February 21, 2014

Most generous in the world

From Stuff

But Tertiary Education Minister Steven Joyce has made it clear they are not going to get any more in this year’s Budget, and says students already have “one of the most generous support systems in the world”.

This is sufficiently vague that you can probably find a sense in which it’s true, and so could Mr Joyce’s counterparts in most other countries. For example, the Hong Kong system provides slightly larger loans and similar tuition subsidy, but charges (low) interest on the loans from day 1.  The US system allows much larger student loans and significant means-tested non-loan support, but provides much less public subsidy for tuition.  The UK system is more generous for students in low-income households but less generous for students in high-income households. It must be hard to find criteria where the NZ system is more generous than Germany or some other Western European countries, though.

What’s a bit more surprising is that the story treats inflation as basically a matter of opinion

From January 1999 to December 2008, they could borrow up to $150 a week. The limit has risen slowly since, and now stands at $173.56, which Mr Joyce says is in line with the rise in inflation.

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But Victoria University third-year student Annabelle Nichols said she and many of her friends were left in the red at the end of each week, and disagreed with Mr Joyce that living costs had kept pace with inflation.

If you look at the RBNZ online inflation calculator, you find that $150 in the first quarter of 1999 translates to $212.06 in the first quarter of 2014 using overall CPI, $217.38 using the food category, $346.62 using the housing category, $221.11 in the transport category, and $155.72 in the clothing category. Unless students are expected to spend the majority of their money on clothing, this seems inconsistent with Mr Joyce’s claim.

It’s possible that the Treasury has done specific living-cost modelling for students and that they do face lower effective inflation rates than the rest of the population, but given the location of many universities in places with expensive housing, that’s a bit surprising and would have been worth mentioning explicitly.

[Update: Mr Joyce was talking about just the period since 2008 ,when the loan limit stopped declining in real terms. That doesn’t affect my main point, which is that reporters shouldn’t treat inflation adjustment as a matter of opinion — they should check. Also, while 2008 is a relevant starting point for Mr Joyce, it’s not clear that it is for anyone else]

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Thomas Lumley (@tslumley) is Professor of Biostatistics at the University of Auckland. His research interests include semiparametric models, survey sampling, statistical computing, foundations of statistics, and whatever methodological problems his medical collaborators come up with. He also blogs at Biased and Inefficient See all posts by Thomas Lumley »

Comments

  • avatar
    Martin Connelly

    While Stephen Joyce might the one Minister who would go to the RBNZ inflation calculator himself, its probable that he is just repeating something an official (who should know better) has told him. But good that someone such as yourself was prepared to check, since the media could not be bothered. And looking forward to an improved Listener, now that I hear you are about to contribute.

    9 months ago Reply

  • avatar
    Ben Brooks

    “It’s possible that the Treasury has done specific living-cost modelling for students and that they do face lower effective inflation rates than the rest of the population”.

    “…its probable that he is just repeating something an official (who should know better) has told him”.

    Time for an OIA request?

    9 months ago Reply

  • avatar
    Michael Looker

    Why are we starting the comparison from the first quarter of 1999? Surely it’d make more sense to start from the fourth quarter of 2008, which is both the time that Stephen Joyce’s party was put in charge of the country and the time when the living costs borrowing limit started increasing to keep up with inflation.

    Starting from Q4 2008 and using the RBNZ calculator you find that the current weekly student loan living costs maximum ($173.56) is greater than the inflation-adjusted values of the food, housing and overall categories ($162.17, $173.53 and $164.27 respectively).

    Also, the values quoted in the post are adjusted for inflation to the first quarter of 2013, not 2014 as stated.

    9 months ago Reply

    • avatar
      Thomas Lumley

      Unless you’re just trying to make a partisan political point one way or the other, why would you start in 2008?

      9 months ago Reply

  • avatar
    John MacCormick

    Debates about generosity aside, the inflation adjustment claim passes the fact-check test if you look at CPI since Dec 2008, as the article clearly states. (Not since 1999 – it’s clear the limit was frozen for 9 years)
    Using the calculator, $150 in Q4 08 translates to $166.23 in Q4 ’13 using General CPI, and $182.99 using the housing index.
    As the new limit for Jan is set in the preceding budget with CPI data from Dec and March forecasts, the match will never be perfect anyways.
    No, Treasury doesn’t do specific cost of living modeling for students to set these rates.
    I hope that reassures you, Martin, that said official (once your understudy!) did know better and didn’t lead the Minister astray.
    And I hope that saves me from having to process your OIA request Ben :-)

    9 months ago Reply

    • avatar
      Thomas Lumley

      Thanks. I don’t think this affects my point about the media, but it’s good to know the Minister has his (suitably selected) facts right.

      9 months ago Reply

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