Hobson Article - October 2015
Recently I found myself standing in front of a lecture theatre of 300 school kids, as part of Money Week, asking them some maths questions. You never know what a day in politics is going to bring.
We talked about an iPhone 5, which you can probably pick up for $800 these days. But last year I saw one advertised for $59 a week, for 100 weeks. The kids at the Money Week event had no trouble working out that it was a very bad deal.
The tragedy is, that there are plenty of people who can’t and don’t work out that it is a bad deal. After making bad decisions they swiftly find themselves and their families locked into a spiral of debt.
Budgeting services, volunteer groups and government welfare agencies help pick up the pieces when things go wrong, but obviously it’s best to help people avoid bad decisions.
New consumer credit laws that came into effect in June, which I’m responsible for as Commerce Minister, will require traders and money lenders to be much more upfront about the total cost of purchases and interest rates. The Commerce Commission is actively enforcing those new rules.
But the long term solution lies in improving the money skills of New Zealanders.
People often ask me why Financial Capability isn’t taught in the school curriculum. In fact, it is. We have a devolved curriculum system, which means that schools have the freedom to choose which subject areas will best suit their students, and how they teach them. Financial Capability is also a subject that lends itself well to being taught as a part of other subjects – like Maths and Accounting. But a lot of schools have excellent programmes and as a government we are encouraging the rest to weave it into what they offer.
The Ministry of Education produces a large range of resources for teachers in this area and also invests in teacher professional development so that teachers are equipped to incorporate financial capability in lessons about other subjects.
The event I spoke at as part of Money Week was a Finance Festival at Massey University in Albany, involving a cluster of a dozen or more schools on the North Shore that have worked together to bring the teaching of money skills to life. That’s been a successful pilot, which will next be extended to South Auckland.
A survey released during Money Week showed that nearly 90% of school kids thought they were financially savvy, while only 19% of teachers thought the same school kids had the basic skills required. The truth is probably somewhere in the middle. Our goal in government is to give the kids every reason to be confident, and to equip them well for the financial challenges of modern life.