New Zealand First leader Winston Peters says the fees-free university scheme will be scrapped in the upcoming Budget.

Peters described his revelation that the scheme would be canned as a “Budget leak”.

Fees-free study was introduced under Dame Jacinda Ardern’s Labour Government and covers the final year of tertiary education study for eligible students.

The NZ First leader was asked by Newstalk ZB’s Heather du Plessis-Allan today whether the scheme was “wasteful spending” and whether the coalition would cut it.

“I’ll give you a Budget leak right here, right now, the answer is yes,” he said.

“We are going to reshape and repurpose it for the trades and all sorts of industries where we do need it and where we can get a far better payback for our money and pay far less money doing it.”

Finance Minister Nicola Willis has since confirmed that Peters’ statement is true and that this is the last year in which students completing their studies will be eligible for fees free.

“We will have more to say about this in due course.”

The coalition, which includes Finance Minister Nicola Willis, Prime Minister Christopher Luxon and NZ First leader Winston Peters, is preparing to scrap the fees-free university scheme. Photo / Mark Mitchell

The flagship policy from the Labour-led Government provided up to $12,000 in tuition fee payments for the first year of provider-based study, or the first two years of work-based learning.

The coalition Government then changed it to cover the final year of tertiary education study.

In the 2017 election, the Ardern-led Labour Party campaigned for fees-free tuition. The scheme was introduced as part of the then Labour Government’s first 100-day plan in 2018. But in 2019, $197 million in fees-free funds that hadn’t been spent because of a lack of uptake were redirected.

NZ First leader Winston Peters and then Prime Minister Dame Jacinda Ardern in 2022. Photo / Mark Mitchell

A Herald analysis, published in January, revealed the number of disadvantaged students using the fees-free scheme for university in 2024 slumped to the lowest figure in the scheme’s short history.

Data obtained by the Herald under the Official Information Act looked at the policy from 2018 to 2024, and the relationship between the scheme’s uptake and students’ socio-economic circumstances.

It found 1.3% of the fees-free students at university in 2024 came from EQI 7 schools, which, in actual numbers, translates to 230 students, while there were 775 students from EQI 6 schools.

Both of these are the lowest numbers on record for the scheme’s six-year history.

Julia Gabel is a Wellington-based political reporter. She joined the Herald in 2020 and has most recently focused on data journalism.