House of Representatives

Higher Education Support Amendment Bill (No. 2) 2011

Second Reading Speech

Mr Garrett (Smith-Minister for School Education, Early Childhood and Youth)

I move:

That this bill be now read a second time.

The Higher Education Support Amendment Bill (No. 2) 2011 amends the Higher Education Support Act 2003 to implement 2011-12 budget measures and update maximum payment amounts to provide for indexation and other variations.

The bill also clarifies the government's policy in relation to Australian citizens studying at an overseas campus of an Australian provider and their eligibility for Commonwealth support and income contingent loans.

The 2011-12 budget included:

additional funding of $1.2 billion over four years to fund growth in university enrolments;
an extra $550 million for improved indexation for universities, to put them on a more sustainable funding base;
$500 million for the regional priorities round of the Education Investment Fund; and
additional funding of $109.9 million over four years for regional loading to help overcome the higher costs of regional campuses.

The budget also included a reduction in HECS-HELP upfront discounts, providing savings of $479 million to assist in paying for the government's increased investment in higher education.

From 1 January 2012, the government will lower the HECS-HELP discount for upfront student contribution payments of $500 or more from 20 per cent to 10 per cent. Currently students can make a full upfront payment of their student contribution amount by paying 80 per cent of this amount for all of their units in a course of study with the same census date. The Commonwealth pays the remaining 20 per cent of the student contribution amount.

Students can also pay part of their student contribution upfront and receive a 20 per cent discount for any payments totalling $500 or more for units in a course of study with the same census date.

The reduction in the upfront discount will affect students who can afford to pay upfront and choose to do so. It will not affect students who fund all of their university studies through HECS-HELP deferred loans and it will not affect university revenues.

The HELP voluntary repayment bonus, applied to payments of $500 or more, will also be reduced from 10 per cent to five per cent.

Students can make a voluntary repayment towards their HELP debt to the tax office at any time. Voluntary repayments of $500 or more currently attract a 10 per cent bonus on the payment amount. Effectively the government pays this 10 per cent by removing it from the student's debt.

The decreased bonus for voluntary repayments will apply to all HELP debts.

This savings measure will help the government to maintain its commitment to fund a demand driven supply of undergraduate places and to ensure low-income people get the opportunity for higher education.

The act will be amended to provide for an increase in funding for overenrolment of Commonwealth supported places that has occurred in 2011.

Funding for overenrolment of Commonwealth supported places was raised from five to 10 per cent above funding for allocated places for 2010 and 2011 as a transitional measure prior to the introduction of the demand driven funding system for higher education funding from 2012.

From 2012, the government will fund all undergraduate Commonwealth supported places provided by public universities.

The bill increases the maximum amounts for other grants under section 41.45, and Commonwealth scholarships under section 46.40 of the act to provide for indexation and other variations affecting the 2012-14 years, and to include the 2015 funding year.

There is currently ambiguity in the act about its application to Australian citizens studying at the overseas campuses of Australian universities.

This has resulted in a small number of Commonwealth supported places being offered by Australian universities to Australian citizens studying at overseas campuses. These students have also been able to access the HECS-HELP scheme.

As students are only required to pay back their HECS-HELP debt if they file an Australian tax return, there is a higher risk that HECS-HELP debts incurred offshore will not be repaid, or not repaid for a longer period of time.

The bill amends the act to clarify that Australian citizens are not entitled to Commonwealth support or access to an income contingent loan when they are undertaking their course of study primarily overseas.

Current students will not be affected. Universities that currently have students in Commonwealth supported places at overseas campuses will be able to maintain the status of these students for the duration of their current courses.

The bill reflects the government's continued commitment to growing Australia's higher education sector and to expanding opportunities for Australians to obtain a high-quality higher education.

I commend the bill to the House.

Debate adjourned.