Joe Hendren

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Sunday, May 30, 2004

Labour not as kind to students as would appear in Budget

In 1999 students made the issue of student debt a key issue on the 1999 New Zealand election campaign. Labour gained most of the benefit. But ever since Labour came to office they have been using excuse after excuse for not increasing funding to tertiary education, especially when it comes to addressing student support issues. Think Labour's attitude towards tertiary education has changed with the budget announcement increasing access to student allowances? Think again.

In the budget it was announced that the parental income thresholds that determine eligibility for student allowances (SA) for students under 25 would be raised for the first time in 12 years, and would now be adjusted for inflation each year. This is welcome, even if it is far too little, too late to make any significant impact to student debt. However it appears that some of the funding for this change has come from making cuts to student allowance eligibility in other areas. The most significant change, affecting 6200 students, was the removal of the work history criterion for the independent circumstances allowance (a SA not subject to parental income test)

According to the Ministry of Social Development website, these independent circumstances applied if "you are 18 or over, have lived away from your parents for at least 2 years and support yourself by working, earning at least $100 a week before tax, for at least 96 weeks of that time (not counting any time spent on a Student Allowance or benefit). "

So people who have been working and living independently of their parents for two years will not be considered to be financially independent for student allowance purposes. Bizarre. A significant backwards step, as this change reinforces one of the most stupid assumptions behind the means testing - that parents will support students under 25, whether they support their children or not. Oh, wait, I just said 'support their children' and no one but the Government thinks of a 24 year old as a child. According to budget figures I looked at tonight this change will save the government around 25 million a year, and is expected to increase student loan borrowings by 17 million a year. So as Aotearoa Tertiary Students Association say, rather than a education spend up, its a reshuffle.

Additionally married and divorced students under 25 with no dependants will now be subject to a parental income test. So instead of marrying for a student allowance, 'lets sprog for an allowance' could become a common pick up line in student bars.

While being treated as single students will give some about $20 a week extra, many will face a cut. In a very cynical piece of spin, the Government attempts to justify these three cuts on the basis of that the Government is required by the Bill of Rights Act to remove discrimination. As NZUSA points out this argument is extremely shallow. "The government can say all they like about consistency with the Bill of Rights Act but their claims are hollow while the allowance system continues to discriminate on the basis of age until a student is 25 years old."

As it appears that the Government (or at least the ministry) is aware of this discrepancy. In the 'Complying with Bill of Rights Act: Questions and Answers' section of the 'Student Support Guide' released with the budget it is asked why the Government does not bring 'never been married' students into line with 'previously been married' students. The answer is that this would make all students eligible for an allowance and is not affordable - so compliance with the Bill of Rights is only an issue when the Government is making cuts.

The new policy will cost around $55.6 million a year. But from this take away the effect of the cuts to eligability and it comes out that the government is only spending $17m of 'new' money. Of course the government estimates assume that student loans are an asset and all will be paid back (ha ha). If they faced the fact that a lot of student debt is going to remain unpaid they could use the money currently funding student loans to fund a universal allowance!

Based on the budget figures the new allowance policy will only lessen new student debt by 9.23m a year - it won't even take a blood sample from the debt monster.

It is also interesting that the lower threshold has been raised to $33,696 - this is very close to the figure had the income thresholds been raised for 10 years of inflation in 2002. What does this say about Maharey as an advocate for students in cabinet? So the policy work must have been completed before the last election, so does that mean that the review of student support last year was looking for the cuts?

The most disappointing aspect of these changes is Labour have decided just to tinker with the highly flawed policy of the last Government. The parental income tests applied to student allowances since 1992 was just stupid flawed policy right from the start, National's key criterion in its design being to save 'X' amount of money.. National managed to make a system that was full of contradictions, full of injustice and difficult and expensive to administer. I have been reliably informed WINZ hate it. With four years in power and significant government resources devoted to education policy one would expect that Labour would have the resources to develop at least a policy that was at least half as stupid. They can't defend the current system on the basis of research of the effect of the current system, as little to no research has been done into the area (as was admitted in a select committee report in 2001). Its all based on ideological assumptions, penny pinching and bullshit.

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