If I had to grade Education Minister Jason Clare on his recently announced policies for higher education, I’d give him a C. He has made a good start but currently has a half-baked conclusion.
Luckily, the government’s final assessment isn’t due for a couple of days, with Clare promising to outline the “full first stage” of his response to the Universities Accord around this week’s budget.
He still has time to push for top honours. Here’s what he needs to brush up on.
Indexation is fixed, but thresholds are still too low
Last week, Clare made two major announcements, clearly aimed at winning back support among current and former students, whom teal MP Monique Ryan and the Greens have been increasingly courting.
Firstly, HECS indexation has been changed to whichever is lower in the given year: the wage price index or consumer price index. This should stop aberrant years of high inflation sending student debts surging, like last year’s 7.1% rise. This exceeded many students’ repayments, sending them backwards. Furthermore, the change is backdated to 2022-23, retrospectively wiping an estimated $3 billion of debt.
This was a sensible change. The original logic of HECS was that repayments were meant to be income contingent. It never made sense that debts were indexed to prices, not incomes, especially if the former surged past the latter.
But Clare has so far glossed over the absurd timing of indexation — it should occur after one makes their repayments that financial year, not before.
The next step in restoring the income contingency principle, which hasn’t received much media attention, should be raising the repayment thresholds. HELP loans were originally intended to be repaid only when students started earning approximately average incomes, from which point they could be said to have derived some additional salary from their qualification.
But now, as the final report of the Universities Accord notes, repayments kick in at “around 50% of the average income level — the result of steady decreases in the minimum repayment threshold over time”. The notion that fast-food workers are cashing in on their half-finished bachelor of arts is ludicrous. When someone earning barely above the minimum wage is targeted, the system’s pretence of progressivity is dead.
Repayment rates were between 1-3% in 1988-89 when HECS was introduced. Now they extend up to 10%. Even for higher earners, this represents a significant chunk of their income per year, at a time when many are financially squeezed by rent, mortgage repayments and childcare costs. Smoothing that out, with lower repayments over a longer period, would give them more breathing room.
Such issues were glaring even before Scott Morrison’s Job-ready Graduates scheme piled additional debt on students in certain disciplines, particularly the arts and humanities, in a seemingly arbitrary fashion. It hinted at the Coalition’s motives for previous nasty tweaks: punishing supposed layabouts, whom certain conservatives imagine reading Sartre in the quadrangle instead of getting a job.
Thankfully, here Clare is edging towards gutting his predecessors’ stereotypical legacy.
Relief from ‘placement poverty’ — if you qualify
The government’s second big-ticket announcement last week was a new Commonwealth Prac Payment of $319.50 per week for teaching, nursing, midwifery and social work students. Recognising the long-ignored problem of “placement poverty” is a step forward. Many students must complete hundreds or even thousands of hours of unpaid work experience during their courses, often at full-time hours, which can prevent them from doing other work and subject them to severe financial stress.
At $8 an hour, however, the payment is pretty paltry — it’s more a supplement than a living wage. And by narrowly targeting certain jobs the government is keen to recruit for, they have passed over equally worthy recipients. Medical students, for instance, must complete 2,000 placement hours, compared to 1,000 for social workers, 800 for nurses and 600 for teachers. But absurdly, medical students have been left out.
And, as is Australia’s inglorious tradition, the payment will be means tested. Recipients can still receive other Centrelink payments as well. But if the usual tests are applied, students may have to first run down their savings before accessing it, and they wouldn’t get it if they kept earning income (including paid leave) from their other employment. Shouldn’t we want young people to build up some savings?
Australia relies too much on means testing generally, but we are especially paternalistic toward young students. Those aged under 21 are usually considered dependents by Centrelink (unless they meet strict criteria), despite being considered independent adults by pretty much everyone else. This means they are rendered ineligible for payments like Austudy, ABstudy and Youth Allowance not only if they have too much money in the bank but also if their parents do — even if their parents aren’t supporting them financially.
A student’s rate of payment is reduced by 20 cents for every dollar of parental income over $58,108. The Universities Accord recommended the parental income “free area” (threshold) be increased.
Stamped by stinginess
Austudy, ABStudy and Youth Allowance are also simply too low. A student on Youth Allowance earns just 24.6% of the gross national minimum wage. On that income, free student society barbeques become not a nicety but a necessity.
Such payments are important because many students don’t just have a reduced capacity to work during placements, but during busy periods, exam seasons and, for some, their whole semesters. Completion rates of full-time students are six to seven percentage points higher for those receiving income support than those excluded. More students drop out when they can’t make ends meet.
Requiring students to jump through complex hurdles to access below-poverty-line payments, at significant administrative expense to the taxpayer, just to avoid the vague possibility of a handful of kids accessing support who don’t really need it? Clare is gaining ground, but if he doesn’t push beyond this miserly paradigm, he mustn’t yet have learnt his lessons.
Should the government be doing more to help university students? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
