Pass the sauce, please - Key swallows a dead rat
Labour's interest-free student loans policy was a big "dead rat'' to have to swallow, but John Key had no choice but to hold his nose and throw it down the hatch.
Labour will howl "policy theft" and there will be more accusations of "me-tooism'' against National. And some might say fair enough. I reckon Key has engineered at least ten policy reversals since becoming leader (perhaps someone wants to count?). The biggies include income-related state rents, KiwiSaver MK1, Working for Families Mk1, and the Cullen super fund.
In his ongoing quest to clear the decks and remove the stench of the Brash years from National, it does appear at times as if Key is simply removing reasons not to vote National, rather than giving people reasons to vote for it.
But in this case, Key had precious little choice. In all honesty, National couldn't enter an election campaign promising to raise interest rates on student loans. That would have gone down like an empty keg at a student union orientation.
Neither could National easily unpick the adjustments to the half a million Kiwis with student loans, whose balances have all been altered since last year and who will now be making financial plans based on having no interest to pay on their loans.
Key was honest today when we asked him why the U-turn: "Because we lost the election.'' It's an answer that could be interpreted a number of ways. His critics will argue that what Key meant was that National will copy anything Labour did that was successful.
And there's no doubt it was successful. If you look at how the polls were tracking up until the announcement of Labour's interest-free loans policy in July 2005, National was about five points clear. After Labour gazumped National's much weaker promise of tax deductions on loan payments, Labour leapt ahead. The policy was the single biggest king-hit of the campaign, beating even National's tax cuts package, in my opinion.
The other way of looking at what Key is saying, however, is that National has to accept certain realities. While it may appear ideologically bankrupt to blow with the wind, there's no point in pushing the proverbial uphill. The public like interest-free student loans. The policy is firmly embedded and costed into the Crown accounts. Changing it for the sake of ideological opposition would not be worth the grief.
There's another reason why it was a pragmatic decision. The way Budgets operate these days, government can lock in future spending tracks well into the future. Labour has become expert at that. The student loans move - and KiwiSaver Mark 2 - are both examples of this. Key has been forced to acknowledge that interest-free loans are now part of the landscape.
The big question now, however, is whether or not National has set a precedent with this decision which means it will also have to implement Labour's big-spending KiwiSaver MK2 plans as well. That policy is similarly becoming embedded and will be difficult to unpick.
My guess is National is still wrestling with this, however, because if it also accepts this policy it will be starting to run out of money for its own ideas, including tax cuts. My bet is National won't keep KiwiSaver MK2 in its current form but will replace it with a mixture of tax cuts and other savings incentives.
Once Key has swallowed all the rats he can stomach, however, he must quickly press on with serving up some more reasons to vote for National however, rather than simply removing the ideological differences between him and his opponent.
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I think it was inevitable that the Nats would try and hide their real values by deciding to keep Labour's student loans scheme. It was too popular and decent for them to do anything else.
I'm really not pleased though at the extra kick - the subsidy to the highest income grads, who can pay back $500+ lump sums and get 10% extra paid off. That's just giving more cash to those who already have the most. That money could be pledged with a lower threshold and a declining subsidy rate so that all grads could have a chance to gain.
It is good to see National being up front about their values: sticking a benefit into the pockets of those who have the most, rather than those who are struggling.
It's about time these politicans started doing the right things for the country and not their political agendas.
This is one of those policies that short of a complete economic melt down and a serious dose of Roger Douglas' or Ruth Richardson's "this is going to hurt but it's good for you" (ala 84 and particulary 90) then it has become part of the landscape. Good tactics biting the bullet after a successful and detailed policy speech. Not necessarily ideologically sound but realistic and pragmatic.
John Key has faced this situation up front .There are so many students with loans imagine the cost of reversing this Labour policy. I think we should be more concerned about Labour blaming today's problems on Ruth Richardsons' budget. I wonder how many students would even know who Ruth Richardson is. Mind you with our Minister of Police blaming South Auckland's woes on the heat and the full moon we certainly have a Government who are a pack of ostriches. Sheelagh
"This policy has the integrity of a drug dealer". - John Key
"grossly irresponsible" - Bill English. “This is a reckless policy..." - John Key.
John Key stands for nothing expect getting elected. Disgraceful. He is the ultimate Hollow Man. A wet-finger-in-the-wind politician. And you should call him on it.
I cringed when I heard that National MPs have been reported as saying they would have to ‘swallow a dead rat’ to get rid of this policy. I’m sorry but this policy is helping hundreds of thousands of NZers pay off their student loans faster – I’d like to hear them describe no interest on loans as a dead rat on campuses this year.
Seeing a flip-flop like this goes to the heart of what a John Key administration would look like. He is a politician with no integrity.
Simon, that can only happen if voters support those that do. Probably that'll happen about the same time Hell freezes over despite global warming.
Jordan,
In my opinion, the interest-free student loans is NOT good policy. I reckon the Nats are keeping it because it's too hard to reverse.
And as for your comment about more money for high-earning graduates? Well, the median starting salary for graduates is well past the 40k mark - there are very few LOW EARNING graduates who won't be able to take advantage of this.
I agree that it refreshing to see an honest answer in politics. Don't despair at the $500 lump sum, remember you could save up the $500 over any period of time in a bank account, accrue some interest on it, then chuck it on your loan with the bonus rate. You can hardly call that a kick in the teeth for those that are struggling. If we had less tax to pay you would definitely struggle less and be able to save more...
Yes Troy,Heather Simpson is the real leader of the Labour party. She has manipulated our country so it is now out of step with the majority of the world. For example,our view on the family and parenting is via the gallery of absurdity. The PC nanny - social engineering experiment has failed, and only a change of government can rectify the mounting serious issues that our country is now facing. The Clark era is all but over. Time to rebuild together as a focused and committed people. Not many people can honestly say they're proud to be a kiwi in 2008 (Jordan being the exception).I rest my case.
I agree that politicians should start doing the right thing for the people, not only students.
The Key Klark Klan should think about the value of parents and children as the fundamental building block of a balanced and decent society.
A change of government is inevitable.The rot cannot be allowed to continue. Surely?
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I don't think it matters if National has swallowed the pill on this... actually to not do so would have been the wrong thing to do. Frankly, I don't see anything wrong with a political party coming right out front and coming clean about a policy. The fact that National will knock 10% off student loans repaid over the minimum amount is a good thing - I've decided now that I will vote National (I'm a student with a hefty loan to pay off). Labour is dead in the water anyhow - seems as though Heather Simpson (the real leader of the Labour Party) has lost her way.