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

I move:

That this bill be now read a second time.

We need to fix HECS.

Millions of Australians have done the right thing. They've studied hard at school and at university. They've got a degree. They're working, they're paying taxes, and yet they have HECS debts that they still can't pay off.

And now, they're struggling to fulfil their dreams—to buy a home, to live comfortably, to start a family of their own.

Why is that? Because the government has created a cost-of-learning crisis.

Here's how.

HECS debts and other student loans are indexed on 1 June every year. If your salary is more than $67,000, over the last twelve months your employer has withheld money from your salary to repay your HECS debts and student loans. But those repayments weren't deducted from your HECS balance before indexation was applied on 1 June.

So, this month, you were indexed on HECS that you have already repaid.

You are being charged interest on a debt that you have already paid off.

It's no wonder that Australians can't get ahead. It's no wonder that graduates are watching their balances barely move despite years of repayments. The system isn't broken by accident—it's working exactly as it was designed. It is imposing an unfair stealth tax on our graduates—one which will cost them over $3 billion in the next 10 years if we don't fix this inequity.

This is structural unfairness which was deliberately baked into the legislation in the 1980s at a time when HECS fees were modest, when house prices were a fraction of what they are today, and at a time when the cost of living wasn't eroding the dreams of young Australians.

Times have changed.

But the law has not.

If a mortgage or credit card debt were structured in the same way as HECS debts, it would be illegal. But when governments take advantage of a generation which is already locked out of homeownership, already crushed by rent, already stretched by the cost of groceries, fuel and electricity—apparently that's just fine.

It doesn't need to be this way.

This bill moves the annual indexation date of HECS from 1 June to 1 November. That five-month shift would mean that both voluntary and compulsory repayments made during the financial year were credited to a person's HECS and student loan balance before indexation was applied.

Graduates would pay indexation only on what they actually owe—not what they've already repaid.

It's that simple.

And it is that fair.

The Parliamentary Budget Office has costed this change.

The verdict: it would save graduates $3 billion in HECS debts and other student loans. Three billion dollars in a stealth tax that the government has been quietly collecting from people who are already struggling to save a deposit, already paying record rents, already choosing between their ambitions and their bank balance.

And here's the part I want the government to hear: it would cost the budget only $374 million in its net headline cash impact over the forward estimates.

Because when graduates aren't being indexed on money that they've already repaid, they can pay down their principal faster. Under this legislation the Commonwealth would receive an additional $819 million in principal repayments over the forward estimates. So, we would achieve $3 billion in savings for graduates at a fraction of that cost to the budget.

It's an extraordinarily good deal for young Australians.

Australians have taken on HECS debts because they've been told that education is an investment in their future. They've held up their end of the bargain. They've studied, they've graduated, they've got jobs, they've started repaying their debt. But they're watching their debt regrow faster than their ability to clear it—because the system is designed to extract more from them than it should.

A degree should be a pathway to opportunity. It shouldn't be an anchor around your neck when you're already treading water.

The National Union of Students, the universities and the higher education institutions are all clear: HECS is one of the single biggest financial pressures on Australians, and the system, as it is, is broken.

HECS was introduced to help more Australians access tertiary education. But over time it's become a massive net negative for this country. This bill fixes an important aspect of the intrinsic unfairness of the system as it now stands. It fixes it practically, it fixes it immediately, and it fixes it at a cost that the budget can easily absorb.

This is not a radical proposal.

It's fair. It's costed. It's simple. And it's long overdue.

I commend this bill to the House.

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

Is the motion seconded?

Zali Steggall (Warringah, Independent) | Link to this | Hansard source

I second the motion. Imagine you're a new graduate with a $30,000 HELP debt. Over the year, about $3,000 is taken from your wages to repay it. But when 1 June comes around, the day that HECS is indexed under current law, that repayment of $3,000 has not been applied to your debt. Indexation is charged on the full $30,000, not the $27,000 that you actually owe. Meanwhile, that $3,000 that has been withheld from your wages is held by the ATO, but no interest is applied. That is the level of unfairness of the current system. At three per cent of indexation on that $3,000, graduates are charged an extra $90 extra of debt. Across the population of Australian students in the tertiary system, the Parliamentary Budget Office estimates that additional indexation paid will amount to about $3.2 billion over the decade.

I wonder why it is that governments of both persuasion, coalition and Labor, have refused to do anything about it. This is ultimately a sneaky student tax. The member for Kooyong's bill, Higher Education Support Amendment (Fix HECS) Bill 2026, will fix this. Indexation is intended to keep the value of HECS debt in line with rising prices. But indexation, whilst not technically an interest, has, for someone with a HECS debt, the practical effect of essentially being an interest payment. Their debt goes up, and the problem is the system can increase their debt before counting the repayments already taken from their wages.

I regularly hear from students and young graduates across Warringah who are worried about their financial security and the amount of debt they are taking on. They are managing high rents, grocery bills, transport costs and insecure work. They are training and getting those qualifications to build the kind of Australia we want and need for the future, but how are we saying, 'Thank you,' to them? We're just socking them with a sneaky additional student debt tax. Now they're asking how they're going to save for a home or build financial security while they begin their working lives with tens of thousands of dollars in student debt. They understand that they must repay what they have borrowed, but they rightly expect the system to recognise the repayments they have already made.

Why is it okay for the ATO to sit on repayments made without even applying any interest to that or applying it to the debt? Every mortgage holder in Australia, imagine if a bank charged interest on money that you had already repaid. There would be outrage. Yet that is effectively what the government is doing under the current HELP indexation system. This bill will move the indexation date from 1 June to 1 November. This gives the tax system time to count for the repayments already made from people's wages and for people to lodge their tax returns. With repayments deducted first from the debt, indexation would then be applied only to the debt that remains.

This bill does not wipe student debts. It does not remove indexation. It simply moves the date so that indexation is calculated fairly. Without this change, graduates will continue to be charged indexation on amounts that have already been withheld from their pay. Young Australians should only be charged indexation on the debt they actually still owe. That is fair. That is logical and how the system should already work. It is staggering that the government can seriously still be here refusing to make this change. This should be multipartisan. No-one should be debating that this is a change that should be done out of fairness.

I commend the member for Kooyong for bringing forward this sensible reform. I urge the parliament and the Albanese government to support it. You cannot, with any credibility, talk about intergenerational inequity or a system that is fair where you're encouraging Australians to build a better future and not change this aspect of indexation and the timing. None of us in this place would accept it on any kind of debt repayment if it were for mortgages or anything else. It is unacceptable that it continues to be the case for student debts and HECS-HELP. I commend this bill to the House, and I urge everybody to be fair to graduates and change this date.

Scott Buchholz (Wright, Liberal Party) | Link to this | Hansard source

The time allocated for the debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.