Committee Majority Report

Committee Majority Report

Introduction

1.1        On 17 November 2010, on the motion of Senator the Hon. Stephen Conroy, the Senate referred the Social Security Amendment (Income Support for Regional Students) Bill 2010 (the bill) to the Senate Standing Education, Employment and Workplace Relations Legislation Committee for report by the second sitting day in February 2011.[1]

1.2        The bill, a private senator's bill introduced into the Senate by Senator Fiona Nash on 28 October 2010,[2] seeks to amend the Social Security Act 1991 to provide the same eligibility criteria for independent youth allowance for students residing in the Inner Regional zone of the Australian Standard Geographical Classification – Remoteness Area map as currently apply to students residing in the Outer Regional, Remote and Very Remote zones.

1.3        Senator Nash explained the rationale for the bill as follows:

When the Government made the changes to the eligibility criteria for Independent Youth Allowance, they used the Australian Standard Geographical Classification – Remoteness Area (ASGC – RA) map, for the purposed [sic] of determining the 'regionality' of students. The map is in five zones – Metropolitan, Inner Regional, Outer Regional, Remote and Very Remote. However, this is a flawed basis to determine the 'regionality' of students. The issue for regional students is the distance they have to travel to attend tertiary education and the ASGC-RA map does not adequately reflect that. The issue here is that many students in regional areas simply have no choice but to relocate to attend tertiary education – and that comes as a cost.[3]

Conduct of the inquiry

1.4        Notice of the inquiry was posted on the committee's website and advertised in The Australian newspaper, calling for submissions by 6 December 2010. The committee also directly contacted a number of interested parties, organisations and individuals to notify them of the inquiry and to invite submissions. A total of 214 submissions were received, as listed in Appendix 1.

1.5        A public hearing was held in Canberra on 17 December 2010. Witnesses who appeared before the committee are listed at Appendix 2.

1.6        The committee thanks those who provided submissions to the inquiry and appeared before the committee at the public hearing.

Background

Review of Australian Higher Education (Bradley Review)

1.7        In December 2008, the Review of Australian Higher Education (the Bradley Review) reported on whether the higher education sector is structured, organised and financed to position Australia to compete effectively in the new globalised economy. The Bradley Review examined student income support programs and found that they were not accurately targeting students in most need of assistance. It also found one of the unintended effects was that youth allowance was being accessed by some students living at home in high socio-economic status households.[4] To address these issues, the review recommended a comprehensive reform of student income support programs.

Response to the Bradley Review

1.8        In response to the Bradley Review's recommendations in relation to student income support, the government announced a package of reforms in the 2009–10 Budget.[5] The reforms were aimed at ensuring that only those students who are genuinely independent qualify for assistance and included:

1.9        The Department of Education, Employment and Workplace Relations (DEEWR) outlined for the committee the effect on students of the reform package. Ms Marsha Milliken, Group Manager, Income Support Group, DEEWR, stated that changes to the parental income test and taper rate[9] will improve access for dependent young people from low- to medium-income families and:

...over 100,000 students are expected to benefit from those changes. Many will receive a higher payment than would have previously been applied and many students who have previously considered it necessary to gain eligibility as independents would no longer need to do so.[10]

It is estimated that an additional 67,800 students would qualify for income support and approximately 34,600 will receive a higher rate of payment.[11]

1.10      In relation to the changes to the workforce participation criteria, it was noted that it was about establishing genuine independence. Ms Milliken commented that:

The whole package goes to targeting assistance more closely to young people from lower socioeconomic backgrounds, and the 18 months in two years is an average of working 30 hours per week over 18 months in a two-year period. So you might have a break in that two-year period. It is not necessarily 18 months straight but, on average, 30 hours per week for 18 months out of 24. You could achieve that in 18 months; you might achieve it in two years if you have some breaks.[12]

1.11      DEEWR also informed the committee that by the end of August 2010 around 174,000 students had received at least one payment of under the Student Start-Up Scholarship and over 22,000 students had received a Relocation Scholarship.[13]

1.12      On 31 December 2010, the government reported on the effect of the decrease in the age of independence:

...already more than 2400 students have gained access to Youth Allowance or ABSTUDY for the first time or have received increased student payments...The Government expects 7000 additional students to benefit from the 1 January 2011 change.[14]

Further reform of student support system

1.13      In response to concerns raised by students about changes to the Youth Allowance system, the Hon Julia Gillard, the then Minister for Education, announced on 26 August 2009, that the government would introduce transitional arrangements for those students who had left school in 2008, had taken a gap year in 2009 and who must leave home to attend university. Until 31 December 2010 these people can be assessed under the pre-existing workforce participation criterion for independence and would therefore be not caught up in the transition between the old and the new systems.[15]

1.14      On 1 December 2009, the Minister for Education announced the establishment of the Rural Tertiary Hardship Fund worth $20 million. This fund will help to address the barriers preventing disadvantaged rural and regional students from attending university.[16] A taskforce was established to advise the government on the eligibility criteria for assistance under the fund.[17] The taskforce reported in December 2010. The taskforce proposed two sets of criteria (eligibility and selection criteria) for achieving the purposes of the legislation in a systematic and equitable fashion.[18]

1.15      On 16 March 2010, as a result of negotiations (see paragraph 1.20), special arrangements were implemented for students from outer regional, remote and very remote Australia who are required to live away from home to study. From 1 January 2011, these students are able to access the former elements of the workforce participation criteria provided their parents' income is less than $150,000 per year.[19]

1.16      The government initially proposed to implement the reforms announced in the 2009–10 Budget through the Social Security and Other Legislation Amendment (Income Support for Students) Bill 2009. They were subsequently implemented with the passing of a revised bill, Social Security and Other Legislation Amendment (Income Support for Students) Bill 2009 [No.2]. The history of the bills is discussed below.

Social Security and Other Legislation Amendment (Income Support for Students) Bill 2009

1.17      The Social Security and Other Legislation Amendment (Income Support for Students) Bill 2009 was introduced in the House of Representatives on 10 September 2009. On 17 September 2009, the bill was referred to the Senate Standing Regional, Rural Affairs and Transport References Committee which examined the proposed changes to student income support and broader access issues facing rural and regional students.[20] On 27 October 2009, the committee tabled its report on the bill.[21] Following extensive debate, amendments to the bill were agreed to by the Senate. However, the House of Representatives agreed to only two of the nine amendments made to the bill in the Senate. On 24 November 2009, the Senate voted not to adopt the report from the committee of the whole.[22] The bill remained before the committee of the whole and subsequently lapsed at the end of the 42nd Parliament.

1.18      The Senate amendments rejected by the government sought to:

Social Security and Other Legislation Amendment (Income Support for Students) Bill 2009 [No. 2]

1.19      The Social Security and Other Legislation Amendment (Income Support for Students) Bill 2009 [No. 2] (the revised bill) was introduced into the House of Representatives on 25 November 2009[24] and into the Senate on 30 November 2009.[25] The revised bill incorporated amendments which had been negotiated by the Australian Greens and Senator Xenophon with the government. Differences between the original and the revised bill were as follows:

The compromise

1.20      The revised bill was the result of negotiations undertaken by all parties to achieve a way forward. On 16 March 2010 the Hon Julia Gillard, then Minister for Education, announced:

The Liberal and National Parties agreed to the bill after the Government made changes that will mean students who live away from our major cities and regional centres who have to move will be eligible under the existing independence test. The existing test will be restricted to those who leave home to study, whose parents earn less than $150,000 a year and who live in 'Very Remote', 'Remote' or Outer regional' areas as defined by the Australian Bureau of Statistics.[27]

1.21      However, during consideration of the bill on 17 March 2010, further amendments were made. During the second reading debate, Senator the Hon. Brett Mason spoke about the deal that was agreed:

The bill currently before the Senate represents the result of negotiations undertaken between the government and the coalition. It embodies what I believe is the best deal achievable by all of the parties under the circumstances. This is not to say that this is the best deal that could be. We believe that the government should have been more generous to rural students, and as such I foreshadow that in the committee stage I will move an amendment which will reflect the coalition's view of what a better outcome for rural students would be.[28]

1.22      Senator the Hon. Kim Carr, the then Minister for Innovation, Industry, Science and Research, pointed out that the Coalition intended to move amendments which they knew could not be accepted given the agreement reached. Senator Carr noted the letter from Mr Christopher Pyne MP to the then Deputy Prime Minister on 16 March 2010 detailing the agreement that the Coalition 'would ensure passage of the legislation'. Senator Carr added:

Just as long as you understand, Senator Nash, what those words 'ensure passage' mean. You cannot go outside and say that you were not signed up to the deal, because what we have now is a set of arrangements to give effect to landmark reforms that this government has introduced—that this government has ensured will provide enormous benefit to the people of this country—which will be supported by the coalition...The member for Sturt has committed your votes, in writing, to this proposition.[29]

1.23      During consideration of the revised bill, Senator Mason proposed an amendment to preserve the same workforce participation routes for students in inner regional areas as defined by the ASGC. Senator Mason noted:

...this amendment reflects the coalition's continuing concern for rural students and also, in a sense, reflects that whatever happens there will be anomalies. Whenever lines are drawn on maps there will be anomalies. This amendment will cater for more students and make more funds available for, let us face it, one of the most disadvantaged groups when it comes to access to higher education. That is why the coalition is moving this amendment. But we also move it in the spirit that there is no easy answer here.[30]

1.24      However, this amendment was negatived[31] and is now the substance of Senator Nash's senator's private bill. The Social Security and Other Legislation Amendment (Income Support for Students) Bill 2009 [No. 2] was passed on 18 March 2010 with a number of amendments made by the Senate and amendments made by the House of Representatives at the request of the Senate. The revised bill, with amendments, was passed by the House of Representatives on the same day and was assented to as the Social Security and Other Legislation Amendment (Income Support for Students) Act 2010.[32]

Reference on rural and regional access to education opportunities

1.25      Overlapping with the Rural and Regional Affairs and Transport References Committee's inquiry into the Social Security and Other Legislation Amendment (Income Support for Students) Bill 2009, the References Committee undertook an inquiry into rural and regional access to secondary and tertiary education opportunities which had been referred on 16 June 2009. The report was tabled on 18 December 2009.[33] The key issues for this inquiry were the proposed changes to student income support and in particular the proposed changes to Youth Allowance which the bill outlined above implemented.[34]

Social Security Amendment (Income Support for Regional Students) Bill 2010

1.26      As noted above, Social Security Amendment (Income Support for Regional Students) Bill 2010 was introduced into the Senate by Senator Fiona Nash on 28 October 2010. On 16 November 2010, Senator Nash sought the suspension of standing orders in order for her bill to be considered by the Senate. When this was not agreed[35] she explained:

I certainly tried to use appropriate processes so that this bill could be considered at this time during these sitting weeks. Unfortunately, the government was not of a mind to accommodate that. The reason that it is very important that we debate this bill today is the timeliness of this bill. This bill relates to the changes that the government made earlier in the year to the provisions in the independent youth allowance. We have spent all year with thousands of students across the country who are absolutely desperate because they no longer have access to a funding mechanism that would allow them to start university or further tertiary education next year. That is the reason it is so important for us to debate this bill now, and the government's refusal to do so is really quite extraordinary. The government did not want to debate this bill, and we can only ask why not.[36]

1.27      Unsurprisingly, the agreement reached between the parties to pass the Social Security and Other Legislation Amendment (Income Support for Students) Bill 2009 [No. 2] was raised by the government. In response to this, Senator Nash commented:

...I am going to place on record exactly why that happened. It happened because the government wanted to get rid of the independent youth allowance for every single student across the country; however, the coalition managed to have three of those zones, though the inner regional zone was not among them, kept for inner regional students. The reason we supported that and the legislation's going through at the time, as the Minister for Tertiary Education, Skills, Jobs and Workplace Relations knows full well, is that there were a number of good measures—the start-up scholarships, the relocation scholarships and the changes to the amounts available through the straight-up youth allowance—in that legislation. Far from being obstructionist, we on this side of the chamber were very happy to support those measures. We were not going to stop those good measures going forward for those students who needed them. As Senator Evans will be at pains to point out to you our reasons for supporting those measures at the time, I will tell you what they were. We supported them because the then Minister for Education, Employment and Workplace Relations and current Prime Minister, Julia Gillard, refused to split the bill. She refused to deal with the independent youth allowance measures separately from all of those other measures in the bill that did have some value for those students and that we very much wanted to support. It was purely for political reasons that she would not split that bill. So, when Senator Evans stands up and tries to say, 'Gee, the coalition supported this before,' it is now on record exactly why we did it—we did it because we had no choice. But we now have an opportunity to make sure that we get some fairness for regional students.[37]

1.28      Senator Mason also commented that the deal was made 'to overcome a legislative impasse between the government in the House of Representatives and the coalition and, indeed, the Independent senators here in the Senate'. However, it was 'never, ever intended to last forever, certainly not beyond a federal election'.[38]

1.29      Senator the Hon. Chris Evans responded:

The reality is that Senator Nash, Senator Joyce and every Liberal member voted for the arrangements they seek to now overturn in a public, open and clear agreement with the government...In passing, they do not tend to mention that it is going to cost $300 million or so...[39]

1.30      Senator Xenophon summed up the way forward:

So the issues of concern raised by Senator Nash are matters that have been previously raised. I do not for one moment question the sincerity and genuineness of Senator Nash in relation to this issue, but I think it would be fair to say that no new evidence has been presented since this matter was last debated and the compromise was reached between the opposition and the government that would warrant the suspension of the practices of the Senate. The best way of dealing with this matter is not to suspend those practices but to have it referred for an inquiry.

Having said that, I have had discussions with the minister about specific concerns put to me about potential anomalies with the classifications and boundaries caused by the instrument that has been used. In particular, I appreciate very much the conversation I had with Richard Vickery, the president of the South East Local Government Association in South Australia, earlier today about some of these potential anomalies. For instance a student on one side of the street in Mount Gambier is classified as outer regional, while their neighbour on the other side of the street is classified as inner regional. We are talking about a matter of metres and yet the classification criteria are quite different.

I have had discussions with the minister in relation to this and I can say—and I am sure if I am wrong that the minister will correct me—that the minister has agreed to examine whether the use of the Australian Standard Geographical Classification, the ASGC, is the most appropriate mechanism for determining eligibility for the independent youth allowance. I believe that the best way of resolving this in the longer term is to have that review and to have this bill get the scrutiny it deserves because it is a bill that is important. It is a bill deserving of scrutiny and there are budgetary considerations in relation to it. That is the best way forward, and such a committee ought to report back in the first week of February.[40]

1.31      As noted above, on 17 November 2010 the bill was referred by Senator the Hon. Stephen Conroy to the Education, Employment and Workplace Relations Committee.[41] This was confirmed by the Selection of Bills Committee Report adopted by the Senate on 18 November 2010.[42] The following discussion canvasses issues in relation to students from the Inner Regional zone.

Students from the Inner Regional zone

1.32      The bill before the committee seeks to extend the eligibility criteria for independent Youth Allowance for students residing in the Inner Regional zone of the Australian Standard Geographical Classification (ASGC) – Remoteness Area map. It was noted by many submitters that the reforms to the student support arrangements introduced by the government result in differing treatment of students from inner regional and outer regional locations.[43]

1.33      The Australian Bureau of Statistics (ABS) advised that the ASGC is used for the collection and dissemination of geographically classified statistics noting that '[i]t is an essential reference for understanding the interpreting the geographical contact of statistics published by the ABS'.[44]

1.34      The ASGC contains seven classification structures of which the remoteness structure is one. It was added in 2001 in response to a request from stakeholders for a standard classification which defines remoteness as a characteristic of an area. It is this structure that leads to the break-up of Australia into six remoteness classes: Major Cities, Inner Regional, Outer Regional, Remote, Very Remote and Migratory. The remoteness structure is based on the Accessibility/Remoteness Index of Australia (ARIA+). The original version of ARIA was commissioned by the then Commonwealth Department of Health and Aged Care in 1997. It was designed, constructed and is maintained by the National Centre for the Social Applications of Geographical Information Systems (GISCA), part of the University of Adelaide. The ABS interprets ARIA+ values to create the remoteness structure.[45]

1.35      ARIA is a purely geographical approach to defining remoteness. It does not take account of socio-economic status (SES), rurality or population size. The ABS advised that:

As a comparable index of remoteness that covers the whole of Australia, ARIA+ provides a measure of remoteness that is suitable for a broad range of applications including assisting in service planning, demographic analysis and resource allocation.[46]

1.36      The ABS told the committee that the main use of the classification is in the health area where, for example, allowances paid to medical practitioners are based on ARIA classifications. ABS reported that the classification is:

...used for a variety of purposes, and certainly departments have talked to us about what the classification tries to do and we have provided that advice. Ultimately, the decisions for these things are of course with the department.[47]

1.37      At Senate Estimates in October 2010, Ms Lisa Paul, Secretary DEEWR, explained the decision to use the ASGC map:

This [ASGC map] is based on ARIA, which is a health based indicator but it seems to be one of the most robust indicators of the differences between regions. It is one of the categorisations that we use fairly regularly...it is still the best approach to regional demarcation that we have, and it is the one that is based on a notion of distance from the centre.[48]

1.38      In response to further questioning from Senator Nash, the Minister added:

...if your point is: is it imperfect–it probably is. Are there a hundred other different ways to calculate rural and regional–yes. Every department and act seems to do it in a different way. If you have got the perfect solution for this, I would love to hear it, but I think that the department, as a result of the discussions chose this as an established model that seems to be based on reasonable grounds...[49]

1.39      The committee majority understands the frustration for some students when eligibility to allowances is based on residence in a defined geographical zone. For example, Miss Sarah Dickens told the committee:

We live 150 metres away from White Avenue, which is the deciding border for whether you are in a regional or outer regional area. If we lived 200 metres to the left, we would qualify for youth allowance by taking the gap year, but without it we are not going to be able to qualify.[50]

1.40      However, witnesses also recognised that moving the boundaries is likely to shift the problem on to others.[51] Some witnesses disagreed with the use of the ASGC in relation to youth allowance and suggested that the eligibility criteria should be based solely on the need to relocate to study.[52]

1.41      ABS advised the committee that a new Australian Statistical Geography Standard (ASGS) Remoteness Structure is being developed for the 2011 Census. Consequently, a new remoteness structure will be released by the end of 2012. It is anticipated that the new structure will result in less instances where the boundary between Inner and Outer Regional areas bisects towns.[53]

1.42      DEEWR commented on the rationale behind the differing criteria for students in the inner regional zone:

...those arrangements were reached prior to the passage of the legislation in March in the context of the broader package of student income support reforms which the government had designed to be a budget-neutral package. In order to afford those changes, there were offsetting changes to the amount of money in the Student Start-up Scholarship. So it was within the context of a broader package.[54]

1.43      DEEWR also outlined to the committee the criteria for students in the Inner Regional zone to access income support:

Young people in inner regional locations can qualify for an away-from-home rate of student income support which is the same amount that is paid to independent students—young people who are attracting at the maximum level. It is subject to the parental income test and family income and assets test. Young people who relocate from inner regional locations to study and who attract the dependent rate of youth allowance will also attract the relocation scholarship of $4,000...

as well as the student start-up scholarship, whatever the amount of youth allowance they were eligible to receive as a dependent student. So young people in inner regional locations can attract youth allowance and associated scholarship payments where they need to relocate to study.[55]

1.44      In addition, students in the Inner Regional zone may be eligible for assistance under the Rural Tertiary Hardship Fund as 'it is not restricted only to income support recipients'.[56] Ms Milliken explained further:

The Rural Tertiary Hardship Fund is not linked as directly as your question might suggest as to whether you are an independent or a dependant recipient of income support. There is a range of criteria. Location is one of them, because it is intended for rural and regional students, as well as the type of course, the level of study and a financial hardship measurement. But it is not dependent on whether or not you are receiving youth allowance.[57]

1.45      The committee majority notes that the government has committed to a review of the student income support reforms[58] which will include the use of the Australian Standard Geographical Classification.[59]

Addressing the effect of the recent floods

1.46      The issue of flooding affecting the ability for students to comply with the 30 hours per week element of the workforce participation criterion was raised with the committee.[60]

1.47      The committee majority notes that the extensive flooding across Australia could temporarily affect the ability of some students to access employment in order to meet the workforce participation criterion. The committee majority is of the view that this temporary inability should not undermine a students' eligibility. The committee majority notes advice from DEEWR that the department is considering a range of responses to ensure individuals are not disadvantaged as a result of the flooding in December 2010 and January 2011.[61]

Recommendation 1

1.48      The committee majority recommends that as a matter of urgency the Department of Education, Employment and Workplace Relations finalise responses to ensure that regional students who are temporarily unable to meet the workforce participation criterion because of the recent flooding are not precluded from accessing Youth Allowance.

Conclusion

1.49      The government is committed to assisting students in regional and rural Australia. In March 2010, after extensive consultations with the Coalition and cross-benchers, the parliament passed the Social Security and Other Legislation Amendment (Income Support for Students) Bill 2009 [No. 2] which contained a package of budget neutral reforms to ensure a fairer system for more students and increased support for those who need it most. Through the package of reforms, the government has expanded the reach of support and income support for students across the board.

1.50      The reforms were necessary. They are already underway and students are benefiting. This was acknowledged by witnesses.[62] For example, over 100,000 students will benefit from changes to the parental income test and taper rates. The committee majority notes that there has been a substantial take-up of the scholarships which became available from April 2010. DEEWR reported that by the end of August almost 174,000 students had received a Student Start-up Scholarship with almost 38,000 receiving one payment of $650 and over 136,000 receiving two payments. Also as at the end of August 2010, 14,000 students had received the $4,000 Relocation Scholarship and over 8,000 had received the $1,000 scholarship.[63]

1.51      In addition, the government agreed to set up the Rural and Regional Taskforce to investigate issues of participation and attainment by regional students in tertiary education and to report by the end of 2010. At the committee's hearing on 17 December 2010, DEEWR advised that the government has accepted the recommendations of the taskforce.[64] The Rural Tertiary Hardship Fund will assist young people in rural and regional areas who are facing particular financial hardship to attend university. Under the $20 million fund, students from areas other than major capital cities, commencing a bachelor degree in 2011 and experiencing severe financial hardship, will be able to apply for a $3,000 one-off grant to assist in undertaking their university degree.[65]

1.52      The committee majority notes advice that the bill would increase public expenditure by approximately $272 million to 2013–14.[66] What the committee did not hear from witnesses was an agreed position on how to fund it. Some thought it should just be funded as those students will pay the extra money in taxes.[67] The Explanatory Memorandum suggested it should be funded from the Education Investment Fund,[68] and some agreed[69] but many disagreed with this position.[70] Some suggested that the allowance be extended by reducing the amount of the allowance for everyone[71] but others did not agree.[72]

1.53      Regarding the ASGC remoteness area map mechanism, the committee majority notes that if the government moves the line then it is likely that the problem will just be shifted elsewhere on to others.[73] This was acknowledged by witnesses.[74] Again the committee heard no agreed way of addressing this. The committee majority notes the work underway in the ABS on the ASGS.

1.54      The committee majority notes the government has recognised that with such a comprehensive package of reforms a wide-ranging review of their operation is necessary. To this end the government has committed to undertake a comprehensive review of the effects of the student income support reforms. The review will have a particular focus on rural and regional students and be completed by 30 June 2012.[75] It will include the use of the Australian Standard Geographical Classification.[76] This was supported by witnesses.[77] The committee majority notes the contribution from Ms Maureen Campbell, Group Representative, Monaro Area, Country Women's Association of NSW, who told the committee:

Whatever time it takes, it has got to be right. There is no point in rushing something through if it is not going to end up being the best product in the end.[78]

1.55      The committee majority awaits the outcome of this review with interest and in these circumstances believes that the bill should not proceed.

Recommendation 2

1.56      The committee majority recommends that the bill not proceed.

Senator Gavin Marshall

Chair

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