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The Real Danger Zone - Bradford To Canterbury Uni

Speech Notes For Canterbury University Visit
Wednesday October 13th, 9.30am
By Hon Max Bradford
Minister for Tertiary Education

Good Morning,

I am aware that the issue of tertiary fees is a hot topic here following last weeks’ events.

I want to say a couple of things about this.

The first is that it is your university and not the Government that sets the level of fees.

Government funding for Canterbury has not fallen over the last two years and will not fall next year.

Because of this, you should be very wary of claims that somehow the Government is to blame for large fee hikes.

I know that many of you have been rightly looking at the university’s
$80 million capital expenditure programme in 1997 and 1998 and other aspects of the way the university has been managed in the past.

Other universities manage to live within the funds they receive from Government or those funds they are able to generate. Canterbury needs to explain why it can’t.

On the issue of student loans; one thing the run-up to this year’s election has proved is that student fees and loans are here to stay.

All parties with the exception of the loony Alliance agree with this.

All policies on offer this election start from the premise that while taxpayers should pay the lion’s share of the costs of tertiary education, students should also make a contribution.

National and Labour agree that the taxpayers’ contribution to course costs should be around 72 per cent.

It is a fair deal.

The last census shows that a graduate can expect to earn, on average, $525,000 in their working lifetime more than their non-graduate colleagues.

Where National and Labour differ is in their approach to the Student Loan Scheme.

Labour has taken a grossly hypocritical stance.

It says it is concerned about the level of student debt.

Yet it is proposing a policy that would only encourage students to borrow more.

Labour is trying to buy your vote, by proposing that students pay no interest while studying.

This would only lead to many students having larger debts once they finish their courses.

After all, you’d be a fool to repay a free loan.

If Labour decides it does not want debt to escalate at tremendous expense, it would have no choice but to restrict access to loans.

This could result in means-testing, reducing entitlement or limiting loans to first degrees.

The National-led Government’s Scheme is not about cost cutting, or
means-testing.

Since 1991, National-led governments have increased tertiary funding by
22.8 per cent to $1.93 billion (forecast for 1999/2000).

Alterations to subsidies have enabled the number of funded tertiary places to increase by 31 per cent over this time.

And $30 million of extra funding will create more than 3000 tertiary scholarships over the next three years to promote excellence.

What the current Government has promised are changes, which will help students reduce debt more quickly and pay less interest.

Under proposals already announced, students will have up to 25 per cent of their base interest written off while studying from 2001.

In addition, 50 per cent of each compulsory repayment, minus the inflation adjustment interest, will go to the repayment of outstanding principal.

This will reduce the amount of interest being accrued and most importantly the time it takes to repay the loan.
For example, if you are a teacher who graduated with a $38,000 loan and start on $34,000 a year salary you will be able to repay your loan 8.4 years faster and pay $25,300 less.

Or, if you graduate with a medical degree on $45,000 a year, you will be able to pay off a $75,000 loan 6.9 years faster and pay $52,000 less.

The only way a Labour government could pay for its scheme is to increase taxes.

So when you graduate and start repayment in earnest, many of you would have less money with which to repay your loan.

And remember, if Labour is in Government you also get the Alliance.

No matter what Labour says about tax now, you can guarantee taxes would go up further and quickly.

It would be the Alliance’s price for propping up a Labour government.

Any loans you have would take you longer to repay.

In contrast, the Government is promising changes in 2001 and lower tax rates over time.

Finally, I’d like to talk about the so-called brain drain.

Despite the fact that Kiwi’s traditionally head overseas for a working holiday
after completing their education, many people are concerned that fees are encouraging more to leave.

I must say there is no evidence that debt levels are encouraging a greater percentage of graduates to go offshore.

But this will happen if a Labour-Alliance government gains office and hikes up tax rates.

How many of you would be encouraged to stay in New Zealand if all you have to look forward to after working hard to get ahead, is the prospect of higher taxes?

I suspect a large number of you would look overseas.

Ends.

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