Is Student Loans the next Kyoto?

[Imported from Whale Oil Beef Hooked on Blogger]

Labour clearly has not thought through the total impact of their student loans BRIBE.

In their desperate bid to retain the keys to the Treasury benches they have simply implemented policy on the hoof with little thought or research, if any, into the impact.

Stuff who have an article questioning the numbers.

Labour claims the policy will cost $100m in its first year and will rise to $300m a year from 2008-2009.

National yesterday said the true cost of the scheme was between $500m and $600m a year, while ACT put it at $1.1b.

Labour’s costings appear to be largely based on lost income from the interest that graduates will no longer pay to Inland Revenue each year. The interest rate is 7 percent, and last year this earned the Crown $245m.

However, Labour does not appear to have factored in the potential for a rapid uptake in loans once they become interest-free.

National finance spokesman John Key said the forgone revenue from moving to a zero interest rate on student loans would start at about $350m.

“After four years, the taxpayer will have had to find another $3b to $4b to act as the banker offering zero-interest loans to students. After 10 years, that will be around $6b to $7b higher,” he said.

And what does the Duckman have to say about this all?

“All our costings are based on forecasts and assumptions of behaviour”

I hope and pray that the same people who based our Kyoto liabilities on Assumptions and Forecasts are not the same as the ones doing the forecasting on Student Loans.


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