E nga mana, e nga reo, e nga hau e wha. Tena koutou, tena koutou, tena koutou katoa.

Thank you for your welcome. I am pleased to be able to speak at your conference. I am going to talk about the strategic direction for tertiary education in New Zealand as well as some specific areas of interest to students, such as the student loan scheme repayment bonus and changes to the way Inland Revenue administers student loans.

Government priorities

The Government sees the tertiary education system as having a vital role to play in up-skilling new Zealanders to meet the challenges of the 21st century.

Our priority is to have relevant and efficient tertiary education provision that meets the needs of students and labour market. 

We want to ensure that New Zealanders from all educational backgrounds have the right opportunities to gain world-class skills and knowledge.

We all share a common goal - ensuring New Zealand has a high quality tertiary education system for those who wish to participate. This is important for students and for the country’s economic and social performance as a whole.

Over the coming months, I would like to have a dialogue with you about how to achieve these goals.

This Government came into power with a clear set of priorities for tertiary education. They are:

• to simplify the tertiary education funding system


• to reduce central bureaucracy


• to strengthen quality and require accountability


• to support and encourage students, and


• to improve the interface between schools and tertiary education institutions.

We are working on new tertiary education policies, and I want to explain those choices and the reasons for them to you today.

The challenges and a way forward

Tight economic conditions create financial pressures on every area of Government, including tertiary education. While New Zealand is better placed than many economies to deal the economic downturn, we will suffer a sharp impact nevertheless.

You will be aware of the tough choices we made through Budget 2009. Those choices were not made lightly. One of our priorities was to maintain funded student places at tertiary institutions while also managing the impact of the previous Government’s more than $500 million worth of unfunded promises.

Those promises included $172 millions worth of student support initiatives, which we have maintained. But to pay for this, we had to phase out several scholarship programmes.

Participation in tertiary education has increased rapidly over the past decade and the cost of tertiary education has also grown significantly.

We have had to make the hard decision that our country cannot continue to meet the growing costs of tertiary participation by simply expanding the number of places in tertiary education.

We don’t have the financial resources at our disposal that we had in the recent past. We have to work smarter to find ways to do more with what we have.

We need to reduce the Government’s administrative costs and the compliance costs faced by providers. We also want less central planning – in other words, the needs of students and the economy should have a bigger say in driving the provision of tertiary education.

We are committed to improving the efficiency of the tertiary education system to maintain its effectiveness and ensure access for priority groups is not compromised.

We can help do this by prioritising spending where it can most benefit students and the economy, and by simplifying the fee maxima settings. The Government is committed to retaining restrictions on fees.

We are committed to improving fee maxima policies so that students and families can better understand the fee system. On behalf of your Union, Sophie and Jordan have told me they believe that we can and should improve the current fee regulation mechanism.

We have many options available to improve the tertiary system, including increasing flexibility for providers within their allocated funding, incentivising providers to respond to the market, and introducing a range of administrative efficiencies to the planning and funding system.

We want providers to respond better to your needs as students and we want providers to respond better to the needs of employers. As part of this we want to make information about provider quality more publicly available so you can make informed decisions about what and where you want to study. For example, we want you to know how many students complete courses and what jobs they get following study.

We also want to reduce the growth of provider qualifications, particularly at sub-degree level, to make it easier for both you and your future employers to find out what’s in a qualification and what skills will be gained from it.

Work has also begun on making it easier for students to move from secondary school into tertiary programmes and to succeed at the tertiary level. Our commitments to trades academies, trades in schools and an initial roll-out of the Youth Guarantee Scheme next year are the first steps in creating a better pathway through education for all students.

Consultation

The first part of establishing new direction for the tertiary education system is preparing a new tertiary education strategy. The strategy is important because it allows the Government to clearly outline how it sees tertiary education contributing to New Zealand’s future, and what changes it will make to ensure that contribution is achieved.

One of the big changes we will make to the Strategy is to make it something that people relate to, particularly students. We will signal the high level direction the government intends to take, in plain English. We won’t look to prescribe what, where, and how you access tertiary education. This is something that individuals are best placed to determine.

We want your views on our plans for improving the tertiary education system. I encourage you all to provide feedback on the direction and decisions I have outlined and on how these can be further developed.

A draft Tertiary Education Strategy discussion document will be available in September or October this year, and the Government will seek submissions on the strategy.

I have signalled some of the changes we are looking to make to the Fee and Course Costs Maxima policy as part of the broader review of the tertiary funding framework. Student groups, such as NZUSA, will be asked for views on fee regulation.  

Student Loan Scheme Repayment Bonus

In April, the Government introduced a 10 percent repayment bonus to borrowers who make voluntary repayments on their student loans of $500 or more in a tax year

. The bonus is to be credited to the borrower’s student loan account after the end of the tax year to reduce the loan balance.

This is a significant step to encourage student loan repayment and reduce overall repayment times. It is good news for those who want to pay off their student loans sooner. Shorter repayment times mean young New Zealanders can be debt free earlier.

I know that NZUSA is concerned that the bonus scheme is narrow and that it may not be accessible to everyone. We did make some changes to expand on our Manifesto pledge so that it would be easier for borrowers to qualify for the bonus.

For example, the scheme provides an incentive for borrowers who can’t make lump-sum payments towards their loan to make smaller and more frequent payments. And because there is no time limit on entitlement for the bonus, borrowers who are in a better position to make additional payments later in their working lives will be able to take advantage of the bonus incentive when it best suits their financial position.

We are expecting an additional 14,000 people a year to make early repayments because of this scheme.

Student Summer Scholarships

This Government recognises the financial uncertainty facing many students in the current economic climate.

As part of the response to the Prime Minister’s Job Summit, the Government is providing $4 million for summer research scholarships at universities over the summer. This Government funding matches $4 million provided by universities, making a total of $8 million available for the scheme. It will help about 1600 students gain paid scholarships over the summer holidays. 

I am also working with the Minister for Social Development on other opportunities to provide employment and support for students and young people.

Changes to Inland Revenue’s administration of student loans

The Government’s commitment to reducing bureaucracy can also be found in proposed changes to managing student loans.

We are considering having wage earners’ repayment obligations assessed on a pay-period basis rather than on an end-of-year basis, and replacing higher penalties on overseas borrowers who do not meet their compulsory repayment obligation with a lower interest rate.

We also want borrowers to be able to manage their student loan account online and to have access to a complete picture of their consolidated loan balance.

Inland Revenue is currently consulting with borrowers through an online forum

.I encourage you to give feedback on these changes also before this consultation closes on 17 July.

Thank you for inviting me and thank you for listening.

Your conference focuses today on politics. I invite you to use your political leaders, be active, and get involved in the upcoming discussion on the future of tertiary education.

We need your input. I look forward to having a productive and wide-ranging discussion, and working with you to improve the tertiary education system.

There has been a 2.8 percent increase in the number of students enrolled in tertiary education in April this year compared with the same time last year. When this is converted to Equivalent Full-time Students (EFTS) the increase is 6 percent.

Examples include: shortening the Tertiary Education Strategy, using a more consistent funding formula and, over time, having fewer steps in the planning process for funding.

The policy applies from 1 April this year and the first bonus will be credited to borrowers’ accounts after 1 April 2010 once system changes and legislation are in place.

Over the 12 months starting 1 July 2009, it is estimated that 14,700 additional people will make voluntary repayments of $500 or more (which makes a total of 54,800 people).

• Anne Tolley
• Education