Zoe McKenzie (Flinders, Liberal Party, Shadow Assistant Minister for Mental Health) Share this | Hansard source

I rise to speak on the Universities Accord (Cutting Student Debt by 20 Per Cent) Bill 2025, a measure which provides a one-off 20 per cent reduction to higher educational and program debts and restructures how young people will repay their debt, including lifting the threshold for compulsory repayments from $54,435 in 2024-25 to $67,000 in this financial year.

Around three million Australians who have student debt loans will see some benefit from the debt reduction measure, including the 70 per cent of HELP debtors who are aged 35 years old or younger. This change forms part of broader adjustments to the repayment system and will provide some immediate cost-of-living relief for those carrying significant student debt. This policy resonated at the election, because young people are being hit hard by Labor's cost-of-living crisis, and student debt is part of that pressure. This policy will assist a specific cohort: those with large HELP debts, most of whom had the opportunity to attend university.

The government has accepted that early childhood workers and nurses should be writing off the debts of lawyers and doctors—indeed, debts worth $16 billion. But there are millions of Australians who don't have a student loan, and many of them are also struggling to pay the rent, to buy groceries and to cover basic bills, and it is their taxation dollars that are going towards this one-off $16 billion cost to the bottom line of the budget.

The government's approach ignores the needs of those young Australians who don't go to university, including those in insecure or lower paid jobs who are highly exposed to high cost of living and high housing costs. Students face huge increases in everyday costs thanks to this government's policies. Since they were elected, rent has gone up by 18 per cent, cheese has gone up by 20 per cent, milk has gone up by 17 per cent, cereal—the staple of all students, may I say—has gone up by 20 per cent and eggs have gone up by 32 per cent.

We understand that, today, around three million Australians have a student debt amounting to $81 billion, meaning each student carries an average debt of $27,640. As they move into the professional world, they have to work out how they will repay this debt. We acknowledge, though it is predominantly higher education debt, there are also some VET loans. The government estimates this measure will save those debtors, on average, $5,520 on their accumulated HECS debt.

The Australian government invests heavily in university education and has done so for decades, and it is important to remember that Commonwealth covers around 60 per cent of a student's degree, although that varies greatly by discipline. Further support for students is welcome, but it must be balanced with a focus on broader reforms that improve opportunity for all.

Analysis of this policy would suggest that it will benefit high-income earners who have undertaken expensive degrees. We know there are some categories of women who will be disadvantaged, especially those who will work part time early in their careers, and that past debtors who have repaid the cost of their studies and future students, enrolling as of tomorrow, will miss out. The changes to the repayment method also contained in this bill will affect all debtors and, for many of those with low incomes, may keep them in debt for even longer. The Parliamentary Budget Office modelled that a graduate with a low income—50 per cent of average graduate income—will fall below the new minimum repayment threshold and will take approximately another eight years to pay off their debt.

With effect from 1 June, the bill reduces student debt, including all HELP, vocational education and training student loans, Australian apprenticeship support loans, student start-up loans and other student loans. While attractive at the ballot box, this is poor economic and educational policy. When Labor announced this policy last year subject to the election outcome, economists slammed it as a poorly targeted sugar hit. Let me quote Chris Richardson, an economist:

…handing $16bn to graduates is a reverse Robin Hood: it's a tax cut targeted to the big end of town, with money going from the less well off to the better off.

It's a fairness fail.

Worse still, that $16bn does nothing for the nation's future.

Andrew Lilley, Chief Interest Rate Strategist at Barrenjoey, said:

Just sad to see this. Many good ways to "spend" ten billion. Attempting to buy 3 million votes in a close election is not a good one. We should be wary—creeping populism can grow for decades.

Ashley Craig, economist said:

He also said:

This is exceptionally bad policy which favours the rich, doesn't help with current cost of living, and does nothing to encourage higher ed.

Ben Phillips of the ANU Centre for Social Policy Research said:

'Real cost of living relief' better directed to genuinely poor people rather than well paid Uni grads in their late 20s/early 30s (when they benefit from the new policy). What about future grads?

And Andrew Norton, the highly regarded Professor in the Practice of Higher Education Policy at ANU, said:

Marginal HELP repayments will be 15% on incomes $67,000-$124,999 & 17% on incomes of $125,000+.

For most HELP debtors, the marginal HELP repayment rate will be slightly higher than now. A consequence of needing to recover the lost revenue from the higher first threshold.

Those with bigger debts will get more relief, regardless of their capacity to earn more in the future, so a lawyer who graduated last year will receive more help than a social worker. Young people who haven't gone to uni or who studied a lower cost course and those who haven't worked hard and haven't made voluntary payments will not see the same benefit. The biggest beneficiaries of the 20 per cent cut are recent graduates whose debts are at their peak but who haven't made any significant repayments on that debt. Those midway through paying down their loans and current students will see some benefit, but those who have just finished repaying and who have struggled to retire their debt and future students will get nothing. Others who gain the most are current and former students of private higher education providers, who pay high fees through FEE-HELP, and postgraduates who may have large debts.

It goes without saying that the best long-term cost-of-living relief for students and non-students alike is to get the cost of living under control. That means cutting red tape, boosting productivity, easing pressure on energy prices and winding back wasteful government spending. The reality is, under Labor, everything has been, and continues to be, going up in price. Since Labor came to office, health costs are up by 13 per cent, food by 14 per cent, rent by 18 per cent and insurance by a staggering 36 per cent. This is the cost-of-living crisis of Labor's own making, and now they're offering narrowly targeted relief while leaving millions of Australians behind and asking them to pick up the bill for the three million Australians who will benefit from this one-off reduction.

All young Australians, whether they went to university or not, deserve a government focused on real reform and fair opportunity for everyone, not just the few. As the Leader of the Opposition and the shadow minister for education have indicated elsewhere, we will be constructive and we will not stand in the way of this legislation passing. This policy resonated at the election because young people have experienced the heat of Labor's cost crisis over the past three years and they continue to feel locked out and let down by Labor on housing.

HELP is a system which supports students to access tertiary studies by deferring the cost until they are earning. It is predominantly used for university degrees and has opened the doors to university for millions of Australians. It is indeed a national asset which has enduring support from all sides of government.

While this government shifts its focus to productivity in coming weeks, having overseen a slump in productivity to what is now the lowest average productivity growth in two decades, it may wish to think through the relationship between extending student debt and productivity. The biggest productivity payoff comes not from forgiving debt but from ensuring the education system matches labour market needs, lifting quality in higher education and supporting lifelong learning across all sectors of the workforce.

My party is focused on our duty to reflect and represent modern Australia, including the three million Australians carrying significant education debts. Those debts are concentrated in seats like Kooyong, Chisholm, Ryan, Menzies, Goldstein, Bradfield, Bennelong, Deakin, Dickson and Mackellar. Australians sent us a clear message at the election, and we are listening. We'll take time to get it right and we will show up and engage with the issues that matter to younger Australians, and we're working to get that done.

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