Free Press 22/8/16
Free Press
ACT’s regular
bulletin
David vs.
Jacinda
In this week’s Sunday Star
Times column, David Seymour argues that student loan
interest write-offs have been bad policy and Jacinda as
usual attacks the messenger. Read the full column
here.
Sacred Cows Make Good
Burgers
Last week the New Zealand Initiative
scared the living daylights out of National and Labour by
releasing a thoughtful analysis of student loan
interest write-offs. Neither of the traditional parties are
prepared to engage in a debate over what the policy should
be, with Labour attacking the messenger and National fudging
it.
Ideas vs Personality
This weekend
at graduation Otago Uni graduates heard that smart people
are interested in others’ ideas, and dull people in
others’ personalities. On the Initiative report,
Labour’s Chris Hipkins attacked the messenger: "This is
exactly the type of ideological right wing clap-trap I’ve
come to expect from the successor to the Business
Roundtable." National’s Steven Joyce muddled through
“There's those on the left that want to give students more
stuff and those on the right who want them to pay more for
stuff. Our view is that the settings are about right and
have broad public support.”
Insulting the
Voter
Politicians on both sides have decided
students and young graduates are either too stupid or too
disinterested to have a debate in terms other than WIIFM
(What’s In It For Me?). The thought is that it’s
‘smart politics’ to avoid the issue altogether. Free
Press believes young voters understand that today’s
policy choices will affect them longer than other voters,
and they want politics in full sentences.
The
Tragedy of the Commons
Voters do face a real
problem with entitlement spending. If you give up your
entitlement you still pay for everyone else’s. Even a
student or recent graduate who knows that student loan
write-offs are poor policy cannot afford to give it up if
they’ll just end up paying for the Government’s bribes
to other voters. Other examples include pensions at 65
despite rising life expectancies, working for families
payments for parents earning six-figure salaries, and
government grants to businesses that know how to work the
corporate welfare machine.
Entitlement
Reform
There has to be a quid pro quo to
entitlement reform. Last year it cost the Government $600m
to write interest off student loans. For the same amount of
money the Government could cut every tax rate by half a
percentage point. A graduate earning $60k would save $300
per year, or $12,000 over a forty year career. A student
graduating with an average loan of $14,000 would pay $980 at
seven per cent interest in their first year, but be much
better off in the long term –they would pay off their loan
in just over three years then pay reduced taxes for
life.
Technical Notes
These numbers
don’t allow for the time value of money - $300 today is
worth more than $300 in 40 years - or for the fact that if
you graduate onto $60k you probably did something complex
causing you to borrow more than $14,000. Free Press
has not done detailed modelling but the fact remains that if
you borrow prudently and work hard, you will be better off
paying for your own education once rather than subsidising
less fastidious borrowers for the rest of your working
life.
The Party of Ideas
ACT has
always opposed the use of taxpayer money for electoral
bribes. The National Party opposes them until the Labour
Party proposes them, then National adopts the policy as
their own. ACT understands that talking about removing any
entitlement is not a short term vote winner, however we
don’t believe that avoiding hard issues is a long term
vote winner, either.
Meanwhile in
Transport
Simon Bridges has begun the back down
on ride sharing under pressure from ACT. Under questioning
from David Seymour he made the extraordinary admission that
someone might have a Passenger Endorsement on their license
despite having killed someone through drink driving. When
asked why people should wait 6-8 weeks and pay $2000 for get
a P-Endorsement he said the Government would streamline the
process. Watch or read the whole exchange
here.
Still Ridiculous
The
P-Endorsement is not about safety at all, but protecting the
incumbent taxi industry. As Bridges admitted in the House,
the Government is only worried if you get paid. Hospital
volunteers, car poolers, parents on school camp, practically
anyone can share a ride until you charge for
it.
Why it Matters
The single biggest
cause of congestion is single occupancy vehicles. Public
transport is hopeless for most people which is why the
overwhelming majority drive. Making it legal for anyone to
drive a paying passenger, coordinated by apps such as Uber
may be the most powerful thing that the government could do
to ease congestion. Every university student driving into
the city could take passengers. There could be a revolution
in school car-pooling, ditto congestion on the Southern
Motorway as more people commute from Pukekohe and
Pokeno.
The Trouble with
Government
Uber has overturned the transport
world in two short years, whereas Government must be grabbed
kicking and screaming, not to catch up with ride sharing,
but just to get out of its way. Needless to say ACT will
continue campaigning and lobbying for a tech-friendly
regulatory environment in the South Pacific.
An Auckland Conference
We’ll be
discussing these issues and more at this Saturday’s
Auckland Tech Session in Ponsonby. Speakers include tech
writer Ian Apperley, Healthlink CEO Tom Bowden, and ACT
Leader David Seymour. You can register
here.