Hon Nick Smith
Opposition Education Spokesman

7 March 2000

Papers show Govt warned over student loan changes

Papers obtained under the Official Information Act reveal that the new Government ignored advice that rushing through changes to the student loan scheme prior to Christmas would make it “extremely difficult” for WINZ to manage the transition of student loans from tertiary institutions, National’s Education spokesman Nick Smith revealed today.

“The Government ignored advice that WINZ was already under pressure in managing the transfer of loans. The decision by the Cabinet on 20 December to rush ahead with the complex interest exemption policy took key policy people away from ensuring a smooth transition of the loans to WINZ and resulted in increasing the number of loan applications by an estimated 40%.

“The new Government can’t go on blaming the previous Government when they were clearly warned of likely problems but in their desire to be popular, ignored advice and rushed the policy through,” said Mr Smith.

The Cabinet Paper to the new Government on implementing the student loan policy proposal states:

“WINZ takes over the role of lending money on 1 January 2000. This transition period makes any critical systems and process changes extremely difficult for WINZ.” The paper further warns on implementation issues of the policy “that there has been insufficient time to complete an impact assessment.”

“These papers make a mockery of repeated public statements by Tertiary Education Minister Steve Maharey that the student loan debacle is all the fault of officials and the previous Government. That’s a cop out.

“The Minister:
 knew the problems last year with WINZ’s administration of allowances.
 knew systems were stretched with the transfer of loans from tertiary institutions to WINZ and trying to get the allowance system right.
 knew the change in loan policy would cause a huge increase in loan applications.
 knew the changes were complex with the differentiation between the interest free policy for full time and part-time students, and the income testing criteria for part-time students.

“Knowing all this Mr Maharey insisted that WINZ implement the policy changes in just three weeks. He gambled with students’ futures by rushing the changes and plunged some students into terrible hardship.

“Nobody wins from rushed changes, as students have found out. The new Government risks the same sort of speed wobbles with their rushed changes in ACC and Health. They should learn the lessons from the WINZ student loans debacle and slow down,” says Mr Smith.

Ends

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