9. METIRIA TUREI (Green) Link to this
to the Minister for Tertiary Education
Has he received any reports that student debt will reach the milestone of $10 billion this week; if so, what, if anything, does he plan to do about it?
Hon PETE HODGSON (Minister for Tertiary Education) Link to this
Yes, I have. Next month’s Budget will contain some measures to further increase student support, just like each of our first eight Budgets have already done. I acknowledge in passing the Green Party’s consistent support for progress in this area, and I also acknowledge that the National Party has consistently voted against such progress.
Does the Minister stand by this statement, which he made in January of this year: “Each year under Labour-led governments student support has strengthened,”; if so, how does he reconcile that comment with the fact that the latest figures show that fewer students received a student allowance in 2006 than when Labour came to power in 1999?
The proportion of eligible students who are receiving the allowance now is well over half—it is about 57 percent—about three-quarters of whom are receiving the full allowance and one-quarter of whom are on the cusp, if the member might see what I mean. That is a great many more students than when we first came into office. I cannot express the difference in a percentage, however, because I do not have the figures with me.
Hon Mark BurtonIn the light of the Minister’s response to the primary question, does he expect that total student debt will go on to reach $11 billion or even $12 billion; if so, why is the total debt still rising?
It is a very good question. The total debt continues to rise because, apart from inflation, there are more students, and more students are studying to a higher level. That is a good thing. It is a good thing. The question is what is happening in the life of an individual student, and what is happening there is that conditions continue to improve. They would say “too slowly”, but conditions do improve. The average debt is now rising more slowly than the average wage, with the average wage being the way that one pays the debt off. For that reason the average repayment of the debt has reduced from where it was in 2001, at 9½ years, to where it is now, at less than 6 years. So there is an improvement for students. The Greens have assisted with that improvement. We need to make more improvement.
Dail JonesDoes the Minister accept that the problem associated with student debt, with or without interest, can be substantially reduced by the introduction of New Zealand First’s policy, which for many elections has stated that New Zealand First will introduce a universal student allowance that does not require repayment?
Having a universal student allowance is the policy of a number of parties in this House. For my part, we are happy in our party to move towards, but not to, a universal student allowance, and this is why: I have other priorities. I need to pay attention to the quality of tertiary education. I need to ensure that the completion rates continue to rise. I need to ensure that the access—especially for Māori and Pacific Islanders, which is well below par—must be increased. These things all cost money and I happen to place them above the move to a universal student allowance. On the other hand, we make progress towards that universality in most years, and I hope we may do so again next month.
Does the Minister disagree, however, that his inadequate student support policy, which includes interest-free student loans, has actually led to a 9 percent decline in the enrolment of students from poor backgrounds; and will he then make a real commitment to fulfilling the policy of the Green Party, the New Zealand University Students Association, and, obviously, New Zealand First, for having a universal student allowance, which would ensure that today’s students are able to have the same opportunity to learn, to buy homes, to choose when to have families, and to take control of their financial destiny, as he and most of the Labour Party leadership have also been able to do?
The short answer is no. I have no advice to the effect of a 9 percent reduction in whatever the member suggested might be occurring for New Zealanders who are from more modest backgrounds. On the contrary, there is documented evidence of higher access for Māori and Pacific Islanders, but not high enough, and of higher completion rates at level 7 and above, but not high enough. We have had some dramatic, outstanding improvements in education amongst Māori and Pacific Islanders in the tertiary sector in this country—especially in the years 2002 to 2006, which is the latest data available—but I would be the first to say, along with all of my colleagues, that progress is not yet sufficient.
Is the Minister aware that student debt can begin to be decreased by increasing the current parental income maximum for a student allowance from $71,000 before tax, if one lives in a parental home to study, and just over $77,000 before tax, if one lives away from a parental home—the current rate—to, say, $100,000 before tax, if one lives in a parental home to study, and $105,000 before tax, if one lives away from a parental home, which would cost an estimated, and I emphasise “estimated”, additional expenditure of about $300 million to the Government, and surely this would be a good investment in education and in the future of New Zealand and it would encourage qualified people to stay in New Zealand?
Yes, I am aware of that, which is why, although the member was not able to be with us, this Government shifted parental thresholds three times in each of the last three Budgets—by 20 percent, 10 percent, and 10 percent—and we do not rule out the possibility in the future of a further shift in the thresholds.
Is the Minister aware that the Minister of Finance recently told the TaxAgents’ Institute: “We have real ambition for New Zealand and our economy. And we know that by refusing to burden our children and grandchildren with a legacy of debt, we are removing one of the biggest obstacles to realising that ambition.”; if so, does it worry him that the Minister of Finance is so ignorant of the $10 billion legacy of student debt left by this and previous Governments, which has a proven, disproportionate exclusionary impact on women, Māori, and the least well-off New Zealanders?
Just a couple of comments in response: first, the level of participation of, say, New Zealand Māori in our universities is still below that of, say, New Zealand Europeans, but it is getting better, not worse. The member shakes her head—she needs to go back and look at the statistics. Second, I did not have the pleasure of being in the room when the Minister of Finance made his quoted remarks, which is a shame, of course, but I would not mind betting he was talking about KiwiSaver, and that is a magnificent policy that will change the face of this country.
I seek leave to table a chart showing that the numbers of students receiving an allowance in 2006 are 5,000 fewer than in 1999.
I seek leave to table an article describing how the under-35s are now effectively shut out permanently from financial security.
Madam SPEAKERI seek leave to table “Freedom from debt, freedom to prosper”—the Minister’s speech to the TaxAgents’ Institute of New Zealand given in March this year.