Herald critical of Labour’s bribe

The Herald editorial:

A universal entitlement to three years’ free tertiary education has overwhelming public appeal. Whether it is in the public interest is another question. The policy is expensive: $1.2 billion when fully implemented.

That is a considerable lump of public spending. As always when something of this magnitude is proposed, we should not look at its merits in isolation. Governments do not have infinite budgets and there is a limit to the taxation an economy can provide and remain healthy.

Labour needs to be asked, is this the most worthwhile use of $1.2 billion Is it even the most worthy use of funds allocated to education?

Many professionals (outside the tertiary sector at least) would say raising funding of pre-school education is more socially urgent and productive than relieving school-leavers of an obligation to contribute to the cost of their qualifications.

Most of the $1.2 billion will go to wealthy families who planned to go to university anyway.

University student associations have complained about course fees and loans to cover them since they were introduced. But many thousands of graduates have paid their fees and repaid their loans over the past 20 years.

Tertiary education has seen spectacular growth over that period, attracting foreign fee-paying students as well as meeting New Zealanders’ needs. Why change the funding system now?

Or to put it another way, what problem is this policy designed to fix? Labour’s leader presents it as an answer to the frequent and unpredictable career changes people will need in the workforce of the future. But this “future” has been present for many years now and there has been no sign the costs of retraining have become a problem.

The student loan scheme is effectively a temporary targeted tax on those who undertake tertiary study. Once you eanr above a certain level, you pay a 12% higher tax rate until the loan is paid off.

So what is fairer – those who get the benefits of tertiary study paying a temporary higher tax rate, or all New Zealanders paying a permanent higher tax rate?

The economy is strong in large part because public spending is under control. Expensive proposals that waste money purely for political gain could put the country’s prosperity in peril.

It’s the old tax and spend.