His Mouth Is Writing Cheques His Body Can't Cash!

In Labour's latest sign of desperation so far, it has promised that no interest will be charged to anyone who has a student loan, as long as they remain in New Zealand.

It's not entirely clear what the Government's motive is, or whom it is targeting for the policy. Costing the policy at $700 million over the next three years, it makes a further lie of the Government's repeated claims that there is no money left for tax cuts.

The policy discriminates against several groups of people: people who have diligently paid off their student loans voluntarily, people who minimise while at University, and people who go overseas once acquiring their degrees, in order to gain new skills and experience. And the consequences of the policy are alarming: students will be encouraged to maximise their borrowings, make no voluntary payments, and stay in New Zealand rather than gain overseas experience.

The trouble with giving money to students, even when it is interest-free money, is that students are notoriously bad at thinking past the next dozen beer. The policy might actually have positive economic effects, if students maximised their student loans and invested what they didn't need in beneficial economic activities. But being the sort of people that students are, the money will be wasted. Students will have substantially more debt, and taxpayers will be fronting the cost of it.

Expect a massive blow-out in student loans from students who see the short-term benefit in getting free money that costs them nothing. Because of Labour's absurd fiscal model of financing capital expenditure--including student loans--from the current account, it will allow Labour finance ministers to make even more nonsensical claims about the so-called "real" operating surplus--once capital expenditure items have been paid for--being non-existent, and tax cuts being unaffordable.

The policy is unworkable, totally irresponsible, and devoid of any economic benefit, whatsoever. It screams of a Government that is panicking, and resorting to reckless promises that they cannot possibly hope to keep. It is an entirely negligent policy that has no place from any sensible, mainstream political party, is a clear indication that Labour have lost all faith that they can actually win an election and carry the policy through to implementation.

And the most bizarre part of the Government's statement is that the calculator used to determine the amount of savings takes the reader straight to the Labour Party website. Once clicking the link on the Official Government announcement, the reader is directed to a Labour Party page requiring that the reader submit their details so that they can receive Labour Party propaganda. Either the policy is developed by the Labour party, or by Government officials. If it is a properly-costed Government policy, then why isn't the calculator on the Government website? If the policy was developed by the Labour Party, then how valid are the costings and calculations behind the policy?

This promise isn't about delivering better educational outcomes. It's about delivering Labour Party propaganda in the most destructive, irresponsible way with no regard to the tax base.