The Government is being warned that millions of dollars may be at stake because its flagship fees-free policy will essentially rely on "an honesty system".

But Education Minister Chris Hipkins is confident that an auditing process and signing a statutory declaration will be good enough to catch anyone attempting to rip off the system.

Tempers flared at the education select committee this morning as Hipkins crossed swords with National's education spokeswoman Nikki Kaye and tertiary education spokesman Paul Goldsmith over the policy for a year's free post-secondary education next year.

It will apply to all New Zealanders who have done less than half a fulltime year of post-school education or training, with no age restrictions.

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Hipkins said it would be easy to check school leavers, but about half of the 74,000 applicants - including refugees and overseas-born students - would have to sign a statutory declaration saying that they met the requirements.

Goldsmith said it was a lot of money at stake - $2.8 billion over four years - with "up to 50 per cent [of participants] based essentially on an honesty system".

Kaye went further: "It's an audit system and you're not going to audit everyone.There is a high likelihood that there are hundreds of thousands, if not millions, of dollars potentially spent on people who are ineligible. And you'll never know."

Hipkins said there were a number of Government processes that relied on statutory declarations - not just education.

"No Government can ever prevent people from lying when they do a statutory declaration ... We do have to rely on people being honest. I'm pretty confident we will get our systems right and that people will be caught if they are ripping off the system."

Goldsmith questioned the $2.8b spent on the estimated uptake of 14,000 students over four years - or $200,000 per student.

"A CEO can go and do an MBA. Is that really the target?"

Hipkins told Goldsmith that the policy would not apply to MBA students, but was later corrected - the policy can apply to people doing an MBA.

"The entire society and community benefits from people with high levels of education and training," Hipkins said. "The return to the Crown and the taxpayer is immense."

Kaye later grilled the minister on dropping national standards, and Hipkins repeatedly accused Kaye of misrepresenting his statements.

At one point, he said: "There's a lot of anger in one question."

Kaye: "These are the questions that hundreds of thousands of parents are asking and that schools are asking. Why did you revoke national standards without having [in place] detailed investment and tools for [measuring] progression right across the system?"

Hipkins: "Because they added no value. And if we're talking about measuring progress in literacy and numeracy, we've got tools to do that. If we're talking about science or the arts, national standards have no input into science or the arts, so therefore removing national standards makes no difference whatsoever.

"If you're a science teacher, you don't need a national standard to able to report progress a child is making in your class. I mean, what do you think teachers do all day?"

Kaye: "You do need a system to enable some consistency across school reports within a school to determine what that progress ... looks like. Those documents across the curriculum don't exist."

Hipkins: "Look, I can give you my school report from intermediate ... that shows that, back in 1991, my intermediate school had exactly such a system in place."

Kaye: "Schools are saying, 'the minister did this a week before Christmas, they're turning up next year, and they haven't determined what the new system is and you got rid of national standards without having a decent replacement.'"

Hipkins: "That's just not true."

As the minister left the meeting, Kaye wished him and education officials a merry Christmas.