The federal government’s plan to use taxpayers’ money to wipe $16 billion off student loans was welcomed with fanfare by the usual suspects in the media, universities and politics, and hailed as a win for young Australians.
According to the announcement, university students are set to save $5,500 on average and the minimum repayment threshold will be lifted from $54,435 to $67,000 and indexed to sit at 75 per cent of average graduate earnings.
On top of an already generous HECS education financing system, the announcement is clearly a win for current students incurring debt for their studies. But is this really a win for young Australians, particularly the large cohort who will never attend university?
Once again, the federal government is catering to elite interest groups and revealing just how out of touch it is with mainstream Australians.
For some time now, the political class has been pushing for higher university attendance. In the last Budget the federal government said it would set a tertiary qualification target of 80 per cent of the working age population.
Meanwhile, the dropout rate from university has been increasing – it currently stands at 25 per cent – and there are key trade shortages across the country. This makes the government’s target an impossibility from the outset.
University is not for everyone and trying to force more young Australians to study benefits neither the individuals themselves nor the country. Attending university costs young Australians time, money, and forgone opportunities, but is undertaken in the belief that the benefit of completing a degree is ultimately greater than the costs involved. Student dropouts are at a distinct disadvantage as they leave university with a student debt and no qualification.
In fact, the only groups likely to benefit from higher numbers of students attending university are the Greens and Labor at the ballot box. Could the Prime Minister’s decision to cut student debt be more self-interested than it looks?
Recent research out of the US found a large percentage of college students identify as more left leaning. A 2020 survey conducted by the Foundation for Individual Rights in Education (FIRE) reported 50 per cent of university students identify as liberal (left-wing), 37 per cent as moderates, and 26 per cent as conservative.
This is supported by exit-polling conducted by the Institute of Public Affairs after the Voice to Parliament referendum that found those with a university degree were the group most likely to vote ‘Yes’. Those with a degree were more than two-and-a-half times more likely to vote ‘Yes’ as those who had not completed year 12.
The move to the left in the tertiary education sector has also coincided with declining education standards. A recent Productivity Commission report found poor quality teaching in universities is undermining productivity growth. Productivity Commissioner Catherine de Fontenay highlighted what she described as a ‘productivity paradox’, where Australians are more highly educated than ever before, but economic growth remains poor. Students are coming out of the tertiary sector unequipped to deal with real world demands – they are woke-ready rather than work-ready.
This was reflected in the latest university rankings where 17 Australian universities fell down the ladder, with teaching and research cited as significant concerns. Among Australia’s top ten universities the average teaching score has fallen from 48.2 to 46.9 and the average research environment score fell from 59 to 57.4.
With universities demonstrably failing young people, there is less reason than ever before to encourage greater numbers to attend universities by subsidising their degrees.
If the federal government is serious about helping young people, they should introduce policies that reduce housing prices and address the cost-of-living crisis. These are the big issues that young people face today.
The Institute of Public Affairs’ Future of Australia survey revealed lowering the cost-of-living is more than twice as important to young Australians as any other issue. In this area young men and women are united. In fact, women at 45 per cent were more concerned than men, at 38 per cent.
On the economic front, rampant inflation has seen record cost-of-living increases. In May 2023, living costs for working Australians experienced the highest yearly jump on record and the price of many goods and services has continued to rise since. This is compounded by the fact that Australia’s economy is mired in a per capita recession, with GDP shrinking for the past six consecutive quarters.
Political leaders need to step up, listen and act on the real concerns of all young Australians, not just those who study at university. They must do more to ensure that policy settings tackle the cost-of-living crisis and help young Australians own a home.
The current situation, difficult as it may be, presents both challenges and opportunities for Australia’s political leaders. Those who address the issues head-on will be rewarded with support. Any way you look at it, the plan to wipe HECS debt is actually a handout to a particular sectional interest, for rank political purposes, ahead of a federal election due early next year. What is really needed is a plan to help all young Australians get ahead.
Brianna McKee is a Research Fellow and the National Manager of Generation Liberty at the Institute of Public Affairs.
