Westpac's dodgy analysis driven by selfishness
1 August 2005
Westpac's dodgy analysis driven by dubious motivation
Westpac's analysis of Labour's proposal to abolish interest on student loans appears to be self-interested, Education Minister Trevor Mallard said today.
"It has become evident to me that Westpac has got its own very selfish reasons for releasing this analysis – it will lose money. Westpac has a 'Graduate Package' where they buy out up to $10,000 of a graduates student loan at a discounted interest rate as a loss leader in order to try and capture very valuable mortgage business," Trevor Mallard said.
"As a result of Labour's new interest-free policy, Westpac will lose millions of dollars of loans business, and the follow-on business that they are really chasing.
"It is disappointing that this international company did not declare its conflict of interest.
"It is even more disappointing that they have used misleading figures that do not give an accurate picture of the possible uptake of student loans.
"Westpac's analysis does not take into account part-time borrowers when calculating the borrower entitlement. This is a fundamental error because part-time students are entitled to borrow much less than full-time students, and part-time students have a very low uptake of loans compared to full time students.
"Westpac also fails to use the latest data on actual fees charged, and a realistic discount for the effects of increasing eligibility for student allowances.
"Our calculations, factoring in the correct figures for the full-time/part-time split of borrowers and current fees and allowances uptakes, show that Westpac's maximum estimate is out by over $500 million.
"Westpac's analysis is an outrageous exaggeration. It is unfair and misleading not only to students, but also to the public. New Zealanders need to be given accurate information on which to make decisions. Inflammatory, self-motivated garbage like the analysis from Westpac is totally unacceptable."