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Brash: Cut interest-free loans to pay for rebuild

Monday 29 Apr 2013 10:50 a.m.

Former National Party and ACT leader Don Brash says the Government should use the increased cost of the Christchurch rebuild as an excuse to ditch interest-free student loans.

Prime Minister John Key yesterday said the estimated cost of rebuilding the quake-hit city was now $40 billion, up from $30 billion in December. The direct cost to the taxpayer has been bumped up by another $2 billion, but Mr Key said this wouldn't impact on the Government's plan to get the books back into surplus by 2014/15.

Speaking on Firstline this morning, Dr Brash said the last Labour Government introduced "a number of very unfortunate spending programmes" which should be cut back.

"National criticised those… but has left them all in place," he says.

"You'd think with the Christchurch earthquake costing the Government itself an estimated $15 billion, they would have used that to explain to New Zealanders why some of those programmes have to change."

Dr Brash said cutting back on interest-free student loans and superannuation would also offset inflationary pressures additional spending would bring.

"If the Government says, 'Look, we've got to spend more in Christchurch, therefore we have to spend less on interest-free student loans or New Zealand Super' or whatever, that of course would offset the increased inflationary pressures.

"One of the headaches right now is the export sector is being squeezed, and has been squeezed now for quite some time, in part because government spending has been quite strong, and it's kept the economy more buoyant than it would otherwise be."

Despite calling interest-free loans a "big electoral bribe", Dr Brash says "most people" would now support cutting it back.

"I don't think there was any ever any great policy justification for waiving interest on student loans," he says.

Christchurch Mayor Bob Parker this morning said the rebuild is contributing to a fast-growing economy in the region, but Dr Brash says it's "misleading" to say the rebuild will help the overall economy.

"It's a lot of additional money and it doesn't come from thin air – it comes from taxpayers either now or in the future. And that's why I think it's misleading to say this is a great stimulus for growth.

"I mean, the reality is more money is being spent in Christchurch, or will be spent in Christchurch, but that's at the cost of less money being spent by other taxpayers elsewhere."

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