Sarah Henderson (Victoria, Liberal Party) Share this | Hansard source

I move my amendment on sheet 3376:

(1) Page 33 (after line 22), at the end of the Bill, add:

Schedule 3 — Capping student debt indexation at 3%

Part 1 — Amendments of the Australian Apprenticeship Support Loans Act 2014

Australian Apprenticeship Support Loans Act 2014

1 Section 5 (definition of WPI indexation factor )

Repeal the definition.

2 Subsection 32(1)

Omit "the WPI indexation factor for 1 June in the financial year (see subsection (1B))", substitute "1.030".

3 At the end of subsection 32(1)

Add:

Note: The AASL debt indexation factor is capped at 1.030. This means indexation cannot increase debt by more than 3%.

4 Subsection 32(1B)

Repeal the subsection.

Part 2 — Amendments of the Higher Education Support Act 2003

Higher Education Support Act 2003

5 Paragraph 140-10(1)(b)

Omit "the *WPI indexation factor for 1 June in the financial year (see subsection (1C))", substitute "1.030".

6 At the end of subsection 140-10(1)

Add:

Note: The HELP debt indexation factor is capped at 1.030. This means indexation cannot increase debt by more than 3%.

7 Subsection 140-10(1C)

Repeal the subsection.

8 Subclause 1(1) of Schedule 1 (definition of WPI indexation factor )

Repeal the definition.

Part 3 — Amendments of the Social Security Act 1991

9 Subsection 1061ZZET(1)

Omit "the WPI indexation factor for the relevant year (see subsection (1B))", substitute "1.030".

10 At the end of subsection 1061ZZET(1)

Add:

Note: The indexation factor is capped at 1.030. This means indexation cannot increase debt by more than 3%.

11 Subsection 1061ZZET(1B)

Repeal the subsection.

12 Subsection 1061ZZET(2)

Omit "or a WPI indexation factor".

13 Subsection 1061ZZET(2)

Omit "or (1B)".

Part 4 — Amendments of the Student Assistance Act 1973

Student Assistance Act 1973

14 Subsection 12ZF(6)

Omit "the WPI indexation factor (see subsection (6A))", substitute "1.030".

15 At the end of subsection 12ZF(6)

Add:

Note: The indexation factor is capped at 1.030. This means indexation cannot increase debt by more than 3%.

16 Subsection 12ZF(6A)

Repeal the subsection.

17 Subsection 12ZF(7)

Omit "or a WPI indexation factor".

18 Subsection 12ZF(7)

Omit "or (6A)".

Part 5 — Application provisions

19 Application of amendments

The amendments made by this Schedule apply in relation to working out an amount of debt as at 1 June 2025 and as at a later time.

This is a very important amendment to this bill. It has the effect of capping HELP indexation at three per cent. This would mean that HELP indexation would change to the lower CPI or three per cent, ensuring that everyone with a student debt, including future students signing up for a HELP loan, would not be lumbered with the risk of escalating high indexation such as we have seen under this Labor government. Since Labor was elected, even after changes to the way HELP indexation is calculated, student debt has increased by an alarming 14.3 per cent. This is in stark contrast to the average indexation rate under the former coalition government of just 1.7 per cent.

This is a proposal backed by Australia's pre-eminent higher education expert Professor Andrew Norton of Monash University. In our Senate inquiry last year into the bill which changed HECS indexation to the lower of CPI or the wage price index, he made it very clear that a much more certain way to proceed is to set a flat maximum indexation rate. He said that this has the benefits of simplicity and reassurance. I say to this chamber: why should anyone with a student debt face the risk of a 7.1 per cent increase in their student debt, as happened in 2023? That was simply outrageous. Why did that happen? That happened because the Albanese government failed to control inflation. Inflation was higher for longer because inflation was home grown, and because HELP indexation was directly linked just to CPI, when inflation was high, HELP indexation was high. Australian students, young Australians and anyone with a HELP debt paid a very high price.

Then the government had to scramble because, with very high indexation rates—3.9 per cent in 2022, 7.1 per cent in 2023 and 4.7 per cent in 2024—anyone with a student debt was facing an increase over those three years of nearly 16 per cent. So the government scrambled, and it changed the indexation methodology to be the lower of wages or CPI. Of course that meant that there was an adjustment in the indexation, and indexation rates did come down. That was at a cost of $3 billion. So there was some saving. But of course that only happened because wages were running at less than inflation—real wages were going backwards—and that has happened pretty rarely over the last 30 years. So it was a short-term fix, but it did not address the core problem.

We need to build confidence in the HELP scheme. We need to make sure that, if anyone is going to take out a HELP debt, they have the confidence to do so and have their potential risk capped within the upper band of the RBA's inflation band, which is, of course, between two and three per cent.

I'm bringing this amendment forward. It hasn't received the support of the coalition as a whole, but many of my colleagues have spoken to me about the positive merits of this amendment. It was something that I took forward before the last election and I think it's a very important policy that we need to embrace as a whole. But I'm bringing this forward now because there is no time to waste. The coalition needs to present a credible policy alternative when bills come before the parliament. There's no point doing this in 12 months time. This is basically saying to the Senate 'here is a credible policy alternative.' Frankly, I've even had a couple of conversations—and I won't disclose those conversations—with people associated with the Labor Party, and I think they see that this has some real merit as well. So I am asking for the support of the Senate for this amendment.

I do note with disappointment Senator Faruqi's comments about not supporting this amendment, and I say: what hypocrisy from the Greens! Senator Faruqi—through the chair: to be fair, we have been on the same page on the huge escalation in student debt, and, in some respects, particularly on higher education, we've worked quite closely together where we've got mutual interests. Now, I get the politics, Senator Faruqi, but what I don't understand is why you would oppose this amendment, because this delivers greater certainty and greater assurance for anyone signing up to a HELP loan. So I'm disappointed. I think there's been a dirty deal done between you and Labor, because that's what happens in this chamber. We constantly see deals behind closed doors—