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Student loan numbers change again

John Key MP
National Party Finance Spokesman

10 November 2005

Student loan numbers change again

National Party Finance spokesman John Key says Michael Cullen suddenly appears to have accepted Treasury’s advice that the student loan scheme will cost a lot more than Labour was prepared to admit before the election.

“This week, Dr Cullen has confirmed that the Government policy will automatically devalue the taxpayer’s worth on the balance sheet to the tune of $2 billion. It’s the same as giving away a publicly-owned company worth $2 billion for the sake of a few votes.

“But inadvertently this week, Dr Cullen confirmed the on-going operating costs of the scheme will be closer to the hotly disputed Treasury estimates which Labour tried to hide until after the election.”

When asked about the on-going cost of the interest free student loan scheme yesterday, Dr Cullen replied ‘we’re still talking there of something which is not much more than ten percent of the annual cost of National’s tax cuts’.

“Given that Dr Cullen constantly refers to National’s tax cuts being worth $3.9 billion annually, is Dr Cullen now saying the annual cost of the loan policy will be more than the $390 million that Treasury initially predicted?

“And if that’s correct, why did Helen Clark say the policy would cost between $100 and $300 million? And why, on TVNZ’s Close Up just before the election, did Trevor Mallard say it would cost less than $300 million?

“Dr Cullen knows Labour has been caught out and he’s changing the figures to suit,” says Mr Key.

In Treasury papers, which the Ombudsman ordered to be released just before the election, the annual operating cost of the student loan scheme was put at $390m by the third year, rising to $500m after six years, and by 2019 it will be $924m.

When Labour launched the loans policy, Helen Clark’s release stated:
‘The total cost of this policy is expected to begin at around $100 million in its first year, rising to around $300 million per annum.’

And the Q&A said:
What does it cost?
The cost of this policy will grow through time through to a maximum of around $300 million. The cost in the first year will be around $100 million.’

Later in Parliament Trevor Mallard also said ‘the maximum is $302 million in 2008-09’.


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