EMBARGOED AGAINST DELIVERY

ISSUES IN TERTIARY EDUCATION RESOURCING AND
THE ROLE OF THE SELECT COMMITTEE INQUIRY

Dr. Liz Gordon M.P.
Alliance education spokesperson
Chairperson, Education and Science Select Committee

Speech to Youth Summit, Wellington.
Friday 25 August 2000 at 1 p.m.

Good afternoon,

I would like to begin by congratulating the Minister of Youth Affairs, Laila Harre, for organising this gathering along with students’ organisations.

There is no issue more important for our young people, and indeed for the future well-being of our nation, than the issue of student debt and the high cost of tertiary education.

From my point of view, this is turning out to be a fascinating year in the struggle for a fair and just system of tertiary education resourcing in New Zealand.

Let me give you just a few examples of things which have happened this year that challenge and undermine the expensive and unsustainable structures of tertiary education that we currently have in place.

At the beginning of the year the government, led by Alliance party concerns, decided to depart for the first time from a pure market-led system of setting interest rates on existing student loans. The Treasury advised the government to increase the rate of interest on loans to 7.6%, on the basis of movements in various indices. The government declined and fixed the rate at 7% for the upcoming year.

At the beginning of May, the world went mad. Wyatt Creech who, as Minister of Education, had sneered at the Alliance’s policies, said that National might support universal student allowances. The system of means testing on parental income until a person was 25 years of old was unfair he said. Pity it took so long for him to come to that opinion, but also indicative of a welcome change in thinking.

A third event was the announcement by Massey University, in the same month, that it intended to lay off a large number of permanent academic staff and cut programmes. A falling roll had taken its toll on the expansionist ambitions of that institution. This event confirmed to us that the end point of the market system of tertiary education was a rationalisation of courses, a decline in quality and an increase in costs.

A fourth event was the long-awaited report of the Audit Department of government on the student loan scheme. I had not actually expected much from the report, but its results were stunning. Apart from the well-publicised fact that loan debt would grow to $20 billion and that its social and economic effects had barely been researched, there was another aspect to the report which vindicated something I had been saying for years: the student loan asset held by the government is an uncertain and wobbly asset, and much student loan debt may never be paid off.

It should not have taken the Audit Office so long to see this. When one lends thousands to 70 year olds to write their Masters thesis, and to people with severe intellectual disabilities to allow them to participate in ‘skills for living’ courses at polytechs, one cannot really expect the money back.

There is increasing evidence that women who earn the average female professional pay and who take time off to have and raise children will, as a group, have major difficulties in paying off their loans. Perhaps it is time the government stopped positioning loan debt as an asset and saw it instead as a liability.

Finally, a few days ago, was the extremely interesting proposal that state sector hospitals be allowed to include student loan repayments as part of a salary package for junior doctors.

It is very important that we understand the mechanisms of this. The state, in giving out loans for fees, is paying to itself an amount as an asset. By charging interest on the loan debt, it is increasing that asset. Then, in paying back the sum of loan, plus interest, plus compounding increments, the state may end up paying out far more than the original cost of the fees and expenses it loaned. The state has paid dearly in gaining only a few years’ delay in shelling out education money.

Bad as this is, it is not the key issue in this debate. Far more important is the precedent set in the public sector as a whole.

Where do people go when they graduate? Well, some go overseas and some work in the private sector. But most graduates in New Zealand eventually enter public sector employment.

If we are to set a precedent by providing loan repayment for junior doctors, then are not nurses, police officers, judges, teachers, social workers, lecturers, policy analysts and kindergarten workers equally as deserving?

What exactly would happen to the state sector pay bill if loan repayments became a general tool to solve recruitment and retention problems? It would soar, and what we would have is a displaced system of free education.

So issues around tertiary education keep boiling to the surface, because the underlying injustices and inequities of the system have become so blatantly apparent in this ninth year of the loan scheme.

When the Tertiary Education Advisory Commission was set up by the government earlier in the year, resourcing matters were barely on the agenda of that body. Instead, the government asked the Education and Science Select Committee to examine issues around student loans.

The terms of reference of the committee ended up somewhat wider than fees, loans, and allowances, however, and included the brain drain, course selection, sustainability of the present system, quality/cost analysis and a catch-all “other matters”.

Submissions have now closed for the Inquiry and the Committee will start hearing them in a few weeks time. The issues raised in the submissions are complex and fascinating. I am not allowed to tell you what is in them while they are being considered by the committee, but I can assure you that they question every aspect of the current system of resourcing tertiary education.

Everyone knows that something has to be done.

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