OnPoint by Keith Ng

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OnPoint: 3 News Exclusive Investigation Newsflash: Government Not Profitable

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  • DCBCauchi, in reply to the sprout,

    people here and a few other places get it, but then we ain't most people. it never fails to amaze and dismay me just how naive most NZers are when it comes to the political interests of the msm. we must be one of the most gullible peoples on the globe in that respect :-(

    I very much dislike this argument, if it's what I think it is.

    People being uninterested in politics and the news media is not an indication that they are fools, gullible, deluded, or under some malign influence. It just means that politics and the news media has no relevance to them. It is not the be all and end all of everything.

    Since Feb 2011 • 320 posts Report Reply

  • the sprout, in reply to DCBCauchi,

    priceless.

    nz • Since Nov 2011 • 14 posts Report Reply

  • Steve Barnes, in reply to Kumara Republic,

    Yep, our equivalent of Alec Baldwin, for better or worse.

    Pah! 30 Rock was way betterer than Outrageous Fortune, no contest.
    (unless you disagree that is ;-)

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • Keith Ng,

    We need some way of dealing with this. If someone left study in 1992, has stayed in NZ and has never made a repayment since, then I think its fairly clear that they’re unlikely to, and their loan should be (gradually) written off. Debts that can’t be repaid won’t be repaid, and it is false accounting to pretend otherwise.

    The accounting side already happens. The value of new loans is written down massively (over 40%, I think – don’t quote me on this) to take non-payment into account. e.g. If you take out a $10k student loan, the fair value of the Student Loan Scheme only goes up by $6k. So they’ve immediately absorbed the $4k loss they expect, on average, to take.

    The fair value write down is the main cost of the of Student Loan Scheme – greater than interest write-offs for now. This will change when the SLS gets bigger.

    But the change is to the value of the loans held, not to how much people owe. Writing off people’s debt for non-payment would encourage them to not pay.

    Auckland • Since Nov 2006 • 543 posts Report Reply

  • Idiot Savant, in reply to Keith Ng,

    But the change is to the value of the loans held, not to how much people owe. Writing off people’s debt for non-payment would encourage them to not pay.

    If its been more than a decade, I think we've already established that they will not and can not pay. So what's wrong with admitting that? Or must we make people suffer the burden of a lifetime of unrepayable debt, for fear that acknowledging the reality might set "a bad incentive" for people to spend their entire lives earnign less than the minimum wage?

    Palmerston North • Since Nov 2006 • 1716 posts Report Reply

  • Lucy Stewart, in reply to Idiot Savant,

    If its been more than a decade, I think we've already established that they will not and can not pay.

    Unless they're living overseas, in which case you're essentially bribing them to come back (stay overseas long enough and your student loan vanishes!). I'm gonna guess that's not an insignificant proportion of that 30%. Your argument definitely has relevance for people who are living in New Zealand and have never had income over the threshold, but if someone wants to take the investment the country has made in them and trade it in for a better living overseas, without repaying the loan - well, my sympathies are at best limited.

    Wellington • Since Nov 2006 • 2105 posts Report Reply

  • linger, in reply to Lucy Stewart,

    OTOH, I do have some considerable sympathy for that reaction, because the country may arguably have "made some investment" in the individual's training -- but in many cases, no investment in guaranteeing local jobs using the resulting knowledge & skills; and once you start to commodify education by placing a monetary value on it, you are basically encouraging students to view it as theirs rather than the country's, regardless of who ends up paying for how much of it.
    (Full disclosure: I managed without a student loan, but only through a large amount of luck, a considerable amount of part-time work, and eventually, a generous scholarship. I know things got much worse after my time as a student; so I don't at all begrudge those students who needed a loan taking full advantage of it.)

    Tokyo • Since Apr 2007 • 1931 posts Report Reply

  • Lucy Stewart, in reply to linger,

    OTOH, I do have some considerable sympathy for that reaction, because the country may arguably have "made some investment" in the individual's training -- but in many cases, no investment in guaranteeing local jobs using the resulting knowledge & skills; and once you start to commodify education by placing a monetary value on it, you are basically encouraging students to view it as theirs rather than the country's, regardless of who ends up paying for how much of it.

    A lack of investment in creating jobs is certainly a fair criticism. While I didn't do a great deal of job-hunting post university in NZ, being focused on the move to a postgrad degree, there's definitely a lot of people out there who do degrees in the full expectation that they'll be able to pay it back with the increased job opportunities they'll gain and then find those opportunities only exist overseas. Why people go, I understand.

    And I do think the current student loan system probably is unsustainable in the levels of debt it entails. I have a less-than-average student loan, but it's still a substantial amount, even though I got nearly a full scholarship for five years of uni and had considerable parental investment and found a permanent part-time job and jobs every summer. I think people who grew up in generations without student loans really do underestimate the sense of futility about "adult life" that this sort of debt can induce - you can't even really think about kids or a mortgage until you've been working for a few years, assuming you get a decent job (i.e. one at or significantly above the median income). We have to find better ways to do this. That includes not making a BA or BSc a minimum requirement for any sort of non-labouring job, when it's not necessary. And making part-time and night-school tertiary education more accessible.

    That being said, I still don't have sympathy for people who can afford to pay it back, without hardship, and choose not to. Regardless of how they feel about it, the country did make an investment in them, and I think it's pretty low to take that and run. Taking overseas income levels into account is probably going to be hard, but in the interests of fairness, it's worth doing.

    Wellington • Since Nov 2006 • 2105 posts Report Reply

  • merc,

    Since Dec 2006 • 2471 posts Report Reply

  • the sprout,

    trust me, Key will never meet with Banks in public during this election.
    Banks has some rather problematic 'issues' that are yet to emerge.

    nz • Since Nov 2011 • 14 posts Report Reply

  • merc,

    Yeah, strange Rodney doesn't come up, him threatening Hamilton Council and all and being Minister for Local Govt. Key is playing a very fine line here, and let's not forget, what happens to English after the election; he who has admitted publicly fiscal defeat.
    Banks is not well liked in Remuera, and Rodney reviled, the old guard are old, the new matrons are appearing. Fortunately Mr Key is more handsome than Mr Peters ;-)

    Since Dec 2006 • 2471 posts Report Reply

  • Ian Dalziel, in reply to merc,

    Minority rapport...

    Stuff does precognition, Key-edging-toward-symbolic-ACT-cuppa

    Ahah! So that's what ACT is an acronym for - A Cuppa Tea...
    Beige stirrers laced with dangerous sweeteners that sit in saucers!

    Love that photo, with the linked article, of Key
    wrestling with Rodney Hide!

    Christchurch • Since Dec 2006 • 7947 posts Report Reply

  • merc,

    Wonderful toys watch no.3
    "One of Labour's handicaps in this election campaign is that the party is plagued by what might be termed the politics of the never, never."
    http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10764513
    Really, gosh that's well framed but, what's wrong with this picture (Placebo).

    Since Dec 2006 • 2471 posts Report Reply

  • Ian Dalziel, in reply to merc,

    Et tu Brute...
    Friends, Remuerans and Countrymen lend me your arse...

    Yeah, strange Rodney doesn’t come up, him threatening
    Hamilton Council and all and being Minister for Local Govt.

    Though I am hoping he will lay the law down, on the same grounds,
    to The Chchch City Council as well, when he says Hamilton:

    "Should progress in addressing Audit NZ's recommendations be insufficient, the Government will look at a review process that could lead to the appointment of commissioners.
    It is crucial for local democracy that ratepayers have confidence in their councils. For that to happen, councils must have the right governance structures and delegations. Councils must maintain transparent and robust decision-making processes and act in accordance with the Local Government Act 2002 and other laws."

    Especially as Tony Marryatt (seemingly Redman's Svengali) and other powers at the CCC seem to want to continue doing things behind closed doors and they now want to raise unapproved discretionary spending from $500,000 to $5 million!!
    Hamilton's V8 (and Caudelands) fiascos should be a salutary lesson in not letting this happen - if Hide could rein that in before shuffling off the political stage he might redeem himself somewhat - but with only 18 days to go it seems unlikely.

    Christchurch • Since Dec 2006 • 7947 posts Report Reply

  • Bart Janssen, in reply to Lucy Stewart,

    At risk of derailing completely, ah who am I kidding ...
    TLDR just me ranting about universities

    I have a couple of major problems with student loans, but they stem first and foremost from the problem of universities using fees to limit the number of students.

    In the good old days (TM) universities were the places where those people who through good luck happened to have brains that could absorb and process knowledge really well went to learn skills that would help society progress. The selection was almost completely on merit. If you were good at Rugby you played Rugby and got a job at the ASB and if you were good at Math or English you went to Uni.

    The payoff for society was a cadre of people who made changes to society for the good. It was a lot random because you could never tell which student was going to contribute but you knew that a percentage would contribute. You knew that because that is the way it has actually worked in the past.

    All this came at a cost to society that was borne through taxation. That was because historically it had proven to be true that having a certain number of university graduates in society helped society in pretty much every way that could be measured.

    Then someone decided that if we ran universities for the economic benefit of NZ (a dubious assumption) then we should manage them like a business (a demonstrably false assumption). So universities had to charge fees according to the costs of courses. And they had to make "profits". And they got funding based on how many students they could push through to a degree (that has changed now).

    So guess what, universities started promoting cheap courses like business instead of expensive ones like chemistry and engineering. And they dragged in students from everywhere they could to take those courses and charged them fees. And suddenly students couldn't afford to go to university and so the government had to step in and pay them. But that didn't look right to the economists so they made it a loan.

    Now of all the things wrong with that structure the very worst one is what it does to the best and brightest students. These are the really bright kids, the ones most likely to write a great piece of music or understand the geology of our lands or develop something utterly new we never thought of before. These kids are smart. And we've made them take on a debt. So because they're smart they choose a degree that will pay that debt back as fast as possible. It may not be what they love the most and it may not be what they were capable of contributing the best to society (if you want to be prosaic, what they were born to be). In short we push our best and brightest to become lawyers and doctors, even if they were the next great author or the next great biologist or the next great chemist.

    And all because someone forgot what role universities are meant to provide for society and instead slammed their business model on our universities. Scrap the loans and scrap the fees. Limit university entrance based on how many students we can afford to pay for through taxation and then select on merit.

    Auckland • Since Nov 2006 • 4460 posts Report Reply

  • Sacha, in reply to linger,

    encouraging students to view it as theirs rather than the country's

    exactly the intent, like so much of the neoliberal kool-aid this country has swallowed since the 1980s

    Ak • Since May 2008 • 19728 posts Report Reply

  • Lucy Stewart, in reply to Bart Janssen,

    Limit university entrance based on how many students we can afford to pay for through taxation and then select on merit.

    I think this is the one that people choke on, because it's meritocratic rather than egalitarian. It is inherently unpalatable to suggest that there are a lot of people who don't get much out of university, who never will, and whose time and energy is far better spent advancing their skills in other ways (other tertiary courses, on-the-job-training, etc.) But I think it's pretty much true. Of course, I would say that, because the university system suits me just fine, but when you look at the non-completion levels it's fairly obvious that university as it is doesn't work for a lot of people.

    But if we're seriously going to do that, we need to find a way to move businesses away from using a university degree as a first-order screening tool. That's what the later levels of college should be for - NCEA Level 3 and/or 4 should be a meaningful qualification, not just a get-into-university pass.

    In short we push our best and brightest to become lawyers and doctors, even if they were the next great author or the next great biologist or the next great chemist.

    Which is why we have a massive surplus of people with law degrees (who, contrary to popular belief, don't earn that much of a premium if you look at the bulk of law graduates rather than the few successful ones who drag up the average.) That said, we've still got to find a way to increase industries that employ the next great scientists.

    Wellington • Since Nov 2006 • 2105 posts Report Reply

  • merc, in reply to Ian Dalziel,

    Rodney doing his actual job and making sure Local Bodies perform within the law? Not how the west was won.

    Since Dec 2006 • 2471 posts Report Reply

  • Sacha, in reply to Bart Janssen,

    people who through good luck

    and family wealth, let's not forget.

    Ak • Since May 2008 • 19728 posts Report Reply

  • Sacha, in reply to Bart Janssen,

    And all because someone forgot what role universities are meant to provide for society and instead slammed their business model on our universities.

    They didn't so much 'forget' as get away with changing.

    Ak • Since May 2008 • 19728 posts Report Reply

  • NBH, in reply to Lucy Stewart,

    But if we’re seriously going to do that, we need to find a way to move businesses away from using a university degree as a first-order screening tool. That’s what the later levels of college should be for – NCEA Level 3 and/or 4 should be a meaningful qualification, not just a get-into-university pass.

    You might be happy to learn that this is actually happening. The vocational pathways idea developed a couple of years ago by the Industry Training Federation was formally adopted as government policy at the beginning of the year – and has buy-in across the political spectrum as far as I’m aware – and is now in the process of being implemented, with leadership from the industry skills bodies (ITOs).

    (Oh, and a small correction – NCEA only goes up to Level 3).

    Which is why we have a massive surplus of people with law degrees (who, contrary to popular belief, don’t earn that much of a premium if you look at the bulk of law graduates rather than the few successful ones who drag up the average.)

    I don’t know that that’s actually true – the work that Stats NZ and the Ministry of Education have done in outcomes from 3ry Ed seem to show a pretty strong incomke premium for law degrees compared to other qualification areas right out of the gate (when results are less likely to be subject to significant distortion from high earners). In fact that’s one of the problems with the current system – law is a comparatively cheap qualification (thus leadign to lower student loans) with comparatively high potential returns. This sort of situation is one of the reasons why I’m in favour of a graduate tax as a partial solution to the funding conundrum.

    Wellington • Since Oct 2008 • 97 posts Report Reply

  • Sofie Bribiesca, in reply to merc,

    “One of Labour’s handicaps

    Yes, I couldn't help myself so I have 2 comments awaiting... what I don't know, but I mean REALLY! What is it with this guy. How biased is he? and this line

    Labour, however, is counting on most voters only picking up on headlines saying what it would do

    I mean I know the Harold really cares about journalism over headlines... yeah right.

    here and there. • Since Nov 2007 • 6796 posts Report Reply

  • Lucy Stewart, in reply to NBH,

    (Oh, and a small correction – NCEA only goes up to Level 3)

    Then how come I have a rather official-looking certificate saying I passed NCEA Level 4? Or have they switched up how the Scholarship-level subjects work since I was a guinea-pig?

    I don’t know that that’s actually true – the work that Stats NZ and the Ministry of Education have done in outcomes from 3ry Ed seem to show a pretty strong incomke premium for law degrees compared to other qualification areas right out of the gate (when results are less likely to be subject to significant distortion from high earners)

    Quite possibly - I was lazily going by stats I'd read on American law graduates, where there is a massive disparity between average and median income. I'd be curious if that remains the case (looking at median, obviously) after some time in the industry.

    This sort of situation is one of the reasons why I’m in favour of a graduate tax as a partial solution to the funding conundrum.

    Taxed by qualification, or just a flat grad tax? As the system stands that could really rort some people. By qualification is tricky, too. Seems much easier to just raise top-level income tax rates.

    And in some ways you could say the student loan system *is* a tax on graduates, albeit one that applies equally regardless of your success or failure. I could also see a nice peverse incentive for people to do a Steve Joyce and all-but-complete degrees, if an extra tax were imposed upon formal graduation.

    Wellington • Since Nov 2006 • 2105 posts Report Reply

  • Bart Janssen, in reply to Sacha,

    people who through good luck

    and family wealth, let’s not forget.

    Only now. It wasn't like that before. My cohort at Uni were not conspicuously wealthy far from it. My complaint about the current system is that it does now favour the wealthy.

    Auckland • Since Nov 2006 • 4460 posts Report Reply

  • Sacha, in reply to Bart Janssen,

    Agreed. I was thinking mainly of the link between wealth and success at university entrance exams, but I don't have the time to dig up any stats to back that up.

    Ak • Since May 2008 • 19728 posts Report Reply

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