Chapter One
Introduction
Background
1.1
The Social Security and Other Legislation Amendment (Income Support for
Students) Bill 2009 (the bill) was introduced into the House of Representatives
on 10 September 2009. The bill was introduced into the Senate on 17 September
2009. On the same day, the Selection of Bills Committee referred the provisions
of the bill to the Senate Standing Committee on Rural and Regional Affairs and
Transport References Committee for inquiry and report by 26 October 2009.[1]
Conduct of the inquiry
1.2
The committee advertised the inquiry in The Australian on
Wednesday, 23 September 2009. The committee also wrote directly to a number of
key stakeholder groups, state and federal government departments and agencies,
and peak bodies inviting submissions.
1.3
The committee received 50 submissions (see Appendix 1). The committee
decided that submissions and evidence to the committee's inquiry into Rural and
Regional Access to Secondary and Tertiary Education Opportunities, in as far as
they are relevant, will be considered as submissions and evidence to the
inquiry into the Social Security and Other Legislation Amendment (Income
Support for Students) Bill 2009.
1.4
The committee held a public hearing in Canberra on 13 October 2009 and
heard evidence from a number of witnesses, including government departments and
agencies, key stakeholder groups and educational institutions. (See Appendix 2
for a list of witnesses).
1.5
All evidence provided to the committee is available on the parliament's
homepage at http://www.aph.gov.au.
1.6
The committee appreciates the time and work of all those who provided
oral and written submissions to the inquiry. Their work has assisted the
committee considerably in its inquiry.
Purpose of the bill
1.7
The bill amends the Social Security Act 1991 (the Act), the
Higher Education Support Act 2003, the Military Rehabilitation and
Compensation Act 2004, the Social Security (Administration) Act 1999 and
the Veterans' Entitlements Act 1986 to make wide-ranging changes to
income support arrangements for students. The bill implements a number of
recommendations made by the Review of Australian Higher Education
conducted by Emeritus Professor Denise Bradley, AC.[2]
In particular, the bill:
-
changes the criteria upon which a Youth Allowance recipient is
considered to be 'independent';
-
makes major changes to means testing for payments to students and
youth from 1 January 2010, and increases the personal income-free area for Youth
Allowance and Austudy students, and Australian Apprentices, from 1 July 2012;
-
provides for new scholarships for students on income support; and
-
exempts merit and equity based scholarships from the income test
under social security and veterans' entitlements legislation.[3]
The Review of Australian Higher Education
1.8
In the second reading speech for the bill, the Minister noted the
measures in the bill were part of the government's reforms to higher education
which are aimed at two policy objectives:
-
that by 2025, 40 per cent of 25- to 34-year-olds will hold a
bachelor degree or higher; and
-
that by 2020, 20 per cent of higher education enrolments at
undergraduate level should be people from low socio-economic status
backgrounds.
1.9
The measures in the bill contain the government's response to the
recommendations in the Review of Higher Education in Australia (the Bradley
Review) in relation to student income support. The Bradley review found:
Current levels of income support are inadequate to support
the participation and success of students from low socio-economic backgrounds.
Reforms to, and better targeting of, income support should enable such students
to attain better qualifications in a more timely fashion and are urgently
required. This will require significant reforms to elements of Australia's
welfare and income support system.[4]
1.10
Specifically, the Bradley Review recommended that the government
introduce the following package of reforms to the student income support
system:
-
Increase threshold for Parental Income Test to $42,559,
consistent with the value used for the Family Tax Benefit.
-
Change the indexation rate for the Parental Income Test to be
consistent with the Family Tax Benefit index, a combination of CPI and Male
Total Average Weekly Earnings.
-
Change the Parental Income Test taper rate for reduction in
benefits for each child in the family on income support benefits to 20 per
cent.
-
Apply the new taper rate only once as is the case for the Family
Tax Benefit rather than for every child in the family receiving benefits.
-
Increase the personal income threshold for Youth Allowance and
Austudy to $400 per fortnight.
-
Change the indexation of the personal income threshold from zero
to a wage basis (for example, Male Total Average Weekly Earnings).
-
Reduce the age of independence for Austudy from 25 to 22 years.
-
Remove the workforce participation criteria for independence of:
-
Introduce 'grandfathering' arrangements for existing students who
have already satisfied these criteria for independence.
-
Extend eligibility for benefits to students enrolled in all Masters
by coursework programs.
-
Continue and enhance the Commonwealth Scholarships program by
providing benefits to all eligible students on Austudy or Youth Allowance for
education costs and accommodation costs (for those who need to leave home) and
by transferring responsibility for the payment of benefits to Centrelink.
Principal measures of the bill
1.11
As mentioned above, there are four principal measures contained in the
bill.[5]
Changes to criteria upon which
recipient is considered to be 'independent'
1.12
The bill contains changes to the criteria upon which a Youth Allowance
recipient is considered to be 'independent'. Independent Youth Allowance
recipients are entitled to the maximum rate of payment and are not subject to a
test for parental income.
1.13
The age at which a person is automatically deemed independent will be
changed from 25 to 22 years. It is intended that the change will be phased in,
so that the age of independence will be reduced to 24 years in 2010, 23 years
in 2011 and 22 years in 2012.
1.14
From 1 January 2010, a Youth Allowance claimant will no longer be able
to attain independence through part-time employment or wages. No person who is
currently independent because of the current workforce participation tests will
be affected by the change. In addition, students who completed secondary school
in 2008, did not study in 2009, commenced university in 2010 (and are required
to live away from home) will not be affected.
Changes to means testing for
payments to students and youth
1.15
It is proposed that, from 1 January 2010, the annual parental income
threshold (for non-independent Youth Allowance recipients to get the maximum
rate of Youth Allowance) will increase from $32,800 to $44,165.
1.16
The parental income reduction for Youth Allowance will also be changed
from a taper rate of 25 per cent per person, to a taper of 20 per cent
apportioned between the members of the family who are subject to the parental
income test. This change will reduce the effect of parental income on a Youth
Allowance recipient, particularly where the same parental income applies to
multiple recipients in a family. It will also mean that the point at which a
person's parental income disentitles them to Youth Allowance will be raised
substantially.
1.17
The Government estimates that these changes to the parental income test
will mean that an additional 67,800 students will qualify for income support
and approximately 34,600 will receive a higher rate of payment.
1.18
From 1 July 2012, the personal, income-free area for Youth Allowance and
Austudy students and Australian Apprentices will increase from $236 to $400 per
fortnight. This means that students and Australian Apprentices will be able to
earn up $400 per fortnight without having their payments reduced. The increased
income-free area will be indexed to the CPI and the Government estimates that
61,480 students will receive a higher rate of income support payment on the
implementation of this measure.
New scholarships for students on
income support
1.19
It is proposed that all students receiving Youth Allowance or Austudy
while undertaking an approved higher education course will receive a student Start-up
Scholarship. In 2010, the scholarship will be $1,127 for each six months of
study – a total of $2,254 for the year. The Government has indicated that the
student Start-up Scholarship payment will effectively increase the value of
student income support by $86.77 per fortnight. An estimated 146,600 students
will receive a student Start-up Scholarship in 2010.
1.20
In addition to the student Start-up Scholarship payment, some students
receiving student income support will receive a relocation scholarship to
assist with the cost of relocating for study. The scholarship will be $4,000
for a student's first year, and then $1,000 per year, in subsequent years, up
to four years.[6]
The Government estimates that 14,200 students will receive a relocation
scholarship payment in 2010.
Exempting merit and equity based
scholarships from the income test under social security and veterans'
entitlements legislation
1.21
Merit and equity based scholarships will be exempt to a threshold of
$6,762 per year, and the threshold will be indexed. The Government anticipates
that this measure will increase the entitlement to income support for students
receiving scholarships, and provide an incentive to individuals and
organisations to fund scholarships for students. It also estimates that this
measure will result in approximately 3,500 students receiving a higher rate of
income support payment.
1.22
The bill also makes amendments to the social security law and veterans'
entitlements law to facilitate the measures and make amendments of a technical
nature.
Financial impact
1.23
The explanatory memorandum to the bill expresses the financial impact of
the measures to be introduced in the following table:
|
FINANCIAL IMPACT |
|
Year |
Expense ($ million) |
|
2009-10 |
85.7 |
|
2010-11 |
-72.8 |
|
2011-12 |
-127.5 |
|
2012-13 |
8.1 |
|
Total |
-106.5 |
1.24
The explanatory memorandum also notes that the financial impact
statement does not include the extension of Youth Allowance and Austudy
payments to students undertaking Masters programs by coursework. It is proposed
that this particular measure will be enacted by legislative instrument and does
not form part of this bill. It is estimated that this measure will produce an
estimated expense of $72.7 million over the period of the financial impact
statement.
Comment of Senate Scrutiny of Bills Committee
1.25
The Senate Standing Committee for the Scrutiny of Bills (Scrutiny
committee) has a standing brief to consider all bills as to whether they
trespass unduly on personal rights and liberties, and related matters.
1.26
The Scrutiny committee commented on the following issues in relation to
the bill:
Delayed commencement
Subclause 2(1)
Item 4 in the table to subclause 2(1) provides that Divisions
3 and 4 of Part 2 of Schedule 1 commence on 1 July 2012. Where there is a delay
in commencement of longer than six months, the Committee expects that the
explanatory memorandum to the bill will provide an explanation, in accordance
with paragraph 19 of Drafting Direction No 1.3.
In this case, the explanatory memorandum does not provide an
explanation for the delayed commencement. The Committee seeks the Minister's
advice on the reasons for the delayed commencement and requests that
these reasons be included in the explanatory memorandum to assist readers
and those affected by the legislation.
Pending the Minister's advice,
the Committee draws Senators' attention to the provisions, as they may be
considered to trespass unduly on personal rights and liberties, in breach of
principle 1(a)(i) of the Committee's terms of reference.
Incorporating matter as in force from time to time
Schedule 2, item 4, new subsection 592N92)
Proposed new section 592N of the Social Security Act 1991,
to be inserted by item 4 of Schedule 2, provides for the Minister to
approve scholarship courses by legislative instrument which may make provision
for, or in relation to, a matter by applying, adopting or incorporating any
matter contained in an instrument or writing 'as in force or existing from time
to time'. The explanatory memorandum clearly and comprehensively explains (at
page 25) why this incorporation by reference is necessary and also provides
relevant examples. The explanatory memorandum also states that 'only very limited
non-legislative instruments would be incorporated as in force from time to
time'. The Committee is satisfied that this incorporation by reference is
thoroughly explained.
In the circumstances, the
Committee makes no further comments on this bill.[7]
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