Labour’s books for the Government are forecast to have to borrow $20 billion over the next decade. A decade of deficits is going to push debt from under 20% of GDP to over 30%.
In that context, Labour’s pledge today to introduce universal student allowances within four years is reckless and unaffordable. Every cent of those allowances is going to be borrowed.
In 2005 I would have cheered for abolishing parental means testing. It would have been a far better policy than interest free student loans.
But to go ahead and announce this, after learning about the decade of deficits in reckless, and reinforces that this Government only knows how to spend money, and doesn’t know what to do when it runs out of money to spend – it just keeps spending.
This is not about some noble public policy goal – such as more operations, or not having eight year olds unable to read or write. It is purely an attempt to buy votes through a borrow and spend policy. Once fully implemented it will cost over $200 million a year – every cent of it borrowed.
It is becoming clear what Labour’s secret mini budget in December will be – massive tax increases. It is either that – or borrowing so much it will take a generation to repay.
There are many good things one can do when you have large surpluses. But when the economic is in recession, and you are spending more than you are receiving, you have to make choices. And those choices should be aimed at growing the economy, not just free cash for students.