‘Placement poverty’ to be tackled in Labor budget with new payments for student teachers and nurses

Nurses working in a hospital ward. The government is establishing a practical payment for 68,000 university students and 5,000 vocational education and training students. Photograph: Carly Earl/The Guardian

Student teachers, nurses, midwives and social workers will receive a $320 weekly payment during their mandatory placements under a new cost-of-living measure in the May budget.

The Albanese government will establish a commonwealth practical payment for 68,000 university students and 5,000 vocational education and training students undertaking mandatory workplace placements as part of their courses.

From July 2025, students in those four disciplines will be paid $319.50 a week, benchmarked to the single Austudy rate, in addition to any income support they already receive.

The announcement follows Labor’s decision to wipe $3bn from student debts by legislating to index Hecs and Help debts to the lower of the consumer price index or the wage price index, backdated to June 2023.

The tertiary education sector and crossbench welcomed the Hecs measure but called on the government to fully implement the recommendations of the Universities Accord, including changing the date of indexation so increases are not applied to debts students have already paid off.

On the new placement payments, the prime minister, Anthony Albanese, said “teachers give our children the best start in life – they deserve a fair start to their career”.

“We’re proud to be backing the hard work and aspiration of Australians looking to better themselves by studying at university.”

The education minister, Jason Clare, said: “This will give people who have signed up to do some of the most important jobs in this country a bit of extra help to get the qualifications they need. Placement poverty is a real thing. I have met students who told me they can afford to go to uni but they can’t afford to do the prac.”

Independent MP Monique Ryan told Guardian Australia ahead of the announcement that she had heard of “nursing students sleeping in cars while doing rural rotations”.

In addition to prac payments, Ryan is pushing the government to change the date of indexation from 1 June to 1 November, to avoid the “completely inappropriate” addition to debts “that have already been paid off”.

The government has revealed that in the 2024-25 budget, tax receipt upgrades excluding GST were expected to be $25bn over four years, less than independent forecasters expected and less than the past three budgets, which averaged $129bn of upgrades.

The government is expected to bank almost all the revenue upgrade in 2023-24 – around 95% – as it pushes the start date of measures including the prac payment and super on paid parental leave to mid-2025.

A surplus remains within reach for 2023-24 – which would be Labor’s second – but the budget position for the remaining three years was expected to be worse than projected in the mid-year update.

The federal treasurer, Jim Chalmers, said the government was being “realistic” that it would not see “the same sorts of massive revenue upgrades that we’ve seen in recent budget updates to continue”.

“We’ve made substantial progress in getting the budget in better nick, having delivered the first surplus in 15 years with a second one in prospect, but we know that the pressures on the budget are intensifying, not easing,” he said.

Chalmers said the government was “striking the right balance between getting inflation under control [and] easing cost-of-living pressures” but that it was also necessary to “make room for urgent and unfunded priorities and invest in the future drivers of economic growth in the years ahead”.

Economist Chris Richardson said the government would “need to be careful with its extra spending in the budget” because it wanted “at least one rate cut under its belt before going to the polls” but inflation was “hanging around” longer than expected.