Speaker 1: Already and this is this is the daily This is
Speaker 1: the Daily OS. Oh, now it makes sense. Good morning
Speaker 1: and welcome to the Daily OS. It's Tuesday, the third
Speaker 1: of June. I'm Lucy Tassel.
Speaker 2: I'm Zara Sidler.
Speaker 1: If you haven't checked your Ato account recently, I've got
Speaker 1: news for you. Over the weekend, your hextet went up
Speaker 1: by three point two percent.
Speaker 2: Which is bringing everyone the good news. Good news, Tuesday morning,
Speaker 2: good good news.
Speaker 1: But wait, I hear you ask, didn't the government promise
Speaker 1: to take twenty percent off my debt after the election.
Speaker 1: In today's podcast, we'll explain how and why Hex works
Speaker 1: and how this planned discount is going to take effects. Zara.
Speaker 1: Over this weekend, I spent a bit of time talking
Speaker 1: to my friends about our Hex debts.
Speaker 2: Yep, so did I. I don't think you're alone there.
Speaker 2: It was the topic of conversation for many young people.
Speaker 1: Yeah.
Speaker 2: Yes, and that's because our Hex's debts went up. They
Speaker 2: went over the weekend, as you said. Plus there's also
Speaker 2: the question I think that naturally follows on every time
Speaker 2: we see that increase, which is why are we paying
Speaker 2: off these loans when generations before us got university for free.
Speaker 1: Exactually, someone who got university for free was Prime Minister
Speaker 1: Anthony Albanisi. And that is because there was once a
Speaker 1: time from nineteen seventy four to nineteen eighty nine when
Speaker 1: the government subsidized the cost of unique degrees.
Speaker 2: I thought it was longer, if I'm to be honest,
Speaker 2: I didn't realize it was that short.
Speaker 1: It is short. I wonder if it's because there's so
Speaker 1: many people who benefited from that era who went on
Speaker 1: to go into public life.
Speaker 2: Yeah, there are a lot of.
Speaker 1: People in Parliament right now that.
Speaker 2: Age it would check out.
Speaker 1: Yeah, that makes sense, including of course the Prime Minister. Now,
Speaker 1: while this was great for students of that era, it
Speaker 1: has also been argued that this was an unfair burden
Speaker 1: on taxpayers.
Speaker 2: Can you just unpack that? Why is free university unfair
Speaker 2: for tax payers?
Speaker 1: Yeah? Our taxes are one of the main ways the
Speaker 1: government makes money. It's not the only way, but it's
Speaker 1: a big contributor. Some people would argue that when the
Speaker 1: government says it's making something free, it's not really free
Speaker 1: because one of the ways that the government gets money
Speaker 1: is via USA so taxpayer exactly. So an example of
Speaker 1: this is the Medicare levee. It's part of the taxes
Speaker 1: that you pay. It's calculated at two percent of your
Speaker 1: overall income. The argument in favor of this is that
Speaker 1: everyone who pays taxes pays a tiny fraction of the whole,
Speaker 1: and then this being allowed to fund something like Medicare,
Speaker 1: it is argued, ends up benefiting us more than we
Speaker 1: end up paying. When the Bob Hawk government came to
Speaker 1: power in the early eighties, so in the middle of
Speaker 1: this program, it believed the government could not keep spending
Speaker 1: as much as it had on places at university because
Speaker 1: in effect, government spending is in some way you're spending.
Speaker 1: So by the government subsidizing these free, unique places, they
Speaker 1: were finding that they didn't want to be spending quite
Speaker 1: as much of taxpayer money when the government has many
Speaker 1: things to pay for. Then in nineteen eighty nine, we
Speaker 1: have a new system. It's called the Higher Education Contribution
Speaker 1: Scheme or HEX. The Education minister at the time was
Speaker 1: a guy named John Dawkins, and here's a little bit
Speaker 1: of what he said when he was introducing the bills
Speaker 1: of Parliament that would then kind of make this scheme happen.
Speaker 1: He said, people who benefit from higher education will be
Speaker 1: required to make a small contribution towards the cost of
Speaker 1: their study. The key features of the contribution scheme are
Speaker 1: an annual course charge of eighteen hundred dollars per year
Speaker 1: of equivalent full time study, payment arrangements based on personal
Speaker 1: capacity to pay, and a choice between lumpsom payment with
Speaker 1: a fifteen percent discount or payment through the taxation system
Speaker 1: once a person's income reaches around the level of average
Speaker 1: earnings in the Australian workforce. He also noted the payments
Speaker 1: would be indexed to keep pace with inflation.
Speaker 2: Okay, so I just want to recap where we are at.
Speaker 2: So for a period of time, university was free for
Speaker 2: students who were attending, and that's because the government was
Speaker 2: subsidizing the cost of that, and that money was raised
Speaker 2: through tax payers. We were ultimately in one very big
Speaker 2: circle all paying for that to occur. When Bob Hoork
Speaker 2: came to power, he said, we're spending too much on this.
Speaker 2: We are going to implement a new scheme as we
Speaker 2: now understand it to be the hex scheme. Yes, and
Speaker 2: from nineteen eighty nine onwards that scheme has been the
Speaker 2: dominant way that people take out a loan for higher
Speaker 2: Education study. Yes, is that right?
Speaker 1: That's correct?
Speaker 2: Okay, you passed. So then you did say at the
Speaker 2: end there that the education minister at the time called
Speaker 2: it a contribution. I believe a small contribution, is what
Speaker 2: you said. A lot of our listeners who have HEX,
Speaker 2: maybe they have a double degree, not call it a
Speaker 2: small contribution. Yes, talk me through that thinking.
Speaker 1: Yeah. So, even though in this podcast and in life
Speaker 1: we all call our student debts HEX, scheme is actually
Speaker 1: called the Higher Education Loan Program HELP, so you might
Speaker 1: hear it referred to as HEX help or help.
Speaker 2: It was like only upon entering this job that I
Speaker 2: thought about the fact that it was an AGX. I
Speaker 2: just always thought there was like a HEX on your
Speaker 2: home anywake it going, Dan.
Speaker 1: It was only when I started this job that I
Speaker 1: realized it had been called help since I was in
Speaker 1: year three. But there you go, no matter. The reason
Speaker 1: for this is because of changes made to the system
Speaker 1: under the Howard government. Okay, there were many different kinds
Speaker 1: of changes, but basically more kinds of debts were included
Speaker 1: in the scheme. Different kinds of schools, different kinds of programs,
Speaker 1: and different degrees were able to cost different amounts. Changing
Speaker 1: from that original eighteen hundred dollars fee.
Speaker 2: Okay, So under Howard there were changes to the way
Speaker 2: system works.
Speaker 1: Yes, so it became more of a loan and less
Speaker 1: of a contribution, reflected in the name of the scheme.
Speaker 2: We'll be back with the rest of today's deep dive
Speaker 2: after a quick message from our sponsor.
Speaker 1: But in a lot of other senses, the original plan
Speaker 1: is still the case all those things I outlined. So
Speaker 1: your repayments are based on how much you earn, that's
Speaker 1: still true. You begin paying once you meet a certain threshold.
Speaker 1: That's still true. And the amount that you owe is indexed,
Speaker 1: which everyone would remember from a couple of years ago,
Speaker 1: is still very much true. And that's what happened this
Speaker 1: past weekend.
Speaker 2: That was an excellent segue into the news of the day,
Speaker 2: which is, of course that our hex set went up
Speaker 2: due to indexation. Can you just talk our listeners through
Speaker 2: how indexation is calculated and what it's based on.
Speaker 1: Basically, the idea of indexation is that your debt should
Speaker 1: increase with the value of money to reflect the actual
Speaker 1: value of money. This time, debts not by three point
Speaker 1: two percent based on the rate of inflation that's rising prices.
Speaker 1: This is historically what it's been based on. As I mentioned,
Speaker 1: John Dorkin said it should be based on the rate
Speaker 1: of inflation. But as we would remember, our hex stets
Speaker 1: jumped up by seven point one percent in June twenty
Speaker 1: twenty three.
Speaker 2: Hearing that it's just unbelievable.
Speaker 1: Yes, because inflation was so high at the time. And
Speaker 1: at that time the government passed a new law changing
Speaker 1: the rules, and that meant that indexation would be based
Speaker 1: on whichever is the lower of inflation or how much
Speaker 1: wages have risen by, So that's the wage price index.
Speaker 2: So until that time it had always been pegged to
Speaker 2: the rate of inflation, but because inflation was so high,
Speaker 2: there had to be an alternative here, Yes, and they.
Speaker 1: Went back and applied the new rate of indexation to
Speaker 1: those to that increase from June twenty twenty three. And
Speaker 1: now again the government is planning to change the rules
Speaker 1: in another sense by promising to discount student debts.
Speaker 2: I think this is where a bit of confusion, and
Speaker 2: I'd say rightly so has kicked in for our listeners
Speaker 2: and for TDA readers, because throughout the election, the big
Speaker 2: pitch to young voters, especially from labor was we are
Speaker 2: going to cut your hextet by twenty percent, and now
Speaker 2: that indexation has kicked in, our debt has gone up.
Speaker 2: A lot of people are saying, well, I thought it
Speaker 2: was getting cut. So can you just explain to us
Speaker 2: when does that actually happen or how does it happen.
Speaker 1: Yeah, it's all about timing. The first thing to know
Speaker 1: is that the discount can't happen until Parliament sits again.
Speaker 1: But it's not doing that until the end of July.
Speaker 1: The government has, as we know, a really big majority
Speaker 1: in the lower House. It will own.
Speaker 2: Huge majority, the biggest ever.
Speaker 1: In fact, it will only need to negotiate with the
Speaker 1: Greens or the coalition to pass the bill and the
Speaker 1: Upper House. Now we don't know for sure, but we
Speaker 1: know that the Greens policy is that all student debts
Speaker 1: should be wiped, so I think we could suggest that
Speaker 1: they would be open to negotiating with the government. I
Speaker 1: haven't called them up to ask, but I think we
Speaker 1: will hear from them again ahead of parliament sitting. Then
Speaker 1: if slash when the bill.
Speaker 2: Passes, what you're saying is very likely.
Speaker 1: Yes, And the government also, I should note, has said
Speaker 1: they want to do this as soon as possible.
Speaker 2: Yeah, as their first kind of action.
Speaker 1: Item if SLASH. When it passes, the reduction will be
Speaker 1: applied automatically by the ATO. It will apply to the
Speaker 1: amount of your loan before indexation. If you pay it
Speaker 1: off in between indexation, so now and the end of
Speaker 1: the financial year this month, you will get the discount
Speaker 1: rebated in your tax return, assuming you get a return
Speaker 1: and not a bill. The indexation applied this weekend will
Speaker 1: then be recalculated based on the new reduced loan amount.
Speaker 1: So I think it's time to do a bit of maths.
Speaker 2: Please. Unfortunately, let's hold hands and do it together.
Speaker 1: So say you have a loan of ten thousand dollars.
Speaker 1: As of this weekend, your debt went up three point
Speaker 1: two percent to ten thousand, three hundred and twenty dollars.
Speaker 1: When the discount comes into effect, it reduces your pre
Speaker 1: indexation debt to eight thousand dollars, and then the indexation
Speaker 1: is recalculated and reapplied, so your final result will be
Speaker 1: eight thousand, two hundred and fifty six dollars.
Speaker 2: And can I just jump in here, so no one
Speaker 2: has to actually do anything, yes, In order to access
Speaker 2: that cut.
Speaker 1: It happens automatical. Okay, all right, and then again, as
Speaker 1: I said, the government has committed to bringing it forward
Speaker 1: basically as soon as they walk into the House of Representatives,
Speaker 1: so we could be seeing it fairly soon.
Speaker 2: Yeah, really interesting there, Lucy. Before we go, I do
Speaker 2: just want to ask is the government planning to change
Speaker 2: anything else about our hex system, because you said that
Speaker 2: they've already changed the way that indexation is pegged or
Speaker 2: what's pegged. Two, are there any other changes coming down
Speaker 2: the line that we know about.
Speaker 1: There's one more thing they want to change, which is
Speaker 1: raising the threshold of when you need to start paying
Speaker 1: it back. So right now you need to be earning
Speaker 1: fifty one thousand, five hundred dollars a year to begin
Speaker 1: repaying your debt, and the government wants to increase that
Speaker 1: to sixty seven thousand dollars per year, which is quite
Speaker 1: a jump. Yeah.
Speaker 2: Yeah, well I have to wait and see. The government
Speaker 2: has a big agenda of election commitments, and as we
Speaker 2: have said many times before, it's as important to hold
Speaker 2: the government to account post election as it is during
Speaker 2: an election period. So we will be keeping track of
Speaker 2: those commitments and if and when they come to fruition.
Speaker 2: Thanks for explaining, Lissie, Thanks Sarah, and thank you for
Speaker 2: joining us for another episode of The Daily Os. We
Speaker 2: will of course be back later today with your afternoon headlines,
Speaker 2: but until then, have a good day.
Speaker 1: My name is Lily Madden and I'm a proud Arunda
Speaker 1: bunge Lung Kalgotin woman from Gadigal Country. The Daily Os
Speaker 1: acknowledges that this podcast is recorded on the land of
Speaker 1: the Gadigal people and pays respect to all Aboriginal and
Speaker 1: Torrestrate island and nations. We pay our respects to the
Speaker 1: first peoples of these countries, both past and present.