Monique Ryan (Kooyong, Independent) Share this | Hansard source

When it was first introduced in 1989, the HECS scheme was the world's first national income-contingent charging mechanism for higher education. In 1989, only 12 per cent of Australians had a university degree. The idea was that students who benefited from their tertiary education by earning average or higher incomes would then contribute to the cost of that education, primarily by making repayments after finishing their studies such as to enable the creation of additional spots for students from lower socioeconomic backgrounds.

The growth in higher education over the last three decades, with the expansion of student loan schemes and the tightening of repayment arrangements, has damaged students' experiences of tertiary education in Australia. It now costs much, much more for students to study at a university. For courses with government subsidies, the expected contribution has increased from about 20 per cent to about 48 per cent of student course costs. Students now finish their degrees with average debts of $50,000 to $60,000. They're taking, on average, about 12 years to repay their debts, and repayment times are trending upwards. This is occurring in a cost-of-living crisis. Graduates are struggling to get home loans. Many are deferring having a family.

The burden of HECS debts is greatest on women, who take longer to pay back their debts and end up paying back more. In this country income 10 years after graduation is more strongly associated with gender than with field of study. Men earn $27,000 more than women 10 years after graduation. The lower payment threshold enacted in 2019-20 now reduces the incentive for women to work, and it can create poverty traps for families. A single parent with two children and an income between $46,000 and $100,000 will lose, on average, 70c of every extra earnt dollar due to reduced family benefits, increased tax, Medicare and HECS repayments. The recent Australian Universities Accord recommended significant reforms to make this HECS system more fair. This legislation goes some way towards that but not nearly far enough. We need this government to act more quickly and more effectively to fix the broken HECS system.

Federal funding of Australian universities has now decreased from 80 per cent in 1992 to around 35 per cent today. In 1996 student fees constituted about 10 per cent of universities' income. For some tertiary centres that figure is now 70 per cent. Most university revenue is from domestic and international student fees. Pivoting to a revenue stream dependent on very high proportions of international students, the large universities have now resorted to workforce casualisation and increased class sizes. They've reduced contact hours for students, and they've increased workloads for academic staff. Our universities have lost more than 46,000 full-time academic staff over the last decade alone. At the same time, the dilution of course requirements, larger class sizes, soft marking for international students and forced group assignments have lessened the educational experience for Australian students. Domestic enrolments have plateaued, drop-out rates are at a historic peak, an increasing number of school leavers are deferring commencing their studies and more young Australians are undertaking their tertiary education overseas because it is cheaper.

HECS is a really big part of this problem. In recent years the annual indexation of HECS by the rate of inflation has resulted in significant increases in residual student debt. The outstanding HECS debts owed by graduates have ballooned from $22.5 billion in 2011 to $78 billion in 2023. Many young Australians had no idea what they were getting into when they signed up to university at the age of 17 or 18. Greater inflation has resulted in indexation of 3.9 per cent and then 7.1 per cent in the last two years. The tax office collects HECS payments on an ongoing basis during the year, but it doesn't adjust the balance owing until a tax return is filed. That's after indexation is applied. So graduates have been finding that their debts have been increasing despite their best efforts to pay them off. It is outrageous that payments made during the year are not taken into account when a student's debt is indexed. My generation would not put up with this creative accounting on our mortgages, but we're expecting the next generation to put up with what amounts to cynical gouging by the Treasury.

To add insult to injury, in 2020 the Morrison government introduced not only a more challenging regime for repayments but also the Job-ready Graduates Package for degrees such as arts, commerce, accounting and business. The cost of these degrees more than doubled overnight, from about $16,000 to as much as $51,000, purely because of the Morrison government's wish to dissuade students from undertaking courses which it, in its infinite lack of wisdom, felt to be of limited value. This, while other courses—nursing, foreign languages and others—cost less than $5,000 a year. The gap between the cheapest and the most expensive courses doubled to more than $10,000 a year.

The indexation of these fees rubs further salt into the wounds. The truth is that, in a post-truth world plagued with populism and polarisation, we need more, not fewer, graduates with high levels of literacy, the capacity for nuanced thought and debate and the ability to communicate complex ideas. Graduates from varied ethnic and socio-economic backgrounds will be the thought leaders of tomorrow, and they should reflect the diversity of Australian society. The job-ready graduates scheme didn't align with labour-market outcomes. It didn't align with national priorities or projected skills shortages. It left a frightening number of students facing debt far higher than was anticipated when HECS was first introduced. That is debt which is vastly disproportionate to the future earning potential.

The job-ready graduates scheme succeeded in decreasing the number of students undertaking arts, commerce, law and psychology degrees, but only by 1.5 per cent. It markedly increased the disparity in debts incurred by students from lower socio-economic backgrounds, First Nations students and women. Debts of $30,000 to $50,000 are common. Debts over $100,000 are not rare. The program was not just flawed and ineffective policy; it persists as an indictment of the Morrison government's intellectual poverty. It should be dismantled immediately. To add insult to injury, since September 2023, banks must, under updated regulatory guidelines, include HECS debts in home loan application calculations. This means that residual HECS debts reduce graduates' borrowing power by between $15,000 and $104,000. The Universities Accord also recommended that we address this inequity.

It's in this setting that the University Accord has suggested significant changes to the HECS system, of which some are being enacted through this legislation. A significant initial change is reform of HECS indexation, to cap it to the lower of the consumer price index or the wage price index. This change will ensure that outstanding loans will not grow faster than the average wage. The new indexation cap has a retroactive effect from 1 June 2023, introducing an indexation credit to HECS accounts, which will help more than 3 million Australians.

These changes are in response not only to the Universities Accord report but also to the sustained and unified efforts of the 2.9 million Australians with HECS debts who have, for two years, represented their need, their want and their desire for the Albanese government to change the system as strongly as they can and the efforts of the 288,000 Australians who signed my petition to fix the broken HECS system. To them are owed the changes in indexation and the refunding of $3 billion.

The legislation also creates a support payment to help students bear the cost of participation in mandatory practical training. The University Accord recommended this form of support to students in the care and education sectors, but the legislation affords it only to the approximately 68,000 students who are undertaking teaching, nursing, midwifery and social work studies. There is really no clear or justifiable rationale for excluding students of medicine, radiography, allied health and other health sector professions—students who are also required to undertake compulsory placements. Some of them have told me that they find themselves paying rent in two places. Some of them find themselves sleeping in cars on their country placements. Some have to take time off to save before they can take those placements. Placement poverty doesn't distinguish between different academic disciplines.

The payment will be means tested, and it will be matched to the Austudy rate of about $8 an hour, but all details of the scheme have been left, at this point, to the delegated legislation, which renders it very susceptible to repeal. The government intends that prac payments will be administered by the universities, but they do not generally administer Commonwealth supports. It appears that there may be a cap on the number of supported placements allocated to each institution. We have limited insight into the practicality of the scheme. We have doubts about its equity and residual concerns regarding the potential for it to be repealed by subsequent governments. The scheme should be administered by the government. It should include all care sector degrees necessitating practical placements away from home for anything more than four weeks. It's time to show real commitment to students who are making sacrifices to undertake the courses that we need them to take.

If we value education, if we value the skills that graduates bring to our society and if we wish to ensure Australia's future, we have to ensure that all Australian students share in the opportunity to benefit from our world-class educational institutes and that all of us can benefit from the fruit of their studies. Students should be able to make choices in line with their strengths and preferences. Course funding should include an appropriate balance between student and government contributions, recognising both the public and private benefits from higher education. Equal or flat-rate student and government contribution rates should be the starting point, with differentiation based on clear evidence for this. This would be simpler. It would minimise inequality, and it would be more justifiable to the public. For student contributions, graduate employment is the clearest and most valid evidence for differentiation of costs, which approximate the private benefits from education. A government contribution system differentiated by cost of delivery but not employment would ensure that universities supply higher-cost courses of interest to students which are aligned with national priorities. A government which is truly serious about improving educational outcomes and stimulating research and innovation would commit to the full funding of our universities. That would ensure adequate places for all competent students. It should adequately and actively address the inequities in our education system.

There's a lot more to be done to make the HECS system simpler and more fair. Let's remember that, in many cases, the graduates who are now experiencing bloated HECS debts are the generation of young Australians who are still making up for time lost during the COVID-19 crisis, a time in which we confined them to their homes and they often received a third-rate educational experience delivered online. That educational experience has not improved in the post-pandemic years. This is a generation which now, in the face of a cost-of-living crisis and a crisis of home affordability and availability, is being burdened with unprecedented levels of personal debt arising from their attempts to equip themselves with the skill sets required for their adult lives. This is a generation which understands that Australian university students contribute more to government revenue than the oil and gas revenue pays in its super profits tax.

The government must immediately reverse the gross inequities visited upon art students by the Job-ready Graduates scheme. I will move an amendment to that effect in the Consideration in Detail stage of this legislation. I will also move an amendment allowing for the payments made by Australians to be accredited to their accounts before indexation is applied each year, to stop this government from gouging extra money from the young and the vulnerable. The Australian tertiary education system is, at this time, broken. A government that really believes in it will demonstrate the commitment required to fixing it, and it will do that now.

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