The Mendacities of Mr Key # 16: No one deserves a free tertiary education (except my mates and me)
As reported in a previous blogpost last year (Steven Joyce – Hypocrite of the Week);
Fun Fact #1: Student loan stood at $14.235 billion, as at 30 June 2014 – up from 9.573 billion in 2008.
*Up-date* – Student loan stood at $14.837 billion as at 30 June 2015 – up from $14.235 billion in 2014.
Fun Fact #2: As at 30 June 2013, 721,437 people had an outstanding student loan, registered with Inland Revenue. That’s roughly 16% of the population.
Fun Fact #3: Approximately 1.2 million people – roughly a quarter of the population – have taken out student loans.
Fun Fact #4: Students have borrowed $20.119 billion of which $9.157 billion has been collected in loan repayments. More than 415,000 loans have been fully repaid.
Fun Fact #5: $1.031.7 billion in loan repayments were received, $22.2 million less than last year. The total number of students completing formal qualifications reached 144,000 in 2013 – a decrease of 0.6% from 2012. The number of people enrolled in tertiary education has dropped, from 504,000 in 2005 to about 420,000 (in 2014).
Fun Fact #6: The student fees/debt system began in 1992. Prior to that, students had access to Bursaries and Student Allowances and tuition fees were minimal.
Fun Fact #7: “The median borrowing increased – from $7,441 in 2013 to $7,708 in 2014. The median loan balance also increased – from $13,882 in 2013 to $14,421 in 2014. Both were driven by higher fee borrowing: fees are rising and students are more likely to take more expensive courses. In the 2014 academic year, 72.4% of eligible students took out a loan, down from 73.8% in 2013… The number of borrowers in default has declined slightly on 2013/14, but the amount in default has increased.”
Fun Fact #8: On 17 May 2013, National announced new legislation would give the IRD powers to arrest loan defaulters at “the border” (ie, airports) if they are “about to leave or attempt to leave New Zealand after returning from overseas”.
Fun Fact #9: On 18 January this year, the first person arrested at the border for non-payment of a student debt was a 40-year-old with an outstanding debt that, with interest, had ballooned from $40,000 to $130,000.
Fun Fact #10: The Prime Minister, John Key, and Tertiary Education Minister, Steven Joyce, both received near-free tertiary education, paid nearly entirely by the New Zealand taxpayer.
Some Recent History: 1972 – 1992
Prior to 1992, tertiary education at Universities was mostly free, with minimal course fees. On top of which, a student allowance plus part-time paid employment, was usually sufficient for students to graduate with minimal debt hanging over them.
This allowed graduates to start their adult lives, careers, and families with only as much debt as they chose to take on. This was usually in the form of a mortgage and business start-up costs (if they elected to be self-employed).
Those that earned more in a professional capacity, paid a higher rate of tax. This ensured that those who stood to gain the most, financially, from a near-free tertiary system, paid more in taxation. This – in part – assisted funding for future generations to move through the tertiary education system.
Those that did not achieve high income-brackets could contribute in other ways.
When National’s Ruth Richardson became Finance Minister in 1990, the social contract between generations “paying it forward” was broken. University fees were increased; student loans were made available to cover payment for increasing user-pays;
Acknowledgement of image: NZ Herald
Ironically, Ruth Richardson herself was a beneficiary of New Zealand’s then near-free tertiary education system. In 1972, she graduated from the University of Canterbury with a Bachelor of Law (Honours). She immediately went to work – debt-free – for the NZ Department of Justice (NZ).
She has made herself a Limited Liability Company, ostensibly to minimise her tax “liabilities”. According to her website, her husband is General Manager of “Ruth Richardson Ltd”.
Some Recent History: 1986 – 2010
Though the tertiary education system was far from perfect – for example polytechnics could charge higher student fees – it offered near-free higher education and taxpayers were ultimately beneficiaries of a system that produced doctors, engineers, scientists, and other skilled professionals to take New Zealand into the 21st Century.
Even those who went overseas in pursuit of lucrative work gained valuable experience which benefited the country as a whole, upon their return.
Unfortunately, the social contract between generations was broken as the Lange-Douglas Labour Government implemented neo-liberal policies that included user-pays as a new concept upon which to base State/individual transactions.
Labour did not implement user-pays in tertiary education – but it laid the fertile ground for the following Bolger-Richardson National government to radically change University funding for course fees.
For the right-wing Labour (of the 1980s) and National, smaller government meant tax-cuts, and from 1986 there were no less than seven cuts to taxation;
1 October 1986 – Labour
1 October 1988 – Labour
1 July 1996 – National
1 July 1998 – National
1 October 2008 – Labour
1 April 2009 – National
1 October 2010 – National
Each cut to taxation has meant less revenue for the government and resulted in either reductions to social services, and/or increases in user-pays.
The ballooning of “voluntary” school fees to over a billion dollars since 2000 is the clearest example yet of tax-cuts making way for the covert rise in user-pays for what is supposedly “free” schooling in this country.
The under-funding of schools and desperate need for parents’ “donations” has become such a pressing problem that Patrick Walsh, of the Principals Association of New Zealand, has openly suggested that the ideal of free education should be abandoned;
“I think the basic principle is you undertake a study … of what it costs to actually run a school, all the operational costs including staffing, and you either fund it to the level it actually costs, or you say the pie isn’t big enough to support that and we will now allow schools to charge parents for some of the services.”
Perhaps Walsh has a point. It would at least acknowledge the current semi-user-pays system as a reality, rather than fooling ourselves with dishonest and quaint notions of “school donations”. Only then might New Zealanders clearly comprehend how we have arrived at a toxic mix of tax-cut bribes and implementation-by-stealth of user-pays in education, and other state services.
Education is not the only state service suffering from lack of adequate funding, as recent media reports from Canterbury and Waikato DHBs indicate. The increasing waiting times for public operations, and painful suffering of people with debilitating medical conditions, is a telling indicator that our health care system is ailing through lack of funding.
A September 2012 Treasury paper, “Average Marginal Income Tax Rates for New Zealand, 1907-2009“, revealed;
In 1900 tax revenues were approximately 8% of GDP. They rose to 28% of GDP during WWII and to a high of 37% in 2006. Currently tax revenues make up around 29% of GDP.
Taxation has fallen – as have once-free services which New Zealanders took for granted. At the same time, population growth has put pressure on (reduced) government revenue and spending.
In 1984 the population stood at 3,175,737 (as at 1981 Census).
By 2013: our population had swelled by over a million to 4,242,048 (as at 2013 Census).
We are spending less, for more people, to meet expectations that are simply unrealistic after seven tax cuts.
Rather unsurprisingly, the consequences of successive tax-cuts have been predictable, and well-reported in the media;
According to the most recent data, taken from the 2013 Credit Suisse Global Wealth Databook, 44,000 Kiwis – who could comfortably fit into Eden Park with thousands of empty seats to spare – hold more wealth than three million New Zealanders. Put differently, this lists the share of wealth owned by the top one per cent of Kiwis as 25.1 per cent, meaning they control more than the bottom 70 per cent of the population.
New Zealand’s wealthiest individual, Graeme Hart, is ranked number 200 on the Forbes list of the world’s billionaires, with US$7 billion. That makes his net worth more than the bottom 30 per cent of New Zealanders, or 1.3 million people.
The Progressive Response
January 31st marked a giant step Kiwi-kind that – if endorsed by voters – could prove to be the the first nail-in-the-coffin for user-pays.
Labour leader, Andrew Little, announced a policy that, while seemingly radical in the 21st century, was common-place policy in this country pre-1980s.
“… that the next Labour government will invest in three years of free training and education after high school throughout a person’s life.
Three years of free skills training, of apprenticeships or higher education right across your working life.”
He then pointedly explained not just where the money would come from – but that bribes in the form of successive tax-cuts had under-mined our once-proud cultural expectations of state-provided services;
“The money is there – the Government just has it earmarked for tax cuts. We will use that money instead to invest in New Zealand’s future.”
In effect, this would be a massive admission of failure in user-pays, and the beginning of rolling back thirty years of New Right doctrine.
The Neo-Libs Strike Back
The response of the National Party and it’s front-organisation, the so-called “Taxpayers’ Union“, has been utterly predictable.
From Tertiary Education minister, Steven Joyce, came these two ‘clangers’ via Twitter;
Judging by the angry responses on Joyce’s Twitter account, his comments were more provocative and self-defeating, than achieving any ‘hits’ on Labour’s policy-announcement.
John Key fared little better after his jaw-dropping gaffe on this issue;
Aside from the usual tactic of playing on low-paid workers’ dire plight to criticise free education (or free anything provided by the State), links were quickly drawn to Key’s on-going assault on waitress Amanda Bailey, in Auckland’s Rosie Cafe;
Prime Minister John Key has drawn a barrage of criticism after questioning if Labour’s fee free study policy was fair on waitresses who would be paying tax to subsidise students.
His comments also drew a quick response from some critics on social media who drew the link with Key’s repeated pulling of Auckland cafe waitress Amanda Bailey’s ponytail.
Key’s rhetorical question attempted to paint free tertiary education as unfair on low-paid workers;
“How much should the waitress.. how much of her taxes should go to a student who will absolutely earn a lot more?”
The question could equally be put;
“How much should the waitress.. how much of her taxes should go to…”;
- National Ministers gifting themselves 34 new BMWs. The last batch – bought in 2011 – are to be replaced only after about three years’ use. Cost? Unknown. According to National, the price is “commercially sensitive”. (Code for *politically embarrassing*.)
- Farms in the middle of the Saudi Arabian desert. Cost to taxpayer: $11.5 million (with a further $3 million in the pipeline)
- A luxury $11 million apartment in New York, and a $6.2 million luxury Hawaiian mansion. Total cost to taxpayer: $17.2 million.
- Bailing out Tiwai Point aluminium smelter, and helping Rio Tinto make a good profit ($10.2 billion!) that year? Cost to taxpayer: $30 million.
- Subsidies and special tax concessions to Warner Bros for ‘The Hobbit‘, and to other movie companies? Cost – ongoing.
But the main question should be;
“How much should the waitress.. how much of her taxes should go to paying for tax-cuts for the top 1% of New Zealanders.”
When National cut taxes for high-income earners in 2010, and raised GST from 12.5% to 15%, this was essentially a transfer of wealth from low-income earners to the uber-wealthy. Low income earners pay disproportionately more in GST than the wealthy.
People like Ruth Richardson can structure their tax-affairs by registering as a limited liability company (or using Trusts and other accounting trickery) – which allows her to claim back on GST – this puts the rest of us at a distinct disadvantage.
Other companies such as Facebook and Apple have made big profits in New Zealand, but paid minimal tax. Facebook paid $23,034 in 2013/14 (out of alleged revenue of just $846,391), whilst Apple paid $5.5 million in 2012/13 (out of $571 million revenue).
As for criticisms from the so-called “Taxpayers Union” – this is a front-organisation for National. It’s organisers are party apparatchiks from National and ACT;
Jordan Williams is closely connected to the likes of David Farrar, Cameron Slater, and Simon Lusk – all of whom are hard-Right National/ACT supporters and apparatchiks.
Right-wing blogger, David Farrar, is one of the Board members of the Taxpayers Union. He has been a member of the National Party since 1986, as his candid Disclosure Statement on Kiwiblog reveals.
John Bishop; businessman; columnist for the right-leaning NBR; and authored a “puff piece” on National’s Deputy Leader, Bill English; Constituency Services Manager, ACT Parliamentary Office, April 2000 – August 2002, “developing relationships with key target groups and organising events”.
Gabrielle O’Brien; businesswoman; National Party office holder, 2000-2009.
Jordan McCluskey; University student; member of the Young Nationals.
Jono (Jonathan) Brown; Administrator/Accounts Clerk at the Apostolic Equippers [Church] Wellington, which, amongst other conservative policies, opposed the marriage equality Bill.
Publishing criticisms from the “Taxpayers Union” is simply another PR statement from National, masquerading as independent analysis.
People’s Exhibit #1 – The Case for Key’s and Joyce’s Hypocrisy
Undeniably the worst aspect of National’s condemnation of free tertiary education rests with our esteemed Dear Leader, John Key, and Tertiary Education minister, Steven Joyce.
Both men were recipients of free, tax-payer-funded, University education.
In Key’s case, his was obtained at Canterbury University, from 1979 to 1981;
Has Key re-paid any of his University education? One suspects the answer is a firm “no”.
And with seven tax cuts, neither did he pay for it with taxation, as high-income earners paid less and less since 1986 – five years before graduating.
In Joyce’s case, as first reported on 6 August 2015, in a previous blogpost;
Steven Joyce, born: 1963.
After completing a zoology degree at Massey University, Steven started his first radio station, Energy FM, in his home town of New Plymouth, at age 21 (1984).
Student Loan system is started: 1992.
Joyce completed his University studies and gained his degree eight years before the Bolger-led National government introduced student fees/debt in 1992.
One wonders how Joyce reconciles his free tertiary education – as well as benefiting from seven tax-cuts, along with John Key – with justifying National’s issuing warrants-to-arrest for loans defaulters;
“Just because people have left New Zealand it doesn’t mean they can leave behind their debt. The New Zealand taxpayer helped to fund their education and they have an obligation to repay it so the scheme can continue to support future generations of students.”
Key and Joyce never paid for their free University tuition.
Yet they expect other New Zealanders who followed in their foot-steps to pay for theirs.
Or face arrest.
What does it say about us as a nation, when we elect hypocrites as our elected representatives, who bludge of the tax-payer?
If this does not fly in the face of New Zealanders’ values of fairness and giving everyone a fair go – then we are not the same people we once were.
Tweet from Steven Joyce, condemning Labour’s policy for free tertiary education;
Can we take it from the Tertiary Education Minister that his own university education “achieved absolutely nothing”?
National Business Review: Budget 2015 – student loans – does the government dare to act?
Ministry of Education: Student Loan Scheme Annual Report 2014
Beehive.govt.nz: Celebrating student support under Labour
Ministry of Education: Student Loan Scheme Annual Report 2015
The Wireless: Getting by on a student budget
Fairfax media: Joyce defends student loan crackdown
Fairfax media: Student loan arrest could prompt others to address debt
NZ Herald: ‘I don’t think I’m a criminal’
Teara.govt.nz: National Party – The ‘mother of all budgets’
Statistics NZ: Annual unemployment rate has increased from 1987
Ruth Richardson NZ Ltd: Ruth Richardson CV
Ruth Richardson NZ Ltd: Home page
Fairfax media: ‘Free’ education cost set to mount to more than $1 billion
Fairfax media: ‘Painful wait’ for surgery
NZ 1984 Yearbook: 3A – General Summary – Increase of population
Statistics NZ: 2013 Census Usually Resident Population Counts
Andrew Little: State of the Nation speech
Twitter: Steven Joyce
Twitter: Steven Joyce
NZ Herald: Govt backtracks on limo statements
Radio NZ: Saudi abattoir deal will proceed – PM
Otago Daily Times: Smelter gets Meridian, Govt lifeline
NZ Herald: GST rise will hurt poor the most
Fairfax media: Time to pay some tax, Facebook?
NZ Herald: Apple’s NZ unit coughs up 0.4pc tax
Kiwiblog: Disclosure Statement
Sunday Star Times: Politics – John Key – A snapshot
Wikipedia: Steven Joyce
National Party: Steven Joyce
The Daily Blog: John Key said WHAT about waitresses’???
The Daily Blog: Why does Steven Joyce hate education so much?
Previous related blogposts
This blogpost was first published on The Daily Blog on 7 February 2016.
= fs =
For a better New Zealand…
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