Hobbs Marian: Student Loan Scheme Amendment Bill (No 2) — First Reading 
Hobbs Marian: Student Loan Scheme Amendment Bill (No 2) — First Reading 
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Hon MARIAN HOBBS (Labour—Wellington Central) 
: 
 On behalf of Labour I welcome this bill and rise to support the Hon Peter Dunne’s work on it. An amendment bill rightly presumes that a problem has been identified and also that it needs to be tackled. The problem that has been identified in this bill is associated with the Kiwi rite of passage—namely the OE. It is rare in the early months of an OE for young Kiwi graduates to be earning enough and to be earning steadily enough to be in a position to repay their loans. As a result some have been growing their loans with penalties as well as with interest and that can become a disincentive for them to return home to New Zealand where we need and want them. 
The second problem that has been identified and that has been a problem since the beginning of the student loan scheme is that the Inland Revenue Department does not know who is overseas let alone whether those people are actually overseas. It does not know whether they are in Outer Mongolia or inner London. When interest-free loans were introduced there was an even greater incentive for people not to tell the Inland Revenue Department where they were. The interest-free policy applied only to those living in New Zealand so why would people tell the department they were going overseas? 
The Government has in this bill introduced some solutions. First up it has introduced a fresh start amnesty and that amnesty for non-resident borrowers—those overseas—with arrears will be extended to 31 March 2008. I welcome the fact that Mr English recognised that that amnesty is for penalties only. Penalties will be wiped if people apply for the amnesty—because they have to apply for it. They also have to meet certain conditions including making regular repayments based on new repayment rules for 2 years. 
Another thing we are doing is making it easier to repay loans. There will be a repayment holiday of up to 3 years for borrowers who are going overseas during which time they will not have to make repayments although their loans will still attract interest. This will also apply to those who have met the amnesty conditions. That is a recognition of facts. As I said before when young Kiwis go on their rite of passage overseas they do not always walk into Stg£50000-a-year jobs as they come off the plane. That is not what they get paid in bars in the various parts of London—or that is what they tell me anyway. 
The third thing we have done and worked very hard on is encourage overseas study. The Inland Revenue Department will be able to grant interest-free loans to undergraduates—not just graduates—who want to study full time overseas to bachelor’s degree level. As well we have brought in some other things. For example borrowers who had repaid their loans by 13 November 2006 and who had had an interest write-off to which they were not entitled will not have that write-off reversed. So borrowers who have repaid their loans will not be revisited; we will accept that the main thing has been done. 
Then there are some things that apply to all borrowers. The late payment penalty for all borrowers will be reduced from 2 percent per month to 1.5 percent per month. The change will apply to amounts subject to a late payment penalty on or after 1 April 2007. The Inland Revenue Department’s powers to grant hardship relief will be made more flexible by allowing the department to suspend payments during the year for borrowers who apply for relief—and that is very welcome indeed. 
We come to the issue of data matching. In future the Inland Revenue Department will know when borrowers go overseas. Again I am pleased to see that the National Party supports this. A law change will allow data matching between the Inland Revenue Department and the New Zealand Customs Service. This will ensure that only those entitled to interest-free loans have access to them. The only thing about which I feel slightly differently from Mr English relates to the data match being expected to reveal—it has not revealed as yet—that about 40000 borrowers are or have been non-resident so their loan accounts will have to be adjusted. We have yet to get the proof in the pudding about that. 
This bill sits in a context. Sure it is right to correct a problem that has been around since the introduction of the student loan scheme but the context is even bigger than that. I think that everyone in here acknowledges that New Zealand needs its graduates whether they are graduates of polytechs private training establishments or universities. We need those graduates with their skills intelligence creativity and energy. We want them to come home and stay home eager to contribute. We also want to increase the numbers of students who are graduating from our tertiary organisations so Labour has continued to make tertiary education more affordable. 
We have done that largely with the interest-free student loans policy for all New Zealand - based graduates that started this year. We have also increased the numbers of students eligible for student allowances and we have done that almost year by year as we have looked at those issues. We are making available bonded merit scholarships and we have increased the numbers of those scholarships. We saw that in Budget 2006. So we have done our best to make access to tertiary education for our people absolutely important. 
It is not only that; the Labour Government is moving very strongly with help from its partners to improve tertiary education. It is making a shift away from the numbers-only policy which was promoted largely by the previous National Government in response to figures showing that in the 1990s we had one of the lowest numbers in the OECD of students studying at tertiary level. The problem was that we concentrated on the numbers of students studying not on what they were studying so this is a shift in tertiary policy away from the numbers-only approach to a focus on what people are learning. 
There is a new approach to planning funding quality assurance and monitoring for all tertiary education. The new system for tertiary education will promote a much stronger focus on the quality and relevance of education and on research outcomes. It will ensure that tertiary education organisations identify plan for and meet the needs not only of students but of employers industry Maori community groups and other stakeholders. It will do this through investing in tertiary education organisations in order to support and reward quality and through requiring tertiary education organisations to demonstrate that their educational research is contributing to economic social cultural and environmental outcomes for New Zealand and New Zealanders. That is far more than just concentrating on the numbers who are studying at tertiary level. They are studying at tertiary level for a reason and the reason is about a better standard of life for us. 
Again it is not only that; in this new tertiary education reform we want tertiary organisations no longer to be competing or ending up all offering the most popular courses because doing that has not served New Zealand well at all. We are instead talking about collaboration about competing against standards—not against each other—and about valuing each other’s differences. Each tertiary organisation has a different contribution to make towards success for all New Zealanders. This legislation sits in the context of being utterly ridiculous for New Zealand to compete for low pay and low skills; we are interested in high pay high value and a highly skilled workforce. We must use our talents we must support our people to grow their talents and this legislation is part of that whole scene. Thank you.