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Government extends special Youth Allowance access to Inner Regional students

The Government has announced that it will introduce legislation allowing students from inner regional areas to access independent Youth Allowance under the same rules that apply to students from Outer Regional, Remote and Very Remote areas.

This follows the Government’s release of a scheduled review of student income support reforms conducted by Professor Kwong Lee Dow (the Dow Review).

The Government brought forward the review by 12 months in response to concerns about access to income support by students in rural and regional areas. The Government has not accepted Professor Dow’s most contentious recommendation which is to remove the current special arrangements for young people from Outer Regional, Remote and Very Remote Australia and establish a single new self-supporting criterion for independence for young people.


The background to the independent Youth Allowance issue is complicated and has been covered in several FlagPosts over the last year. In brief, the issue has its origins in substantial changes to student assistance that the Rudd-Gillard Government introduced in 2010 in response to the Review of Higher Education conducted by Emeritus Professor Denise Bradley.

The main area of contention at the time was the Government's attempt to tighten eligibility for independent status under Youth Allowance. This was aimed at closing a loophole under which students from higher income families had been able to access Youth Allowance by taking a 'gap year'.

The attainment of ‘independent’ status is highly sought as it means applicants for Youth Allowance are exempt from the parental means test that applies to dependent students and independent recipients are paid the maximum benefit. However, the original policy intention of the independent rate is that it provides a higher rate of assistance for those who are genuinely independent (for example, they have been in the workforce for a number of years and have decided to get a degree).

Applicants for Youth Allowance would need to have worked full-time for at least 18 months in the previous two years. They would no longer be able to claim that they are ‘independent’ based on part-time employment.

Legislation did not pass until an agreement was reached between the Government and the Opposition allowing students who live away from major cities and regional centres to be eligible under the previous independence test which included part-time employment. Under the deal, this test was restricted to those who leave home to study and whose parents earn less than $150 000 a year and who live in Very Remote, Remote or Outer Regional areas.

Despite this agreement, the Opposition has campaigned since prior to the 2010 election for an extension of the special arrangements for rural and regional students to include students in Inner Regional areas. This culminated in the introduction of a Private Member's Bill by Senator Fiona Nash seeking to bring this into effect. The Bill passed the Senate but, following the Government’s decision to bring forward the review of student income support reforms, debate on the Bill did not proceed in the House of Representatives.

What the Dow Review recommends

The Dow Review was presented to the Government in July 2011 but not publicly released until 14 September. In the Review, Professor Dow noted that the ‘underlying tension’ was ‘how to reconcile the competing need of those on low incomes and those from rural, regional and remote communities’. Ultimately, the Dow Review has opted towards supporting those in greatest financial need (though, as the report indicates, this would end up assisting proportionately more country students anyway).

The Dow Review cautions against a classification system that creates 'further lines of demarcations between regional and metropolitan students'. It says that 'the focus should move to considering the additional cost for all students who need to relocate—both country and city students’.

As such, the main recommendation of the Dow Rview is for a ‘single new self-supporting criterion for independence for young people who have worked full-time for two out of three years, where a minimum of two years has elapsed since leaving school.’ This can be seen as a tightening of the current arrangements applying to Inner Regional and metropolitan students, which require full-time work over 18 months in order to establish independence (though, the report notes that, in effect, the 18 month requirement tends to result in people delaying study for two years anyway).

At the same time, the Dow Review proposes a loosening of the independence test by adopting a more flexible assessment of whether a young person has worked full-time over a period by allowing this to be measured in terms of average hours worked and/or total dollars earned. The new test will also allow seasonal work and periods of unemployment or underemployment to count as full-time work.

The new single self-supporting criterion would also remove the special arrangements for Very Remote, Remote or Outer Regional students ‘subject to extending appropriate transitional arrangements to those young people who have already made plans based on current rules’.

Essentially, then, the Dow Review's recommendations would return the situation to something very similar to the independence test recommended by Professor Bradley. Indeed, the Dow Review concludes that ‘on balance, and within available resources, the Bradley review recommendations on student income support basically got it right’.

Other recommendations include increases in the value of and extended eligibility for scholarships for those needing to leave home in order to study; and that development work be undertaken on an income-contingent loan scheme targeted at students who are required to move away from home to undertake particular course requirements.

Thus, while the Dow Review made some recommendations aimed at addressing obstacles to support for rural and regional students, this was within the context of its position that ‘families from low socioeconomic backgrounds remain the priority group for student income support and that it would be wrong to erode their entitlements to offset the equity needs of regional families with higher incomes’.

What is the Government planning to do?

The Government has announced a $265 million package which ‘partially adopts the recommendations of the Review and builds on them to provide additional support for students from Regional Australia who need to relocate to study’.
While it is not entirely clear from its announcement, it appears that the Government may reject the Dow Review's call for a new independence test that removes special arrangements for regional students. According to media reports (see here and here), the Government intends to extend the special arrangements to include Inner Regional students. Were this to happen, it would appear to meet the demands of Senator Nash’s Bill but would be inconsistent with the Dow Review recommendation to abandon the demarcation between regional and metropolitan students.

The Government will fund the changes through offsets to a number of other measures, including reducing scholarship values, deferrals of programs and the winding up of the Rural Tertiary Hardship Fund.
Legislation introducing these changes will be introduced in the week beginning 19 September and is planned to take effect from 1 January 2012.

In effect, what is now proposed is an extension of the existing compromise between a genuine independence test and an affirmative action measure aimed at addressing the financial difficulties faced by the many young people from regional Australia who must relocate to attend university (and the lower regional participation rates in higher education, more broadly).

Dow's response to the latter objective is that 'the number (though not proportion) of metropolitan young people who relocate for study is greater than the number of regional young people doing so' and that 'the focus should move to considering the additional costs for all students who need to relocate—both city and country students'.

While the special arrangements for regional students may address the concerns of many who must move to attend university, there will be many others in metropolitan areas requiring such assistance who may miss out.