Woods Megan: Student Loan Scheme Amendment Bill (No 2) — In Committee 
Text is incorporated into the Bound Volume 
Woods Megan: Student Loan Scheme Amendment Bill (No 2) — In Committee 
[Sitting date: 19 March 2013. Volume:688;Page:8685. Text is incorporated into the Bound Volume.] 
Dr MEGAN WOODS (Labour—Wigram) 
: 
 Part 3 of this bill the Student Loan Scheme Amendment Bill (No 2) and in particular clause 64 which I am going to speak to here is where it really becomes clear what this legislation means for individuals. It is where we get to these definitions of adjusted net income and are replacing them in terms of gross income. We have heard speakers prior to me talk about this in terms of the impact that this has in terms of everyday life. We have seen earlier from this Government an increase in the student repayment amount from 10c to 12c which effectively makes the marginal tax rate of a graduate very high. I think that is something we need to consider in a very careful way and it is in clause 64 in Part 3 of the bill that this becomes very clear. 
This is something that we have to give real thought to because it is effectively this marginal tax rate these very definitions we are seeing here that is often the thing that drives young New Zealanders offshore to go and live in other countries and contribute to the development of and make contributions to societies other than our own. 
We hear a lot of rhetoric from the Government about the income benefit that someone with a tertiary qualification gets in New Zealand. I think that a few facts need to be put around this claim that we are hearing all the time from members opposite because what we are seeing in terms of OECD countries is that the benefit you get from having a tertiary qualification in New Zealand in terms of income is much lower than in many other OECD countries. Our wages are lower and there is a whole raft of reasons—which probably fall outside Part 3 clause 64 of this particular piece of legislation that we are looking at—as to why it is that we have these lower wages in New Zealand but we have to face this reality. 
I think that the New Zealand University Students Association gave a very useful submission to the Finance and Expenditure Committee on this piece of legislation. The association provided some facts around what an average student income looks like. An average student leaves a tertiary institution after some study with a mean debt of $17176 and a median graduate income is $42120. I will talk a bit more in a couple of minutes about how this is calculated. The average time to repay this debt is 5.2 years with the real value of the loan repayments being 92 percent. What we see is that these 5 years the very years when someone has finished their tertiary study might be a time when they are looking hopefully be able to buy a home and maybe start a family. 
These are the things that actually get in the way and it is these kinds of numbers that make individual New Zealanders make decisions every day to get on a plane and leave New Zealand. If we have a look at what I am talking about—and the mean debt and median repayment time is for a domestic borrower; I just want to make that clear. As the submission says these figures are: “Based on: mean debt and median repayment time (for a domestic borrower) from the 2011 Annual Report on the Student Loans Scheme graduate income (less than one year’s experience) from NZ Immigration Service with 5% annual growth a discount rate of 3.5% (reflecting borrowing cost + 0.5% risk).” I think it is really important to think about what numbers like this actually look like—living in your street shopping at the same shops that you do and going to the same schools that your children are going to—because these are the experiences of a generation of New Zealanders. A generation of New Zealanders now have student loan debt and it is their children who are about to enter tertiary education so what we have is a generation— 
House resumed. 
The Chairperson reported the Minimum Wage (Starting-out Wage) Amendment Bill with amendment progress on the Student Loan Scheme Amendment Bill (No 2) and no progress on the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. 
Report adopted.