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  • Budget penalises upfront HECS repayment

    12/05/11

    The Gillard government has again played the class warfare card in the 2011-12 Budget when it chose to penalise students who pay their HECS debt upfront, according to Senator Brett Mason, Shadow Minister for Universities and Research.

    “For all its rhetoric about ‘education as the engine room of the economy’, whenever this government desperately needs to find money, higher education and research prove to be the softest targets and are the first on the chopping block. We have seen it recently with the decision to abolish the Australian Learning and Teaching Council and the cuts to research funding,” said Senator Mason.

    “This is yet another bad higher education policy from the Gillard government. It is supposed to save the government some money but it is uncertain whether it will actually achieve that objective in the longer term.

    “In the meantime, however, reducing the upfront repayment bonus from 20 to 10 per cent, and the early repayment bonus from 10 to 5 per cent, clearly penalises those students who pay their HECS debt upfront or early and provides a strong disincentive for many not to do so in the future.”

    “These measures have been considered by some experts to actually save the government money because paying the bonus upfront or early is in many cases cheaper than the cost of providing students with an interest-free loan over the longer term.

    “What is particularly disappointing is that the Gillard government has once again chosen to use the class warfare and politics of envy dog whistle, justifying the cut on the basis that the bonuses are used by ‘students with wealthy parents’.

    “It is true that many parents indeed partly or wholly help their children to repay their HECS debt upfront. Many hard-working parents indeed consider quality primary, secondary and tertiary education the best gift they can give to their children. This does not automatically make them wealthy, even if the government’s definition of ‘wealthy’ now seems to extend to all those who choose not to rely on government largesse.

    “Anecdotal evidence also suggests that in at least some cases, parents don’t gift their student children money for up-front repayment but merely loan it to them. In addition, this measure penalises a number of students who study and work part time or full time, making a tough decision to pay their HECS debt upfront in order to enter the workforce debt free.

    “It is ironic that while the government's own figures show that billions of dollars of the HECS debt are considered to be at risk of never being repaid, instead of doing more to chase up these unpaid debts, the Gillard government has chosen instead to penalise precisely these students who pay their debt fully and promptly.

    “This is yet another ill-thought out, pointless higher education policy by the Gillard government, rationalised in bad faith, and unlikely to achieve its objectives. It represents another fail mark for the government.”
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Brett Mason

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