2GB Ben Fordham

E&OE TRANSCRIPT 2GB – Sydney Live with Ben Fordham 22/05/2014 SUBJECT: Budget 2014 BEN FORDHAM: The Abbott Government is making some pretty major and controversial changes to universities, as we certainly saw yesterday, well, not only ruffling a few feathers but students taking to the streets, not for the first time, but there's a lot of passion around this and I think some serious questions to be asked and hopefully some explanations this afternoon because we have Christopher Pyne, the Federal Education Minister, joining me in the studio. But I just want to set up the concerns a little bit. Students and parents of those students are worried about the Government deregulating university feeds. They're worried that people are going to be priced out of higher education and that students will have unreasonable amounts of debt. They're also not happy that interest rates on HELP loans are set to rise, and students aren't alone in their concerns. You've got experts warning that course costs could double or even triple for some degrees. So are the best students going to get into the best courses or will the richest students beat them in? Christopher Pyne, the Federal Education Minister, is live in our Sydney studio. Good afternoon to you, Christopher Pyne. CHRISTOPHER PYNE: Good afternoon, Ben. Good to be with you. BEN FORDHAM: Why don't we answer that first of all, are the best students going to get into the best courses or will the richest students get into the courses? CHRISTOPHER PYNE: Well, even more so the best students will get into the best courses and even more so low socio-economic status students and students from disadvantaged backgrounds will get into the best courses. And how is that going to happen? It's going to happen because we'll continue the Higher Education Loan Programme, so they'll be able to borrow every dollar up front and pay it back when they earn over $50,000 a year. BEN FORDHAM: And just so we're following this, because it can be confusing for people who aren't involved in going to university or children there, that's called HELP. That's what - formerly known as HECS, right? CHRISTOPHER PYNE: Exactly. So that's the Higher Education Contribution Scheme, it's the scheme where the student borrows every single dollar from the taxpayer, 100 per cent up front, and they only pay $4 out of every $10 back on average. So students who go to university are going to earn 75 per cent more over a lifetime than people who don't, and less than 40 per cent of Australians have a university degree. So six out of 10 Australians are paying for 60 per cent of university students' courses and they're earning more than they're going to over lifetime. It's a very generous gift that the non-university graduates give to university graduates. BEN FORDHAM: Isn't that part of the investment that we make as a nation into the... CHRISTOPHER PYNE: And that's why we're asking... BEN FORDHAM: ...people out there who are going to change the face of the nation and the future... CHRISTOPHER PYNE: Well, I hope so. BEN FORDHAM: ...who are going to crack the codes of how we're going to make more money, the people who are going to discover cures to illnesses. CHRISTOPHER PYNE: Well, if only that were the case. But of course there are 577,000 students in Australia today being subsidised to the tune of 60 per cent by the Australian taxpayer. The Australian taxpayer, I think, could expect students to contribute a bit more and I think 50/50 is a reasonable contribution. Just to answer your question though, because we are expanding - we are establishing, expanding a Commonwealth scholarship scheme, tens of thousands more students will get to go to uni on the basis of merit and disadvantage. Because we are expanding the demand driven system to diplomas and associate degrees which typically first time university users use to go into university, we expect 80,000 more students to go to university over the next four years and they will almost all be low socioeconomic status disadvantaged students who will access these pathways into undergraduate degrees and we won't lose one in four in dropout rates. BEN FORDHAM: Okay, can I just take you back to a interview that you gave to Sky News, The Australian Agenda program last year. You said, I'm not even considering it. This is when you were asked whether you would raise university fees: I'm not even considering it because we promised that we wouldn't and Tony Abbott made it very clear before the election that we would keep our promises. CHRISTOPHER PYNE: And we're not. So, we will not be introducing up front fees for domestic students which used to exist under the Howard government. We will not be introducing those. BEN FORDHAM: But if you… CHRISTOPHER PYNE: Students will still be able to borrow every dollar. BEN FORDHAM: If you deregulate university fees, then the universities have the choice what they charge. CHRISTOPHER PYNE: They have a choice. BEN FORDHAM: So when you said that we're not going to raise university fees, university fees are going to rise. CHRISTOPHER PYNE: I'm not going to raise any university fees. BEN FORDHAM: Oh, the universities are going to do it? CHRISTOPHER PYNE: If universities are deregulated in terms of their fees, it will be a matter for them. BEN FORDHAM: Okay. CHRISTOPHER PYNE: Some may raise fees, some may drop fees. Because we're allowing private providers into the market for Commonwealth Grant Scheme money which is the subsidy that the universities get from the Australian taxpayer, universities will be competing with private providers and you know what that will do, that will force down the price of fees because they will have to actually compete. They won't have the market all to themselves. BEN FORDHAM: You're convinced that the fees are going to drop? CHRISTOPHER PYNE: I think some will. But I think also the competitive nature of having the universities competing with about 140 non-university higher education providers will mean that universities won't be able to charge astronomical fees, or no students would turn up. BEN FORDHAM: Okay, the architect of the HECS system, Professor Bruce Chapman, has said that he's concerned that fees, at prestigious universities, could double even or triple, so… CHRISTOPHER PYNE: I have great respect for Bruce Chapman but usually the architect of a particular scheme - whether it's Medicare or whether it's the Higher Education Contribution Scheme - never likes it to be tinkered with. The reality is HECS has been in place for 20 years and it's constantly being altered and changed, and what was right in the 1980s and the early 1990s is not right now because we've already extended the demand-driven system to undergraduate places. That's led to $7.5 billion more spending by the taxpayer on students at universities. Now, some of the current students seem to want to slam the door behind them and say, no, we don't want anybody else to be able to come in. I want to open the door and expand it so more people get the chance to go to university. BEN FORDHAM: You respect Professor Bruce Chapman. You've just said that. CHRISTOPHER PYNE: Sure. BEN FORDHAM: He believes that university fees could double or even triple. Can you… CHRISTOPHER PYNE: I think he's wrong about that. BEN FORDHAM: Can you give a guarantee they won't triple? CHRISTOPHER PYNE: Well, no one can ever give a guarantee about anything, Ben, as you know. But the truth is that… BEN FORDHAM: Well, I don't know about that. CHRISTOPHER PYNE: …the competitive - well, I can guarantee that you and I will have a very friendly chat this afternoon. But beyond that I can tell you that the competitive pressures that I'm introducing into the system will keep the prices down, and in some courses they will fall, and in some courses they might rise. But let me say this. If you go to Melbourne University and you are in a tutorial of 20 students and you are being taught by one of the world's leading professors at whatever course it might be, why shouldn't that course be valued more than if you are at a tutorial with 200 people being taught by a first year professor and not doing any research? Now, at the moment, those two courses are funded exactly the same way, and that is the problem in the system. People need to be able to value their courses based on what they offer and that's why a lot of universities are very in favour of this. BEN FORDHAM: If you are so confident about the increased competition and therefore the drive on fees to go down, why can't you say look, I honestly don't believe that they are not going to double? CHRISTOPHER PYNE: I don't believe they'll double at all. I'm quite sure they won't. BEN FORDHAM: But you won't guarantee that? CHRISTOPHER PYNE: Well, of course I can't guaran… that would be a facile guarantee to give you, and you know it. BEN FORDHAM: What about when it comes to… CHRISTOPHER PYNE: I'm happy to say lots of things, but I'm not going to make facile guarantees. BEN FORDHAM: Okay. Well, when it comes to taking on debts - for students taking on debts so they can repay their tuition fees later on when they're earning money. In the past, the interest rate has been set at inflation, which at the moment is 2.9 per cent. But from 2016, students will be charged with a - at the 10 year government bond rate. At the moment, that's 3.8. It could go as high as, what? Six per cent? CHRISTOPHER PYNE: The cap is six. At the moment it's 3.8. Now, the reason for that is that the taxpayers are lending these…$52 billion is the HECS debt the taxpayers have lent students - $52 billion. We've lent that to them at an interest rate of two and 2.9 per cent, as you just said. The Government pays four per cent on what we borrow so that we can fund those students at university. So the taxpayers are paying four per cent; the students are paying us back at 2.9. All we're asking students to [indistinct] is pay the same interest rate that the Government is paying on borrowing that money for them. BEN FORDHAM: Yeah, can you see why that will be intimidating for a lot of young people? I mean, these are kids at the start of their lives and if they have a look at it, and they're weighing things up here, and part of what we're getting the message out at the moment is the age of entitlement is over and therefore you can't go putting everything on credit and thinking that you're never going to pay it back. If you're looking at that as a young person and thinking, well, at that interest rate, I may never be able to pay that back won't that encourage - or, discourage people from taking - from going to university? CHRISTOPHER PYNE: No. And it doesn't. There's absolutely no evidence that the fees that students are currently charged has any impact on them deciding to go to university. They don't like paying the fees. When I was at university, we didn't like it when the Government introduced the administration charge. Then we didn't like it when they introduced HECS, because nobody - everyone would rather have something for nothing. But the students are being asked to pay about 50/50. They don't decide not to go to university because of these fees that are being charged, and they will make a discretionary decision as a consumer based on what they think they can earn if they do a particular course. Now, we know that on average, they'll earn 75 per cent more over a lifetime than people without a university degree. So, they're all making that decision. Every time there's been a change to the Higher Education Contribution Scheme over the years, the number of students at university has increased. University students haven't said I'm not going to go to university because of fees because you know they don't have to pay it back until they earn over $50,000 a year. It's the best loan that they'll ever get. BEN FORDHAM: What people are worried about here is not the fact that people will stop going to university. It's those people out there who do not have a lot of money, they may not have wealthy parents, they may not have the capacity to take on enormous loans, and we all know, we read these success stories out there, Christopher Pyne, about people from humble beginnings who went off to university and then their lives have become absolutely phenomenal. They've had an impact on all of us, whether they have cured some kind of illness or whether they've built billion dollar companies. The worry is - and this would surely be weighing on your mind as well - is that there might be a kid out there who's got something to offer this country who is not going to go ahead with that because there is a greater focus on money. CHRISTOPHER PYNE: No. That will not happen, because whether you are from a rich family or from a family of low socio-economic status background, you have exactly the same capacity to borrow that money from the Australian taxpayer and the same chance to get a job later in life and earn over $50,000 a year and pay it back at low interest rates, which is a great deal. And as we know that most Australians - or, more than 60 per cent of Australians don't have a university degree - they are making the sacrifices to pay their taxes so that people like you and I could get to go to university. BEN FORDHAM: I never went to university. CHRISTOPHER PYNE: Well, that's your choice, but I did go to university. You were probably a cadet journalist, were you? BEN FORDHAM: I was. CHRISTOPHER PYNE: Right. So, I - well, I had the opportunity to go to university and I'm very grateful that the taxpayers helped subsidise my education and these students who are protesting - quite frankly, I think they are demonstrating their lack of understanding about the system and how they should be grateful to the Australian taxpayer who are at the moment paying $6 out of every $10 that we are - that they are spending on our tuition fees for students. BEN FORDHAM: How well do you think you guys have solved this Budget? CHRISTOPHER PYNE: I think it's early days. It's a tough Budget. We were elected to make tough decisions. They didn't re-elect Labor because the champion of complaint, Bill Shorten, was as bad in government as he is in opposition. They elected us to make the tough decisions to get the country back on track and to make the Budget - to fix the Budget. And that's exactly what we're doing. This was never a Budget where people were going to hang garlands around our necks and give us boxes of roses - chocolates - and say thank you. BEN FORDHAM: Mmm. CHRISTOPHER PYNE: But I think deep in their hearts, the Australian public knows this is the Budget the country needs and in the short term there might well be unpopularity, but in the medium to long term, I think we'll be given credit for making the decisions that need to be made to fix the country, to fix the debt and deficit disaster that Labor left us. BEN FORDHAM: Well, when people are making tough decisions, sometimes promises have to be broken, don't they? CHRISTOPHER PYNE: I don't believe that the issue of broken promises on individual items in the Budget is more important than the commitment we gave the Australian public that we would fix the Budget. And that's exactly what we're doing. And I think they understand that. BEN FORDHAM: You guys are gambling here on the fact that the economy will be in such a rip-roaring state by the time you go to the polls next time around that everyone will say: well, we wore some pain, all of us, and we had to do some heavy lifting and yes, we might have been told a few things leading into the last election that didn't turn out to be the case after the last election, but we're now sailing a lot prettier than we were three years ago, so we're going to put these guys back in and get them to continue their good work. That's the gamble you're taking, right? CHRISTOPHER PYNE: Well I don't think it's a gamble. I have a lot of faith in the Australian public; I believe that they understand that they elected the Coalition because we had to fix the debt and deficit disaster that was left to us by Labor. I think they know that. And I think that they will give us the credit in the longer term, as the election approaches. And we are a long way from an election. We want to get the economy moving, we want to lower unemployment, we want to give people piece of mind that there's a government in Canberra that actually gets it, and doesn't just think you can keep borrowing money from overseas, racking up debts to $677 billion, and deficits of $123 billion. That was unsustainable, and I think the public knows it. BEN FORDHAM: I know you never mind taking a call. Caroline's called in with a comment or a question. Caroline, Christopher Pyne the Education Minister with us in the studio live, what did you want to say? CALLER CAROLINE: Mr Pyne, I'm one of the middle class voters who have voted you in, 49 years old, three kids, never claimed a cent - no stamp duty, no baby bonus, nothing. Paid for our kids through private schools, my son's at university doing science now, hopes to eventually do medicine. Yesterday they got an email from Sydney University saying the medical degree will go up to roughly 180,000 per year. [Indistinct] for us. We can't afford it. I'm so disappointed. I've written you an email today, I mean, surely this can't be correct? CHRISTOPHER PYNE: Well it's not correct, you're quite right. CALLER CAROLINE: Why did they send an email out to all the students? They're all devastated. CHRISTOPHER PYNE: Well I'd love to see the email. CALLER CAROLINE: Right. CHRISTOPHER PYNE: I read my own emails so you're welcome to send it. CALLER CAROLINE: Well I sent you an email last night, I was quite upset. CHRISTOPHER PYNE: Oh good well I've have a look at it today. CALLER CAROLINE: Now I [indistinct] Abbott's electorate. And we've paid our own way and we've just been kicked in the teeth. Kicked in the teeth. BEN FORDHAM: So it's not right Christopher Pyne? CHRISTOPHER PYNE: Look we are – the next 18 months is about consulting the universities about each of these decisions to do with courses. Medicine is a capped university course. It remained capped even under the demand-driven system. So there is no reason for the university to send an email out of that nature to all of its students saying medical degrees could rise to or are rising to $180,000. So that is just unfortunate scaremongering. I would say though, that every dollar of that - say it was $180,000, which at the moment it costs $68,000 to do a medical degree, and of course our medical practitioners, specialists particularly, are amongst - well are the highest paid people in Australia, let's not forget. Even if it did rise, every single dollar of that could be borrowed from the Australian taxpayer. Every single dollar. So the caller who rang would not be asked to pay it except as a taxpayer. Secondly, if somebody chose to do a medical degree of that kind that was as expensive as that, they would be making the assessment that when they started earning a million dollars a year or more, as many specialists earn, they'd be able to pay it back very quickly. Secondly I would say- well thirdly I would say that, if Sydney University offers a $180,000 medical degree, somebody will compete with them at a lower price, and they won't get students. That's how the market works. So, I'll be happy to look at her email, I'm surprised that the University of Sydney would say such a thing when we're in the middle of the process of consulting with the universities about how it would be implemented, which is why we've given ourselves 18 months to do so. But even if it were true, the three things that I've pointed out would ameliorate the issues - the concern that your caller has got. BEN FORDHAM: When you see these students marching, and the banners, and the chants and whatever, I mean I know it's nothing new, it's happened since day dot - you support their right to get out there and say what they want to say don't you? CHRISTOPHER PYNE: Of course. I don't mind students protesting, I used to protest when I was a student. BEN FORDHAM: What did you protest about? CHRISTOPHER PYNE: We protested about the administration charge, we protested about HECS. You know, students protest against governments. I didn't notice those students protesting about the Labor Party's $2.7 billion- BEN FORDHAM: True. CHRISTOPHER PYNE: - of cuts to higher education six months ago. BEN FORDHAM: Funny that. CHRISTOPHER PYNE: I didn't notice that. What I don't like the students doing though is assaulting the Foreign Minister, or assaulting Sophie Mirabella. I think that is really undemocratic, and quite outrageous. BEN FORDHAM: The Foreign Minister- CHRISTOPHER PYNE: And Bill Shorten is yet to condemn it. BEN FORDHAM: I also condemned what happened to the Foreign Minister Julie Bishop. She wasn't assaulted though, was she? CHRISTOPHER PYNE: It's assault if you feel threatened. And she was actually touched, pushed, grabbed. So she was definitely assaulted. BEN FORDHAM: She was touched and pushed? I didn't know that. CHRISTOPHER PYNE: Absolutely. But I'm surprised that Bill Shorten is yet to condemn it. I assume he prefers the tumult that we're experiencing. BEN FORDHAM: Speaking of Bill Shorten, what did you call him in Parliament last week? CHRISTOPHER PYNE: A grub. BEN FORDHAM: A four-letter word. CHRISTOPHER PYNE: A grub. I called him a grub, and he called me a grub. And I responded by saying you're such a grub. And I'm happy to call him an empty vessel that makes the most noise, an intergenerational thief. BEN FORDHAM: How did people get mixed up with that word and then all of a sudden it was the C-word? CHRISTOPHER PYNE: Search me. BEN FORDHAM: And people were- CHRISTOPHER PYNE: I knew you'd raise this. BEN FORDHAM: - no people were playing it as well. And even though - and I made the point to people: if he used a word like that, which he never would anyway, do you reckon people would react? I mean the whole place would be in shock. There was no reaction. But why did it sound like that on that tape? How did that work? CHRISTOPHER PYNE: I don't know. Let me tell you, if I had used anything other than grub, I would not be sitting here as the Education Minister in the Abbott Government. Secondly, if I had, does anybody seriously believe that Bronwyn Bishop, or Tanya Plibersek, or Kate Ellis would have simply sat there demurely and allowed it all to continue? So it's completely absurd, it's had 350,000 views on YouTube apparently. BEN FORDHAM: And you'd love that. CHRISTOPHER PYNE: I hate it. I think it's appalling. BEN FORDHAM: Okay. CHRISTOPHER PYNE: But, you know, I said grub, and he shouldn't have called me a grub either. BEN FORDHAM: Did you just wink at me? CHRISTOPHER PYNE: [Laughs] No I certainly did not. BEN FORDHAM: Christopher Pyne, thank you for your time. CHRISTOPHER PYNE: Pleasure. BEN FORDHAM: Federal Education Minister Christopher Pyne. [ends]