Cuts 'short-sighted' for New Zealand

Anthony Davidson
Anthony Davidson
Georgina Hampton explains how the cuts to student allowances for graduate students are both unfair and damaging to research in New Zealand.

Meet Anthony Davidson, an MSc student in the University of Otago's department of marine science. For the past three years, he has been part of a small team of researchers making month-long expeditions to the Auckland Islands to study nationally endangered Southern right whales. He has one more year to complete his MSc.

He never received a student allowance as he did not meet eligibility requirements based on his parental income. Parental income no longer counts once the student is 24, and as Mr Davidson is now over 24, he was due to receive the allowance for the first time. He made his study plans on that basis, and now faces dropping out of university without completing his Masters because he will be unable to fund his study and living costs.

The Government's student allowance cuts, announced last year, have recently come into effect. The cuts mean that, from this year, no student will qualify for the student allowance after their fourth year of study, regardless of whether they have previously received the allowance or not. These cuts, and their rapid introduction, is short-sighted and does not consider the positive impact of postgraduate research students on the research community of New Zealand.

The changes that have come into effect in 2013 will profoundly change the course of study, or the ability to live, for a significant number of students, says Erin Jackson, president of the University of Canterbury Students' Association.

''We know that the impacts will manifest in different ways for postgraduates; in lower living condition standards, in increased hours committed to employment (in addition to study), and, in some cases, abandonment of study or in the choice to study overseas. All of these consequences are concerning for the progression of innovation and development in New Zealand, a field that postgraduate students should be the leaders in.''

However, Steven Joyce would have us believe that ''New Zealand has the most generous support system in the world''. This is not true. In Germany, university only costs students a minimal amount to attend. In Scandinavia, PhD students are compensated fairly for their work, earning in excess of $60,000. A typical PhD scholarship stipend in NZ is $25,000. A recent BSc (Hons) graduate from the University of Otago has been offered a fully funded PhD position in the US. Funding includes a generous living stipend, unlimited research funding, and flights home to New Zealand each year.

To think cutting allowances in New Zealand won't drive motivated research students overseas, when support like this is on offer, is short-sighted. In fact, a survey carried out by two doctoral students, Amanda Thomas and Bella Duncan, at Victoria University, indicated up to 40% of current postgraduate students are thinking of turning their back on studying in New Zealand.

''It's almost as if the Government wants talented students to leave,'' one survey respondent said.

These cuts not only affect current postgraduate students, but future postgraduate students also. There is no doubt the psychological burden of debt is a barrier to further study, and to life - young people are delaying having children, and buying a house because they feel they cannot until they have paid off their student loan. New Zealand does not pay its graduates competitively enough on a worldwide scale to make staying in New Zealand, working, and paying their student loans back at 12% tax, on top of income tax, an attractive or viable option.

Students studying postgraduate degrees have had the rug pulled out from under them. Funding that was available at the time of committing to a postgraduate degree has been cut off with limited warning, leaving students requiring financial support without access to it. For many students, such as Mr Davidson, funding availability was a critical factor in their decision to commit to study. These cuts directly affect postgraduate students, but they also indirectly affect researchers. Science funding in New Zealand is critically low and difficult to acquire.

The Marsden Fund, one of New Zealand's main funding sources, funded just 87 out of 1113 proposals received in 2012 - a success rate of 7.7%. In times where external funding is low, researchers rely on postgraduate students to continue their work. Prof Warren Tate, 2010 recipient of the Rutherford Medal, says postgraduate students have been critical for the success of New Zealand research.

''Highly creative well-trained postgraduate students who, at minimal cost, are often the engine room of research - committed, hard-working, and selfless.''

There are many ways the student allowance scheme can be made more effective - targeting students with a genuine need - and less costly. Decreasing the 200-week limit on allowance schemes, changing eligibility requirements so students whose parents' wealth is tied up assets do not qualify for allowances they do not need, or incentives for students to finish courses in a timely manner are just a few examples.

Overall, New Zealand has a positive environment for young researchers, with PhD programmes designed to give apt mentoring, supervision, and other non-financial support students may need. Completing a PhD is not easy, and is not supposed to be, as evidenced by the small number of postgraduate students carrying out meaningful research and contributing positively to New Zealand's research reputation.

The recently introduced cuts will decrease the numbers of postgraduate students, based solely on who can afford to pay the high cost of study. As Prof Tate says: ''Any marked decrease in numbers of postgraduate students has the potential to significantly compromise contemporary national research programmes.''

And what options are left for Mr Davidson?

''I'll probably return to my job in Australia. The money's better over there.''

- Georgina Hampton is a PhD student in genetics

Cuts to student allowances

"The whole pensioner population has paid their taxes all their life expecting to be paid a pension. It's not right to take that from them simply because we don't want to pay for it" 

The current postgraduate student population has paid taxes - often very high taxes due to secondary tax rates and students often having multiple jobs during summer - and committed to a long term degree, on the understanding that the allowance would be available to them if they met certain conditions evidencing their need. How is it right to take that from current students simply because we don't want to pay for it?

Currently the pension scheme is paid out at 65 regardless of employment status. Changing that to only pay a pension to those who are retired would save money and mean that people with a genuine need for those funds receive it.

I'm sick of hearing "I lived on $160 when I was a student" or similar arguements. Good for you. But this is NOT possible for every student, such as those who balance families as well as their study, or those students whose course demands are so high they are unable to maintain a part time job. 

I'm not even saying students shouldn't "take a hit" but that the current method of allowance cuts are affecting those people who are at the higher level of tertiary education and, after a long commitment to study and to the research reputation of NZ as all postgraduates complete original research as part of their degrees. These students are not the ones who should be taking a hit! We've taken a hit already and been saddled with huge loans $40,000 for a 3year BSc + 1 year Honours year) that we must pay back. We've committed to a higher degree and gained a scholarship to fund most of it, on the understanding that a small amount of financial assistance would be available to us to enable timely completion. It's just like your argument for pensioners. It's not fair for dedicated, hard working, current postgraduate students.

There are smart ways of saving money and making cuts. For pensioners, it's making those people who are over 65 and still working not eligible for the pension until they stop receiving employment income. For the student allowances, it's as simple as grandparenting the schemed cuts in so that students know at the beginning of their study, what funding options are available and you don't end up with 5,000 current students, mid degree, no longer eligible for funding they need, or might have been planning to receive short-term in the future. 


It's already done

You may not know the Govt has already started welfare reforms? They have reduced the number of people on benefits with measures such as making beneficiaries re-apply for their benefit. The beneficiaries have done their part, now time for students to take their hit for the country. I lived on $160 a week when I was a student. 

Not everyone can work until they are 70. Especially farmers and other people doing physical work who often have to stop working even by 60 or earlier. The whole pensioner population has paid their taxes all their life expecting to be paid a pension. It's not right to take that from them simply because we don't want to pay for it.

Students need to accept these changes. If they want to go overseas then that is fine, especially if they are earning more - I don't know why people are so worried about this. The opposition would have you believe that there's an unemployment "crisis" at the moment anyway (but that's another story). 

Missing the point

You've missed the point.

I'm not saying pensions shouldn't be paid, but perhaps should be paid from age 67 or even 70, not 65, or paid only once a person retires. This is going to have to happen sometime in the future as our aging population will mean that the future working population will be unable to support the pensioners in the same way.

I'm not saying we shouldn't support beneficiaries either - but how does the Govt. pay an unemployment benefit to an individual at around $250 a week, and expect them only to attend the occasional job interview; whilst students are expected to somehow support themselves and study full time whilst receiving $170 a week which they will have to pay back.

I'm not saying support all students, but for some motivated, talented students, the money situation will be the only barrier to their study success. So we'll have fewer people gaining degrees, more young people heading overseas and therefore fewer people contributing to the income tax revenue of the government - making benefits and pensions even harder for the future Government to afford.

No pension for pensioners?

To suggest that pensioners who contributed to this country all their lives are less deserving of the pension they have expected their entire tax paying life than students is ridiculous. We owe them a pension at the very least.

I want to agree with you on the beneficiary point but as you are "informed" you will understand that the benefit keeps people from resorting to unlawful acts to feed their kids. The benefit is for people who have been knocked down and need a hand up.

It's not like these post-grads won't have any money from the Govt, it just means they now have to pay back what they do get. 


sv3nn0, if the economy in New Zealand was managed like a Scandinavian economy, perhaps we would be able to afford to support post-grads. Many of us would like New Zealand to share the standard of living Scandinavians have and you spreading rubbish about them living in socialist misery is unlikely to help us get there. There is nothing less relevant than nonsense presented as fact.

Priorities the issue, not affordability

Interesting that NZ can't afford to give money to postgrads who will contribute to NZ's economy and future but can afford to pay superannuation to anyone over the age of 65, even if they are still working .. (and if they aren't, it's way less likely that they are doing anything "useful" in terms of NZ's future). 

Interesting too, that the unemployment benefit requires less of a person than postgraduate study but postgraduate support that was cut was less $ than the unemployment benefit anyway ..

Your comment on affordability really rings false - it's not that the government can't afford to support postgraduate students, it's that they don't see the value in doing so. And that is incredibly shortsighted, as talented postgrads will take their talents overseas instead.  

Lots of facts, little relevance

Interesting that all replies to my comment were about the Scananavian part, not the fact NZ can't afford to keep giving money to post grads without requiring them to pay it back.

Nords praised

Scandinavia has been praised by US economist Joseph Stiglitz, for its equality. That'll be where the 'socialist' tag comes from.

Scandinavian taxes

Yes, taxes are slightly higher, but so what?  The real question should be, not are their taxes higher or lower, but do they get better value for their tax dollar/krone.  Answer - they pay a bit  more tax but have a higher standard of living.  Health services, welfare, education, housing, as well as disposable income are somehow better than ours, so perhaps one could come to the conclusion that our taxes are not all that much lower but they get frittered away by governments that have different priorities than giving the people the best opportunities for the $$ available.

Myths for the ignorant

sv3nn0, there is no 50% "socialist tax" for students in Scandinavia.

Take Norway for example. There is a 28% flat tax rate on income up to 509,600 NOK ... i.e NZ $113244. At that level you'd pay $28,283 tax in New Zealand and $31,700 in Norway. Yes, it's more expensive to live in Norway, but it's also more secure employment wise. Besides, students I know (not in the oil industry) are getting closer to $75,000, not $60,000 ... and last year there was a 5% pay rise.

For a more general view of Scandinavia look at this document from the OECD. Graph GE1.1 shows that in 2011 the median disposable income of all Scandinavian counties was higher than that of New Zealand. Not only that, the annual growth rates of median disposable income between the mid-1980s and late-2000s have also been higher, i.e. the gap in disposable income is growing.

I don't know who started this myth that NZers are better off than Scandinavians because they pay less taxes but I suspect it is a useful tool for suppressing the ignorant.

Tax exceptions

Hi, thanks for your comment.

Scandinavian PhD students' incomes are usually tax exempt. Yes, it's true that they have higher living costs but they are still paid relatively more than what NZ pays its students.

Your comment about postgrads being in "their insular academic world" is a big generalisation. Particularly in science, postgraduate researchers understand and feel the effects of national debt every day - by their research being hampered by the very limited funding available. Postgraduate students, in science fields in particular, in their "insular academic world" also contribute meaningful, important research to New Zealand. We are simply asking for some recognition for the hard work that postgraduate students do.

It isn't hard to save money on this scheme if it is saved in a smart way - as the article says, decreasing the previous 200-week limit, creating incentives for postgraduates to finish their degrees in a timely manner, focussing on eligibility. Money can be saved in these ways but it would appear the Government instead opts for the lazy, shortsighted way which leaves students in the middle of degrees unsure of funding that was previously available.

It's not a question of if student allowances should be cut or not - but how they are cut. Giving students 9 months notice and ending all allowances past the fourth year of study is, without a doubt, the easy but ineffective solution.

Smart people?

Postgrads are supposed to be smart but they are in their insular academic world which means they (clearly) don't put any importance on national debt. Everyone else is taking cuts on Govt spending and some excess public servants are even losing their jobs altogether so the students shouldn't be too quick to squeal.

As for the Scandanavian Phd students getting $60,000: apply their near 50% socialist taxes and significantly higher living costs and I think you will find they have less expendable income.


I feel a little . . . like Nelson Muntz here, but New Zealand voted for this. What? You thought you'd get tax cuts AND all the things you take for granted?

Mr Davidson should try directly for a position in an Australian university PhD program. If he has a good honours degree, he'd be eligible, he wouldn't acquire debt (it would be fully funded), and a full scholarship wouldn't be hard to come by. 

Just not on

Any reasonably-minded New Zealander can see that it is manifestly unfair to cut allowances for students who are mid-course. It's simply wrong. To wield such a blunt policy shows an absence of compassion and decency to those who have invested so much time and investment to this point.

I do suspect that when Labour returns to power at some time in the future, they will right this wrong. Sadly, that is cold comfort to those whose plans have been knee-capped by a grossly unfair policy.

The right way to save on tertiary costs is to restrict enrollment in the first place. It might be politically incorrect to see, "Not welcome" to an aspiring student, but better that than the current mess.

National, you're acting badly.