Tuesday, July 26, 2005
Gosh: no interest on student loans if you stay in the country. More allowances too, but, gosh. As a key pledge and therefore, based on this term's record, reliable. Probably instructive to compare the clusters of comments here and here.
I've often wondered what National would actually propose to stop the flow of our best and brightest across the Tasman* (apart from cutting taxes - which in the context of lower employee bargaining power probably wouldn't make much difference to net wages - at the same time as not thinking of 'making the country a nice place to live' as part of their job description). Anyway, I can't imagine it would work any better than this.
Labour's bold and unprecedented move to the Left is both welcome and, well, weird.
It will of course make the loans easier to pay off. It is the first Tertiary policy during my knowledge of student unions that said unions (and all the other Tertiary-sector unions) are actually happy about.
And it will be popular with students (who need all the encouragement to vote they can get), and people who know students, and people likely to give birth to potential students, and so on. It's looking big.
Now, while I'm not a great fan of Labour, whenever I've strongly disagreed with them on actual policy National has been worse. And the Nats and Brash don't show any promise of behaving better than Helen's mob in the general deportment stakes either. So, at a pinch, and leaving aside the electoral-death-by-Winston effect, I'll take Labour.
So yay the election-year bribe.
The weird thing is that it creates some perverse incentives.
Mmm, perverse incentives.
On an economic analysis, even if you happened to have the cash on hand, you'd still be better to pay with the loan. In fact, best to max out you account and invest the difference. And there's no incentive to pay it off any faster than you have to, long as you can stand to stay in the country.
The loan scheme has always been a bit odd when compared to what for the sake of argument I'll call 'real debt'. The fact that one only has to actually pay it off if one has the income makes the monstrous debt burden less monstrous of a burden than it might seem. As such, in a sane world, it shouldn't really effect people's chance of getting a mortgage or anything.
And then there was the interest write-off while studying. One hears stories now of people cunningly investing their free loan money, thus basically ripping off the taxpayer. But it's not a common pursuit. I think most people aren't so calculating about their loan. The amount they borrow is based on more immediate concerns and the actual loan balance is just a horribly large number best ignored. I don't think that would change too much.
And one also hears stories of people going bankrupt to avoid paying their student loans. Which is just stupid. Less incentive to do that, too.
Still: more borrowing. Increasing amounts of money really and apparently lost in written-off interest. Loan-funded entrepeneurs. By the standards scandals are made these days, it will be one continuous scandal.
But I can't bring myself to dislike it.
Partly for the 'getting Labour elected' reason cited earlier.
Also because, even with the side-effects, it's an improvement. We want an innovative knowledge economy so bad, or highly-skilled workers, we probably want a tertiary education system that doesn't scare people.
Or maybe I'm just in shock at a post-1990s Government actually proposing that kind of shit. Or I'm getting in touch with my inner leftie-random-spender; kind of in counterpoint to certain cheerfully self-avowed right-wing psychos I could mention.
At least more people will pay the damn things off.
But it will take some mental adjustment in the short term: the man who has the Left taking fiscal conservatism, whose cupboard is bare for tax cuts, Mister Chastity Cullen, appears to have found rather a lot of millions rattling around in his pants ready for next April. And will no doubt whip out more over the coming weeks.
However, National's finance policy so far is mostly new spending and they're proposing to cut taxes as well.
Of course, we can't have that debate right now, no matter how hard the media tries, because they won't offer up a shadow Budget. Honestly. If it's playing games to not announce the election until you said you would, what is it when you say you'll release a policy and then delay it twice?
But still, I'll mention this now: Top of the economic cycle. Aging population. Oil crisis. Now is not the time to borrow. It's all very well paying for the costs of your infrastructure with the benefits you derive from having it. But it's a rare Government that actually does this, and if your income plunges anyway, you're a bit fucked.
I'll stick with Mike as the reliable one for the time being.
*These Tasman-flowees are of course made up for by carefully-screened immigrants from the rest of the world. But many of these people are brown, and therefore do not count.