Editorial: Yearly fee for student debt makes sense

OPINION: An idea to effectively tax student loan holders with an annual fee appears, on face value, to be a reasonable one.

The National-led Government inherited Labour's interest-free student loan policy and knows it can't reverse that decision without a major political backlash.

Many saw Labour's policy as an election bribe just months out from the 2005 election. It may have been the policy decision that helped them win a tight election.

National has a deep-seated loathing of the scheme, but there is little that can be done to offset the "lost" revenue from the interest that is no longer accruing.

Tertiary Education Minister Steven Joyce summed his feelings on the matter up when he said: "The view I have taken of it is that I actually don't think that is fair when you consider it [the student loan scheme] compared with any other form of loan you have".

So, the plan to bring in a $50 annual fee for the thousands of people who have student loan debt is one way the Government can claw back some money from what has become a multi-billion dollar hole.

It's estimated the fee would bring in $15 million, which would be a drop in the bucket, but would go some way to covering the administration costs racked up by the Inland Revenue Department, which looks after the loan system.

If approved, this plan would sit snugly beside the Government's earlier moves to tighten up the loan system, which include putting a year limit on getting loans and pegging loans to pass rates of undergraduates.

All of those moves will come up against resistance, but the first two definitely increase personal accountability for interest-free loans and are hard to argue against.

And as a person with a decent student loan to still pay off I don't think $50 a year is going to hurt too much, especially considering my annual bank fees are almost triple that.

A piece of legislation flew below the radar as it went through its first reading in Parliament this week. And the amendment to the Local Government Act has the potential to hit ratepayers in the pocket hard. The change, pushed through by Local Government Minister Rodney Hide, opens the door for councils to look at privatising water services – the water that comes out of your taps.

There are places in New Zealand, such as Auckland and Tauranga, where people pay for their water and it is more likely others will eventually follow suit. The day will come when councils realise how precious a commodity water is and while charging people for how much they use will reduce how much is used it would be political poison for whoever decides to go down that route.

- © Fairfax NZ News