Chapter 1 - Introduction and background to the inquiry
1.1
The Senate referred this inquiry into student income
support to the Employment, Workplace Relations and Education References
Committee on 11 March 2004
with a reporting date of 25 November
2004. The committee tabled an interim report on 20 October 2004, following the prorogation of
Parliament, advising of a new reporting date, probably in May 2005, subject to
the committee being reconstituted in the 41st parliament. On 8 December 2004, the reporting date was
extended to 16 June 2005.
1.2
The committee was asked to examine and report on the
following matters:
- current measures for student income support,
including Youth Allowance, Austudy and ABSTUDY, with particular reference to
the adequacy of these payments, the age of independence, the parental income
test threshold, and the ineligibility of Austudy recipients for Rent Assistance;
- the effect of income support measures on
students and their families, with reference to the increasing cost of higher
education, students being forced to work longer hours to support themselves,
and the closure of the Student Financial Supplement Scheme;
- the importance of adequate income support
measures in achieving equitable access to education, especially for students
from disadvantaged backgrounds, and improving access to education; and
- alternative student income support measures.
Conduct of the inquiry
1.3
The inquiry was advertised in the Australian, and submissions were invited from a wide range of
interest groups, organisations and individuals with an interest in student
income support issues. Relevant Commonwealth
and state and territory ministers were also invited to make submissions. A
total of 140 submissions were received, predominantly from student
organisations, vice-chancellors and other senior university administrators,
academics and individual students. Submissions were received from the
Department of Family and Community Service (FaCS) and the Department of
Education, Science and Training (DEST). The South Australian and Queensland
governments also made submissions.
1.4
The committee conducted public hearings in Melbourne,
Adelaide and Canberra
in April and May 2005. The committee notes that
mid-way through the inquiry, in late October 2004, responsibility for income
support programs, including Youth Allowance, Austudy and other minor payments
to students, moved from FaCS to DEST. Responsibility for Rent Assistance and
the Family Tax Benefit stayed with FaCS. All income support payments to
students continued to be delivered by Centrelink. In light of this
administrative change, and to avoid any confusion, officers from DEST, FaCS and
Centrelink agreed to appear together before the committee at the public hearing
in Canberra.
Policy neglect
1.5
Most of the evidence to this inquiry showed
conclusively that the student income support system has operated in a policy
vacuum for too long, and is showing clear signs of policy neglect and poor
service delivery. Many witnesses conveyed a strong view that the drift in student
income support policy is not only unacceptable but has become an important
factor contributing to the financial hardship of many students. A consistent
theme in the submissions is that the income support system has remained largely
unchanged during a period which has seen a radical shift in the way higher
education is delivered across Australia's
university sector. One of the consequences of this neglect is that the increasing
financial hardship among the student population is not included on the national
policy agenda. Students and their representative bodies have struggled to have
their voices heard and their worsening financial situation accepted as a
serious public policy issue, but to no avail.
1.6
The past decade has seen a major shift in the profile
of students, to the extent that the level of income support does not even come
close to providing students with a decent living wage to cover the basic cost
of rent, food, bills and transport. The level of support provided by Youth
Allowance, Austudy and ABSTUDY has been outstripped by rising living costs and the
cost of higher education more generally, as well as by spiralling student debt.
Many students receive a level of income support which leaves them between 30
and 50 per cent below the poverty line. How students are meant to survive each
week on such a 'pittance', as academics have described it,[1] was a question which students raised
with the committee at every available opportunity. The committee finds that their
evidence, and that of many university administrators, amounted to a collective
plea for the government to reform the income support system to relieve the
increasing financial strain on students.
1.7
The committee was struck by the consistency and force
of the recommendations made by student associations and university administrators
across the range of issues addressed in its terms of reference. The committee
interprets this response as conclusive evidence that the income support system
is in a serious state of disrepair and that nothing short of a major policy
review and overhaul of the system is required. There was broad agreement among
the witnesses that the base rate of payment should be increased to a level which
is at least comparable with the Henderson
poverty line. The committee accepts that the Henderson
poverty line was raised in evidence most often as a benchmark to demonstrate
the low level of financial support which students receive compared with other
categories of social security support. The committee notes that a renewed
commitment by the Government to adequately fund the student income support
system, unlikely though this may seem in the current political climate, would require
a significant and sustained financial commitment by the Commonwealth. The
committee accepts that a strong case was made for the level of financial
assistance for students to be increased to an acceptable level, yet it believes
that any proposals to substantially increase Commonwealth expenditure in this
area should be fully costed and assessed for their financial impact.
1.8
The committee accepts the argument of the Student Financial
Advisers Network that the various income support schemes are of diminishing
relevance to changing student and institutional profiles. The committee heard
from a number of witnesses that the Department of Family and Community Services
and Centrelink have become obsessed with demonstrating administrative
efficiency and improving client-customer service instead of monitoring and
investigating the effectiveness of the various income support schemes. It was
as if student income support had disappeared down a black policy hole. Yet the
committee received almost no evidence on why the Government has ignored student
income support. It is left to the committee to speculate in this area. The
committee believes that the decline in funding for students over the past
decade can be attributed principally to changes to funding arrangements for
higher education and the advent of the 'entrepreneurial' university and the
development of a culture and ethos of managerialism. The effect of these
changes on students was examined by the committee in its 2001 report, Universities in Crisis. The report found
that students were paying more for their education at the same time that the level
of financial support that they were being offered had declined. This had
resulted in the increasing debt burden and paid work commitments of full-time
students.[2]
1.9
While the income support system underwent significant change
in 1998 with the introduction of Youth Allowance, more stringent eligibility
criteria, harsher parental means testing and an increase in the age of
independence to 25 years, the evidence strongly suggests that these and other changes
have not kept pace with the fluidity of university structures and the changing
profile of students. It was pointed out that many of the regulations governing income
support schemes have become increasingly irrelevant and confusing to students.[3] One submission noted that, despite its
supposed simplicity, Youth Allowance is one of the most complex payment structures
in the social security system, resulting in a high level of confusion among
students.[4] A consistent theme raised in
evidence was that while the income support schemes run with relative efficiency
from the point of view of public administration, students experience a range of
difficulties in their dealings with Centrelink. This has resulted in added frustration,
financial inconvenience and students under the age of 25 accounting for an
unusually high percentage of all administrative and activity breaches imposed
by Centrelink.
1.10
It is significant that a House of Representatives committee
inquiry into student financial assistance in 1991 found that it was difficult to
measure the effectiveness and efficiency of the Austudy program. The report of
that inquiry, which became known as the Price Report, was unable to accept the
then Department of Employment, Education and Training's (DEET) subjective assessment
of Austudy. The data required for the committee to form an objective assessment
of the program was not available. Nor could it accept that the Parliament had
been allocating hundreds of millions of dollars each year to a program for
which few objective measures of effectiveness were available.[5] The report recommended that the
government develop clear policy objectives for student financial assistance
programs and that DEET develop performance indicators consistent with these
objectives and use them to assess the overall effectiveness of the programs.[6] The committee notes that the recommendations
from this report have never been implemented or even responded to by
Government.
Major issues
1.11
The committee believes that the concerns aired more
than a decade ago apply with equal force to current circumstances. It became
clear during the inquiry that missing from the current debate on student
finances is a sense of what the purpose of the income support system is, and
how its performance and effectiveness are measured and reviewed by the
Department of Family and Community Services and Centrelink. Part of the problem
relates to the absence of disaggregated data on the proportion of students receiving
less than the full amount of the Youth Allowance and the number of students
receiving Youth Allowance who were assessed as either dependent or independent.
It has been left to Dr Bob
Birrell and others at the Centre for
Population and Urban Research at Monash
University to analyse data made
available to them by the department and Centrelink. The committee notes that their
research findings led them to publicly advocate reform of the Youth Allowance
eligibility criteria to improve access to higher education amongst lower middle
and working class families. Their findings have been studiously ignored by the
Government.
1.12
A critical factor in the government's continuing neglect
of the student income support system is the shift away from public funding of
higher education and the introduction of policies which reflect a 'user-pays'
philosophy. The committee had to look no further than the closure of the
Student Financial Supplement and Educational Textbook Subsidy Schemes and voluntary
student unionism (VSU) legislation for evidence that Government cost-shifting
has resulted in students bearing more of the cost of their education than
before. Although the VSU legislation was introduced in the Parliament mid-way through
the inquiry, witnesses raised concerns about its likely adverse effect on
student finances. There was widespread concern that the legislation will erode
the capacity of universities and student bodies to deliver essential services
to financially struggling students.
1.13
The extent of student financial hardship is apparent by
the number of students forced to work long hours who become trapped in cycles
of financial insecurity and poverty. Anecdotal and empirical evidence shows
that the level of payment under Youth Allowance, Austudy and ABSTUDY is inadequate
and that the system operates with various disincentives, inconsistencies and
anomalies which penalise students who are most in need of financial assistance.
Students from households with low to modest incomes, from regional and remote
areas and indigenous students are hardest hit by these systemic failings. The
committee believes that while poorer students are the most deserving of Commonwealth
financial support, the current system conspires against them. The committee is
particularly concerned by evidence that the current system discourages young
people from entering university at a time when the government is trying to
maximise the skill level of the workforce.
1.14
The harshness of the eligibility criteria relating to
the age of independence, the parental income test threshold and the
ineligibility of recipients of Austudy for Rent Assistance are of greatest
concern to students. Anomalies regarding the treatment of scholarships as
taxable income and the level of income support available for postgraduate
students are also a concern. Student bodies told the committee that Centrelink
officers are unable to exercise discretion to ensure fair outcomes for students
who face exceptional circumstances. This often results in unintended
consequences for students and their families. The committee is concerned that students
are penalised if they have to move away from home to study a particular course which
is not available at their local university because their Youth Allowance
payment is means tested. Similar financial penalties apply to students who, as
a result of an illness or injury, cross over an arbitrary age threshold and are
moved from Youth Allowance to Austudy, resulting in the loss of Rent Assistance.
1.15
The committee accepts, and Government senators emphasise,
that there has been a significant rise in the number of people participating in
non-compulsory education and combining work with study. The Department of
Family and Community Services submission emphasised that young people who
combine work with study are contributing to a more educated and skilled
workforce.[7] Yet other evidence mounted
a serious challenge to the official line. This is because changes to the higher
education system introduced by the Coalition Government have made it harder for
many school leavers to gain access to financial assistance while studying. They
have also produced disincentives for young people who are contemplating
enrolling in a university.[8]
1.16
The committee finds that the rules governing the
receipt of Youth Allowance and Austudy produce strong disincentives for
students who want to work more than one day a week. The income students receive
from the limited part-time work they can undertake before they encounter these
disincentives leaves them financially vulnerable.[9] A survey of undergraduate student
finances in 2000 by the Australian Vice-Chancellors' Committee found that the income
support system places students in a difficult financial bind. The system forces
students into more hours of paid employment because the level of income support
is inadequate, yet the amount of money which students can earn before their
Centrelink payment is reduced does not meet the financial shortfall created by
the low level of income support. Students have been protesting against the
effect of this anomaly for many years and have been advocating major reform of
the system. Yet the Government seems oblivious to their concerns. It has not
made any attempts to introduce reforms which students and universities have viewed
as necessary. While the topic of student financial assistance is revisited
occasionally by governments, little has ever been done to improve the lot of
'financially strapped' students.[10]
1.17
The low level of income support forces students to work
longer hours to survive. Full-time students now resemble part-time students in
their study habits and how they interact with students and teaching staff. There
is general agreement among students and academic experts that Government measures
are needed to arrest the deteriorating state of student finances. Without
Government intervention, a combined weekly total of 60 hours of full-time study
and part-time work will soon become the norm for a majority of students. The committee
believes this is an unacceptable scenario for students to have to face. Working
long hours not only has a detrimental effect on students' academic results and reduces
their level of engagement with university life. It also has an economic effect
because it delays course completion and entry of skilled young people into the
workforce. The committee believes that the evidence presents a clear policy
challenge for the government. The income support system should be reformed to
reverse the trend of full-time students working longer hours in part-time work.
1.18
The committee does not doubt, and Government senators
strongly believe, that many students who increasingly combine work with study are
able to strike a balance between the two activities. Students can reap financial
and social benefits through paid employment and perhaps lay the groundwork for
a smooth transition from university to full-time employment upon the completion
of their course. Full-time students who successfully negotiate work and study
are in the minority, however, and generally come from more affluent families. The
committee is mainly concerned by mounting evidence that students from
households with low to modest incomes experience some form of financial
hardship whilst at university. Students from the most financially disadvantaged
backgrounds are almost certain to experience extreme hardship. The committee concludes
that the relationship between paid employment and study is one of the most important
policy issues facing the higher education sector. Providing adequate income
support will ensure that work does not interfere unduly with attendance at
lectures and tutorials, good study habits and academic performance.
Chapter summaries
1.19
The report deals with these main themes in the
following three chapters:
- Chapter 2 provides an overview of current income
support arrangements and examines wider concerns regarding the policy framework
which underpins the income support system. Issues considered include the
collection and analysis of official data on the effectiveness of income support
payments, Centrelink's service delivery and customer relations, and the extent
to which current income support measures encourage access to higher education,
especially for students from disadvantaged backgrounds and indigenous students;
- Chapter 3 addresses the adequacy of student
income support measures against a background of rising student poverty;
critically evaluates the main eligibility criteria which apply to Youth
Allowance, Austudy and ABSTUDY payments; and examines issues affecting
postgraduate students and other anomalies in the system. It also examines
briefly alternative measures for student income support, including proposals to
reform the system to enable students to receive a higher level of financial support
for the duration of their studies; and
- Chapter 4 examines the effect of income support
measures on students and their families. It looks closely at the trend of
students spending more time in paid employment and how this adversely effects academic
achievement and student engagement with university. It also looks at the impact
on students of the rising cost of higher education and the extra financial burden
resulting from the closure of certain financial assistance schemes and the
Government's proposed voluntary student unionism legislation.
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