Interview on ABC AM with Kim Landers
Negative gearing; University student employer survey results



Kim Landers:               The largest survey of employers and employees about the quality of higher education has been released. Funded by the Federal Department of Education, it raises some questions about the value of some degrees. Ninety-seven thousand graduates and 4000 employers were surveyed.

For more, I’m joined by the Education Minister, Simon Birmingham. Minister, good morning.

Simon Birmingham:    Good morning, Kim. Great to be with you.

Kim Landers:               Before we turn to your portfolio, if I could begin with that Treasury analysis our story just mentioned; has the Government been caught out lying about the potential impact of Labor’s negative gearing policy?

Simon Birmingham:    Well, absolutely not, Kim. That two-year-old analysis does very clearly show that there would be a negative impact in terms of housing prices as a result of Labor’s policy, which would be bad news for all existing Australian home owners. But we should also have a look at what’s happened in the following two years though, which has seen – as a result of both regulatory action and government policies – investors exiting the housing market, price growth has slowed dramatically and even declined in some quarters. Labor’s policy would be, potentially, much more dangerous today even than it would have been two years ago. And of course the Government …

Kim Landers:               But that Treasury analysis says that there may be some downward pressure. It certainly doesn’t equate with disaster or calamities or smashing the housing market.

Simon Birmingham:    Kim, it’s a two year old analysis. It shows, indeed, that there would be downward pressures, which is exactly what the Government has been saying all along; that housing prices for existing owners who have mortgages, who have geared their finances around the value of their homes would indeed be threatened. But you have to look as well at what’s happened since then and you have to also say: well, if this is about helping first home owners, what’s the most effective way to do it? The Government’s doing it by providing the same tax breaks as exist for superannuation to first home owners to be able to save, to be able to invest in their homes, to buy a home without threatening the value of homes for existing home owners. And that really is a much safer, simpler, better way of ensuring you provide that support; rather than what, effectively, Bill Shorten and Chris Bowen are conceding, is they’re claiming that their policy won’t have an impact on house prices, then they’re admitting it is all about simply being a big tax grab, part of their $160 billion in additional tax hits.

Kim Landers:               As a senior government minister, did you know at the time that there was this Treasury analysis about Labor’s policy?

Simon Birmingham:    Listen, Treasury advice, as the Education Minister, isn’t something I’m usually privy to, but what I know is that it’s been clear all along that there would be a detrimental impact on values of existing homes and that, of course, that is a threat to existing home owners. But I also know that we have done major reform since then to provide support for new home owners, for first home buyers that don’t threaten the value of existing homes, but there have also been really serious macro prudential steps taken by the regulators to make sure that we have a much more cautious approach to lending to investors and that really has flowed through with a significant reduction in the rate of investment lending.

Kim Landers:               Alright. Let’s turn to that survey about university courses and what graduates and their employers think; 15 per cent of graduates said that their qualification was not that important, 11 per cent said that it was not at all important for their current job. Does that justify your decision to cap funding for university places?

Simon Birmingham:    Well, the Government’s approach for some time has been that we really want to make sure that there’s a strong focus by universities in particular on outcomes for graduates that relate to their employment prospects, improve their employment prospects and deliver what employers in our economy need to keep growing. Now, we proposed in the previous Budget some efficiencies in higher education and also new performance arrangements. Sadly, the Senate blocked that, but what we’ve done as an alternative is indeed put in place a temporary two year freeze to one stream of university funding and that thereafter, growth in that stream of funding will be contingent upon university performance – and by performance, what we’re meaning is ensuring that graduates who are admitted, successfully complete their degrees; that those degrees give graduate satisfaction, employer satisfaction, that we actually see outcomes from unis that are a value to not only taxpayers but importantly to the students themselves and, of course, to our overall economy.

Kim Landers:               The report also, there are a lot of stats in this report, but overall almost 84 per cent of employers were happy with university graduates. The report says that employers are highly satisfied with graduates. So, isn’t that the flip side from what you were just arguing?

Simon Birmingham:    Kim, you’re right, we have high performing universities that are a great value to our economy. However, the trend lines show that there’s been an increase in terms of non-completions or attritions of students, that there have been concerning indicators in terms of employer satisfaction slipping somewhat, that student satisfaction levels equally have got concerning trends attached to them. So we need to nip that in the bud and make sure that with record numbers of students at Australian universities, record funding flowing into Australian universities, that we are also getting the type of value for money for taxpayers and for those students that they would expect.

Kim Landers:               The Government wants to make students start paying back their loans when they earn $45,000 instead of $55,000. Now, that’s a measure that’s going to need some Senate approval. Have you been working over the summer to get any of the cross benchers onside?

Simon Birmingham:    Well this is a slight softening of the Budget measure that we put in place, or that we proposed last year, and of course, we developed that and released it in MYEFO following some of the consultations we had last year about what might be acceptable to the Senate. I’m not going to play negotiations with individual senators out in public.

Kim Landers:               Have you made any contact with anybody over the summer?

Simon Birmingham:    Well, Kim, I’m not going to play discussions with individual senators out in public, but for your listeners what’s important to understand is we have around $50 billion of outstanding student debt that the Government carries on the loan books now and that without some changes to that, around one quarter of it are estimated not to be repaid. So, what we’re trying to do here is ensure that student loans are sustainable for taxpayers, but that, importantly, means we can continue to provide access for students to university with no up-front fees and with still one of the most generous student loan schemes in the world.

Kim Landers:               Alright. Minister, thank you very much for speaking with AM.

Simon Birmingham:    A pleasure, Kim.

Kim Landers:               And that is the Education Minister, Simon Birmingham.