Kiwiblog

John key’s speech is here. Key points:

• WFF, interest free loans and KiwiSaver costing $5b a year, and why we now have a structural deficit, and all has to be borrowed from overseas
• All changes will take place after election, so there is a mandate for them
• KiwiSaver will be changed so that over time employees and employers contribute more, and the Government less
• KS changes will lead to an improvement in the rate of national savings and reduce foreign debt by 2% of GDP over the decade
• Will reduce amount spent on WFF, but target a greater proportion at the most vulnerable families
• For every $100 of student loans, taxpayers get only $55 back
• Half of the overdue student debt is students living overseas – will make sure they live up to their responsibilities

The exact details will be in the budget. To me it looks like a good step in the right direction.

The Herald supports proposed student loan changes:

Either way, it is clear that the Government, having declined to do away with interest-free student loans, must find ways to reduce the cost of the scheme.

t has to do this, first, because an alarming 41.5 per cent of the Government money placed in tertiary education goes directly to students as loans, allowances and interest subsidies. That is more than double the OECD average. Also, Mr Joyce, like other ministers, must find savings in his portfolio for this year’s Budget. This year he took a first step by proposing that student loans should be conditional on students’ success. That was reasonable, if only because it moved the loans into the same territory as living allowances to students on age, income and residential criteria, which are not available to those who failed more than half their course the previous year. In the same vein, new residents already have to wait two years for a student allowance or a welfare benefit. There seems no reason for student loans to be different, and good reason for them to be aligned. …

If any exception is to be made to the proposed stand-down period for student loans, it should be for refugees. Most, by dint of their status, arrive in this country with virtually nothing. The scheme provides those who wish to study with a degree of independence. Clearly, refugees are not comparable to the new residents who Mr Joyce suggests swoop on student loans as soon as they arrive, whether or not they are committed to their studies or to New Zealand. In effect, signing on for tertiary courses provides them with funding denied them by the two-year benefit stand-down.

I agree that the two year stand down for new migrants should exclude refugees. Refugees are admitted for humanitarian reasons, not economic reasons.

The Dom Post talks terrorism:

Hence, terrorist threats to Olympic and Commonwealth Games are not just an attack on the athletes, or host countries, but an attack on international fellowship – an attempt to stop nations and peoples co-operating and getting to know each other.

The reasons for the weekend bomb blast outside the Chinnaswamy Stadium in Bangalore, venue for an Indian Premier League cricket match, are not yet known, but the amateurish nature of the devices that injured 17 people suggests it may have been the work of disaffected locals rather than al Qaeda, which early this year warned international competitors to stay away from the World Hockey Cup, the IPL tournament and the October Commonwealth Games in New Delhi.

But, whatever the case, Commonwealth governments and sporting associations are doing the right thing by not being panicked.

And the ODT supports safer driving measures:

Something must be done about youth driving.

The statistics are oft-quoted but they bear repeating because they lie at the heart of the Government’s move, among other things, to raise the driving age to 16.

Take comparison with Australia: New Zealand drivers in the 15-19 age group suffer an average of 21 deaths a year for every 100,000 of population, compared with Australia’s rate of 13.

Further, young drivers between the ages of 15 and 24 in this country comprise 16% of all licensed drivers but in 2008 they were involved in around 37% of all fatal crashes and 38% of all serious injury crashes. …

Road crashes in fact are the highest single killer of 15- to 24-year-olds and the leading cause of their permanent injury.

Broadening out the international comparisons, 15- to 17-year-olds in New Zealand have the highest road death rate in the OECD and 18- to 20-year-olds the fourth highest.

The Government’s moves in the area of youth driving are widely supported as long overdue.

The Herald says student loans should be linked to success:

Tertiary Education Minister Steven Joyce had barely opened the portfolio passed to him at the end of January before he floated a significant change. He proposes to make student loans conditional on the student’s success. Living allowances available to students on age, income and residential criteria are not available to those who failed more than half their course the previous year. But loans are subject to no such test. From next year they could be.

And should be. The loan scheme attracts loud criticism from students’ associations because unlike grants and allowances, loans must be paid back. They call the debt a burden when it is, in fact, a considerable benefit from the taxpayer. The loans carry no interest during the borrower’s years of full-time study and repayments are not required until the recipient is earning an income.

And now the loans carry no interest, ever.

Since National promised at the last election to keep the loans interest-free, he needs to find another way to rein in their cost. Making them conditional on pass rates is an obvious and reasonable step. …

Higher education is expensive for the country and it would be reasonable to restrict it to school leavers who can pass an entrance test.

Mr Joyce should look beyond loan conditions and consider entry restrictions as he searches for the savings that all ministers are expected to produce from their portfolios for this year’s telling Budget.

I would also get rid of the stupid fees maxima policy.

The Dominion Post wants the whaling slaughter stopped any way possible:

The messy dispute now taking place between opponents of whaling is about tactics, not aims. That is what the critics of New Zealand’s willingness to explore a diplomatic solution that allows for some limited commercial whaling are refusing to acknowledge.

Labour foreign affairs spokesman Chris Carter – whose own government had no success in nine years stopping the Japanese – lambasted the Government yesterday as “an active advocate for the resumption of commercial whaling” adding it “simply doesn’t care about marine mammal conservation”. That owes more to rhetoric than realism, and fails to acknowledge the need for practicality as well as principles.

I suspect some opponents of whaling would be horrified if it stopped, as they would then have one less thing to protest about.

Foreign Affairs Minister Murray McCully has been suitably cautious over any arrangement. He is quite clear that the Government’s aim is to stop whaling in the Southern Ocean. He told Radio New Zealand those seeking a diplomatic solution had no mandate to do any deal, but were to see if they could come up with a solution “that the New Zealand Government and then the New Zealand people can consider”.

The Government is right to be cautious, but it is also right to allow Sir Geoffrey to explore all options.

In any negotiation, there has to be concessions from both sides. Otherwise there is nothing to negotiate.

The Herald reports:

Tertiary students who fail more than half their courses may lose their student loans as the Government moves to crack down on abuse.

Only 50 per cent of domestic students who started studying for bachelor’s degrees in New Zealand in 2004 finished their degrees within five years – suggesting that up to half of the country’s 145,000 bachelor’s students will fail or drop out.

Student allowances are chopped if students failed more than half of their courses in the previous year, but there is no requirement to pass courses to keep getting student loans.

I can see this changing very soon. However I think one will want some ability to access loans if say a student drops out, enters the workforce, but a few years later wants to return to finish their degree.

Mr Joyce pointed to research showing 41.5 per cent of New Zealand’s tertiary education budget went into student loans and allowances, compared with an OECD average of only 17.6 per cent.

He told the Weekend Herald he wanted to shift funding to pay for more tuition places. “I’d like to see more money going into actually training EFTSs (equivalent fulltime students) and I’m looking around for opportunities to deliver that in 2011,” he said.

The budget will be interesting.

The ODT reports:

The Government needs to consider adding “a little bit of interest” to student loans to ensure it has enough money to better fund universities, University of Otago vice-chancellor Sir David Skegg says.

And he is right. Of course it won’t happen, as National promised not to reverse the policy, but logically interest should be charged at least at the rate of inflation – maintaining the value of the loan in real terms.

Prof Skegg said the “massive cost” of student loans meant little money was available for other forms of tertiary funding.

Yep – that’s it for this generation. The bribe was so huge it chewed up all the disposable money. Without it, one would have a decent chance at abolishing parental means testing but that is off the table for at least a decade also.

The university council yesterday adopted a string of fee and levy increases for most students next year, and introduced a capital development levy of $50 to help fund improvements to student social facilities such as the University Union building.

Otago University Students Association (OUSA) president Edwin Darlow “somewhat reluctantly” supported the increases, which will add $190 to $600 to most Dunedin students’ bills next year.

The other student representative on the council, Simon Wilson, opposed the increases, saying they would lead to students increasing their loans.

The capital development levy was “essentially just an additional charge on students” because the university was unable to increase tuition fees beyond the level allowed by legislation, he said.

Prof Skegg agreed.

The problem is the silly fees maxima policy. The Government is controlling both the amount of funding from the Government, and the amount a university can charge in tuition fees. Of course it will end in tears – or with universities finding a way around it. It was one of the stupider policies of Labour and should not be continued by National.

National promised not to charge interest on student loans, and that promise should be respected. But it promise on the fees maxima was simply “Retain restrictions on the amount by which institutions are able to annually increase fees for publicly funded courses” which allows the Government to increase the amount institutions can charge, while still having some restrictions.

The Dom Post reports:

Scrapping financial help for students aged 65 and over would put retraining out of reach for many older workers, senior citizens say.

Education Minister Anne Tolley said last week she had asked for advice about scrapping student loans and allowances for senior citizens.

Ms Tolley said although she supported lifetime learning, “in tough economic times we do have to carefully consider how and where our investment in education is best placed.”

About 150 people over 65 got a student allowance in the first three months of this year and 655 received a student loan.

Grey Power national president Les Howard said cutting funding for older students was discriminatory and ignored the increasing number of people choosing to work past retirement age.

The reality is that if you take out a student loan at age 65, you will probably never pay it back, and it is ridicolous to think that in these tight economic times the priority should be totally free tertiary education for people who have mainly retired from the workforce. The state subsidises tertiary education partly because a more educated workforce has an economic return to it.

The latest student loans annual report has the percentage of borrowers aged over 50 having increased from 0.4% in 1992 to 4.3% in 2007.

The former President of Grey Power was not as greedy as his sucessor – he agreed it was perverse:

“I struggle with the concept that money will be lent to people who are not working and can’t pay it back,” said Grey Power national president Graham Stairmand.

And Dr Cullen also said it was an issue:

Tertiary Education Minister Michael Cullen told the Herald he was aware of the issue and was looking into it.

He told National MP Pansy Wong in Parliament last week: “One of the slightly stranger features of the student loan scheme is that once one reaches a certain age, in effect one does not have to pay the loan back.”

If someone over 65 wants to do tertiary study then good on them. The taxpayer is still going to subsidise 70% or so of the cost of their course – which is bloody generous. But by giving them a student loan they will never repay, we are effectively increasing that subsidy to 100%. If you are over 65 and want to study you should pay for the course fees yourself – not borrow off the next generation of taxpayers. I hope the Government does change eligibility.

NZPA has a story (not onlne yet) quoting Bill English taking questions at a post budget speech.

He is talking about how he wants to make it easier for graduates, especially overseas, to pay off their loan. His exact words:

For example, he said it was extremely difficult for students to get information about and repay loans, especially when they were overseas.

He said graduates were computer literate and handled banking on-line so should be able to make payments to their loans the same way.

“If you are overseas with a student loan it’s very hard to even find the IRD’s phone number anywhere,” Mr English said.

“For any other service you just go on your laptop and they’ve got their pirated movies, and they’ve got their music downloads and they’ve got their email from mum.

“It’s all there — so why aren’t their student loans there? Then they’d repay them.”

So Bill is saying it should be as easy to pay off your student loan, as it is to pirate music and movies

From the 1st of April, any voluntary repayments over $500 towards your student loan, will get you an additional 10% knocked off the balance.

And as the Herald reports, this will apply to everyone with balances – not just those still in NZ.

The interest free students loans policy is fundamentally flawed. It provides an incentive for students to borrow more than they need, and to pay it back as slowly as possible.

The voluntary repayment discount is a good way to counter one of those problems, as it will now give an incentive for early repayments.

The ODT has a story of a student who made free money from his interest free loans. Now there were bank loans, not the government student loans, but the principle is the same in terms of highlighting why it is a bad idea.

Of course the interest free bank loans are a deliberate loss leader to try and get students to join their bank, hoping they will remain with them. And it tends to work as a strategy.

At school I banked with Wesptpac after winning a bank account (and some money) in an Australasian maths competion. But at university went with BNZ for the interest free overdraft and have stayed with them ever since.

National’s voluntary bonding scheme was made public yesterday, with this fact sheet. Key details for the health sector are:

• Open to any doctor, nurse or midwive who has graduated since 2005
• Doctors have to work in a hard to staff area for two years and then commit to a hard to staff speciality (which may move them to a different area)
• Nurses need to work in a hard to staff speciality while midwives in a hard to staff location.
• Hard to staff areas for Doctors are Southland, West Coast, Whanganui, Northland, Wairarapa, Lakes DHB, Tairawhiti DHB, Wairau Hospital, Whakatane Hospital and Thames Hospital
• Hard to staff specialities for doctors are GP, General Surgeon, Internal Medicine, Psychiatry and Pathology and for nurses are Theatre, Intensive Care and Cardiothoracic
• Doctors will get $15,873 gross or $10,000 net a year. Midwives $3,500 net and Nurses $2,833 net.

The NZ Herald editorial praises the scheme:

The use of voluntary bonding in many countries bears testimony to its effectiveness. It is timely that the Government has introduced a comprehensive scheme here, not just for doctors as it promised before the election, but also for nurses, midwives, teachers and veterinarians. …

During the latest junior doctors’ dispute, bonding was often mentioned as a means of stopping the drift to Australia. The National Party made it part of its election manifesto. Commendably, it has enacted its proposal quickly, adding cash incentives for those who do not need student loan writeoffs. Some may quibble at these extra payments but they are, in reality, compensation for compromised career paths. As such, the Government scheme should go some way to solving the country’s medical and educational staffing woes. Whether it is tailored sufficiently well to have the maximum impact is another matter.

It will be interesting to monitor how many people take it up

Treasury has suggested that the Government should use the tax cuts to increase the minimum repayment rate on student loans, correctly noting that there are little incentives o pay back loans faster at 0% interest.

At present, everyone earning more than $18,000 a year must contribute 10 per cent of their earnings to repaying their loan.

Treasury officials recommend new thresholds be set at 12 per cent for people earning more than $40,000 a year and 15 per cent for those on more than $60,000.

Planned income-tax cuts would offset the effect of the increases, the Treasury said.

Sounds sensible to me. It will lead to less student debt, and faster repayment times – both something student associations have complained about.

It recommends an overhaul of the repayment scheme and measures that “could include requiring students to pass a certain number of their courses or limiting the number of years students can borrow for”.

Also sensible. Good bye to life time students.

New Zealand Union of Students’ Associations co-president Sophia Blair called the Treasury suggestions ” ludicrous”.

“This would take much-needed money directly out of the pockets of struggling families,” she said.

This is ironic. I don’t recall NZUSA campaigning for tax cuts to help struggling families who earn above the average wage.