Savings plan criticised

May 27, 2005

Critics have rounded on a savings scheme proposed by the New Zealand Government to help families pay for their children's higher education. They say it will not improve participation among those on low incomes and promotes the idea that education is a "private good".

Trevor Mallard, the Education Minister, has called for expressions of interest from commercial firms that might want to operate the plan. He said children aged six and under would be targeted, with a possible Government contribution of up to NZ$1,000 (£388). Participation would be voluntary, and students would have to use their savings before they could access Government loans.

New Zealanders' poor savings habits are a concern, and the Government has signalled that it will announce policies to encourage personal saving in this month's budget. But the tertiary savings plan is clearly an attempt to rein in student debt.

Since 1990, when universities were allowed to set their own fees and the Government began to lend money to students, the total amount owed has increased to more than NZ$7 billion.

While the vice-chancellors' committee said the plan was essential to "break the impasse over the continuing controversy around student loans", student representatives and academics called it the "worst tertiary policy move by any government in over a decade".

Helen Kelly, secretary of the academic staff union, said: "It would not only favour those who can afford to save, but also would discriminate against low-income families and groups such as women who take time out from paid employment to meet family responsibilities. It erodes the notion that tertiary education is a public good."

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