Mehreen Faruqi (NSW, Australian Greens) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to table an explanatory memorandum relating to the bill.

Leave granted.

I table an explanatory memorandum and seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

Today I introduce the Education and Other Legislation Amendment (Abolishing Indexation and Raising the Minimum Repayment Income for Education and Training Loans) Bill 2022 to tackle the student debt crisis.

Let me say right at the start, education is a basic human right. It is not a privilege. TAFE and University should be fully funded by the government and should be fee-free for everyone, whether you are leaving school, changing careers, retraining later in life or looking to gain new skills and knowledge.

Under the current system, students come out of university and TAFE saddled with tens of thousands of dollars of study debt that can take them decades to pay off. More than three million people in Australia are shackled with a total of around $74bn in HELP debt alone. More than 1.5 million of those people have debts greater than $20,000. This is unsustainable and wholly unfair. That's why we went to the last election with a policy to cancel all student debt.

We are in a cost of living crisis. Housing costs have skyrocketed, adding to this burden of study debt. This is having an enormous impact on people's lives, especially young people and women who have borne the brunt of the pandemic and are now bearing the brunt of the cost of living crisis due to rising rents, insecure work and stagnant wages.

The LNP government's terrible Job-ready graduates package that hiked up Uni fees has only made things worse. Exacerbating the problem is the fact that the Coalition government also passed legislation which significantly lowered the minimum repayment income for student loans and linked indexation of income-contingent student loans to CPI.

It's no small problem, millions of people are impacted, and it's not one we can afford to ignore any longer as inflation drives up student debt and the steep cost of living bites.

Something needs to be done, and it needs to be done now.

My bill gives this Parliament the opportunity to do just that.

While, ideally, all student debt should be wiped, this bill is a clear and immediate step to start tackling the student debt crisis while providing cost of living relief to those with a study loan as we work towards the abolition of all student debt and a future where TAFE and university are free for all.

There are two elements to this bill, which will, together, deliver cost of living relief to people with study debts from July next year.

First, the bill immediately halts indexation of all study loans. Currently student debt is indexed by CPI on 1 June each year.

This June, with inflation skyrocketing, a 3.9% CPI increase was applied to all student debt, adding more than $900 to the average student debt. For many students, that figure was much higher.

3.9% was the highest indexation rate in a decade. Inflation is at 7.3% now and it has not yet peaked, according to forecasts it's on track to be even worse in 2023. This is such bad news for anyone with a student debt. As the Sydney Morning Herald reported this month "This could mean an increase of nearly $2000 for someone with an average HECS debt of $23,685. Ouch."

Ouch, indeed!

People with a student debt are telling me this:

This year my debt went up by more than the compulsory payments reduced it by. Paying thousands to still have my HECS debt growing is so disheartening.

I'm literally 20 and already owe more than 20,000, that's more than 1000 for every year of my life.

My Hecs & Student loan comes to 80k, indexation will mean all I have paid in the last 12 months comes to nothing.

I've just finished my degree (mum of 2 who staggered through it during lockdowns) and about to enter the full time working world. Feeling like I'm behind before I even begin.

I'm going to pay about $3500 in HECS this year and at the end of the year my HECS debt will increase by $4760. Absolute nightmare.

We must stop this pain of ever ballooning student debt. It does nothing but make life harder for so many, just for studying.

The bill I have introduced immediately stops any indexation of student debts going forward, effectively freezing debt levels and preventing the nasty jump in debts we're headed for next year.

The second part of our bill lifts the current minimum repayment threshold of $48,361 to the median wage.

This means that no one with a study debt will repay a cent of that debt until they're earning above the wage of around $62,400. As the median wage rises, so too will the minimum repayment thresholds established by this bill.

This reverses the Liberals' persistent cuts to repayment thresholds that have seen thousands upon thousands of graduates forced to start repaying student loans before they've found their feet and long before they're making a median wage and can afford to make repayments. If the neo-Liberals had not made these terrible changes to drop the minimum repayment income in 2016 and 2018, the minimum repayment income today would be $63,333.

If this bill passes, more than 3.2m people—that's every person with a study debt—will see the benefits of the indexation freeze in this Bill when 1 June comes around. 54% of these people are under forty and just getting started in their post-education lives. About 60% of those who benefit are women.

But that's only the start of the benefits.

Anyone earning less than median wage would see an immediate increase to take home pay from 1 July 2023.

Someone earning just under what the median wage is expected to be this financial year—would have more than $1,600 extra in their pockets in the 2023-24 tax year alone.

Many who earn above the median wage will also get a hip pocket benefit because the lifted thresholds mean a lower percentage of their income is being withheld for student debt repayments.

Anyone earning a median wage or below will never have to make any student debt repayments.

2.4 million people will benefit from the new repayment thresholds established by this bill, more than 80% of whom are under 40 and more than 60% of whom are women.

The abolition of student debt is not a new idea, nor should it be a controversial one.

If US President Joe Biden's mostly boring, mostly centrist government can wipe the student debt of more Americans than Australia has HELP debtors, then we certainly can do better.

The cancellation of study debts in the US is a credit to the work of activists and students in the US whose years of work on the issue gave a loud and clear message to the establishment that education should never be a debt sentence.

In Australia, the last decade has been a particularly tortured time for students and graduates.

In 2016 and again in 2018, fresh from a few failed attempts to jack up Uni fees, the Liberals introduced legislation which significantly lowered the minimum repayment income for student loans to hike the rate and pace of repayments. At the same time they messed with indexation, tying it to CPI instead of wages.

These changes were as harmful as they were nonsensical. Lowering the minimum repayment income disproportionately affected students and graduates on low-incomes and completely abandoned the principle that students should only begin repaying their debts when they earned roughly the average wage.

When 2020 rolled around, the Liberals came back for another go at university fees and funding with the disastrous Job Ready Graduates package which hiked fees on students and cut funding, massively shifting the cost of delivering a university education away from the Government and onto students.

The fee changes were not small tweaks either. They more than doubled the fees for degrees like arts and commerce to more than fourteen thousand dollars a year. On average, the package drove up fees for women by 10% compared to 6% for men.

With the fee hikes came enormous cuts to teaching and learning funding that have since forced universities to teach more students with less money across the board.

These cruel funding cuts and fee hikes are further fuelling the explosion in student debt that is hurting students today.

This bill is an opportunity for the Labor government and cross benchers to join the Greens in supporting the interests of students.

Once you might have assumed that Labor would have no problems voting for this bill's simple measures to give those with a study debt cost of living relief and make our education system fairer for all.

But I fear Labor is no longer the party of Whitlam when it comes to education. They talk a big game from the benches but seem to have fled the field now voters have given them a run.

On this occasion, I would be glad to be proven wrong and very pleased to see Labor support this bill.

When the former Liberal government slashed the minimum repayment income, Labor said the changes were unfair and voted against them.

When the Liberals introduced their university fee hikes and funding cuts in 2020, Labor made the correct eleventh hour decision to oppose them.

But since then they have been deathly quiet on university funding. They won't even commit to reversing the atrocity of those funding cuts and fee hikes that are seeing universities forced to do more with less while students pay through the nose and face decades of debt.

So I hope with this bill they take the opportunity to back students, women and other people struggling to pay off their study debts.

Ballooning student debts and government inaction can't be seen as anything other than punching students and graduates while they're down.

The hip pocket harm of having exorbitant student debt repayments withheld from paychecks isn't the only harm we're seeing done by student debt.

Only recently, we saw renewed testimony from people with study debts and lenders that outstanding HELP debts are preventing people from getting finance to be able to purchase a home or severely limiting the amount that they are able to borrow. It's tough enough as it is to find secure housing. Allowing the problem of student debt to go unaddressed will only make it worse in the months and years to come.

Even if there were no cost of living crisis, we have to be clear on the principle that underscores all our efforts for free public education and an end to student debt:

Now that we are no longer weighed down by the Liberal's attacks on the very idea of public education and training, it's time we began the work of rebuilding our education system. I won't ever miss the opportunity to remind the Government that a majority awaits them in the Senate for ambitious measures that look to the future and advance the cause of higher education and training as a universal public good, built on the principles of equity and democracy.

For the Greens part, we are proudly the party of public education. We know that education at every level should be free, fully funded and properly resourced, with staff who are paid properly, valued and respected for the incredible work they do.

This bill is one of the pieces of the puzzle in making that vision a reality.

I commend the bill to the Senate.

I seek leave to continue my remarks later.

Leave granted; debate adjourned.