of warning, future foreign residents would also be required to pay back their HELP and TSL debt should they be required to move after the commencement period. Although the Greens still have significant problems with this bill, it would certainly be an improvement on what has been proposed by the government.
At the root of our opposition to this bill is a bafflement at this government's priorities—warped priorities they are indeed. The tax office found in 2011-12 that over $60 billion was moved from intra-party transfers to related entities in tax havens—$60 billion. Even if we were to assume that only 0.1 per cent of this, a tiny percentage, could be captured by the Australian corporate tax system, it would still amount to $60 million per annum, compared to the paltry $6.5 million per annum from this bill's projected revenue in the forward estimates.
The question is: why on earth is this government pursuing university graduates so hard yet it is unwilling to move on multinational corporates? Why is the government wanting to hassle students about their gap year yet leaving corporate entities untouched? Why is the government continuing to pounce on the most vulnerable members of our community rather than asking those with the wealth and the means to pay their fair share? These are questions that the Greens will continue to pursue. The government has a huge source of potential revenue at hand, not only with regard to corporate tax evasion but via reforming the superannuation system, negative gearing, capital gains and fossil-fuel subsidies. Of course, it is reluctant to go down that path, but, when it comes to slugging students, they are always fair game for the Liberal Party. The Greens will continue to point out the punitive nature of the government's revenue strategy of going after the poor and the politically weak while letting the rent seekers and the rich get off scot-free. That is this government's modus operandi and this bill is an extension of that agenda.
The Australian Greens remain committed to a universally free, accessible and world-class education system. This extends from early childhood to primary and secondary school and right up to tertiary education and training, whether that be at university, at TAFE or via an apprenticeship. The right of every individual to the education and training they need to be self-actualised citizens is essential to our vision of a fair, just and future-looking society—and the Greens will always stand up for that vision. The Greens do not support a further expansion of the HELP system that leads to tracking down overseas debtors and, because of this, we do not support this bill. However, we do believe that our amendments today could improve certain aspects of the bill as it stands, taking the onus off the individual, who, as always, is lumped with further bureaucratic requirements and responsibilities, and taking the pressure off those expats who have already made significant life decisions based on the current regime. I move the second reading amendment on sheet 7788 standing in my name:
At the end of the motion, add:
", but the Senate calls on the Government to use existing mutual taxation agreements to assist in the identification of foreign residents and overseas travellers required to repay HELP or TSL debt, rather than require those residents and travellers to comply with changes in Australian law.".
It gives me great pleasure as the Chair of the Senate Education and Employment Legislation Committee to stand here and speak to the government delivering on the Senate doing its work. That is what is so exciting as a chair of a Senate committee—when we work very hard on some of these reports into legislation, we come up with a set of recommendations and those recommendations go on to be adopted by government. During the course of the investigation by my committee into the Higher Education and Research Reform Amendment Bill 2014, the committee report recommended, at recommendation 4:
The committee recommends that the government explore avenues to recover HELP debts of Australians residing overseas.
I will go into the detail of that a little later—fantastic.
Senator Simms, I know you are new to this place, but I tell you what: it was a little frustrating to sit here and be lectured by the Greens on red tape, to be lectured by the Greens on fairness, to be lectured by the Greens about standing up—through you, Mr Acting Deputy President—and to be lectured by a Greens senator on regulation and impost as if somehow the Department of Education and Training and the Australian Taxation Office will suddenly be donning a hat and dark sunglasses, taking a dog and racing around the world searching for those intrepid graduates who are not paying back their HECS debts. I am sorry; that just fails the pub test. It might pass all right down in Fitzroy or whatever the fancy inner-urban suburb of Adelaide is—
but it does not pass the pub test out in the western suburbs, Senator Conroy, it does not pass the pub test anywhere in Hobart, Senator Bilyk, and nor does it pass the pub test anywhere in regional Australia.
We are interested in fairness. As the Prime Minister made very clear with his comments around taxation reform more generally over the last couple of weeks, ours is a government that is interested in fairness. Once the taxpayer subsidises your fabulous law and commerce degree at the University of Adelaide, at UTAS or at the University of Melbourne, you go off to the corporate wonders of the world and, after you have, yes, had a little dalliance in Europe, you end up in New York at Goldman Sachs or Barclays, why should the Australian taxpayer not be recompensed for the gift they have given you and given your family? You have been able to travel the world and be very successful, which is what we want you to do, and take brand Australia to the world—we are very creative and ingenious. We are happy for that to happen, but, at the end of the day, the Australian taxpayer has subsidised your very capacity to earn that salary. It is only right, just and fair that you, as a very well reimbursed and moneyed individual, pay that back.
We are very lucky in this country. Students are absolutely blessed to be in this system. The taxpayer subsidises upwards of 60 per cent of our young people's higher education. That is a great system. They are not having to leave university, like in the US, and be saddled with a student loan they have to start paying back straightaway for 100 per cent of their tuition costs. That does not happen here. You get a HECS debt that you can delay until you can afford to pay it back, for a little over one-half of the cost of your degree. That is a great system. It is a system that was designed by Bruce Chapman. I was in the first HECS generation. It was painful and I have had to listen to everybody who is one year older than me talk about their free education. It is tough, but, at this end, I think it is just and fair. It is just and fair because, while the Australian taxpayer receives a benefit from my education and from that of any Australian who goes through our higher education system, we also get an individual benefit. What we choose to do with that degree, where we choose to take it and how we choose to maximise the fabulous quality of Australian education is up to us as individuals. So, for those who choose to maximise that by going overseas and earning a lot of money over a long period of time, it is only fair and just that they be required to pay it back.
It was through the committee inquiry that we actually heard about the level of HECS and HELP debt that was not being repaid. Indeed, it was Professor Chapman, the architect of the original system, who gave us that evidence. He actually urged the committee to examine the matter of lost revenue and to look at the debts of Australians living overseas. Professor Chapman and Dr Higgins estimated in 2013 that between $400 million and $800 million in revenue had been lost since 1989 due to the non-payment of HECS and HELP debt held by Australians residing overseas. I do not know where you live, Senator Simms, but that is hardly 'pitiful' revenue. There are a lot of schools that could be built with $400 million to $800 million. There are a lot of communities that could be supported. There is a lot of key research that could be undertaken through our higher education institutions on the back of $400 million to $800 million.
But I think the most important factor is that there is fairness throughout the system. Right now, if I choose to stay at home—if I choose to stay and support our local economy—I am more disadvantaged than if I choose to take my fabulous Australian higher education and take off to contribute to the economic development of some other nation and some other community so that the very taxpayers who contributed to my education fail to be repaid.
Chapman and Higgins also stated that an additional $20 million to $30 million each year is expected to be at risk due to future graduates moving overseas. We have a much more highly mobile graduate workforce. And that is a good thing. It is good that, as we meet and engage with the businesses, economies and communities of the world, we take our know-how, our entrepreneurial spirit, our innovation and, yes, our agility as graduates, and apply them to the problems and the companies of the world. That is a good thing. We want to encourage that. But we need to ensure that the HECS system is fair to all.
The measures in these bills are estimated to save more than $25 million between 2015-16 and 2018-19 and more than $150 million over 10 years. That is a lot of money. That is a lot of schools. That is a lot of research.
I would argue that this is a matter of fairness. Andrew Norton, who is well known for his research on and passion around higher education policy, also appeared at our committee and talked about the HELP debt issue more generally. He also talked about collecting debts. He also agrees with us that collecting the HELP debts of overseas students is all about fairness.
I cannot believe that the Greens are here arguing against having a fair system. What we do know is that 20 per cent never do repay their HECS debt—20 per cent. That is ridiculous. We need to be ensuring that the taxpayer who has funded that student to attend a variety of institutions across this country, to study a variety of disciplines that all have the capacity to contribute to the growth and development of our nation, actually pay that debt back.
The Australian Taxation Office will provide a simple online tool to enable debtors to easily assess their repayment income and make repayments. So that is far from the convoluted and evocative language that Senator Simms chose to put in his speech. Really, I thought I was about to watch a Steven Spielberg movie, as the poor student was subject to the tyranny of the state chasing them around the world looking for their 25 grand for their business degree! That is not going to be the case. Students across Australia: it is okay; we just want to make sure that, when you are earning enough money overseas that you can afford to pay back your HECS debt to the Australian public, you do it—just like your mates who stay at home. If you are over in London on a good wage, it is hardly unfair that you are expected to contribute back to your HELP debt.
Senator Simms, you also talked about how onerous it was for these poor graduates—who, by the way, are running companies overseas that Goldman Sachs are relying on for advice, thanks to the degree. These young Australians who are doing fabulous things overseas—
Senator Canavan interjecting—
Senator Whish-Wilson interjecting—
And I would love it if, in the committee stage, I could ask Senator Whish-Wilson if he contributed to paying back his HELP debt while he was working overseas, or whether he was not earning enough money to do that. I suspect I know the answer to that question, but I am happy to have that conversation off-line.
As to these people being somehow impotent and not aware of their responsibilities—I think, Senator Simms, that was the most classic line you used. Yes, I am sorry, but we do expect you, by the time you graduate from higher ed and you are managing people and handling transactions worth millions of dollars, to be aware of your responsibility under the law. If you are a driver in Victoria and have a licence, and if you change your address and you are 18, then, yes, the state expects you to inform it that you have changed your address. So I do not think it is onerous on a 24-year-old, 25-year-old, 30-year-old or 36-year-old to be aware of their responsibilities under the law with respect to this issue. Whilst I think it is wonderful to be lectured by the Greens on priorities, I did just want to briefly touch on some of the priorities that they have focused on over time that really go against those notions of fairness that underpin this bill. From the conversation today, and from continual contributions from the Greens, it is very clear who and what they prioritise: it is the wealthy; it is those who are highly educated—those who have an elite education; and it is the entitled. Rather than prioritising the workers in manufacturing, rather than prioritising those who have jobs in forestry, rather than prioritising those in the mining industry, rather than prioritising jobs in regional Australia and in agriculture, you come in here, with the seats you hold, with the highest median incomes, and lecture us on fairness. It is absolutely offensive.
This bill is all about fairness. No, it is not going to fix the surplus with what it will get back, but it is about principles, underlying how this government approaches its relationship with people and how it prioritises its relationship with taxpayers. Taxpayers invest in us, as graduates, and it is only fair and just that we repay them whenever and however we can. This is a bill that will allow us to do that.
I thank the minister for adopting the recommendations of the Senate committee. It is always fabulous to have that occur. I know my colleagues will be very happy that this is occurring. I also thank the Labor Party, and Senator Carr particularly, for supporting this bill, which actually adjusts fairness to the system that was brought in by the Hawke government: the Chapman design, which ensures all students in this country are treated fairly.
I thank all senators who have contributed to the debate on the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015 and the Student Loans (Overseas Debtors Repayment Levy) Bill 2015. The government is very proud of this reform, because we believe it will build and strengthen the sustainability of our higher education loans program—the HECS scheme, as it was originally established—which underpins the operation of higher education in Australia. It is critical that we ensure the sustainability of these HELP programs, because, by ensuring their sustainability, we then preserve to the maximum extent the capacity of future governments and future taxpayers to continue to support higher education around Australia.
These measures ensure the sustainability of what is a world-class students loans scheme, a scheme that ensures students in Australia have access to higher education, increasingly to vocational education, and support for apprenticeships, all of it in a manner that ensures they need not pay up-front and that they have equitable access, no matter how much they may earn or how much their family may have. It ensures that they have the capacity to attend university, or get a vocational diploma or an advanced diploma, without having the barrier of up-front fees.
These bills are not only about ensuring sustainability of the HELP programs, but are also about fairness. They are about ensuring that no matter who you are once you have finished your university degree, or your other program, or where you go in the world, you face the same repayment terms, to underpin the future sustainability of the system.
Out of this legislation the Australian government is introducing repayment obligations for overseas student loan debtors. The simple message is that if you live overseas at the end of your study you will have the same repayment obligations as people who live in Australia—no more and no less. Repaying your student loan debt, if you are earning above the repayment income threshold, is fair for everyone. It ensures the sustainability of the HELP program, which has played a critical role over the last 25 years in increasing access to higher education.
The success of HELP, and its predecessor HECS, is something of which all sides of politics I believe can rightly be proud. But we need to make sure that the HELP program continues to be the best and fairest student loans scheme in the world, and to ensure that they continue to play a critical role in the decades to come. That is why this government has taken steps to strengthen repayment arrangements by closing a loophole that has in fact existed since HECS began, back in 1989.
Until now, a person's repayment income was based on their taxable income, as defined by the Australian Taxation Office. This meant that a person who was not a resident for tax purposes did not face repayment obligations. As a result, we are losing tens of millions of dollars every year because of student loan debtors who go overseas and from whom we do not collect repayments. It is important to understand that every single year in which a loan is deferred is a cost to the budget bottom line and to every other Australian taxpayer, because student debts are indexed at the CPI rate only, whilst the cost to government of carrying these debts is closer to or at the long-term bond rate. As a result of that, it is a continued increase in cost where debts are continually deferred. Therefore, if a student is overseas for a prolonged period of time at the conclusion of their degree or other course program, the cost to taxpayers of that debt not having been repaid increases over the course of that time.
Professor Bruce Chapman, who is widely recognised as being the architect of HECS, as it was adopted by the Hawke government—and he was there when HECS began—has repeatedly said that this is a problem that we can fix. He has urged the Senate and governments to look at this problem. We have looked at it and we have come up with a solution, and we are proud to be the first Australian government to close this long-standing loophole. This will mean that in future expatriate debtors are treated in the same way as their onshore peers. From the 2016-17 financial year, overseas student loan debtors will be liable to make repayments based on their assessed worldwide income, which includes both Australian repayment income and foreign sourced income.
The government has put forward two bills as part of this package: the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015, to amend the Higher Education Support Act 2003 and the Trade Support Loans Act 2014 to create the arrangements that underpin the operation of overseas debt recovery; and the Student Loans (Overseas Debtors Repayment Levy) Bill 2015, which will strengthen the legislative basis for the overseas debt recovery program and improve the capacity of the Australian Taxation Office to collect these repayments through existing tax administration arrangements.
From 1 January 2016, HELP and trade support loan debtors who move overseas for six months or more will need to notify the Australian Taxation Office that they have left the country. From 1 July 2017, these debtors will be required to contribute towards repaying their loans based on the income they earned in the 2016-17 financial year. Minor amendments to the Higher Education Support Act 2003 to allow the Department of Education and Training to access tax file numbers also form part of the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015. This extends administrative processes that already exist for trade support loans, and as a result the Department of Education and Training and the ATO will be able to more effectively administer the overseas debt recovery program and the HELP programs more broadly.
The bill also includes minor amendments in the Taxation Administration Act 1953 to allow data sharing of protected tax data with overseas jurisdictions to administer student loan debt. This will allow the government to enter into reciprocal arrangements with other countries to support student loan debt recovery. The government is making good progress with New Zealand and the United Kingdom in exploring the use of reciprocal data sharing to support overseas student loan debt recovery. There are also amendments to the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 included in the bill. These amendments will ensure that repayments made by overseas debtors cannot be claimed as a tax deduction as an allowable self-education expense. Repayments made by Australians living overseas should be treated the same as HELP and trade support loan repayments made by those debtors who still live in Australia.
These bills will for the first time require all Australians, whether they live in Australia or abroad, to make repayments on their student debts based on their income. Those overseas debtors who have benefited from the government's generous income-contingent student loans but until now have been able to avoid paying the taxpayer back for the education they have received will no longer be able to do so. Overseas debtors will now be required to make the same repayments that they would have had to make if they were living in Australia based on their income. Australians who have received the benefits of Australia's world-class education system should make repayments when they are living overseas and earning a good income. To do otherwise undermines the sustainability of the HELP programs. To do otherwise ensures that other taxpayers, including those who have not had the benefit of higher education, face increased costs into the future. However, these bills also ensure that Australians who are not earning—those who are volunteering, full-time carers or looking for work overseas—or only earning a modest amount will not be required to make repayments. The legislation ensures that the same equity provisions apply wherever you live in the world. Just as we have an equitable arrangement in providing access to higher education without the application of up-front fees, so too will we universally apply an equitable arrangement that ensures that, no matter where you live, you do not have to repay the debts unless and until you are earning a reasonable income. These bills, in providing that equity and fairness in the treatment of HELP and trade support loan debts, will help improve the sustainability of our world-renowned income-contingent student loans system.
These loans are the envy of the world. They ensure all Australians are able to access the higher education or apprenticeships they need to contribute to our workforce and economy into the future. The changes made by these two bills will not only preserve these loan schemes for students and apprentices but will improve them by making them fairer for all Australians regardless of where they live. Overseas debt recovery is not just fair for individuals; it is also fair for the taxpayer. By recovering debt from HELP and trade support loans debtors living overseas, the government expects to save more than $25 million in the period from 2015-16 to 2018-19 and more than $150 million over the next 10 years in fiscal balance terms. As I said before, and I reiterate, it is important to appreciate that, the longer it take for repayments to be made, the more it is that taxpayers are subsidising that student. The longer it is that a person is overseas under the current arrangements, enjoying the benefit of not making repayments, the longer they are not only not making a tax contribution to Australia but accruing an ongoing benefit in terms of the subsidy associated with the student loan that they have had courtesy of the Australian taxpayer.
I hope that this outline will allay the concerns of some of the senators who spoke on these bills tonight about the growing value of the HELP debt. I am pleased that opposition senators support the bills. It is an important step in levelling the playing field, while at the same time preserving the income-contingent nature of our student loan schemes. I do give, as I have publicly and elsewhere, full credit to the Hawke government for introducing the HELP debt model, originally known as HECS. It is something that we need to preserve and ensure the sustainability of in the future. I thank Senator Carr and those opposite for their cooperation to date on this matter.
I look forward to hearing further comments, if need be, during the debate tonight. I note the amendments proposed by the Australian Greens. Let me say that in relation to the second reading amendment that has been moved by Senator Simms that I think it is unreasonable to expect solely the use of existing mutual taxation agreements by government. To do so would potentially create a circumstance of extreme cost in terms of the recovery mechanisms for the taxpayer relative to the value, compared with the reality that Australians living in Australia are expected to comply with Australian tax law. They are expected to be aware of their obligations in that regard, and it is not at all unreasonable to expect that people with a debt to Australia via a student loan who may happen to be living overseas should equally be expected to comply with any changes in Australian law, just as we expect Australians who are domiciled here to do so.
Ultimately, Australia needs experienced, innovative workers to drive productivity in our rapidly changing global economy. Our higher education and training systems are critical to this and are vital tools to give Australian students the skills they need for success into the future. Our government is committed to supporting higher education, training and research so that we can take advantage of the opportunities new industries present to us and create a more innovative and productive Australia. Student loan schemes support equal access to higher education and training and, in turn, greater workforce engagement. Overseas debt recovery will contribute, as I have said before, to keeping our generous income-contingent student loan schemes fair and sustainable into the long term. In doing so, they will help to underpin the investment in higher education by this government and future governments well into the long term.
I thank senators for the support that has been expressed thus far of this legislation and for their support of ensuring equitable repayment of student loans by all Australians, regardless of where they live, to ensure the sustainability of this loan scheme and, most importantly, the sustainability of future support to our higher education and training systems.