The Universities Accord (Cutting Student Debt by 20 Per Cent) Bill is an admission of abject failure by the Albanese government—failure to control inflation, failure to protect young Australians from Labor’s shocking cost-of-living crisis, failure to deliver a student loan scheme which is fair for all and failure to show any regard for the 24 million Australians who don’t have a student debt. This measure is only necessary because, under Labor, student debt has skyrocketed out of control since the Albanese government was elected. In 2022, HELP indexation was up 3.9 per cent. In 2023, student debts rose a staggering 7.1 per cent. In 2024, the increase was 4.7 per cent. In three years, it was up nearly 16 per cent. For the average loan holder, this was a hit of more than $4,000. Labor’s failure to control inflation drove sky-high increases in student debt. So I say this: why should three million Australians with a student debt pay the price for Labor’s gross economic mismanagement? The three million Australians with a student loan should not be paying this price.
It was only after the coalition pressured the government to act on, in particular, its crippling 7.1 per cent rise in 2023 that they finally changed the way indexation is calculated to the lower of CPI and the wage price index. That had the effect of lowering indexation from 7.1 per cent to 3.2 per cent in 2023 and from 4.7 per cent to four per cent in 2024. That relief was backdated, at a cost of $3 billion. But the fact remains that, under Labor, student debt has gone up in total by 14.3 per cent. This is in stark contrast to the former coalition government, under which annual indexation averaged just 1.7 per cent.
Of course, we know that this bill proposes a one-off upfront reduction of 20 per cent on all existing HELP student debts. It will also increase repayment thresholds from $54,435 to $67,000 from 2025-26, but this is deeply flawed policy and, as I say, deeply unfair.
Australians expect the coalition to fight every single day for better policies in the national interest. That is why I will be moving an amendment to this bill—which has been circulated—that would, if passed, provide greater certainty and fairness to every young Australian with a student debt. So many young people have been hit so hard by Labor’s cost-of-living crisis. For three million Australians with a HELP loan and for future students enrolling in tertiary education who are currently denied Labor’s 20 per cent discount, my amendment would provide much-needed certainty and would be an important safeguard both now and into the future. What it would do is to change HELP indexation, which would be calculated as the lower of the consumer price index and three per cent. Capping indexation at three per cent would mean that tertiary students would no longer be forced to pay the price of Labor’s failure to control inflation. This is a commonsense proposal for a HELP loan inflation guarantee, which makes it clear the coalition takes its responsibility to manage inflation very seriously.
While I will join with my coalition colleagues in not opposing Labor’s student debt discount bill, I do commend my amendment to the Senate and I do hope that it receives support. While this will involve crossing the floor and being on the so-called wrong side of the chamber, I believe I will be on the right side of history. With inflation forecast to be three per cent or under over the forward estimates and into the medium term, this HELP loan inflation guarantee is a very low-cost measure. It is with regret, as I have said, that we did not take this policy to the last election. This is a policy that would have been in stark contrast to Labor’s 20 per cent student discount.
If the amendment is passed, it would have the effect of decreasing HELP indexation from the current rate of 3.2 per cent to three per cent, which, of course, represents a fairly modest saving for most borrowers. But, very importantly, what this does is to deliver certainty now and into the future. Never again would tertiary students be strangled with Labor’s debt noose. As I say, frankly, this has been a shocking noose around the necks of so many young Australians because, as we know, the higher the debt, the more impact this has on the ability of debtors to borrow money. That includes the ability of young Australians to buy their first home. We are seeing debts running out of control, and they will continue to run out of control. The risk is that they will continue to run out of control unless there is an inflation guarantee so that young Australians, when they are deciding what to do with their lives—whether they go for vocational education or to university—and they are looking to take out a HELP loan, will have the certainty that they are never again going to face the risk of these sky-high indexation rates.
I want to reference the media release which was put out by former shadow Treasurer Angus Taylor and me, when I was the shadow minister for education, after Labor announced its student HELP debt discount.
As Mr Taylor made very clear:
There are no free lunches in economics. Under this policy, every Australian will continue to pay the price for Labor’s high interest rate, high inflation environment—but only a few will see the benefits.
At $16 billion—the cost of this to each Australian household is around $1600.
And, as I said, it is really unfair that 24 million Australians see no benefit. Even students commencing in semester 2 of this year see no benefit from the discount. Students who’ve exercised responsibility by paying off their debts as quickly as possible, who’ve made voluntary payments—they too have been left behind, because those who have paid off their debts receive nothing.
One of the most egregious parts of the student discount is that it really is the high-flyers who benefit the most, because some debtors, including those who may have done multiple degrees or their PhD, will benefit from very, very high reductions in their debt, reductions of an average of perhaps $25,000 or $30,000. There are other young Australians—tradies and those who decided not to go to university—who are literally struggling every week to pay the rent. As I said at the time—and this may have altered slightly, but I’m speaking in general terms—more than 55,000 people, as at last year, had a HELP debt of between $100,000 and $200,000, meaning that, under this policy, Labor will be delivering them an average pay cheque of $25,000. How is this fair, when so many young Australians who aren’t or haven’t been students are struggling to pay the rent or put food on the table because of Labor’s cost-of-living crisis?
The economic experts have been scathing. Leading economist Chris Richardson said:
… 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.
Ashley Craig said:
This is an abominable idea that gives precious tax dollars to rich Australians while doing nothing to help with the currently elevated cost of living. If it is popular, it is because people don’t understand this, and are being misled.… … …This is exceptionally bad policy which favours the rich, doesn’t help with current cost of living, and does nothing to encourage higher ed.
Peter van Onselen, the political editor of Daily Mail Australia, said:
… this is just transferring their debt to all taxpayers. What’s next, cutting home mortgage debts. It’s so profoundly economically irresponsible …
The coalition agrees with those experts. It is a poorly targeted sugar hit, which won’t touch the sides when it comes to young people dealing with the cost-of-living crisis, and, of course, indexation on HECS-HELP loans will still be applied before repayments, meaning that debt balances will remain unnecessarily inflated. I will also reference the recent Parliamentary Library analysis which found that, in real terms, Labor’s 20 per cent HECS cut would amount to a reduction of just 7.9 per cent for some borrowers, based on their debt from 2022. So there’s a lot of spin in this 20 per cent discount.
I mentioned before that, as a result of those huge increases in student debt, the hit on the average loan was more than $4,000. Labor is saying this measure will save the average debtor $5½ thousand. There’s not a lot of difference. It’s actually not 20 per cent, because, in order to get the 20 per cent discount, Australians with a student debt have had to pay a very, very heavy price. And I do note that this is in stark contrast to the performance of the former coalition government—and I mentioned this before—when, under the coalition, on average, the indexation was nearly two per cent lower than what debt holders have had under the Albanese government. It was 1.76 per cent under the coalition during those nine years, compared with 3.58 per cent under this government between 2022 and 2025. It is regrettable that it’s got to this, because if Labor had managed the economy responsibly and taken the control of inflation seriously—because, of course, HECS-HELP indexation is directly linked to CPI—then we would not have seen this skyrocketing debt which caused a lot of grief for so many young Australians.
I look forward to discussing my amendment, which I think will improve this bill. Capping indexation to give certainty to future students and those three million Australians with a student debt is a good thing. I regret that this has not been endorsed by shadow cabinet, though I’ve had some very good responses by many of my colleagues, but I do commend this amendment because it is common sense, it provides certainty, it’s responsible and it builds confidence in the HELP loan scheme. At a time when the HELP loan scheme has been under a very black cloud, we need this confidence, and my amendment will help to deliver that.