Poll Dancer by Keith Ng

...they makes an ass of you and me.

Will the real costing of Labour's interest-free student loan policy affect my vote? Well, I guess it shouldn't, since this merely confirms my analysis from July/August. (In fact, the $16.5b debt by 2015 falls handsomely within my $15-20b estimate.)

But it does.

Although the original costing from 22 June (the one everyone has been talking about) blows a hole through Labour's public costing, the second costing - ordered by the government - from 27 June is even more remarkable and damning. The opening paragraph:

You have asked us to provide a costing of providing an interest free student loans scheme, using altered assumptions... this changed estimate assumes that voluntary repayments will continue at the rate at which they occur under the current scheme, the percentage of the $150 [weekly] entitlement for living costs drawn [down] does not increase, and draw down rates increase in the following manner: [a <1% change in fees borrowing over 4 years, ~10% increases for living and course costs]"

This second costing had the cost of the scheme hovering around $300m a year until 2012. This is the costing that Labour went public with, and the assumptions are downright dishonest.

No change in voluntary repayments? 1% (!?!) increase in fees borrowing over four years?

They are such unreasonable assumptions that I can only imagine that they were designed to be so. They don't make any attempts to go half-way to meet the Treasury assumptions. In fact, it's only marginally above the lowest possible set of costing assumptions. In short, it's been rigged to make the scheme look as cheap as possible, and Cullen specifically asked for it to be like that.

I'm trying to convince myself that the Good Doctor Cullen had a gun to his head when he asked for that second costing. I'll tell you whether I succeed on Saturday.

[Update 1: Salient writer Graeme Edgeler cites this line from Question Time on 2 August:

Dr Don Brash: Has the Prime Minister asked Treasury to forecast the long-term fiscal impact of her Government’s proposed interest-free student loan policy; if not, how can she assure this House and New Zealanders that her gift to students in this election year will not be a noose around the neck of hard-working taxpayers for years to come?

Rt Hon HELEN CLARK: No, this is a Labour Party policy, not a Government one. Even the most expensive and ill-founded estimates of its cost are significantly less than what Dr Brash thinks he could spend on tax cuts.

[Update 2: No, assumptions don't make an ass of you and me. It makes an ass of u and mptions.]