Yes the student allowance gets abated – but it does so in the same way as the unemployment benefit. As a result, if we think the abatement rate is too high (eg is disincentivises work) that is a problem in both schemes.

If the problem is that the allowance is “too low” then that is a problem with both as well, as the student allowance sits at about the unemployment benefit level.

These discussions are surrounding the “level” of any such allowance – or minimum citizen income – that should be received by people. This is a value judgment that has to be made, but not one that I have an opinion on.

I agree that it is near impossible to live anywhere near, say Wellington, on $150 a week. However, if this is the minimum income that society wants everyone to be on, then when someone makes the DECISION to be a student they know they will have to borrow or scrounge up money in some other way to make do.

I worked long hours at the Warehouse, and for a while I worked two jobs to get income together to do it – ohh well, I made that choice because I valued the investment in my human capital.

So I have the impression that you both agree that people deserve some minimum income – but the level of income you support may be different to what other people are after. These varying assumptions are important to lay down.

If their weekly expenses are more than $310 and they have earnings of $200 a week they wont be getting student allowance abatement of $105 odd even if they qualify as it wont pay the bills – they`ll be getting a loan of $150 a week.

And students in that situation support this policy?

Ultimately it is not about strictly being sold on an idea – I can understand why people may never agree with any of this sort of thing. It is ultimately about making the value judgments we make when supporting/attacking policies transparent. I am glad that we are doing this 🙂

Hi mavxp

“Bribes to unproductive sectors of NZ cost. In the long run NZ will be the poorer for it. Those few who can avoid the poverty trap of living in NZ will do so.”

Remember, production is not the only thing we value. Government is a institution which hopefully represents the preferences of its constituents. If this is the case then the redistribution of resources in an “unproductive” way is of social benefit.

As a result, the question is – what trade-off are we willing to make in society between what we perceive is “fair” and what gives us the greatest level of material wealth.

Also note that with what I constitute as fairness in this post, students would pay all of their fees – as compared to the current situation where they only pay a third. This provides a separation between the “private investment” and the social belief that everyone deserves some “minimum income” as a member of the New Zealand “community”.

Even with redistribution in NZ, I think calling the place a poverty trap is a little excessive 🙂

I was grateful for the opportunity to study. Without the loan it would never have happened. So I had debt? So what? I knew it was an investment. And I paid near market rate in interest on it while I studied. So? Thats the cost of money. Nice little lesson there early on. I worked my summer hols to pay for my fees which inched from $3000 to $5500 by the time I finished – still pretty cheap really (figures not adjusted for inflation).

I stayed at uni 6 years all up – thanks to the Asian Economic Crisis removing demand for my degree, and retrained as something more practical than Science -i.e. in Engineering. In all my debt reached the mid 60k range. With a moderately well paying job (starting on $38k in 2001) and no financial commitments (wives, kids, houses) I paid it back in 4 years.

I am now overseas, have completed a UK MSc degree, and am looking at the changes to make education a free ride back home. I look at the wage disparity between NZ and Aus, NZ and UK, NZ and Canada, NZ and US, and I’m thinking… why should I go back? Whats the incentive? And I know, I’m not the only one.

Bribes to unproductive sectors of NZ cost. In the long run NZ will be the poorer for it. Those few who can avoid the poverty trap of living in NZ will do so.