Dunne Peter: Student Loan Scheme Amendment Bill (No 2) — Second Reading 
Text is incorporated into the Bound Volume 
Dunne Peter: Student Loan Scheme Amendment Bill (No 2) — Second Reading 
[Sitting date: 28 February 2013. Volume:687;Page:8339. Text is incorporated into the Bound Volume.] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Student Loan Scheme Amendment Bill (No 2) be now read a second time 
. The changes that are contained in this bill build upon earlier legislation aimed at bringing greater value efficiency and fairness to the student loan scheme. Along with a number of administrative measures that are being undertaken the changes in this bill are a reflection of the Government’s continued commitment to the proper governance of what is a major Crown asset. 
The first of the measures contained in the bill proposes to broaden the definition of the term “income” that is used to determine the loan amount that a New Zealand based borrower has to repay each year. Under the proposed changes the definition of income that will be used for student loans will be broadly in line with that used for the purposes of Working for Families tax credits and for other social policy programmes so we are bringing a measure of consistency into this area. The effect of the change will be both greater fairness and greater transparency across the student loan scheme by ensuring that the repayment obligations of New Zealand based borrowers are determined on an equitable basis irrespective of the type of income they earn. In particular these changes will ensure that income that currently lies outside the current definition of income such as income from trusts as an example will now be taken into account when determining a borrower’s repayment levels. 
The second important change contained in the bill proposes an information match with the New Zealand Customs Service to identify borrowers at the border who are in serious default on their loan repayments. Customs will then be able to forward the current contact details of those borrowers to the Inland Revenue Department so that it can in turn discuss with them by following up with them their particular situation. I should point out that there is a vast gulf between the repayment activity of domestically based borrowers and that of overseas-based borrowers. Typically our overseas-based borrowers take about three or four times as long to pay back their student loans as our domestic borrowers do. In many senses our domestic borrowers proceed relatively quickly and effectively to repay their loans. Our major problem with defaulters is with our overseas-based borrowers and the measures regarding data matching are an important way of ensuring that we can track them and start to ensure that they meet their obligations. 
The bill contains a number of other measures. They are largely administrative in nature and they are designed really to correct inconsistencies or to improve the operation of the current legislation. These changes include clarifying the repayment obligation rules for new borrowers in the first year of borrowing confirming the current late-payment interest rules and repealing changes from earlier legislation that are no longer needed following some changes that the Inland Revenue Department has made to the way it administers the scheme. I would also like to make members aware that I intend to introduce a Supplementary Order Paper at the Committee of the whole House stage. The amendments in this bill are very complex. As a result a number of drafting oversights and errors have been identified and the Supplementary Order Paper will correct these so that the legislation operates as intended. 
When I bring this bill to the House I acknowledge and thank the Finance and Expenditure Committee for the pragmatic way in which it dealt with the technical detail of the bill and for the recommendations it has made to ease the transitional and administrative processes involved in bringing the proposed changes in the bill into operation. I think the select committee has done a good job and I acknowledge the work of all members of that committee as they considered this bill. On that note I commend the bill to the House for its second reading.