John Key MP National Party Finance Spokesman

08 November 2005

Labour confirms $2 billion hit from loans plan

National Party Finance spokesman John Key says Labour has finally confirmed that its student loans policy will cost a lot more than it originally suggested.

"Papers released today confirm National's fear that this extravagant, vote-buying policy will wipe $2 billion off New Zealand's net worth.

"Even now the Government has failed to recognise the ongoing impact this scheme will have on New Zealand's balance sheet.

"The Auditor General has already confirmed that to me in a letter.

"The $2 billion write-down is only part of the total cost of this reckless policy. On top of that, the taxpayer is threatened by a massive blow-out going forward, as students feast on a diet of growing debt."

Mr Key says he is looking forward to the full Treasury costings of the student loan policy now that legislation has been tabled.

"Then we'll get to see just how expensive and irresponsible this election promise was.

"It's clear Helen Clark, Michael Cullen and Trevor Mallard never wanted the initial costings made public before the election. But nothing they've said since convinces me that Treasury got it wrong.

"In fact, the IRD annual report shows the number of students taking out loans increased in the past year, even before Labour announced plans to make student loans interest free.

"This is a reckless policy that will encourage students to borrow the maximum and repay only the minimum," says Mr Key.

ENDS

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