Sarah Dingle: Well, it’s bad news for any Australians with student loans living overseas. As of 1 January this year, new rules have meant that graduates who live and work abroad while owing money on government loans must register with the Tax Office. And once they earn more than $54,000 Australian per year, they’ll have to start paying off their debts. Simon Birmingham is the Federal Education Minister, and he joins us now.
Welcome to Breakfast, Minister.
Simon Birmingham: Good morning Sarah, and Happy New Year to all your listeners.
Sarah Dingle: Happy New Year. Well Minister, we’re talking about 20 to 30 million dollars lost annually by graduates moving overseas and not paying back their debts. That is a rather small amount in terms of the total federal budget, is it worth chasing?
Simon Birmingham: Well, it is worth chasing Sarah, because Australia runs one of the most generous student loan schemes in the world, and that’s incredibly important for the equity of access to higher education and universities in Australia that students can go and undertake an undergraduate degree without facing any up-front costs at all, and the taxpayer wears the burden of that by giving a very generous loan where people don’t pay anything up front. It’s only interest rated or charged at the interest rate that is applied to the CPI, which of course means that in real terms the Government loses money each and every year on those borrowings because the Government’s borrowing at a higher rate, and then of course you only repay it once earning more than $54,000 per annum. So, for the sustainability of that generous student loan scheme, and the equity of all those who as students do undertake debt, we think it’s fair and reasonable that every student who passes an income threshold repays the debt regardless of where in the world they will be living.
Sarah Dingle: You are going to be chasing graduates all around the world though, how much will it cost to recover the $30 million? How does that balance out?
Simon Birmingham: Sarah, what we will be utilising are some of the data sharing arrangements that Australia already has with other countries, particularly countries like the United Kingdom and New Zealand, where there are strong arrangements in place already to understand exactly how much Australians abroad might be earning if there are tax implications from that, and vice versa, with those nations. So, this doesn’t come with a hefty implementation price tag. Of course there is a degree of onus on the individuals to comply themselves, as there always is with tax law, but then the ATO have their range of penalties that they can apply to those who are non-compliant. And I would hope and trust everybody sees the equity in this, that if you are earning a reasonable income you start to repay your student loan, whether you’re living in Australia as you currently have to do, or whether you’re working and living somewhere else around the world having benefitted from that Australian taxpayer support for your income. And for those who may need more information about how it is that they should register with the Tax Office and how this will be handled, I’d urge them to either have a look at the ATO website or the mygov.au website.
Sarah Dingle: Sure, but do you have an estimate for how much it will cost to recover this money from graduates?
Simon Birmingham: We think the implementation costs are fairly modest, because we are expecting …
Sarah Dingle: [Interrupts] What does that mean?
Simon Birmingham: Sarah, in terms of the overall costs, I can’t give you an exact figure here, but we will certainly reap far more back than any of the implementation costs may be. This will be integrated into the ATO’s standard operations, so aside from a bit of an initial communications campaign to make sure that people are aware of it, we are otherwise looking at standard ATO operations, including standard ATO compliance activities, and this will just become a normal part of those operations. And, as you said in the intro, while in the grand scheme of the federal budget, 20 to 30 million dollars a year is not a huge amount, it is important that just as we are seeking to make sure that multinationals pay their fair share of tax, just as we are seeking to make sure that every other Australian pays their fair share of tax, we are looking here to make sure that students who have benefitted from a- one of the world’s most generous student loan schemes pay that back in the same fair and equitable way.
Sarah Dingle: The threshold for repayment is just over $54,000 though, often when people are travelling they work for cash in hand. How are you going to know if all these graduates are earning above the $54,000 threshold?
Simon Birmingham: That, of course, comes to the reporting regime and the compliance arrangements. So, students will be expected to report an annual income statement that brings together all different aspects of their income, whether some of it is earned in Australia and some of it overseas, or from multiple jurisdictions. Now, that will be a tax responsibility that those carrying those student debts will have to meet, just like any other tax responsibility that any other Australian individual or business may have to meet in completing their tax return arrangements. Of course, you talk about cash in hand arrangements; people are expected to declare those types of cash in hand arrangements. In practice, that may not always happen, but the expectation is that they are expected to declare it, and of course the ATO does have certain investigatory powers available to it to look into unexplained income that individuals may have.
Sarah Dingle: I also want to ask you about Gonski. Last week, the Federal Government confirmed it won’t deliver on the last two years of Gonski schools funding, instead you’ll strike new funding deals from 2018. Will schools be getting less or more than the $10 billion that was promised?
Simon Birmingham: Sarah, nothing actually changed last week. It’s been clear for some time now that the Federal Government was not only honouring the arrangements under the Gonski program that we inherited from the previous government, but putting an additional $1.2 billion in on top of what was already budgeted for when we came to office over the four-year budget cycle. In terms of the debate about the so-called final two years, what I’ve equally said ever since becoming Minister was that we would sit down with the states and territories, and the non-government schooling sector, and work to strike a deal that went beyond just a two-year cycle. Now, I’m not going to pre-empt the terms of that deal in terms of how the finances of it will be struck.
Everybody knows that the Federal Government has a budget problem, that there are unfortunately large amounts of debt we inherited from the previous government and we’re trying to bring the budget slowly and carefully back towards a budget balance. So we don’t have limitless money to put at any topic, but in relation to schooling we want to make sure that funding is directed to students who most need it, to schools who most need it, that we are very conscious of the principles behind the Gonski model, and the discussions that I’ll be having with the states and territories and non-government sector will be driven by those principles of equity as well as fairness and simplicity across the state.
Sarah Dingle: So, you won’t commit to sustaining at least that $10 billion worth of funding if you have a budget problem?
Simon Birmingham: Funding will absolutely continue to go up. The budget already has funding going up in the forward estimates beyond that initial four year cycle. So there is no doubt that we will maintain and increase our school funding approach, because we know how critical that is for the future of the nation, but by exactly what quantum is set [inaudible] in the future would really better pre-empt those discussions.
Sarah Dingle: Minister, the Immigration Minister Peter Dutton is under fire today after accidently sending a text to a journalist, calling her a mad witch.
Samantha Maiden: Had a Liberal MP text me this morning, clearly not meant for me, describing me as a bit of a mad witch for writing this story, which I thought was spectacular, and he apologised and said that he’d sent the text to a wrong person. So I think some of these MPs, they’re having a bit of problem with their phones.
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Sarah Dingle: That journalist was the Daily Telegraph’s Samantha Maiden. It’s been revealed Peter Dutton fired off a text calling Samantha Maiden a mad witch, and expletives were used. That text was meant for Jamie Briggs, but he accidentally sent it to Samantha Maiden herself. Does this live up to the high standards the Prime Minister says he expects of his ministers?
Simon Birmingham: Look, I think it’s unfortunate, and Peter obviously recognised that and immediately contacted the journalist to apologise, taking that matter into his own hands and of course has come out and publicly acknowledged that it was him to avoid there being a witch hunt, or blame being pointed in other directions. So I think he has taken quick action there, recognising that it’s not necessarily appropriate …
Sarah Dingle: [Interrupts] Well, he sort of had to, didn’t he? I mean, he sent the text to a journalist. Journalists publish, that’s what they do.
Simon Birmingham: Well, Sam Maiden had chosen not to actually identify who it came from. She of course simply referenced the message, and I understand she’s accepted his apology.
Sarah Dingle: This is the second gaffe in a few months for Peter Dutton. In September, he joked about rising tides, saying time doesn’t mean anything when you’re about to have water lapping at your door. Should he be reprimanded by the Prime Minister?
Simon Birmingham: Well, I think he has essentially faced now a degree of public opprobrium by having to acknowledge a mistake here and apologise not just to Sam but to do so in a public way.
Sarah Dingle: This all relates of course to Jamie Briggs stepping down as former Minister for Cities. The Briggs affair continued on the weekend with Jamie Briggs confirming he forwarded a photo of the woman involved, taken on his phone, and that photo ended up in the weekend papers. Should there be an investigation into how these photos ended up in the paper?
Simon Birmingham: Look, I think those investigations about how things get into newspapers are often very difficult to conduct, and we rarely see conclusions to those things. Because, as you would well appreciate Sarah, rarely do those who are working in the media co-operate in terms of revealing who their sources were, it’s a very good and ethical reason for journalists. So I think if we stepped back for a second and have a look at the so-called Jamie Briggs affair, we can see that a very strong and proper process applied in dealing with this issue, that a complaint was received from a public servant, the Government brought in an independent investigator to look at that complaint, it was then properly considered by a Cabinet sub-committee. Mr Briggs was then informed of the results and took responsibility for his action, acknowledged a mistake and resigned as a minister, and has paid a very clear price for it.
Now, I think this is a strong and clear standard of conduct that has been applied, proper process has been applied, Mr Briggs has paid a price for that, and really I think it’s high time that we return to talking about the big issues facing the future of Australia now that Jamie’s accepted responsibility for his mistake and paid that price.
Sarah Dingle: Minister, we’ll have to leave it there, thank you for joining us.
Simon Birmingham: My pleasure Sarah, any time.
Sarah Dingle: That was Education Minister Senator Simon Birmingham.
Senator Birmingham’s media contact: James Murphy 0478 333 974
Nick Creevey 0447 644 957
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