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Another 'unquantified risk' with loans policy

Hon. Bill English MP
National Party Associate Finance Spokesman

20 December 2005

Another 'unquantified risk' with loans policy

National Party Associate Finance spokesman Bill English says Labour's 'no interest' student loan policy has another fishhook that the Government has conveniently forgotten to mention.

"According to yesterday's Half Year Economic And Fiscal Update (Specific Fiscal Risks - Page 84), the student loans computer system may need a rebuild to handle the switch to the 'no interest' policy. It's described as an 'unquantified risk'.

"The costs of this are still being assessed, but you can bet this is not going to be cheap.

"Here's another example to illustrate National's point that the real cost of this irresponsible and rushed policy will be much higher than Labour is letting on," says Mr English.

"Yesterday, new costings revealed the taxpayer will face a massive up-front cost of more than $1 billion, the equivalent of giving away a significant state-owned enterprise for zero return.

"The Treasury papers also show the number of borrowers will increase, the size of student debt will rise and voluntary repayments will almost dry up.

"This is a policy that will provide most benefit to those with big loans.

"So while Labour's enticing more students into debt and committing the taxpayer to rising future costs, it is trying to tell home-owners to tighten their belts because of the spending it is helping to push along.

"For an increasingly arrogant Labour Government this is a classic case of do as I say, not as I do," says Mr English.

ENDS

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