Mike Hosking: Reality check - Kiwis are not drowning in debt

Another dramatic myth might have been busted this week. Photo / File

Opinion

Another dramatic myth might have been busted this week.

Statistics New Zealand put out some numbers around student debt and liable parent payments.

The liable parent payment is often floated about as a way of suggesting how egregious the whole process is.

How much is owed and how many endless deadbeat dads are trapped in a world of debt?

The figure owed is $2.7 billion, woe, you go $2.7 billion that's enormous, which it is.

But only sort of.

The reality is $2 billion of that is penalties, and penalties accrue.

In other words if you don't pay or you're late they bill you, and they bill you on top of billing you until they collect the money.

Now one of two things is happening.

One, you've got your genuine deadbeat dads who don't pay and they've scarpered therefore the growing penalty element is pointless because you're never getting it back.

Or two, when and if they do track these people down and arrest them at the airport or whatever, if the person is prepared to cut a deal penalties are often wiped. Common sense rules if they see a person willing to pay.

Which leaves of course of the original $2.7 billion, just $700 million in real payments. Not actually in the grand scheme of things all that much.

And that figure, by the way, is dropping and dropping for the first time in 20 years, so a reason to celebrate.

And then we come to myth number two, student loans.

Far and away the largest number of ex-students owe between $10,000 and $14,000.

Not exactly the Queen's ransom it is so often made out to be.

Of all the hundreds of thousands of students and ex-students out there, only 1600 owe more than $140,000.

And once again a lot of that is penalties.

They're people who have gone offshore hoping to escape their responsibilities.

So at $15,000 or less this is not a debt to sink you, it is not a weight that holds you back, it is not preventative to borrowing money for a house.

Student loans have been held up as a barrier to learning, as something that haunts you for the rest of your days.

It is nothing of the sort.

Where the government, by the way, aren't doing their job is in getting the arrears back.

National in government cut a deal with Australia and it's been wildly successful.

But of the 90,000 in default owing the $1.2 billion.

Once again, a lot of that is penalties and what makes it worse is the government have no idea where the 90,000 are, if they're not in Australia.

Of the locals who have defaulted they only owe $100 million, less than 10 percent.

So next time you hear the news that students are sinking in a world of debt, remember the stats.

Like so many things these days, woe, misery and financial hardship is pedalled as a piece of propaganda, not an example of any kind of fact.