Bills Digest no. 137 2007–08
Higher Education Support Amendment
(2008 Budget Measures) Bill 2008
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Higher Education Support Amendment
(2008 Budget Measures) Bill 2008
Date introduced: 29
May 2008
House: Representatives
Portfolio: Education
Commencement: Royal
Assent
Links: The relevant
links to the Bill, Explanatory Memorandum and second reading speech
can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills
have been passed they can be found at ComLaw, which is at http://www.comlaw.gov.au/.
The Bill will amend the Higher Education Support Act 2003 (the
HESA) to provide additional funding for the following 2008–2009 Budget
measures:
- additional Commonwealth supported places in early childhood education
and nursing;
- to compensate higher education providers for a reduction in the student
contribution amount for mathematics, statistics and science;
- additional Commonwealth supported places and transitional assistance
for the phasing out of full fee paying domestic undergraduate places;
- the doubling of the number of undergraduate Commonwealth scholarships
by 2012;
- the doubling of the total number of Australian Postgraduate Award
(APA) holders by 2012;
- for capital infrastructure and additional Commonwealth supported
places at the James Cook University Dental School; and
- capital infrastructure and additional Commonwealth supported places
in medicine, nursing and education at the University of Notre Dame Australia.
The Bill will also amend the HESA to provide for a reduction in Higher
Education Loan Program (HELP) repayments and in certain cases a reduction
in HELP debt for eligible persons in the form of a new HECS-HELP benefit.
Background
The Commonwealth provides assistance for higher education through the
provisions of the Higher Education Support Act 2003 (the HESA).
Part 2-2 of the HESA sets out the conditions for the Commonwealth Grant
Scheme (CGS), which provides grants to higher education providers on the
basis of the number of Commonwealth supported places they have been allocated
in specified funding clusters.
Parts 4-1 and 4-2 of the HESA deal with how debts accumulated under the
student loans scheme, the Higher Education Loan Program (HELP), are worked
out and discharged.
Section 238-10 of the HESA allows the Minister to make guidelines and
for the guidelines to be disallowable legislative instruments.
In Opposition, the Australian Labor Party claimed that ‘no policy is
more important than Australia’s investment in human capital – the education,
skills and training of our workforce and our people’.[1]
This emphasis on investing in education as the basis for productivity
growth, overcoming individual disadvantage and social inclusion continues
in government.[2] The higher education budget measures
fulfil election promises to phase out domestic undergraduate full-fee
paying places, reduce the student contribution fees in mathematics and
science, reduce the HELP debt of mathematics, science and early childhood
graduates, increase the number of places in dentistry, medicine, nursing,
early childhood teaching and double the number of Commonwealth scholarships
and Australian Postgraduate Awards. Broadly the focus is on measures to
overcome skills shortages and to a lesser degree address equity issues.
More wide ranging reforms of university funding and possible changes
in policy direction might be expected after the Education Minister receives
the final report of the Review of Australian Higher Education (the ‘Bradley
review’), by the end of 2008. We might expect, as a result, more significant
measures in the 2009–2010 Budget.[3]
Provisions in Schedule 2 increase the overall appropriation by
$2,259,982,000 for the period 1 January 2008 to 31 December 2012 (excluding
the Higher Education Loan Programme).
In relation to the Higher Education Loan Programme the Explanatory Memorandum
states the estimated financial impact ‘over the forward estimates period
(2008-09 to 2011–12) is -$26.050 million on the fiscal balance, resourcing
amounts to $4.198 million and underlying cash is -$33.252 million’.[4]
Schedule 1 deals with a new HECS-HELP benefit.
Items 1 to 12 provide for a reduction in compulsory HELP repayments
and in certain cases a reduction in HELP debt in the form of a new HECS-HELP
benefit.
Item 13 provides for a new division dealing with eligibility,
amounts and determinations regarding the HECS-HELP benefit.
The details of the HECS-HELP benefit will be specified in HECS-HELP Benefit
Guidelines which are made by the Minister under Section 238-10 of the
HESA. The amendments and the Guidelines for HELP debt ‘remissions’ will
implement an election promise to ‘halve the HECS repayments of maths and
science graduates if they take up work in a relevant maths/science occupation,
particularly teaching’.[5]
The measure will apply to graduates from second semester in 2008 and the
benefit will be claimable for a total of five years from the 2008–09 income
year and cost ‘around $63.6 million over four years’.[6] Halving the HECS repayments of science and mathematics
graduates who work as teachers for five years is welcomed by a number
of stakeholders including the Federation of Australian Scientific and
Technological Societies (FASTS) because it ‘not only addresses the absurd
inequity of new science teachers having higher debts than their colleagues,
but may also improve the quality of school teaching by encouraging suitably
qualified people’.[7]
Schedule 2–Other amendments deals with payments
under the Commonwealth Grants Scheme.
Item 1 increases the maximum grants for the years 2008 to 2012
under the Commonwealth Grants Scheme to fund additional Commonwealth supported
places and compensate higher education providers for a reduction in student
contributions in mathematics and science and the phasing out of domestic
full fee paying places.
Items 2 to 5 provide for a new transitional loading to compensate
higher education providers for the reduction in student contributions
in mathematics and science and the phasing out of domestic full fee paying
places.
Item 7 deals with the phasing out of domestic full-fee paying
places. Public universities will not be allowed to enrol full-fee paying
students (other than overseas students or post graduate students) beyond
1 January 2009. Provisions will allow full-fee paying students already
enrolled, or deferred, to complete their courses.
Since 1998, universities have been able to offer full-fee paying places
to domestic undergraduate students. Although the uptake of these places
was initially small, it has increased since the introduction of income
contingent FEE-HELP loans to full-fee students in 2005. Along with this
increased uptake has been an increase in the proportion of university
income from domestic student fees. The Australian Labor Party has opposed
domestic full-fee places on the grounds that university access should
be determined by merit rather than wealth, and has promised at every election
since 1998 to phase them out.
Estimates of the required commensurate increase in Commonwealth funding
to universities to compensate for the loss of full-fee paying students
have varied widely from $200 million to $700 million. In opposition the
Labor Party estimated that universities would forgo $325 million in revenue
in the years 2009–2011 and promised $355 million to provide an additional
11 000 Commonwealth Supported Places (previously called HECS places) to
replace the full-fee paying places.[8] The government, whilst still providing up to
11 000 new Commonwealth supported places by 2011, has revised the cost
of this measure down to $249 million.
During the election the Labor Party expected the replacement Commonwealth
supported places would be in target areas of national priority and skills
shortage such as teaching, mathematics, science and engineering.[9] The government has not provided details of the
places to be offered and how they will be allocated except to state that
the compensation and replacement places will be negotiated with each university.[10]
Media coverage reports that most universities expect the Commonwealth
supported places will not adequately cover the revenue previously generated
from full-fee places.[11] However there will be extra revenue generated
from the student contributions component (previously HECS fees) of the
Commonwealth supported places.[12] Whether the combined government and student contribution revenue
from the new places will be sufficient to replace revenue from the full
fee places in disciplines such as law, commerce and medicine is unclear
but some universities with a large number of full-fee paying students
may need to find alternative revenue means, possibly through an increased
intake of overseas and domestic postgraduate coursework fee paying students.
The provisions in Items 2 to 5 for a new transitional loading
may address some of universities’ concerns. The Minister’s second reading
speech states:
If universities demonstrate that assistance is required
to ensure the delivery of replacement Commonwealth supported places,
the government may provide additional funding, over and above that for
the places, through the new transitional funding that is being introduced
through this bill.[13]
The details of the loading and how it will be applied are unclear. A
departmental document circulated to universities and reported in the media
stated ‘the transitional funding will only be available in 2009, pending
the outcomes of the higher education review and the negotiation of funding
compacts, and will be restricted to specific purposes relating to the
delivery of these [Commonwealth supported] places’.[14]
Items 11 and 12 provides for reduced maximum student contributions
for mathematics, science and statistics units. Section 93-10 of the HESA
sets out the maximum student contributions grouped in seven funding clusters.
Funding cluster three includes mathematics and statistics. From 1 January
2009 contributions for these units will be reduced from $7260 to the lowest
level of $4,077 equivalent to the national priority places of education
and nursing.[15] Funding
cluster six includes engineering, science and surveying. Science contributions
will also be reduced to the lowest level of $4,077. This measure aims
to encourage more students into the mathematics and science disciplines
and delivers on an election commitment.
Although universities will receive additional funding of $562 million
through the transitional loading provided for in Items 2 to 5 to
make up for the reduction in student contributions in mathematics and
science, the total funding per student place will not increase. This policy
to reduce HELP fees for mathematics and science goes against research
that suggests HECS–HELP charges in general do not deter students and that
changes, either increases or decreases in particular discipline costs,
have insignificant impacts on demand for those courses. For example,
Macquarie University experienced no increased demand in science when it
reduced student contributions in science in 2005.[16]
Furthermore the Australian Academy of Science’s 2006 review of mathematics
and statistics recommended that the relative funding of mathematical sciences
departments in universities is inadequate and the emphasis should be on
increasing the Commonwealth grant per place rather than reducing the student
contribution.[17]
Item 9 inserts a new table in subsection 41-45(1) to vary the
maximum payments for Other Grants for the years 2008–2012. The maximum
grants will increase to fund the establishment of the James Cook University
Dental School ($49.5 million) and infrastructure at the University of
Notre Dame’s Sydney and Fremantle campuses ($7.5 million). Both these
measures, along with extra funding for Commonwealth supported places in
dentistry at James Cook University and teaching, nursing and medicine
at Notre Dame, funded under Schedule 2 Item 1, deliver on election
commitments.[18]
Item 10 increases the maximum payments for Commonwealth Scholarships.
In 2003, the Coalition Government introduced an equity based Commonwealth
Scholarships Programme to assist students from low socio-economic backgrounds,
especially those from regional and remote areas and Indigenous students,
with costs associated with higher education. As an election commitment,
under the Scholarships for a Competitive Future initiative, the
Labor Party promised to double the number of Commonwealth Scholarships
by 2012 from 44 000 to 88 000.[19]
The Budget provides $238.5 million to meet this commitment. Two new categories
of Commonwealth Scholarship will be introduced from 2009: National Priority
Scholarships and National Accommodation Scholarships. Twenty nine thousand
National Priority Scholarships will target undergraduate students enrolling
in priority disciplines such as nursing, teaching, medicine, dentistry,
allied health, maths, science and engineering. Fifteen thousand National
Accommodation Scholarships will be available for students relocating from
interstate to study a specialist course not available near their home.[20]
As part of the Scholarships for a Competitive Future initiative
an election commitment to double from 4 800 to 9 600 the number of postgraduate
students receiving an Australian Postgraduate Award (APA) for their PhD
or Masters by Research is also met in the Bill. $209.0 million over four
years is provided to meet this promise.[21] Stakeholders, including the Council of Australia Postgraduate
Associations (CAPA) and Universities Australia whilst welcoming the increased
numbers of APAs have called for an increase in the APA stipend and a change
in the way the APA is treated in assessing income for taxation and income
support purposes.[22] According to CAPA, by the end
of 2008 the Australian Postgraduate Award (APA) stipend will drop below
the poverty line.
Concluding
comments
The Bill fulfils a number of election commitments. It provides for increased
funding for measures aimed at overcoming skills shortages in mathematics,
science, nursing, medicine, teaching and early childhood education. To
a lesser degree measures such as funding to double the number of Commonwealth
scholarships and to provide 11 000 Commonwealth supported places in lieu
of domestic full fee places address equity issues in the higher education
sector.
However stakeholders look to the next budget to address what they see
as the critical issue of adequate funding per university place. Universities
Australia concludes that ‘while places, incentives and scholarships are
important to encourage growth in the sector the Government must still
address the immediate need for better funding per university place to
maintain quality of teaching’.[23]
Similarly the Federation of Australian Scientific and Technological Societies
has called for more ‘funding per science and technology student place’
and ‘a new funding model for universities that encourages knowledge transfer’.[24]
Coral Dow
16 June 2008
Bills Digest Service
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