Commonwealth of Australia Explanatory Memoranda

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HIGHER EDUCATION SUPPORT LEGISLATION AMENDMENT (STUDENT LOAN SUSTAINABILITY) BILL 2018

                           2016-2017-2018




   THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




                               SENATE




HIGHER EDUCATION SUPPORT LEGISLATION AMENDMENT
     (STUDENT LOAN SUSTAINABILITY) BILL 2018




         SUPPLEMENTARY EXPLANATORY MEMORANDUM




       Amendments to be moved on behalf of the Government




(Circulated by the authority of the Minister for Education and Training,
             Senator the Honourable Simon Birmingham)
HIGHER EDUCATION SUPPORT LEGISLATION AMENDMENT
     (STUDENT LOAN SUSTAINABILITY) BILL 2018

                                  OUTLINE

The amendments to the Higher Education Support Legislation Amendment
(Student Loan Sustainability) Bill 2018 being moved by the Government will
give effect to a one-year delay in commencement of the Higher Education
Loan Program (HELP) repayment thresholds and make consequential
changes arising from the delay.

Revise minimum and subsequent HELP repayment thresholds for 2019-20
commencement

This amendment will replace proposed repayment thresholds for HELP for
2018-19 with those for 2019-20, using the Consumer Price Index. The
revised minimum repayment income is $45,880. The new minimum
repayment threshold will be $45,881 with a one per cent repayment rate, with
a further 17 thresholds and repayment rates, up to a top threshold of
$134,573 at which ten per cent of income is repayable.

Remove transitional arrangement for 2018-19 for certain SFSS debtors

From 2019-20, repayment arrangements for Student Financial Supplement
Scheme (SFSS) loans will be the same as those for HELP loans under HESA.
This amendment will remove the inclusion of a transitional year in the 2018-19
income year for SFSS debtors. The transitional year would have determined a
provisional repayment threshold applying to the SFSS scheme that would
have been fixed at three specific repayment thresholds and rates payable to
the Commonwealth under the Social Security Act 1991 and the Student
Assistance Act 1973. The transitional provisions for 2018-19 are no longer
necessary as the status quo will apply to repayment arrangements for SFSS
loans until the transition to HELP repayment thresholds on 1 July 2019.

Revise commencement dates for indexation, application and transitional
provisions

These amendments will make consequential revisions to the Bill to replace
relevant references to "2018-19" with "2019-20", and "2019-20" with
2020-21", to account for the one-year delay in commencement of Schedule 1
of the Bill.

Financial Impact

The estimated financial impact of this one-year delay is a cost of
$106.3 million in underlying cash terms and a saving of $22.0 million in fiscal
balance terms over the forward estimates (2018-19 to 2021-22).


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            PROPOSED GOVERNMENT AMENDMENTS
The Government proposes the following amendments to the Bill.

Amendment (1) amends the commencement table in clause 2 of the Bill, to
provide that Schedule 1 to the Bill commences on 1 July 2019.

All of the other amendments to the Bill are consequent on this one-year delay
in the commencement of Schedule 1.

Amendment (2) replaces the minimum repayment income (for repayment of
HELP debts) of $44,999 for 2018-19 with a minimum repayment income of
$45,880 for 2019-20.

Amendment (3) similarly replaces the table of income thresholds for 2018-19
with a new table of income thresholds for 2019-20.

Section 154-10 of HESA sets out the minimum repayment income, being the
amount of a person's repayment income above which a person with a HELP
debt has to start repaying that debt. Section 154-20 of HESA includes a table
that sets out the percentage of a person's repayment income that goes
towards repaying their HELP debt. The repayment percentage increases as a
person's repayment income increases, with different income thresholds for
different repayment percentages.

Items 1 and 2 of Schedule 1 to the Bill replace paragraph 154-10(a) and the
table in section 154-20 of HESA to establish a new minimum repayment
income and repayment income thresholds for repayment percentages. These
income thresholds were originally to take effect from 1 July 2018.
Amendments (2) and (3) replace the relevant 2018-19 repayment income
thresholds in items 1 and 2 of Schedule 1 with 2019-20 repayment income
thresholds, to reflect the one-year delay in the commencement of Schedule 1.

Amendments (4) and (5) oppose (repeal) the proposed subsection
1061ZZFP(4) of the Social Security Act 1991 and subsection 12ZLC(4) of the
Student Assistance Act 1973, respectively. From 2019-20, the repayment
arrangements for Student Financial Supplement Scheme (SFSS) loans under
the Social Security Act and the Student Assistance Act are to be calculated in
the same way as HELP loans under HESA. Subsection 1061ZZFP(4) of the
Social Security Act and subsection 12ZLC(4) of the Student Assistance Act
provided for transitional SFSS loan repayment arrangements for 2018-19.
With the amendments to the repayment arrangements for SFSS loans now
commencing on 1 July 2019, the transitional provisions are no longer
necessary.

Amendments (6) to (12) replace relevant references in the Bill to "2018-19"
with "2019-20", and "2019-20" with "2020-21", to account for the one-year
delay in commencement of Schedule 1 to the Bill.



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