Hughes Gareth: Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill — Second Reading In Committee 
Hughes Gareth: Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill — Second Reading In Committee 
[Volume:660;Page:9376] 
GARETH HUGHES (Green) 
: 
 Kia ora Mr Chair. He mihi nui ki a koutou kia ora. To answer Carmel Sepuloni’s question I am one who has a student loan and was a student last year and I am excited about the opportunity to participate in this debate. I will talk a little about the reasons why the Green Party is opposed to this bill. I first started studying in 2000 towards a Bachelor of Arts degree at Victoria University and of course because my parents are not wealthy I had to take out a student loan. Ever since then every couple of months I receive a new letter in the mail from the Inland Revenue Department saying how big my student loan is and it is so discouraging to have to look at that $30000 figure. Like many people of my generation I want to buy a house I want to start setting up a superannuation fund and I want to put money aside for my son’s education so that he does not have to take out a student loan and this letter is one of the most discouraging ones I ever receive in the mail. 
Ever since the student loan scheme was introduced students in New Zealand essentially have been paying an education tax. Every fortnight 10 percent of my gross pay is deducted straight away and paid towards my student loan repayments. What we are talking about in this bill is for some like a tax increase. I congratulate the decision made in 2005 to reduce the interest payable on student loans. When I first started studying in 2000 I had to pay interest on my loan while I was studying. I thought this was ridiculous. I think we need to listen to the students associations on this issue the other people who can talk for students who call this bill unmanageable and unaffordable. The student loan scheme is a public good. We cannot be looking at it as though it is just a cost to the economy. This scheme is a public good. If we are to increase our GDP if we are to race Australia in wage increases we need to make education more accessible. We need more people developing skills if we are to live in a sustainable and innovative economy. 
This bill makes some changes to the student loan scheme. Some are good some are all right and some are bad. I turn first to the good changes. The bill extends interest-free loans to borrowers in Niue the Cook Islands Tokelau and the Ross Dependency and to students enrolled with a New Zealand education provider or engaged in full-time study overseas under a formal exchange programme. This is a good move. It extends the interest-free student loan provision which was such a benefit to me to other students. This provision supports our Pacific neighbours and builds stronger relationships. I turn to the changes that are all right. This bill replaces the interest rate where applicable and sets it by formula. The proposed formula is identical to the formula currently in use. The change is to take it out of regulation and put it into the principal Act. We are fine with this provision. 
Then there are the bad changes. This bill enables the Commissioner of Inland Revenue to increase the standard rate for deductions from salaries and wages from 10 percent to 15 percent. For borrowers who have failed to have the correct deductions made the increased deductions will apply until any under-deductions including late repayment penalties have been fully repaid. Compulsory student loan repayments already kick in at a very low threshold. Increasing the deduction to 15c in the dollar will have a severe impact on some borrowers their families and their children. The current threshold is set at $19084 gross. I ask whether any members in this House could survive on seeing 15 percent of their gross income going straight back to the Inland Revenue Department on top of GST increases rent food and other costs. For some this is another tax increase that they will be seeing this year. An amount of $19084 is very hard to live on. I ask whether any members could live on that amount. 
What do we need to do with this bill? The Green Party believes that the student loan scheme is already a heavy burden on many students on low incomes and on students who do not have high-paying jobs after they leave tertiary education. We oppose all initiatives that increase that burden. Despite the useful technical amendments—and we support the idea that students in the Cook Islands Tokelau and others should have the benefit of interest-free student loans—we will not be supporting this bill. 
The CHAIRPERSON (Lindsay Tisch) 
: Before I call the next speaker I say to the member that when he goes for the call he must remain standing. If he were to sit down he would forfeit his right to speak. I knew the member was going for the call so I was happy to give it to the member. I say well done.