The tide is turning
Boy, how the tables have turned. The parties of the right are getting so desperate about the positive publicity surrounding Labour’s interest-free student loan policy that they’re ratcheting up how much the policy will cost, suggesting as much as $1 billion, or three times what Labour has claimed. Jordan Carter has good rebuttal of the more outlandish of National’s claims. It will be interesting to see how these costings shake down in the final analysis.
However, Labour does seem to be on to a winner. Russell Brown claims that some 60,000 people used Labour’s loan calculator in the first few hours, frantically working out how much they would save. Meanwhile, Jordan Carter writes:
This ain’t cynical vote-buying. It’s a stake through the heart of the student loan problem…Iit fundamentally changes (and makes more generous) New Zealand’s student support environment. That is why students, their parents, their grandparents, and graduates and their families, are over the moon about the announcement.
The only thing people should remember is that they get better public services (like this) only by voting for the centre-left parties - Labour or the Greens. The centre and right wing parties don’t want to make life better for students or anyone else who is a user of public services; they want to put tax cuts in the pockets of people like them.
It’s been a very good month or so for Labour and the Greens, and a very bad one for National. Think Iraq. Think nuclear policy. Think student loans. Don’t be at all surprised if the next suite of polling, starting with polls in the NBR and the Sunday Star Times in the next three days, has Labour back in front. Certainly, the tide is turning. It’s time to ride the wave.
July 28th, 2005 at 1:49 pm
Don’t forget TV3 tonite
Some one on Farrar’s blog under the post “Student Loan Editorials” said this:
The bribe worked.
A TV3 poll being rushed out for tonight shows Labour back in front.
Never underestimate the power of bribing people with somebody else’s hard-earned money.
Posted by dave at July 28, 2005 12:49 PM
Hmmm could be a double tricky.
I personally wouldn’t be surprised if the Nbr and the sst had labour sailing high as well. I think the love affair with the duplicitous doctor is over. He should put up or shut up.
July 28th, 2005 at 3:13 pm
Jordan Carter is hardly one to speak for the right wing parties.
He said they “don’t want to make life better for students or anyone else who is a user of public services; they want to put tax cuts in the pockets of people like them”.
Rather than an elitist approach to using tax payers money (electricians, plumbers, cafe workers, sales assistants, sports people and people who paid their loans off long ago) the right want to put more money in peoples pockets and let them decide how to spend it.
If you extended the 19% tax bracket by another $10,000 this would have the effect of giving all Kiwis on any income the ability to put more into their student loan, their mortgage or helping their parents with the rates bill.
Instead, the money is spent on a narrow group of people, that will in turn be forced to pay even higher taxes for the next round of students going through the system.
If this policy goes the same way as the American example, you will find fees increase, loans increase and overall debt increases.
I don’t believe that is going to be positive for the country in the long term.
July 28th, 2005 at 4:39 pm
Zen Tiger,
When you say ‘…the money is spent on a narrow group of people, ‘, who do you mean exactly? I understand there are a few hundred thousand students and ex-students with loans out there. The majority of them also have parents and grandparents who either assist them financially, or at the least worry about the steadily accruing debt. This is not just going to benefit those who spend a lifetime at varsity, racking up useless quals and smoking weed. It’s going to benefit anyone and everyone with a tertiary qualification. Granted, some of those quals are pretty tenuous, but how many engineers, teachers, chemists, vets, doctors, nurses, accountants, historians and writers do our universities and polytechs turn out every year?
If this isn’t a benefit to ‘mainstream’ New Zealand, I don’t know what is. A tax cut would be better for every individual taxpayer. But I think I’d prefer to forgo my handful of shekels a week in order to let others behind me get a decent education, one that will not only stand them in better stead, but which will actually contribute to this country. As this policy will require them to remain in NZ if they wish to benefit from it, well, even better. If they head off overseas in search of sun, sand and euros, then they can accrue interest, just like they do now.
You’re right, this policy does need a lot of work if it is not to become some bottomless black hole. I’m not entirely sure what that would be, it’s still early days. It’s a safe bet that some students are right now concocting ways to defraud the system. This will cost the taxpayer a lot of money (certainly more than Labour lets on), but I still firmly believe it’s a step in the right direction. Anything that gets people to complete their education, and allows them to pay off their loans at the earliest date, is to be welcomed.
July 28th, 2005 at 4:52 pm
Zen Tiger
This cut is a little cut. It isn’t a billion and it is targeted at a single group. You may regard the students as an elite, but they come from homes that are the homes of electricians, plumbers etc. I don’t necessarily regard the cut as the best way to do this. Better to fund the Universities more completely, lower the fees. Get more people through it. This is the means chosen though, and it isn’t too bad.
The question you raise however, is basically whether the society as a whole should fund the Universities at all. That question is implicit in your assailing the redistribution of money from the many to benefit a few.
YOUR model results in the most expensive and elitist educational results.
YOUR model is what put G.W. Bush through one of the most expensive schools in the country and turned the country into a plutocracy. The State schools in the US are one of the biggest successes I can point to in education. The overall system is one of the biggest failures anyone has ever seen.
IMHO it is a mistake to hand money to students, better to fund the schools directly, but it isn’t a mistake to support their investments in themselves.
It would make sense to make the same sort of benefits available ot those who are learning a trade instead of earning a degree. For all I know they are in some way, but I haven’t been here long enough to know. The thing is that these kids are the people who are going to earn money and pay taxes in the future. Investing in them is not a bad idea at all.
respectfully
BJ
July 28th, 2005 at 5:12 pm
My model? I didn’t put forward a model? I did suggest raising the $38,000 threshold by $10,000. I did suggest that THIS MODEL is one of the factors that increased the cost of tertiary education in America.
I was not suggesting society not fund Universities, and the implicit question was not implicit. Society already funds something like 70% of the fees. They already make money available to those that cannot afford the difference between the subsidy and the cost as a low interest loan. I did not call for that system to end.
Society is already providing a hand-out to students. You try to make out my displeasure at THIS METHOD for providing further release is in some way selfish, and the current level of assistance appears conveniently forgotten.
I am inclined to agree with the prevailing opinion that students could be helped more than the “previous” system (Labour have not won the vote yet). IMO, interest free loans is not the way to achieve it.
I know many students that have worked extra hard to pay off their loans, whilst balancing the bills and putting off luxury purchases. Contrast that to a guy with a new $50,000 car, moaning about a $30,000 debt that is not going anywhere. He structures his salary through his business and minimises taxes and payments. I foresee a big explosion in people abusing the system. These kinds of tax relief are inherently flawed, and we pay a greater “admin fee” for administering it.
Cullen used the excuse today at question time - why worry that 52,000 was spent at a TVNZ party. That’s just a few cents per tax payer. What arrogance. That is why it seems acceptable to add over a thousand bureaucrats every year to handle overly complex handout schemes.
People need to value and respect the assistance they get from tax payer funds. This is not a way to foster or encourage that respect.
July 28th, 2005 at 6:50 pm
fwog, you gotsta get this chipper off your site, he do nothing but promulgate doubts about yous religion, who that chip think he is, writings talking saying things like trades man equal to elite student, what go wrong with him fwog, don’t he know about priviledge, aristrocracy ,mn that stuff, i very suspicious he did science at school, rithmetic and things fwog,
July 28th, 2005 at 9:12 pm
peterquixote - I like you. You make me smile.
July 28th, 2005 at 10:32 pm
National’s Tax Cuts. Yeah Right !
July 29th, 2005 at 7:41 am
ZenTiger
Rather than an elitist approach to using tax payers money (electricians, plumbers, cafe workers, sales assistants, sports people and people who paid their loans off long ago) the right want to put more money in peoples pockets and let them decide how to spend it.
It is hard to read this as anything other than a requirement to that the government should NOT fund schools. Just take out all the extra words
That IS a model and it IS promoted by people on the right, if not by you. If promoting this wasn’t your intent in making the statement that’s fine… but if so then what DID you mean?
Being displeased with the method is one thing. I think most of us (at least those of us with active imaginations and experience with the ways money gets misused) are a little uncomfortable with with the method. OTOH, the statement of yours I just led with is quite unambiguous about the desired results.
I’ve got my own problems with Labour… after all I’m HERE not in their organization.
PeterQuixote my dad was a cab driver, my mom taught elementary school. I got the State to pay for a lot of my education, something like 85-90% and I borrowed the rest. Equal opportunity of education is the cornerstone of a successful democracy.
I could not do now what I did then, the money has been removed from the system in the USA. The Republicans have initiated private schooling, private funding, bigger loans and less support. I know DAMNED well that it’s important to fund that opportunity for EVERY kid who has the abilities if you expect to advance society and civilization.
respectfully
BJ
July 29th, 2005 at 9:15 am
Any comment on the Herald/DigiPol that has the Greens following ACT into electoral oblivion? To use your own over-heated metaphor, looks like Labour’s riding the wave - and the Greens are heading for electoral oblivion.
BTW, Frog, can you tweak this so folks actually have to post using a valid URL and e-mail address? Might discourage the crazies - or at least the cowardly ones.
July 29th, 2005 at 10:29 pm
BJ - I think I explained myself immediately above you last comment. I was talking specifically about making the final 30% of the fees, plus any additional money students loan not to be interest free.
I went on to say that I was not proposing winding the current funding back.
However, now that you mention it, part of my support for lowering taxes across the board is also to cap government growth of the bureaucracy, to reduce government for specific areas of government.
Last year the government spent $53 billion. That is set to rise by nearly 10 billion a year. As a percentage of GDP, Cullen has been claiming this is sustainable. I suspect our GDP will be rapidly eroded during a slump, and the extra government bloat will gobble even more of the GDP. They need to be limited by real dollars, not percentages.
The larger the government gets, the more wasteful it seems to become. I have started a spreadsheet, following David Slacks earlier calculator that only identified a couple of “wasteful” items. He then made the assumption the wasteful spending (about 200 million I think) would not make a significant difference to the figures. I’m up at 2 billion dollars.
This government approaches problems thinking it can spend its way to fix things. It then raises taxes to achieve that. Over 23 tax hikes since it was voted in. The effect of that is a lot more people have to tighten their belts and budget. They are told the pain is for the greater good.
Pacific Island Theme Party for Leaky Homes Staff? $6,000. Party for TVNZ advertisers? $52,000. Advertisements in bus shelters to advertise Cullen’s budget 11 days after the event, and up for 10 days total, and the word budget was not on the Advertisement, $90,000. ACC taking out full page advertisements to tell NZ it has been in business for a long time doing a good job (and it has a monopoly position) $100,000. All the way to 2 billion dollars.
It wasn’t just the Republicans making schooling more expensive. The Democrats have a lot to answer for. Coincidentally, I just saw an article that whilst George Bush was Governor, he managed to make huge inroads into the literacy stats for his state.
But you must excuse me, I have a GST return to submit within the next hour to avoid penalties.
July 30th, 2005 at 2:46 pm
ZenTiger
You DID explain better the second time ’round. Glad enough to hear you didn’t mean it quite the way it read.
You have a point in terms of the wastefulness of this government. I personally do not LIKE the way they are managing the money I have paid in taxes, and I have more than a little annoyance with them on the subject of tax policy. That however, does not justify gutting the taxes. The “starve the beast” theory didn’t actually work in the USA, its only result was larger deficits. Maybe NZ will do it better and differently (if things go badly for my side in this), but I don’t think it will. I would prefer a paydown of the debt, to cutting taxes.
The problems you’ve noticed are real ones, but they are not nearly as dangerous as hoisting the American Flag over our troops and sending them charging off to Viet-Nam West (AKA Iraq). Nor are they as dangerous as ignoring the Kyoto agreements, global warming and peak oil. In other words, even if you were right about Taxes, you’d still not convince me that I should vote on that issue. My take on the taxes is not that they are really too high, but that they are maldistributed.
The top effective marginal rate is the result of tax and benefit changes as one makes more income. The 2 family 90% wall between 40K and 65K is the problem. Make less keep more benefits. Make more, and the tax doesn’t go up anymore. Our top marginal rate hits the middle, not the upper class. That’s just silly, and the LAQC is insane without a mortgage deduction for homeowners…. but I will vote on other issues…. not tax and waste.
The education system in the US is absolutely F’d beyond any Kiwi’s wildest imagination. The public elementary and intermediate systems, the public/private separations, the teachers unions, the gunfire and the school boards form a good part of the reason I moved here. There isn’t an innocent politician in that mess. I think that if you study the real results of what Bush did you will find that he stuffed things up quite thoroughly and the stats don’t mean quite what you believe. Not really relevant, and I’d rather NOT get started on Bush specifically.
I was referring to access to the Universities. THAT has become far less egalitarian than it was when I went through. I could not have gotten through the schools or even gone TO those schools, without assistance programs that no longer exist.
Sorry about that GST. One of the ways Sweden manages to keep its top marginal rate of 57% is a GST that is different for different things. Housing 0% Books 6% Food 12% Everything Else 25% …
Yikes!!!
respectfully
BJ
July 30th, 2005 at 10:37 pm
Good points all BJ. Some of this comes down to pure religion. Err, I I meant opinion.
Re the tax. I think it is an important issue when combined on too fronts: smaller government (and less bureaucracy, red tape and wastage) and the growth factor. Both need to be implemented to maximise the benefits. Ireland might be the best example - Corporate tax and personal tax had been going up for years, and the company was closer and closer to bankruptcy. Their corporate rate was around 40% and the top marginal rate was 80%.
They dropped both rates significantly. Corporate tax rate is down to 12.5%, and most low income people pay 20% tax, and then 42% top rate above Around NZ$50000. They have no GST on food, medicine, children’s clothes and a few other items, but GST of 21% on petrol (actually cheaper than our 50% tax surcharge), cars, consultancy.
The benefit to the economy has been enormous. Just google Ireland and 12.5% and see what you find. It’s not all rosy of course. I blame the fact that they are still intensely socialistic (free health and free education - even university) but long waiting lists and complaints all around.
My point is they had tried increasing tax rates until point of bankruptcy, and turned their whole economy around within a few years. They have the cash to fix up their health and education, providing they don’t go completely red and stuff that up.
This is not a unique experience. Former Soviet countries, and countries like Poland, new to the EU have lowered taxes and gained growth, helping them power ahead to catch up with Western Europe. They had every disadvantage, and instead are proving what had only been right wing theory until a few years ago, due to lack of examples (tax havens do not count - that’s just a con supported by corrupt governments, such as NZ with the Transpower off-shore lease deal recently).
On the Green blog, I might be in danger of being banned when I say the Kyoto agreement is bad for NZ. The major players are not in. It seems far more sensible to me to be allocating 1 billion per year to specific environmental initiatives than sending money overseas. We can aim for their targets, but put the money into our projects, not fines. Why does every left wing solution require a tax?
A $1000 credit towards home insulation would cost the same as the estimated Kyoto payment for the first year. A lot of low income families could have insulated roofs or double glazing installed for around that cost. What’s the bet the health issues would also decline?
The second year we do a new project, etc. (Actually, you wouldn’t do it all in one year. You’d have a staged plan to roll-out this over several years to manage demand.)
Yes, might be safe not to get started on Bush. Oh, just a wee bit perhaps… I agree war is bad, maybe the US shouldn’t be there etc. But they are there, and Saddam is out, and there is just a chance some good can come of this, and sometimes you have to make a stand. I’d much prefer to stand with America than Iran. With England than China. With Australia than North Korea. With Poland than Russia. With Churchill than Chamberlain.
And to close with some ACT policy (what, they do more than tax???), Capill would be in for 20 years, not 9. The guy that had $70,000 or so of traffic fines wiped (how bad do you have to be to rack up 70K?) would be doing time or working his butt off in the community, rather than the 53rd offence (having finally killed someone) having the judge say “I’m going to have to get tough on you”
As for Sweden, I’m going to enjoy giving it a good fisk. It deserves it.