‘Watch this space’ on student debt, Australian parliament told

Australian officials have kept mum on the prospect of student debt relief measures, as independent and opposition parliamentarians pressure the government over “crippling” loan repayments.

Grilled by the Senate’s economics committee, finance minister Katy Gallagher said she was “not aware” of any plans to reform the student debt repayment system managed by the Australian Taxation Office (ATO), which falls under her responsibility.

Tax officials were equally uninformed. “That would be a matter for the Department of Education, whether they wish to make a policy change,” said deputy commissioner David Allen.

Similar questions the following night, from members of the Senate’s education and employment committee, elicited similar responses.

“There is a serious issue when it comes to [university] affordability,” assistant education minister Anthony Chisholm acknowledged. “It’s one I know [education] minister [Jason] Clare has taken seriously and has tasked the Universities Accord panel to report on. And we expect that report in coming weeks.”

Mr Clare has signalled that the report, due to be released publicly in late February, might contain debt relief measures.

“The Australian Universities Accord has looked at a range of important issues, including access and affordability and how the Help [Higher Education Loan Programme] system interacts with the tax system,” he told the ABC.

Independent senators have raised concerns about student debt indexation – particularly an indexation mark-up on money already repaid through months of compulsory repayments.

Shadow education minister Sarah Henderson blamed the system’s failure to account for repayments in “real” time. “If someone with a A$20,000 [£10,400] loan pays off A$5,000 during the financial year, they will be indexed on the full A$20,000 – not the lower balance of A$15,000,” she said. “This is not right and not fair.”

Crossbenchers shared her assessment. “There’s surely a way to not charge people…on money that they’ve already paid off,” independent senator David Pocock told the ABC.

His Tasmanian counterpart Jacqui Lambie said it amounted to “profiting off our kids”, while North Sydney representative Kylea Tink labelled the anomaly “ridiculous and egregious”.

Deputy taxation commissioner Allen told the economics committee that changing the system would be “quite complex and expensive. We’ve not considered other options, because that’s being managed by the Department of Education.”

In an answer to a question on notice from Ms Henderson, the ATO outlined the difficulties. Real-time payments would require “significant legislative and system redesign” for both the tax office and employers, it said.

Student loan repayments would have to be “tagged” so that they could be distinguished from other tax payments. This would be “extremely complex and come at a considerable financial and time cost” to the ATO, employers and payroll systems providers.

“Further complexities would arise for people that work part of the year or for people with variable income such as casual employees, shift workers or people taking parental leave,” the office said.

john.ross@timeshighereducation.com