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
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