ABC 891

E&OE Transcript 891 ABC ADELAIDE BREAKFAST Date: 04/06/2014 Subjects: Higher Education reform, Clive Palmer MATTHEW ABRAHAM: Mark Butler, Labor MP for Port Adelaide. He's the Opposition's climate change spokesman, joins us from Canberra. Mark Butler welcome to the programme. MARK BUTLER: Good morning. DAVID BEVAN: Watch out Butler, I'm sharp today. MARK BUTLER: [Laughs] Good thing I'm a long way away. DAVID BEVAN: Oh yeah, yeah, yeah. MATTHEW ABRAHAM: And Chris Pyne, Liberal MP for Sturt. He's the Education Minister; he's also the Leader of the House. Chris Pyne welcome to the programme. CHRISTOPHER PYNE: Good morning, gentlemen. DAVID BEVAN: Christopher Pyne, as Federal Education Minister can you clear up a matter? Will the changes to the HECS programme that you are foreshadowing, will they affect current HECS debts? CHRISTOPHER PYNE: Yes. DAVID BEVAN: Right. MATTHEW ABRAHAM: And how so? DAVID BEVAN: So - well, for instance, somebody who's finished their degree in the last year or two, you might have finished your degree five years ago, but you haven't got around to paying off your HECS debt, how will these changes affect that person's indebtedness? CHRISTOPHER PYNE: Well from June the 1st 2016, which is the day that they apply the either indexation under the current arrangements, the CPI or the interest, which will be the new arrangement, which is the 10-year government bond rate, which is the rate at which the taxpayers borrow the money on behalf of the students and the students only pay it back at the moment on CPI, so the taxpayers generously subsidise them the difference. On June the 1st 2016 the new interest rate will be applied on the current HECS debt. So if you still have a HECS debt then you will have the new interest rate applied on June the 1st 2016. MATTHEW ABRAHAM: And is that fair? CHRISTOPHER PYNE: I think it's perfectly fair. MATTHEW ABRAHAM: But how is that fair? Because you effectively entered into a contract - you the Government - you weren't in office, but you the Government entered into a contract with these people that they would have a debt, but it would be paid back at CPI and now you're changing the rules. How is that fair? CHRISTOPHER PYNE: Well, if anybody's ever had a mortgage or a credit card and I think most Australians have had one or both, they know that the bank or the institution that's lent them the credit card or the mortgage, if it's a variable rate loan can change it at their discretion(*). MATTHEW ABRAHAM: Yes but this was not a variable loan. This was a loan taken out on the understanding that it would be CPI and CPI for the duration. This is not a variable loan, not when they entered into that contract with you, the Government. CHRISTOPHER PYNE: No this is actually a much more generous loan than any student will ever get from any bank or any banking institution. MATTHEW ABRAHAM: Yes but you've changed the rules. You're comparing it to a variable interest rate on a credit card or a mortgage. It's nothing like that. CHRISTOPHER PYNE: Well, it's actually much more generous and I think it's only fair that the taxpayers who borrowed four per cent, if you say that's the Government bond rate, which is about what it is, if the taxpayers borrowed four per cent the student should pay it back at four per cent. MATTHEW ABRAHAM: Would a bank be able to change the terms and conditions? We know banks can change the interest rate on a loan. Can banks retrospectively change the terms and conditions of your mortgage? CHRISTOPHER PYNE: Well, it's not retrospective, it's prospective. MATTHEW ABRAHAM: Well, it is retrospective if you currently hold a HECS debt, surely? CHRISTOPHER PYNE: Well the answer - the answer to your question is yes of course they can and they do it all the time, but the other point to make is this is from June the 1st 2016. So people have 18 months, in fact longer, because of the day that they apply the interest rate to work out their arrangements. So it's a very fair arrangement, in fact, you see 60 per cent of Australians don't have a university degree and yet at the moment they are subsidising students to the tune of 60 per cent of their tuition fees and all we're asking is that students pay 50/50 and I think that is very fair to the taxpayers of Australia because those students will go on to earn a million dollars more over a lifetime on average than people without a university degree and we worked out we're asking them to pay $3 to $5 a week more to pay back their HECS debt. DAVID BEVAN: Do you - well hang on, how did you work out $3 to $5 more? Because… CHRISTOPHER PYNE: [Interrupts] Very simple. I've got the paper - I've got the tables, they're in The Australian today. DAVID BEVAN: Some of these people will have debts of a few thousand; some of them would have debts of tens of thousands of dollars. So how can you… CHRISTOPHER PYNE: Sure. DAVID BEVAN: …in a sweeping comment say oh it will be 3 to 5 bucks? CHRISTOPHER PYNE: Well, because it's not a sweeping comment, David. If you examine page four of The Australian today you'll see the tables that I've had my office do and the Department of Education has verified, which show that even if you have a $40,000 HECS debt, which would be a very high debt when the average at the moment is $16,800 in 2012 figures, so even if you had double that, which most students will not have, we'll be asking you to pay it back over 12 years rather than the 10 you're currently paying it back at and it would cost you $5 a week more to do that. MATTHEW ABRAHAM: What's the total of the HECS debt portfolio at the moment for the Government? CHRISTOPHER PYNE: $30.1 billion. MATTHEW ABRAHAM: And do you make money on that? CHRISTOPHER PYNE: No we don't, because that's the point you see. It's - at the moment it's only indexed to CPI and because it's only indexed to CPI it maintains its value in real terms but there's no money being made on it. In fact the taxpayer is losing money because the taxpayer is borrowing at around four per cent and the student is only paying back at around 2.5 per cent. MATTHEW ABRAHAM: Mark Butler, Labor MP for Port Adelaide and Opposition frontbencher, do you find you may not be on a winning wicket on this one, because while there are a lot of students obviously with HECS debts or about to incur HECS debts, the Government is arguing that the changes are quite reasonable? MARK BUTLER: Well, this is all very embarrassing for Christopher. I'm glad that he's finally admitted that the indexation changes, the lift from CPI to the bond rate, will apply to existing students, because he said precisely the opposite on the Insiders programme on Sunday morning and I think it's come as a great shock to existing students that the loan arrangements they entered into in good faith are going to be unilaterally changed by the Government. So at least he's put that to bed. But Christopher, in the paper this morning, is pretending that, Mr and Mrs Mainstreet I think were his terminology, somehow are doing the young people of Australia a favour by supporting them getting educated. Well, the Mr and Mrs Mainstreet I talk to, parents and grandparents, want their children and grandchildren to have the opportunity to go to university because they understand that it's not a favour to them, it's an investment in the future of our country. And so I think the whole frame that Christopher brings to his portfolio is greatly mistaken. And then on top of that he continues to try and assure Australian young people that this is just a trivial impost. It's $3 to $5 maybe per week channelling his friend Amanda Vanstone and the milkshake and sandwich comment. MATTHEW ABRAHAM: Can you argue with those figures though? MARK BUTLER: Well I can, because Universities Australia has released figures today, also in the newspaper, that indicate that an engineering graduate is likely to graduate with a debt of $119,000 and if she takes six years moving from part to - full time to part time work to raise a child, so six years on part-time work the rest on full-time work, she will take 26 years to pay off that debt. A nurse would take 22 years to pay off her debt of $66,000 in the same position, compared to not an average of ten years repayment that Christopher just said, but on average it takes about eight years to repay a HECS debt right now, which is actually very good timing, because that's about the time, at the end of that eight years, that a graduate will be starting to think about settling down, having a family and buying a house. And what people are realising now, whether they're students, parents or grandparents is this change from Christopher is going to have a massive impact on the capacity of young families to plan their future. MATTHEW ABRAHAM: Chris Pyne, just before we go to callers - there's a couple of callers who want to talk to you in particular - that is correct, did you say on Lateline… CHRISTOPHER PYNE: [Indistinct] MATTHEW ABRAHAM: …that it would not affect existing students, and was that wrong and can you clarify that now? CHRISTOPHER PYNE: Look, this is such an old story. I thought I was answering a question about fees, and the answer was entirely correct about fees. As it turned out, it was a story - a question about… MARK BUTLER: [Indistinct] CHRISTOPHER PYNE: …the HECS interest rate, and for that purpose it was wrong, but… MATTHEW ABRAHAM: But it's a question of whether you're making it up as you go along. I'm just asking, did you initially say existing students would not be affected, and is that wrong? CHRISTOPHER PYNE: Fran Kelly on the Insiders programme asked me a question which I thought was a question about fees. If it had been a question about fees, I would've been entirely accurate. As it turned out, it wasn't a question about fees, it was a question about the interest rates. That matter has now been cleared up. MATTHEW ABRAHAM: Joseph from Woodfield Park. Hello, Joseph. Good morning to you. CALLER JOSEPH: Good morning. Mr Pyne, [indistinct] tried to… MATTHEW ABRAHAM: What's the question, Joseph? CALLER JOSEPH: Yeah, the question is education is our biggest investment for the future. You're stopping it. This is a very prosperous country, and I'll give you an example. We have a son that's studying in Germany, studying electrical engineering and renewable energy. As an Australian citizen, my son is getting their education for free. What do you have to say about that? MATTHEW ABRAHAM: Christopher Pyne. CHRISTOPHER PYNE: Well, free education means that the sons and daughters of the middle classes and upper-middle classes get their education for nothing. The studies have shown - and, in fact, the experience in both Australia and now in Scotland - have shown that there has been no change whatsoever under free education to low socioeconomic status students getting to university. Let me give you a lovely example, because it's happening right now: in Great Britain, in Scotland, the education is free. In Britain, England, the market is deregulated and there are fees for university courses. Since deregulation in England, the number of students from low-socioeconomic status background has ballooned to record levels. In Scotland, it is utterly unchanged. So free education simply means that the middle class students of middle class families get free education and the lower-SES families subsidise it. DAVID BEVAN: Mike has called from Dulwich. Hello, Mike. CALLER MIKE: G'day, David. Chris, I seem to recall Adelaide used to have a fully subsidised law degree. How about putting your money where your mouth is and handing that funding back? DAVID BEVAN: Christopher Pyne. You got your law degree for nothing. CHRISTOPHER PYNE: Well, they were the arrangements that the Government had at the time. I mean, it's a really pretty pathetic point, quite frankly. When the Higher Education Contribution Scheme was introduced, I paid it. I paid it on a graduate diploma of legal practice that I did, and I paid it back through the tax system. If HECS had applied when I was doing my law degree, I would've paid it then as well. But… DAVID BEVAN: Has any… CHRISTOPHER PYNE: But it's a rather sort of simple point. DAVID BEVAN: Has any consideration at all been given to ultimately privatising the HECS debt? CHRISTOPHER PYNE: No. DAVID BEVAN: So the Government hasn't got any advice at all on what measures would need to be put in place to ultimately sell off this $30.1 billion in debt? CHRISTOPHER PYNE: No. DAVID BEVAN: Okay. Chris Pyne, you say the market will drive down uni fees because of competition. It hasn't in other areas. We've seen in South Australia, power prices have gone up since privatisation… CHRISTOPHER PYNE: There is no competition in the power market in South Australia. DAVID BEVAN: Okay, eggs haven't got cheaper because of when the market was deregulated, so it doesn't always flow, does it, that if you effectively deregulate a market, allow universities to set fees, that there'll be competition in the sector. We don't see it in petrol. CHRISTOPHER PYNE: Well, there aren't many competitors in petrol. There's like four or five providers. DAVID BEVAN: Well, how many do you want? CHRISTOPHER PYNE: Well, there'll be 200 in higher education, so you just can't make these very simple comparisons. Because of the fact that I'm opening up the Commonwealth Grant Scheme to non-university higher education providers, that'll bring about another 150 providers into the higher education space, competing with the 40 - just less than 40 universities. So suddenly there is a great adrenaline shot of competition in this market. Now, you can't compare a market that has 200 offerings to a market like petrol where there are, you know, less than half a dozen providers of fuel. MATTHEW ABRAHAM: Okay, now, just to move onto another topic for Mark Butler, a member of the Labor left, Labor MP for Port Adelaide, that the left in the Labor Party, which is very vocal over attacks on Julia Gillard over her - the fact that she was a woman. The criticism now is that there's a deafening silence from the left over the Clive Palmer criticism of Peta Credlin, saying that she is supporting the Paid Parental Leave scheme, it's her idea because she'll benefit when she's pregnant. MARK BUTLER: Well, I don't think that's a fair analysis. I think when members of the Labor Party have been asked, including Bill Shorten and Tanya Plibersek, they've called Clive Palmer's for what they are: completely inappropriate comments. They were completely out of line, and I'm happy to say that right now. I think there's more than enough policy detail to attack around the Paid Parental Leave policy. I think it's, as a rule, completely inappropriate to play the person rather than the ball, particularly when it comes to staff. MATTHEW ABRAHAM: Is Clive Palmer the sort of person that you want the Labor Party to have to deal with? Or do you just say look, he's somebody we don't want to deal with, we'd rather talk to other people within the Senate rather than his lot. MARK BUTLER: I didn't vote for Clive Palmer. MATTHEW ABRAHAM: No. MARK BUTLER: Christopher and I and our respective parties have to deal with the Senate that the Australian people delivered to us. It's not for us to pick and choose who we deal with. We have to deal with quite a substantial crossbench now. There's going to be 18 senators who are not from the major parties, about a quarter of the Senate on the crossbench, from a whole range of backgrounds - Greens, Palmer and many independents. Both Christopher's party and our party will have to deal with them. MATTHEW ABRAHAM: Chris Pyne? CHRISTOPHER PYNE: Well, Labor is the party of double standards, and we see it every day in their treatment of the Speaker Bronwyn Bishop. When we were in opposition, if I had treated Anna Burke the way that Tony Burke and Mark Dreyfus in particular treat Bronwyn Bishop - and I would exclude Mark Butler from this because he doesn't try and bully the speaker in the way that Mark Dreyfus and Tony Burke do - the Labor Party women, the Tanya Pliberseks and Nicola Roxons of this world, would've been up in arms. But because it's a Liberal Speaker, apparently it's fair game to shout at her and bully her and treat her the way that they do, and similarly with Peta Credlin, the way that she was talked about with Clive Palmer, Labor would've been up in arms if it was one of their own people, but they really have always been the party of double standards. We see it every day. MATTHEW ABRAHAM: The harsh reality, though, when it comes to double standards is that you need Clive Palmer and his Senator's vote, and you'll need to do business with somebody who you regard as making outrageous comments about a member of Tony Abbott's staff. CHRISTOPHER PYNE: Well, I've said that Clive's statements were cowardly, wrong and ignorant. They're cowardly because in politics you don't attack staff who can't defend themselves in the same way as you don't attack families of MPs because they also - it's not their fault that their father or mother or whomever is in politics. Secondly, he was wrong because he claimed that Peta Credlin has influenced Tony Abbott to have the Paid Parental Leave scheme, but of course Tony Abbott wrote about that in Battlelines before Peta Credlin ever worked for him. And it's ignorant because, of course, Peta Credlin, if she was fortunate enough to have a child, and we know that she's had great difficulty in that, and she indicated that - it was ignorant because she would have the Paid Parental Leave scheme that applies to the public service, which is a very similar scheme to the one we are trying to implement for the private sector across Australia so that working women get the same treatment as the public servants do right now. MATTHEW ABRAHAM: Christopher Pyne, thanks for your time. CHRISTOPHER PYNE: It's always a pleasure. MATTHEW ABRAHAM: Liberal MP for Sturt, Education Minister and leader of the House. And Mark Butler, thank you for your time. MARK BUTLER: Thank you. Talk next week. MATTHEW ABRAHAM: Labor MP for Port Adelaide, opposition environment and climate change spokesman. [ENDS]