Monique Ryan (Kooyong, Independent) Share this | Hansard source

There are 2.9 million Australians with a HECS debt, and this bill, the Universities Accord (Cutting Student Debt by 20 Per Cent) Bill 2025, will reduce their debts by 20 per cent. As a result of this bill, every single one of the 1.2 million Australians who are currently repaying their student loans will pay less per year.

I wish to congratulate and thank the 290,000 Australians who signed my HECS petition to the education minister last year. You contributed to this change. You spoke, and your voice was heard by your elected representatives and by the government. You did this. I also want to thank and congratulate the Minister for Education for responding to the voices of hundreds of thousands of Australians. Our democracy is strong. I've heard from or spoken with many of you—students, graduates, parents, grandparents, academics, educators and Australians distressed that a system designed to increase access to tertiary education has been reverse-engineered to the point where it is an active disincentive to start studies. It's become a burden around the neck of young people and older people saddled with life-changing debt.

This legislation will lift some of that burden for Australians. It's very clever politics but it is not ideal policy. The 20 per cent cut is not well-targeted. It will deliver major benefits to recent graduates but give much less to current students or earlier graduates. It gives nothing to future students or those who have already completed their repayments. It will help those people who have bigger debts more.

Under this bill, the income threshold for compulsory HELP repayments will increase to $67,000. Repayments will be calculated only on that portion of the income which is above the $67,000 threshold rather than the total income. This marginal repayment system will result in lower compulsory repayments for everyone who earns less than $180,000. The problem is that that higher threshold and the marginal repayment rates mean that, although we won't any longer have that paradox where graduates who are earning pay rises sometimes see their take-home pay decrease, more graduates will find themselves repaying less than the annual indexation on their HECS balance. As a result, their debt will increase each year. They will effectively be locked into a debt treadmill. The Parliamentary Budget Office has calculated that, for those starting careers with incomes below the repayment thresholds, particularly women, repayment could take 40 years or more. Some young students are signing on for what is effectively a lifetime of debt, and they don't understand that when they take on those degrees.

University isn't what it used to be. Domestic enrolments have plateaued, dropout rates are historically high, debts of more than $150,000 at graduation are no longer rare and women are taking longer to pay back their HECS debts—so they end up paying more. Meanwhile, the government has still not unwound the job-ready graduates scheme, which, five years ago, doubled the cost of arts, law and business degrees overnight. Students of those disciplines are still accruing massive debts—$50,000 for a basic degree and $85,000 for common combinations. The Australian Historical Association said on 24 July:

In an era of severe international turmoil, climate crisis, rising disinformation, and declining trust in democratic principles, a higher education in subjects that stress global knowledges, reasoned debate, and civic literacy is paramount.

Job-ready Graduates did not align with national priorities or with projected skills shortages. It left students with debts which were vastly disproportionate to their future earning potential. The PBO has estimated that it's already increased student debt by more than $10 billion, and that is going to continue to increase massively until it is reversed. The minister has suggested repeatedly that the Australian Tertiary Education Commission will provide advice on student fees, but it will not be able to change them before 2027 at the earliest. The minister could do that tomorrow. In 2021, the Labor caucus called the job-ready graduates scheme 'inequitable, pernicious and perverse'. Even the Liberals are now admitting that the job-ready graduates scheme is an appalling policy which should be scrapped immediately.

Prac placements are another burden. Optometry students and medical imaging students have to undertake a full year of full-time, unpaid training. Physios, occupational therapists, podiatrists, speech pathologists, vets and others have to complete a thousand hours or more of unpaid placements. During those placements, which can be hundreds of kilometres from their homes, they have to pay for travel, additional accommodation, uniforms, equipment, professional registration and insurances, not to mention their loss of income, plus or minus childcare costs. Those placements are much more burdensome for students from rural and regional settings and for those from First Nations and vulnerable backgrounds. They are more challenging for women, who are more likely to have dependants and other care responsibilities.

The Commonwealth Prac Payment program, which commenced on 1 July, was a response to the recommendation of the Universities Accord that we provide financial support for the nursing, care and teaching professions. But it is currently limited to students of nursing, midwifery, teaching and social work. There is no possible justification for excluding students from other care disciplines at a time when we have persistent and significant workforce shortages in virtually all healthcare disciplines. It is a false economy to force students to defer their studies or to go part time to cover the cost of their prac placements, knowing that, in many such cases, those decisions are followed by noncompletion. We're already investing in those students. We need the skill sets that they are acquiring in all good faith. Placement poverty is exacerbating workforce shortages in many key professions, like psychology and radiography. By worsening skills shortages, we are driving up the out-of-pocket costs for things like psychology support, mental health care and medical imaging. I join with the allied health professionals' association, the Australian Medical Students' Association, the AMA, the National Union of Students, the Health Services Union, the Australian Veterinary Association and the Pharmacy Guild in calling on the government to immediately extend support for compulsory prac placements to all care-sector students.

Finally, HECS loans are indexed annually on 1 June, using a formula based on either the CPI or the wage price index for the previous year, and that ensures that debts maintain their real value over time. The fact that the tax office doesn't adjust the balance owing until after a tax return is filed, after indexation is applied, means that many graduates see their debts increase, despite their very best efforts to pay them off. It is outrageous that payments made during the year by these graduates are not taken into account before that indexation is applied. We would not put up with this on our mortgages. Why do we expect graduates to put up with it? It is a sneaky, unnecessary cash grab which is costing Australian graduates $175 million every year.

We need fairer, more equitable and more systematic higher education contribution schemes. Young people are facing a housing crisis, a cost-of-living crisis and a climate crisis, and now we've given them the additional burden of making their education too expensive. We need to align the cost of education with the earning potential of graduates. We have to ensure that Australians aren't saddled with a lifetime of debt, because they've worked to gain skills from which we will all benefit. We shouldn't make laws that prolong and increase their debt burden. That is what we are doing today.

HECS debts are stopping young people from starting degrees. They're preventing them from getting home loans. They're causing them to put off starting families at a time when our birthrate is lower than it's ever been before. We need to make degrees cheaper and we should start by scrapping the job-ready graduates scheme. We need to change indexation to make it more fair. We need to help young people complete practical training in the courses that they love so that we can benefit from the skills they bring to our healthcare system. We need to show some generosity. We will all benefit so much in return. I brought to the House today an amendment to those ends. I commend it to the House, as I commend this bill, and I trust that colleagues from all sides will support it.

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