Julian Wood

By Julian Wood - 12/02/2016

Julian Wood

By Julian Wood -

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Free tertiary policy lacks precision

I never knew the “glory days” of tertiary education where everything was free. After high school I was ushered into the mid-90s student life of fees, loans with interest, and years of repayments. My education cost me money and the interest accumulated while I studied.  It brought a certain clarity of mind, and a sense of urgency to my study.  

Over the years though it is fair to say we have witnessed both the costs of tertiary education and the costs to society of someone not having a tertiary education rising.  The days of a job for life are well gone, and, as Labour’s Andrew Little points out, there are concerns that in the near future increasing numbers of people will be at risk of having their jobs automated. While change in the labour market is a constant reality, it’s those with the least transferable skills that are most at risk from the looming threat of automation.

Labour is proposing to return to the halcyon days of basically free course costs with a policy that is aimed at helping workers reskill to meet the job market. Their zero-fee policy would allow every New Zealander three years of fee free study—only if Labour gets three terms in government—available at any stage of life. It is estimated this will cost the taxpayer an additional $1.2 billion dollars when fully implemented. 

A blanket policy of zero fees is not the best way to tackle the real problem of labour market instability and change brought about by technology and global forces. School leavers studying for the first time can look to the current job market to make informed decisions about their field of study. While there are always recent graduates that struggle to find work, studies show that most people who undertake tertiary study go on to have higher pay and better outcomes than those who don’t. A recent Ministry of Education report into what young people earn after their tertiary education found that five years after finishing study, a young graduate with a bachelor’s degree earned 53 percent more than the national median wage.  A young graduate with a Master’s degree earned 86 percent more than the national median wage. This makes it feasible for students to pay off this early investment in their own futures. 

Additionally, it is easy to forget that what the average domestic student currently pays in fees is still only around 30% of the true cost of their course, with New Zealanders stumping up the other 70% of their fees. Over three years of study, this adds up to around a $60,000 fee subsidy for a commerce student to get their degree, and $72,000 for an engineering student. 

So instead of paying another $18,000 to every commerce student or an additional $22,000 to each engineering student, should we not focus our scarce resources on those most at danger of their skills becoming redundant or their job being automated. Zero fees for all, seems a blunt policy solution for a very complex need.

I agree wholeheartedly that our focus should be on life-long learning, and increasing adaptability in the face of a rapidly changing labour market. However, it’s just not necessary to give more to those who already have the best chance of success.

*This is a slightly extended version of an article that first appeared in the Northland Age newspaper.

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Julian Wood

By Julian Wood -

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