Freedom from debt… sweet as
Hon Jim Anderton Progressive Party Leader
Freedom from debt… sweet as - Opinion piece on Progressive policy to reduce student loan debt
12 November 2004
Over half a million Kiwis now work overseas, contributing to foreign economies. Wouldn't it be better if more chose to apply their talents to growing the New Zealand economy?
I want our best and brightest to stay in New Zealand and contribute to our communities, regions and country. I value their skills, talents and creativity and encourage them to play a part in our future whenever I can.
While that future is looking better than it has in a long time because of the Labour Progressive government's commitment to economic and social development, I believe we can make it even better if we can benefit from the contribution of our tertiary graduates.
As I travel around the country I meet many parents who are worried about their children's mounting student loan debt. We have suspected for some time that student debt has become a serious financial obstacle.
Just last week, government funded research confirmed our suspicions and found that student loan debt was forcing graduates to 'leave New Zealand, delay home ownership and even put off having a family.'
This is not only sad for the people involved, but it also has a negative effect on our economy and is no doubt part of the reason for reduced home ownership in New Zealand, something that once was a cornerstone of our society.
The Progressive Party is campaigning to meet student loan repayments for each year worked in New Zealand after graduation, for at least three years. This is just one part of the answer to the problems caused by student debt and skills shortages. It is a pragmatic step in the right direction that we believe can be achieved now.
Currently, when graduates with a loan debt earn income in New Zealand above a threshold level ($16,172 in 2005), they pay a surcharge tax of 10 cents in the dollar to repay the loan plus interest (of 7 per cent), until the debt is paid back.
Under the Progressive scheme, for each year a graduate works in New Zealand the government would pay back their loan debt for that year. The scheme would continue for a three year period in the first instance and then be subject to a review.
The scheme will cost approximately $100 million a year, or $300 million after three years as a new set of graduates joins each year.
Our ultimate ambition is to have free education from pre-school to tertiary level. For tertiary students we promote eliminating fees and instigating universal student allowances. That shows how important we think education is in lifting the living standards of all New Zealanders.
The international community is now in an epic contest to attract skilled and talented employees. That contest is only going to get harder as more and more people move out of the workforce because of the ageing population of developed nations. Our own population is ageing too but that's not our only concern.
Because we are at the bottom of the world, and our economy is small on an international scale, we must work even harder than most countries to maintain our place in the world economy and to attract and maintain a talented and highly skilled workforce.
That is why it is more important than ever to keep our best and brightest here in New Zealand to contribute to our communities and help us lift economic growth through the development of high skill, high value export products and services. We are a nation full of good ideas, but we must keep evolving those ideas, investing in research and development and supporting people who can transform ideas into commercial opportunities which will contribute to our social and economic advancement.
Many of them now studying at our tertiary institutions almost certainly are considering going overseas. It's understandable that they are looking to do so when they have big student loan debts to pay off at home. The Progressive policy is just one mechanism we can use to encourage them to stay here and play a part in the future of New Zealand.
We want to encourage education, not penalise it. The costs of tertiary education have gone up and up since the student loan scheme was brought in by a National government in 1992. At one stage we paid people to learn, to train as teachers for example. This was viewed as an investment in our nation's future. I believe that now, more than ever, it's time we invested even more in that future by helping our graduates reduce their student loan debt.