Seanad debates

Wednesday, 15 June 2011

Proposed Legislation

Third Level Charges

8:00 am

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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I welcome the Minister of State to the House. While my question is simple there is a certain complexity behind it. The first indication that the student charge was going to be increased came prior to Christmas when, ironically, a question was tabled by the now Minister for Education and Skills, Deputy Ruairí Quinn. It was followed up by his party colleague the Minister of State at the Department of Health, Deputy Róisín Shortall, who asked the then Tánaiste and Minister for Education and Skills, Mary Coughlan, on Tuesday, 25 January, the precise student contribution charge that would apply in the case of siblings in 2011. The question asked on 25 January is now being asked of the new Administration.

In her reply the then Minister said,

The Finance Bill 2011 provided for certain changes in regard to tax relief arrangements for student fees and charges which would give an effective cost reduction in respect of second and subsequent siblings from a single family who are liable for the new student contribution charge. The existing tax relief for third level fees and charges will now be amended to provide that the first €2,000 in fees charged per claim will be ineligible for tax relief for students in full-time education and families with two or more children liable for the new student contribution will therefore now qualify for tax relief in respect of payments arising from second and subsequent sibling liability.

The matter then rested and the new Government took over. Despite repeated attempts to establish with the Department of Education and Skills what exactly the position is regarding the second and subsequent siblings of a student who is in third level education in terms of what the charge will be, there has been a failure to establish it, hence the question I am asking today.

I should put on the record that according to the Irish Independent, the Minister, Deputy Quinn, has commissioned a report on funding for the education sector and has not ruled out the introduction of fees and new student charges claiming it is hard to see how higher education can meet Government targets without more money. However, before the election the Labour Party promised that it would not increase fees or charges and would also reverse the €500 increase in student registration charges due to be introduced in September as per the proposals of the previous Government.

In an editorial in The Sunday Times on 5 June reference was again made to the Minister, Deputy Quinn, as follows:

[The Minister has] upset his backbenchers by executing a U-turn on the funding of third level education and his admission that his pre-election vow to oppose the €500 increase in the student registration fee no longer applies and is in line with last year's Hunt report which found the existing funding model for third level education unsustainable.

In a further comment on 31 May the Irish Independent again referred to the Labour Party Minister admitting that the student registration charge would rise to €2,000 per student in September, despite promising the opposite before the election.

The newspaper also referred to the fact that, during the election campaign, the Minister signed a Union of Students in Ireland pledge that the Labour Party would not reintroduce third-level fees in government, or support an increase in the student service charge.

On 15 December 2010, the Irish Independent referred to Fine Gael's policy to charge college graduates fees. Their policy on third-level funding, entitled "The Third Way", proposed deferred contribution payments by students of up to €4,300 for each year of study. The total of deferred fees mentioned in the report ranged from €11,400 for a three-year arts degree, to €17,096 for engineering. As an alternative to having income deducted, graduates could pay off their fees immediately after graduation. However, the Fine Gael policy document did not mention how students in expensive courses, such as veterinary science and medicine, would pay.

The former president of Dublin City University, Professor Ferdinand von Prondzynski, said that while Labour has a strong emotional attachment to free fees:

It was a massive gift to the middle classes. It paid for many well-to-do people to go to university from areas such as Foxrock and Stillorgan, but did nothing to increase numbers going from areas such as Ballymun.

I have tabled this Adjournment matter because it is obvious from all the statements by representatives both of Fine Gael and the Labour Party that there is some confusion over what the position will be when the academic year commences in September 2011. Will there be a continuation of the previous Fianna Fáil Minister's proposals to increase fees to €2,000 for the first student and to introduce a tax relief for second or subsequent siblings, or will there be some other form of increased registration charge? One way or the other, I do not anticipate that the status quo will remain, given what the Minister of State had to say in answering the previous Adjournment motion. I hope he will not start with the pejorative statement he made in the last reply, that Fianna Fáil mismanaged the economy. There were many other factors apart from political activity, as he and everybody else now knows and readily acknowledges. I would be grateful for some clarification, however, in the interests of parents, like myself, who want to know how much it will cost for our children to enter third-level education in September.

Photo of Ciarán CannonCiarán Cannon (Galway East, Fine Gael)
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I am taking this Adjournment matter on behalf of my colleague, the Minister for Education and Skills, Deputy Ruairí Quinn. I wish to thank the Senator for raising this matter.

I will start by explaining the background to the current student services charge. In the context of the introduction of the free fees initiative in the 1995-96 academic year, in acknowledgement of the variation in the arrangements that existed in colleges, a standardised charge was levied by the third-level institutions to defray the costs of examinations, registration and student services. The range of student services in question may include such facilities as on-campus medical and counselling facilities, access and disability services, careers office services, student facilities, student clubs and societies.

As announced by the previous Fianna Fáil-Green Party Government in the 2011 budget, a new flat, higher education student contribution of €2,000 will be introduced with effect from the 2011-12 academic year. This new student contribution will replace the existing student services charge and will apply to all students who currently benefit under the free fees scheme. This contribution will encompass the current student services charge and will also include a contribution by students towards tuition costs.

It is also important to remember that the contribution will continue to be paid by the Exchequer in respect of students who qualify under the third-level grant schemes. Conscious of the financial pressures that this contribution may place on families where family income is marginally in excess of current eligibility levels for maintenance grant support, and on families with more than one sibling in higher education at the same time, the current higher education grants scheme's threshold will be increased to provide for an additional eligibility category of support qualifying for a 50% student contribution.

Arrangements have been made to provide that second and subsequent siblings from a single family will not have to bear the full increased cost of the new €2,000 charge. While the current student services charge in higher education does not qualify for tax relief, the new contribution will be allowable for tax relief. The Finance Act 2011 provides that, with effect from 2011, the first €2,000 in qualifying fees per claim will now be ineligible for tax relief for students in full-time education. An effect of this is that families with two or more children liable for the new student contribution charge will therefore now qualify for tax relief in respect of payments arising from second and subsequent sibling liability. This will result in a reduction in the overall effective cost of the contribution in these cases. Based on current rates of relief, the effective cost of the student contribution, net of tax relief, for second and subsequent siblings will be €1,600 each. These arrangements provide a practical means of giving effect to the commitment made that the full, increased cost of the new contribution would be alleviated for second and subsequent siblings within a single family.

Higher education institutions have also been asked to put in place arrangements under which a student may opt to pay the charge in two equal instalments of 50% in September and 50% in January in a given academic year.

The Government is committed to ensuring that opportunities to engage in higher education continue to be made available to potential learners and that access to higher education will continue to be determined by a student's ability and not his or her financial circumstances.

I would like to thank the Senator for affording me the opportunity to respond to the House on this matter.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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I am grateful to the Minister of State for his reply.

Photo of Paddy BurkePaddy Burke (Fine Gael)
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A brief question, please.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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Am I right in saying that the Government will now have to sell this on the basis that it will generate just €47 million in any given year? The Minister of State's reply is similar to an answer provided in the Dáil which stated that €55 million would be generated in any one year as a result of the increased charges, but that because of the clawback in tax relief there would be a loss of €8 million. I am suggesting therefore that the net benefit to the Exchequer will be €47 million. If so, that is what the Government will have to sell to the increasing wrath of the Union of Students in Ireland and to parents who will have to scramble to provide this extra money. I fully understand, and in no way wish to understate, the real economic challenge facing the Government. I hope, however, that it will not be a repeat of the attempt by the last Government to end medical cards for all. That was done for an equally small sum of money in the overall economic context.

Nonetheless, I am grateful to the Minister of State for at least bringing clarity to this situation. Since the change of Government, this has been a grey area for parents.

Photo of Ciarán CannonCiarán Cannon (Galway East, Fine Gael)
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It is my understanding that the figures mentioned by Senator Mooney concerning the revenue accruing from this are accurate. However, I will seek to clarify that for him in the next couple of days and will revert to him directly with that information.

Photo of Paschal MooneyPaschal Mooney (Fianna Fail)
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I thank the Minister of State. He is very kind.

The Seanad adjourned at 9 p.m. until 10.30 a.m. on Thursday, 16 June 2011.