Another limp response likely for final Tertiary Education report

The Productivity Commission continues to recommend tertiary students pay interest on their student loans. Photo: Lynn Grieveson

The Productivity Commission’s final report on the tertiary education sector is out, but don’t expect wholesale changes anytime soon.

It’s a slightly watered-down version compared to last year’s draft, following submissions and a luke-warm political reaction.

Perhaps the most controversial suggestion – diverting funding from universities to students by giving every person $45,000 to spend on education once they turned 16 – has been scrapped.

But the Commission has stuck to its guns on student loans, recommending interest be reintroduced on new borrowing.

When the draft was released every major political party came out stating it would be a bad idea to bring back interest.

In a nod to that, and realising their main recommendation is unlikely to get through, the Commission has included a second option to adjust any new borrowing for inflation by linking it to the Consumer Price Index.

The 500-page report also suggests New Zealand institutions are plagued by “inertia” and need to adapt to more progressive international models.

In defence, Universities New Zealand said the Commission had missed the mark and funding was the real barrier to change.

With an election looming there are unlikely to be any major changes to the sector this year, especially around student loans which can be an election winner, or loser.