TOP dubs Labour’s tertiary policy as middle class welfare

Labour has committed to free tertiary education – including 3 years of free post-school education over a person’s lifetime. As an added sweetener they have boosted student allowances and loans by $50 per week in a package that will cost $2b over 4 years. The first year of this package will be available to new students as early as 2018.

Here at TOP, we have no issue with the idea of investing in education. There are considerable benefits derived from upskilling the workforce, and the desire to invest in the future and give more kiwis the opportunity to study is admirable. However, knowing that the pot of money for education is limited, we have to make sure we are getting the best bang for our buck, both in terms of education outcomes and fairness. Labour’s policy fails on both counts.

Early Childhood Education is the better investment

During the lead up to the election, TOP campaigned for investment to be directed at early childhood learning. From a purely economic perspective, the return on investment here is simply much higher, relative to tertiary. Contrary to popular belief, the skills needed for the modern world are actually learned in early childhood; skills like collaboration, creativity, communication and critical thinking. It may look like fun and games in the sandpit, but any skilled early childhood educator will show you there is a lot more going on than that.

Early childhood education also has the greatest potential to close the gap between rich and poor. Currently, some kids in poverty are heading to school two years behind their wealthier peers, a gap that they never make up throughout their school career. This clearly has a significant impact on future outcomes for these kids, and explains one of the reasons why those in poverty go on to be over represented in many of our negative social statistics.

Tertiary Education benefits the already well off

Clearly the growing inequality in our education system is an area that needs to be addressed, unfortunately, the evidence suggests that investing in free tertiary education is not the best way to do this. We know through current attendance levels that those from poor backgrounds are considerably less likely to attend university, or other forms of tertiary education, compared to those who are well off. Of those in the bottom 20% of incomes, half won’t attend any post school training. Someone from the poorest households is 65% more likely to not do any tertiary study at all than someone from a rich household. And of course the numbers get worse the ‘higher’ you go in the education system – people from the poorest 20% of households are four times less likely to attend University compared to those in the top 20%.

In other words, Labour’s policy to offer free fees and boosted allowances will benefit the rich far more than the poor. This problem becomes even more pronounced when you consider that rich people tend to do more expensive courses. The current fees for building and carpentry apprenticeships for instance are around $2,000-$4,000 and diplomas and certificates around $12000-$19000, while University fees cost around $22000-$32000 for a bachelor's degree. Some subjects such as medicine, veterinary science, and postgraduate study are even higher - totalling around $46,000 for three years. Bear in mind that the government is already covering 75% of the cost of these degrees, so this policy change is simply giving even more money to people that already get a considerable amount of support from government. Meanwhile we have 90,000 young people not in any education, employment or training. What support do they get?

But surely cutting fees will help more people from poor backgrounds go on to tertiary study? Actually, no. The evidence shows that investing in early childhood education is actually a much better way to get poor people to improve their education outcomes in the long term. In the meantime, the best way to increase University participation would be to fund the First in Family proposal put forward by NZUSA. At a cost of $54m it would help anyone who is the first in their family go to University. This program is based off overseas research which indicates that the understanding of benefits and support plays a greater role in improving attendance in cases where higher level tertiary education is not normalised through previous experience (i.e. those where no family member has attended univeristy).

Middle class welfare

In summary, Labour’s policy will give more money to people from wealthier backgrounds, who already get considerable support, and who are likely to earn more over their lives. This is simply middle class welfare.

Should we be surprised? Under the last Labour Government inequality didn’t fall, it only plateaued, because despite their rhetoric Labour aren’t really interested in helping the poorest members of our society. At the end of the day, they are competing with National for the middle ground, which means delivering the same old, same old.

Many will say that at least Labour are doing something, but that is not good enough. If we really cared about the poor, we would put this $2b into early childhood education. Funding tertiary is too late, because by the time many kids are ready to leave school , the system has already failed them. Targeting early childhood education allows us to build prosperity on a foundation of fairness, rather than just throwing money toward a group of society that the evidence shows is already better off.

Bearing all this in mind, this leaves the question of why Labour has pushed so hard for this tertiary policy? The answer may lie in the voting statistics. While barely half of those aged 18-24 voted this election, this was actually a marked improvement from the last election, up around 6%. It’s difficult to tease out the reasons for the increase, but one could make an argument that Labour’s tertiary education offering (similar to 2005) had something to do with it. In short, their election bribe seems to have worked.

By Geoff Simmons & Andrew Courtney