Zoe McKenzie (Flinders, Liberal Party, Shadow Assistant Minister for Mental Health) Share this | Link to 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.

Anthony Albanese (Grayndler, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

Labor is the party of education and Labor is the party of aspiration. This bill delivers both, cutting 20 per cent off all student debt for university students but also, importantly, vocational education and training students too, saving around three million Australians an average of $5½ thousand and, importantly, making the repayment system fairer for the future, delivering a permanent structural boost to the take-home pay of young Australians.

Two hundred and sixty-eight days ago, in the electorate of Sturt, I promised that this 20 per cent cut to student debt would be the first bill that we brought into this parliament. Today, we deliver that. Every member of the government knows how important that promise was to Australians who we engaged with from that day, 268 days ago, right through to 3 May. Twenty per cent off student debt was the first bill we introduced to the parliament. Now, this bill will be the first bill that passes this parliament as well, because that is what our government is all about: delivery, turning promises into progress.

We started at the beginning of this month, 1 July, delivering cost-of-living relief, a real pay rise for three million people on minimum wage and award wages. We haven't just done it once; we've done it again and again and again. At the 2022 election, the $1 coin I held up, something that those in the then government said would see the sky fall in, saw us win the support of workers, who understood how important it was. On 1 July, that real wage increase, following on from the tax cuts that we had from 1 July last year, means that our commitment to have people earn more and keep more of what they earn is being delivered.

There's another round of energy bill relief for every household and every small business. We expanded paid parental leave by two weeks and, importantly, we added superannuation to it for the first time. We increased the superannuation guarantee to 12 per cent for every single working Australian, and we introduced as well the $10,000 incentive for construction apprentices, following the successful implementation of our program for new energy apprentices. That had already been implemented. Our Cheaper Home Batteries Program, permanently cutting power bills and taking pressure off the grid, has been an enormous success. The energy minister reported to parliament yesterday that, in just a matter of weeks, the figure is that already over 12,000 households have benefited from this policy. And we'll finish July with real cost-of-living relief for all three million Australians with a student debt.

Education is the most powerful weapon we have against disadvantage. It is the best investment that we can make in a stronger, more productive and more skilled economy. Education is fundamental to the Labor mission. It opens the doors of opportunity and widens them. That is why we are doubling the number of university hubs in the regions and outer suburbs—to bring higher education to communities that were missing out. It is why also an important measure came in on 1 July: we delivered paid prac—paid prac for students studying to be nurses, to be social workers and to be teachers. I think that most Australians would be stunned to hear that someone studying to be a nurse, to look after their fellow Australians, would have to sacrifice a part-time job in order to go do the prac that's a part of their course—to be penalised financially for doing so. The measures that we've put in place there will make an enormous difference. That's new financial support for the next generation of teachers, nurses and social workers so that they're not put in that position while they're on placements.

In last year's budget we wiped $3 billion in student debt from Australians who had been caught out by the global spike in inflation. This saved a person with an average debt around $1,200. We addressed that one-off and fixed the system so it could never happen again.

But at the election on 3 May, of course, people did have a choice. You had our position of paid prac and then taking 20 per cent off student debt, and you had the coalition, which released its costings just on the Thursday of the election week, on 1 May. They released their policy, which not only was to oppose the 20 per cent reduction in student debt; it was to get rid of the paid prac policy and to put that onto students' HECS debt. It was a bit like their tax policy that said not only were they opposed to the tax cuts that will come in on 1 July next year and the July after but they would legislate to increase taxation for all 14 million taxpayers. In this area of policy, they not only opposed the 20 per cent student debt reduction; they said they would add to student debt by adding the paid prac payments to the HECS debt that people owed the government.

Our government understands that student debt can hang over young Australians. It can affect how much they can borrow for a home. It impacts decisions they make about family and career. That's why, when those opposite said that this was somehow unfair, we said that this was an intergenerational-equity measure to make an enormous difference. It's not like we came out with it at the last minute. We came out with it in November, in a speech in Adelaide in the electorate of Sturt, and made it clear that it would be, as we said at that time, the first piece of legislation we would introduce into the 48th Parliament.

Because of the changes that the Morrison government made, as well, HECS came out of your take-home pay sooner. Right at the heart of our election campaign was the commitment to tackle this intergenerational unfairness, and that's what this legislation is about. It takes 20 per cent off student debt, the debt that was there. We imposed it from 1 June, before indexation came in, and are making the system better and fairer into the future.

We are raising the repayment threshold from $54,000 up to $67,000. We're lowering the rate of repayments and indexing both to keep them fair. This means that someone earning $70,000 will save around $1,300 a year in repayments, helping everyone repaying a student debt right now and delivering a better deal for every student in the years ahead. It's permanent, structural reform to boost take-home pay for young Australians, putting money back into people's pockets and putting fairness back into the system. It's good for the cost of living, good for this generation and generations to come and good for building Australia's future. I'm proud to lead a government delivering on this commitment and I'm proud to commend this bill to the House.

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

I rise to thank the minister for education for moving this bill, the Universities Accord (Cutting Student Debt by 20 Per Cent) Bill 2025, with a degree of urgency. We know that HECS debt is an incredible burden for so many Australians, current students but also graduates. We know that young Australians are deferring starting their studies because of the fear of the extreme debt that they can accrue as a result of the massive increase in the cost of HECS that we've seen in recent years. We've seen the impact of the job-ready graduates scheme, which the government, when in opposition, described as pernicious and punitive. It has doubled the cost of degrees in arts, business and law overnight. As a result, arts degrees are now $50,000; combined degrees are $85,000.

We know that many graduates now have $150,000 in debt when they graduate, and the PBO has told us that some people will struggle to pay off their HECS debt in their working lifetime. One of the implications of the bill that the government has in front of the House is that many students will go onto a debt treadmill when in fact we're going to see that the increase in the repayment threshold, which appears on the surface of things to be a positive move, will mean that many people pay off less than the cost of indexation each year, such that their debt actually increases rather than decreases.

The Prime Minister spoke quite movingly about the impact of students in the care sector having to pay for prac placements. It's great that the government is extending that support now to students of nursing and midwifery, teaching and social work, but it's not extending that support to other students in the care sector. We have medical students sleeping in their cars when they are undertaking prac placements. The system of prac placement is particularly difficult for women, because they often have care responsibilities. It means that people from Indigenous backgrounds and from rural and regional communities are less likely to complete their studies on time. They're having to defer or go part time to meet the extreme cost of prac placements, which doesn't just include travel and accommodation but includes professional registration, uniforms and insurance.

I will speak to this bill in more detail later today, and I thank the government for the opportunity to do that. I move the amendment that has been circulated in my name:

That all words after "That" be omitted with a view to substituting the following words:

whilst not declining to give the bill a second reading, the House:

(1) notes that many degrees have increased in cost well above CPI, resulting in excessive HELP debts which place additional financial burden on Australians in the midst of a cost-of-living crisis;

(2) calls on the Government to:

(a) calculate HELP debt indexation after the due date for individual tax returns each year; and

(b) immediately reform the failed Job Ready Graduates Program, which has been the primary driver of increased student debt; and

(3) asks that the government recognise the importance of practical placements in care sector degrees, but also the cost and practical challenges associated with rural and regional placements, by:

(a) extending practical placement payments to students of all care sector professions including medical, allied health, mental health, pharmacy, and veterinary sciences, who are required to undertake such placements as mandatory components of their courses;

(b) reducing both the student and Government funding contribution for units that are delivered as practical placements; and

(c) allowing practical placements undertaken by Australian students overseas to be recognised as course credit by their Australian higher education provider".

This amendment essentially asks the government to change the timing of HECS indexation, which is unfair; to extend the support for paid practical placements to all students in the care sector; to reduce the cost of degrees, particularly by immediately reversing the job-ready graduates scheme; and to look at education more as an investment in our future and not as a cost to the people of Australia.

Milton Dick (Speaker) Share this | Link to this | Hansard source

Is the amendment seconded?

Helen Haines (Indi, Independent) Share this | Link to this | Hansard source

I second this motion and I will reserve my comments for my speech that I'll make as a statement in the House later this afternoon.

Milton Dick (Speaker) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Kooyong has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The question now before the House is that the amendment be agreed to.

Jason Clare (Blaxland, Australian Labor Party, Minister for Education) Share this | Link to this | Hansard source

As promised, this was the very first bill to be introduced into the parliament after the election and, very shortly it will be the very first bill that we vote upon. This bill cuts student debt by 20 per cent. It also makes important structural changes to the way our student debt repayment system works. The Universities Accord (Cutting Student Debt by 20 Per Cent) Bill 2025 will take a weight off the shoulders of three million Australians, and it's happening because of a promise that the Prime Minister made to the Australian people in November last year. It's happening because Australians voted for this in their millions in May this year. And it's happening because we are about to vote for it in a few moments time.

I thank the member for Kooyong, not just for her contribution to this debate but for her ongoing commitment to reform of higher education. The changes the member refers to were considered by the Universities Accord. I've often said, as I did in answer to a question in question time yesterday, that the accord is bigger than one budget and that it's a blueprint for the future. We will keep working through the accord's recommendations, and we will take advice from the Australian Tertiary Education Commission as well.

Although we're not in a position to support these amendments at this time, my door is always open to all members of parliament to talk about how we build a better and a fairer education system. With that, I commend this bill to the House.

Milton Dick (Speaker) Share this | Link to this | Hansard source

We are dealing with the amendment moved by the honourable member for Kooyong. I will put the question that's before the House, that the amendment be agreed to.

Question negatived.

Original question agreed to.

Bill read a second time.