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Universities Accord Cutting Student Debt by 20 Per Cent Bill 2025, second reading amendment

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 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’ve 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—
Senator Hanson-Young: Where’s the dirty dealing on the opposition’s side?

Senator HENDERSON: Senator Hanson-Young, at least I’ve got the courage to stand up for my convictions. So why doesn’t the cult of the Greens—

Senator HENDERSON: So I just say to the Greens: I’m very disappointed that the Greens would not support this amendment, because this does provide more certainty. It does provide greater assurance. It does build confidence in the HELP scheme when young Australians know that they can sign up and they do not face the risk of escalating student debt year in and year out.

I am really concerned. I spoke last night on the second reading about my concerns about the student debt discount bill, because there are big winners and losers here. I won’t repeat what I said last night in my speech on the second reading, other than to say: I am going to support the bill, but I would like to see the bill improved. I think this does improve the bill. I think perhaps members of the government would privately consider that as well. I am asking the crossbench to support this amendment. This respects the fact that young Australians have had it really tough over the last three years. The cost-of-living crisis has hit young Australians really hard. Australians are struggling to put food on the table. Australians are struggling to pay the rent. And then they are faced with these massive increases in student debt, which, of course, the government has now alleviated through the student debt discount. But that is not the way to run a loan scheme. What’s going to happen? Is the government going to go to the next election with another student discount costing Australians and the 24 million people who do not benefit from this another $16 billion dollars? That is not the way to run a loan scheme.

A much more responsible way to run it is to cap indexation and then for the government of the day to take its responsibility to manage inflation seriously. It imposes greater discipline on any government to say, ‘We take our responsibility to manage inflation very, very seriously, because, if we don’t, we will pay the price.’ At the moment, what’s happening under the HELP scheme with indexation uncapped is that Australian students and debtors are paying the price and wearing the loan scheme.

To the Greens: please reconsider your position. To the crossbench: please support this amendment. This is commonsense policy. This is sensible policy. This is acting in the best interests of young Australians seeking to enter tertiary education. This is acting in the best interests of all Australians. That’s why I’m asking that this amendment be supported.

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