John Key. Pic: NZPA

Wellington, April 19 NZPA - Prime Minister John Keys say universities will not be given carte blanche to raise fees even if the Government changes a policy capping what they can charge.

The previous Labour government instigated the policy to ensure the institutions that get large amounts of taxpayer funding did not raise fees to the extent a tertiary education was unaffordable.

At the weekend Tertiary Education Minister Steven Joyce fleshed out changes he is making to education policy, including changing the fee maxima policy.

"I'm looking at whether we should retain the maxima for those expensive courses, or whether there perhaps should be a percentage increase that's similar right across all courses, regardless of whether they're expensive or inexpensive," Mr Joyce said.

Labour's tertiary education spokeswoman Maryan Street said the changes would hurt students with higher fees and living costs as well with no compensation for increased GST.

The fee increases would hit medicine and dentistry, and other high-cost courses would be harder choices for students to make, which would not bode well for New Zealand's future health and science needs, she said.

Mr Key confirmed to reporters this afternoon that there would be changes.

"There's no question that there may be some increase but there won't be carte blanche given to universities and that's because the taxpayer has a significant stake in funding universities at the moment," he said.

Mr Key said there were some anomalies and quirks in the system which saw some courses cross-subsidising others.

"Getting to a more coherent and logical structure will be important but ultimately there will be a cap on how much those fees can go up."

Mr Key acknowledged the cost would have to be met by students, probably through higher loans.

"But I think you also have to acknowledge that those (courses) that come with a large price tag often come with a large pay cheque and the reality is they are expensive courses to run."

The Government also had a voluntary bonding scheme where doctors, for example, could get part of their loans written off in exchange for remaining and working in New Zealand.

At the weekend Mr Joyce also said he was looking at limiting the number of years a student could continue to get loans before they passed their first degree to six or seven years, and confirmed that the Government would tie in 5 percent of tertiary institutions' funding to the pass rates of some courses and reduce some of the 6000 qualifications being offered.

Earlier today Mr Key told Breakfast on TVNZ that there needed to be more respect for taxpayer money.

"The poor old cleaner that's out there, working from midnight to six in the morning, or eight in the morning, working their socks off to get paid the minimum wage is actually paying taxes to go to the students, that's fine as long as the students actually taking the process seriously."

New Zealand Union of Students' Associations (NZUSA) co-president David Do said students were also taxpayers, 90 percent of full-time students also worked, and they understood and valued what they were getting.

Mr Do said restricting access to student loans would mean some people who had to spread study over a number of years would not have the opportunity to study.

On Sunday, Mr Joyce also said the Government was considering making new permanent residents and Australians wait two years before being eligible for a student loan.

Currently new permanent residents are not allowed to get welfare benefits until they have lived here for two years and Mr Joyce said this created an incentive to sign for tertiary education courses.

The Service and Food Workers Union northern regional secretary Jill Ovens said Mr Key's remarks did not acknowledge that many of the taxpayers he referred to were working to put children through tertiary study.

"For many of our members, the cost of supporting a child or family member to go to university means working two jobs, or couples working two different shifts, night and day, just to make ends meet. The suggestion that new migrants may have to wait two years to claim student loans would have a devastating effect on these families, who rate education very highly."