Commonwealth of Australia Explanatory Memoranda

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STUDENT ASSISTANCE AMENDMENT BILL 2003

2002-2003




THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




HOUSE OF REPRESENTATIVES






STUDENT ASSISTANCE AMENDMENT BILL 2003






EXPLANATORY MEMORANDUM















(Circulated by authority of the Minister for Education, Science and Training the Hon Dr Brendan Nelson MP)

STUDENT ASSISTANCE AMENDMENT BILL 2003

OUTLINE

The Student Financial Supplement Scheme (the SFSS) is a voluntary loan scheme whereby eligible tertiary students trade-in income support in return for a loan, on the basis of a $1 trade for a $2 loan. The money traded-in becomes part of the loan, all of which is repayable.

Part 4A of the Student Assistance Act 1973 (the Act) provides for SFSS loans in respect of ABSTUDY students while Chapter 2B of the Social Security Act 1991 provides loans to other tertiary students. The Bill provides that no new loans will be issued from 1 January 2004 in respect of ABSTUDY students. A separate Bill will amend the Social Security Act 1991 to close the SFSS for other tertiary students.

The closure of the SFSS is in response to increasing levels of bad and doubtful debt and reduced take-up of loans. The Australian Government Actuary has estimated that some 84 per cent of total loans may never be repaid.

The SFSS was introduced in a climate of high youth unemployment, high interest rates and when few commercial loan packages were available to students.

The take up of the SFSS has declined over the years and since 1 January 2000, Rent Assistance has been payable for full-time students in receipt of the ABSTUDY Living Allowance.

The repayment provisions of the SFSS will continue to apply.

The Bill will also amend the Act to insert an express provision permitting the incorporation of an instrument “as in force or existing from time to time” for the purposes of section 49A of the Acts Interpretation Act 1901. This will eliminate the need to make new regulations under the Act whenever guidelines for the non-statutory ABSTUDY and Assistance for Isolated Children schemes are altered.

FINANCIAL IMPACT

Financial Impact of the Repeal of the SFSS

Year Expense Revenue
2003 – 2004 $5.3 m $0.3 m
2004 – 2005 $12.7 m $0.4 m
2005 – 2006 $10.7 m $1.3 m
2006 – 2007 $8.8 m $2.2 m

Total $37.5 m $4.2 m

STUDENT ASSISTANCE AMENDMENT BILL 2003

NOTES ON CLAUSES

Clause 1 - Short title

Provides for the Act to be cited as the Student Assistance Amendment Act 2003.


Clause 2 - Commencement

Provides for the Act to commence on the day on which it receives the Royal Assent.


Clause 3 - Schedule(s)

Provides that each Act that is specified in a Schedule is amended or repealed as set out in the applicable items in the Schedule and that any other item in a Schedule has effect according to its terms.



Schedule 1 – Amendment of the Student Assistance Act 1973

Part 4A of the Student Assistance Act 1973 provides for a statutory loan scheme known as the Student Financial Supplement Scheme, which enables a tertiary student who is, or except for the parental income test would be, eligible for certain benefits under the ABSTUDY scheme to obtain a repayable financial supplement.

Part 1—Closure of Student Financial Supplement Scheme


Items 1 and 2 - Subsection 3(1)

Insert a note after the definitions of eligible student and Student Financial Supplement Scheme, to alert the reader to the fact that the Student Financial Supplement Scheme is closed to applications from 1 January 2004.


Item 3 - Part 4A

Inserts a new Division 1A containing proposed sections for the closure of the Scheme.

proposed section 12

Provides that the purpose of proposed Division 1A of Part 4A is to close the Student Financial Supplement Scheme to applications from 1 January 2004.


proposed section 12AA
 
Has the effect of providing that no new loans are to be issued to an otherwise eligible student under the Student Financial Supplement Scheme from 1 January 2004.


Item 4 - Subsection 12C(1)

Inserts a note alerting the reader to the fact that an otherwise eligible student is no longer entitled to financial supplement for a period beginning on or after 1 January 2004 because of proposed section 12AA.


Item 5 – Subsection 12F(1)

Add a new subsection 12F(1A) which has the effect of relieving the Secretary from the statutory obligation of having to make a decision about whether or not a person is eligible to obtain financial supplement after 1 January 2004.

Item 6 - Subsection 12F(2)

Technical amendment to the wording of subsection 12F(2) to reflect the amendment made by Item 5.


Item 7 - Subsection 12QB(1)

Technical amendment to the wording of subsection 12QB(1), substituting reference to “section 48” with a reference to “subsection 48(1)” as a result of amendment made by Item 9 of Schedule 2.


Item 8 - Subsection 12S(1)

Technical amendment to the wording of subsection 12S(1), substituting reference to “section 48” with a reference to “subsection 48(1)” as a result of amendment made by Item 9 of Schedule 2.

Schedule 2 – Extension of regulation-making power relating to notifications

Student Assistance Act 1973

Item 1 – Section 48

Inserts proposed subsection 48(2) which provides an express provision permitting the incorporation of an instrument “as in force or existing from time to time” for the purposes of section 49A of the Acts Interpretation Act 1901. This will eliminate the need to make new regulations under the Act whenever guidelines for the non-statutory ABSTUDY and Assistance for Isolated Children schemes are altered.


Item 2 - Subsection 49(1)

Technical amendment to the wording of subsection 49(1) substituting reference to “section 48” with a reference to “subsection 48(1)” as a result of the amendment made by Item 9.

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