Allegra Spender (Wentworth, Independent) Share this | Hansard source

I rise to speak on the Universities Accord (Cutting Student Debt by 20 Per Cent) Bill 2025 that is in front of the parliament, and I rise to speak about Australian young people who are struggling at this time in ways that they haven't in previous generations. It goes to the heart of why this bill is important but also why other things are also necessary as well.

I met a young woman recently. She was in her early 30s. She had one little child, about a two- or three-year old, and twins. She came up to me at Kings Cross one Saturday morning when I was standing there. She is a doctor. She said: 'I used to be a nurse; I then became a doctor. I've just paid off all of my HECS debt. My husband is a lawyer; he used to be a policeman. He also retrained and just paid off his HECS debt.' She said: 'I think I've done everything right. I've tried to make all the good choices, but I cannot see how I'm ever going to have a home of my own. I can't see how I move forward, and I think about this every single day.' This, to me, is absolutely gutting, because this goes to the heart of some of the challenges we have in our country right now where people who are doing everything right. In this case, it was an individual who is working to care for people—she cared for my mother—talked about how she is caring for people, making all the right choices, investing in herself and her education, and she cannot get ahead. This is the problem that we're facing. We're facing it in the tax system, and we are facing it in the education system that we have here in this country.

Let's now talk to the bill. This is an important bill. It is not a perfect bill, but it also doesn't deal with some things that really need to be done. What does this bill do? It reforms the HELP system. This reform of the HELP system will go some way to alleviating financial pressure for many young Australians and so it is a welcome measure to many young Australians. I will support this bill, but I also acknowledge that this bill is far from the best version of the bill it could be.

There are a number of measures in this bill, and two of the three measures in this bill, namely the changing in the repayment threshold and introducing the marginal repayment system, have enormous merit.

Firstly, increasing the payment threshold from the current $54,435 to $67,000 will mean that graduates on lower incomes and lower salaries will take home more pay before having to contribute back to the cost of their education—which is a response to the fact that over time the repayment schedule for HECS has not kept pace with the cost of living, in particular affecting low-income households. Similarly, the Universities Accord identified that the current repayment schedule is unfair since the stepped increase resulted in some cases of people earning less take-home pay after receiving a pay rise. That just doesn't seem right. As Professor Andrew Norton argued, these measures in principle sound good—graduates will pay less on average every year—but there are some downsides, including in the marginal increase in the average repayment timeframe and an increase in the likelihood of some low-income graduates having their HECS index faster than their ability to repay. So these are good measures but they're not perfect.

However, there are a couple of issues with the bill. One is how we are giving one-off HECS-HELP relief to students. I do support HELP relief for students, and that is because I believe that, in Australia, young people are struggling to achieve the same milestones as their parents. We have a birth rate of 1.5. That is the lowest it has ever been, and it is because young people are saying they can't actually afford to have children. We, as a country, will pay the price for that going forward. We are seeing this in our wealth outcomes. In the last 10 or so years, households over the age of 65 grew their wealth by around 50 per cent. Households under the age of 35 pretty much went nowhere. We see that in our tax system. If you take two households both on 100 grand, if one household is retired it is, on average, paying half the tax of a young working household.

We all know that it's when you are young and working, when you're trying to buy a house or raise kids—that's when you have the most pressure on your income, and that's when our tax system goes for you the most. So this is why I support the measure in this bill that cuts student debt, because I believe that we do need to find broad ways to try and support young people in what is a really difficult moment for them right now.

But I do have some questions in terms of how the government designed this part of the bill, and I wish they had, frankly, approached it a different way. The government decided to offer HELP relief to students by slashing 20 per cent of their account balance as at 1 June 2025. And, look, that's going to help a whole bunch of people—many, many people in my electorate—and I'm extremely pleased about that.

However, this policy is extremely dependent on timing, and it is, as economists call it, 'horizontally inequitable'. As e61 estimate in their recent research, a graduate who finished the same degree four years ago—and, by all accounts, can be expected to face the same financial pressures and burdens as someone who graduated today—will experience just half the benefit of this policy, relative to someone who graduated last year. So, within four years, one person gets twice the benefit of somebody else because of the way that this bill has been designed.

That just seems a shame. Frankly, just because you graduated four years ago doesn't mean you are less worthy of a reduction in your HECS balance, and it doesn't mean that you're less pressured in terms of your finances; it's just the timing. If, right now, you're at maximum HECS debt, you're going to get the full benefit of this bill. If you have paid it off over time, you're just not. I don't think that's a particularly fair way of approaching it. And, frankly, a young person going into uni right now or starting next year is not going to get any benefit from this bill at all. This is part of the challenge here.

I believe that good policy requires people in the same situation to, ideally, get equal treatment. I recognise that many people in this House, for instance, had free university, which is a luxury that many won't have. I think it's of concern that this bill is so sensitive to the timing of when somebody completed their university degree. Other options were presented by e61. They recommended that the government pay each student with a debt a flat amount equal to 20 per cent of the average HECS debt. This simple change would have provided $5,500 to all students with a HELP debt, regardless of their year of graduation. The policy would have cost the same, yet it would have mitigated this horizontal inequity based on when a person happens to graduate from university. It would also have given, possibly, the government a longer grace period before pressure mounts for other people to get future cuts to their HECS debt—which is probably going to happen after this one-off debt relief. That is a problem for a future government.

I've talked a lot about HELP debt, about what it is and about why this is an important bill, and I recognise that it is important. But I also recognise that there are many other issues with the current HELP system which are problematic and have not been addressed by this bill. I'll put one out there that the member for Kooyong raised in her second reading amendment, and that is the job-ready graduates scheme. This is a policy that keeps on coming up when I go around my community and ask them what they think about HELP debts and education. This policy, which was implemented by a previous coalition government, increased particularly the cost of arts degrees to around $55,000. They were trying to disincentivise people from going into the arts and encourage more into STEM. It did not work or achieve its policy objective, but it burdened arts graduates with an education debt that outstripped, frankly, the costs of the university and penalised a group of people who actually have relatively low lifetime earnings. So it wasn't fair either, and it's a shame that the government hasn't dealt with this problem, because it is a significant problem with the HECS-HELP system, and it is urgent that it be addressed.

Another opportunity that has not been dealt with in this bill and was recommended by the Universities Accord was to change the timing of indexation from 1 July until compulsory repayments made during the previous year were deducted from a student's balance. This would help students pay down their loans quicker.

In summary, I will support this measure because I believe it is providing relief to a part of the community that really needs it. But I do believe that the government could have done a much better job in terms of designing some aspects of this bill, and this bill still has a significant way to go in addressing some of the problems in our university sector.

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