WEBVTT - Your HECS debt questions, answered

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<v Speaker 1>Already and this this is the Daily This is the

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<v Speaker 1>Daily OS.

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<v Speaker 2>Oh, now it makes sense.

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<v Speaker 1>Good morning and welcome to the Daily OS. It's Friday,

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<v Speaker 1>the first of August. I'm Harry Seculch, I'm Billiefit Simon's.

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<v Speaker 1>Your HEX balance is about to go down by twenty percent.

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<v Speaker 1>In Parliament yesterday the government passed its bill to reduce

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<v Speaker 1>all student debts. So when will this actually apply to

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<v Speaker 1>your HEX account? And what if you already paid off

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<v Speaker 1>your HEX debt. We asked what you wanted to know

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<v Speaker 1>about this new development, and today we're here to answer

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<v Speaker 1>all your questions.

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<v Speaker 2>We'll get to those questions in a moment, but first,

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<v Speaker 2>here is a quick message from today's sponsor. Okay, Harry,

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<v Speaker 2>So we are talking about the Hex's discount. Now, this

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<v Speaker 2>is one of the key promises from the Labor government

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<v Speaker 2>at the last election and it has now gone through Parliament.

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<v Speaker 2>For anyone who miss this, do you want to just

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<v Speaker 2>explain what exactly it is, because my understanding is this

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<v Speaker 2>is just a one off discount. It's not a long

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<v Speaker 2>term overall reduction on the price of Uni degrees.

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<v Speaker 1>Yeah, that's right, Billy. So it's the reduction in the

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<v Speaker 1>value of a debt. It doesn't necessarily translate to anything

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<v Speaker 1>beyond that. So the price of a UNI degree, the

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<v Speaker 1>price of a tape course or private college, that's not

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<v Speaker 1>changing necessarily. But what this does apply to is the

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<v Speaker 1>value of a debt balance at a particular time. And

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<v Speaker 1>as far as we know, there's no plans to discount

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<v Speaker 1>future debts. If you don't already have one, or if

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<v Speaker 1>you paid off a debt last year, that this doesn't

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<v Speaker 1>necessarily apply to you. So I suppose it's important to

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<v Speaker 1>put those guardrails in place. That this is a one

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<v Speaker 1>off twenty percent discount on a debt balance on the

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<v Speaker 1>first of June twenty twenty five.

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<v Speaker 2>So just to be clear there, this apply to the

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<v Speaker 2>dollar figure that was attached to your hex debt as

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<v Speaker 2>of the first of June this year.

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<v Speaker 1>That's right just before the indexation kicked in. Got it.

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<v Speaker 1>So that's when the value of your debt goes up

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<v Speaker 1>to slightly and it's based on one of two measurements.

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<v Speaker 1>It's either the wage price index or the consumer price index.

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<v Speaker 1>Without going too deep into what that means, it's just

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<v Speaker 1>basically increasing in line with the value of money over time. Yes,

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<v Speaker 1>got it? Okay?

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<v Speaker 2>So let's go to the questions that we got from

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<v Speaker 2>the audience yesterday. The first one we got was does

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<v Speaker 2>it apply to private unis and all degrees?

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<v Speaker 1>Yeah, effectively, it does, because the federal government oversees and

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<v Speaker 1>administers all things relating to student debts at a higher

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<v Speaker 1>education level. So when you want to start studying at

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<v Speaker 1>an accredited institution, so at universities or private colleges, you

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<v Speaker 1>can get what's known as a higher education loan program

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<v Speaker 1>or help. And it doesn't really matter which institution and

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<v Speaker 1>you get this hex debt or help debt from. It'll

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<v Speaker 1>all be processed in the exact same way when it

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<v Speaker 1>comes to this discount. So, like I said, this is

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<v Speaker 1>a discount on the value of a debt. That debt

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<v Speaker 1>is pretty much the same across the board in the

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<v Speaker 1>sense that it all comes from the same place, which

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<v Speaker 1>is the federal government. So it will apply to you

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<v Speaker 1>if you have a help debt sitting there.

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<v Speaker 2>I'm one of those people who always gets confused between

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<v Speaker 2>help debt and hex debt, But for the purposes of

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<v Speaker 2>this conversation, it really doesn't matter. It literally just applies

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<v Speaker 2>to all student debts.

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<v Speaker 1>Student debt. I think that's like the more I guess

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<v Speaker 1>inclusive term, but I mean I always just tend to

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<v Speaker 1>say hext I think everyone.

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<v Speaker 2>Yeah, okay, next question that we got, what happens if

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<v Speaker 2>I have already lodged my tax return and paid off

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<v Speaker 2>my hex will I be refunded? And just another one

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<v Speaker 2>that kind of relates to that, someone asked if I

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<v Speaker 2>pay mine off in full, now will I get a

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<v Speaker 2>twenty percent refund when it comes in?

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<v Speaker 1>So these two questions kind of touch on the same thing,

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<v Speaker 1>which is how far back does the discount apply? And

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<v Speaker 1>I will go back to that date of the first

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<v Speaker 1>of June, because that's the all important date for this

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<v Speaker 1>hex stet discount. If you want to pay off your

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<v Speaker 1>full debt, make some further voluntary repayments in the next

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<v Speaker 1>few months, but you haven't seen that hex discount come

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<v Speaker 1>into place, that doesn't matter. And this is why it's

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<v Speaker 1>a little bit technical, So I might just walk you

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<v Speaker 1>through some of these stages. The way it will work

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<v Speaker 1>is if you had a hextet on the first of June,

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<v Speaker 1>but you've since paid it off you plan to pay

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<v Speaker 1>it off before the discount, you'll get a credit to

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<v Speaker 1>what's known as your help account. And then if you've

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<v Speaker 1>got no further debts to the tax office, then that

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<v Speaker 1>will be processed to you as a refund. Right. So

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<v Speaker 1>the government's official advice is, don't wait if you want

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<v Speaker 1>to pay off your full debt, if you've made some

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<v Speaker 1>voluntary repayments. If you you had a debt at the

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<v Speaker 1>first of June, then you will be compensated in one

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<v Speaker 1>way or another, and the actual discount amount only applies

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<v Speaker 1>to that particular date. You will see it flow through

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<v Speaker 1>to you in some form. Got it.

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<v Speaker 2>But let's say that if you paid off your hex

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<v Speaker 2>deet in full, let's say at the start of this year,

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<v Speaker 2>then unfortunately this doesn't apply to you because you didn't

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<v Speaker 2>have a debt as of the first of June this year.

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<v Speaker 1>That's right, So it doesn't backdate beyond the first of June,

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<v Speaker 1>got it. And it also doesn't apply to any future debts.

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<v Speaker 1>Like I said, there's no plans, at least that we

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<v Speaker 1>know about, for the government to make unied degrees cheaper

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<v Speaker 1>or to discount the value of debts over time. It's

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<v Speaker 1>just this one particular date.

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<v Speaker 2>Yeap, All right, Next question, which I think is the

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<v Speaker 2>number one question that we got from our audio.

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<v Speaker 1>Can I take a bit of a guess, Yeah, what

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<v Speaker 1>it is? When will the hex sebt discount actually take place?

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<v Speaker 2>I think that is the question we got maybe thousands

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<v Speaker 2>of times yesterday understandably, and so that is when will

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<v Speaker 2>we actually see this in our hex debt accounts?

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<v Speaker 1>Yeah, so I needed a bit of help in answering

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<v Speaker 1>this as well, because based on some of the messages

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<v Speaker 1>that the government was putting out there, they were saying

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<v Speaker 1>that it will take a little bit of time once

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<v Speaker 1>the legislation becomes law, which it has now, well it

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<v Speaker 1>needs role as sent from the Governor General, but that's

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<v Speaker 1>just a very form procee drill thing, tick of the

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<v Speaker 1>box thing that will happen. But basically what happens now

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<v Speaker 1>is that the Australian Tax Office also known as the ATO,

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<v Speaker 1>they will be the ones processing this hex debt and

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<v Speaker 1>that will apply automatically to hundreds thousands of different accounts.

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<v Speaker 1>The government has said that it can take a bit

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<v Speaker 1>of time based on people's individual circumstances. It's a little

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<v Speaker 1>bit case by case. The twenty percent might seem like

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<v Speaker 1>a really straightforward formula, but it actually does take a

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<v Speaker 1>little bit of working out because of the smaller factors

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<v Speaker 1>like the indexation value that was applied, So it can

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<v Speaker 1>just take a little bit of time. That I asked

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<v Speaker 1>the Prime Minister st when people can actually expect to

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<v Speaker 1>see the value of their student debts reduced. And here's

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<v Speaker 1>a bit of what he had to say.

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<v Speaker 2>Most people should see the benefit by the end of

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<v Speaker 2>the year, and it will be backdated importantly to the

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<v Speaker 2>first of June.

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<v Speaker 1>So I can't say with absolute confidence that overnight on

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<v Speaker 1>this particular date you are going to see your HEX

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<v Speaker 1>debt reduced. But in the Prime Minister's words, it should

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<v Speaker 1>be done by twenty twenty six.

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<v Speaker 2>Got it, So it will happen by the end of

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<v Speaker 2>this year. Now, the other thing that has changed as

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<v Speaker 2>part of this bill, which I think has got a

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<v Speaker 2>little bit less airtime but is still important, is the

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<v Speaker 2>change to the minimum repayment threshold. Now, this is the

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<v Speaker 2>minimum salary you need to have in order to start

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<v Speaker 2>paying off your HEX debt. What is the change there.

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<v Speaker 1>The way that HEX was conceived as an idea when

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<v Speaker 1>it first came into being was you you start paying

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<v Speaker 1>off this debt once you can afford to. So in

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<v Speaker 1>that way, it doesn't really work like other debts, where

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<v Speaker 1>say you take out a loan from the bank, you

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<v Speaker 1>have to start paying it off despite your circumstances that

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<v Speaker 1>you are indebted to the bank, so you have to

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<v Speaker 1>start giving them some money. The way that hex stets

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<v Speaker 1>work is that you need to earn a minimum amount

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<v Speaker 1>before you start paying it off, and the more you earn,

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<v Speaker 1>the more you pay off. Right now, the minimum repayment

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<v Speaker 1>threshold is fifty six, one hundred and fifty six dollars,

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<v Speaker 1>and that minimum threshold is now going to increase to

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<v Speaker 1>sixty seven thousand dollars. And that's all under the same

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<v Speaker 1>piece of legislation that we saw the hex debt discount

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<v Speaker 1>fall under as well, which is just about to become law.

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<v Speaker 1>And what this means is that over the next year

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<v Speaker 1>or so, if you are earning, say between seventy and

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<v Speaker 1>eighty thousand dollars, you'll actually find that over time you're

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<v Speaker 1>paying off a little bit less than you were last

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<v Speaker 1>year because the minimum payment threshold has increased. And basically

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<v Speaker 1>there's a pay as you go system, so there's a

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<v Speaker 1>bit that's withheld from your pay each week, and then

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<v Speaker 1>that all sort of comes together at the end at

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<v Speaker 1>tax time. So July next year, and since the payment

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<v Speaker 1>threshold is higher, you don't end up paying as much.

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<v Speaker 1>Does that make sense?

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<v Speaker 2>That makes sense. So what you're saying is that with

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<v Speaker 2>the minimum repayment threshold changing, so too does all of

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<v Speaker 2>the thresholds change.

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<v Speaker 1>They're all scaling up, if you're so, it's going from

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<v Speaker 1>people at fifty six thousand dollars and above paying it

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<v Speaker 1>off to sixty seven thousand and above paying off. And

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<v Speaker 1>like I said, the more you earn, so if you

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<v Speaker 1>get up to one hundred, one hundred and fifty thousand dollars,

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<v Speaker 1>you end up having more pay with held from your

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<v Speaker 1>pay slip. And then people who are on slightly lower

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<v Speaker 1>incomes but just meeting that threshold won't pay as much

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<v Speaker 1>over the next financial year.

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<v Speaker 2>Got it, Harry. I think that's all of the questions

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<v Speaker 2>that we've got. Thank you so much for taking us through.

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<v Speaker 1>That, No problem, Billy, there were some great questions.

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<v Speaker 2>And thank you so much for listening to this episode

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<v Speaker 2>of the Daily OS. We'll be back this afternoon with

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<v Speaker 2>your evening headlines, but until then, have a great Friday.

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<v Speaker 1>My name is Lily Maddon and I'm a proud Arunda

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<v Speaker 1>Bungelung Kalkutin woman from Gadighl country. The Daily oz acknowledges

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<v Speaker 1>that this podcast is recorded on the lands of the

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<v Speaker 1>Gadighl people and pays respect to all Aboriginal and Torres

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<v Speaker 1>Strait island and nations.

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<v Speaker 2>We pay our respects to the first peoples of these countries,

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<v Speaker 2>both past and present.