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Laila Harre Address To Student Loans Summit 2001

July 6 2001 Hon Laila Harre Speech Notes

Keynote address to Student Loans Summit 2001
Student Debt and Workforce Issues
Main Auditorium
Christchurch College of Education

Good morning to you all, and welcome to the second Student Loans Summit.

Last year I was approached by NZSUA and asked if I would host a summit to bring together a variety of people with an interest in the impact the loans scheme was having on our young people.

Like the original architects of the student loan scheme, I don't think any of us who were involved in organising that event really knew what to expect. In the end we were overwhelmed by the response we received, both in the number of people who took part and the passion with which people spoke about the impact student debt is having on their and their families' lives.

We heard from teachers who spoke of the change in attitude towards education that has accompanied the user pays model of tertiary education and economists who spoke of the scheme's potential long term costs to individuals and society as a whole.

There were tears and genuine anger about what debt was doing to our young people, and many good suggestions about how this issue should be progressed from the ground up.

A year on we have seen a few changes around the edges of the scheme, but the core issues remain the same.

For two years in a row the Alliance has managed to get the student loan interest rate frozen at 7 per cent, and the government has made incremental changes to the interest repayment threshold and has written off the first lot of interest for full time and part time low income students. This amounted to $30 million and affected about 60,000 borrowers.

The Science and Education Select Committee is in the process of considering submissions from the public and other government departments as part of its review into student loans and allowances, and we all await its report with interest.

In the mean time, we are back together again to look at this issue from a new angle, specifically the impact student debt is having on our workforce.

When we are looking at the student loans scheme from this perspective it is better to start by asking what we don't know, rather than what we do know.

The reason for this is that the answer to the last question is little more than anecdote. That is of course excepting the excellent independent research being carried out by groups like NZUSA, who in conjunction with NZEI today released the first comprehensive study of the impact of student debt on the teaching profession.

As the auditor general stated in last year's report on the student loan scheme, "the effect of student debt on the property and labour markets is unknown. There is a lack of systematic information of the scheme, including both intended and unintended outcomes. This is the area where the information gap is the greatest, and the most critical.

"It is important that the risk of unintended outcomes is assessed, monitored and managed. We believe that Parliament needs more information about both intended and unintended consequences than it is currently receiving."

This issue has arisen for discussion within government and at the moment there isn't a consensus on whether there is a need to look more closely at things like the scheme's effects on the labour and property market, as opposed to just the educational impacts – things like course choices and decisions to undertake postgraduate study.

This is a good illustration of where two schools of thought intersect on this issue. One looks at the issue of debt as financial bit also considers its demographic and socioeconomic implications.

The other views debt as a more technical or fiscal issue that should be considered and evaluated on these terms, and within the education model that it was supposedly designed to serve.

I will be interested to hear your thoughts on this today, and also your suggestions on how you think we can begin to draw together what, up until now, has largely been ad hoc, anecdotal evidence into a form that could influence the process from here on in.

In its response to the Auditor General's report, the Ministry of Women's Affairs strongly supported the view that more research was needed into the intended an unintended outcomes of the student loan scheme, particularly in relation to women.

It said "we are particularly concerned that the unintended consequences of the scheme will particularly impact on women, especially Maori and Pacific Island women from low-income families".

This view was strongly influenced by another report the Ministry prepared on the participation of women in tertiary education. This suggested that we need to look beyond and beneath the high-level data that shows women are participating in tertiary education in increasing numbers.

Because despite this fact, women are slightly more likely to be studying at diploma or degree level than men and are less likely to be undertaking postgraduate or doctoral degrees. The number of female tertiary graduates completing teacher training diplomas was twice as high as the number of male graduates in 1998, when 18 per cent of male graduates were at postgraduate level compared to 12 per cent of women. In 1998 157 women were awarded a doctoral degree compared to 250 men.

Before we can draw conclusions from these outcomes we need to know more about the relationship between gender and ethnicity, we need to know the type of tertiary institutions women are studying in and the courses they are taking.

Then we may be in a position to start looking a the impact these decisions are having on women's overall participation in the labour market, how these decisions are influenced by student debt, and how they fit into the bigger equality picture in relation to, for example, the gender pay gap and women's concentration in certain sectors of the labour market.

So, from the viewpoint of the school of thought that believes we need to take into account the broader social implications of the student loan scheme, we have a long way to go in terms of having the data we need to influence decision making on this front.

That's why your input today is so important.

That said, we simply cannot ignore the weight of the anecdotal evidence.

It all points to the fact that the structural inequality that exists in New Zealand society is being perfectly replicated by and within the student loans scheme. Rather than creating an equal playing field for access to tertiary education and the chance to "get ahead", the scheme is hitting hardest the very people it was supposedly designed to help.

Not only that, but the scheme may actually act as a disincentive for the kind of work which we have relied on to keep our social fabric together in the face of massive benefit cuts and the economic restructuring of public health care.

I'm talking about early childhood teachers, social workers, and those who devote their careers to the community and voluntary sector. Into this category also falls doctors and health practitioners who have continued to support the free and community health care model through union and iwi health centres despite the financial disincentive to do so.

Increasingly specialisation is seen as the only viable option for making the profession worth while in the face of a $100,000 debt before your stethoscope is even warm.

Of course the other option is making sure your costs are covered by what you charge at the other end, which will likely influence the kind of community a practitioner will choose to operate in.

For Maori and Pacific Island communities this could be the difference between being looked after by your own in a way that is going to have the most effective outcomes in health terms. It also puts at risk the already flickering flame of the public health service of old, where access wasn't dictated by ability to pay.

Another issue, and probably the most well documented, is the impact the scheme is having on New Zealand's ability to retain skilled workers. The reasons are often financial, but the lure of a buoyant and diverse overseas market where there are plenty of jobs and good pay is proving too much for our educated citizens with big debts to resist.

The previous government was quick to dismiss this concept, saying that the big OE was a normal part of life and there was no proof that loans were having any additional impact.

Well we don't think that what people say doesn't count, and that's why Jim Anderton is driving within government the first real exercise in labour market planning carried out in a very long time. This is in the form of regional development and job creation, a scheme specifically designed to keep skilled New Zealanders at home, and hopefully attract back some of those we have already lost.

In the past New Zealand has relied heavily on the international labour force to fill the gaps in particular trades and professions. More carpenters, plumbers and sparkies needed? No problems, let's open up the immigration gates, after all, who wouldn't want to come and live in the land of milk and honey?

Unfortunately this tactic is no longer viable. We are up competing with the rest of the world for skilled labour. Retaining our own skill base should be our greatest priority.

So when it comes to long term workforce planning we simply cannot ignore the impact the student loans scheme is having on people both before they start university and after they graduate.

Just before the 1999 election then Education Minister Max Bradford stated that "professional stirrers and ignorance" are to blame for people's concern.

The stirrers? Student's associations and more than likely the whole Alliance party.

The ignorance? A perception that the average loan is much higher than it really is.

Taken in the context of what is happening here today, I think these comments should make us all feel strong and optimistic about our ability to influence change.

I would also encourage you to think carefully about the financial implications that will accompany any change to the student loan scheme, as this was an issue people seemed a little scared to tackle head on last year. If we truly want this, we have to decide how we will take the burden of debt off individual shoulders and deal with it as a whole society. We can't keep kicking this one to touch.

Thank you.


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