Labour’s unwise tertiary sweetener

There is no doubt Labour’s tertiary education fees promise is a major policy.  It will cost a huge amount of money and affect many people.

It could well boost student numbers in Dunedin, given the importance of the University of Otago and Otago Polytechnic to the city.

But reservations are in order.  Is this the best use of taxpayers’ money?  Is it fair? Could the university cope successfully with an additional influx?

With Labour a good chance to lead the next government,  it is time to examine its policies.  While it is all very well to talk of visions, it is important also to be sensible and hard-headed.  Worthwhile intentions alone are not enough.

Labour plans are for new students from as early as next year to receive a year of free tertiary education.  The no-fees plan will extend to two years by 2021 and three by 2024.  At the same time, student allowances — which for students under age 24 are based on parents’ income — will rise by $50 to $220 a week from next year.  Allowances will also be reinstated for those studying for more than seven years.

The extra cost for the no fees had been put at about $1.5billion a year when fully implemented.  That is close to $900 a year in taxes for each household, or about the same as the so-called National "tax cuts" due to take effect on April 1 next year.  Labour’s policy might upset some current and recent past students who feel they have missed out and the change is unjust.

Overall, however, given the costs of tertiary education,  the policy will appeal to many parents in the middle classes, those most likely to have children due to go to university.

For, while the policy applies to all tertiary education, most benefit will be "captured" by university students.

Already, the taxpayer pays most tertiary education costs, including for interest-free loans, the great  Labour sweetener, or bribe as some would have it, of 2005.  As the Taxpayers Union has said,  there is definitely an element of money from taxes shifting from low- and middle-income earners to tomorrow’s wealthy.  Those with tertiary education do, overall, earn higher salaries and receive personal benefits from their study on the whole.It is also true that paying even a proportion of course costs encourages higher standards both from students and institutions.  Pay for something and it is much more likely to be valued.

While the institutions themselves want more students, it is vital quality be maintained.  Auckland University slipped in the Times Higher Education World University Ranking  rankings which came out last week.  Otago stayed in the same 50-university band,  and its policy in recent years has been to endeavour to stress quality over quantity.  Free fees, quite apart from the administrative headaches in implementing these across the country,  will not encourage that.  More "bums on seats" could worsen funding squeezes on tertiary institutions that could further affect quality.

Most likely, most of the free fees will be used by students going to tertiary education anyway. Surely,  with such deep-seated and widespread needs in our society, there are higher priorities.

Not surprisingly, Invercargill has baulked at the idea, with the Southland Institute of Technology losing its  free-fees advantage, even if city accommodation remains cheap and there are proposals for making that free.

Labour is, at the same time, planning a Dole for Apprenticeships scheme, which pays employers to help put the unemployed through apprenticeships. That could increase numbers on trade courses and in areas desperately needed.

The heavy subsidies of tertiary fees is practical and beneficial.  Interest-free loans, meanwhile, have made university and polytechnics far more accessible, even if they have sometimes encouraged spendthrift attitudes.  But free fees is unwise profligacy with likely detrimental effects.