Improving educational standards and improving the performance of the benefit system

Schooling Improvement

• set national literacy and numeracy standards, require regular assessment and plain language reporting
• targeted funding and support for schools dealing with struggling and disruptive students
• review teacher education and encourage schools to share effective practice
• tougher stance on truancy
• increased support for special education including special schools and increased ongoing renewable resourcing scheme (ORRS) funding.

• New Zealand has increasing, but still relatively low secondary school completion rates.  By age 15, literacy and numeracy is high on average, but the variability in achievement is greater than in many OECD countries, and underachievement is more strongly related to socio-economic status. 
• The multi-faceted approach outlined in National Party education policy statement is consistent with evidence that sustained improvement for students requires quality teaching, effective parental involvement and actively engaged students. 
• Measures to improve information for parents, extend the use of high-quality assessment, and target additional resources to students at risk should help lift performance.

The current Education Amendment Bill and review of the school sector regulations (National Admin Guidelines) can be used as vehicles for implementing national standards, reporting to parents and truancy policy.

Policy design details are critical to success - for example, ensuring that assessment and reporting is fairly benchmarked and focuses on students' progress over time,

Government's approach to school sector industrial negotiations in the next 3 years should emphasise the need for greater flexibility,  productivity and performance as a condition for salary increases

School Choice

- increase funding for independent schools by $10 million

- set up an inter-party working group, to consider policy options that will increase parental choice and school autonomy.

• Where families can exercise choice - within the state sector or between state and other providers - this can encourage greater responsiveness and performance by all schools.
• Overall, New Zealanders have more ability to choose between state schools than in many other state systems.  But choice is restricted where popular urban state schools are constrained by capacity limits.
• High quality information for parents is essential to support informed choice.  Funding and regulatory policies should avoid fuelling competition for enrolments to the point that it undermines collaboration between schools.

To maximise the benefits of additional funding for independent schools, consider options to ensure that the extra funding delivers increased capacity and reduced fees.

While the bulk of the $500 million signalled for school property capital will be required to fund projects that are already planned, consider using a proportion of any discretionary funding to ease capacity constraints in over-subscribed state schools rather than further upgrading existing capacity.

• A strong focus on improving participation and qualifications rates for senior-secondary aged students will help to improve skills and labour productivity over time. 
• This will require more responsive and flexible secondary schooling, and a greater focus on identifying and supporting students at risk of disengaging.
• Outcomes from tertiary programmes for low-achieving school-aged students are variable and, on average, unsatisfactory.  While alternatives to school may be more suitable for some students, these need to be carefully designed and monitored.
• Changes to school funding rules and regulations could encourage partnerships with polytechnics to provide a wider range of vocational training choices.

While expanding options for students, we recommend that schools' accountability for under-18 year-olds studying for school level qualifications outcomes should be retained and strengthened.  There is a risk that schools avoid responsibility for struggling students by referring them to alternative providers of variable quality.

Consider proceeding with the proposal (in the current Education Amendment Bill) to abolish early leaving exemptions, while increasing schools' ability to refer students and contribute funding and support to other providers while students remain enrolled with the school.

To ensure alternative programmes for teenagers are high-quality, carefully monitored, and centred on foundation skills, consider extending Education Review Office (ERO) mandate to cover these.

Consider changes to industry training to prioritise increased participation by young workers, with an emphasis on foundation skills

Student loan borrowers incentive

• retain interest-free student loans and indexation of living component borrowing limit
• 10% repayment bonus on voluntary repayments.

• Policies to ease graduate debt do not appear to have a significant impact on tertiary participation, or graduates' migration, labour force participation or social outcomes such as home ownership or timing of child bearing.
• With zero interest on student loans, there are is financial incentive for graduates to repay more than the minimum.  Even with a 10% discount, it is still generally no financial benefit for borrowers from making voluntary repayments. The policy may therefore only have a small impact on the level of voluntary repayments.
• Any increase in voluntary repayments induced by the 10% repayment bonus will reduce the Crown's net debt and loan provisioning costs, However, this will be offset by the deadweight cost of discounts on voluntary repayments that would be made anyway.

• We can provide further advice on the overall fiscal impact of this proposal.
• Student debt would also be repaid faster if compulsory repayments were increased above 10% for those on higher incomes (eg, 10% for income above $18,000 (as now); 12% above $40,000, and 15% above $60,000). The impact of this on Effective Marginal Tax Rates would be offset by the planned income tax reductions. The existing repayment threshold could also be lowered.
• Other ways to better target loans and align with student allowances policies could be explored. This could include requiring students to pass a certain number of their courses or limiting the number of years students can borrow for.
• We recommend that bonding, incentives and/or support for student loan repayments be developed and prioritised in the context of the strategies and industrial frameworks for each specific workforce.  This will help to ensure that such programmes are effective and fit for purpose.