Media Releases

CAPA welcomes further investigation into proposal to recover student debt from deceased estates

24 Mar 16

CAPA Media Release- Proposal to Recover Student Debt from Deceased Estates

24 March 2016 – The Council of Australian Postgraduate Associations (CAPA) believes that the Federal Government’s plan to recover outstanding HECS debts from the estates of households in the top 50% of the wealth distribution in Australia passes the Government’s earlier test of balancing the budget on the basis of fairness and equity.

We do not demur from the fact that savings have to be found in the upcoming budgetary cycle to address the structural budget deficit caused by personal income tax cuts given to high income earners during the mining boom. High income university graduates received the bulk of these personal income tax cuts and on that basis accumulated large amounts of wealth. This wealth would otherwise be passed on as unearned inheritances. As such, recovering outstanding debts to the taxpayer accrued through the HECS system is a fair and just mechanism of budget repair.

Additionally, the wealth accumulated by high income university graduates is primarily accrued on the basis of the far higher incomes they receive throughout their lives due to their university qualifications obtained with taxpayer support. It is thus fair that the outstanding debts from those qualifications be recovered from the wealth left in the estate of university graduates. As opposed to the other proposed savings in the higher education sector by the government, such as the deeply unfair fee deregulation proposal and proposals to lower the HECS repayment thresholds, this plan has some merit.

We are dismayed that others have immediately rushed to dismiss this proposal with hyperbolic claims rooted in a flawed understanding of the extreme generational inequality in wealth in Australia. However, we do believe that substantive modelling by the Treasury on this proposal should be released immediately, with the assumptions made transparent, so that an understanding of the distributional impacts of the proposal on female led households, among others, are clear prior to the introduction of such a proposal.

“In a fiscally constrained budgetary environment, ensuring that lifetime high wealth households repay their debt to the taxpayer is ultimately a question of intergenerational fairness, and as such, this policy has substantial merit,” said CAPA National President Jim Smith.

ENDS

For comment: Jim Smith, National President, CAPA: 0437 006 605 / president@capa.edu.au