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Auditor-General Repeats Student Loan Debt Warning

Auditor-General Repeats Student Loan Debt Warning

Thursday 21st Dec 2000 Stephen Franks Media Release -- Education

The Auditor-General’s Report released yesterday includes a worrying and very strong repetition of its landmark warnings given in June this year, that student loan debt is increasing rapidly and the government is not getting information on “intended and unintended socio-economic outcomes, said ACT Tertiary education spokesman Stephen Franks.

“The June report was on the Auditor-General’s own initiative. These are uncommon steps. Behind the formal Auditor’s language there are strident alarm bells, yet the government is doing nothing about the Auditor-General’s concern. In the pre-Christmas legislative rush the Student Loan Amendment Bill implemented the “interest free” election bribe policy.

“But there was nothing in that Bill to deal with the Auditor-General’s concerns. Hundreds of millions extra is going out on student loans. It should have been going to the education disaster areas, the bottom third of our primary and secondary students. Of course most of this new money has gone to students who last year borrowed less or didn’t borrow at all, because they came from well off families, or were able to get by through holiday savings and the like.

“This is desperately sad. The lessons for our most promising young people are all wrong. As a country we have borrowed to keep up our living standards for the last forty years. Now the Government is happy to erode the integrity and self reliance of even those best able to look after themselves. Students are now mugs if they don’t take the money.

“And the worst of Mr Maharey’s little vote catching scheme is still to come. The Bill passed did nothing to improve arrangements for collecting loans when graduates are overseas. The scheme is therefore a giant ejector seat, a permanent emigration subsidy for our most promising people, at the expense of ordinary New Zealand working families who pay tax.

“Financially sophisticated students will have noticed the ‘doubts’ about the true value of the Government’s student loan ‘asset’ from both the Auditor-General and Finance Minister Cullen. These signal that it might be written off some day. That prospect could make mugs out of any student and family that fails to borrow under the scheme.

“The message to young New Zealanders who are not sucking on the Government for their start in business, is - start clamouring for it. Why shouldn’t they demand that the Government lend them the money for their first farm or their first courier van. The Government has bought the votes of young professionals by paying for their career asset, their qualifications.

“If Labour had been concerned about education values instead votes, the extra hundreds of millions now pouring out as student loans would have been dedicated to real education needs, like offering meaningful bursaries based on merit (exam success) or improving woeful science and maths standards or raising academic salaries and conditions, and maintaining rigorous standards instead of allowing our qualifications to be dumbed down,” said Stephen Franks.

For more information visit ACT online at http://www.act.org.nz or contact the ACT Parliamentary Office at act@parliament.govt.nz.

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