House of Representatives

Labor 2013-14 Budget Savings (Measures No. 2) Bill 2015

Second Reading Speech

Ms O'Dwyer(Minister for Small Business and Assistant Treasurer)

I move:

That this bill be now read a second time.

This Bill will reintroduce, with certain modifications, a number of savings measures that were originally announced by the former government in the 2012-13 Mid-Year Economic and Fiscal Outlook and the 2013-14 budget.

These are savings measures that the former government promised prior to the last election to help repair the budget; but since the election they have failed to keep their promise to the Australian people.

We are now introducing legislation to allow the former government to keep its promise to the Australian people to fix the budget. These measures will provide savings to the budget of over $2 billion over the forward estimates.

Two of the measures were removed from the Social Services and Other Legislation Amendment Act 2014 during its passage through the Senate in March 2014, and reintroduced in the Social Services and Other Legislation Amendment (Student Measures) Bill 2014 on 17 July 2014. This bill has not passed the Senate.

The two other measures were introduced in the Higher Education Support Amendment (Savings and Other Measures) Bill 2013, which has also not passed the Senate.

This bill facilitates the former government keeping their election promises. That is what we are doing. We are giving them the opportunity to keep their election promises, because they did not reverse the decision to proceed with these measures in the 2013 economic statement or in their document outlining their costings for the 2013 federal election. Since the election, they have been saying-claiming, incorrectly-that we have deepened the budget deficit.

In fact, those opposite are the ones-by their own actions-who are deepening the budget deficit by not passing these measures. There is no sense of embarrassment about it. They are just opposing what they took to the last election.

Schedule 1-student start-up loans

Schedule 1 to the bill replaces the current student start-up scholarship with an income-contingent loan, the student start-up loan.

The student start-up loan aims to help students with the costs of study, including the purchase of text books, computers and internet access.

This proposal will provide significant savings to government while maintaining students' access to funds to assist them with the up-front costs of study. It also recognises the financial difficulties that some students and their families may experience in undertaking education and training, and includes a number of measures to assist people financially.

Under the new arrangements, there will be a limit of two student start-up loans per year, of equivalent value to the student start-up scholarship (currently $1,025 each and to be indexed from 2017).

The loans will be available on a voluntary basis, and will be repayable under similar arrangements to Higher Education Loan Program debts.

Students will only be required to begin paying their student start-up loan after their Higher Education Loan Program debt has been repaid.

This measure will commence on 1 January 2017 (or, if royal assent occurs after 1 January 2017, the first occurring 1 January after royal assent).

This measure only applies to new recipients of youth allowance, Austudy and ABSTUDY after the day it takes effect. It does not affect the entitlements of individuals currently entitled to these benefits, who will continue to be able to obtain student start-up scholarships.

Schedule 2- efficiency dividend

Schedule 2 to the bill amends the Higher Education Support Act 2003 and the Commonwealth Grant Scheme Guidelines 2012 to apply an efficiency dividend to Commonwealth contribution amounts in the act and loadings under the guidelines.

It will adjust these amounts for the year in which the bill receives royal assent and later years. The adjusted amount would be the amount that would have been payable in these years had the efficiency dividend applied in 2014 and 2015, consistent with the original policy announcement of the former government.

These amendments result in significant savings that have already been included in the budget bottom line, but are not expected to impact on access to, or the quality of, higher education.

Schedules 3 and 4-Removal of the upfront payment discount and voluntary repayment bonus

Schedules 3 and 4 to the bill amend the Higher Education Support Act 2003 to abolish the HECS-HELP up-front payment discount and the Higher Education Loan Program voluntary repayment bonus.

The removal of both the discount and the bonus would occur from 1 January occurring at least three months after the bill receives royal assent.

As a result, from this time, students will no longer receive a discount of 10 per cent on their student contribution for units with a later census date by paying the amount up-front, nor will they receive an additional five per cent reduction in their Higher Education Loan Program debt if they make a voluntary repayment of $500 or more.

Again, while these amendments result in significant savings that have already been included in the budget bottom line, they are not expected to impact on access to, or the quality of, higher education.

Schedule 5-Interest charge

Schedule 5 to the bill will allow for an interest charge to be applied to certain debts incurred by recipients of Austudy Payment, Fares Allowance, Youth Allowance for full-time students and apprentices, and Abstudy Living Allowance.

The interest charge will only be applied where the debtor does not have or is not honouring an acceptable repayment arrangement.

At present, current recipients of income support with debts have their payments reduced until their debts are repaid. For former recipients of income support, on the other hand, there is no incentive to repay their debts.

Debtors who are already making repayments, or who come to a repayment agreement with the Department of Human Services following implementation of the measure, will not be charged interest.

The key purpose of the interest charge is to encourage debtors to repay their debt, in a timely fashion, where they have the financial capacity to do so.

Once the interest charge is in place, debtors who have not been making repayments will have an incentive to engage with the Department of Human Services to make a repayment arrangement in order to avoid the interest charge.

The rate of the interest charge will be based upon on the 90-day bank accepted bill rate, plus an additional seven per cent, as is currently applied by the Australian Taxation Office for unpaid tax debts under the Taxation Administration Act 1953. Over the last four years, this rate has averaged approximately 10.1 per cent, and currently stands at 9.15 per cent for the quarter July to September 2015.

This measure will commence on 1 January or 1 July first occurring after royal assent.

As I mentioned at the outset, this bill will reintroduce with certain modifications a number of savings measures originally announced by the former government. I ask them to support the bill. I commend the bill to the House.