KEY POINTS:
At the launch of the Labour Party's election campaign, Helen Clark talked of what might have been assumed to be a long-term ambition. "My dream," she said, "has always been to enable our young people - and mature students - to have the kind of support my generation had in full-time, quality tertiary education." Given the Treasury's gloomy prediction of nine years of deficits, it seemed safe to assume this was the stuff of fancy. Only the bluest of skies and most buoyant of surpluses could underpin such a notion. Yet the Prime Minister has now confirmed a Labour government would spend $420 million to phase in a universal student allowance over the next four years. This is ill-conceived, unnecessary and unaffordable. In sum, it is an exercise in irresponsibility by a party that has been all too keen to preach fiscal prudence.
Immediate comparisons were drawn with Labour's pledge to abolish interest on student loans during the 2005 election campaign. They are valid. Both are abject cases of political bribery designed to shore up the student vote and to attract the attention of the students' parents and grandparents. Clearly, the loan policy had great appeal, and Labour hopes a universal allowance will have a similar sway. The only concession to the country's dire fiscal position by a party seemingly prepared to countenance anything for a fourth term of office is the phasing in of the policy over four years.
In many ways, the progressive lifting of the parental income threshold - the lead-in to a universal allowance in 2012 - actually represents a more sensible means of helping students than the lifting of interest on loans. The current thresholds bear only a passing relation to present-day earnings. But just as statistics on the average size of student loans showed the 2005 initiative was ill-founded largess, so too is the eventual abolition of the parental income test, a move that will benefit 50,000 students. The universal allowance will have an annual price tag of $210 million when introduced in four years, a time forecast to feature intensified fiscal pressure.
Helen Clark says "most of these students would receive no allowance under the current rules and need to borrow, receive help from their parents or work part-time to make ends meet". This overlooks the fact that many parents are perfectly able to support their children financially. Universality, as is always the case, means the allowance will go to those who do not need it. Equally, the Prime Minister forgets that, even in her day, most students had some sort of part-time work. Quite simply, the burden on all students is not so great as to warrant a universal allowance.
Even if students were, indeed, suffering undue hardship, this would not be the most rational approach. That would lie in an examination of why they require an allowance or must take on debt. The answer is the level of tuition fees charged for courses. A steep rise in these has occurred since an increasing number of school-leavers began to seek tertiary education, much of it for trade training. If more of the latter was reclaimed through apprenticeships and suchlike, the cost to the public of tertiary education would drop, and lower fees could be introduced.
Any radical change should be along those lines. If tinkering there must be, it could be to the parental income threshold. But at no time will there be a need for a universal student allowance. The country cannot afford it now, of all times, and the students' lot is not so harsh as to demand it. Throwing an eventual $210 million at this annually adds to the $300 million a year cost of the abolition on interest on student loans. Labour's extravagance is matched only by the cynicism implicit in its desire to buy votes.
