John Key MP National Party Finance Spokesman

08 September 2005

Ombudsman to probe Cullen on loan papers

The Ombudsman is to conduct a 'formal urgent investigation' into Labour's decision to refuse the release of Treasury papers analysing its student loans promise.

"Michael Cullen has refused National's legitimate request for more details about this grossly irresponsible policy. I'm pleased the Ombudsman accepts the urgency of this matter."

National Party Finance spokesman John Key says the policy encourages students to borrow the maximum and repay the minimum.

"The only independent analysis done of this scheme says it'll be far more costly than Labour has let on. Labour's only response was to bully the critics into silence.

"The Finance Minister has provided only the slimmest of outlines, and has still failed to produce any of the written material that would normally accompany such a significant policy.

"Labour is clearly stalling for time.

"Even the flimsy costings Dr Cullen has released so far don't reflect Helen Clark's claim that the policy would cost as little as $100 million. Treasury says it'll cost $170 million in the first instance, that's $70 million more than suggested by the Prime Minister.

"Some experts say the funding of the policy will rise to $1 billion a year, while Labour maintains it will cost, at worst, $300 million.

"Independent assessors suggest it will lead to an immediate $1.7 billion write-down on the balance sheet in 2007, while Treasury papers prepared in 1999 say 'the greatest benefits go to those with the highest debt, not necessarily those with greatest need.

This option would significantly increase the attractiveness of borrowing .... It is also likely to encourage existing borrowers to take out larger loans and offers few incentives for students to repay earlier'.

"There are far too many unanswered questions about this policy," says Mr Key.

ENDS

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