Universal allowance – Labour joins rest of Left

59 comments on “Universal allowance – Labour joins rest of Left ”

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1. outofbed 1

   13 October 2008 at 3:28 pm

   Great about time to

   Labour seems to be on a roll
   not quite such a roll as the Greens
   its looking good though
2. dan 2

   13 October 2008 at 3:29 pm

   I was arrested protesting for this way back when, and FINALLY… the irony is coming from a poor background, I got the student allowance anyway, with much hassle… but my just as poor friends didn’t, because their parents ‘earned too much’. Earning too much and just scraping by without offering anything to your kids, it’s a fine line…
3. Rakaia George 3

   13 October 2008 at 3:35 pm

   What services are being cut to pay for this bribe?
4. Pat 4

   13 October 2008 at 3:35 pm

   It’s hard not to be cynical…

   Why did it take 9 years?
   How will it be paid for?
   What will Cullen scrap/reneg on in the December mini-budget?
5. AndrewE 5

   13 October 2008 at 3:38 pm

   It must be an election year. How many people will die on hospital waiting lists to pay for this?
6. burt 6

   13 October 2008 at 3:40 pm

   The current allowance scheme is ripped off by too many children of wealthy farmers and businesspeople who hide their incomes and failed to deliver to too many who really do need assistance. Now, everyone will be offered the same assistance no matter their family background, which is the way it should be.

   Excellent, universal benefits – a return to true Labour party policy. Now just WFF to do the same to and many many people will be happy. Afterall if 75% of families already get WFF why not extend it to 100% – It’s only fair that people who pay for it get it as well.
7. Pat 7

   13 October 2008 at 3:40 pm

   Good point Andrew. They’ll be setting up the MASH tents in the North Shore Hospital carpark as we speak.
8. Vanilla Eis 8

   13 October 2008 at 3:41 pm

   Pat: It probably won’t cost all that much in the immediate future as students will simply not have the cost of the allowance added to their loans as they currently.

   I’m in the same boat as Dan – I got the allowance through poor parents, but friends of mine whose parents made a bit more (what was the joint threshhold there, around 54k?) were denied and had to borrow at $150 a week. That works out to some $6k a year that they’ll have to repay that I won’t.

   Oh yeah, and what grated was the wealthier kids I knew whose parents assets were in trusts and were able to claim the allowance too. One girl had a seperate credit card for costmetics forchrissakes!
9. randal 9

   13 October 2008 at 3:42 pm

   vanilli…envy is a cardinal sin!
10. forgetaboutthelastone 10

    13 October 2008 at 3:45 pm

    so today its either:
    we strengthen our education system by prosecuting the parents of truant children.
    or
    we strengthen our education system by offering a universal student allowance.

    Could John Key not see this coming?
11. AndrewE 11

    13 October 2008 at 3:45 pm

    Actually I think it’s a fairly ridiculous analogy to make but it does seem a bit strange that the government is announcing all these things that are going to cost shitloads of money when we appear to be heading into a decade of deficits.
12. AndrewE 12

    13 October 2008 at 3:48 pm

    t looks to me like Labour is going to do what The Standard has consistently argued

    Let’s not forget that the Standard is a machine! Sorry Lyn, couldn’t resist that one.

    [lprent: Agreed… Now who wrote that]
13. Vanilla Eis 13

    13 October 2008 at 3:49 pm

    randal: Indeed, but imagine how the kids who weren’t getting the allowance felt when their considerably better-off peers had A) No student loan and B) $180 in the pocket a week, plus whatever their parents shelled out.

    Hell, the only reason I’m not finishing my degree right now is that I couldn’t afford to survive in Wellington the way things were going. Taking a semester off to earn and try and cut back on debt before heading back when things are settled was the best option available.
14. Hoolian 14

    13 October 2008 at 3:53 pm

    Good policy – for once. But how will Labour pay for this? Incredibly ironic that the very party that has attacked National for its spending has just consumed 50 per cent of the operating balance for next year. Where the money will come from after that is yet to be seen.

    So, where will the $$$ come from?
15. radar 15

    13 October 2008 at 3:59 pm

    Where is the money going to come from to pay for this? Is it just me or do the people who run this blog jump up and down and clap their hands anytime the Labour Party releases policy and scream and hiss when the National Party does?
16. Pat 16

    13 October 2008 at 4:00 pm

    “So, where will the $$$ come from?”

    Kiwi investors via the Deposit Insurance Scheme? 0.10% on all bank deposits will more than cover it.
17. Higherstandard 17

    13 October 2008 at 4:04 pm

    I would have supported this wholeheartedly if it were not for the current and predicted future economic conditions – it would have been acceptable to have introduced it in the last parliamentary term or prior to the last election – introducing it now suggests that it is no more than an election bribe.

    Still awaiting some signs of sentience from either of the two major parties in response to the economic climate – I suspect I’ll be waiting a long time.
18. Steve Pierson 18

    13 October 2008 at 4:06 pm

    Pat. that’s stupid. The cost of the insurance scheme is $15 million a year and it’s an insurance scheme. The cost of the allowance scheme is many times that.

    And the rest of you, there are obviously trade-offs with any spending choice – maybe we should close the universities and put all that money into health
19. Steve Pierson 19

    13 October 2008 at 4:06 pm

    HS. read Clark’s speech

    [lprent: I haven’t read it (was whimper… almost as locked out as Key). Where is the link?]
20. Higherstandard 20

    13 October 2008 at 4:11 pm

    Maybe we should look to decrease spending on social welfare as a percentage of the budget from it’s current levels ?

    In terms of the money spent on tertiary education – I’d guess that you’d get far better long term returns by spending money in primary and secondary school than the tertiary system.

    Health is a financial black hole – you could spend the entire budget on health and probably not make a very exciting dent on health statistics.
21. lprent 21

    13 October 2008 at 4:11 pm

    Andrew: The time to do investments is in the downturns. Ignore all of the kenysian stuff – it just makes common sense at a business level. But it is counter-intuitive if you’re only interested in money and not in growing the business.

    If you assume that typically the upturns and downturns only last a matter of years. Typically when the market is up, a successful business to too damn busy running around making hay while the sun shines. They don’t have time to plan on what to do on the next cycle.

    But when the downturn happens they have spare labour/skills resources. If they have been good farmers, they also have spare hay to feed the process. So they do their R&D (pity about the Nay’s wanting to can the R&D tax though), develop new business and marketing models, and bring new skills on board during the downturn. This means that when the next upturn happens, they’re in a good position to make hay for longer.

    Of course the ones that retrench heavily and wait for the good times are also having the hassle that they have a problem rolling out of hibernation. They don’t have sufficient resources left. It is always freaky looking at how many businesses fail AFTER a recession. They try to restart to take advantage of the good environment, over-extend themselves and fall over their own bootlaces.

    The worst thing a government can do is to try and shut everything down in a vast money saving exercise. You get the artificial recession that the Nay’s caused in the early 1990’s.

    What you do with a recession in government is to take advantage of the now available resources- retrain people, put in the infrastructure, get the programmes in place. Get ready to take advantage of the next upturn. Of course to do that you have to have saved money in the good times.
    Paid off all debt – yep done that.
    Paid off a pile of future debt to reduce foreseen costs – yep partially done that.
    Be able to borrow (yep), or have money in the coffers (nope – some idiots wanted to have tax-cuts)

    3 out of 4 ain’t bad…. Now if they spend on programs that have real infrastructure benefits (unlike that idiot Muldoon) then it is a perfect time to invest.

    That is how you manage an economy…. The big hassle is all of the usual bunch of short-term get-rich quick nutters who want everything NOW! Fortunately they concentrate themselves in a single party (even Act usually has more sense)
22. Pat 22

    13 October 2008 at 4:13 pm

    “Pat. that’s stupid. The cost of the insurance scheme is $15 million a year and it’s an insurance scheme. The cost of the allowance scheme is many times that.”

    ASB currently have deposits of approx $35B. At 0.10% that’s $35M per year. Multiply that by 4 Banks and you get $140M per year.

    [then it must be 0.01%. because the number’s I’ve seen is $15million.SP]
23. Higherstandard 23

    13 October 2008 at 4:17 pm

    SP

    I only saw the report of what was siad but the bit about the fact that students only had to achieve a 50% pass rate to qualify for this scheme got me a bit worked up.
24. Pat 24

    13 October 2008 at 4:26 pm

    SP – from the NZ Herald:

    “The Government covers an institution for no fee up to $5 billion in deposits. Larger institutions will be charged a fee of 0.1 per cent above that. So a bank with $20 billion in retail deposits will pay $15 million a year in fees, and that could be passed on to customers.

    The smallest trading bank is Kiwibank with a little over $5 billion. The big four – Westpac, ANZ-National, BNZ and ASB – have deposits in the order of $30 billion to $40 billion each”.

    So, I’m not stupid. The government stands to collect upward of $140M a year.
25. Vanilla Eis 25

    13 October 2008 at 4:28 pm

    HS: That’s the deal with the current scheme – you can only access the allowance if you pass more than half of your papers in your previous semester.

    And the problem with this is? You forget that a considerable number of our elders never even had to pay for their studies – yourself probably included. A failed paper is a paper the student has to resit. Maybe we need to add an ‘envy-tax’ to everyone that graduated from university before the 90’s? 😉
26. Phil 26

    13 October 2008 at 4:30 pm

    Steve/Pat

    $15m refers to the example that has been used to help explain the level of deposit.

    For a financial institution with $20bln of deposits, the first $5bln are covered ‘free of charge’. The next $15bln are subject to a fee of 10 basis points (which is 0.1% of the total) and is $15mln

    [fair enough, you’re right on the details of the deposit insurance, but you’re dreaming if you think they’re raising that money to put in the universal allowance. SP]
27. mondograss 27

    13 October 2008 at 4:34 pm

    HS – Unless you’re going to do an endless B.A then most degrees etc wont let you progress very far without passing a decent number of papers anyway, hence no real need to set an arbitrarily restrictive pass requirement on the allowance side. That would just increase the administration of the allowance. You’re a university educated person, you know this so why put up the straw man?

    As for all the calls about how it’s going to be paid for, the longer term view is that it will largely pay for itself, firstly by reducing the draw down on student loans and therefore the accompanying loss of interest\debt write offs etc and secondly through improved economic position.
28. MikeE 28

    13 October 2008 at 4:37 pm

    wooohooo

    Beer money for the kids of rich pricks! Paid for by taxpayers who can’t afford to go to uni

    GO LABOUR

    BEER MONEY FOR RICH KIDS
29. Piggy 29

    13 October 2008 at 4:43 pm

    That’s quite an ironic comment mikee considering your first post on the blog at the bottom of this page.

    Also, I’m sure you know this, but – when ‘rich pricks’ like you scam the system, thanks to our progressive taxation system poor people pay a lot less of the burden incurred by cheating buggers like yourself, and ‘rich pricks’ pay a lot more.

    Sounds like you’re just bitter it’s kicking in after you’ve left uni.
30. Matthew Pilott 30

    13 October 2008 at 5:10 pm

    I gather this policy won’t cost anything until late 2009, and bugger all until 2012. Seems sensible enough to me. Pat et al, i assume you’re over on the right blogs right now complaining about Key’s $437 mil for education? That is designed to kick in right away…

    HS, can I suggest a light course of Socialist Participatory Democracy? Because until we get rid of the current system of minimal representation held to account every 3 years and an alienated and apathetic electorate, how else do you expect parties to treat people? Look around at the number of people who are only after tax cuts, only ask “what’s in it for me, now?”, and the level of debate engendered by right-wing attack politics such as ‘PC’ and ‘Nanny-State’.
31. Proctor 31

    13 October 2008 at 5:27 pm

    Awesome.

    As one who’s got a stupidly large loan that is slowly being repaid I’m all in favour of this. Won’t do anything for my loan but you shouldn’t have to borrow to live.

    Captcha: letters cadetship
32. QoT 32

    13 October 2008 at 5:43 pm

    So The Standard is a coherent entity with consistent arguments when it’s convenient, I see.

    [lprent: Damn I meant to locate where that was coming from. Amended the post for Steve.]
33. Ari 33

    13 October 2008 at 5:45 pm

    Hah, I think it’s more that Steve forgot what Lynn always says. A trait sadly common amongst the more bull-headed gender 😛
34. Daveski 34

    13 October 2008 at 6:05 pm

    This is so sad on a number of fronts.

    First, everyone knows that rich pricks are overly represented as parents of university students so guess who benefits. Bizarre.

    Second, what happened to the meltdown? Election bribes in the middle of a meltdown. How responsible is that?

    Trust Labour to come up with an election bribe for students 🙂
35. randal 35

    13 October 2008 at 6:54 pm

    Labour is going ahead on a broad front. they are not single issue nutters like natoinal.
36. mike 36

    13 October 2008 at 8:02 pm

    When is Cullen announcing he’s reviewing his tax package in light of recent events?
    Oh that’s right in December…
37. Ianmac 37

    13 October 2008 at 8:06 pm

    My two youngest are still at Uni and tell me they know of Rich parents who have their money in trusts, so that their student sons/daughters can qualify for the student allowance. One girl was also given a house to live in, charged 2 others rent and collected the SA. Seemed to be a bit unfair. My two boys have Student loans and work 2/3 days a week.
38. Robin Grieve 38

    13 October 2008 at 8:07 pm

    The present allowance has not been increased in years but costs have. The poor students have suffered under labour and are now expected to be happy because they are going to get something in 4 years time. I think not. Anyway it will be a big boost for the rich pricks kids who will now get a nice little payment paid for by the taxes of the poor kids parents. Labours is so lucky their core supporters are too stupid to work that out.
39. Ianmac 39

    13 October 2008 at 8:09 pm

    Mike: Cullen has been unequivocal. Tax plans remain. They are legislated for. If you have credible information to the contrary please tell.
40. Robin Grieve 40

    13 October 2008 at 8:14 pm

    Not easy to anticipate because Labour only ever promises tax cuts prior to elections and the last time they did that and legislated it they reneged on it and changed the legislation. So on form why would he not do it again.

    [no, last time the ‘chewing gum’ cuts were not legislated. That’s why they did it this time, to show they are serious about it. Remember too, cancelling those cuts paid for the upgrades to Kiwisaver. SP]
41. mike 41

    13 October 2008 at 8:17 pm

    “If you have credible information to the contrary please tell.”

    How can he avoid not pulling out of them?

    He’s already forcasting 10 years in the red and has no problem cancelling tax cuts he has promised as we found out when he back tracked on the “chewing gum” cuts.

    Labour are also very good at changing legislation to suit themselves.
42. gobsmacked 42

    13 October 2008 at 8:39 pm

    Just a friendly word for the right-leaning contingent …

    Have you noticed how Key & co have been very mild in their criticism of this? I wonder why? Perhaps because they have promised their own “generous” allowance policy later.

    Better not attack with all guns blazing, you know how the Nats love to leave you foot-soldiers standing exposed on top of the hill, while the generals retreat back to safe quarters. Brave but futile, chaps.

    (see interest-free loans, WFF, Section 59, nuclear-free, etc, etc …)
43. Ianmac 43

    13 October 2008 at 8:57 pm

    Robin/Mike: I do believe, and I’m no tax expert, that what you call the “chewing gum tax cut” was never a tax cut. It was I believe to be an adjustment to the ceilings (is that what they are called?) for the margins at which the various tax rates are paid. This was cancelled because the tiny effect (chewing gum) was more expensive to deliver than the benefit for the very few on the margins.
    Recent research published a fortnight ago had Labour at about 85%+ success at carrying out promises in this 9 years. The lowest was in the early 90’s at I think about 35%. Does that help?
44. jo zinny 44

    13 October 2008 at 9:33 pm

    pat,

    I didna read all of the comments here [ so.. maybe the answer is above] though just to clarify that a ‘basic unit’ = 1/1000 – therefore 10 b/u = 1/100 = 0.01 percent. At the $20bn sum the charge is 0.01 percent p/a on the last $15bn.
45. r0b 45

    13 October 2008 at 9:45 pm

    Labour only ever promises tax cuts prior to elections and the last time they did that and legislated it they reneged on it and changed the legislation. So on form why would he not do it again.

    Following the same “logic”, National are obviouly opposed to tax cuts because they voted against the recent company tax cuts. So on form why would they not do it again?
46. milo 46

    13 October 2008 at 10:30 pm

    So that’s two universal allowances – Superannuation and Student Allowances. There are two things that should be done for consistency.

    – First, make sure that student allowances are taxable at the marginal tax rate of the individual receiving it.

    – Second, get rid of the grossly distortionary, anti-beneficiary, inefficient, Working for Families, and replace is with the old Family Benefit, again, taxable at the marginal tax rate of the recipient (either parent, whoever has the lowest marginal tax rate).

    Now that would reduce deadweight losses, eliminate much of the marginal abatement poverty trap, and improve national productivity.

    If Labour did that, I might even vote for them ….. 🙂
47. burt 47

    13 October 2008 at 10:33 pm

    Steve P.

    Look it’s hard to argue against paying students as much to study as you pay people on the unemployment benefit. Interest free student loans cover the course costs in many areas of training/education. Great. I like it, education is universally accessible and you don’t need to borrow (as much) to live while consuming it.

    There is one problem, now that this is on the agenda we could further lower unemployment. Unemployment benefit numbers would be well down and the number of full time students would be rocketing. Great social indicators.

    See while studying you get interest free money to spend on courses, and borrow interest free for living as well.You have to do a few things and you might even pass a few – go on give it go!

    But seriously, if this is part of the cost of the social wage in NZ then we don’t want to be told what it will cost in 3 years, how about in 20 years. How much per year once it’s up and running?

    Anyway, the best I could do was treat the $120m as the cost till 2012. I jumped onto the stuff mortage calculator and assumed 6% as an interest rate over that time and assumed full repayment in 12 years (2020). 10 years to stop running deficits and 2 years of spectacular growth. Anyway, the Weekly repayments are
    $476,790.66. Total interest over that time is $78,756,609.52. That’s the cost of three years, so times that by 4 before we get to 12 years?

    How much will this actually cost? The voters need to be informed about what they are voting for, the best way to represent it would be as a fully operational cost as a cents in the dollar figure. Like ACC. EG: By 2012 this will cost ??? cents as tax for every dollar of income earned.
48. burt 48

    13 October 2008 at 10:40 pm

    milo

    I too would vote for them if they stopped picking the winners and the losers in the social cacophony we call NZ. Simple universal benefits. Special needs benefits for special needs people which are more generous than ACC.

    Get it right Labour, return to your roots and stop the social engineering.
49. noxxano 49

    13 October 2008 at 11:07 pm

    Bribes, bribes, and more bribes.

    Why has Labour waited so many years and comes with this bribe now before the election? Clark´s lust for power deserves to be punished.

    [lprent: In case you’re wondering why you are in moderation. See my comment below. ]
50. burt 50

    13 October 2008 at 11:32 pm

    Steve P.

    Has Labour considered the inflationary effect of adding $200m year into consumptive spending? Bars will flourish, so will retailers in university towns. Rents will rise as students expect, and can afford, a better standard of living.
51. r0b 51

    14 October 2008 at 12:05 am

    Clark´s lust for power deserves to be punished.

    noxx – you should probably lay off the whole “lust for power” gig for a bit. In poor taste, while Bill “win at any costs and never mind our principles” English is still fresh in our minds.

    Just a thought.
52. lprent 52

    14 October 2008 at 12:21 am

    burt: *sigh*. There is a fundamental assumption that you have wrong in most of your analysis. You are assuming that the treasury forecasts are correct.

    Now tell me how many years they have been correct in the past 9 years? After all that was the basis that the lunatic right were braying for tax-cuts. That Cullen kept getting ‘unexpected’ surpluses because he based the budgets around the most conservative models available. Their model is conservative as hell (as it should be).

    I’d note here that the ‘surpluses’ were largely mythological, they didn’t take into account the forward liabilities for an aging population. There was some very selective picking on which numbers the media wanted to publish. I’m just glad that Cullen et al stuck to their guns and started to attack both past and forward liabilities rather than giving the consumption boom that you idiots wanted.

    What treasury is looking at right now assumes that the global economy stays down and that there is a very slow rate of growth over the next 10 years. Now in all probability that is not what is going to happen. The forecasts are conservative.

    But lets say the world economy does an 1873 (the worst case scenario). We still need to increase the skills available in NZ, because in case you hadn’t noticed that is where we have labour shortages – in skilled workers. The economy is slowly transitioning from a low-wage unskilled economy to a higher skilled higher waged economy.This is priming the pump for those types of skills.

    If we don’t have those skills available then our economy will grow slower, thereby reducing our tax take (competing with low wage economies is a negative sum game), thereby making sure that everyone is poorer as the population ages.

    But the spending is phased in slowly so there isn’t likely to be a vast consumptive inflation. Besides cutting tax-cuts seems like a better idea to get rid of that problem – those are FAR more inflationary 😈
53. burt 53

    14 October 2008 at 12:30 am

    lprent

    This is what we have after 9 years of Labour govt. Our economy has grow slowly, our tax take is reducing (competing with low wage economies is a negative sum game), and everyone is getting poorer as the price of good and services outstrip wage rises. The population ages largely irrespective of political or economic conditions.

    Long terms on waiting lists and harsh poverty do however effect survivability therefore actual aging population numbers may vary. National’s increase in GRI will be welcome by old people – the old people who, when they were younger, were told by successive Labour govt’s that if they pay their high taxes now they will be looked after in retirement.
54. burt 54

    14 October 2008 at 12:54 am

    lprent

    When wanting to apply the laws of unintended consequences I look at my own situation. I do that because I have been since the mid 80’s the demographic that Labour love to hate. I don’t qualify for any social policy handouts. I pay for everything twice. Makes me a fool I guess, but that’s the way it is in the two tier model Labour like to perpetuate. The poor that need helping and the rich pricks that help them.

    So I’ve got scholarship savings in place for my kids so they wouldn’t need horrific student loans. Umm student loans turned interest free since I started that – so there is an investment opportunity for them to pay for their OE. (If I’m still here I hope they come back one day).

    Now the other thing the scholarship scheme does is pays all capital back when the teenager starts Uni. That lump sum is designed to cover their student living costs, managed by the parents. So IF we get a survivable universal student allowance I guess I get a new Ducati and the wife – who knows what she will spend her share on…. The kids will have enough to get by and giving them anymore will just disappear into recreational entertainment one way or another.
55. lprent 55

    14 October 2008 at 1:07 am

    poxx: You really are completely shallow. Tell me do you ever bother to read anything here or are you just dropping graffiti.
    After scanning all of your comments, I’m going to assume the latter. In the meantime I think you can go into moderation because you’re acting like a very strange troll – your comments veer all over the place. That is a graffiti dropper trait
56. milo 56

    14 October 2008 at 1:45 am

    lprent – actually, the “rich” have a higher marginal propensity to save, so one of the best things you can to for savings and capital formation is to cut taxes – but only at the upper end! But let me guess, you’ll now abandon economic arguments in favour of moral ones? 🙂

    And how did you do that devil smiley face? That was cool !

    [lprent: Read here for the faces http://www.thestandard.org.nz/faq/smile/ ]
57. lprent 57

    14 October 2008 at 9:16 am

    burt: The issue is where does talent arise in the population structure?. The short answer is from anywhere and it is quite rare. So we need to encourage it where-ever it arises and regardless of the family circumstances.

    Now on the way we are going to waste money on some of the scions of our more affluent families who go to uni in the absence of any other ideas. I saw a lot of that in the 70’s with massive dropout rates in first year. But by making it easier to go to uni/tech we’d allow a wider range of people to run the higher ed filter.

    At the end we’ll still get 95% drones (by my rather particular standards), but the remainder will have the talents to drive the economy with ideas. They will have the required drones (business people etc) to help make it happen. But if you don’t feed the system then you cannot get the result.

    You also can’t pick them. The strangest people are usually the most productive ones. They also take the strangest paths through education. Trying to find a innovative working programmer who actually trained as compsci is really rare. It is the same in most areas that provide new wealth for the country.

    Education is a broad investment pattern, just like R&D funding. It is also one of the most productive for a society over time. That is the way to ensure that we have the wealth to fund the growing needs of an aging population. Having retirement savings to help indirectly with capital would help as well. It is incredibly hard to get capital to exploit ideas here.

    Argghh I’d like to discuss this further – but it is time to go to work.

Links to post

1. Universal student allowance « The visible hand in economics: posted on 13 October 2008 at 3:51 pm
2. Universal Student Allowance - why did it tke Labour so long? « g.blog: posted on 13 October 2008 at 6:47 pm

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