Street Maryan: Student Loan Scheme (Repayment Bonus) Amendment Bill — First Reading 
Street Maryan: Student Loan Scheme (Repayment Bonus) Amendment Bill — First Reading 
[Volume:653;Page:2811] 
Hon MARYAN STREET (Labour) 
: 
 It is a pleasure to speak on the Student Loan Scheme (Repayment Bonus) Amendment Bill because there are a number of points in the bill and in the Minister’s introductory speech that I think need challenging. I thought the Minister would have understood the difficulties this bill presents. At first glance the bill looks like the usual efforts of National to support the well-off. If someone with a student loan pays $500 extra off his or her loan above the minimum requirement in any tax year that student gets his or her loan total abated by 10 percent of the extra money that was paid off—for example $50. The extra payments that qualify must be $500 and above. 
The Government says that its purpose is to encourage student loan borrowers to make extra repayments to repay their loans faster. It looks like a typical National Government bill which advantages those who can pay extra and disadvantages those who cannot. But it is on closer examination clearly a con. Why would anyone go for a 10 percent discount when the loan is attracting no interest? Any students from wealthy backgrounds who in practice would be the only ones with the resources to increase repayments would also be the ones most likely to have access to financial advice. This advice would point out to the students very quickly that they are better-off investing any extra money elsewhere and keeping their interest-free loan in its current state. So why would the Government introduce such a measure when it will not work for the less well-off which is to be expected from National but it also does not work for the better-off which one might have expected from National? 
There are two possible answers to that question. The first is that the National Government did not realise what it was doing in which case it was stupid. The second answer is that the Government knew exactly what it was doing but wanted to deflect attention away from a real agenda in the tertiary education portfolio therefore making the Government duplicitous. In that case the Government would be doing what it has done before and that is telling only half of the story. 
Just as an example from another portfolio we might recall announcements about improvements in health reforms in the National Party manifesto last year but the big missing feature which Tony Ryall at that time blurted out was that National’s intention was to lift the cap on general practitioners’ fees. He was very quickly slapped back into line for releasing something that National did not intend to release at that time. I use that as an example because I suspect that that is exactly what is happening in this case. 
It is time to remind people that National when last in office did the same thing to students. Back in 1990 it promised to scrap Labour’s student loan policy in its entirety but it failed to announce that it would be replacing it with a harsher one. What could the hidden agenda be? What could the real agenda for the tertiary education sector be? One possibility is that National might reintroduce interest on student loans because this bill makes sense only if interest is being charged on student loans. 
Another thing that National might do is lift the cap on student fees. It could consider doing that. Another thing it might consider is to stop the indexing of features of the student loan system such as the thresholds for loan repayments which are currently linked to the consumer price index and the movement in that. The Government could choose to take away the consumer price indexation and impose a freeze which as everybody knows with any increase in the CPI amounts to a cut. National consistently opposed every single measure the Labour Government took over the last 9 years to improve the affordability of tertiary education. It now quite frankly beggars belief that it would offer a discount for early payment of an interest-free loan without also having a secret agenda of reintroducing interest because that is the only circumstance in which such a bonus would make sense. 
Labour’s history in this area is to make the student loan scheme and more generally the funding of tertiary education more sustainable more reliable more stable and more predictable. This bill as it stands could be more correctly entitled the “Saving Incentives Bill” because it makes no financial sense to pay off more than is required of a loan that is generating no interest. Borrowers would be better off putting their extra dollars if they have them into an interest-bearing savings account for a deposit on a first home. When we take into account years of saving interest on that and compound interest on that we see that it makes more sense for those who leave university or a tertiary education programme and go into the workforce to put any extra money they have into an interest-bearing savings account for any other purpose than paying off an interest-free student loan. If they already have a house then they could pay more off their mortgage or anything else but the way this bill is structured makes no financial sense. If the Government has not been stupid about this bill the only alternative is to conclude that it has in fact been duplicitous. Labour opposes this bill.