Walker Holly: Student Loan Scheme Amendment Bill (No 2) — In Committee 
Text is incorporated into the Bound Volume 
Walker Holly: Student Loan Scheme Amendment Bill (No 2) — In Committee 
[Sitting date: 19 March 2013. Volume:688;Page:8682. Text is incorporated into the Bound Volume.] 
HOLLY WALKER (Green) 
: 
 I apologise to my honourable colleague. Perhaps he will get to fill in the other 15 minutes of his 20-minute call shortly. I would like to address clause 64 of Part 3 which is the clause that gives effect to one of the more significant changes in this Student Loan Scheme Amendment Bill (No 2) and that is the alignment of the definition of “net income” in the student loan scheme with that used in Working for Families. That is one of the two probably more significant changes amongst a raft of very minor technical amendments in this bill. 
We feel in the Green Party that this alignment and this new definition of “net income” with that used by Working for Families is a sad missed opportunity to correct what is a very unfair element of the definition of income currently used under the student loan scheme and indeed for Working for Families. This unfairness I think became apparent at the time when the Government introduced the increased repayment rate under the student loan scheme from 10 percent to 12 percent so that graduates now pay their student loans off at 12c in the dollar when they earn over the threshold which is less than the full-time equivalent of the minimum wage. At that time what became apparent looking at the definition of “net income” used for both the student loan scheme and for Working for Families was that Working for Families entitlements are calculated based on the household’s income before student loan repayments are deducted. That is significant because as I mentioned in my previous contribution when we are talking about who is affected by the changes to the student loan scheme we are talking about graduates. Graduates are grown-ups who have lives jobs homes and families. Many of them are eligible for payments under Working for Families the definition of income for which this bill aligns. 
Many young families have student debt and the changes therefore impact directly on families and on the mum and dad New Zealanders I talked about earlier. What this means and what is now in practice under the current regime is that the higher repayment rate for student loans of 12c in the dollar essentially operates as a tax. It operates as a higher tax or a tax increase on those families because they get no corresponding increase in their Working for Families entitlements but their income is less each week because they have higher student loan repayments. So they are actually out of pocket every week by a significant amount. 
If we are talking about aligning the definition of Working for Families income with income under the student loan scheme in our submission that needs to be aligned after student loan repayments have been taken into account. It is all very well to align them as this bill does but what this bill could have done and fails to do is correct that unfairness that Working for Families entitlements are calculated before student loan deductions have been removed. For many families this actually has had a significant impact in their weekly budget. 
The second point I want to address on this point of aligning the definition of Working for Families income with the student loan scheme income is that they are not actually 100 percent aligned by this bill. The reason for that is that by definition the student loan scheme income is always calculated on the individual level because it is the individual borrower and their individual debt. But actually Working for Families calculates income at the household level because it is looking at household and family entitlements. What I would have liked to see is the Government explore that a little further before making the changes made in clause 64 in Part 3 of this bill to actually explore whether it would be possible or practical to align the definition of income for student loan purposes with household income. I believe that that would make it easier—or allow for an amendment that would make it easier—for couples to help to pay off each other’s loans. 
If I can just explain a little bit of what I mean by this. I believe that this would help to eliminate a significant gender inequality in the student loan scheme. What we know is that women tend to take much longer to pay off their student loans and over their lifetime they have higher student loan debt because of the length of time they take off to raise children and because of the penalties and interest that they have in many cases accrued before student loans were interest free. 
An amendment such as the one that I am suggesting here which again I think is a missed opportunity that this bill did not take is that if you calculated student loan income at the household level you could allow an amendment to take place that would make it easier for partners to assist each other to pay off their loans. For example if a woman or even a man has taken some time out of the workforce to care for children their partner could continue to pay 12 percent of their income although it should be lower towards the student loan debt of their household but they could split it between their own loan and their partner’s loan so that the woman—or indeed the man but in most cases it is the woman—does not accrue a higher student loan debt over their lifetime. I think that would help to eliminate what is one of the significant gender inequalities in the student loan scheme. It could be achieved through what this clause here is trying to achieve in aligning the definition of income for student loan purposes with that used for Working for Families. 
The bill actually does not go all the way. It goes part of the way to aligning that definition of income but because it does it only at the individual level and does not contemplate doing it at the household level I think it is a significant missed opportunity to eliminate that gender inequality. It would be a complicated change to make and I acknowledge that. We have had a number of complicated changes already to the student loan scheme but I think it would have been great if the Finance and Expenditure Committee or indeed the Government had explored this opportunity in a little bit more detail because for the purposes of the bill—aligning the definition—it would actually achieve that to a greater extent. It would make it easier for partners to help each other to pay off their student loans. As a partner who is about to pay off mine and considering helping my partner to pay off his I think that would be great. 
Both of these changes I think highlight the effect that I talked about in an earlier contribution which is that although the Government and the members opposite like to talk about changes to the student loan scheme as if they will affect only those greedy selfish current students who never had it so good in fact the people affected by the changes in this bill and the other changes to the student loan scheme that have been made by this Government over the last several years are graduates who are grown-ups who are living their lives who are homeowners who have families and who indeed may be voters potentially for this Government. 
I think it ignores that group of people at its peril and that it continues with these punitive changes at its peril instead of looking at some smart amendments like those I have just outlined which could actually make life and the weekly budget easier for those families who are struggling to make ends meet but working very hard working to pay off their loans and working towards owning their own homes. There are changes we could make to the definition of income in the student loan scheme that would make things easier for those families. Sadly the clauses in Part 3 here are a missed opportunity to do that.