Summing Up Speech: Family Assistance Legislation Amendment (Extending Family Assistance to ABSTUDY Secondary School Boarding Students Aged 16 And Over) Bill 2019

This Bill is being introduced to implement a measure announced as part of the 2019-20 Budget. In the Budget, the Government announced that it would extend Family Tax Benefit to the families of ABSTUDY students who board away from home to attend secondary school. This will remove the existing perverse incentive for Indigenous boarding students to drop out of school at age 16.

I thank the Senate Community Affairs Legislation Committee for its report on the Bill and its recommendation that the Bill be passed

Under current arrangements, once an ABSTUDY boarding student turns 16 they no longer attract Family Tax Benefit. This creates a perverse incentive for families to retain Family Tax Benefit by removing their child from boarding school.  This is a policy anomaly that is not aligned with supporting Indigenous students completing year 12.

Many remote communities have no local secondary school, so boarding is frequently the only option for children to go to secondary school. However, Aboriginal and Torres Strait Islander boarding students are disproportionately dropping out of boarding education around the age of 16.  Data from the Department of Human Services (Services Australia) shows that the number of ABSTUDY boarding students drops by approximately 60 per cent between the ages of 15 and 17.

The Prime Minister’s 2019 Closing the Gap address to Parliament emphasised that for Indigenous students in remote and very remote areas, access to quality education can be a lifeline to future prosperity and wellbeing. This statement echoed the views of the House of Representatives Standing Committee on Indigenous Affairs in its 2017 report on Indigenous education, which stressed the importance of education but found room for improvement in the support of Indigenous boarding students.

Amendments introduced by this Bill, will build on the 2018‑19 Budget measure “50 Years of ABSTUDY”, which provided $38.1 million over five years to improve assistance for Indigenous secondary students who need to study away from home, including better, fairer and more flexible travel provisions and the portability of ABSTUDY benefits if students change schools. This Bill will extend Family Tax Benefit to eligible secondary students aged 16 years and over who receive ABSTUDY assistance to study away from home.  These changes will commence on 1 January 2020 subject to the timing of the passage of this Bill.

Extending Family Tax Benefit to ABSTUDY boarding students is consistent with broader Family Tax Benefit rules. It also aligns with recommendations from the 2014 Forrest Review ‘Creating Parity’. The Forrest Review recommended that Indigenous families with children at boarding school have access to Family Tax Benefit payments until students finish year 12 in recognition of the costs parents incur for their children.

Currently, families of Indigenous boarding students aged under 16 are generally eligible for both ABSTUDY and Family Tax Benefit.  ABSTUDY for these students is paid directly to the school and boarding provider to cover tuition and boarding costs, while Family Tax Benefit is paid to the family to help with the cost of raising children.

Families rely on Family Tax Benefit to meet the ongoing costs of their children’s daily incidentals while they are away at school, such as clothing, toiletries, medicines and pocket money as well as their living costs when they are at home during school holidays. Once the student turns 16, Family Assistance legislation precludes ABSTUDY students from receiving Family Tax Benefit, leaving families with no assistance for the cost of everyday essentials for the child.

The loss of Family Tax Benefit when a boarding student turns 16 is a significant drop in income support for families, which can be as high as $6,900 per year.  This contributes to financial pressure for families at a critical stage in a young person’s education. It creates a disincentive for families to continue sending their child away to school and attain a year 12 qualification. If they drop out of school early, these young people are in a much weaker position to transition to work in adulthood.

Modelling using the Priority Investment Approach shows ABSTUDY students who stay in boarding for their senior schooling are less likely to need income support in the future.  On average, within five years of leaving school, Indigenous young people who study year 11 as boarding students are projected to have income support costs that are 38 per cent lower than those of their peers who leave school early.

Changes introduced by this Bill will mean that from 1 January 2020, families of Indigenous boarding students will stay in the Family Tax Benefit system until their child reaches the end of secondary school. Eligible families of boarding students aged 16 years and over can receive both ABSTUDY for school and boarding fees, and Family Tax Benefit to assist them with the ongoing costs of raising the child. These improved payment arrangements will better reflect the needs of remote Indigenous families with children studying away from home.

The families of more than 2,000 Indigenous secondary students will benefit from these changes. On average, these families would receive an additional $5,911 per year.

Through these changes the Government is delivering an additional $36.4 million in support over the next four years.  This investment will contribute to increasing the proportion of Indigenous students who complete year 12 – improving their work prospects and lifetime wellbeing, and reversing the potential costs to the community that come with long-term unemployment and welfare dependency.

In summary, this Bill allows for the implementation of measures that will extend Family Tax Benefit to the families of ABSTUDY students who need to board away from home to attend secondary school.