OnPoint by Keith Ng


3 News Exclusive Investigation Newsflash: Government Not Profitable

Dear 3 News. You said:

A 3 News investigation into the student loan scheme has uncovered documents that show, if it was run as a business, it would be losing a billion dollars each year.

Critics are outraged and want it to become an election issue.

Let me ask you a question: If you ran an interest-free loan scheme as a business... what kind of business would it be? I don't claim to know more about economics than Don Brash, than Alasdair Thompson's replacement, than the head of NZIER - but seriously, if you fellas are outraged that a scheme offering free money is making a loss, then you are - as John Key might say - a monkey's uncle.

The simianly obvious point is that the student loan scheme is not run as a business because it's not a business. It has the social goal of making tertiary education more accessible. Sure, it's legitimate to ask whether it's achieving its goal, and it's legitimate to ask whether the goal is worth the cost,* but to be outraged simply because a government programme cost money, ignoring what that money buys, that's stupid.**

And let's look at this story. It's a 3 News "exclusive" "investigation", which obtained "confidential Treasury briefings" under the Official Information Act.

Though their thorough investigation, they found that the Student Loan Scheme costs money. It's hard to tell because they only mention rough numbers, but I expect that those figures came from the Budget Fiscal Strategy tables which breaks down the cost of the scheme.

That is to say, these exclusive confidential numbers are publicly accessible by anyone at anytime.

But you know what, this happens all the time and it isn't such a big deal. It's journalists thinking that they've done some badass journalisting because they used the OIA instead of Google. It's showboating, it's hyperbole, but it's not wrong.

But back to the story itself: Brook Sabin then goes on to interview Don Brash, Alisdair Thompson's replacement at the EMA, and the head of NZIER who has (in quite a reasonable fashion, BTW) been a vocal proponent of cutting the interest-free policy.

But what exactly does the EMA have to do with anything? The sum of their contribution to the story was:

The balance sheet is wonky and it needs addressing.


So, Sabin does a story in support of a policy that only ACT supports. Then he interviews the head of a right-wing organisation, because.. what, he needed a competing right-wing view saying the exact same thing? All he got was a completely meaningless statement of support, which he included in his story anyway. And then he goes to a vocal proponent of this policy. And omits NZUSA, which would be an obvious port-of-call for this story. And Labour, whose policy this is. And the Greens, who have the student policies most diametrically opposed to ACT's.

Yes, he then gave 20 seconds to the Minister for Tertiary Ed, so it's not completely unbalanced - but that hardly makes it balanced.

This can't really be chalked up to an accident or a mistake. You can't accidentally forget NZUSA on a student loan story and - whoops, wrong office - end up talking to the EMA instead. You might be able to randomly pick a high-profile economist, and just happen to pick one that's vocally against interest-free student loans. That might happen, since we don't have that many economic consultancies. But the two together?

Maybe 3 News is partaking in crusading journalism, and they're consciously pimping this policy. But that's pretty unlikely.

The more likely scenario is that Sabin "owed" ACT for the story. For example, if Brash went and said: "Hey Brook, got a great tip. Can tell you exactly what to OIA if you promise to interview me and my pal for the story". In itself, that's not unusual. I don't think I'm out of line to say that this is common practice for political journalists. (And if I'm wrong, I'd like to know.)

Usually, these kinds of deals aren't as smelly as they sound because the journalist pushes back and go: "Yeah, I'll talk to the EMA, but I won't promise to run it; and at the very least, I will talk to NZUSA because otherwise I'll look like a goddamn tool." And politicians accept that, because the point of these deals is to get a story written about their policy, using a news hook that works in their favour. The point isn't to buy the whole story, because that makes everyone involved look like a tool.

And usually, a journalist can justify it because the tip they're getting is of genuine news value, and it's something they wouldn't have found otherwise.

Except in this case, the hot tip was for secret documents containing information that's been in every budget since 2005. 3 News got punk'd.


If anyone from 3 News would like to respond to this, I will gladly publish your response verbatim on these pages.


* Not all of the cost of the student loan scheme comes from the interest-free policy. A lot of it is from people who just don't pay it back.

According to the Student Loan Scheme Annual Report, of the people who left study in 1992, 12% have paid back nothing by 2009. Of people who left study in 2000, 30% have paid back nothing by 2009.

These people may have skipped the country (in which case they are already being charged interest under the current policy) or they may have no taxable income. Either way, charging them interest is simply going to mean they owe more money that they're not paying back.

** Or maybe they're simply outraged at the sum? It's an interest-free loan-book worth $12b with a high rate of non-payment. Why would any economically-literate person by surprised that it cost $1b a year?

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