Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

I rise today to continue a conversation I commenced in December here in the chamber and have spoken about in the media in recent times, and that is the opportunity for young people from their mid-20s to their mid-30s to be able to, if they want to, opt in to access their superannuation funds to meet their Higher Education Loans Program debt. I will speak about three groups of people: first, those who are graduates now and have a HELP debt which they would like to relieve themselves of; second, people in their mid-20s to mid-30s who did not avail themselves of a university education when they left school but would like to do so; and, third, those Australians overseas who have a HELP debt they want to pay back and want to use their Australian superannuation that is going backwards in their fund in Australia because administrative costs are exceeding the interest levels. They do not have access to their superannuation overseas and they want to use their Australian super for that purpose.

I will make some points. First of all, this is a scheme that people can if they want to opt into but simply, if it does not suit their purposes, they would not. The second point I want to make is that it would not be available to school leavers simply because, firstly, they have alternative options for higher education and, secondly, they would not have accumulated a superannuation dividend or a superannuation sum. So this is a scheme in which a person could use their own funds to improve their position financially and/or, hopefully, to improve their position in terms of higher education.

I want to speak firstly about graduates in their mid-20s to mid-30s and have a debt they are repaying. They might be on $70,000 or $80,000 a year and paying eight per cent, somewhere around $9,000 possibly per year, off their HELP debt. They could access that level of superannuation and pay down that debt and relieve themselves of the burden they face at that time—and it might be one associated with a young family, a home mortgage or whatever. They would do that in the knowledge—and I wish to make this point strongly—that at a later stage in their lives when the burden of debt is released from them they will repay the funds they have taken out of their superannuation scheme with compound interest so that by the time they retire they will have at least the same sum of money back in their super fund. Even those who have a degree have a requirement these days for retraining, for taking on new skills, for perhaps doing a master's degree to improve their circumstance. So that is the first group who would be assisted by this scheme. They opt in if they want to and if they do not want to they do not need to.

Our colleague the member for Fraser, Dr Leigh, asked in a tweet of Senator Back:

Hoping @senatorback can explain the benefits of using tax-advantaged super, growing at 7%, to pay off HECS debts, growing at 2.5%

The answer is I can. I do not know what Dr Leigh's circumstances were, but I know what mine were in my early to mid-20s—I had a young family and was paying off the debt I had accumulated for my university degree; I was certainly cash poor. The value of those funds to a young person may well exceed the eventual value upon retirement. That is the situation that Dr Leigh addressed to me. In the memory again because he probably did not understand that one of the principles of this scheme is that the person does eventually repay. Over the next 20 or 30 years of their career they pay it back, so they have got at least as much in the scheme.

The other criticism I suffered was from our good Senate colleague Senator Carr who seemed to have the idea that I was attacking low-paid workers—which brings me to the second group and that is those who have now reached their mid-20s to mid-30s. They did not get a university degree. They may now be in an office where others around them are doing better financially and because of their qualifications are going to continue to do so. That person, again, may well have a debt. They may well have a young family. They cannot afford a university education. What a wonderful opportunity for them to be able to say: 'Yes, I can. I've got those $15,000 or $20,000 in my super fund. I am going to use those funds. I am going to now go and study—possibly part-time—in the knowledge that when I graduate I can use those funds out of my super fund. I can pay off that HELP debt.'

If we all genuinely believe, as we say in this place so often, that a person with a degree will earn up to a million dollars more over their career than a person who has not got a university degree, I would say to Senator Carr in relation to his criticism of me: this scheme allows the lower paid worker, the person who is semi-skilled or unskilled, to increase their skill level, to cease being a low-paid worker if they want to be aspirational. Of course, we know that at retirement they have the obligation to pay that sum back. If we believe that a graduate will do better over their career, that person will have far more as a university graduate with a better job over their career than they otherwise would have.

I say again, it is a scheme in which if it does not suit that person to avail themselves of that opportunity, if they want to leave the funds in their super account and either not go on and study further or they want to in some other way find those funds—fine. All I am saying is it is the person's own money. This is an opportunity to improve their educational opportunity, to get a degree, or to get a higher degree. It is an opportunity for them to avail themselves of that chance so that throughout their career they can improve themselves, aspire to a higher position, a higher education and, therefore, a higher salary and a higher circumstance at retirement.

The point was made to me by the gentleman who really is the architect of this program, Mr John Adams. He finds himself in that same position and has allowed me to use him as a case study. He is married and has a young family. At the moment he has a debt of around about $9½ thousand dollars a year that he is paying back. He said to me that, if he had the opportunity to access some of his superannuation to relieve himself of that $9,000, or $770 a month now, he may well in fact—as his wife and he want to do—start a family. She could stop working. They would then have sufficient funds to be able to allow that circumstance, a circumstance in which he says at the moment he wants the value of those funds. To answer Dr Leigh's question—I do not know who is getting seven per cent on their super at the moment but nevertheless—he is happy to forgo the future benefit because he wants the immediate benefit now.

There is a third group who I believe would be assisted by this scheme. In this place, only in early December did we legislate to make it more applicable to Australians working overseas with a HELP debt—for the government of the day to actually recover those unmet costs. When I started speaking about this in the media in the last two to three weeks I had conversations with people in Scandinavia and in Asia who said to me: 'We know we have to pay back our HECS or our HELP debt. We have superannuation willowing away in Australia', because the administrative costs of their super fund exceed the actual interest that they are earning on it. They cannot access their Australian super to move it overseas to where they now reside. At least in the case of the Scandinavians, they said to me, 'I am not likely to come back to Australia. I realise I've got a debt. I want to pay the debt. I've got funds in my Australian superannuation account which are diminishing. Allow me to access the funds that are in my super fund in Australia to repay my debt to the Australian government for the higher education that I gained.'

It is the case that we have a substantial sum of money out there in unpaid HECS or HELP paid for, of course, by the Australian taxpayer. This would be a benefit to our bottom line. We have a circumstance in which people with funds in their super account want to access it to either relieve themselves of the debt or, in the case of someone without a degree, to access it to improve themselves in terms of their higher education, or those who are overseas and want to discharge themselves of that debt. This is worth consideration. It is worth, in my view, the support of all sides. I for one would be very happy to engage further with Senator Carr and with others on what they see as the disadvantages of this scheme.