For discussion FCR(96-97)73
on 29 November 1996

ITEM FOR FINANCE COMMITTEE

HEAD 173 - STUDENT FINANCIAL ASSISTANCE AGENCY
Subhead 275 Student travel scheme

Members are invited to approve supplementary provision of $46.8 million under Head 173 Subhead 275 for payment of student travel subsidy.

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PROBLEM
PROPOSAL
JUSTIFICATION
FINANCIAL IMPLICATIONS
BACKGROUND INFORMATION

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PROBLEM

The approved provision for student travel subsidy is insufficient to meet the increased expenditure in 1996-97.

PROPOSAL

2. The Controller, Student Financial Assistance Agency (C,SFAA) proposes supplementary provision of $46.8 million under Head 173 Subhead 275 for payment of student travel subsidy to eligible students in 1996-97.

JUSTIFICATION

3. On the basis of the estimated average subsidy and the latest projection on the number of successful applications, C, SFAA estimates that expenditure in the current year will exceed the approved provision by $46.8 million, as follows -

4. The shortfall is mainly due to an increase in public transport fares and an increase in the number of successful applications. In preparing the 1996-97 draft Estimates, we calculated the provision required to meet payments under the Student Travel Scheme on the basis of an estimated 187 992 successful applicants. C, SFAA now estimates that the number of successful applications will be 198 824, an increase of 5.8%. The average subsidy per successful applicant having regard to the updated public transport fare matrix for the Student Travel Scheme has also increased by 10.8% from $1,231.5 to $1,364.9. This reflects the increase in public transport fares. There is also a residual payment of $6,930,000 carried forward from 1995-96, mainly to cover appeal cases, late applications and applications the processing of which we could not complete in 1995-96 because of incomplete information then.

FINANCIAL IMPLICATIONS

5. We will offset the supplementary provision of $46.8 million, if approved, by deleting an equivalent amount under Head 106 Miscellaneous Services Subhead 251 Additional commitments.

BACKGROUND INFORMATION

6. Members approved the Student Travel Scheme on 14 July 1988. In the present form of the Scheme, we provide travel subsidies during term time to needy full-time students between the age of 12 and 25 who have not yet completed their first degree and who live beyond walking distance from their places of study. We calculate the subsidy at the rate of half the average fare on public transport between the district in which the student resides and the district in which the school is located.

7. The Transport Department updates a fare matrix covering all districts annually to determine the subsidy required in each case. We introduced means testing under the Scheme in the 1991-92 school year. Since then, we have been assessing eligibility for the subsidy on the basis of a points system which takes into account the applicant’s household income and the number of dependants in the family.

Education and Manpower Branch
November 1996

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