Funding issues avoided, as NZ parties target graduate debt

New Zealand’s looming election is unlikely to move the dial for the country’s universities, as policy contestation focuses on graduate debt rather than the fundamentals of funding and research.

In an election fought largely over cost-of-living issues, political parties have unveiled fee relief proposals ranging from a debt wipe and reduced loan repayment rates to a veto on compulsory student service fees and a cut to interest charges for expatriates – proposals that critics say offer little for students or their financially stretched institutions.

The senior governing National Party has presented no new policies on university funding or research, with its higher education platform consisting solely of a “back pocket boost for graduates” – by reducing student loan repayments from 12 to 10 cents in the dollar – and tougher action against overseas-based student loan defaulters.

The main opposition Labour Party also offered few higher education-related measures in a policy manifesto unveiled nine days before the 7 November election.

Labour has promised to refocus the Tertiary Education Strategy towards “stable and sustainable” settings, with “a funding approach that gives three to five years of certainty”. But the party offered little detail on how this would be achieved, in a 101-page document that included just four mentions of “research”, two of “science” and one of “university”.

Labour has yielded more detail about its policy to reduce student loan balances by 10 per cent. Graduates’ debts would be cut in April 2027, while current and future students would attract the discount after completing their qualifications and spending a further three years in New Zealand. Borrowers who had benefited from the short-lived Fees Free scheme, or failed to meet their repayment obligations, would be ineligible.

Labour has estimated the cost of the measure at almost NZ$40 million (£16 million) a year once the scheme is “fully running”. Tertiary education policy expert Roger Smyth said the saving for graduates would be considerably less than 10 per cent because they would have made at least three years’ repayments before the cut came into play.

National’s policy to reduce student debt repayments could help people who have not yet graduated, given that debtors start repaying on earnings of over NZ$24,128 a year – a threshold that some students exceed with part-time jobs to afford rent and food.

However, Smyth said, any assistance from the repayment rate cut would be cancelled out by National’s pledge to increase default employee contributions to New Zealand’s “KiwiSaver” pension fund to 6 per cent, up from 3.5 per cent now.

National has also flagged tougher compliance action against New Zealanders who flout their student debt repayment obligations after moving overseas. The party plans to strengthen powers to arrest loan defaulters, use people’s superannuation to pay off their loans, and allow tax officials to register a “charge or caveat” over expatriate debtors’ property in New Zealand.

National will also increase the interest payable on expatriates’ student debts – currently 5.6 per cent a year, and 9.6 per cent for overdue repayments – by a further percentage point.

The centrist Opportunity Party, by contrast, has pledged to forgive up to three years’ student loan interest for graduates who have returned home. “We want to encourage young Kiwis to go offshore, get experience and build connections,” the party explained. “But we also want to bring all that back home and use it to drive the New Zealand economy.”

Opportunity has emerged from relative obscurity to loom as a likely kingmaker after the election. Smyth said the most likely future government would be a returned coalition of National, the libertarian Association of Consumers and Taxpayers (Act) Party and populist New Zealand First – with Opportunity guaranteeing to pass supply bills – or a left-leaning government of Labour, Opportunity and the Green Party.

Green, like Opportunity, has vowed to reduce interest rates for overseas student loan borrowers. Its broader policies include gradually eliminating tuition fees, writing off student debt and introducing a universal student income, bankrolling all this through a 2.5 per cent “wealth tax” on people with net assets exceeding NZ$10 million, family homes excluded.

Unlike the major parties, Green has also unveiled a detailed research, science and technology policy along with a goal of boosting national research and development spending to 3 per cent of gross domestic product. Smyth said that if the party ended up in government, it was unlikely to assume responsibility for research.

Salient, the student newspaper at Victoria University of Wollongong, interviewed representatives of six political parties about their higher education policies. While most identified cost of living as the election’s dominant issue, none of the governing coalition members supported caps on tuition fee increases or cost-cutting measures specifically aimed at students – other than Act’s policy to make the student services fee voluntary, which it said could save each student up to NZ$1,253 a year.

Smyth said the coalition parties’ latitude to make spending promises was limited by a commitment to budget surplus. “Their…argument on cost of living really amounts to: ‘Trust us, we are heading in the right direction. We will get the economy fixed [so] that government expenditure can be redirected towards social services rather than paying interest on huge government debt.’”

john.ross@timeshighereducation.com