7. GRANT ROBERTSON (Deputy Leader—Labour) to the Minister for Tertiary Education, Skills and Employment: How many people will lose access to some or all of their student allowance as a result of the changes he announced last week?

Hon STEVEN JOYCE (Minister for Tertiary Education, Skills and Employment) : I am advised that approximately 4,000 to 5,000 students would be affected by the policy change that removes student allowance eligibility for post-graduate master’s and PhD students. Those students will, of course, remain eligible to borrow from the interest-free student loan scheme. The change would not affect the vast majority of students undertaking undergraduate degrees, and, of course, the 200 weeks eligibility rule—roughly equivalent to 5 years of study—has been in place for decades. The member does have to remember the context that the Government’s expenditure on student allowances has blown out in recent years from $385 million in 2007-08 to $620 million in 2010-11, which is a 62 percent increase.

Grant Robertson: Has the Minister read the Ministry of Education’s advice that the increase in student allowance expenditure that he has just referred to is “largely due to high unemployment, particularly for younger age-groups, due to the economic recession.”?

Hon STEVEN JOYCE: That explains some of the increase. The other significant contributor to the increase was the very large increase in the parental income threshold made by the previous Government, back in the time when it thought that the golden world economic weather would go on for ever. The increasing parental income threshold was the very significant change made by the previous Government.

Grant Robertson: Will a student such as one who contacted me today, who has already used the 200 weeks of allowances allowed under his new system and is 1 year into a 2-year Master of Science programme, be able to get allowances for the final year of their study?

Hon STEVEN JOYCE: The exact details of the transition will be released in the Budget, but I can say that once somebody has had the 200 weeks of student allowances at an undergraduate level, just as happens currently they will have to move on to a student loan.

Grant Robertson: Does the Minister understand that the person whom I referenced in the last question, who is 1 year into a 2-year Master of Science programme, under the current rules would be able to get allowances next year, and will not be able to get them under the rules that he has now announced?

Hon STEVEN JOYCE: Indeed, if they are a postgraduate, yes, the member is right. The master’s and PhD degrees are no longer eligible. However, those students will be eligible to borrow from the student loan scheme, which, as we know, is interest-free. Of course, somebody who is getting a master’s degree or a PhD is actually highly likely to have a very significant income premium over somebody who has not completed such a degree. And, of course, given that their student loan repayments are income contingent, they will be paying off their loan only as their income rises.

Grant Robertson: Does the Minister realise that student allowances are available only to people from low and modest income backgrounds, and why does he think it is right that people from poor backgrounds should have to bear the brunt of his Government’s inability to grow the economy while his Government has given tax cuts to people who do not need them?

Hon STEVEN JOYCE: I appreciate that the member has not yet seen a student allowance he does not want to increase, but the reality of the situation is that student allowances should be focused on the early years of study and on low-income families—on that, I agree with the member. But once you get to postgraduate level, you are going to graduate; you are going to achieve your postgraduate degree and achieve the ability to earn a much higher income than somebody else. I would also—[Interruption] Do you want to listen, Mr Robertson? You might learn something. Also, it is important to point out that university graduates, on average, achieve an income premium, earning about 50 to 60 percent more than somebody who does not go to university, and I do not think we should actually be saying we want more subsidy of university students by people who do not actually go to university.

Grant Robertson: When he made his announcement last week, why were there no papers released to back up the announcement, and why were there no final figures on the costs or savings for the announcement, yet when Paula Bennett made her announcement this week there was a full suite of background papers and costings? Could it be that there was a need to provide a diversion last week from Mr Banks and his failing memory?

Hon STEVEN JOYCE: I think the member has confirmed that as well as never seeing a student allowance he does not want to increase, he also wears a tinfoil hat on regular occasions.