(Bloomberg) -- Australia’s center-left Labor government has pledged to cut A$16 billion ($10.5 billion) in student loans for universities and skills colleges ahead an election due by May, aiming to counter voter frustration at rising living costs.
The government plans to reduce student loans by 20% from June 1 next year, affecting more than three million Australians, Prime Minister Anthony Albanese said in a statement. The measure will cut A$5,520 off an average loan of A$27,600, the government said.
Some 276,000 Australians holding more than A$60,000 in debt are expected to receive reductions of as much as A$12,000, according to the statement.
The move is to ensure “intergenerational equity,” Albanese told Australian Broadcasting Corp. radio on Monday. “We know that 80% of the children who are in primary school today will need either a university degree or a TAFE qualification, not as an added bonus for their employment, but as a precondition to getting a job because of the changes that are happening in the economy.”
The exact cost of the measure hasn’t been announced, but Albanese said it would be released in the next budget. “This legislation is the first legislation we’ll introduce if we’re re-elected next year,” he said.
Albanese’s argument is surprising given higher education payments were introduced by a previous Labor government. It argued at the time that university graduates generally earned more than other Australians and should pay for their degrees rather than leave the burden to lower-income taxpayers.
Australia will head to an election in the next six months, and voter frustration with Albanese’s Labor government has mounted over elevated inflation and high interest rates. That’s been compounded by a housing shortage that has driven up home prices and rents.
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Labor has attempted to assuage voter concerns with a range of measures to ease the pressure, including energy rebates and expanded rental assistance.
The latest voter survey by Newspoll in mid-October found that the center-right Liberal-National opposition was ahead of the government for the first time since the 2022 election which brought Albanese to power.
(Updates with PM Albanese’s morning interviews)
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