Albanese will make the announcement at a rally with South Australian Premier Peter Malinauskas on Sunday.
It will be the first in a series of speeches over coming weeks in which the prime minister will outline his second-term agenda after weeks plagued by his off-taste Tourette’s insult, the purchase of a $4.3 million holiday home, and debate about his relationship with former Qantas boss Alan Joyce.
Sources previously told this masthead Labor’s second-term agenda would be focused on HELP changes, universal childcare and new investments in TAFE.
The wiping of debt, which mirrors similar moves by the US Democrats, although Americans are not helped by the government to pay tertiary study fees, will affect people with HELP debts (previously known as HECS), VET student loans and apprenticeship support loans.
The 20 per cent cut will not have an immediate effect on people’s take-home pay because repayments are levied off the person’s income, not as a proportion of the loan size.
However, in addition to the changes to repayments and thresholds, the package will both put more money into people’s pockets and cut the number of years it takes to pay off a debt, potentially making it easier for young people to own a home.
On Saturday, Labor said it would lift the income threshold at which a person must start paying back their loans, from $54,500 to $67,000. The figure will be indexed so it rises in line with wages.
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The government will also adopt a recommendation by the Universities Accord to move to a marginal repayment system.
At present, when a person earns between $54,435 and $62,850, 1 per cent of their salary is diverted to repaying their HELP debt. Once their pay increases to between $62,851 and $66,620, 2 per cent of their salary is taken to repay the debt. Moving to a marginal repayment system would mean people will pay the higher rate only on the portion of their income in the higher bracket.
Independent economist Chris Richardson said the changes were sensible. “And that’s good. ‘Sensible’ is rare when elections loom,” he said on Saturday.
“It makes sense to raise the income at which debts start to be repaid, and for the repayment to be on a sliding scale.
“The changes are also pretty generous. Remember that improving the treatment of those who went to uni has to be paid for by those who didn’t go to uni, so these changes come at the cost of less well off people (who’ll eventually have to pay for the more generous treatment of graduates).”
Before the government revealed the 20 per cent slashing of loans, which this masthead signalled on Friday, Richardson expressed concern about this policy.
“I agree with the [government’s] view that this won’t hurt inflation prospects (as it is a steady cost, rather than a big lump),” he said.