Accounting for Income-Contingent Loans as a Policy Hybrid: Politics of Discretion and Discipline in Financialising Welfare States

Income-contingent loans (ICLs) are becoming widely adopted across higher education sectors internationally, and increasingly proposed for other policy domains. This article explores why this policy form has gained such wide popularity in the context of fiscal austerity and greater financialisation of social policy. It argues ICLs act as a policy hybrid, combining elements of a tax and a loan. The article traces the development of ICLs in their original and most developed context, Australia’s university sector. We connect the development of ICLs to changes in modes of state accounting associated with the application of private sector accounting techniques. These changes reflect financialisation inside the state, producing contradictory political dynamics. Drawing on Streeck’s conception of a shift from the ‘tax state’ to the ‘debt state’, we argue the hybrid construction of ICLs creates political tendencies in both directions, facilitating greater state discretion while also implementing market discipline. Alongside these contradictory state imperatives we highlight continued partisanship, pointing to new and ongoing forms of distributive politics. To the extent that accounting technologies allow the state to act as a special kind of creditor, we ask whether financialisation may also involve the emergence of an ‘asset state’.