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Government unveils fees-free cost to taxpayers

Newshub logoNewshub 14/12/2017 Anna Bracewell-Worrall

The Government will spend $2.5b on its fees-free tertiary education package over the next five years.

That cost does not include the reinstatement of post-graduate allowances, Education Minister Chris Hipkin's office has confirmed. That's because the policy hasn't come before Cabinet yet. 

The predicted cost of fees-free post-school education will go from $342m in 2017/18 to $628m in 2021/22.

Most of the cost comes from full subsidies of fees. The first-year free will cost $303m in 2017/18, increasing to $397m in 2021/22, when the second free year kicks in. 

The cost of increased student allowances is projected to increase from $50m in 2017/18 to $134m in 2021/22.

Grant Robertson takes media questions post-budget announcement. © Newshub. Grant Robertson takes media questions post-budget announcement.

There is a small additional offset in the cost of student loans.

Because students will borrow less money, there will be a $25m reduction in the operating costs of student loans in 2017/18, Mr Hipkins says.

"The overall total has been offset by a $434 million reduction in capital spending over the next five years, as students borrow less overall, even as student loan living cost payments increase."

National's finance spokesperson Steven Joyce says all the money from cancelling National's planned tax cuts has gone into tertiary education.

"It is wrong to take $1060 off average wage earners to give a year free tertiary education to lawyers and accountants," he said.

Labour campaigned on not introducing National's planned tax cuts, which would have entitled average-wage earners to a $1060 tax cut each year. 

Instead, Labour's introduced its fees-free package its and families package, which will see about 384,000 families receive an average of $75 extra per week.

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