Practical questions about “Commonwealth Prac Payments”

In last month’s Budget the government announced a “Commonwealth Prac Payment” of $319.50 per week to be paid to students in selected higher education and VET while they undertake mandatory work placements.

The Budget measure is worth $427.4m over four years and has been warmly welcomed by many peak bodies and sector leaders for the difference it will make in reducing ‘placement poverty’ for students studying the education, health and social work courses which will be eligible for the payment.

The government is consulting on the implementation of this payment and in questioning in this month’s Senate Estimates hearings it emerged that there are important reasons for providers to pay close attention to this new initiative and engage closely in the consultation on its implementation.

Why?

Well although the payment will be benchmarked to the single Austudy weekly rate and other welfare support payments a student receives will not be affected – the government will not be making the payments to students: universities will and it appears (although it is less clear) that TAFE and private providers may be administering the payments to eligible VET students (the Department of Employment and Workplace Relations is yet to determine this).

If the payments were being paid to all students doing the specified courses while they were on workplacement – it would be an extra administrative task for providers but would still be quite straightforward (and universities will receive a small administrative amount from the government to assist them with this work).

However the Budget factsheet makes clear that these payments will be means-tested.

As a taxpayer (and a former welfare recipient) I completely support means-testing for income support payments. If students have sufficient financial resources that they do not need the payment they should not be eligible for it.

But at face value this commitment to means testing appears to potentially add an extra element of complexity for providers – presumably they will need to sight their students’ income in the weeks before and during the workplacement component of their course to determine if they meet the income threshold for the payment?

And then turn your mind to what will happen if, like many students, those potentially eligible for the Prac Placement payment have variable earnings while they are studying?

If Centrelink/Services Australia did not have the resources, or sufficient interest, to properly calculate income support eligibility for welfare recipients (including those eligible for Austudy) during the Robodebt scandal – do we really think our universities, TAFE Institutes and private providers will be able to make these calculations and ensure means testing for the payments are properly applied?

Note that the implication of means testing the payment was only partly discussed in the Senate Estimates hearing – or perhaps I am misreading this exchange (and am wrongly worried about means testing)? Does this exchange below, and the government’s commitment to means testing the payment, mean that the Prac Placement payment will only be made to students in receipt of Austudy? And if that is the case then I am not sure that all stakeholders have that understanding of this Budget initiative?

A further complicating factor might arise for students when it comes to tax time.

If the placement payment income takes them above the annual tax-free threshold – will this have implications for how much tax they should have paid during the year (through another part-time job perhaps?) and hence leave them with a tax liability at the end of the financial year?

The Estimates hearing also confirmed that international students will not be eligible for the payment. Which makes sense at one level – after all international students are ineligible for other income support payments BUT if we want more international students to study courses where Australia is facing skill shortages – then surely this makes it harder for them to consider courses where they could make a real positive difference to the Australian labour market on graduation?

And finally – how were the eligible courses chosen?

As Senator David Pocock pointed out – there are plenty of other courses where students have mandatory workplacements, which are experiencing skill shortages and which could have been eligible for the payment.

It turns out the courses were agreed in “background discussions” between the Department and the Universities Accord Panel: