Student debt loan cut to target mostly Labor, Greens and teal seats, data shows

New analysis reveals the suburbs that will see the greatest benefit – that is, those with the largest average HELP debts per debtor – are all Labor, Greens or teal independent inner-city seats.

The majority of student debt cuts are likely to go to people in inner-city seats held by Labor, Greens and teal MPs, like Tanya Plibersek's Sydney, Adam Bandt's Melbourne, and Allegra Spender's Wentworth.

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Two-thirds of the $16bn in student debt cuts promised by the Albanese government will likely go to people in seats held by Labor, the Greens, and teal independents, leading to accusations the promised 20 per cent reduction is “obviously designed to win votes”.

The revelation comes weeks out from an election that could result in a hung parliament where the teal independents and Greens could become kingmakers.

The Australian’s postcode-level analysis combined 2021-22 tax returns data – the latest available – with polling booth-level data from the 2022 election to estimate the likely winners and losers of the marquee policy.

The suburbs that will see the greatest benefit – that is, those with the largest average HELP debts per debtor – are all Labor, Greens or teal independent inner-city seats.

They include Darlinghurst, Surry Hills, Sydney, Carlton North, East Melbourne, Elizabeth Bay, Potts Point and Woollahra, all focused in the electorates of Labor’s Sydney, Greens’ Melbourne, and teal Wentworth.

But, western Sydney seats like Blaxland and Watson, where Education Minister Jason Clare and Home Affairs Minister Tony Burke are trying to fend off Muslim votes matter-backed challenges, are set to see the most gain relative to the lower average salaries in those postcodes.

Higher education expert Andrew Norton said Labor’s student debt forgiveness policy was clearly targeted at winning the support of the three million Australians with existing HELP debts.

“This is obviously designed to win votes,” he said.

“Whether they have done a comparison of this between alternative ways of spending large amounts of money, I don’t know.

“But I think it’s a cut through policy for people who have particularly significant HELP debts, and that is why they have gone for it, and made it conditional on winning the election.”

Professor Norton said the Albanese government had chosen to take the “simple messaging” of a 20 per cent cut to the election without considering the complexities of who should benefit from the policy.

The suburbs with the lowest average HELP debt – and, hence, the smallest discount – are in regional areas mostly held by the Coalition like Karte in South Australia, Howitt in Queensland, or Nullarbor in South Australia.

The electorates that will gain the least are Liberal-held Grey in South Australia, Canning in Western Australia held by opposition defence spokesman Andrew Hastie, and Nationals-held Flynn in central Queensland.

The Coalition has opposed the Labor HECS debt cut policy and labelled it “elitist and unfair”, saying it would deliver “large financial windfalls to those with multiple degrees while ignoring 24 million Australians who don’t have a student loan”.

Opposition education spokeswoman Sarah Henderson told The Australian that it was “curious that those who stand to benefit most from this policy are those with high HELP debts in Greens’ electorates and raises questions whether this is an effort by the government to shore up its green left flank ahead of the election”.

In 2021-22, 20 per cent of taxpayers in Darlinghurst and Surry Hills had a HECS debt at an average of $35,811. In Docklands, Melbourne, some 12 per cent of taxpayers had a HECS debt at an average of $34,335.

The analysis shows 67.3 per cent of total debt was held in Greens, Labor or teal independent seats. Assuming this distribution has not changed in major way, this would mean around two-thirds of the $16bn cut Labor has proposed would go to its own electorates as well as those held by the Greens and teals.

The postcode-level analysis allowed for a more in-depth look at the HECS debt-to-average-salary ratio of individual postcodes. A postcode with a lower average salary but a relatively high HECS debt sees greater benefit than a high-salary postcode with a similar level of HECS.

This analysis reveals the policy will appeal not just to the wealthy, inner-city voters but also to the educated, aspirational class in the outer-lying suburbs.

The electorate – according to the previous electoral boundaries – with the highest HECS-to-average-salary ratio is Blaxland, in western Sydney, held by Mr Clare.

This is followed by Fowler – which Labor lost to independent Dai Le – also in western Sydney, and then by the nearby seat of Watson held by Mr Burke.

Other seats in this category include western Sydney electorate McMahon, which is held by Energy Minister Chris Bowen, the Gold Coast seat of Moncrieff, held by the LNP’s Angie Bell, Parramatta held by Labor, and southwest Sydney seat Banks held by opposition foreign affairs spokesman David Coleman.

Predictably, this policy would deliver the biggest benefit to high-income postcodes – there is a statistical significance in the positive relationship between a postcode’s average salary and the average HELP debt.

When contacted for comment, Mr Clare declared that “only Labor will cut student debt by 20 per cent”.

“This is all about supporting aspiration and supporting young Australians just starting out,” he said.

“It’s also an example of the massive difference between Labor and the Liberal Party.

“Labor will cut the HECS debt of around three million Australians. The Liberal Party say this is a terrible idea.

“If you want your student debt cut, vote Labor.”

The Albanese government has unveiled a series of policy changes targeted at making the student loan scheme more affordable, including changes to regulations to assist Australians with HELP debts to take out mortgages.

Labor also changed the way loans were indexed through legislation that was backdated so debt-holders were granted a refund earlier this year.

A major review of the tertiary education sector, called the Universities Accord, recommended changes to how HELP debts are indexed and reforms to how student contributions to cover course fees are calculated.