It is difficult to imagine conditions under which this policy makes sense.
But we are talking Hockeynomics here. Remember the budget emergency which has suddenly gone missing?
My only nark with Matt’s analysis is with this bit:
At the moment, HECS is a pretty good deal. Your debt doesn’t rise in real terms, you don’t start paying it back until you earn somewhere around the median full-time wage, and the repayment levels are not too onerous.
ETA: Matt has kindly pointed out what ‘real terms’ means in relation to HECS debt.
From Matt’s comment:
I said “the debt doesn’t rise in real terms.” It doesn’t. The ‘real’ bit there is important, meaning “the debt doesn’t rise in inflation-adjusted terms” or “the debt rises only by the CPI.” In your situation, the nominal value of your debt rose, but the inflation-adjusted value did not.
ETA: So while the inflation adjusted value of my HECS debt was nomially the same the effect was that My debt did rise. When I finished University my base level jobs were too low paying for me to pay any HECS. Or if I did pay some I got it back when I did my tax return because I hadn’t earned enough overall. Which was nice for a tax return but annoying because I wanted the rotten thing paid off. Meanwhile it was growing at about 3% per year. Then gradually I got better paying jobs and began to chip away at the debt. Then I stopped work when I had my first child. I had only made a small dint in my debt but I was very proud of it. My debt was around $13 000 because I did two years of a science degree before switching to a 4 year education degree. Once I went on leave to have my baby my HECS debt started to accumulate again due to CPI increases. By the time I was earning enough to start paying HECS again (which was a few years since my first jobs post baby were under the HECS threshold) my HECS debt had risen above its previous level. So effectively all the money that I had paid off it was wasted.
This is obviously going to continue to be an issue for women who complete their degree then take time off for child rearing before their HECS debt is paid. It will also affect any parent who wants to take significant time off, or work significantly less to share the childrearing if their income drops below HECS level. It will also affect anyone in contractual employment who doesn’t have a steady income throughout the year.
This situation will only be made worse if HECS is privatised. The Liberals in Opposition accused Labor of being involved in class war, but changes to HECS will disproportionately affect people from lower socio-economic backgrounds and may be the difference between some people going to University or not.