Labour’s bribe could cost $1.1b a year

On the 27th I estimated that Labour’s student loan bribe could lead to student debt blowing out by $1.1b a year.

Of course I was attacked as partisan and scare-mongering. Mind you I don’t think their hearts were totally in it as some made comments saying hey the economics may be stuffed but at least it is good politics.

Now Westpac Bank has come out and said the proposal is a very bad policy, and by coincidence have also said it could add $1.1 billion a year to debt, and cost that much as expenditure annually. I await the apologies of course 🙂

Westpac have said they do not want to enter the political fray but that the policy is so bad, they implore Labour to drop it.

As I have said wanting to spend more money on tertiary education is not a bad thing, but Labour’s policy will send debt and costs skyrocketing. As Westpac point out it is not just free money, it is actually giving it away with an effective negative interest rate.

In the history of politics this bribe may go down as equally damaging to Muldoon’s 1975 superannuation pledge.