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$1.2 billion in higher education and welfare savings set to pass


On 26 November, the Government introduced the Labor 2013-14 Budget Savings (Measures No. 2) Bill 2015 which proposes amendments affecting student payments, university funding, university fees and the Higher Education Loan Programme (HELP). Similar amendments were proposed in the Labor Government’s 2012–13 Mid-Year Economic and Fiscal Outlook and 2013–14 Budget but were not legislated. The Coalition Government has previously attempted to legislate the measures but the changes were opposed by the Australian Labor Party, the Australian Greens and some crossbench senators. The Labor caucus has now reportedly agreed to support three out of the five measures.

The Labor 2013-14 Budget Savings (Measures No. 2) Bill 2015 proposes five measures:

  • replacing the student start-up scholarships paid to Youth Allowance, Austudy and ABSTUDY recipients in higher education (currently worth $2,050) with an income-contingent loan payment of equivalent value. The student start-up loan would be available on a voluntary basis and would be repayable under similar arrangements to HELP debts, after HELP debts have been repaid

  • introducing an efficiency dividend (a funding cut) for university funding. Funding amounts for the year the Bill receives Royal Assent (and later years) will be adjusted as if the funding cuts of 2 per cent in 2014 and 1.25 per cent in 2015 had applied

  • removing the ten per cent discount on paying university fees up-front

  • removing the five per cent bonus received for voluntary repayment of HELP debts and

  • allowing for interest charges to be applied to certain debts incurred by recipients of student assistance payments (charged at the same rate applied to tax debts).

Labor has agreed to support the replacement of the start-up scholarships with start-up loans, the removal of the discount on paying university fees up-front and the removal of the bonus received for voluntary repayments of HELP debts. Labor remains opposed to the efficiency dividend for universities and the interest rate charges measures. The Greens have criticised Labor's new position as a 'betrayal of students and the sector'.

Previous attempts to legislate these measures

The Coalition Government first attempted to introduce the student start-up loans and interest charge measures in the omnibus Social Services and Other Legislation Amendment Bill 2013. The Opposition and Australian Greens were opposed to these measures and they were removed from that Bill and reintroduced in the Social Services and Other Legislation Amendment (Student Measures) Bill 2014. Despite announcing the measures while in Government, Labor opposed the measures as introduced by the Coalition holding that these savings measures were only intended to fund changes to school funding arrangements (sometimes known as the Gonski reforms - which had been abandoned by the Coalition Government). In dissenting committee reports Labor senators expressed concern about the impact of the start-up loans on students from low socio-economic status backgrounds and argued that the interest charge was overly punitive on students.

The Coalition Government attempted to introduce the efficiency dividend, removal of the fee discount and removal of the voluntary HELP debt repayment bonus measures in the Higher Education Support Amendment (Savings and Other Measures) Bill 2013. Labor again opposed this Bill on the basis that the measures were only intended to fund new school funding arrangements. The Greens were also opposed to these measures.

Savings

Total savings from the Labor 2013-14 Budget Savings (Measures No. 2) Bill 2015 are expected to be $2.15 billion over the forward estimates. Savings from the measures Labor supports total $1.17 billion. However, it should be noted that there are hidden costs associated with converting the scholarship payments to loan arrangements. Outstanding loan amounts that will replace the outlays are shown as assets in the Government’s financial statements, but the stated asset value does not reflect its true value as it is likely that a significant proportion of this debt will not be repaid (as with HELP debt).

Further information

For analysis of the student start-up loans and interest charges measures see: C Ey and M Klapdor, Social Services and Other Legislation Amendment (Student Measures) Bill 2014, Bills digest, 15, 2014–15, Parliamentary Library, Canberra, 2014.

For analysis of the remaining measures see C Ey and C Dow, Higher Education Support Amendment (Savings and Other Measures) Bill 2013, Bills digest, 23, 2013–14, Parliamentary Library, Canberra, 2013.

For further information on the removal of the fee discount and voluntary HELP debt repayment bonus see: L Doyle, ‘And then there were none: HECS discounts’, FlagPost, Parliamentary Library blog, 16 April 2013.

Coauthored with James Griffiths

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