Kerre Woodham: The failure of Fees Free

Do you want another example of Labour's ideology over pragmatism? I really, really hope that the previous Labour ministers have learned from their previous terms in government that thought bubbles and bright ideas do not sound policy make.  

Remember Fees Free? The policy was introduced in 2018 and was a key part of Labour's election campaign. The first year of tertiary study would be free for students. It would progressively roll out to cover three years, which never eventuated. We, the taxpayer, provided up to $12,000 in tuition fee payments for the first year of provider-based study or the first two years of work-based learning. The idea behind the objective was sound and worthy.  

The Labour Government, Jacinda Ardern, Chris Hipkins, et al, billed it as improving equity and opening the doors to higher learning for disadvantaged people for whom the doors would otherwise be closed. Labour expected to see a first-in-family effect. There would be students who would be the first in their families to attend higher education, now a significant cost barrier would be removed.   

Did that happen? Thank you for asking, no, it didn't.  

Over the years 2017 to 2022, European, Māori, Pacific, and Asian participation rates stayed relatively steady. The failure to shift the dial, the New Zealand Herald reports, was so evident that in 2020, Labour shifted the policy's purpose to reducing student debt levels. All right, well we can't get disadvantaged kids to university, we can't get first in family. Oh, I know, we'll use the taxpayer money to reduce student debt level.  

The failed objectives were to increase participation in tertiary study, expand access by reducing financial barriers, and support lifelong learning. Nope. First year fees-free was limited to learners with little to no prior study, limiting lifelong learning support, the analysis said from the Ministry of Education. It described the scheme as a lot of money for little behavioural change, or as they put it, a high deadweight cost.  

From this year, the Coalition Government has changed the scheme so it applies to the final year of study, with payment following the completion of studies. The policy has three objectives: to incentivize learners, particularly disadvantaged learners, to finish their studies, to reward learners who complete their program of study, to reduce the overall cost of study.  

The Ministry of Education officials say this is going to fail too. Particularly for degree level study, once a learner reaches their final year, they are already far more likely to complete than those first entering study. So basically, they said it's a self-fulfilling prophecy.  

By the time you reach your third year, you're going to finish whether the taxpayer is paying for your final year of fees or not. You're motivated enough to stay. They say the second goal is essentially meaningless. Of course there's going to be a completion of qualifications. And the third objective, will most likely succeed, to reduce the overall cost of study. And it will at least help the government's books, the trade-off being an estimated $230 million a year in student debt or more debt repayments than would otherwise occur.  

So thought bubbles don't make sound policy. The thing that really concerned me in the early years of Labour was that they were ideas I'd think of – ‘Oh, I know, let's do this’. Which is great, but you have to think it through, and you have to listen to your advisors, and you have to listen when people say, "Mm, I'm not entirely sure that we're going to be able to build 100,000 houses." "Yeah, yeah, yeah, but what about if we do this?" And we just throw as much money as we possibly can at it.   

And on the face of it, taking away that first year of paying your fees – "Hey, gang, I've got an idea. Let's take away that first year of fees so that disadvantaged kids will see university as a great option." I mean, it doesn't take much scratching beyond the surface to see that's not going to work. And we all said that at the time, didn't we? We discussed it.  

And now it looks like according to the analysis that fees-free final year won't work either. At least not for getting disadvantaged kids through degrees. For those who are highly motivated and have families that go to university, it's like, "Hooray!" Excellent. We'll take the $12,000 off our student debt, thanks very much, and good. If it helps motivated kids get through their study with less of a financial burden around their neck, it makes it easier for them to move onto the next phase of their life, buying a home, starting a family, this is all good.  

You know, but in terms of the objectives, it's going to fail. But they have to keep it because of the coalition agreement with both NZ First and ACT. So they might have to do what Labour did and just rewrite the objectives.   

Our objective is that we reward kids who were going to go to university anyway, who are motivated, who are successful, who we want to keep in New Zealand. We'll take $12,000 off their overall student debt, so they'll stay here, buy a house, and have a family. And on the face of it, that's not a bad objective. 

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