Higher education financial support measures
2.1
As explained in chapter one, the bill contains three measures that
relate to higher education financial support:
-
establishes a new minimum repayment threshold (schedule 1);
-
updates the indexation method used for HELP debt (schedule 2);
and
-
removes the HECS-HELP benefit scheme (schedule 3).
2.2
Taken together, these measures will save Australian taxpayers nearly $80 million
over the forward estimates. This chapter provides an overview of the submitter
views on the three measures.
Schedule 1: Minimum repayment income for HELP debts
2.3
Schedule 1 proposes establishing a new minimum repayment threshold for
HELP debts of 2 per cent when a person's income reaches $51 957 in the
2018-19 income year.[1]
In the 2016-17 income year, incomes below $54 869 do not attract
compulsory repayments. Incomes above $54 869 attract a repayment rate
ranging from four per cent through to eight per cent for incomes
above $101 900.[2]
Views on schedule 1
2.4
Universities Australia reported to the committee that they support a
'moderate reduction in the minimum repayment income' aimed at assuring the
viability and sustainability of the HELP scheme.[3]
2.5
Several submitters, such as the Public Health Association of Australia,
the Council of Academic Public Health Institutions Australia and the Australia
Institute, expressed concerns about the measure potentially discouraging people
from entering (or re-entering) the workforce, particularly in lower paying
professions.[4]
2.6
The committee notes that the question of lower minimum repayment incomes
for HELP debts was addressed as part of the Senate Education and Employment Legislation
Committee's consideration of the Higher Education and Research Reform Amendment
Bill 2014 [Provisions]. In its report on the bill, that committee concluded
that it was:
...satisfied that the lower two per cent repayment rate for
those above the new minimum repayment threshold will ensure that low-income
graduates will not experience a large reduction in their disposable income,
while supporting the sustainability of HELP.[5]
Schedule 2: Indexation of higher education support amounts
2.7
Schedule 2 of the bill changes the index for the amounts that are
indexed annually under the Higher Education Support Act 2003, from the
Higher Education Grants Index[6]
(HEGI) to the Consumer Price Index (CPI), with effect from 1 January 2018.[7]
2.8
The current HEGI was announced in the 2009–10 Australian Government
Budget. It was a key recommendation of the 2008 Bradley Review into the
Australian Higher Education sector. It was explained by Universities Australia
that 'the HEGI is aimed squarely at covering university costs, which do not
move in lock step with CPI. In some years the HEGI will be higher than CPI,
others lower'.[8]
The HEGI was higher than CPI between 2012 and 2014, but lower in 2015 and 2016.
2.9
The Treasurer explained that this measure would 'streamline and simplify
indexation rates for government programs'.[9]
Views on schedule 2
2.10
The Australia Institute submitted that changing the index would mean
'real reductions in the resources committed to higher education.'[10]
The National Union of Students expressed concerns that any such funding
reduction would eventually be passed on to students.[11]
2.11
Universities Australia suggested it was difficult to predict how a
change in indexation would play out over the medium term, and thus called for a
review in three years' time to assess the impacts of this measure.[12]
Schedule 3: Removal of the HECS-HELP benefit
2.12
Schedule 3 to the bill discontinues the HECS-HELP benefit from 1 July
2017. The HECS-HELP benefit operates as a deduction from the HECS-HELP debt of
graduates in certain fields employed in related occupations. The benefit
provides 'an incentive for graduates of particular courses to take up related
occupations or work in specified locations by reducing their compulsory HELP
repayments'.[13]
2.13
The HECS-HELP benefit was introduced as part of the 2008-09 Budget, and
was designed to reduce HECS-HELP repayments by around $1,800 a year for early
childhood education graduates and $1,700 a year for certain other occupations.
Since 2008, the HECS-HELP benefit has been expanded to cover graduates employed
in other areas of identified need, including mathematics, science related
occupations, teaching and nursing.[14]
Views on schedule 3
2.14
The National Union of Students observed that there remain shortages of
skilled graduates in certain occupations, and the bill does not propose to
introduce any alternative measures to address this issue.[15]
2.15
However, Universities Australia supported this measure, pointing to the
HECS-HELP benefit's 'limited success in influencing study choice selection and
increasing demand for particular occupations.'[16]
Committee view
2.16
Supporting the development of a highly skilled workforce that meets the
requirements of the 21st century labour market is a key objective of
the Australian Government. The changes proposed in this schedule support
the ongoing viability of the government supported higher education sector.
Changing the repayment rate threshold for HELP debts will ensure that future
students will have access to quality higher education services. Noting the lack
of evidence on the efficacy of the HECS-HELP benefit, the committee considers
it appropriate that the benefit cease.
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