David v Jacinda: 'Enough already with the education bribery'

Taxpayers already support tertiary education generously.
Fairfax AU

Taxpayers already support tertiary education generously.

Opinion: David Seymour believes university students enjoy enough taxpayer largesse without adding debt relief for public servants in the regions.

It's the ultimate perpetual motion machine.  Politicians create problems through bad policy and then assume the role of hero to fix things.  Then their solutions create more problems, which require further fixes.  Politicians get re-elected but taxpayers are worse off.

Take tertiary education funding.  Student loans have been Labour's go-to tool for winning elections since 1999 – swapping taxpayer money for student votes.  In 1999 Labour campaigned to remove interest charges for the duration of full-time study.  The bribe worked.  In 2005 they proposed to remove interest over students' entire lives.  Again the bribe worked.  Now we live with the consequences.

This week the New Zealand Initiative reported that student loan debt currently totals $15 billion and costs taxpayers $600 million a year in interest write-offs.  If you're a graduate, you're burdened by these costs via both debt repayments and high tax rates.

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That might be worthwhile if it made access to education more equal, and didn't damage the quality of learning.  But sadly our universities have tumbled down the world rankings lately, and our access to tertiary education hasn't improved.

Since the introduction of the interest-free scheme, repayment times have reduced by just a year, and students are borrowing more than ever.

Interest-free loans have created the perception of risk-free borrowing.  This encourages students to choose courses that don't improve job prospects, maximise their living costs, and delay entry to the workforce.  It's not just a rip-off for the taxpayer – the students themselves graduate with huge debt, and struggle to compete for jobs with so many similarly deceived graduates.

But interest-free student loans aren't just costly and ineffective – they actually perpetuate inequity.  Unlike most government spending, this policy subsidises the wealthy.  How Labour have changed.

New Zealand students already get large subsidies.  Around threequarters of university costs are covered by the taxpayer.  Once borrowing costs are included, this increases to more than 80 per cent.  Sure, society benefits from graduates getting educated, but not that much.

Yet debt-laden university graduates are understandably aggrieved.  And predictably, Labour now presents a "solution" to the problem it created: writing off student debt (for regional public servants).

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Beyond costing taxpayers (and thus graduates) even more, this would further encourage irresponsible borrowing and be deeply unfair to the majority of students who work hard to pay back debt.

I can almost forgive Labour for returning to the pork barrel.  Blaming the left for overspending is like blaming a dog for barking – it's in their nature.

But National, the supposed party of fiscal responsibility, has little excuse.  In 2005, National had the courage to call the interest-free loan bribe a bribe.  But in 2008 John Key changed tune and National has quietly retained Labour's policy ever since.  It's National's refusal to have a transparent and honest conversation about interest-free student loans that has now allowed Labour to push the debate into the dangerous realm of debt write-offs.

The question for millennials is, what sort of policy will our generation support?  Should politicians cynically buy votes, or evaluate the real effectiveness of tertiary spending?  Do you want to pay for your own education once, or pay for others' bad decisions for the rest of your tax paying career?  And which parties are willing to address these questions?

JACINDA ARDERN REPLIES:

So cynical for one so young. But to label all students as people who, when presented with the ability to borrow money, are incentivised to choose dud courses, 'maximise their living costs' and 'delay entry to the workforce' is not just cynical, it's wrong.  

It demonises young people, when it's the barriers to education that we should be attacking.

There was a time of course when tertiary education was free. Those were the days when we considered education a public good - something we all benefited from, not just the person who walks away with a qualification. Surely if we all benefit (and research shows we do) we would want tertiary education to be much more accessible. And that is the key word. Access.

I was at university in 1999, when students who were still studying had loans that were growing before their eyes. I remember, because it was not only daunting, it was terrifying and off-putting.

Interest-free student loans are not a panacea, but they also aren't a bribe. Nor is our plan to give everyone who hasn't accessed post-secondary education, three years of study for free. It's what you do when you want an educated society, with decent wages and decent jobs. What's cynical about that.

 

 - Sunday Star Times

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