The views expressed are my own and do not represent in any way the opinions/plans of my employer and have not been informed by any data/information which is outside of the public domain.
I have voted no because while I think YA should exist in some form the form which I envisage is so different to it's current form as to be a completely new payment model. But before we jump to my conclusion some background:
- As you would know I am not a massive fan of taxation/welfare (the transfer system) in general. Insofar as it does exist I think that it should be flat not progressive and definitely not regressive.
- Youth Allowance and HECS are extremely regressive forms of welfare because they are recieved by people who will later go on to be the middle and upper classes however are paid for by everyone. The checkout operator at coles is subsidising your university education and lifestyle.
- YA/HECS do help disadvantaged people attend university and bootstrap however they also encourage over-consumption of education. I like the former and don't like the latter.
So for me the challenge is how to have a system which helps the disadvantaged to better themselves but is not regressive and does not encourage over-consumption. My ideas are still in a nascent stage but a rough overview is:
- YA abolished in it's current form
- HECS abolished in it's current form
- A new system called Higher-Education-Loan-Allowance (HELA-cool
) is established
- Universities are free to charge whatever fees they want
- HELA to provide a loan to students. The loan could cover fees (or a proportion thereof) and also pay a living allowance (a max living allowance figure would be set and students could elect to recieve any amount up to the max)
- The interest rate would be available in a similar way to a mortgage (fixed, variable, etc)
- Neither the interest or the principal would be payable until graduation. And the repayment term would be 10 years
- Parents, employers, etc could contract to pay for part of the fees (under whatever arrangement/conditions they want) which would reduce the amount the student would be loaning
- Existing HECS supported students would be grandfathered
The funding itself would work as follows:
- The HELA loans would initially be made by a government run (but corporatised) HELA-Fund,
- Other financial institutions would be free to compete
- The HELA fund would initially be primarily funded by the Government however would seek private investment primarily from institutional investors like pension/super funds.
- The HELA fund could also raise capital by selling bonds
- Over-time the HELA fund would transistion to privatisation
Normally I like your ideas Lou (calling you Lou cos I can't be fucked with your actual username and don't know your real one). But this one is horrible.
America has a system very similar to the one you've proposed. Basically, their system ensures that only the upper classes can actually afford to go to uni, even with the loan, and it really only serves to perpetuate the already growing divisions in welath within their country. Many times there is no garuantee of employment after uni, and yet the banks and lending institutions in America still hound the former students for repayments as soon as they graduate. Because some of the students are unable to repay the loans, the banks charge higher risk premiums on all their loans, which in turn makes them all harder to repay (after all, there is no mortgage contract, so default by the graduate results in the bank losing the entire sum, not like with home loans where the house can be repossessed). Also, the banks don't wait until the graduate earns a reasonable sum before asking for repayment, like our government does, but instead start asking for repayment straight away.
The only exception to this are the few students who are lucky enough to get scholarships, and we all know how few and far between they are.
Also, Lou, you really haven't taken into account a communal or social gains from the current system. Higher levels of education across the board helps lift job prospects and hence standards of living for the graduates, which in turn has carry-on effects to the wider community. It also means there are a greater amount of competitive Australian human capital upon the world markets, which helps non-physical exports. Most glaringly of all though, is that the current system means that the Australian government makes an investment in Australia's youth which costs virtually nothing in the long-term (interest on HECS is pegged to inflation, so the repayed amount is theoretically worth exactly the same as the principal loan) and has very large benefits in the former of greater tax revenue from higher incomes.
I honestly see no downside at all in the current system, except perhaps for the income statement of the universities themselves, which I believe isn't necessary to inflate.
