Increase to Student Allowance to cost $700m

Prime Minister Jacinda Ardern.
Prime Minister Jacinda Ardern. Photo credit: Getty

The Government has been pressured into releasing the preliminary costings of its student allowance boost. 

It comes after Newshub revealed this morning a final cost of the policy had not been prepared - with the Government refusing to release any numbers. 

The policy will see student allowances and weekly loans increased by $50 a week from January 1st.

Over a four-year period, it will cost an extra $700 million. Around half of that will go to allowances, the other half will be spent on loans.

The Government previously said it would only release the cost when the next part of their tertiary package, the first year fee-free policy, is announced in a couple of weeks.

Prime Minister Jacinda Ardern defended that stance. 

"In part the first-year-free has the potential to impact on the number of students that may, for instance, enrol, so once we've finalised some of the costings for that, there'll be a link between the two and we'll be able to release both of those," she said. 

"We're talking a matter of weeks here. There is a flow-on effect from our other policy around first-year free tertiary education, and we want to make sure that when we release those figures that they are as robust as possible."

Asked why they had released a policy without a final cost, the Prime Minister said it was important to give students as much information as possible as they make decisions about study next year. 

"We've been asked for as much certainty as possible from the sector and from students."

"The most important point here is transparency. We'll be making sure that full costing is released."

But just a few hours later, the Government has delivered the figures, prepared by Ministry officials, that were presented to Cabinet for sign off - but points out they are still preliminary numbers. 

It shows a cost of $94 million in 2017/2018, increasing steeply to $200 million the following year and modestly rising by a couple of million annually in the years following. 

During the election campaign, Labour had put a much larger price tag on the policy - $270 million per year - or more than $1 billion over the four year period.