Student Loan Scheme Amendment Bill (No 3) — First ReadingText is incorporated into the Bound VolumeStudent Loan Scheme Amendment Bill (No 3) — First Reading[Sitting date: 27 August 2013. Volume:693;Page:13016. Text is incorporated into the Bound Volume.]Student Loan Scheme Amendment Bill (No 3)First ReadingHon TODDMcCLAY (Minister of Revenue): I moveThat the Student Loan Scheme Amendment Bill (No 3) be now read a first time. I nominate the Finance and Expenditure Committee to consider the Student Loan Scheme Amendment Bill (No 3).This bill continues the Government’s focus on providing proper governance over this multimillion-dollar taxpayer-funded scheme by making borrowers aware of their personal obligations to repay their loans and the consequences they will face when they choose to ignore them. I should add at this point that the overwhelming majority of borrowers do the right thing and take their repayments seriously. However there remains a small group of mainly overseas-based borrowers who consistently renege on their loan repayments. As at 30 June this year this group was responsible for 80 percent of all overdue loan repayments. This lack of personal responsibility is clearly unfair to the borrowers who do honour their repayment obligations. The main purpose in this bill is therefore targeted at the small group of overseas-based borrowers who in spite of the Inland Revenue Department’s best efforts to encourage their compliance continue to ignore their responsibilities despite having the ability to recognise them.The proposed changes which were signalled by the Government in the Budget earlier this year will give the Inland Revenue Department greater powers to deal with this group of individuals. The proposals in this bill build on measures introduced last year that allow for an information match between the Inland Revenue Department and the New Zealand Customs Service to identify borrowers at the border who are in serious default on their loan repayments and to forward their contact details to the Inland Revenue Department for follow-up. This was the first step towards identifying individuals at the border who failed to respond to the Inland Revenue Department’s best efforts to encourage them to make repayments on their loans. The principal measure proposed in this bill strengthens this provision by allowing the Inland Revenue Department to request an arrest warrant for borrowers with the most serious history of non-compliance who are attempting to leave the country after visiting New Zealand.I would like to stress at this point that this action would be taken only when dealing with the most serious cases of non-compliance. This means that action would be taken only when all other efforts by the Inland Revenue Department to persuade the borrower to make repayments have failed and only for borrowers who can clearly afford to pay. It is however intended to send a clear message to all borrowers that a student loan carries the same responsibilities as a commercial loan and that it must be repaid irrespective of where the borrower may choose to live.The other major proposals in the bill are also based on promoting personal responsibility for loan repayments and greater fairness across the student loan scheme. The principal proposal of these provisions is to bring overseas-based borrowers’ repayment obligations more into line with their New Zealand - based counterparts. Under the current rules an overseas-based borrower’s repayment obligation is based on their loan balance. For New Zealand - based borrowers however their repayment levels are based on their level of income.The effect of this difference is that the repayment obligations for an overseas-based borrower decrease as the person’s loan balance falls whilst a New Zealand - based borrower’s repayment obligation increases as their personal income rises. In the interests of greater fairness the bill proposes to fix repayment obligations for overseas-based borrowers based on their loan balance. Overseas borrowers with a loan balance over $45000 will also have their repayments rates increased. The effect of these proposed changes will be to reduce the current repayment time and the amount ofinterest these borrowers will ultimately have to pay on their loans. This will result in a fairer more efficient outcome for all concerned in the student loan scheme.The remaining measures proposed in the bill are largely remedial in nature. Their purpose is to ensure that the student loan scheme operates as intended and that it delivers value for money to the Government for the taxpayer and for borrowers. It is therefore with great pleasure that I commend this bill to the House.Hon DAVID CUNLIFFE (Labour—New Lynn): I rise in the first reading of the Student Loan Scheme Amendment Bill (No 3) to say that Labour fundamentally and categorically opposes this bill.Tracey Martin: Hooray!Hon DAVID CUNLIFFE: Thank you very much—thank you Tracey. The interest-free student loan scheme was one of the great achievements of the Clark Labour Government. It was actively supported and developed by my colleague Trevor Mallard who is sitting to my right—Hon Trevor Mallard: Ably assisted by Grant Robertson.Hon DAVID CUNLIFFE: —and was ably assisted by Grant Robertson in a backroom capacity. I am not sure that he sits as far to my right as Mr Mallard but that is a different matter.Removing punitive and unsustainable interest charges from student loans de-fanged what had been an increasingly impractical andgenerationally unfair system for funding tertiary education. Generations of students built up a mountain of debt and if they got behind in their payments the debt mountain grew with interest and penalties. It became like a lead collar—like a lead collar that would bow them down when they wanted to hold their heads up and get a decent start in life. It was like graduating with a mortgage before you had a home.Labour is very proud that in its last Government it was able to provide a pathway to the future for our young people by taking the interest component off student loans. National knows that it cannot repeal this policy because it is wildly popular with middle New Zealand as well as providing a ladder up for all young New Zealand students. It is the kind of ladder that people like I do not know Paula Bennett or John Key might have enjoyed in their youth—the kind of ladder that National MPs seem to have a habit of pulling up after they have climbed it to make the climb harder for others.David Bennett: Change the line.Hon DAVID CUNLIFFE: The member at the back may not like it but that is the honest truth of what we are seeing here.It is not just a little bit of fiscal nip and tuck. Like the Government did with the odious Government Communications Security Bureau legislation just a couple of short weeks ago this bill crosses the line. It crosses the line from prudent financial management to an erosion of civil liberties because it imposes criminal sanctions on young New Zealanders trapped in the Kiwidiaspora who might want to come home and start a family. But what the National Party is saying is: “Sonny Jim you step your foot inside our territory you come back through that airport and we’re going to slap an arrest warrant on you for criminal sanctions because you haven’t kept up with your student loan payments.” That is not only morally wrong but also brain-dead. It is brain-dead.“Glossy” there might be smirking away. He will be smirking on the other side of his pate very soon because the Labour Party is coming after National’s majority. The Labour Party is coming after this tired useless National Government and the Labour members are going to be claiming back those Treasury benches in just 1 year’s time from now. When we do the students of New Zealand will know that we are not going to criminalise them if they get behind in student loan payments. It is as simple as that.We all know the situation of people who have gone overseas to seek a bit of experience or on an OE. Sometimes you go through hard times while you are away. You cannot always get continuous employment. You get behind and the old debt repayments mount up because the student loan interest-free remission does not apply when you are overseas. To be hit with a criminal penalty is reprehensible.This bill is overly punitive. It turns a civil matter into a criminal matter by introducing arrest warrants. The Tertiary Education Union says it is a poor alternative to making tertiary education more affordable and accessible. Instead of providing an easier pathway up a gentler slope what the Government is doing is putting a rock at the top and if you slip you get crushed by it. It is so very National with due respect Mr Speaker because of course you have graduated to impartiality in your current form.Hon Trevor Mallard: I don’t know about that.Hon DAVID CUNLIFFE: I find myself tempted to agree with my learned colleague from time to time but not too much on this occasion perhaps because it would be against the Standing Orders and I am the one who is going to get booted out. So let us not go there but thanks Trevor for the suggestion on that one.The other thing about this bill diving down into the grubby details is that Treasury’s analysis is very poor. Treasury’s analysis is very poor. It claims that overseas repayment obligations reduce the percentage of borrowers whose obligation does not cover their interest from 14 percent to 3.5 percent. That takes no account of the fact that interest rates are at historic lows just because the current Government could not manage economic growth out of a wet paper bag. So the interest rates are artificially low and the analysis is skewed but Treasury makes no allowance for it.There are thousands of Kiwis who are currently overseas who are keeping up with their loan repayments but how many of those repayment obligations are increased dramatically and arbitrarily by this Minister of Revenue who appears to have nothing but contempt for young New Zealanders? There is no means testing here. There is no acknowledgment of circumstances just a Government that cannot and will not listen.A better approach would be to create more opportunities for young New Zealanders to stay in the country and earn decent wages. [Interruption] Mr Bennett knows that in a 30-year time series of data mapped against different Governments economic growth is higher under Labour Governments than National ones. Business confidence can sometimes be lower but economic growth is higher which is why it is kind of ironic that the Government has the Minister for Economic Development having that title. He should be more like the “Minister for Economic Stagnation”. That would be a more apt title for him. That is right. There he is trying to sniff the breeze in the National caucus to work out which way Judith Collins is going to come at him from. [Interruption] John Hayes says it is coming from him. There we are. That is wonderful. That is wonderful.The interest-free student loan scheme was one of the most important means of social mobility introduced by the last Labour Government. It meant that young people from modest backgrounds could take on the debt they needed to get a tertiary education without having to worry that the interest component of their repayments would snowball to the point where they could not repay. We agree with the fact that when you are offshore that particular subsidy should be suspended but we do not agree that the failure to keep up—often through circumstances beyond anybody’s control—should give rise to criminal sanctions. Just like in the Government Communications and Security Bureau Amendment legislation where in the name of protecting New Zealanders from foreign espionage we have stripped them of their civil liberties here we are crossing the line from the prudent management of public debt to the incursion into New Zealanders’ civil rights.This Government does not really care about young people getting ahead. This Government does not really care about climbing up the ladder of advantage. If it did it would not be pulling the ladder up in front of a generation of young Kiwis who have yet to make the grade. It would not have stood by when the Reserve Bank introduced loan-to-value ratios without an exemption for first-home buyers. It would not have passed in this very House today the stages of a bill which once again concede what ought to be the right of Government to the same Reserve Bank this time prostituting fiscal policy at the altar of Milton Friedman and giving the Governor of the Reserve Bank effective control over the Minister’s portfolio.Is it because that Minister does not want to govern for economic growth? Is it because he thinks his department is so inferior to the Reserve Bank? Is it because he has lost hope in the future of our country? If that Minister has lost hope colleagues why do we not give him a rest? Why do we not give him some time to recover his energy? The members on this side of the House are full of energy. We are ready to give it a go are we not colleagues? The members on this side of the House think it is time for a change and so does New Zealand. And guess what fellers? A change is coming very soon. A change is coming very soon. We are coming after the Treasury benches and you lot can be very afraid. Thank you.DAVID BENNETT (National—Hamilton East): “A change is coming”—a change is coming to the Labour Party all right. Obama used those words not Cunliffe not at quarter to ten at night to do your speech to be leader of the Labour Party. How pathetic is that? Nobody is listening nobody is watching no union officials are here watching and no members of the Labour Party are here—if there are any members left—and poor old David Cunliffe has to come to this House and use the Student Loan Scheme Amendment Bill (No 3) first reading to do his leadership speech. That is a shame David but it is good to see that you are surrounded by loyal people like Trevor Mallard—people whom you can depend on to be beside you. Sue Moroney is there. Sue Moroney is a definite supporter of David Cunliffe. Sue has gone out there and said she is supporting David Cunliffe.The ASSISTANT SPEAKER (Lindsay Tisch): Order!DAVID BENNETT: Sue Moroney has never got anything right so supporting David Cunliffe is a really good start. Iain Lees-Galloway the man behind is looking at coming up a few pegs or two if Mr Cunliffe gets in. The Labour Party members are playing a game. It is a great game for us to watch and see but it is disgraceful that they have to come and take advantage of the Student Loan Scheme Amendment Bill (No 3) to play their game.This bill is important. This bill is needed because we need to send the right signals to people who borrow and use Government funding—the funding that is the ladder that gives people that step up in life. It is not about taking the ladder away as some people say. It is about actually making sure there is fairness and equity in respect of those people who take advantage of the ladder that the Government gives. That fairness and equity is recognising that you have a debt and paying that debt back. That is the important thing. When we look at some of the statistics—have a look at these.Tracey Martin: Oh here we go!DAVID BENNETT: Yes have a look at these—New Zealand First Party—facts are important. When your leader comes back he will tell you what facts are. If you look at the overseas borrowers there are 64 percent who are in default compared with 36 percent of borrowers in New Zealand. If you look at the amount in default it is $93.4 million for New Zealand borrowers who are here and $536.1 million in default for overseas borrowers. That is 15 percent of the amount in default is owed by New Zealand borrowers and 85 percent of the defaulting loans are owed by borrowersoverseas. Those are New Zealanders who have taken the ladder to get themselves up and have not repaid that ladder. That ladder requires some repayments so that the next generation of New Zealanders can have that ladder so they have got that opportunity. It is a pity how the Labour Party a party that is supposed to be there supporting people in their time of need comes in here and makes political advantage out of something that is there for the good of those people who want to be supported and to be given a start in life. So shame on the Labour Party. It is a disgrace to the values of a real Labour Party. David Shearer stood for a real Labour Party. We are not going to see that out of any of the three monkeys who are trying to stand now. Thank you.Dr MEGAN WOODS (Labour—Wigram): It is my pleasure to take a call on the Student Loan Scheme Amendment Bill (No 3). I think that as one of the few members in this House who lists a student loan on her pecuniary interests I would actually like to talk about the generational politics of student support. In the late 1980s and the late 1990s something happened for a generation of young New Zealanders and I and a number of my colleagues on this side of this House had their politics born at this time. My colleagues Andrew Little and Grant Robertson first spoke to your predecessor Mr Speaker Dr The Rt Hon Lockwood Smith down megaphones on university campuses in New Zealand in the late 1990s. It was around this very issue of paying for our education and how we were going to fund that.It is fair to say that for politicians of my generation on this side of the House student loans and student politics have been defining factors for us. What we have in this Student Loan Scheme Amendment Bill (No 3)—Hon Trevor Mallard: It was for me.Dr MEGAN WOODS: No it was not Mr Mallard. I could talk about the free education that your generation got—a nice part of our history. Mr Mallard will have the right of rebuttal in his speech when he comes to that. But one of the things that we have to think very carefully about is what is actually being done in this piece of legislation. This piece of legislation that we have before us is nothing but a gimmick. It is a headline-grabbing gimmick from a National Government that wants to appear hard on criminals only in this case those criminals are student loan borrowers who might be trying to sneak back into their country through the secret passages of airport terminals. It is going to set up very good border security. Get the beagles out—those criminals might be trying to sneak back in.Let us actually have a look at the kind of advice that the former Minister of Revenue got in regard to this measure when he suggested it as one of his big flagship items in Budget 2013. Well he was told that the police had advised him that very little could be achieved without photos in the crowded area of airports that it would be difficult and that it would be time-consuming. So the very people who are going to be called on to monitor this legislation to enforce this legislation told the Minister who introduced it that it was going to be difficult to do. The officials went on to tell the Minister that the proposal would have cost implications for the courts and that although the number of expected arrest warrants was low and the exact number was unknown the cost to the courts had not been estimated. The full cost of doing this has not even been calculated. Its sole purpose was to create a big headline about how something big was going to be done to create what is in the grand scheme of the student loan scheme a minor problem.Should student loan borrowers who are living overseas be making their repayments? Absolutely. We are not disputing that. But what we are saying is that this is a big gimmick where actually what we could have are far more effective measures to achieve the desired outcome of making it easier for overseas-based borrowers to make their repayments. I will give some credit to this Government. I think this Government has putin place several measures to make the repayment of student loans for those overseas much more simple. I have talked to numerous friends of mine who live overseas who have student loans who are no longer having to try to figure out how through a bank to do a bank transfer. There are much more seamless and integrated ways to do this and this is to be congratulated.But then on the other hand this Government has made it much harder for student loan borrowers who are living overseas. It has reduced the repayment holiday for those who are going out to seek their adventure in the world to gain the experience that we know will make New Zealand a great place. That experience is to be celebrated but by truncating the amount of time you can be overseas without making repayments we are restricting the opportunities of so many of our young people. This is something that we should not be doing. This is not to the benefit of us as a country. This is not what we envision when we think about what our education system can deliver for our 21st century New Zealand. It is just not on.Over the last few months I have had a reasonably steady stream of emails from student loan borrowers who are living overseas who now face really real consequences to their lives. I implore this Government to put in place some more carrots to make it possible for these people. Sometimes life intervenes and people have got themselves into a predicament where they now are so far behind in their student loan repayments they live overseas and the prospect of coming forward is just too daunting. It is not that they do not want to start making their repayments. They are happy to start making repayments and making them regularly but what is absolutely frightening them is the prospect of the size of the back payment they may have to stump up with. Some of these people are in their late 30s and early 40s now if they are like me and they started university in the very first years of the student loan scheme. They have bought a house they have got on with their lives and they are living in fear for their security—that they are going to have to sell their house in order to make these repayments. Why can we not have some period of amnesty where people can come forward they can start their repayment schedule but they are not going to have to rip apart the fabric of their lives in order for them to get their house in order as it were?I urge the Minister to think about this and for members opposite to think about this—that we are not going to destroy the lives of New Zealanders who are living overseas or we are not going to make New Zealanders living overseas make a decision of “Well I’m just not ever going to go back to New Zealand. That’s it. I can’t. We’re not going to darken its doors again because it is just too difficult.” Let us actually make it more easy. Let us take away the difficulties for these people to put everything in place. We know that this works. When Labour was in power it introduced an amnesty for student loan borrowers when Dr Cullen was the Minister of Finance and it was very successful. Thousands and thousands and thousands of people came forward and we actually did see real results. Why is it that we would not think about a measure such as that in relation to this? Members of my generation face very different prospects for their future from those of their predecessors—the people who have gone before them.Another measure—not only is there the big headline “Arrest them at the border.” that was introduced in this bill but also there were measures to speed up the repayments from compliant overseas-based borrowers. One of the important facts to remember is that the rates for student loan borrowers are based on the level of their loan and not their income. So if you have gone to live overseas and you are working as a waitress your repayments are going to be the same as if you were a lawyer. This is not a repayment schedule that is based on income. This is not a progressive repayment schedule. It is based on the balance of your loan. These repayments are going to be increased through this piece of legislation and an even more regressive system is going to be put in place.It is going to make it even more difficult for overseas borrowers and run the risk of more people getting into the situation where it is simply too difficult and they are not compliant with their repayments. This is from a Government that does not believe in fairness. It is from a Government that does not believe in equality. It does not believe in giving young New Zealanders every chance to get ahead and that is what we need to see.I would like to see so many changes to this legislation. Labour is opposing this legislation but we know that it will make its way to the select committee. I implore members opposite to actually have an open mind. Think about what this is doing to a generation of New Zealanders because it is not fair and it is not equitable. Thank you.HOLLY WALKER (Green): Well there has been another Budget back in May and now we have in front of us in the House another series of bad student loan amendment changes. For a Government that loves to deal in stereotypes lazy privileged students are a favourite. So without fail every year you can predict in every Budget there will be some kind of punitive change to student loans and allowances and then a few months later as we are here tonight we will be here in Parliament debating the legislation to give effect to them. This time it is the lazy loan-defaulting overseas borrowers who of course in fact are not actually students at all but are graduates and who are unlikely enough as it is to ever come home to New Zealand to contribute to our economy and society without slapping them with the measures in this bill the Student Loan Scheme Amendment Bill (No 3). The fact of the matter is that those stereotypes that the Government loves to peddle are hardly ever accurate. Later in my contribution I will give you a real-life example of the types of people likely to be impacted by these changes.But first of all let us have a look at what the bill actually does. As we have heard from previous speakers the headline provision of this bill is that it allows the Inland Revenue Department to request an arrest warrant for student loan borrowers who “persistently default on their student loan obligations.” The first thing I would point out here is that this is hardly a proportionate policy response to the amount of debt that overseas borrowers owe in default. At the time of the Budget we saw some great headlines from the Government about how overseas borrowers owed $427 million of debt in default which sounds like a lot. But when you put it in the context of the $13 billion of total student debt it is a drop in the bucket. It is in fact 3.2 percent of the total student debt. It is not a proportionate response from the Government to target that 3.2 percent of total student debt with measures like that proposed in the bill. It makes it a criminal offence for overseas borrowers to knowingly fail or refuse to make efforts to pay. They have to make it a criminal offence because you need to be committing some kind of criminal offence in order to be able to grant an arrest warrant.Let us just think about this for a minute. Having lived and studied overseas for a number of years I can confirm that it is very easy to get behind on your student loan repayments while you are overseas. Notwithstanding some recent changes that have made it slightly easier it is still difficult. Information is hard to come by. It is complicated to make voluntary repayments. Communicating withStudyLink from overseas is difficult. Negotiating a repayment holiday or an interest exemption is unnecessarily complicated as I found when I tried to convince the New Zealand Qualifications Authority that my Master’s degree from the University of Oxford was equivalent to a level 7 qualification in New Zealand which apparently it did not believe. Many New Zealanders living or studying overseas simply give up and they resolve to deal with the problem when they get back to New Zealand. Is that the right thing to do? Probably not but it is the reality. When it is that complicated and difficult it is not surprising that that is the attitude many graduates take.What this bill does is make it much more difficult for people who do this to come home and sort it out. It whacks them with a massive disincentive to ever come home because they will now face potential arrest and criminal conviction. It is madness I would contend for New Zealand to be introducing laws and policies that make it less likely for our tertiary graduates living overseas to come home when in fact we have record numbers of New Zealanders leaving every year and not coming back. We need policies that encourage them to come home like the opportunity of a debt write-off scheme for staying in and contributing to New Zealand not policies like this that scare them off from ever returning.Not only is the threat of arrest and a criminal record a major deterrent against returning to New Zealand for borrowers but also it poses major enforcement challenges. As noted in the regulatory impact statement and by the previous speaker Megan Woods there are some difficulties around enforcement powers in airports. It will be up to the police to decide whether to exercise these arrest powers. I put it to the House as to whether it is really the best use of police time at our airports to have the police running around after student loan defaulters and trying to make a judgment call about whether their bags are already on the plane and whether they have children with them and therefore whether it is worth actually arresting them. I do not think so because I think the police at our airports have a far more important job to do which is actually providing airport security. So enforcement is a joke.The second major change that this bill makes is increasing the repayment obligations for overseas borrowers and that is specifically for borrowers with balances greater than $45000. Those with a balance between $45000 and $60000 will now have to pay back $4000 a year on their loan regardless of their income and those with a balance of over $60000 will have to pay back $5000 a year on their loan. The major flaw with these new repayment obligations is that they are in no way means tested so a graduate living overseas could have a very low income or indeed no income at all and still be required to pay $5000 a year off their student loan. If they do not because it is simply impossible for them to do so because they do not have an income that allows them to do that then they face the punitive arrest powers granted by the bill. So it becomes a vicious cycle.The changes in the bill very much depend on that threat of an arrest warrant actually working as an incentive to start repaying. If that threat does not work if it does the opposite and simply makes a person throw up their hands and say “Well I’m not even going to try.”—and the officials note in their advice that they do not expect this threat to be particularly effective—then all that this change will do is increase the rate of growth of default by increasing the repayment obligation and that is noted for the Minister of Revenue in the regulatory impact statement. Clearly he chose to ignore it. This really begs the question of whether the Government is actually interested in pursuing practical legislative change or just interested in trying to be seen to crack down on those lazy students and graduates. But as I said at the outset of my contribution I think we all know which of those it is.In addition the bill inexplicably changes the repayment rules for overseas borrowers so that their repayment obligation does not decrease as their loan balance decreases. I cannot for the life of me figure out why this has been included and what it achieves. It is manifestly unfair because it creates an inequity where two overseas borrowers who owe the same amount today could have very different repayment obligations based on what their loans were when they left New Zealand some time ago not based on what they have repaid since and not based on their income. Again this puts in place another disincentive to them to actually meet their repayment obligations since there is noreward for them doing so in the form of a decreasing obligation. I cannot see what is achieved in the Government’s view by including that in this bill.At this point I want to place on record before the House a real-life example of how the new repayment obligations would affect a New Zealand family living overseas. This family wrote to us at the time that the changes were announced in May in Budget 2013. This is their situation. The husband has a postdoctoral fellowship in the United States worth $41000. The wife is currently being examined for her PhD but she is otherwise unemployed. They have a toddler and a second baby on the way. Combined their minimum compulsory repayment threshold has now just increased from $6000 a year to $9000 a year which as far as they can tell—and they are correct in this—has no means testing or anything that takes into account their income the fact that they have only one income and the fact that they have two dependants; only the fact that they are now living overseas. At the current exchange rate for where they live that roughly calculates to 18.6 percent of their household income.They chose to leave New Zealand to do a postdoctoral job because it is how that father can establish his international career but they have a strong intention of returning to New Zealand and fully intend to pay off their loans. Indeed they are currently fully compliant with their loan repayment obligations. But they cannot do it in a way that will stretch them so financially when they have children so young. Are these lazy privileged obligation-dodging students—the stereotype the Government likes to peddle in? No they are not. They are hard-working New Zealanders.Hon Trevor Mallard: John Hayes says “Yes.”HOLLY WALKER: John Hayes says “Yes.”Hon Annette King: He got a free education.HOLLY WALKER: Yeah good on you Mr Hayes; I will let them know that you said that. They are actually hard-working New Zealanders who are building their careers overseas and starting their family and are currently fully compliant with all of their obligations. What on earth is achieved by sucking out nearly 20 percent of their income on to their student loan repayments back home at a time when they only have one income and two small children? It is beyond me. Perhaps John Hayes would like to take a call and elaborate on that. So this is a dangerous and unnecessarily punitive policy that is based on the Government wanting to be seen to do something on a populist problem and not based at all on facts or real-life evidence.Hon KATE WILKINSON (National—Waimakariri): It is a pleasure for me to stand and take a call on the first reading of the Student Loan Scheme Amendment Bill (No 3). New Zealand has one of the most generous student loan schemes in the world but I think it is important to realise that it is a loan scheme. It is not a gift. It is not a bequest. It is a loan. The very nature of a loan is that it is repaid. It is a very simple premise. Loans are by their very nature to be repaid. This bill is about people who owe money to taxpayers and it is expecting them to pay it back. That is all it is. This bill is about expecting them to pay back taxpayers’ money and it is expecting them to take personal responsibility.My colleague the honourable David Bennett has already mentioned some of the quite alarming statistics where overseas borrowers make up 15 percent of the number of borrowers but they make up 64 percent of those in default and they owe 85 percent of the total debt. In fact they owe something like $536 million compared with $93 million for New Zealand borrowers. So this is actually incentivising overseas-based borrowers who are letting the side down with their slow repayments and their high level of loan defaults and it is actually impressing upon them the importance that it is a debt it needs to be repaid it is too high and we expect them to abide by and comply with their side of the bargain.The loan scheme does represent a major financial commitment by the Government and by taxpayers to support people in tertiary education. We certainly want to support students in tertiary education but it is important that students do take personal responsibility for repaying their loans. Loan borrowers need to keep up their end of the deal. They need to repay their loans promptly particularly those borrowers from overseas. This bill is a good bill and I commend it to the House.TRACEY MARTIN (NZ First): Kia ora Mr Speaker. I had hoped to start my contribution with the things that New Zealand First agrees with but unfortunately I am going to have to get sidetracked a bit and correct some of the anomalies in the information provided by Government members. This is what happens when you pass speech notes between each other—the same wrong information gets repeated.I am not sure whether Government members have bothered to read the student loan scheme report that their own officials put together for 2012. If they would like to go and have a look on page 35 I think they will find that what we are talking about is debt that has been unpaid for a period of over 5 years. It values at $284 million. There are 33000 New Zealanders whom we are talking about and 3000 of them are currently still residing in New Zealand so that gives us 30000 New Zealanders who are based overseas. Fourteen percent of that outstanding amount is to borrowers who took out their loans in 1992. So if we just put some real facts and figures on the table—and I could always get a copy of the report for Government members if they would like to read the facts—Maggie Barry: The logic remains the same.TRACEY MARTIN: Of course Ms Barry would not want to read the facts. The other thing too that we need to correct is that Minister Todd McClay said that these powers would be used only when all other methods are exhausted.If I take the Student Loan Scheme Amendment Bill (No 3) and turn to page 6 new section 162B(3) inserted by clause 8 in Part 1 states: “To avoid doubt the court may make an order under subsection (2) even if the Commissioner is able to recover the debt by other means.” So in other words it specifically says that an arrest warrant can be sought even if there are other means to gain this debt to secure this debt. Let us just put that on the record for the Minister. I can send him a copy of that highlighted as well.One other little thing before I get on to New Zealand First’s major contribution is that there is nothing as annoying as an arrogant Government that decides that legislation will be passed prior to it even having its first reading. This is an excerpt fromStudyLink today. It says: “Going overseas? ... From 1 April 2014: Inland Revenue will be able to request an arrest warrant for borrowers who knowingly defaulted on their overseas-based repayment obligation and are about to leave New Zealand.” Why on earth would we bother with democracy I would ask you if you can tell your Government department before a bill even has a reading in this House to put up the legislation that you are going to push through regardless of any submission and regardless of any common sense that might be placed in front of you?So back to the beginning—there are some things inside this legislation that New Zealand First agrees with although it is very interesting that since the introduction of the student loan scheme in 1992 there have been 15 major amendments to this Act. So I do not think it is any wonder that New Zealand citizens sometimes get a bit confused about the process by which they are able to pay back and fulfil their payment responsibilities.New Zealand First has no issue with the small amendment proposed to section 110 of the Student Loan Scheme Act that retains a constant amount of loan repayment as opposed to the current decreasing loan repayment amount. Unlike my colleague Ms Walker having previously been a debt collector and credit controller I can see that thereis actually a win-win situation out of this where the borrower has the early removal of a burden of debt and the lender has faster access to those funds for re-lending.New Zealand First also has no issue with the sharing of contact details between the Department of Internal Affairs and the Commissioner of Inland Revenue. In fact again I would have to say that if this ability had been placed inside legislation a lot earlier we would not be looking at 30000 people overseas because we would have actually been interacting with them earlier. We would not have allowed 5 years to pass before we even decided to start talking to these people appropriately and we would not have $284 million worth of defaulted debt right now.New Zealand First agrees that if you have a debt—a fair reasonable and legitimate debt—then the responsible action is to repay that debt. But one cannot get blood out of a stone. It is with great sadness that New Zealand First will be unable to support this bill at its first reading because of the inclusion of what is an incredibly blunt instrument that would allow New Zealand students graduates and citizens—because not all people with a debt who have gone overseas particularly in this economic environment are actually graduates. Not all of them are university students. Many of them have been to a polytech. They have got aStudyLink loan and they have had to leave the country for other reasons.This is a Dickensian step and it is appropriate to mention Dickens because his father was sent to a debtors’ prison back in the day prior to the Debtors Act of 1869. Imprisonment for debt was then abolished and replaced by bankruptcy law. No one could argue that our citizens were not able to travel as much as they can now to avoid debt. But I would counter that argument with the fact that with the invention of the internet credit ratings can also travel.New Zealand First can see no practical sense in waiting for the defaulting borrower to return home one day from foreign shores and hope that they have $30000 or $40000 or $50000 on them when they get to the exit gate or we are going to send them to jail—especially when there are so many other options available to the Government. There are more modern sophisticated ways of affecting a defaulter’s life no matter where they are in the world. We refer to the listing of these individuals on to international credit rating agencies so that no matter where they are in the world when they go to purchase a car or buy a home or get a store card their account will be tagged that they owe the New Zealand Government. Over a certain material threshold this will affect their ability to borrow and to purchase which is a more immediate incentive to pay off or come to an arrangement so that that tag can be removed.New Zealand First also points to the other methods already available to the Government. An example would be the provisions that are currently available in the Customs and Excise Act 1996. If one looks at section 280D(4)(h) the Customs Service and the department—and this could include the Inland Revenue Department—can facilitate the exchange of information on the date on which the person arrives in New Zealand just as they can upon the departure of that individual. Would it not be smarter to intercept the defaulter on their way into the country so as to have a greater opportunity to set in place a payment structure prior to them wishing to depart? This is supposed to be about helping our citizens meet their obligations. There is an obligation on the lender just as there is on the borrower to make sure that a relationship is created that is easy and that works for both sides without disadvantaging both sides.These are New Zealanders and they are not criminals. Today these people are students who have been driven overseas by the lack of opportunity offered for employment in their own nation. At the very worst these citizens are guilty of breaking a contract to repay. So if we are going to allow these citizens to be arrested for breaking a contract about debt will we allow banks to imprison mortgagee defaulters? Whatabout the Farmers’ Trading Co. or GE Money? Are we looking at a future where our last debtors’ prison in Dunedin which was shut in the 1860s needs to be reopened to house all those who find themselves unable to pay?It would appear that part of the motivation for this Draconian step is the idea that all these students are living in the lap of luxury laughing as they rip off the New Zealand taxpayer. I can find no documentation to support this. Perhaps this group of people is hanging out with the children of millionaires in our universities which is the reason Michael Woodhouse recently gave to all our students having to gain a debt to learn. Or perhaps they are related to the millionaireSuperGold card holders who ride for free on the Waiheke Island ferry which is another myth that this Government likes to put out to justify charging our citizens.In reality according to theStudent Loan Scheme Annual Report 2012 on page 32 compliance by overseas borrowers around payment has increased by 20.5 percent since the amendments made to this legislation in 2012 and the increase in the number of overseas borrowers with a repayment obligation rose from 42 percent to 64 percent in the 2010-11 year due to a large number of borrowers having come to the end of their repayment holiday. The Government needs to look at its figures.JOHN HAYES (National—Wairarapa): That was a particularly interesting intervention from the member Tracey Martin from the New Zealand First Party. Her leader was at most of the meetings of the Finance and Expenditure Committee where issues around student loans have been discussed over the last 18 months and not one of the ideas that she brought up and aired in the House this evening was ever expressed to the committee by her leader who had ample opportunity to do so over the last 2 years. It is quite astonishing really.As I listened to the debate in the House this evening there is a disconnect between the views of those in the Labour Party those in the Green Party and those in New Zealand First and reality. The reality is this: we are not dealing here with the Government’s money and that seems to underpin most of the comments I have heard tonight. We are dealing with money that has been taken out of taxpayers’ pockets. I am thinking ofLachie the calf-feeder in Greytown who gets paid $20 an hour for his work starting at about 4 in the morning and going through the day. The money comes from his taxes. I think of Lindsay the builder who is working on my own house at the moment for $20 a year. He has never had a rise in 6 years. That money has come out of his—[Interruption] He works for a contractor and this money is coming out of their pockets. They are paying the taxes for people like you to fund your own education and you come into this House and you have not paid your loan back to those people. You still declare it as a pecuniary interest because it is better for you to have an interest-free loan than to pay the money back.Dr Megan Woods: I raise a point of order Mr Speaker. I was not aware that you had a loan that you declared as your pecuniary interest.The ASSISTANT SPEAKER (Lindsay Tisch): Thank you. I just caution the member to be very careful about what he is saying.JOHN HAYES: Well I am being quite straightforward about this. This money came out of taxpayer pockets and the hypocrisy on that side of the House—The ASSISTANT SPEAKER (Lindsay Tisch): Order! The member will withdraw that comment. You cannot say that word in this House. Withdraw the comment.JOHN HAYES: I withdraw the comment. What I find is the disconnect and I cannot build an association between those people who on the one hand profess to help the downtrodden and take money out of their pockets put it into their own pockets take the loans come in here on $140000 or $150000 a year and pay nothing back. It is outrageous—absolutely outrageous. Our interest-free student loan scheme is the mostgenerous in the Western World and we want to keep it that way. The student loan scheme represents a huge financial commitment by taxpayers—by ordinary people. This is not the Government’s money; this is community money which comes out of people’s pockets.We want to support students in tertiary education but it is really important for students to take personal responsibility for repaying their loans particularly when they are on a good salary. It should be done more quickly. Overseas borrowers are continuing to let the side down with slow repayments and high levels of loan defaults compared with those who stay in New Zealand and pay off their loans. As the New Zealand First member pointed out since 1992 14 percent of students have not paid back their loans after 21 years. I think that is unacceptable.Although the Government has made some progress with these overseas-based borrowers it is time to up the ante. If left to my own devices I would cancel their passports. I would not renew them until the loans have been paid. This bill does not go that far but it goes some way to encourage the money to be paid back and we need that to happen to keep faith with ordinary taxpayers. Thank you.GRANT ROBERTSON (Deputy Leader—Labour): I just want to make sure the people of New Zealand know that John Hayes wants to cancel your passport. That is what he just said. He said that if you are someone who has borrowed from the student loan scheme and you might be having some trouble paying it back John Hayes is going to cancel your passport. And while he is at it he is going to pay his builder 20 bucks a year—$20 a year is what he said. We are debating the Student Loan Scheme Amendment Bill (No 3) and what Mr Hayes does not understand is that the whole point of supporting tertiary education is so that the children of John Hayes’ builder can go on and get a degree become an astrophysicist and earn a lot more than 20 bucks a year from John Hayes. That is why we support people in tertiary education Mr Hayes. It is to give them opportunity. We want to see all New Zealanders get that chance.What we have got today is the first ever tertiary education Minister who has made it his business to take away opportunity from New Zealanders. The very first thing Steven Joyce said when he became tertiary education Minister was that his goal was to dampen demand for tertiary education. He said he wanted to dampen demand. In real people’s language that means taking away opportunity from young New Zealanders. Step by step little by little Mr Joyce is taking away opportunity from young New Zealanders. That is because he does not want to face up to the fact that he hates the interest-free student loan scheme. He does not want the interest-free student loan scheme to exist.In that he is consistent with his leader John Key who stood up in this House when Labour brought in the interest-free student loan scheme and he said: “I will oppose this bill with every bone in my body.” Well the Prime Minister—or as he shall now be known the jellyfish—has failed to oppose it at all. He decided that he had better grab it because it was popular but his party and Steven Joyce his Minister have never supported an interest-free student loan scheme. What has National done in the time it has been in office? It has systematically undermined New Zealand students’ access to education taking away postgraduate student allowances and preventing people aged 55 years and over—this is for you Mr Mallard—from borrowing under the student loan scheme.I have had in my office someone laid off from the Public Service; a single woman who knows that she will be in the workforce for at least another 10 or 12 years. She wants to go back and retrain but Mr Joyce Mr Key and the National Party say that that person is not worthy of that opportunity and that she is not going to be supported to take that on. That is wrong. And then in this Budget the Government said that it was going to lower that down. It was not satisfied just with taking to people in Mr Mallard’s agegroup. The National Government said that people over the age of 40 are limited to 3 years of allowances—that is it. They are not allowed to go on and retrain and go on to postgraduate study. Far be it from us to have more people in postgraduate study. This Government’s small-minded taking away of opportunity for New Zealanders is shameful.And then we come to the student loan scheme. We come to the student loan scheme where just to make sure that the Government could reach another few people it increased the repayment rate from 10c in the dollar to 12c in the dollar. That might not seem like much to Mr Joyce but if you are a young couple starting out both with loans trying to set yourself into your first home that extra payment—Hon Trevor Mallard: With kids.GRANT ROBERTSON: —with kids—limits your opportunities. That is the problem for Mr Joyce. He is taking away from young families the opportunity to get ahead in life so he comes to this House—or Todd McClay on his behalf—with a bill that is just purely and simply a gimmick. That is all it is. The police have asked how on earth they are going to look after this. Kris Faafoi the police spokesperson for the Labour Party has brought up in this House time and time again the fact that under AnneTolley’s watch the number of police on the beat is going down. Well here are Steven Joyce and Todd McClay saying that we should have police at the airport chasing people who have not paid their student loan. Is that the best use of police resources Mr Joyce? No it is not. It is not the best use of police resources and the police themselves have told the Government that it is not the best use of their resources.Nobody has costed out what this measure will mean in terms of cost to the courts because this bill is just a gimmick. It is quite simply a gimmick from a Government that does not want young New Zealanders to get the opportunities they should have. The Government simply wants to make sure that tertiary education stays as the preserve of the privileged over there. John Hayes stood up in this House tonight. Did he get a free education? Was the taxpayer paying for John Hayes to go to Lincoln University? Was the taxpayer paying for that? He is very quiet. He is very quiet because he knows that he is taking from a future generation what he had. He is not offering to this generation the opportunity that he had and that is wrong.We need to invest in tertiary education. We need to make sure that all New Zealanders who are able and capable can take on a tertiary qualification. That might be at a university or it might be in a trade or it might be in a polytech or it might be in awānanga but this National Party has said that only those who can really afford it are the ones who should go there. Well we on the Labour Party side of the House say that tertiary education is an investment. The student loan scheme is interest-free because of Labour and we will not support a bill that is quite simply just a gimmick. We want to see legislation that means that all young people are supported into tertiary education that those who need to retrain are given that opportunity and that we invest in postgraduate study to get the scientists and to get the researchers who are going to lift our economy. This Government has no vision for tertiary education. This bill is a weak weak gimmick and we on this side of the House will strongly oppose it.MAGGIE BARRY (National—North Shore): Well hard on the heels of Grant Robertson’s “weak weak gimmick” which would be the epitaph of contender No. 2—or is he No. 3; where is the smart money these days—I would have to say that the smart money when it comes to the Student Loan Scheme Amendment Bill (No 3) is on people repaying their debts. Pay it back. I too have had letters. The Greens were talking a little earlier about how they had had elaborate letters from people who felt they were under extreme hardship and who had taken choices to have a family to get higher education or to move overseas and then they complained about paying back their debt. Well Ihave also had a lot of letters from people who are unhappy about the student loan repayment scheme because they are students who have repaid their debt and they are not at all happy with the bludgers as they call them and thewelchers. It is a debt; it is not a gift. It is something that they have to give back.Simon O’Connor: Not a bribe from the Labour Party.MAGGIE BARRY: It is not a bribe from the Labour Party—good thought. It has been in the past. No no we have put that on the straight and narrow. It is an important matter of principle and I am not surprised that the buffoons on the other side of the Chamber do not understand this principle. It is about entering into an obligation and then fulfilling that obligation.As a nation we need students. They are special they need to be cultivated and they need to get a good education. They also need to take personal responsibility own up to the agreement that they made and pay their debts back. That is fair. That is why we gave the loans to them. If they do not do that why should they get special treatment? Why should they not be treated in the same way as all other tax defaulters are? They need to be held accountable and that is what we are suggesting in this bill.I think others have gone through the numbers. They have talked about the amount of money that people particularly overseas have paid. One of the interesting things I heard—because I did sit through the select committee on this unlike a lot of the speakers on the opposing side—Tracey Martin: It hasn’t been to select committee yet.MAGGIE BARRY: —when I listened carefully to some of the submitters the Inland Revenue Department for example was that it had some really interesting points to make. And if the yap yap yap of thechihuahua could just stay silent she might learn something to her advantage—namely that the Inland Revenue Department’s experience showed that 70 percent—Hon Trevor Mallard: I raise a point of order Mr Speaker. Two points: I think we are on the first reading of this bill and I think that is relatively important but more important although I am a person who appreciates and likes animals the description of one of my colleagues from New Zealand First in those terms is just not acceptable.The ASSISTANT SPEAKER (Lindsay Tisch): Well I am sorry I did not hear that comment but I just caution the member. And we are on a first reading.MAGGIE BARRY: Speaking to the point of order I did not mention a New Zealand First member. That was that member’s one plus one makes two. The maths Mr Mallard is not correct so your point of order is wasted on most of us if not you.Hon Trevor Mallard: Point of order Mr Speaker—The ASSISTANT SPEAKER (Lindsay Tisch): Order! No I will deal with this. [Interruption] Order! Look when I have ruled on a matter that is the end of it and we do not enter into any further comments on the Speaker’s ruling.MAGGIE BARRY: As I was saying as I was about to wrap up my call the Inland Revenue Department talked about the success that it has had with contacting the families of overseas-based borrowers whereby those borrowers actually do pay back their loans at a high rate and that is because the parents are ashamed. The parents get the call and they go: “This is awful. We’re not going to put up with this.” They ring their children and put on quite a lot of pressure and it actually works.So too will these measures. Arrest at the border is an extreme measure that might be brought into position. It might be put into use if it is absolutely essential. These are measures that we have to take very reluctantly in order to bring a small number of defaulters back into line. And a student loan is exactly that. It needs to be paid back because it is not a gift. That is a very good position and that is why I commend this bill to the House very happily. Thank you.The ASSISTANT SPEAKER (Lindsay Tisch): I understand that the next call is a split call.CHRIS HIPKINS (Labour—Rimutaka): I think perhaps next time before Maggie Barry decides to give us a great spiel about what happened at a select committee she might want to check whether in fact the select committee meetings had even taken place. This is the first reading of the Student Loan Scheme Amendment Bill (No 3) so in order for Maggie Barry to reflect on all of the things that happened at the select committee she might want to check to make sure that the select committee had actually happened. I do not know of any bill that has been in this House for a first reading that has gone to a select committee before it has even been read in the House for a first time. I think that only in the parallel universe that Maggie Barry inhabits—Hon Trevor Mallard: Delirious.CHRIS HIPKINS: —the delirious parallel universe that Maggie Barry inhabits—would a bill go to a select committee before it has had even a first reading in the House.This bill says an awful lot about the National Government which is quite happy to pick on people who find themselves on hard times and who do make some mistakes and who do for whatever reason find themselves in default on their student loans. Yes people who borrow with student loans should pay them back but many times people find themselves in a difficult position because they go overseas or for other reasons.Of course other people find themselves in a difficult position. The owners ofMediaWorks found themselves in a difficult position and Steven Joyce was only too happy to help them out with their loan. There was no problem in helping them out with their loan. But when it comes to a student or a recent graduate who gets into a bit of trouble with their loan Steven Joyce wants to whack handcuffs on them. Why does he not have the same standard for the people who are in receipt of corporate welfare under this Government? It seems that we have one standard for those whom the National Government thinks should receive corporate welfare and another standard for the genuinely needy New Zealanders who through no fault of their own find themselves in need of a little bit of assistance.I am very proud to stand here as a Labour member of Parliament because I think that in the 9 years that Labour was last in Government we did a number of incredibly good things with the student loan scheme that were designed to ensure that no New Zealander was prevented from participating in tertiary education by the cost of it. Yet Steven Joyce has openly said that his intention is the opposite. His intention is to dampen the demand for tertiary education by making it more difficult to get into and by making it more expensive. He has basically said that some people are just too old for tertiary education and that once they get to a certain age they should not be able to access tertiary education any more. That is Steven Joyce’s view. Steven Joyce also does not think that we should offer full levels of student support to people who are doing postgraduate study.Well I have news for Steven Joyce who is also the Minister for Economic Development. If we are genuinely committed to economic development perhaps we might want to focus on supporting the people who are doing advanced qualifications and might actually have some ideas about how we can get the boat to go faster. But no not Steven Joyce. He wants to dampen demand for tertiary education.Of course tertiary education is not just about universities. Student loans are not accessed only by people who go to university. They are accessed by many many people who go into other professions including the trades and Steven Joyce is just as intent to pick on those as he is to pick on university students. We should not ever allow this to be an elitist argument because actually student loans apply to all forms of tertiaryeducation. Steven Joyce should not be pulling up the ladder on those people who want to get ahead. That is exactly what this Government is doing.I can say that the previous Labour Government was working incredibly hard to make sure that tertiary education was more affordable by making sure that fees were frozen by making sure that student loans were interest free and by increasing eligibility for allowances. All of those things are being undone by the Government. Fees are going up again at a phenomenal rate like they used to do. Access to allowances is being cut and we are seeing the Government reintroducing costs on student loans. So although Government members may say they want interest-free student loans they introduce an administration fee here they cut eligibility there and they do all sorts of other things because fundamentally they do not like interest-free student loans.I believed John Key when he said he thought interest-free student loans were communism by stealth or whatever—no that might have been Working for Families. But he was going to fight it with every bone in his body and I tell you what—he has not given up on that. They may say that they are going to keep interest-free student loans but they fundamentally do not believe in it.Hon TREVOR MALLARD (Labour—Hutt South): I seek leave to table a document prepared by the Parliamentary Service which is a flow chart of legislation that indicates that the select committees on which members sit and at which submissions are heard follows the first reading of bills.The ASSISTANT SPEAKER (Lindsay Tisch): No that information is readily available to any member.Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order Mr Speaker. If it was freely available to members one would think that members such as Maggie Barry would obtain it and read it.The ASSISTANT SPEAKER (Lindsay Tisch): Order! That is not a point of order.DAVID CLENDON (Green): I am pleased to join with my Green colleague and indeed my Labour and New Zealand First colleagues to take a brief call to speak in opposition to this very ill-conceived piece of legislation the Student Loan Scheme Amendment Bill (No 3). It is not unusual for the Greens to oppose Government legislation but occasionally I think it is incumbent on us just to retain some perspective and to ask the question: what is this Government good at? It must have some talents some abilities. One can pose the question and get quite a long silence while one waits for an answer. But it has to be said—and it has been proven a number of times just in the last few days—that this Government has an absolute talent for creating legislative sledgehammers for cracking very small nuts. It is a skill it seems to portray at every opportunity.It is indicative to me of the fact that Government members have never quite got their heads around the old saying that goes something like this: for every complex problem there is a simple clear answer and it is always wrong. This bill represents a very simple clear—and one could even say simplistic—approach to an issue that does need to be dealt with and it is a patently wrong approach. It is clear that this fondness—and again we have seen it characterised in a number of the pieces of legislation that have gone through just in the last few days—for meddling around the margins trying to tweak and meddle represents a lack of vision a lack of a strategy and a lack of an overall understanding. The world is quite a complex place and there are many reasons for people’s behaviours and simple punitive measures are seldom going to present a workable and viable solution to that.There are no doubt many reasons why individuals fail to meet their obligations to repay loans and yes loans are loans and there is an obligation on people who take them to pay them back in time. But simply criminalising New Zealand citizens some ofour best and brightest is hardly a creative approach. It does reflect a lack of imagination and a lack of ability to think through a problem and to come up with a positive solution that can actually resolve the problem. It is unlikely even to be an effective solution. One could forgive the lack of shall we say sensibility but it is very unlikely to be an effective solution. Again it is creating a great big legislative hammer that will not solve any problems that it is targeted at.The amount of money in default attributed to overseas former students we are told at 31 March was around $427 million. That is not an insignificant amount of money but again we need to put it in the context of $13 billion of accumulated loans over the years since the loan scheme was put in place. The perverse thing is that that $13 billion actually sits on the Government’s balance sheet as an asset. We have loaded $13 billion worth of debt on to some of our youngest and our not so young and some of our best and brightest and that appears on the books as an asset. That is a very peculiar form of economics in my view.It would seem to me that the Minister of Revenue has not really read very closely the regulatory impact statement because had he done so I suspect that this bill would never have seen the light of day. There are some really interesting points in it which it seems the Government has not really taken into account. One of those is the provision in the bill that raises the repayment obligation of borrowers with loan balances greater than $45000. I would like to quote from the regulatory impact statement. It says: “The impact of this policy”—the raising of the obligation at that $45000 level—“on the compliance of overseas-based borrowers is uncertain.” There is absolutely no guarantee it will have any positive effect. Indeed the regulatory impact statement goes on to say: “There is risk that some previously compliant borrowers with balances greater than $45000 will simply stop repaying or repay less than their obligation because of the higher repayment.” It is creating a very perverse incentive. It is making it easier for people to make the decision to go into default rather than continue to be compliant with their loans.I will not have time to work through all that is wrong with this bill but I would like as others have to reflect on the position that it puts the police in. The police will become debt collectors for the tax department. I look forward to critiquing this bill in future readings. Thank you.Debate interrupted.