Delivering for Students: The Second Term Agenda

Maharey Speech to the New Zealand University Students’ Association January Conference. St. John’s Church, Wellington.

Introduction

Thank you for inviting me to address the New Zealand University Students’ Association at your first conference for 2003.

It’s good to be here with student representatives from across the university sector, and also from colleges of education and polytechnics.

Times have changed

I’d like in particular to extend a greeting, and a welcome, to those of you who are just starting out in the student movement. This government has always valued the contribution that associations play in supporting and advocating for students.

That is why we replaced National’s ‘voluntary student membership’ legislation, and restored students’ right to use the loan scheme to pay their association fee.

The policy environment that you will be encountering during your time in student politics is very different from the one that your predecessors faced when we came into government in 1999.

The 1990s had been spiralling tuition fees. Fees increased by 14% a year under National with no end in sight and no ability for students and their families to predict what they were going to cost from one year to the next.

The latter part of the year was always characterised by controversial deliberations by each institution’s Council as they tried to decide how much to put fees up by this time, in response to the latest government funding cut.

Mass demonstrations by students were a standard feature of this period. It was a common occurrence for the students to actually occupy the registry building to show the strength of their feeling about a proposed increase.

How many people here have been involved in a registry occupation? In our first term, the Labour-led government put an end to the fee spiral of the 1990s.

We committed significant amounts of money over three Budgets to increase funding levels for public institutions by a total of 9.8% so that they could afford to (and were in turn obliged to) freeze fees at 2000 levels.

If we had not been elected and fees had kept going up at the same rate as they did in the 1990s then students would be paying on average $1,000 more this year, with the prospect of a further increase in 2003.

We also ended the inequity that saw loan borrowers facing compounding interest of 7 or 8 per cent while they continued to study and were unable to make any repayments. Under the Student Loan Amendment Act (No. 2) 2000, all interest on the loans of those in full-time study is written off at the end of the financial year. Those in part-time study on low incomes have also had their interest written off.

This Act also introduced the ‘50% rule’. If base interest exceeds 50% of a borrower’s compulsory repayment obligations, then the remainder will be written off.

This prevents a situation known as ‘flat-spotting’ in which a borrower faces repayment deductions year after year, but doesn’t manage to do any more than pay off their interest.

The estimated time it takes the average borrower to repay their loan has dropped by at least 7.6% since the Labour-led government came to office.

Average predicted repayment times as calculated by the most authoritative source, the TESLA model, have fallen below 10 years for the first time.

Those are some of the main things that the Labour-led government did for students in its first term.

(And that leaves aside, of course, the major undertaking represented by the tertiary education reforms. This has moved the sector from a free-market model to a strategic approach. I encourage all student representatives to engage with these reforms, and what they mean for your members. Particularly this year, as your institutions re-write their charters to match the new environment.)

The Next Phase

So what will the second term of this government mean for students? Our agenda for the next three years is: Predictable fees Fair loans; and Wider allowance eligibility Fee Maxima

In the area of fees, it is time to move on from the ‘freezes’ that were introduced as an interim measure last term. We can’t lock institutions forever into a schedule of fees that were decided upon, with varying degrees of deliberation, in 1999. Circumstances have changed. And the differences between the same course at different institutions often has very little logic to it.

We also want to give longer-term security to students. Every year the fee freeze was a negotiation with institutions, in which there was always the possibility that one or more might decide to decline the supplementary funding offer and raise their fees. And students certainly didn’t have any certainty about their fees the year after next.

In order to address this, we changed the law so Section 227 of the Education Act now prohibits tertiary institutions from setting a fee for domestic students that exceeds any maximum set by the Minister. This will mean that the government will be able give students certainty from year to year that it can, and will, regulate fees to maintain affordability while also assuring sufficient income to institutions.

The 2003 Budget will set out the maximum fees that will be in place for courses of study for the 2004 academic year, and indicative fees for both 2005 and 2006. This will give students, intending students and their parents greater predictability as to the costs that they will face.

We are going through the important process of setting the initial maxima with great care. We brought together a sector reference group, which included your then-co-president Andrew Campbell and Nicky McLeod from the Christchurch College of Education Students’ Association (CCESA), to advise on criteria for this process. The criteria they have recommended were:

student affordability: students need to have a reasonable degree of certainty about fee levels before they begin studying and they should not be set at a level that discourages students from enrolling;

provider capability: income from fees, plus the government tuition subsidy, must ensure adequate income for tertiary providers to offer quality education and research;

provider flexibility: maximum fee levels should not constrain the ability of tertiary providers to act flexibly;

simplicity: maximum fee levels should be simple to administer;

transparency: maximum feel levels must be easy to understand; and

ease of implementation: maximum fee levels must be able to implemented relatively easily.

I am pleased to be able to release the Fee Maxima Reference Group’s report today. It will be very valuable to the government and its officials as we continue to process of developing a schedule of maxima, to be announced at budget time.

The Review of Student Support

We also currently have a comprehensive Review of Student Support underway. This we deal with the loans and allowances side of the equation. We’re looking to develop a sustainable set of policies for student support, rather than individual band-aid solutions.

This has been a major activity for our officials in the Ministry of Education – often in parallel with the work on fee maxima and other areas, such as the review of funding categories. And we need to take the time to get this right.

We will therefore be publishing the outcome of the Review in a document in May or June this year. I intend however to consult with NZUSA Federation Office ahead of the finalisation and public release of the document.

I can also give you some idea of some of the initiatives we’ll be covering, since they are ones that we committed ourselves in last year’s election policy.

Part – though only part – of making a fair loan scheme is ensuring that access to borrowing is not unfairly limited. We intend, during this term, to extend Student Loan Scheme eligibility to part-time, part-year students in approved courses. This won’t mean a lot to most students but it will be a major boon for many distance students as the Extramural Students’ Society can attest.

We will also look to making sure that loans are not being taken up for non-educational purposes.

A major focus of the Review will be extending eligibility for student allowances. This will be achieved in a combination of ways.

We will widen student allowance eligibility for single full-time students aged 18-24, beginning by progressively raising the parental income thresholds. We are currently working on how far we will be going in terms of this.

Eligibility for the Unemployment Benefit Student Hardship (formerly the EUB) will be widened in step with this.

We will restore allowance eligibility to those tertiary students aged 16 and 17 who have finished year 13 at school.

And we will also develop fairer provisions for non-custodial parents and parents with more than one dependent child in tertiary education.

Conclusion

That begins to give you an idea of the work that we have currently underway. The last three years were busy and exciting ones for students and the tertiary education sector. The next three years promise to be equally so. I look forward to continuing to work with you during this time.

Thank you again for inviting me to speak to you here today, and all the best with the rest of your conference.

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