- General Policy Statement
Objectives of key measures
The measures in this bill will amend the law that relates to student allowances to ensure parity between the minimum rate of student allowance and the unemployment benefit.
The bill is intended to:
- remove any incentive for young people to go on the unemployment benefit rather than enter tertiary study;
- relate the value of student allowance to the unemployment benefit.
Summary of key measures
The main measures are as follows:
- "Unemployment benefit'' is defined for the purposes of the bill as the rate of benefit payable under the Social Security Act 1964 to an unmarried beneficiary of or over the age of 18 years and under the age of 25. The current rate is $121.77.
- The value of student allowance is linked to the rate of unemployment benefit. At present, under section 303(1)(b) of the Education Act 1989, the Minister prescribes the value of student allowances by notice in the Gazette.
There is no lower limit on the value of student allowances and they may fall below that of the current rate of unemployment benefit. (The lowest current rate of unemployment benefit is $121.77 whereas the lowest rate of student allowance is $nil rising to $94.98 (at home) depending on the parents' taxable income.) This creates a potential incentive for young people to apply for the unemployment benefit rather than enter tertiary education.
The proposed amendment is consistent with the overall Government strategy to reduce the incentives for young people to go on the unemployment benefit. The goal underpinning most student financing agreements around the world is to alleviate the disincentive to tertiary participation.
State funding of tertiary education is also justified on the ground that it provides benefits for society as a whole as well as the individuals undertaking the education. However, fiscal constraints necessitate a balance of student and Government funding.
The amendment strikes this balance while reducing the incentives for young people to remain unemployed.
- Clause by Clause Commentary
Clause 1, subclause (1) provides that the bill is to be read together with and deemed part of the Education Act 1989 (in this Explanatory Note referred to as the "principal Act''). Subclause (2) provides for the bill to come into force on the 1st day of November 1997.
Clause 2 amends section 302 of the principal Act. The amendment inserts a definition of the term "unemployment benefit''. The definition of "employment benefit'' is based on the Social Security Act 1964.
Clause 3 amends section 303 (2) (b) of the principal Act. The amendment ensures that the value of allowance prescribed by the Minister is not lower than the rate of unemployment benefit (as defined in clause 2).
An Act to amend the Education Act 1989 to provide for parity between the minimum rate of student allowance and the unemployment benefit
