Labor under fire for HECS/HELP indexation timing
Aussies keen to see their student loan debts cut by 20 per cent as promised by Labor in the federal election may not be so happy when they check their accounts.
Since Sunday, students with HELP or HECS loans would have seen their debts increase by 3.2 per cent as indexation kicked in.
Indexation serves to adjust student loans according to inflation – but the timing at which they are applied has been heavily criticised for years.
'HELP debts aren't actually very helpful,' independent Tasmanian senator Tammy Tyrell said.
'Today, students are watching their debts go up, with the money they've paid through the year nowhere in sight.
'Banks reduce your loan before charging interest. Credit unions do too. Just not the government who pretend someone's repayments don't exist. It's costing students thousands of dollars all because Labor is too lazy to fix its accounting.
'Labor's HELP debt changes are one-off sugar hits. If they're genuine about making a difference for students, they could fix this rigged system when parliament returns. Just count someone's payments before interest is charged.
'It doesn't make sense to me that someone's debt is indexed before taking into account the thousands of dollars they've paid throughout the year,' she said.
'Imagine if banks did that with your home loan – took your money, charged you interest but the repayments don't come off the outstanding balance. I reckon people would be pretty upset about that, so why do we expect students to put up with it?
'A student's HECS-HELP debt should be indexed after the yearly repayments are taken off.
'No matter what the indexation rate is, it's not a fair system when you're indexing badly. We need to change the timing, not the rate.'
Education Minister Jason Clare said Labor's policy to reduce HECS debts by 20 per cent would be backdated to June 1 before indexation was applied.
'It will be the first Bill that we introduce into the parliament when parliament sits for the first time in the last week of July,' Mr Clare told ABC radio.
'What that legislation will do is cut everyone's debt by 20 per cent and backdate that cut. And that's important because every 1st of June in every year HECS debts or student debts get indexed.
'That 20 per cent cut will come into effect before that indexation effectively happens to make sure that we honour the promise we made and we cut everyone's debt by 20 per cent.
The Australian Universities Accord Final Report 2024 determined that the indexation should be applied later in the year after compulsory repayments made during the previous financial year were deducted from a student's balance.
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Peter Dean: So I think what Richard Marles is putting out there is basically reaffirming Australia's strategic approach and that this is not just something that we can rely upon the US to do on its own. It doesn't have the requisite levels of capability to respond to China in this way. It must be by a community of nations within the Indo-Pacific. And as a status quo power, Australia and the United States and others are attempting to maintain the free and open Indo-Pacific that we currently have and stop any state from being able to dominate that region and impose a sort of hegemonic control over the Indo-Pacific. Sam Hawley: All right. Well, Donald Trump, of course, and Pete Hegseth have urged US allies in the region to increase their defence spending. They want Australia to raise our contribution to 3.5% of GDP, but let's face it, we are nowhere near that at the moment, and that would cost a lot of money, wouldn't it? Peter Dean: Oh, yes. You're looking in the realm of somewhere around $41 billion additional to go into defence spending to raise that level of money. I think what's really key here is GDP as a measure of defence spending has become a bit shorthand in recent decades for sort of commitment towards defending your own country or contributing to collective defence. There is no magical number that the Australian government can get to that would make our country safe. And if you remember way back when Tony Abbott was vying to become Prime Minister, when Julia Gillard and Kevin Rudd were running the country, then there was a whole debate about achieving 2% of GDP, which we currently have. Now the debate has moved on to is it 3 or 3.5% of GDP. But of course, as I said, most importantly, this number is being used internationally as a proxy by both the Trump administration, but by other states around the world, relative to an individual state's commitment to both its own sovereignty and security, but also the collective defence of the region it lives in. Sam Hawley: Yeah, well, Anthony Albanese says we will determine our own defence policy. And he notes that Australia is on track to lift defence spending to 2.4% of GDP by 2033-34. Anthony Albanese, Prime Minister: We're provided an additional $10 billion of investment into defence over the forward estimates. We're continuing to lift up. That adds up to 2.3% of GDP. Sam Hawley: A long way, as we said, to 3.5% that the Americans actually want. But nations like the UK are now moving more quickly, aren't they, Peter? The British leader, Keir Starmer, he has promised to increase annual spending to 3% up from 2.3%. They seem pretty worried in the United Kingdom. Peter Dean: Yeah, look, the UK government has made a firm commitment to move to 2.5% of GDP in the next couple of years and 3% of GDP in the near future. This is off the back of their strategic defence review. News report: Under the AUKUS security pact with Australia and America, 12 new nuclear-powered submarines will be built to protect Britain's waters. Six new munitions factories will be constructed across the UK and thousands of long-range weapons will be manufactured on British soil. Keir Starmer, UK Prime Minister: We are moving to warfighting readiness as the central purpose of our armed forces. When we are being directly threatened by states with advanced military forces, the most effective way to deter them is to be ready. Peter Dean: Particularly in response not only to the war in Ukraine and the threat from Russia, but of course, most recently from the changing posture of the United States under President Donald Trump. And what we can see there is Keir Starmer, along with Emmanuel Macron from France and other key leaders in Europe, are working assiduously hard to provide for greater defence of Europe based on European needs. Sam Hawley: Well, the British leader Keir Starmer says the UK must be ready to fight a war. Keir Starmer, UK Prime Minister: A battle-ready, armour-clad nation with the strongest alliances and the most advanced capabilities equipped for the decades to come. Sam Hawley: What weaponry does he want? Peter Dean: Well, what Keir Starmer has announced is that he wishes the UK military to field a force of at least 7,000 long-range missiles. Now, if you look at what's happening in the war in Ukraine in particular, but also the war in Gaza and the Houthi attacks on shipping in the Red Sea, what you've seen is the explosion of the use of long-range precision fires in each of those conflicts. Sam Hawley: Well, the UK plans to pay for all of this by, in part, cutting international aid, just to note that. What's it really worried about then? Is it just Russia or does China come into this as well for the UK? Peter Dean: Look, I think it's both. I mean, what we're seeing is a fundamental changing of the strategic order of the world that we live in. The world is becoming much more dangerous. As our own government has said, we live in the most perilous times. We're seeing the rise of revisionist powers, in particular China, Russia, Iran and North Korea. And of course, the Russian illegal and immoral invasion of Ukraine has been really at the centre of this. This is the first time since the end of the Second World War that Europe has seen a large major power conduct a full-on invasion of another state in Europe. That is an ongoing war, as we see today. And it looks like President Trump's efforts at brokering a peace deal are faltering at the moment. So that war is going to continue on. Sam Hawley: And the concern is, of course, that if Putin succeeds in Ukraine, he has other plans after that, right? Peter Dean: Well, exactly. And Putin, again, I think we need to actually believe what the rhetoric is coming out of some of these leaders from some of these states. I mean, Putin made it very clear in the lead up to the war in Ukraine that he believes that Ukraine shouldn't exist as a sovereign state, that it belongs as a part of a revitalised Russian empire that he sees. And he committed similar acts in states such as Georgia and other parts. And of course, in Ukraine itself, where he conducted limited incursions. And of course, what we see in the South China Sea and the East China Sea is ambient claims from China that are not recognised by international courts or international law. And the Chinese consistently using coercion military force against the Philippines, against Vietnam, against Indonesia, against Taiwan and against Japan in various parts of those seas to push their own sovereign claims, even though they are not recognised in the international community and not recognised by those other states. And of course, we add in the layer here of the cyber domain and cyber dimension, that while we're largely in strategic competition with these states across the globe in areas such as cyber, we're in day to day limited conflict as we receive an onslaught of assaults in the cyber domain from states such as North Korea, Iran, China and Russia. Sam Hawley: All right, well, Peter, as you say, we're living in a less stable world. But what do you think is our approach when it comes to defence, the right one? Are we war ready like the UK wants to be? And if we're not, do we actually need to be? Peter Dean: I think we're definitely not war ready at the moment. If you look at the Defence Strategic Review in 2023, it made it really clear that the ADF was not fit for purpose. The government is in the process of lifting defence spending to try and achieve some of the outcomes that were set. We don't have 10 years anymore to wait to prepare our forces. Now, what's been happening in Australia has been a long discussion in recent years over the requisite levels of defence spending. This was happening well before Donald Trump was elected for his second term of office. And if you look back to last year, you'll see some very eminent commentators and experienced people in this debate, people such as Sir Angus Houston, the former chief of Defence Force and one of the two independent leads of the Defence Strategic Review, former Secretary Dennis Richardson, former Labor leader Kim Beazley, former Home Affairs Secretary Mike Pezzullo, have all called for increasing of defence spending to around about three percentage of GDP on defence. So this is a national debate that's been happening for quite a while. And now it's become much more direct, given that our US alliance partner has directly made the request to Australia to increase defence spending. Sam Hawley: All right, and what about this imminent threat that Pete Hegseth talks about that China will invade Taiwan soon? If that was the case, and we're not saying that it is, of course, but what would that mean for us? Peter Dean: This would mean you have the two largest economies in the world going toe to toe militarily with each other across the Taiwan Strait and in East Asia. It would always inevitably suck in states like Japan and Korea and Australia and others. And in all the estimates we have, not only would it be the extreme loss of life that would occur by the states involved in the conflict, you would spiral the global economy into a major recession, if not depression. You're talking about the most dynamic economic region in the world being consumed by conflict. And we will be putting ourselves in the risk not just of a global economic recession and a major war, but of course, we're talking about a war here between major nuclear armed states. The government's not wrong when it says we live in this really dangerous strategic age. And of course, Donald Trump is not helping that, right? He's not helping stability and security. He's, you know, in many senses, creating a source of additional instability in the global strategic order. Sam Hawley: Peter Dean is the director of foreign policy and defence at the United States Study Centre at the University of Sydney. This episode was produced by Sydney Pead. Audio production by Adair Sheppard. Our supervising producer is David Coady. I'm Sam Hawley. ABC News Daily will be back again on Monday. Thanks for listening.
