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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.”

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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.


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