Why not loans for all?

May 8th, 2012 at 7:00 am by David Farrar

A reader e-mails:

Hey David, was just reading about possible changes to and was wondering why all young people not working don’t have to draw down a loan for a living allowance. Surely they are all expected to get a job in later life, and most should be able to pay back what they have taken from the State? Why should students be treated differently to their unemployed peers?

Personally, I think the parents income test doesn’t work and all young people not working should have to draw down a loan. Anyone with a child who is a student not getting an allowance has stories of other students with asset rich parents getting an allowance.

The concept could probably be taken further to anyone temporarily unemployed, but where would you stop? 

My son is living at home for free and studying.  We were even paying him a small allowance for a while but now he is drawing down his loan which is sensible since we still have a mortgage on the house. 

An idea worth debating.

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19 Responses to “Why not loans for all?”

  1. ephemera (556 comments) says:

    Indentured labour. Yay!

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  2. mikenmild (11,247 comments) says:

    I should imagine this idea will be taken up by the next Labour government. National will oppose it bitterly, of course, but then promise to retain the policy the next time it looks to be able to win an election.

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  3. Mark (1,488 comments) says:

    Why not simply shackle them and put them down mine

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  4. bevanjs (34 comments) says:

    Young people not in work have access to benefits as a back stop. Students not elligible for allowances do not.

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  5. RRM (9,919 comments) says:

    I think this would be a very good idea………………………………………..

    ….eh………………… ;-) ……………………………………………………………

    …why should freeloaders endlessly get money given to them…………..

    ……….Gratis…………………………………………………………………………

    ……when students working to better support themselves in the future ..

    (and better their future earning/tax-paying potential)…………………….

    ……………………do not?………………………………………………………..

    …It’s an interesting thought………….. isn’t it?……………………………….

    ………………………………eh Phil?…….. ;-) …………………………………………

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  6. miro (1 comment) says:

    There’s a difference between the current payment options though. You can only borrow $170/week, versus $200/week in allowance. There’s also the accommodation supplement (worth another $45/week here in chch), which I think you can only get with the allowance.

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  7. Bed Rater (239 comments) says:

    This should happen with all net handouts, it should be recognised as a loan to be paid back once net income starts rolling in.

    Put it on the balance sheet, it would make that surplus happen.. for a while.

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  8. holysheet (387 comments) says:

    RRM, you beat me to it. I immediately thought of the phools reaction to this suggestion and said the same thing.

    Seriously though, who in their right mind would want to follow up on this suggestion. It would define all bludgers and others as the same as students. What about all the lowlife in prison. All the kiddie fiddlers can be conducting religeous studies in prison and be paid to find their god and become rehabilitated. yeah right.

    Bloody stupid Idea.

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  9. Scott Chris (6,135 comments) says:

    Simple really. The difference lies between productive and unproductive debt. Belongs in the political rubbish pile with such policies as 3 strikes. Populist nonsense.

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  10. Nostalgia-NZ (5,202 comments) says:

    This is a bit like the 90 day trial debate. One side of the argument doesn’t appreciate that an employer is investing in a prospective employee during a trial period, training them and introducing them to a system that ultimately benefits the employer and gets somebody working. There are employer subsidised schemes now that are probably not long enough for the youth struggling to stick with getting to work on time, bereft of basic knowledge, people skills and so on – I think a lot of employers would look at extensions of the current schemes as having a greater benefit for themselves and prospective employees who are uncut diamonds. So maybe money toward a 2 or 3 year contract after 90 days trial that sets the youth on a course rather than the idea of giving them money to see what they can do. The ultimate function is that the youth is getting a broader skill set, longer working history and so on. It’s that skill we ware lacking, I’d rather see an employer being subsidised for at least the amount of the dole to have some young person working for them than the person being on the dole without much purpose.

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  11. Nigel (514 comments) says:

    The problem is you have mixed objectives, you want an educated work force, but you don’t want the educated to leave the country. Then you have to pay for the education.
    It seems to me a very dangerous thing to look at education purely from an initial cost perspective, their needs to be an analysis of the financial benefit to NZ for the various educational courses & a subsidy decided from that, I’d suggest a base subsidy ( 40% of current allowances ) + 20% of the likely return to NZ over a reasonable work period say 15 years.
    At the moment I am sitting here wondering why in the hell I live in NZ to pay my kids Uni fees and put 100k + to the govt for someone elses education, I’d be far better off working overseas, so not only are the incentives bad for the students to stay in NZ once they have got their education, but they’re hardly any better for parents with transportable skills while the children are getting educated.

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  12. SalParadise (54 comments) says:

    Could it not be argued that young people already pay back their benefits when they get a job and start to pay tax?

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  13. Richard29 (377 comments) says:

    @SalParadise
    Indeed – I beleive it’s called the social contract or some other such evil socialist plot.

    Perhaps this living cost loan policy could be combined with the suggestions around parents/family members being guarantors for their kids loans – if you have a child or family member who is born with a disability or suffers an accident and becomes an invalid then their living allowance loan should be picked up by their family. I mean why should the state have to pay for people who are unable to work through no fault of their own?

    Same applies to women with children who find themselves in a violent or abusive relationship – rather than making the choice to leave too easy on them and have them become a burden on the state we should just give them a dramatically reduced income as a temporary loan to cover the formative years of their childrens lives (while we offer them work programs and contraception) – I mean really they should have thought of this scenario before choosing to fall for somebody and have kids with them.

    And those greying manual labourers in their 50’s and 60’s who got laid off in the recession and have little ability to reskill in a different trade (and even less chance of getting re-employed at their age if they did) they should also be made to take loans – they can repay it out of their NZ super when they reach 65.

    It frustrates me how the debate on welfare is dominated by this belief that most beneficiaries are able bodied, single working age people who have made a choice not to seek work or training because they have made a life choice that they are happy to live off a roughly $300 wk state pittance.
    I have no doubt that a few of these people exist – but if you conduct any survey of beneficiaries or look at any of the statistics this group is demonstrably a small minority.

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  14. simonway (387 comments) says:

    Why should students be treated differently to their unemployed peers?

    You mean the people who qualify for the unemployment benefit, which students don’t? I’m reasonably certain that people on the unemployment benefit don’t have to pay it back.

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  15. WineOh (630 comments) says:

    Complex issue.

    How do we encourage study for productive areas (do we really need more english lit majors?) and fund achievement without swinging too far towards elitism? Economic growth will certainly come from a high skill level, and thus we need to fund and support the tertiary sector & remove barriers for those of disadvantaged financial backgrounds. We don’t want to give a free ride to free-loaders, and also don’t want to farm out our best graduates to higher paying jobs overseas. There is no easy fix.

    I would support reinstating interest on student loans, but only at the level of inflation/cpi. That way the loan keeps its value over time to improve the governments books, and there is a benefit & incentive to repayment.

    I would fund targetted fee reductions in areas of key skills areas where we will see growth drivers in the economy. A short list would be IT, business & management, agriculture, biotechnology.

    I do not believe universal eligibility for student allowances or loans is a solution. Encourage excellence not merely participation. Provide a graduation bonus perhaps?

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  16. Alan Johnstone (1,087 comments) says:

    The aim of government should be to design a benefit system that rewards work.

    If starting work bring a loan repayment, it’s another disincentive to work and reduces the already meager difference between a minimum wage job and a benefit.

    Frankly, it’s an epically stupid idea.

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  17. RRM (9,919 comments) says:

    Alan Johnstone (13) Says:
    May 8th, 2012 at 12:26 pm

    The aim of government should be to design a benefit system that rewards work.

    I disagree – “Rewards” have to come from within, it’s not something the gubermint can give to you. I Think this is what my Grandma meant when she used to talk about a “work ethic”??

    The aim of the Government should be
    (1) to provide a safety net so no-one starves in the gutter in our country.
    (2) to remove gross obstacles to beneficiaries getting back onto their own to feet.

    I think we currently do (1) pretty well. It’s (2) that is the hard one…

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  18. wikiriwhis business (3,998 comments) says:

    ‘Why not simply shackle them and put them down a mine’

    Aah yes, the typical storm in a coffee cup conundrum that fills the halls of Kiwi Blog. Build more jails, cut finance to people without finance. Create more homeless and sweep everything under the carpet.

    Problem is the coffee cups are helping to create a tsunami in society because the 1%ers sway govts. They are never original and they never have solutions. Just help perpetuate the social terroism of the Nat/Lab coalition traitorous since 1989 when they took away the treason laws and now we are on the path to privatisation and huge billion dollar profits for overseas multinationals.

    it only took one man – Rodney Hide- to change the law to allow water meters. it will only take one traitor to allow privatization

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  19. Liberal Minded Kiwi (1,570 comments) says:

    Good grief. It isn’t compulsory to become a student.

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