Sarah Henderson, dumped from frontbench, to push for HECS changes from backbench

Sarah Henderson intends to make the extraordinary move of advocating for changes to Labor’s election pledge to cut university student debts from the backbench.

Liberal backbencher Sarah Henderson is pushing for changes to Labor's student debt pledge, putting her on a collision course with Liberal leader Sussan Ley.

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Liberal backbencher Sarah Henderson intends to make the extra­ordinary move of advocating for changes to Labor’s cornerstone election pledge to cut university student debts from the backbench, putting the Victorian senator on a collision course with party leader Sussan Ley months after she was dumped from shadow cabinet.

Senator Henderson revealed she had advocated before the last election to one-up Labor’s 20 per cent student debt reduction proposal by suggesting a “HELP loan inflation guarantee” but this was “left on the cutting room floor”.

While she has discussed her proposal with some colleagues, the Victorian Liberal will take the unusual and provocative step of canvassing support publicly – rather than behind closed doors – for an indexation amendment to Labor’s student debt bill.

The move comes despite the Opposition Leader signalling that she was willing to wave through Labor’s plan to slash student debts, as part of Ms Ley’s attempts to revive the depleted Liberal Party’s image with young voters who largely abandoned it on May 3.

The former opposition education spokeswoman also slammed the Morrison-era Job-Ready Graduates legislation, which raised the price of humanities degrees and lowered that of STEM degrees. She said the changes had “unfairly driven up the cost of some university ­degrees” and it was “critical” that those settings be reviewed.

In an interview with The Australian, Senator Henderson said the “Coalition needs to present credible policy alternatives to win back the trust and faith of Australians. It is imperative we fight for better outcomes every single day. Labor’s bill presents an important opportunity to act now.

“While the Coalition should not oppose the 20 per cent student debt discount, let’s not forget this is a one-off sugar hit at a cost of $16bn which does nothing for future students or to provide the certainty young Australians deserve.”

Senator Henderson, alongside fellow Victorian senator Jane Hume and Nationals partyroom defector Jacinta Price, was a key supporter of leadership contender Angus Taylor and was demoted in Ms Ley’s shadow ministry.

Opposition Leader Sussan Ley during question time at Parliament House in Canberra. Picture: NewsWire / Martin Ollman

She said even as a backbencher, she was “proud” to advocate for policy changes in her previous education portfolio.

Her intervention marks another suggestion of Coalition backbench discontent after The Australian last week revealed former deputy prime ministers Barnaby Joyce and Michael McCormack had made an unlikely joint ticket to advocate against net-zero emissions.

The Coalition’s leader in the Senate, Michaelia Cash, has also this week openly backed a West Australian Liberal Party push to scrap Aboriginal flags and welcome to country ceremonies at ­official government events.

Senator Henderson said a 3 per cent indexation cap would provide a “crucial safeguard” against large student debt increases driven by high inflation. “Australians with a student loan or those planning to undertake tertiary studies should not be blindsided by high indexation driven by high inflation, as has occurred under Labor over the past three years,” she said.

“That is why I am proposing that HELP indexation should be the lesser of the consumer price index or 3 per cent, delivering some three million Australians immediate cost of living relief and much-needed certainty.”

“In contrast to Labor’s one-off 20 per discount which applies to current debtors only, capping HELP loans to 3 per cent, the upper band of the RBA’s inflation target, would be an ongoing measure delivering equity and certainty to all students into the future.”

Senator Henderson said she had “positive discussions” with newly appointed opposition education spokesman Jonno Duniam on her amendment.

She noted that higher education expert Andrew Norton had previously advocated for a flat maximum rate.

“A flat maximum indexation rate – so lower of the CPI or the fixed maximum – would avoid the interdependencies between CPI and other economic indicators,” Mr Norton said in a submission last year. “A flat maximum indexation rate also has the benefits of simplicity and reassurance.

“When current or potential students are thinking about taking out a HELP loan, they can be told indexation will never be more than X per cent and will usually be less.”

The HECS indexation rate in the past four years has been above 3 per cent: 3.9 per cent in 2022, 3.2 per cent in 2023, 4 per cent in 2024, and 3.2 per cent in 2025.

The rates in 2023 and 2024 were even higher originally but they were shaved down by Labor’s retrospective change to set the rate at either CPI or the wage price index, whichever was lower.