Young people are trapped in a debt spiral, and the government fails to recognise that at its peril
It was a tad hypocritical of shadow education spokesperson Sarah Henderson to belatedly get involved in discussions about student debt today, after three million Australians saw their student loans rise by a whopping 7.1 per cent, in line with inflation. Where was the Coalition when the Greens’ bill to abolish indexation went before a recent Senate inquiry? (Oh that’s right, it voted with Labor to reject it.) Or when independent MP Zoe Daniel called for a review, or when crossbenchers signed Monday’s open letter demanding an urgent pause? (No members of the opposition signed the letter.) As Guardian Australia noted, it was Henderson’s party that increased the price of some degrees. And a new NTEU report estimates it now takes up to 44 years to pay off student loans, in large part due to the Coalition’s reforms. But Henderson – who has consistently voted to increase indexation – was nevertheless right in pointing out in estimates that today’s rise is “crippling for so many Australians who are suffering from cost-of-living pressures”. “Already, mortgage brokers … are warning this will impact on Australians’ ability to secure a loan,” the senator said. “This is D-day for three million Australians.” Henderson is spot on: Labor is completely “tone deaf” on this. But so too is the opportunistic opposition, which is once again playing politics with people’s lives.
For weeks now, Greens and independents have been warning that the indexation traps graduates in a debt spiral, with rises often matching or exceeding repayments. Social media is filled with such stories, with one AAP journo noting that his debt has gone up by more than $7500 since leaving university six years ago, despite working full time for four years. For the past few days, we’ve been hearing about the impact this will have on people’s lives, with graduates fearing for their future. Today’s increases, which average around $1775 per person, will have lifelong impacts on borrowing capacity. As Greens education spokesperson Mehreen Faruqi said when her indexation bill (that would also have raised the minimum repayment threshold, which the Coalition famously lowered) was rejected, people’s dreams are being crushed. The major parties, she added, are “completely out of touch with the reality of ballooning student debt and the harm it’s causing”, suggesting that a “student debt avalanche” was coming. No one listened.
Labor’s response to all this has been deeply embarrassing. After rejecting a bill that would have averted this situation (and rejecting crossbench calls for an urgent pause to indexation), Treasurer Jim Chalmers said on Monday it was “dishonest” of the Greens to blame the rising debts on the government because there had been no policy change on HECS. (Never mind that a policy change is exactly what they’d asked for.) Asked by independent MP Kylea Tink yesterday about relief for those “copping this smackdown”, Education Minister Jason Clare said that changing the way HECS is indexed would not “put an extra dollar” in the pocket of university students today, which, of course, was not her question. On Monday, Labor backbencher Julian Hill tweeted an ABC article arguing that an indexation pause would not help with cost-of-living, adding that “anxiety about HECS debt indexation may be overblown”. He was rightfully savaged, with Twitter users explaining that the anxiety of knowing your debt will last even longer, potentially forever, is clearly not overblown. (One helpful account suggested to Hill where the government might be able to find some other revenue, pointing out some of our biggest mining companies that pay zero tax.)
Universities Australia, meanwhile, said today that there was no need to “worry” about the HECS indexation. Chief executive Catriona Jackson told ABC Radio that “it doesn’t mean you are paying more next week out of your tax or the week after or the week after … it’s that the term of the loan gets longer.” To this, Guardian Australia’s Josh Butler responded, “I guess a loan extending for more time is only a bad thing if you like having extra money in your pocket for longer.” But not to worry: NSW vice-chancellors are getting huge pay increases despite universities plunging into the red, with some being awarded a $200,000 raise last year. How nice for them. Jackson, meanwhile, dismissed the idea that young people were getting a raw deal, since university used to be free. “When we had, in inverted commas, free degrees, they were never free. The taxpayer paid for them. A very small proportion of the population went to university … Now, it’s about 40 per cent of the young population.” Never mind that many nations have free tertiary education in some form, including Norway, where young people undertake study at a similar rate to Australia. (Satirical outlet The Shovel quipped: “Young people whinging about the 7.1% increase in HECS debts today should have been more prepared and done university in the 1970s when it was free.”)
Greens MP for Brisbane Stephen Bates pointed out in Question Time today that the prime minister went to university for free. “Why did your government do nothing to stop this indexation and even go so far as to block the Greens’ bill to free student debt and abolish indexation?” Bates asked, with Clare responding that doing so would have cost the taxpayer. (That same taxpayer who is getting ripped off by Labor’s refusal to make oil and gas companies pay their fair share.) There is a reason young people are increasingly fed up. And it has a lot to do with the feeling that people such as Anthony Albanese are pulling the ladder up behind them – whether on education or housing, welfare or tax cuts – while perusing the market for tax-deductible investment properties that most debt-riddled young people will never be able to afford.
GOOD OPINION
Let them share houses
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“I think we’re living in two worlds. We’ve got people who are actually living in very big houses, that have got multiple dwellings and they’re landlords. And what they’re doing is, when the Reserve Bank governor puts up interest rates, they’re passing on that cost onto renters.”
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ACTU secretary Sally McManus rubbishes the RBA governor’s suggestion that people move into share houses to address the rental crisis. Philip Lowe’s “out of touch” comments have gone down like a lead balloon, with older people struggling to find such options.
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BAD OPINION
Laboring the point
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“This debate on the Housing Australia Future Fund has made it crystal clear Labor is the only party who will always back more homes.”
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Housing Minister Julie Collins gives a speech to the Property Council, lashing “the Greens political party” for demanding far more ambition from Labor’s social housing fund (while opposing projects that don’t stack up).
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7am Podcast
Anthony Albanese: Bold reformer or cautious operator?
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Anthony Albanese’s government faces significant challenges – looming climate disaster, a widening wealth gap and international security concerns. But a year after the election, it is hard to judge how it will respond to these circumstances. Today, contributor to The Monthly Sean Kelly, on trying to pin down the real intentions of the Albanese government.
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The number of years within which Australia is expected to exceed the carbon budget required to avoid 2 degrees of warming, if emissions continue at the same rate, with the latest data showing a meagre 0.4 per cent decline.
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The Policy
Government takes first steps to regulate AI
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The Albanese government is considering whether to adopt AI risk classifications similar to those being developed in the EU, amid fears the technology could lead to human “extinction”. As writer Tim Dunlop tweeted: “Gosh, wait till he hears about climate change.”
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