Revised Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)Chapter 11 Student start-up scholarships
Outline of chapter
Schedule 11 to the Bill repeals the student start-up scholarship payment, from 1 July 2017, or the first 1 January or 1 July after Royal Assent after this date. The earliest this Schedule can commence is 1 July 2017.
Background
On 1 January 2016, Schedule 11 to the Labor 2013-14 Budget Savings (Measures No. 2) Act 2015 (Budget Savings Measures No. 2 Act) amended the Social Security Act and Student Assistance Act to provide for the student start-up loan and ABSTUDY student start-up loan. These loans are income contingent and repayable under similar arrangements to the Higher Education Loan Programme. The qualification provisions for the student start-up loan and ABSTUDY student start-up loan are similar to the qualification provisions for the student start-up scholarship currently contained in Division 1 of Part 2.11B of the Social Security Act.
The Budget Savings Measures No. 2 Act also amended the qualification provisions for the student start-up scholarship payment. As a result of those amendments, a person is qualified for a student start-up scholarship payment only if:
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- the person received a student start-up scholarship payment, ABSTUDY student start-up scholarship payment or Commonwealth Education Costs Scholarship before 1 January 2016; and
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- the person has been receiving youth allowance on the basis of undertaking full-time study, austudy payment or payments under the ABSTUDY Scheme known as Living Allowance for a continuous period since receiving the scholarship.
The effect of these amendments is that the student start-up scholarship payment has been closed to new applicants since 1 January 2016 and replaced by the student start-up loan. This Schedule would close the student start-up scholarship for all existing recipients of the scholarship.
The student start-up scholarship was introduced in 2010 to assist students with the upfront costs of study, including text books and course equipment. Due to the nature of the current scholarship qualification provisions, it is expected that many current recipients would no longer be eligible for the scholarship at the commencement of this Schedule as they would have completed their study and no longer be receiving student payments. It is expected that approximately 80,000 existing student start-up scholarship recipients will be affected by this measure as at 1 July 2017. The number of existing recipients affected is expected to decrease significantly over a short period of time, as students complete their courses and no longer require the support of student payments.
Current recipients of the student start-up scholarship payment may be qualified for a student start-up loan or ABSTUDY start-up loan after the commencement of this Schedule. The amount of the loan is the same as the amount of the scholarship and it is paid at the same time as the scholarship.
The measure is intended to be implemented from 1 July 2017.
Explanation of the changes
Amendments to the Social Security Act
Items 1 and 2 repeal the definition of scholarship-entitled person . These items are consequential to the amendments made by items 5 and 6 of this Schedule. Following those amendments, there will no longer be a reference to 'scholarship-entitled person'.
Item 3 repeals Division 1 of Part 2.11B. This Division sets out the substantive provisions for student start-up scholarship payments and contains sections 592F, 592G and 592H. Current section 592F sets out qualification for student start-up scholarship payment. Among other things, a person is qualified for a student start-up scholarship payment only if:
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- the person received a student start-up scholarship payment, ABSTUDY student start-up scholarship payment or Commonwealth Education Costs Scholarship before 1 January 2016; and
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- the person has been receiving youth allowance on the basis of undertaking full-time study, austudy payment or payments under the ABSTUDY Scheme known as Living Allowance for a continuous period since receiving the scholarship.
The effect of these provisions in section 592F is that the student start-up scholarship payment has been closed to new applicants since 1 January 2016. This item repeals section 592F, the effect of which is that current recipients of the student start-up scholarship payment will no longer be entitled to the scholarship after the commencement of this Schedule. Current recipients of the student start-up scholarship payment may be qualified for a student start-up loan after the commencement of this Schedule if, among other things, the person is receiving youth allowance as a full-time student or austudy payment or ABSTUDY Living Allowance and is undertaking an approved scholarship course.
Current section 592G provides for circumstances in which a person is not qualified for a student start-up scholarship payment. In broad terms, a person is not qualified for a student start-up scholarship payment if the person has qualified for the scholarship or certain other scholarships in the previous six months. That is, a person can receive only two scholarships each year. Similar rules apply to the payment of student start-up loans. This item repeals section 592G.
Current section 592H provides for the amount of a student start-up scholarship payment. The amount is currently $1,025 which is the same as the amount of the student start-up loan. This amount will be indexed on 1 January 2017. This item repeals section 592H.
Item 4 is a technical amendment that is consequential to the amendments made by items 5 and 6.
Items 5 and 6 amend section 1061ZVBC which sets out circumstances in which a person is not qualified for a student start-up loan for a qualification period.
Subparagraph 1061ZVBC(1)(a)(iii) provides that a person is not qualified for a student start-up loan for a qualification period if immediately before the person's qualification test day, the person is a scholarship-entitled person. Subsection 1061ZVBC(2) provides that a person is a scholarship-entitled person if:
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- the person received a student start-up scholarship payment, ABSTUDY student start-up scholarship payment or Commonwealth Education Costs Scholarship before 1 January 2016; and
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- the person has been receiving youth allowance on the basis of undertaking full-time study, austudy payment or payments under the ABSTUDY Scheme known as Living Allowance for a continuous period since receiving the scholarship.
Current subparagraph 1061ZVBC(1)(a)(iii) and subsection 1061ZVBC(2) were inserted on 1 January 2016 and they ensure that a person is not qualified for a student start-up loan if the person was receiving a student start-up scholarship payment or certain other scholarships before 1 January 2016 where the person continued to receive a particular payment since the person received the scholarship. Such a person may be qualified for a student start-up scholarship payment in accordance with current section 592F.
Section 592F is repealed by item 3 of this Schedule. As a result, a person to whom current subparagraph 1061ZVBC(1)(a)(iii) and subsection 1061ZVBC(2) apply would no longer be qualified for a student start-up scholarship payment. It is therefore appropriate to repeal subparagraph 1061ZVBC(1)(a)(iii) and subsection 1061ZVBC(2) so that such a person can qualify for a student start-up loan (where all the other qualification requirements are also met).
Items 7, 8 and 9 repeal provisions that provide for the indexation of the student start-up scholarship payment. These provisions can be repealed as a result of item 3 of this Schedule closing the student start-up scholarship payment. However, the student start-up scholarship payment will be indexed on 1 January 2017 before the amendments made by this Schedule commence.
Items 10, 11 and 12 are consequential to the amendments to repeal the student start-up scholarship payment. These items remove references to the student start-up scholarship payment in provisions relating to debts. These provisions will now apply only to relocation scholarship payment.
Amendments to the Social Security Administration Act
Items 13 to 19 are consequential to the amendments to repeal the student start-up scholarship payment. These items remove references to the student start-up scholarship payment in various provisions in the Social Security (Administration) Act 1999 .
Amendments to the Student Assistance Act
Item 20 repeals the definition of scholarship-entitled person . This item is consequential to the amendments made by items 22 and 23 of this Schedule. Following those amendments, there will no longer be a reference to 'scholarship-entitled person'.
Item 21 is a technical amendment that is consequential to the amendments made by items 22 and 23.
Items 22 and 23 amend section 7D which sets out circumstances in which a person is not qualified for an ABSTUDY student start-up loan for a qualification period. The amendments made by these items mirror the amendments made by items 5 and 6 of this Schedule but with respect of the ABSTUDY student start-up loan.
Application and savings provisions
Item 24 contains a number of application and savings provisions dealing with the repeal of student start-up scholarship provisions. Notably, in spite of the repeal of the qualification provisions for that payment, those provisions continue to apply in relation to qualification prior to repeal (which may be important to clarify during reviews about qualification occurring after repeal in relation to qualification prior to repeal). There are also rules to clarify that debts can still be raised and that claim rules and payment rules for the discontinued student start-up scholarship payment remain effective in relation to payments a person was qualified for before commencement.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Student start-up scholarships
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
This Schedule amends the Social Security Act 1991 , Social Security (Administration) Act 1999 and the Student Assistance Act 1973 to close the student start-up scholarship from 1 July 2017 at the earliest, for recipients of student payments (youth allowance, austudy and ABSTUDY Living Allowance) who are undertaking higher education.
The student start-up scholarship was introduced in 2010 to assist student payment recipients with the upfront costs of study, such as text books and course equipment. The scholarship is currently paid twice a year to eligible recipients ($1,025 each), generally at the beginning of each semester.
As of 1 January 2016, the student start-up scholarship has only been available to student payment recipients who had received a scholarship or Commonwealth Education Costs Scholarship prior to this date and had remained continuously in receipt of a student payment since that time. The scholarship is no longer available to new student payment recipients and as such, the number of scholarship recipients has been steadily decreasing since this time.
Human rights implications
Right to education
This Schedule 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)(b) states that secondary education, in all its different forms, including technical and vocational secondary education, shall be made generally available and accessible to all by every appropriate means and, in particular, by the progressive introduction of free education.
This Schedule does not limit the right to education. While the student start-up scholarship will no longer be available to student payment recipients undertaking higher education from 1 July 2017 at the earliest, people who would otherwise be entitled to the scholarship will be eligible for the student start-up loan.
The voluntary student start-up loan was introduced on 1 January 2016 and replaced the scholarship for new student payment recipients. It is an income contingent loan, repayable under similar arrangements to the Higher Education Loan Programme (HELP). The purpose of the scholarship and the loan is identical as both payments are designed to help students with the upfront costs of text books and equipment. Under the loans, students are eligible for the same payment amount as the scholarship ($1,025 twice per calendar year, to be indexed from 1 January 2017). In this way, students will still have access to funds to assist them with the upfront 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 loans (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.
Additionally, this Schedule does not affect a person's eligibility for their primary student payment.
Right to social security
This Schedule 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 this Schedule, 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 a student start-up scholarship, 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.
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 each year to all eligible students. Other student payments will also remain unaffected by the closure of the student start-up scholarship.
Taking into account the continued access to assistance with the costs of study, the amendments to the student start-up scholarship are consistent with a person's rights to social security and to an adequate standard of living.
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 or social security, the limitation is reasonable, proportionate to the policy objective and for legitimate reasons.