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Sky News AU
2 days ago
- Business
- Sky News AU
Labor's 20 per cent student debt cut delivers only 7.9 per cent real reduction, parliamentary analysis finds
The Albanese government's much-celebrated 20 per cent student debt cut will deliver only a 7.9 per cent real reduction, new parliamentary library analysis has revealed. The research, released by the Australian Greens on Monday, showed the $16 billion student debt relief package has been eroded by three years of indexation. High inflation over the first term of the Albanese government caused student debts to balloon as they were indexed each financial year. According to the analysis, students owing $30,000 in loans when Labor came to power will see their debt cut to $27,619 after indexation and the 20 per cent cut are applied. That is just $2,381 in relief, or a 7.9 per cent reduction on their original balance. Despite the government's changes to indexation, the compounding impact of annual increases has significantly diluted the long-term benefit of the one-off policy. The policy drew widespread criticism when it was announced for its high cost and perceived unfairness, particularly for taxpayers without student debt. The total cost of the policy was earmarked at $16 billion, providing assistance to just three million people, while 24 million Australians without HELP debt receive nothing. Concerns over fairness also intensified after Sky News revealed that nearly 40,000 overseas-based debtors will receive close to $50 million in taxpayer-funded relief. The students that were most reckless with their loans also stand to benefit the most, with some individuals racking up hundreds of thousands in debt. Not-for-profit research body e61 Institute recently exposed the way the policy will unfairly benefit students who graduated in 2024. University students who finished their degrees in 2024 will receive twice as much relief as people who left in 2020, according to e61. 'Most HELP debt is held by university graduates, who have much higher lifetime incomes than the average taxpayer,' e61 Research Economist Matthew Maltman said. 'And even if you look within graduates, those with more costly degrees tend to go on to earn higher incomes in the future. 'The current policy isn't at all targeted and that means it's going to give a very large amount of debt relief to future lawyers, dentists and doctors.'
AU Financial Review
03-07-2025
- Business
- AU Financial Review
The graduates getting a winning deal on HECS debt relief
Graduates who enter some of the highest-paid professions, such as medicine, dentistry and law, stand to be the biggest beneficiaries of the Albanese government's 20 per cent cut to student loans. New analysis by economics think tank e61 found people who graduated at the end of last year would also receive a debt cut more than twice as large as those who completed a few years earlier.
Perth Now
02-07-2025
- Business
- Perth Now
Dire flaw in Labor's student fee cut plan
A flat $5500 reduction of HELP debt would deliver better uniform relief for Australians with student debt, with analysis of Labor's signature policy finding that the cost-of-living relief would currently largely help high-income earners. The research, released by not-for-profit research body e61 Institute on Thursday found the policy as is, doesn't meaningfully speed up debt repayment, and unfairly benefits students who graduated in 2024. Instead of a 20 per cent cut to balances, e61 said the relief would be better targeted if Australia's with student debt were given a flat $5500 cut. The figure also represents the average amount set to be wiped across all HELP accounts. e61 said that a $5500 reduction would help 35 per cent of account holders make their final repayment in an earlier year, or 15 per cent more debt holders than a 20 per cent discount. New analysis from e61 urged Labor to consider a flat $5500 cut to student debts, instead of a 20 per cent cut. NewsWire/ Nicholas Eagar Credit: NewsWire e61 Research Economist Matthew Maltman said the benefits of a straight cut was important factor due to the policy's $16bn price tag, which equals the annual cost of Jobseeker. 'Most HELP debt is held by university graduates, who have much higher lifetime incomes than the average taxpayer. And even if you look within graduates, those with more costly degrees tend to go on to earn higher incomes in the future,' he said. 'You could make the argument that we need to provide debt relief to humanities students in a targeted way because of Job Ready Graduates. 'But the current policy isn't at all targeted and that means it's going to give a very large amount of debt relief to future lawyers, dentists and doctors who are going to go on to enjoy very high lifetime incomes.' Labor says its 20 per cent cut to student debt will be the first piece of legislation it will pass once parliament resumes on July 22. NewsWire/ Martin Ollman Credit: News Corp Australia University students who finished their degrees in 2024 will also receive twice as much relief as people who left in 2020, and two and a half times more than students who are currently in their first year of a three year degree. e61 Senior Research Economist Jack Buckley said this would create a debt relief lottery. 'If you cut 20 per cent of each individual's balance, it means two very similar people will receive very different amounts of debt relief simply because one finished their degree in 2024 and the other finished a few years earlier or later,' said Mr Buckley. Anthony Albanese has repeatedly said the 20 per cent cut to HELP debts will be the first piece of legislation passed when parliament returns on July 22, with the changes backdated to account balances as of June 1. Labor is also set to increase the debt repayment threshold from $56,156 to $67,000, repayments of payment will also be lowered.
The Guardian
31-03-2025
- Business
- The Guardian
Cheaper Australian childcare failing to help lower-income mothers return to work
Throwing more money at cheaper childcare fees won't be enough to help mothers with young children get back to work, new research shows, as lower-income families lose more in benefits and taxes than they gain from working an extra day. The independent economic research body e61 Institute analysed childcare reforms in 2018 and found that higher subsidies for lower- and middle-income families had no measurable impact on mothers' participation in the jobs market. Women's earnings plunge by 55% on average in the first five years of parenthood, and this 'motherhood penalty' mostly persists for a decade after giving birth, previous Treasury analysis has found. Australian women with dependent children are less likely to be employed full-time than in comparable countries such as New Zealand, the US, the UK and Canada. But Silvia Griselda, a research manager at e61 and co-author of the report, said the findings were a warning for policymakers that 'increasing childcare subsidies can be costly and ineffective if not carefully designed'. Get our breaking news email, free app or daily news podcast Griselda said cheaper childcare did lead to more children attending centres – an important goal in itself – but that for some low-income families, an increase in childcare subsidies was not enough to offset the loss of benefits and higher taxes from moving, for example, from two to three days of work a week. Cheaper childcare did, however, have more of an impact on labor force participation of parents in middle- to high-income families. 'If we are to truly unlock the economic benefits of childcare investment we need a comprehensive approach that considers not only the cost of childcare, but the entire tax and transfer system,' Griselda said. Lower-income families are eligible for benefits and tax offsets such as the parenting payment, family tax benefits A and B and the low-income tax offset. The Treasury secretary, Steven Kennedy, has also highlighted the need to tackle these high so-called 'workforce disincentive rates', which measure the share of an additional day's pay lost to taxes, reductions in benefits and childcare costs. Anthony Albanese has committed to delivering universal childcare, although in what form remains an open question. Since coming to power Labor has committed $3.6bn over two years to deliver a 15% boost to childcare workers' pay, and lifted the subsidy rate to 90% for families earning less than $80,000. The government also legislated to remove the activity test – which determines parents' level of subsidies based on the number of hours they work in a fortnight – for three days of care from 2026, and has promised to establish a $1bn fund to build and expand childcare centres in areas where parents struggle to find places. Despite the additional billions spent, parents still complain of high and rising costs of putting children in early education and care, particularly as centres increase prices by more than the additional subsidies. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion Out-of-pocket childcare expenses have climbed by nearly 10% in the past year, even as inflation more broadly has slowed to under 3%. The Australian Competition and Consumer Commission (ACCC) early last year found that higher subsidies were only having a 'limited' effect on parents' costs. Over the longer term, the picture is better: childcare costs are 3.4% lower than two years ago, and 5.3% down since December 2021, according to the latest Australian Bureau of Statistics figures. There is growing support for expanding the number of not-for-profit childcare centres, as the spotlight on the expanding for-profit sector intensifies amid recent reports of abuse and ongoing concerns about wider safety. The government has reportedly flirted with the idea of a $10-a-day price cap on fees – a model strongly backed by advocacy groups such as the Parenthood. But the new findings from e61 back up Productivity Commission modelling last year that showed even substantially more generous childcare subsidy rates (at an additional $5bn cost to the budget) would have a 'negligible' effect on parents' labour force participation. Nonetheless, the PC recommended an approach that would deliver access to at least three days a week of quality early childhood education and care, and that this would require a major multi-year effort to expand the supply of centres, particularly in regional and remote areas. Under its preferred option, care would be 'effectively free' for families earning under $80,000 – which includes around a third of families with small children. The PC and early childhood experts said that beyond the narrow focus on workforce participation, boosting attendance in formal early childhood education was particularly beneficial for children in poorer households who were least likely to attend.
