Labour's multi-billion free tertiary education policy called a 'poorly-targeted bribe'

PLUS: Why is Little playing his hand so far out from the election? With special feature audio: Jordan Williams on the Taxpayers' Union (and Greens) call for an indpependent costing unit.

Labour has launched a policy for three years' free tertiary education, costing the initiative at $1.2 billion a year.

Under the plan by leader Andrew Little in his State of the Nation speech in Auckland on Sunday afternoon, up to one year of 'free' post-secondary school education will be available from 2019 for all school leavers, moving to two years from 2022 and three years from 2025. Any New Zealander who has not already undertaken post-school tertiary study — including apprenticeships and polytech courses as well as university degrees — will be eligible under the policy, which will cost $1.2 billion a year once fully implemented and $265 million in its first year.

"This is money that is already budgeted for and which the current government has earmarked for tax cuts," said Little. "As the economy grows and the government gets more revenue, we will be prioritising education," Mr Little said.

Shows need for costing unit
The Taxpayers’ Union says the promise shows the need for an independent, Crown-funded policy costing unit, similar to the one proposed by the Green Party last week. 

The Greens' suggestion was widely derided on the right, but won strong backing from National Party pollster and Taxpayers' Union co-founder David Farrar — who says part of the reason he set up the Union was to help fill the void of independent analysis of party's political promises.

His organisation's immediate reaction to Labour's new policy is a broad-brush impression that it's not including all cost factors (Labour has published some headline numbers; see them here).

Taxpayers’ Union executive director Jordan Williams, says, “We have real doubts about Mr Little’s claim that the policy would cost $1.2 billion per year. It appears that Mr Little’s figures haven’t factored in the inevitable growth of education providers this policy would cause. The moment something becomes free, the actual worth of the courses becomes less of a factor. Providers will bend over backward to get new people through the doors.

“Our first impression is that this is a poorly targeted bribe – the public should at least have access to credible figures on how much it will cost.”

Why play his hand now?
In purely political terms, NBR has a question around timing.

The cost of tertiary education has been a king hit issue for Labour in the past.

On the eve of the 2005 election, Helen Clark launched her party's interest-free loan policy. 

The initiative's economic merits can be debated, but in political terms it was a master-stroke. Students (and, more, the parents who bankrolled them) loved it, and National had no time to react.

(The party has since  enjoyed three terms in power, but free student loans have proved such a compelling example of middle class welfare capture that National has only nibbled at the policy around the edges, in keeping with John Key's general theme of maintaining core Clark-Cullen policy).

Three years' free post-secondary school education is a bold policy, and Labour needs policy to shake things up.

But why would the party play its hand now, adrift from the election cycle?

Possibly because leader Andrew Little needs a jolt in support to firm up his position.

Regardless, National now has time to gauge reaction and, if necessary (and you couldn't rule it out given its track record) co-opt the policy.

Hooton to student unions: be wary of funding squeeze
"The student unions are going to want to look at this policy very carefully: Would tertiary institutions actually be forbidden from charging any fees at all?", political commentator Matthew Hooton asks.

"Or would a Labour-Green government just hope the funding was set high enough so that they didn’t need to? 

"If any and all fees are actually to be forbidden, then there will be a funding squeeze which may not be desirable as New Zealand tertiary institutions try to compete on quality with those in Australia and beyond."

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