John Key MP National Party Finance Spokesman

12 August 2005

Cullen confirms worst on loans scheme

"With a one-word answer Finance Minister Michael Cullen has confirmed our worst fears about the true cost of the student loans' bribe," says National Party Finance spokesman John Key.

"With the stroke of a pen the balance sheet will take a $1.7 billion hit in 2007. That's nearly five times the value of the personal tax tinkering offered by Labour in the Budget "

In a written Parliamentary question, Dr Cullen answered "yes" when asked if the Government is required to report the student loan debt at fair value when the International Financial Reporting Standards come into force in 2007.

"It's increasingly clear why Labour did not want Treasury taking a look at this before the election and why Trevor Mallard attempted to bully the critics.

"It amounts to a $1.7 billion transfer of wealth from the taxpayer to students, and that's before factoring in the increased borrowing which will occur.

"It encourages students to borrow the maximum and repay the minimum, and the effect on the balance sheet shows this hadn't been properly thought through.

"Labour has been saying for months that there is no money for hard-working taxpayers. It is simply now insulting for them to expect ordinary working people to pay for this policy," says Mr Key.

ENDS

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