The cost of Labour's three years free tertiary education policy would not be capped, party leader Andrew Little says.
Mr Little used his State of the Nation speech to unveil the policy which offers three years free training for an apprenticeship or any higher education approved by the New Zealand Qualifications Authority (NZQA).
The policy covers only course fees. It has no age limit, but would apply only to undergraduate education. Those who had already done post-school education would not be eligible.
"This is very much targeted at those entering the new-era workforce in the next few years and beyond and those who are in the workforce now who have had no opportunity for post-school education and who will need that assistance to get some," he told Morning Report.
It would be introduced in phases; one year's education available from 2019, two years from 2022 and three years from 2025.
Mr Little said the policy would cost $265 million per year when first implemented in 2019, and would be funded from money already budgeted for, that the government had earmarked for tax cuts.
Once fully implemented in 2025 the policy would cost $1.2 billion, but would not be capped at that figure.
"What we put together is not based on any capping, it is about meeting the demand that's there."
Official figures indicate fees policy could reduce annual borrowing from the goverment's student loan scheme by about two-thirds.
The policy covers course fees only, which in 2014 accounted for $1 billion of the more than $1.5bn borrowed from the student loan scheme. Students borrowed $417 million for living costs in 2014 and $120 million for course-related costs.
Policy a 'desperate' throwback
However Tertiary Education Minister Steven Joyce said there had been no money allocated for tax cuts at all yet.
"So what they are saying is that they want to take an extra billion dollars of money from taxpayers to replace the private contributions of students.
"Don't forget that when people graduate they earn a significant income premium, so it actually would increase inequity and inequality because you would be asking the builders and the plumbers to pay more for the education of the lawyers, the accountants and the doctors."
Mr Joyce said the whole policy was a desperate throwback to Labour's interest-free student loans policy of 2005.
Labour more desperate than we all thought. Stealing massively expensive InternetMana policy on "free tertiary education" from last election— Steven Joyce (@stevenljoyce) January 31, 2016
Each of the three phases are in a new parliamentary term, but Mr Little said it was about being fiscally responsible, not politics.
"This is about what sized bite that we can bite off and head towards our objective of three years free post-school education.
"We don't think we can do it all in one fell swoop in a single term, so we will phase it in over time. We think that is the responsible thing to do."
Mr Little said students would not be required to stay in New Zealand as a result of taking up three years free tertiary education.
"You're not bonded - there's no further constraints than there are at the moment on students."
If students did a longer course and borrowed, the present scheme would apply.
Andrew Little said the announcement was one of a number of major policies he would be unveiling this year, as he said he wanted voters to be clear about what Labour stood for going into next year's election.