Revised Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)Statement of compatibility with human rights
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
Labor 2013-14 Budget Savings (Measures No. 2) Bill 2015
Schedule 1 - Student start-up loans
This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Schedule
Schedule 1 to the Bill amends the Social Security Act 1991 (Social Security Act) and the Student Assistance Act 1973 (Student Assistance Act) to cease the student start-up scholarship (SSS) for recipients of student payments who are participating in higher education. Students will instead be able to receive either an ABSTUDY student start-up loan or a student start-up loan (the loans), which are voluntary income-contingent loans, equivalent in value to the SSS. These loans will be available to full-time higher education students who are in receipt of youth allowance (student), austudy or ABSTUDY (Living Allowance).
Students will be limited to two loans per year of $1,025 each (indexed from January 2017), in line with the current SSS arrangements, and will be repayable under similar arrangements to Higher Education Loan Programme (HELP) debts. Students will only be required to begin repaying the loans once their earnings are above the repayment threshold (which will be consistent with the HELP repayment thresholds) and after any accumulated HELP debt has been paid.
The loans also provide grandfathering arrangements so that recipients who received an SSS or Commonwealth Education Costs Scholarship prior to the amendments taking effect will continue to be eligible to receive the SSS, whilst they continue to be in receipt of student payments.
Human rights implications
Right to education
Schedule 1 to the Bill engages the right to education contained in Article 13 of the International Covenant on Economic, Social and Cultural Rights (ICESCR).
In particular, article 13(2)(c) states that higher education shall be made equally accessible to all, on the basis of capacity, by every appropriate means, and in particular by the progressive introduction of free education.
Schedule 1 to the Bill does not limit the right to education. While the SSS will not be available for new student payment recipients, people who would otherwise be entitled to the SSS will be eligible for the student start-up loan. The purpose of the SSS and the loans are identical as both payments are designed to help students with the up-front costs of textbooks and equipment. Under the loans, students will be eligible for the same payment amount as the SSS ($1,025 twice per calendar year, to be indexed from January 2017). In this way, students will still have access to funds to assist them with the up-front costs of study.
Income-contingent loans do not place an onerous burden on debtors, as repayments are proportional to a person's income, meaning that those on lower incomes do not have to repay large amounts, unlike other types of loan (such as bank loans). The fact that the loans are repayable once the person reaches a particular income threshold will not limit a person's right to education.
Furthermore, students who never reach the minimum threshold, because they do not obtain the financial benefits of their studies in higher education, will not be required to repay the loan.
Various studies have concluded that income-contingent loans are not a deterrent to study. These studies have identified no significant effects on university enrolments, including from low socio-economic students, from either the introduction of, or changes to, HELP.
Right to social security
Schedule 1 to the Bill engages the right to social security contained in Article 9 of the ICESCR.
The right to social security requires that a system be established under domestic law, and that public authorities must take responsibility for the effective administration of the system. The social security system must provide a minimum essential level of benefits to all individuals and families that will enable them to cover essential living costs.
The United Nations Committee on Economic, Cultural and Social Rights (the Committee) has stated that a social security scheme should be sustainable and that the conditions for benefits must be reasonable, proportionate and transparent (see General Comment No.19).
Article 4 of ICESCR provides that countries may limit the rights such as to social security in a way determined by law only in so far as this may be compatible with the nature of the rights contained within the ICESCR and solely for the purpose of promoting the general welfare in a democratic society. Such a limitation must be proportionate to the objective to be achieved.
To the extent that there is an impact on a person's right to social security by virtue of Schedule 1 to the Bill, the impact is limited. In practice, a person will still be entitled to the same amount of financial assistance under the loans as they would have received from an SSS, and will only be required to repay the loans once they reach the relevant threshold level of income. This threshold is set at a level of income at which a person would no longer require financial assistance to acquire essential health care, housing, water and sanitation, foodstuffs, and education. Given the above safeguards, and the fact that the loans will be given on a voluntary basis (that is, a debtor does not need to incur debt) the measures contained in Schedule 1 to the Bill are compatible with the rights to social security.
It is well established that higher education graduates gain substantial private benefits from their studies, including higher lifetime earnings than non-graduates, increased job satisfaction, higher social status and better health. As the community substantially pays the costs of these benefits through a range of services and supports for students, it is reasonable and proportionate that the students be expected to repay a proportion of those costs when they are financially able. This is the basis for the existing arrangements for assistance provided through HELP for tuition fees.
Converting the SSS into an income-contingent loan recognises the benefits students receive from higher education, while still ensuring that higher education is accessible to all socio-economic groups. Students from low socio-economic backgrounds will continue to receive fortnightly payments of youth allowance (student), austudy or ABSTUDY (Living Allowance).
Additionally, the Government is committed to providing continuing support to students. The relocation scholarship, for dependent students who are required to move from or to a regional area to study and some independent students, will continue to be provided as a grant to all eligible students. Other student payments will also remain unaffected by the loans measure.
Taking into account the continued access to fund the costs of study, the amendments to the SSS are consistent with a person's rights to social security and to an adequate standard of living.
Right to equality and non-discrimination
To avoid doubt, Schedule 1 to the Bill does not engage the right to equality and non-discrimination contained in Articles 2 and 26 of the International Covenant on Civil and Political Rights either on the basis of race or 'other' status.
Article 2(1) of the International Covenant on Civil and Political Rights obligates each State party to respect and ensure to all persons within its territory and subject to its jurisdiction the rights recognised in the Covenant without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status 1.
Article 26 not only entitles all persons to equality before the law as well as equal protection of the law, but also prohibits any discrimination under the law and guarantees to all persons equal and effective protection against discrimination on any ground such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status2.
It is important to note, however, that not all differential treatment will be considered discriminatory. The Committee on Economic, Social and Cultural Rights has provided the following commentary on when differential treatment will be considered discriminatory:
Differential treatment based on prohibited grounds will be viewed as discriminatory unless the justification for differentiation is reasonable and objective. This will include an assessment as to whether the aim and effects of the measures or omissions are legitimate, compatible with the nature of the Covenant rights and solely for the purpose of promoting the general welfare in a democratic society. In addition, there must be a clear and reasonable relationship of proportionality between the aim sought to be realised and the measures or omissions and their effects. A failure to remove differential treatment on the basis of a lack of available resources is not an objective and reasonable justification unless every effort has been made to use all resources that are at the State party's disposition in an effort to address and eliminate the discrimination, as a matter of priority3.
Discrimination on the basis of other 'status'
While the provisions of Schedule 1 to the Bill will establish an ABSTUDY student start-up loan (which, given the eligibility criteria for ABSTUDY, will mean that loan recipients are necessarily of Aboriginal or Torres Strait Islander descent), an equivalent student start-up loan will also be established for those who are eligible for youth allowance (student) and austudy (where youth allowance (student) and austudy are available to non-Indigenous and Indigenous people). As the provisions for the student start-up loan mirror the provisions for the ABSTUDY student start-up loan, there will be no effective distinction between Indigenous and non-Indigenous recipients of these loans.
For these reasons, Schedule 1 to the Bill will not engage the right of equality and non-discrimination.
Conclusion
This Schedule is compatible with human rights. To the extent that it may have limited adverse impact on a person's access to education, social security, an adequate standard of living or the right to equality and non-discrimination, the limitation is reasonable, proportionate to the policy objective and for legitimate reasons.
Schedules 3 and 4 - Removal of the upfront payment discount and voluntary repayment bonus
The purpose of schedules 3 and 4 to the Bill is to amend the Higher Education Support Act 2003 (HESA) to make savings in higher education expenditure. HESA provides for funding of education providers and the legislative authority for the Government's income-contingent loan programs including HECS-HELP, FEE-HELP, OS-HELP, SA-HELP and VET-FEE HELP.
Schedule 3 to the Bill amends HESA to remove the HECS-HELP up-front payment discount for units of study with a census date (the date on which a student's HECS-HELP liability is calculated) on or after 1 January 2016.
Schedule 4 to the Bill amends HESA to remove the bonus for voluntary repayment of debt incurred under the Higher Education Loan Program (HELP) for repayments made on or after 1 January 2016.
Human rights implications
Right to education
Schedules 3 and 4 to the Bill engage the right to education. In particular, Article 13(2)(c) of the International Covenant on Economic, Social and Cultural Rights (ICESCR) states that higher education shall be made equally accessible to all, on the basis of capacity, by every appropriate means, and in particular by the progressive introduction of free education.
Schedules 3 and 4
Schedules 3 and 4 to the Bill contain amendments that remove financial incentives for up-front payment of student contribution amounts and voluntary repayment of HELP debts. Currently, a 10 per cent discount is applied to up-front student contribution payments of $500 or more. The amount of the discount is paid by the Government to the student's higher education provider. The voluntary repayment bonus currently reduces a person's HELP debt by 5 per cent of the payment amount when the person makes a voluntary repayment of $500 or more. Removing the up-front discount and voluntary repayment bonus is estimated to provide in the order of $200 million in savings over the forward estimates.
Student contribution amounts and tuition fees may still be deferred under HELP.
The upfront discount offers little incentive to students to pay their fees upfront, rather than through a HECS-HELP loan. It was reduced from 20 per cent to 10 per cent on 1 January 2012 and this has only had a minor effect on the proportion of student contributions that have been deferred.
Conclusion
Schedules 3 and 4 to the Bill are compatible with human rights.