Proposed Changes to HECS/HELP Repayment Will Be Particularly Harsh on Women

Female graduates earning $50,000 could have less disposable income than someone earning $32,000 under the proposed changes in the 2017 budget, a new report has revealed.

The report by National Foundation for the Australian Women (NFAW), applied a gender-lens to the 2017-18 federal budget and found the proposed measures would likely have more negative consequences on women than men.

Of particular significance were the proposed changes to the HECS repayment threshold which could be reduced from $55,000 to $42,000.

In a statement NFAW said the effective marginal tax rates would be “dramatically impacted” as, unlike normal income tax, the HELP loan repayments apply to a person’s entire income.

“If you add the new HELP repayments to proposed increases in the Medicare levy and changes to other benefits such as rental assistance some women will face effective marginal tax rates of over 100 per cent, particularly as Family Tax Benefit Part A begins to decrease at $51,903,” the report said.

“Graduates caught between these policies will experience considerable financial stress, graduates earning $51,000, most of whom are likely to be women, will have less disposable income than someone earning $32,000.”

Australian Council of Trade Unions president Ged Kearney said analysis of this year’s budget showed younger women were some of the budget’s biggest losers.

“Another generation of women will have less money, less opportunity and less financial security because they’re earning lower wages than their male counterparts from graduation, to childbearing years and right through to retirement,” Kearney said.

According to the 2017 Workplace Gender Equality Agency report there is an average gender pay gap for recent graduates of 9.4 per cent favouring males.

The report concluded: “As a result women are more likely to be caught by the reduced repayment threshold and have a lower weekly take home pay than previously.”

NFAW Committee member and Murdoch University senior lecturer Dr Madeleine Laming said the way in which the proposed repayment scheme was structured would “make women vulnerable to hardship”.

“The changes announced in the budget to higher education will disproportionately impact women, who earn less over a lifetime of employment. Women tend to be concentrated in lower paid occupations such as nursing and teaching, and are more likely than men to take time out of the workforce to raise children,” Laming said.

NFAW Social Policy Committee chair Marie Coleman said the proposed changes could have wider implications and act as disincentive for recent graduates with children to enter the workforce.

“If we are to encourage more women to work there is an urgent need to address the strong disincentives for second income earners in families with children from participating fully in the workforce,” Coleman said.

The NFAW report said: “It may not make financial sense for a woman with young children to take up a position with a salary that is close to the repayment threshold, if it jeopardises other benefits and if she is required to pay for childcare as well.”

In a statement NFAW said a comprehensive gender analysis would have made explicit the challenges Australian women face.

Coleman called on the prime minister to commit to re-introducing gender aware budgeting after the government abolished the Women’s Budget in 2014.