The underexplained and insecure Commonwealth Prac Payment
The planned Commonwealth Prac Payment aims to help students finance mandatory practical training, such as clinical training or teaching rounds. Initially teaching, nursing and midwifery, and social work students in higher education and VET will be eligible.
According to the government, the Prac payment will be means-tested and is 'intended to support learning outcomes, where the financial impacts of placements may have otherwise influenced students to defer or withdraw from study' (emphasis added).
The payment will be matched to the single Austudy rate, $319.50 a week as of today.
The policy is due to start on 1 July 2025, with part of the legal framework in a bill introduced into the House of Representatives last week.
Bureaucratic and intrusive eligibility criteria
While the Prac payment is a good idea in principle, as with almost all the Accord related proposals it comes with a large amount of bureaucracy and red tape.
The typical Australian means test takes into account both personal and family income. For higher education income support, family income is based on parents or partners depending on student age.
The government says that universities will administer the Prac payment. But universities don't have the resources to run means-testing systems. Students should not be required to give their university sensitive information about personal and family finances.
The most practical solution would be to make the Prac payment a supplement to people who already receive some form of means-tested benefit. But that may restrict eligibility too tightly.
Will students have to show they might have deferred or withdrawn?
It's not clear to me whether the reference to withdrawing or deferring is part of the test for getting the Prac payment, or is just a general statement of the policy problem the payment is trying to fix.
It would be hard for a student to prove they would have done something in a counter-factual state of affairs.
A simpler, better test
Rather than means tests or intention tests, to get the Prac payment it should be enough for a student to show that working in their usual job would be impractical during the placement.
This could be done by comparing the location and hours of the student's job with the location and hours of the placement.
However this does not deal with the case the minister mentioned in his second reading speech, a mature age student with childcare responsibilities.
Different rules could be devised for people with caring commitments.
Level of benefit
The Austudy link to the Prac payment is not in the legislation. The minister could decide to set it at a different level.
It is not clear if there will be a tapering system, as for Austudy itself, so that people with higher earnings receive lower payments.
Median full-time student income is already twice the Austudy rate. The loss of a student's other earnings might still be more than they can forgo to do their placement.
The Prac payment will be taxable income for part-time students, possibly full-time students as well.
The bill
The bill as introduced last week answers none of the eligibility or implementation questions raised above. The relevant provision is so short that I can reproduce it in full:
What this means is the legal substance will come from a subsequent legislative instrument that will form part of the other grants guidelines.
Both the House of Representatives and the Senate have the power to disallow these guidelines, but they are made by the minister without parliamentary debate. As I have often pointed out, rule by decree is this government's favoured approach in higher education.
The legislative instrument could put a time limit on the prac payment policy. The minister has said that the more than doubled international student visa application will help fund the prac payment. As the government's plans to block and deter international students take effect, that revenue source could quickly dwindle.
The legislative instrument is likely to cap the payment by provider. None of the existing other grants programs are student demand driven.
A provider cap would mean that a student could be eligible for the Prac payment but not entitled to it.
That is presumably one reason why the government has offloaded administration of the payment onto the universities, so they can make the hard decisions to reject students who meet the criteria.
And if students are not entitled to it, they cannot build it into their assessment of whether taking a teaching, nursing or social work course is financially feasible.
Conclusion
The Parliament should give the government a revise and resubmit on the Prac payments provisions.
The politics of deleting the Prac payment from the bill are tricky, as the government will paint this as opposing the Prac payment itself.
But the policy isn't due to start for nearly a year. There is time for the government to return with a bill than can answer basic questions about the policy's design and commits it delivering the promised payment. The government giving itself the option to partly finance universities delivering a placement program at some future time is not good enough.