Robertson Grant: Student Loan Scheme Amendment Bill — Third Reading 
Robertson Grant: Student Loan Scheme Amendment Bill — Third Reading 
[Advance Copy - Subject to minor change before inclusion in Bound Volume.] 
GRANT ROBERTSON (Deputy Leader—Labour) 
: 
 For the benefit of those listening the previous speaker was not the Hon Peter Dunne; that was the Hon Phil Heatley. It is perhaps interesting that Mr Dunne did not give that speech given some matters which I will come to shortly about what has previously happened with the matter of the student loan repayment holiday. I just want to pick up on one matter that the Minister mentioned in this speech about the question of exactly when the Student Loan Scheme Amendment Bill was going to be enacted.  
Those listening may not be aware that most of the ideas and changes in this bill were actually part of Budget 2011. So there has been quite a length of time for the Government to get its act together and decide on the changes that it wanted to make. The bill has wended its way through the process and finally found its way back here from the Finance and Expenditure Committee just last week. There was an attempt made by the Government—we quickly did the second reading and the Committee stage—but it did not quite get the third reading through in time. So we now have two retrospective subclauses in the commencement clause in this bill. I think that as a matter of principle it is worth putting on the record that retrospective commencement clauses are perhaps not ideal. I think Mr Williamson would agree with that. Yes he is nodding. They are not ideal in Government. The Government actually should have its act together— 
Hon Maurice Williamson 
: Suboptimal. 
GRANT ROBERTSON 
: —suboptimal indeed—to make sure that it actually gets a bill ready in time.  
So what we now have in the commencement clause is a retrospective subclause. It caused some consternation on this side of the Chamber during the Committee stage when it appeared that it was a retrospective subclause that was going to remove the ability not to charge interest on loans. It turns out that that is to do with the transfer of arrangements between StudyLink and the Inland Revenue Department. It was just a pity that during the Committee stage there was no Government Minister able to actually explain that at the time which perhaps raises some questions about how much the Government members actually knew about the bill. But now as a result of the disorganisation of the National-led Government we have a second retrospective subclause (4) in the commencement and that is stating that “The rest of the Act”—other than the provisions set out in the earlier subclauses—“is deemed to have come into force on 1 April 2012.” an appropriate date some might say; 1 April has obviously passed. And if you look at the Inland Revenue Department’s website you will see that it was expecting the bill to be in place by 1 April. It was telling graduates about what their obligations would be under the clauses of this bill. But the Government in its hopeless organisation of the House has failed to get this bill passed and so has to put a second retrospective subclause into this bill and that does it no credit.  
When we come to the content of the bill itself issues have been traversed in the debate that the main purpose of this bill the substantive part of this bill is to reduce the student loan repayment holiday from 3 years to 1 year. In 2007 as has been previously quoted in debates a person named the Hon Peter Dunne who was then the Minister of Revenue under the Labour Government talked about the fact that the 3-year repayment holiday represented a pragmatic approach to dealing with what we have commonly come to know as the good old Kiwi OE. The interest-free student loan scheme was put into place but it was acknowledged that people would still want to undertake their OE. Most New Zealanders who undertake their OE come home. They undertake their OE to get that experience and want to come back to New Zealand to contribute. Mr Dunne said in 2007: “We needed to take a pragmatic way through this and being someone who places great virtue on pragmatism”—Mr Dunne told the House—“it struck me that the logical course of action was to derive the solution that we have: to extend the holiday period for 3 years recognising the fact that young New Zealanders take that extended period overseas;”. That was a very pragmatic decision. However Mr Dunne has changed his mind 5 years on and is now proposing to reduce that repyament holiday to 1 year. The Labour Party—and indeed the Green Party—proposed amendments in order to keep it at 3 years but we also proposed an amendment to compromise at 2 years. The reason we proposed that amendment was that most New Zealanders—by far the majority of New Zealanders who go overseas to have their overseas experience—go to the United Kingdom and in the United Kingdom they are for the most part eligible for a 2-year visa. So actually this bill runs counter to the reality of what graduates are doing at the end of their degrees.  
It is unfortunate that that pragmatism has been let go but what is more unfortunate is that the advice that Treasury and the Ministry of Education actually gave the Government about this is that the bill is not even going to do the things that the Government would like it to do. Treasury told it that there is “Little evidence that this proposal will improve repayments. It is likely to increase debt held by overseas borrowers discourage them from returning and therefore increase the annual student loans impairment.” So Treasury actually said: “It is not going to do what you think it is going to do.” The Ministry of Education followed that up. It said that “This can be expected to have a negative impact at the margin on borrowers’ decisions regarding whether to return to New Zealand.” and that will result in an ongoing increase in the student loan debt held by the Government of about $12 million each year. So the whole policy is flawed.  
In the Committee stage debate Mr Dunne went through what he considered to be a logical process for why we should not have the 3-year repayment holiday and in doing so he actually created an argument for not having a repayment holiday at all because he wanted borrowers to be treated exactly the same wherever they live. Well if borrowers are going to be treated exactly the same wherever they live then there should be no repayment holiday and frankly actually everybody should be being charged interest or everybody should not be being charged interest. We should not have either of those situations. It is not realistic it is not pragmatic and I think it is really unfortunate that the Government has chosen to do this when there is no real positive outcome for it in terms of the policies that it is trying to achieve. So ignoring the possibility of leaving the repayment holiday at 3 years or indeed the compromise that the Labour Party proposed of 2 years I think it is extremely sad that this Government has done that and it has led to the Labour Party opposing this bill.  
There are other elements of the bill that are OK. I think that they could be helpful in ensuring that we follow up with borrowers overseas. On this side of the House I want to make absolutely clear that whatever concerns at an individual level some of us might have with the student loan scheme once people enter into those loan contracts I do believe they should be paying their loans back and we do need to follow up those people internationally who do not. Some of the changes that are being made in this bill to facilitate that include a much greater role for the contact person who is listed by a borrower when they go overseas. We asked Mr Dunne during the Committee stage of this debate to ensure that with regard to those borrowers who nominate a contact person those contact people are now aware of their increased responsibility because they do have increased responsibilities as a result of the clauses in this bill. We got some assurance about that from Mr Dunne but we certainly were looking for a greater assurance that when people—mainly parents I have to add—become the registered contact person they are aware of what their responsibilities now are. I do hope that the Inland Revenue Department and the Minister follow through on that lest we have some parents getting somewhat surprising letters and phone calls. One thing for instance is that when a contact person moves they now have to let the Inland Revenue Department know that they have moved. I am not sure many people will be aware of that and that is now an obligation in law. So it is actually something that needs to be looked at very closely.  
I regret the fact that the Labour Party has to oppose this bill but we do feel the Government has failed to listen to reason around the student repayment holiday. I would just finish by saying that this bill really does very little in terms of the student loan scheme. The amount of money that will actually be coming back now is so small that it is—what is it—0.12 percent of the nominal loan value. 
Dr David Clark 
: That’s on the optimistic end. 
GRANT ROBERTSON 
: That is the optimistic end Dr Clark tells me. This bill is not actually going to do a lot to reduce student loan debt and unfortunately I think where we are heading with the student loan scheme under this Government is greater restriction on its use. We know that in the Budget we are going to be seeing more changes around student support. The National Party has a policy that says it wants to ensure that students who borrow from the scheme are working towards qualifications that can attract an income that allows them to pay back the loan. That sounds to me like this Government is planning to restrict access to student loans for certain types of courses. That is part of Steven Joyce’s agenda to “dampen down demand for tertiary education”. On this side of the House we want more people in tertiary education. We want more people getting skills and training. Limiting access to the student loan scheme—limiting access to opportunities—is not the path forward. This bill although it tinkers around with the student loan scheme is I fear merely a forerunner to much more significant changes that will be negative for tertiary education and students in New Zealand.