Julian Hill (Bruce, Australian Labor Party) Share this | Hansard source

The avid listeners at home may get a sense of deja vu from this debate. Here we are again, six months on, arguing the case against the government's ongoing attacks on education and young people, especially those from disadvantaged or middle-class backgrounds. The best you could say about the Higher Education Support Legislation Amendment (Student Loan Sustainability) Bill 2018 is that it's a little bit less awful than last year's efforts to lower the repayment thresholds to force people to repay their education loans even earlier. It's a reheated version of last year's leftovers—sloppy seconds, as they say. Of course, the midyear financial update package is the fourth attempt by the Liberals to cut universities and make students pay more and pay earlier. So Labor is, rightly, again opposing this bill. It is still unfair and it's still unnecessary.

There is a risk of just repeating oneself in speaking on these bills. There's a pattern we've seen this year, in every sitting week, of the government proposing bad legislation, it being defeated by the Senate and the government serving it up again, a bit less awful, with a few tweaks. We had the bill to repeal the bereavement allowance yesterday. We've got the ongoing attacks on pensioners, the pensioner education supplement, the pensioner energy supplement, making you work till you're 70, changing the indexation rates for pensioners, drug testing people on social security—better known as the 'drive up crime bill'—the English grammar test to become an Australian citizen and the list goes on. The same stuff which was defeated last year represents the government's ongoing agenda. So the thrust of my speech in September still stands, but I'll summarise it briefly and then in the second half of the speech I will build on a particular aspect and respond to some of the comments made in the debate yesterday by the member for Tangney, who's sitting opposite.

To summarise the key arguments, which still stand, this bill makes it even harder for young people from everyday backgrounds to climb the ladder of opportunity through education. Rather than helping young people fulfil their potential, to climb that ladder of life and opportunity and secure a better future, except for the very few amongst us who happen to be born into wealthy families, last year the government tried to make young people repay their education loans when they started earning $42,000. This year they picked a different number: it's $45,000. If we knock it off, maybe they'll come back with $47,000. The point is it's still too low, and there are a few fundamental truths that remain about lowering the repayment threshold from where it is now. Firstly, it still makes it harder—for many people, impossible—to buy a house and provide for a family. We hear in the speeches of those opposite, prattling on, 'It's only $10 a week;' 'It's $5 a week;' 'It's $20 a week.' The point remains: it makes things more unfair and more unequal and it's the wrong way to go, especially at a time of stagnating wages, poor graduate employment outcomes and spiralling house prices fuelled by regressive tax breaks for the wealthy. The point still remains: this bill will worsen inequality in this country. Good luck saving for a deposit for a house, saving for a family, repaying your uni debt, paying off a car, paying your rent, paying your phone bill, paying for food and paying for electricity and any other costs that come up. You'd better hope you don't get sick.

The point remains: what have young people done to deserve this? If we want Australia to remain the land of a fair go, as they say, we have to do more to address inequality, especially that which is of an entrenched and intergenerational nature. We know that education is the best single tool that governments have to encourage social mobility. People in my electorate get it. It was the No. 1 issue over 18 months of doorknocking that came up from grandparents, parents, young people and, particularly, migrants. Fifty-five per cent of people in my electorate were born in another country. They come here seeking a better life for their kids, with that laser-like focus on education. So Labor is opposing this bill because it sells out the country's future as well and takes us in the wrong direction.

The dissenting report of the inquiry into the bill by the Senate Education and Employment Legislation Committee sums it up well:

… the changes to HELP repayment thresholds are simply driven by budget cuts.

They are simply driven by budget cuts in this government's ongoing attempt to cut education. We should not be cutting higher education or making more barriers and disincentives for people to take it up. It's not just a tool for social mobility or to curb inequality but critical to our future economic success. I outlined in more detail why that is in my speech in September. Again, to summarise, our region is the fastest growing in the world. This century holds enormous opportunity, but the world does not owe us a living. We're at the bottom of a region of 4.5 billion people, and we can choose to innovate and compete or get left behind.

Right now, Australia has the second-lowest level of public investment in universities in the OECD. So while our neighbours, partners and competitors in Asia are increasing investment in education, our government spends month after month, year after year, thinking of new ways to cut funding for higher education and make it harder for young people. We need an equitable higher education system if our best future is to be realised, so that the smartest and brightest get the same access, no matter where they're born, how much their parents earn and their capacity to pay.

The last time I spoke I made a few remarks about HELP debt levels and repayment. I want to build on those and respond very positively to some of the comments made yesterday by the member for Tangney in his speech on the bill. The government is concerned about growth in unpaid debt. To be clear, I mean unpaid debt by students, not unpaid debt because of your terrible budget management. Overall, student debts are increasing significantly for a range of positive reasons—there are more people going to higher education and so on—but over the last four years we've seen the number of students with debts grow from 1.7 million to 2.5 million and the total debt grow from $25½ billion to about $48 billion, and 23 per cent of those people are not expected ever to repay their debts. The fact is unpaid debt is largely with people who haven't earnt above the income threshold for long enough to repay, and that debt is written off when they die. I outlined last time that there are still three broad options you can choose, philosophically, to deal with that fact. The first option is that you could just accept that writing off a huge chunk of the debt is an essential part of the scheme—an equity measure if you like, an investment in human capital, some of which will be lost as people never repay the debt. That's one option, and that's got an argument. The government's approach of course is option two, to lower repayment thresholds so as to push young people, effectively, in my view, into a poverty trap. That's their choice. There is a third, interesting but politically very difficult, option, which is to explore recouping unpaid debts from deceased estates when people die.

In September I gave a gentle nod towards option three, floating the idea that it's time to review the current and very peculiar rule, when you put it into context, that HECS debts, HELP debts, are written off completely when you die, no matter how wealthy you are and no matter how big your estate is. It is a fact that the major reason for the high doubtful HELP debt is that it's not collected from deceased estates when people die. The Grattan Institute did some very thoughtful and detailed work on this in 2014. It's also a fact that many people who die without repaying debts will actually be from wealthy households. That's because their family arrangements are such that they may never have personally earnt above the threshold or paid off much of the debt, but they will have married and will end up inheriting a lot of wealth from, often, a husband or wife who dies and who has a lot of wealth. By the time they die they may not have ever earnt enough taxable income to pay their debt, but they will pass away with a lot of wealth. It's politically difficult, mainly because it's very easy to carry on and call this a death tax and such nonsense, but there is a case to look more closely at it.

I'm very conscious that it's not my party's policy, and I am just a humble backbencher, so I am able to explore things more freely, and I think there's a case to do so here. The case for it will only grow over time as we see more debt written off, pressure to pursue more regressive and unfair options, as the government feels necessary to do, and concerns about growing wealth inequality. This could be explored as a small but progressive measure.

In that context, I was surprised and pleased to hear the remarks of the member for Tangney yesterday welcoming my speech, quoting me even, and offering to explore this in a bipartisan way. I welcome that offer and I would be pleased to do so. I say I was surprised because my speech was given six months ago and you're never quite sure whether anyone listens to anything you say in here during legislative debates. The Australian newspaper picked up on it and wrote something on it. I say for the record that I did not send it to them. They must just have been listening or reading Hansard or someone opposite thought they'd give us a poke. Also, it's a good reminder of some advice that the member for Watson gave me when I was first elected: never underestimate the impact that something thoughtful, sensible or silly that you say in here can have in unpredictable ways.

I am also pleased because, as I said in my first speech, I want to be someone who is prepared to work across the aisle and find compromise without compromising our values. I talked about structural deficits and fiscal challenges, acknowledging the community's desire for more bipartisanship. I'm committed to doing my bit to listen and learn and stay true to those words, so I will accept the offer. We can flesh it out, run some numbers and see if the case does stack up, and then we can garner some broader support across the parliament.

In the remaining time, I will precis the 2014 Grattan Institute work because it is a good starting point. They explored one approach—this was their approach—which was a system of asset contingent repayment to ensure the eventual recovery of most outstanding HELP debt but, importantly, protecting the estates of HELP debtors with little wealth so you don't cause hardship. That work highlights that debts are really discharged at death. Tax debts, personal debts and social security debts all have to be repaid from deceased estates—no-one objects to that: we understand that—but just not education loans. The repayment of education loans is income contingent when someone's alive to smooth the income and consumption over a person's life, but:

Once their life is over that policy goal is no longer relevant.

They're dead. It is in that context difficult to understand why government collects tax debts and social security debts but writes off education loans, even for very wealthy estates. Grattan makes the point that the vast majority of people actually die late in life—about 95 per cent of women and 90 per cent of men die quite late in life—and partnered people earning less than the repayment threshold tend not to be the main earner in the household. In effect then, writing off all HELP debts gives a windfall gain to partners who are higher income earners or adult children, with no obvious public policy or equity rationale. Grattan's proposal—I'm not saying I agree with this; we'd need to look at it—was to require HELP debts to be repaid just like tax or social security debts from estates over $100,000 in value. This would raise up to around $2.8 billion over three years and flow from there.

They proposed, obviously, that we would need to craft any such policy carefully. You'd need a reasonable threshold. They thought $100,000. We can model and look at scenarios a bit higher. But importantly—and this is important—there have to be appropriate exemptions or delayed payment provisions to protect people. For example, families with children where a parent dies young or people with surviving partners and cashflow issues where capital is tied up in a house—you don't want to force someone to sell a house. There are a lot of practical issues to be worked out but they could all be done. The Grattan's work also points out that the ATO already has a lot of discretion simply to waive debts where collection would cause financial hardship, and this is important.

Aside from the death tax furphy, there'd be lots of other arguments against it, including one which I've heard before, that HELP, in effect, is a contract between the Commonwealth and the student and addressing the estate exemption is going to be a breach of contract. But really, there have been many changes to HELP repayment rules over the years without any legal concerns—it's a political issue. There's also the argument about pain for gain: it's not worth the political pain as it wouldn't produce any short-term cash. But the reported savings would actually be immediate because of the way the budget accounting rules work. To quote Grattan:

… an allowance for estimated non-repayment is made—

In the budget—

… in the year that the loans are made.

So you lend some money and you make an accurate estimate based on the best info about how much is going to be repaid. So $2.8 billion is a worthy, progressive, long-term or structural reform over only three years, if it can be crafted to be fair and progressive. They conclude the write-off of debts to deceased estates 'has very high financial costs relative to its benefits'.

In putting that out there, I understand this isn't my party's policy but there's a case to explore it, consistent with our values, as it would be a progressive reform if crafted properly. I understand it's also not the government's policy at this time. But I do note that they did float it in their own discussion paper and it's entirely consistent with the government's objective as stated in recouping more HELP debt.

If difficult choices have to be made, to my mind, that's certainly far less regressive and unfair to young people than the government's approach. In plain English, if someone dies wealthy or with reasonable assets, then it seems more reasonable to me to have their estate repay an education debt where it doesn't cause hardship, rather than slugging a low-income young person with higher repayments while they're alive and trying to get a start in life.

This morning I telephoned the member for Tangney to make time for a coffee and a chat. We obviously won't agree on the government's ongoing attempts to lower the repayment threshold. We'll see how that goes in the Senate, for people who are alive—by that I don't mean the senators, I mean the young people. I presume the senators are alive and kicking. But it is worth exploring the issue of deceased estates further in a bipartisan fashion, so we'll see what transpires. Thank you.

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