Govt taking punitive measures against students

The Government has introduced their latest Student Loan Scheme Amendment Bill to put in place the reforms to student loans that they announced earlier this year as a part of the Budget.

Changes covered in the bill focus on issues to do with overseas borrowers and, in the Government’s words, ‘increasing personal responsibility for debt repayment’.

One of the more publicised policies included in this bill is giving the IRD the power to request an arrest warrant for borrowers living overseas who ‘persistently default’ on their student loan repayments. To enable this, the bill also makes it a criminal offence for overseas borrowers to knowingly fail or refuse to make efforts to pay back their loan.

The Tertiary Education Union describe this policy as “a poor alternative to making education more affordable and accessible” – I agree. This policy is a punitive measure that could stop these borrowers from coming back to New Zealand for fear of arrest.

The other big change included in this bill is introducing higher repayment requirements for borrowers who are living overseas. At the time of the announcement, I blogged about this policy and described the impact this would have for the daily lives of borrowers living overseas.

The bill amends the repayment rules for overseas-based borrowers by introducing a fixed repayment obligation and two new repayment thresholds. The Government sees the positives in this, as it will reduce repayment times and lower the interest cost for these borrowers.

Except, these new rules do not take into account the income of the borrowers. Student loan borrowers repaying their loans are graduates with complex responsibilities and situations. Unilaterally raising their repayments, without consideration for how much they are earning or what their situation is, will have very real and serious implications for their daily lives.

We will be opposing this bill when it comes before the House.

71 Comments Posted

  1. I think the government need to look at how to creating more job in New Zealand so people would stay-in and works in New Zealand. The reason that graduate students and skills people leaving NZ and gone to work oversea is because they could not find job in NZ. This issue also reflecting on decline percentage of voting among youth. The political actor was blaming that young adults are lacking of interest on politics and democracy.
    However, political actors and government did not looking at the way to fixing the main problem, which is creating more job. The government had nave establish any campaign to help out create jobs for students and the graduate people. Now the government is try to pass “Student Loan Scheme Amendment Bill” which is to give power to IRD for request and warrant for borrowers who are overseas who ‘persistently default’ on their student loan repayments. That is very sad.
    Moreover, I would love to see how journalists or media a s a fourth estate would give their view on this Bill. It is because the media has influence on politics, the public’s point of view is changed by the way news is reported. The media also helps shape public opinion by the use of words can make make things seem different. We are citizens (blogers) as the fifth estate how can we make things different to “Student Loan Scheme Amendment Bill” Thank you.

  2. I would argue, Dbuckley, that Doctors are worth more than administrators.

    Same as when I was working in the oil industry, skilled people like the tool pusher, mud engineer etc, and myself, were all paid much more than the shore manager. Some skills like directional drillers and divers many times more. Though you could say the divers were not paid more, just faster, as their healthy working life is very short.

  3. If, an employee, with the skills, ability and education to earn 40k elsewhere is only delivering 40K a year of value to the business, then it is either not a viable business, or the Manager is not doing his job well enough to earn 200k.

  4. Germany and Japan seem to have no problems paying their workers well. And, seem to have no problem getting good management despite, on average, paying executives only 4 times staff pay.
    “The corporations with the largest income gap between Directors/Managers and employees have proven to be the least functional”.

    The main difference is, of course, they promote from within instead of having a “Management” caste
    Germany sells twice as many cars as the USA despite a German auto workers pay being twice that of a US workers.

    As for New Zealand workers not being worth it, if wages had risen as fast as worker productivity, and it is worker productivity, (NZ firms have been very poor at capital investment in plant, preferring to cut wages and make each worker do two jobs), then ordinary time rates would be twice what they are now.

  5. My comment was aimed at a “maximum wage” scenario, rather than the “multiple of lowest wage” scenario. But “multiple of lowest wage” is an interesting scenario too.

    I think the answer is “because the typical NZ worker isn’t worth it”.

    I would like to quote the data, but despite a search I cant find it. But (just playing numbers games) if you assume that a typical CEO is worth $200K per annum, on the 5 to 1 rule, that means the lowest paid employee must get paid $40K, and that number (and this is where I cant quote the data – sorry) for most industries exceeds the value an employee delivers to the business. Thus the business is unsustainable.

    How many doctors do you think will work for five times the orderlies salary? Or five times a cleaners salary? Pay the orderlies more so you can attract a senior reg or consultant in the international marketplace, then suddenly an orderly is getting paid the same as a nurse. Pay the nurses more. Just how big is the health service budget?

    You really think this scheme is sensible?

    Multiplier can work in some circumstances, and there are companies that do it, they have some variation (usually based on medians or averages or something, but not lowest) of it as a policy, but the multiplier is a more than five. And these are specialist companies where most employees are high earners.

  6. Really? The size of THEIR pay packet depends on the size of their lowest paid worker’s pay packet. Every added dollar the laborer gets means another 5 to them. The incentive IS there.

    It forces them to do the rising tide thing instead of the “pull the ladder up after us” thing.

    The point here remains. The neo-liberal mythology is wrong, it is obscenely and indecently wrong and it has never worked. The only people who get anything from it are the already wealthy.

    The people advocating it are in general libertarians who haven’t realized that there is a REASON their favorite theory of government has never been successful enough to even make a mark on history. Even communism, despite its own fatally flawed understanding of how the state could work, accomplished more.

    We need to do the self-government. We need to do it well and we need to stop beating ourselves up about needing it. The society and the individual have to strike a BALANCE, and one cannot always be regarded more important than the other.

  7. Kerry, there may be a bit more money in the corporate pot by paying the top earners less, but on what planet do you think the management are going to say “oh, we’ve got more money available, lets pay the workers more?” There are far “better” uses that “saved” money would be put to.

  8. By the way. Muldoon did a lot of things, including, like Key, borrowing for unaffordable election bribes for National voters, but he did not lower the speed limit to 80km/hr.
    It was 50 miles per hour (80km/hr) at least from the early 70’s, and probably earlier, but I was too young to remeber.
    The speed limit in New Zealand has been raised from time to time since cars were here. Certainly not lowered during the Muldoon era.

    More recently it has been put up to 60m/hr (100km/hr).

    No wonder we get so much crap flying around when commentators cannot even get their facts right.

  9. Of course it helps those at the bottom. DBuckley. There is more money to pay those at the bottom end of the scale, when wages at the top end are not off the planet.

    Who do you think paid for the 17% increase in executive pay last year, if it wasn’t the lower paid workers in the same companies/Government departments? Executive performance did not increase 17%.

    Also it is a strong incentive for executives to increase the income of their lowest paid workers if the pay of those in charge is tied to their pay levels.

    It is disgusting that those on high pay are claiming New Zealand cannot afford wage rises, for low paid workers, when they have just awarded themselves 17%, on average, plus bonuses.

    There was a referendum on this in Switzerland recently, by the way.

  10. The chief executive being limited to, say, 5 times the pay of the lowest paid worker in a firm is a strong incentive to pay fair wages.

    CEO paid five times what the lowest paid working in a firm gets? That’s even funnier than thinking that a maximum wage will help those at the bottom end of the scale.

  11. The chief executive being limited to, say, 5 times the pay of the lowest paid worker in a firm is a strong incentive to pay fair wages.

    Germany and Japan seem to have no trouble finding good chief executives despite only paying them, on average, 4 times median wages.

    I would, however, extend it to politicians pay. Tying it to the median income.

  12. Muldoons price controls and carless days were in response to very steeply rising oil prices which were costing us more than we could afford.

    No one had a better idea at the time.

    Now we have a financial sector, and offshore profits taking which is costing us more than we can afford.

    The response, of Rogernomics, was an even worse cure than the original disease. Like, bleeding the patient and expecting a recovery.

    And, a maximum wage is a good idea. Stops the current practice of cutting wages for skilled workers that we need, to reward the very common skill, of administration, with millions.

  13. Gerrit. I was high lighting how malleable our “capitalist” leaders “principles” are.

    The present sidesteps with immigration to ensure wages stay low in Christchurch and WFF, a subsidy from the rest of us to employers, who do not want to pay a living wage, for example.

    Capitalism works fine at the level of the corner grocer, market gardening, small builders and other markets where there are many buyers and sellers.
    However even those need regulation to ensure cheats do not prosper, money does not accumulate in too few hands and monopolies/cartels do not take over the “market” and then the Government.

  14. Wrong to control prices. Not cool to control wages either, but if we have a minimum wage, symmetry demands that we also have a maximum.

    Right to control capital influx and the value of the money. The problems Muldoon had were primarily related to the fact that we had no control over our money supply. We still don’t.

    All we did in the 80’s was bend our knee in obeisance to the imperial bankers and they’ve been running us into the ground ever since. Neo-Liberal ideology is the such pure shit it doesn’t even make good fertilizer… ALL the nutrients have been removed.

    Actual Capitalism would be better.

  15. MRP was bought in by Warren Freer. A labour politician, actually.

    I thought it was a silly policy at the time.

    I don’t see any mention of price controls in Labour or Green policy.

    It baffles me the number of people who pontificate on economics without any idea of our own economic history. Including our rise after the 30’s depression due to “printing” money, the increase in the rate of productivity when we have left wing governments and the drop in all ways with more right wing ones..

    It must be very disappointing to you, Gerrit, that mixed economies with socialist leanings have been the most successful in delivering high standards of living to the majority of their population.
    The most socialist, Scandinavia, NZ and USA in the 60’s, and Australia have been the most successful in terms of overall standard of living for the majority.

    Germany with strong unions, and strong social welfare systems, union reps on boards even, sell twice as many cars as the USA despite double the pay rates for auto workers.

    Pinochets Chile, present day USA, Somalia, Ireland, Indonesia and other bastions of unbridled, unregulated capitalism do so well, of course?

    While State interventionist Singapore, Norway and South Korea will soon be sending aid to us. And our best and brightest are leaving for higher taxed, unionised and interventionist, Australia.

  16. Kerry,

    Am all for capitalist system of allowing failure in business. We dont have a capitalist system here in new Zealand. We have a socialist system interwoven with private enterprise.

    If we had a proper capitalist system, failures would abound as would new enterprises, higher wages, more demand, etc.

    Instead we have interference from the state in a “sort off” capitalist system meaning neither the state nor the capitalist system it tries to “manage”, run true to their respective natural functions.

    This quasi capitalist/socialist system is actually very bad at running an economy.

    You will see, under a socialist leaning government, a return to Muldoon’s MRP pricing structure to try and prevent the increased wages bill being passed back to the workers.

    Which like Muldoon’s effort will fail just as quickly.

    As Barry Soper reports

    Politicians controlling prices rarely, if ever works.

    Muldoon did it in the early 80s, locking the country into an icebox, with his maximum retail prices, his freeze on interest rates and on wages.

    A few years earlier he introduced another silly policy, carless days to try and help an ailing economy. Motorists had to chose one day of the week they’d leave their car in the garage, and were required to put a sticker on the windscreen, but he didn’t count on the fact that a number of people had two cars!

    Muldoon also reduced the speed limit to 80 kilometres an hour and restricted the hours that petrol could be bought at service stations which led to most carrying a petrol can in the boot.

    When the icebox was opened the defrosting was severe bringing the flood of Rogernomics.

    So be careful of what you wish for.

  17. “Pretty much every country on the planet except a handful of exceptions like North Korea”.

    Sometimes I wonder if you live in the real world, Photo?

    Planet Key?

    Countries like New Zealand, most of Europe, the USA, Australia etc all had increasing standards of living under more socialist policies since the 30’s. The USA with 91% tax on millionaires for example. Decades of the most stable and successful societies ever.

    Then along came neo-liberalism. De-regulation, tax cutting, worker screwing mania. It has been downhill ever since in all indicators, including the RWNJ’s favourite one, GDP growth. (Noticeably faster whenever we swing to more socialist policies) But especially in indicators such as child poverty, inequality, crime, health and social stability.

    Photo was on here saying Sweden was adopting neo-liberal policies more recently, notably charter schools. Note the deterioration in standards, for their overall education system, since.

    Since 1984 most New Zealanders experience has been zero to miniscule wage rises against increasing costs. Especially for essentials.

    Then we have idiots like Photo, claiming it is all good, because our poor are not in cardboard boxes, scavenging through tips, like Mumbai or Mindanao.

    It is shameful that we even have poor, in a country endowed with some of the highest amount of resources, per capita, in the world.

  18. Well, Gerrit, the living wage is at least $18 an hour. From a University study. You know, the rate where the rest of us are NOT subsidising low wage paying employers.

    What happened to the capitalist principle that any firm which cannot cover the true cost of the resources they use should be allowed to fail.

    At the moment we are subsidising all these minimum wage paying businesses through our taxes.

    The tax cuts possible, by removing all the subsidies to low wage paying employers, would more than make up for paying a couple of extra dollars for a burger.
    Employers should have to pay proper wages, instead of being propped up by working for families and other handouts, so their workers can survive to go to work

  19. RWNJ’s like Photo like to quote the “average” wage.
    Another use of Photo-stats.

    In case you havn’t noticed, Photo, the majority of New Zealanders are NOT earning the average wage.

    Which has been skewed upwards in the last few decade by big rises for a few at the top end, and loss of jobs for those at the bottom. Even the “average wage” has decreased over the last year, however.

    Photo and co ignore, “median income” a much better indicator of changes in standards of living of the majority, because it clearly shows the failure of their policies to improve New Zealanders lot.

    The “brighter future” Douglas promised us.
    Increasing poverty, unemployment, debt, casualisation, waiting by the phone for, often 6 hours a week, zero hours jobs, skilled people, the ones we need, leaving in droves and children in third world poverty.

    My main two trades are a case in point. Wages, or contractors pay for the self employed, are 40% LESS than they were in 1984.
    Despite both being on the immigration departments severe skills shortages list. And requiring high levels of skill and long training periods.
    Most of the younger people in both have headed off to places like Singapore, the Gulf states, Europe and Australia where skills are still valued. While we import dodgy barely skilled immigrants to keep wages low. Funny how RWNJ’s belief in the sacred “market” changes, when “leaving it to the market” leads to wage increases.

    Christchurch is heading for another leaky building crisis as Fletchers hold down chippies pay, to a level lower than I could earn in Auckland 10 years ago. For that you have to supply tools, transport and pay the inflated accommodation costs in Christchurch.
    Christchurch as a consequence is being rebuilt by semi skilled immigrants and dodgy carpenters who are not competent enough to get jobs in Auckland or Queensland.

  20. I see the greens are losing to race to increase the minimum wage. Labour is now at $18 per hour.

    Any increase by the Greens in this “dog chasing its tail” scenario?

    Could we see the $20 per hour barrier broken this coming election?

    Wonder if Ipredict will take wagers on the final election promise minimum wage rate from either the Greens or Labour.

    I would place a bet that the final amount will be $25 per hour.

  21. The NZ govt is engaging in domestic torture and slavery using acoustic technology directed into peoples homes.

  22. No photo, my examples are net amounts and the first three are youth rates. If you take the timber docking job at $164 net which would have been about $200 gross or $5.00 per hour, for a basic labouring job in 1985.

  23. Solkta says pay as low as $2.67/hr ($107/wk) in 1983 is nonsense, then gives examples of paid LESS per hour.

    Then gives two more examples of getting paid LESS than that.


  24. In 1983 I was paid $2.67 hr, which was significantly better than many.

    photo making it up again.

    In 1983 i was fifteen and used to get $5 a night in the hand for working on a milk run, which was about two hours work.

    In 1984 i started work in a photography shop when just sixteen and on the minimum youth rate my first take home pay was $96. After having been in that job for a year this had increased to $101. I thought i was getting ripped off so quit that job to work in a plant nursery where my take home pay was $136. After a few months (well, days actually) i got bored with that and got a job docking timber for a starting rate of $164 take home pay. After a year of that i was a leading hand taking home $235 per week. By the time i was twenty, in 1988, i was earning $22,000 gross per annum selling TVs.

  25. “The Ministry of Social Development’s latest Household Incomes Report said there was no evidence of any general rise or fall in income inequality since 2007.”

    Kerry says ““Every dollar invested wisely”. How the fuck, Photo, do you invest when you have to choose, this week, between feeding your child or taking them to the Doctor.”

    If someone on the average wage can’t invest a dollar, and has to choose between eating and the doctor, then they’ve been making some really stupid decisions.

  26. Kerry says “Just one country, where your heroes ideas have resulted in a higher standard of living for the majority, anywhere? ”

    Pretty much every country on the planet except a handful of exceptions like North Korea.

    In 1983 I was paid $2.67 hr, which was significantly better than many. In todays money that’s $9.77. The minimum wage today is 40% more than that.

  27. What do we do when this happens to McDonalds?

    The social system and assumptions we are used to cannot be relied on in the future. We are breaking our social contract by putting “productivity” ahead of society and we need to discuss that and find a path forward NOW. What is the purpose of an economy? Why do we work?

    You should have watched the video Photonz, the question is philosophical… metaphysical… and it cuts DEEP.

  28. “Inequality is not rising”. 17% increase in wealth for the top few, (that was a bad year), and nil or under 2% wage rises for the rest who are working, (when they haven’t been forced off the list of those in work of course).

    Pull the fucking other leg, Photo!

    “Every dollar invested wisely”. How the fuck, Photo, do you invest when you have to choose, this week, between feeding your child or taking them to the Doctor.

    Obviously a dweller on planet Key.

    Name me one country were the Neo-liberal prescription of cut costs, cut taxes, cut social welfare, cut wages has worked? Photo. Just one country, where your heroes ideas have resulted in a higher standard of living for the majority, anywhere?

    Hell I will make it easier. Name me, one country, where the prescription has been tried, which has even stood still?

  29. Yet I read recently where inequality in NZ increased in since the 80s, but has been static since 2007.

    Fuck, it’s not even worthy of a quack.

  30. Greenfly promises for the 34th time “I don’t read photonz1′s comments….”

    Yet feels the need to make yet another comment on something he says he doesn’t read.

  31. I don’t know which elephants Photo saw, they may or may not be different to the ones I see.

    But here is a derivitive of the monster, sadly from the Daily Wail, this is a glimpse of the future.

    Some number between 7% and 10% of Americans had their first job at McD, where they learned teamwork, process, and many other skills that are the basics of being a useful employee later in life. This situation will not last forever, the writing is on the wall, the only question is when. Many organisations are trying to crack the automated cooking of food. It will get solved. And when it is cheaper to “employ” robots than people, the Service and Food Workers Union are going to have a dramatic fall in membership.

  32. BJ says “Unfortunately the inequality is real, and it IS rising. ”

    Yet I read recently where inequality in NZ increased in since the 80s, but has been static since 2007.

    However, from the instant someone on the average wage invests so much as $1 instead of spending it, they will continually increase inequality between themselves and everyone other person on the average wage who didn’t invest.

    Inequality is increasing between me, and people who earn much more than me, because I’ve saved and invested wisely, and they haven’t.

  33. I don’t read photonz1’s comments because they are made by someone with a history of cherry picking information, but omiting elephants in the room (if they contradict his whatever predetermined angle he has).

  34. I did watch Mind the Gap, and know nothing of the maker of the programme.

    Extraordinarily disappointing. The factual content was mostly honest, but the opinion drawn from the data was very, very skewed. Not to mention that elephants in the room, elephants that nullify stuff that was suggested, were just ignored.

    As wasted opportunities go, well, this was it.

  35. I see.

    These will probably offend you as well.

    Nothing that fails to correspond with your idea about the way the world works really needs to be shown to you, does it.

    Not surprising.

    Unfortunately the inequality is real, and it IS rising. The results of the New Zealand experiment in neo-liberalism are obvious from Cannon’s Creek to Parnell. Dishonest John has been working hard to make that inequality as permanent and as large as possible, but he isn’t really alone in that. The neo-liberal loons have had help from fools in Labour too along the way.

  36. I didn’t watch the “Mind the Gap” because it was made by someone with a history of cherry picking information, but omiting elephants in the room (if they contradict his whatever predetermined angle he has).

  37. Government money doesn’t represent work because the work is already done rather than being promised? You’ve been inhaling too many darkroom chemicals.

    Government money issued as a loan doesn’t have to be repaid? Perhaps you’ve been indulging in the booze?

    …and WHICH? I described two types of money issue; the money from QE or money the government creates for us to use instead of the bank generated debt instruments? The two are very different.

    Its clear you are having a hard time with this and have reverted to form but for others who understand that I am talking about two different things we do need to clarify.

    Just to make it ENTIRELY clear to you how absurd your claim is with respect to the first one.

    The first case is the “work done” dollars. These are redeemable for KWH of work. That work has to be available at the official distribution points designated, and it sets a limit to how many dollars can be circulating at any given moment.

    The government can’t make more of them than it can back without borrowing from future generations. (puns are fun) It has to issue all of them too, one way or another. This is related to the fact that one cannot “store” work without loss. The hydro lakes are where the stored wealth of the nation resides.

    There are two ways government can issue that money. The first is to buy stuff with it and the second is to loan it to someone who wants to buy stuff. It can’t be stuffed in a mattress. In both cases it is being exchanged for work, and it continues to be exchanged for work until it is returned to the treasury accounts by someone who needs no work done for him at the moment. It becomes a credit there but is not available without notice (it is not a demand instrument).

    In this situation the government can “freely” issue money (go into debt without asking voters) only when using it to build more electrical generation capacity.

    There are further considerations around the total work available rather than the generation capacity that are of interest, we produce a great deal of produce and that also is a form of “work done”, but the simple definition suffices for now.

    The point is that the source of the MONEY that represents the work is the government, not a bank and not someone’s promise to do it in the future. You favor promises over performance here Photonz, and I really don’t think you mean to do so.


    In the second instance we discuss the QE issue in which the relative value of OUR debt backed dollars is being altered by the issue of debt backed dollars on the part of some external government. The exchange rate is altered so that we are to buy more with any dollars we have but can only earn less with the work we do. The altered exchange rates favor the export of raw materials and produce, but not the products of our labor.

    The problems here are pretty obvious and we suffer all of them at present. The question is whether restoring the balance can be regarded as theft since it is the government acting on our behalf to protect us from the unasked for intervention of foreign banks in setting the value of our dollars.

    If it is the viewpoint of the individual who HAS dollars, the increased “value” of those dollars is itself a result of theft from someone else, and it is NOT justified in terms of work done by that individual. The relative value of money and work in this country has to be retained stable, and the only ways to do this in the face of foreign interventions are capital controls and our own government engaging in QE to keep the balance intact.

    Neither of which are done here because we have neo-liberal idiots in charge of things and their free-market fundamentalism is a blind faith in something that has not worked and cannot EVER work, in a society of actual humans.

    If there is anything I know from my life’s experience, it is that New Zealand, under this government and for the past 30 years, has been going in the WRONG direction. It has become a failed experiment in social darwinism driven by wealth and greed.

  38. Of course it’s theft.

    If a government prints money, and gives it a financial value, the only reason it has any value is because everyones elses money is devalued.

    It doesn’t represent work done; it doesn’t have to be paid back; the only reason it has any value at all, is because everyone elses money is worth a bit less.

    When a bank gives out money, that money has to be repaid, so it actually represents work done over the repayment term.

  39. No Photonz, it is NOT “theft”. The creation of a country’s money is the responsibility of that country’s government alone, nobody else should EVER be doing it. Your automatic response/reversion-to-type was expected.

    First, if you understood what I said about the definition of the money, you’d recognize that I am talking about something other than the modest QE proposed by Dr Norman . New money, representing work done and subject to demurrage, is used in place of the old money that represents promises and attracts interest. The difference there is far too clear for you to realistically call it “theft”. So don’t insult yourself by overreaching in that manner.

    With respect to the QE proposed, it is again not “theft” because it is an approved and targeted addition of money with the specific goals of relieving upward pressure on our exchange rates caused by the QE engaged in by the Fed and relieving the government of the need to pay interest on the money being created in the process.

    Paying the INTEREST would be theft, and to foreign banks it becomes destructive theft. I wonder at your misunderstanding this.

  40. BJ says “Photonz, a government creating money has a duty to define what it represents.

    What it represents is theft.

    Essentially, if they print 10% more money, they steal 10% off everyone else by way of inflation devaluing everyone elses money.

  41. Note that this discussion is DIFFERENT from the notion of Quantitative Easing which is realistically an intentional inflation of the money supply to obtain monetary and economic advantages vs other people’s money.

  42. Photonz, a government creating money has a duty to define what it represents. My favored measure is the KWH of electricity, but it can be some form of commodity basket. The key being that it is real. When the bank creates money it represents the PROMISE of the borrower, not his work.

    If one wished to manage it without interest, I suspect that the counterparty risk entailed in this would wind up breaking the system some other way. Real money carries no counterparty risk.

    I note that my version of this is the only way to insulate New Zealand from the manipulations of the US Fed, that do not entail artificial and arbitrary Capital Controls.

  43. BJ says “Just don’t refer to the creation of money by government as “printing money” as though it is worse than what happens if a bank does the exact same thing. ”

    BJ, you of all people should understand the difference. You often repeat your mantra that money equals work done.

    When a bank creates money, it is paid back with work done by the borrower.

    When a govt creates money, it represents nothing.

  44. I agree Spam. In the CURRENT arrangement we have created “no interest” on student loans would indeed be “money for nothing” and create a problem for government.

    This is different from arrangements of QE that have been put in place for the banks in some places, because the banks create the money. One CAN question why the bankers should get this perk when nobody else does.

    My point was related to the fact that the government should not have to BORROW money to create it, and therefore there should not be any interest involved in this at all.

    Dr Norman dipped his toe into that water and the wailing and lamentations of idiots who have no clear idea what money is or where it comes from was sufficient to dissuade him. He co-leads a political party and has to be sensitive to what people believe, even when they are completely wrong.

    I’m just a loud-mouthed Yank who joined up years ago and can offend whom I wish.

    Just don’t refer to the creation of money by government as “printing money” as though it is worse than what happens if a bank does the exact same thing.

    BOTH entities resort to the printing press. The difference is that if the government does it there is no interest owed, no banking grip on the controls of state and no requirement for growth to keep it stable.

    In other words, it can be made sustainable. The Green bottom line.

    I’ve referred often enough to Steve Keen’s take on the money situation, and the creation of credit. Have you examined anything of that yet?

  45. @bjchip:
    So you have an interesting perspective, but it seems to me to be completely irrelevant to the point I am making. I don’t particularly mind how you think the money supply should work, but under the current way it does work / is implemented, the government is borrowing money so that it can provide interest-free student loans, and they then pay interest on that money. ~$14 billion of loans, at what? 3-4%

  46. I’ve always advocated for more filtering to get more people qualified in the skills we need and fewer in those we don’t.

    The method I like is something like, if 100% of radiographers get a job then we fund their course at 100%. If 40% of lawyers get work, then their course gets funded at just 40% – or some similar system with funding based largely on job prospects.

    The problem in photography is so many students are being pumped out and there’s no work, so they do work for free or very low cost to try to get a name for themselves.

    Not only have they destroyed the market and career prospects for themselves, but they are sending many well established photographers under as well.

  47. You aren’t really disagreeing here Photonz, are you? Lack of information and faulty information is one of the things that causes a market to fail. Disproportionate/excessive rewards publicized for those who succeed as lawyers, are far more obvious than the numbers who fail to get work after having spent years and thousands of dollars studying.

    I am not so sure about the nature of photographers. Indeed, I am not clear as to why it should even be a University course. Photography is an Art/Craft that I think one would learn better by being apprenticed to someone skilled in the trade. In any case there seems no likely illusion relating to its compensation. The wealth of photographers is not widely rumored in any society I know of :-).

    No in the case of the photographer there is an investment in a career choice that is being made because we encourage people to do what they love best. For most Photography should be a hobby.

    We do not counsel well and have made a hash of our society by our rising inequalities, automation and limited opportunities. Everyone feels they must have a University Degree or they are not respected. You now need one to apply for a job at a McDonalds some place in the USA?

    or not

    – but there is no doubt that the degree is now used as a method of distinguishing “class”, and we have created a social stigma for those who do not earn one, even though many do not NEED what is on offer.

    Understanding how to change that whole thing so that it makes sense is no small puzzle. I would suggest this… that we arrange for all to get some years at “University”, to partake in that social milieu and to get a firmer grounding in the necessary art of language, debate and civilized discourse. Required courses. Pre-requisites before specialized study.

    Then the more specialized study for the best students in those specialized fields, with numbers limited so that the society can in fact find places for them.

    To this we have to add some rather different economic and social status structure, as we can’t be rewarding the fortunate few too much, lest we re-create the class structure we are trying to dismantle. Yet we have to compensate them as they are going to be working harder. The work part of it has to be shown to the society … that they pay a realistic price in terms of their free time and are being compensated realistically for that.

    That’s a broad brush and I haven’t spent any more time than this post considering the problem, but I’d have to assess it as one of the more challenging ones we have, because it is not the University or its funding that is failing, the social structure itself is twisted into a knot here.

    Work with me on this one. I don’t think this is all entirely right yet.

  48. bj says “I would think of that as a form of “Market Failure” Photonz.”

    Very few markets work without some sort of regulation.

    How many law students are told when they sign up that most of them won;t get a law job?

    How many photography students are told when they sign up that 99% of them won’t get photography work?

  49. What Russel proposed was a nothing, and far less a jump than what I am talking about. I don’t presume to talk for him.

    The work done by the society as a whole and the work provided by the infrastructure the society builds represents the money it can legitimately have in circulation at any given time.

    The first is hard to measure, the latter far easier. To go past that limit is to borrow… from ourselves. That becomes money that must be repaid and so it is really only to be done when it increases the work available to the country.

    However, the issue here is where does money come from, and in that you need to pay attention to its point of creation and the words of notable failures and communists like Thomas Edison, Henry Ford, Thomas Jefferson and a fellow named Rothschild. They all tell you the same thing one way or another, and that is that BANKERS SHOULD NOT HAVE CONTROL OVER THE CREATION OF MONEY!!!!

    They do. Every dollar in every wallet in every pocket of every person in every country on every continent of the planet is created as debt by bankers, not under the control of government. In every country where this is the case, the government is either completely under the control of the bankers or becoming so, and the banks are “To Big To Fail”.

  50. I would think of that as a form of “Market Failure” Photonz. Common problem if you have a situation in which the money doesn’t follow the actual work effort. I am to be sure, not advocating that everyone gets a free ride to follow some fantasy.

    The structural problems in this society include over compensation and over population of lawyers. It is not the largest of our problems but when you consider what happens to the tech specialties… it makes perfect sense. Lawyering is a good racket if you can get into it, and it is a gateway to other sinecures.

  51. If you understand that money is work done you’d understand what “producing money” means.
    So how the hell is Russel getting out the printing press to give free money to people “work done”???? It is devaluing the real work that is done.

  52. BJ says “We’re producing highly educated people who can’t find meaningful work with decent pay here so they are going elsewhere to be productive citizens”

    So why do we keep wasting vast sums of taxpayer dollars training lawyers, when for every ten we train, there’s only four jobs?

  53. We’re wasting billions on higher education? We’re producing highly educated people who can’t find meaningful work with decent pay here so they are going elsewhere to be productive citizens?

  54. If you understand that money is work done you’d understand what “producing money” means.

    We are well aware of the fact that the past holds some shocking examples of foolishness here in New Zealand.

    We’re doing it wrong NOW, we did it wrong THEN.

    The problem you two have is that free-market fundamentalism is unsustainable, deadly and coupled with debt-backed money an existential threat to human civilization.

    Fixing THAT means educating people about what money actually is. A common initial response for people who figure out the truth is a bout of nausea.

    Enjoy your sniping. When you actually DO have something meaningful to say nobody will notice because of all the noise.

  55. BJ says “Simpler of course, to simply fund the school directly. ”

    Simpler, but hugely expensive to taxpayers, and leading to massive inefficiency like the old days (even worse than the billions wasted now)

    Back then we had a creature known as the lifetime student, who would spend much of their life at university collecting degrees, many of which had no value in their career if they finally managed to wean themselves off the taxpayers teat in their 30s.

  56. Spam… I knew you’d work it out by yourself given time. Of course you betray your complete misunderstanding of what money is by your answer, but that is probably as close as YOU are likely to get.

    Imagine money the way it is supposed to be:

    The money is produced and loaned to the student for the schooling. Not for something else, but for the schooling. The student gains entry into a decent school. That money is immediately spent into the school itself and the school immediately spends it or banks it back into the central bank.

    On leaving school the loan is due and the repayment schedule is set up. There are penalties for missing payments, but there is no interest on the loan.

    One asks first, how is this “free”. It is not free to the student who IS required to repay it. It can be inflationary if the students do not become more productive within the society but on average education is worth that investment.

    What the student and the school cannot do is bank or loan the money to earn interest. That money is subject to demurrage, and the longer you hold it the less it is worth.

    Simpler of course, to simply fund the school directly. Make it free to qualified students. Get good grades, go to Uni. No question, no problem.

  57. Why should there be interest?
    Because the government doesn’t just magic up the money it gives out in loans – they borrow it, and it therefore attracts interest.

    Edit – Oh sorry – forgot where I was! You’re right, of course. There is no interest to be paid, because the money comes from Russel’s photocopier!

  58. Sonia Veelenturf,

    Surely the extra money you earned that the government does not want to take back right now, would be placed in a separate bank account to draw YOU interest (I know it is only 4.5% but heck, money for nothing).

    That way you drip feed money as required back to the state from the account whilst drawing interest on the principal.


    Holly Walker

    Student loan borrowers repaying their loans are graduates with complex responsibilities and situations. Unilaterally raising their repayments, without consideration for how much they are earning or what their situation is, will have very real and serious implications for their daily lives.

    Try this angle

    Tax payers providing the loans are workers with complex responsibilities and situations. Unilaterally raising their taxation, without consideration for how much they are earning or what their situation is, will have very real and serious implications for their daily lives.

  59. Why should there be interest?

    Because otherwise it’s a free ride.
    Interest doesn’t need to be anymore than CPI though.

    FWIW, I’ve banged on about how I pay interest for my Masters anyway, purely by virtue of having a mortgage!

  60. costing the NZ taxpayer money
    People with outstanding student loan debt are ALREADY costing the taxpayer money. Who do you think pays the interest on an “interest-free” loan?

  61. It seems like the government think that every NZer living overseas who has a student loan is living it high in “The City” – just like our beloved leader did on his big OE.
    I lived overseas for 8 years, I was not in “the City”, I was in a developing country earning just above the average NZ wage for about half that time, and the rest of the time I was earning below the dole…if I’d had repayments like those proposed, I would have been back in NZ on the dole instead…costing the NZ taxpayer money instead of being able to send a small amount back to NZ each month – I like to think that I was earning NZ valuable foreign exchange 🙂
    Maybe the desperate need to paper over our ever-increasing current account deficit is driving this push to get money from abroad?

  62. I’m living locally, and tried to increase my payments with each pay, but was not allowed. There is a minimum payment level, and I can make a bulk random payment that meets that minimum requirement, or continue to pay off my loan at a lower rate each payday. I little flexibility in helping people to pay off loans would certainly not go astray.

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