Clark David: Student Loan Scheme Amendment Bill (No 2) — In Committee 
Text is incorporated into the Bound Volume 
Clark David: Student Loan Scheme Amendment Bill (No 2) — In Committee 
[Sitting date: 19 March 2013. Volume:688;Page:8672. Text is incorporated into the Bound Volume.] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 Part 2 of the Student Loan Scheme Amendment Bill (No 2) is the part that introduces the “Henry VIII” clause into the legislation. It is the part with which the Labour Party has the biggest problem. We think this clause is entirely unnecessary. It is a clause that is perhaps appropriate in a situation like that of the Canterbury earthquakes. We note that the Labour Party joined in supporting giving Gerry Brownlee powers that became known as those of an earthquake tsar. We can debate hither and yon about how well those powers have been applied but what seems clear is that in such an emergency situation having powers beyond those that would normally be at the discretion of Ministers is entirely appropriate and the judgment of Parliament is that it is appropriate in those circumstances to give “Henry VIII” powers to make law essentially without reference to Parliament. In the bill we are now debating we have clause 39(4) which inserts a regulation-making power and gives the Minister of Revenue discretion to implement or not implement legislation according to any technical hitches. 
The officials who serviced our Finance and Expenditure Committee were excellent I have to say and they did a very good job of servicing our questions of answering our queries and of trying to come to grips with the concerns of members in the committee. If I take one example we had great concerns about where overseas borrowers were located. We wished to know where they might be and what the likelihood of collecting tax from them was. I will come back to that point. One thing the officials shared with us in response to our inquiries about the “Henry VIII” clause was that indeed it was primarily there as a backstop should the computer system not be able to implement legislation. That is a huge admission. That is a huge admission—admitting that a problem had previously been spotted that a problem with implementing other legislation had come to notice. In fact that the bill currently enables the repealing of previous decisions that could not be implemented is right there in front of us. It was something that was unavoidable to debate. The officials told us that really this clause ensures that should further technical issues come up the Minister has at his discretion the ability to revoke decisions made by Parliament in order to ensure that the thrust of this legislation is implemented fairly. 
That is where we really come to the point of debate. We in the Labour Party will probably have quite a different view from the current Government about what is the thrust of this legislation. We believe that it is the duty of Parliament to debate these issues to resolve them and to pass law that has been overseen that has been scrutinised by parliamentarians on behalf of the taxpayer. That is what we are paid to do as our jobs to make sure that the best possible law is created. This clause although entirely appropriate in an emergency situation where Parliament would not have time to sit and meet seems entirely inappropriate in a situation where there is no particular hurry. The Government could come back to this House should it wish to in order to repeal yet more of its decisions. It could bring them to Parliament and explain that it has been unable to implement them as it has done in this legislation and come back with a different set of recommendations that it could implement and that it thinks are roughly in line with the original intention of the principal Act. 
The overarching point I am making here is that there are different ways and means of repealing legislation. What we have here is a Draconian measure inserted into a piece of law where it is not needed—in fact where it is inadvisable. We had the legal advisers also at the select committee warning us that this is an unusual but increasing trend in Government legislation. It was a very rarely used measure in days gone past and is increasingly being used by this Government as it passes legislation and runs up against troubles particularly in the area of student loans and particularly in the area of tax collection. 
I wanted to touch just briefly also on the potential gains from this bill which is despite our grave concern about that clause that we will be opposing why the Labour Party will support this bill. It goes back to the comment I made on the first part of the legislation which was around the frustration that many New Zealand borrowers feel when repaying their loans as they look across the Tasman and further afield and see that their compatriots abroad are not paying their fair share. We asked officials to supply some estimates of the amount of money that could potentially be collected overseas if there was appropriate compliance and we heard from Mr Dunne earlier about how low the compliance is currently. The estimates we got back were that if there was 100 percent compliance we might expect to see an extra $110 million collected in the March 2012 tax year which would indeed be very good. If there was a compliance level similar to New Zealand’s—a 96 percent compliance level—we might expect to see $106 million returned to the taxpayer. A more likely figure of 70 percent compliance was also provided which would see $77 million returned to the taxpayer. 
There is a real paucity of information about where overseas borrowers are and this is something else that was brought to be understood by the committee. Borrowers with an unknown place of residence number 50 percent of those who are overseas—32 percent are known to be in Australia 12 percent in the United Kingdom and 6 percent in other countries. These borrowers who make up the bulk of those overseas are borrowers for whom there is a “no address” recorded of their overseas residence. The Government has attempted through various means to begin tracking down these people and trying to make sure that they meet their obligations. 
This is something the Labour Party supports. We believe in the importance of full student support. Indeed there is good international evidence that we should be providing more student support particularly to those from low-income backgrounds who would find a lack of student support a barrier to their participation in tertiary education. I recall many years ago working on a project at Treasury where I had the opportunity to look at Canadian studies which showed that people from wealthier backgrounds overestimate the costs of education and underestimate the benefits of education manyfold—manyfold. That is people from wealthier backgrounds. Those from poorer backgrounds underestimate the benefits by a factor of 10 or more because people fail to understand compound interest and overestimate the costs because they are perceived as a huge barrier. There is Nobel Prize - winning research that suggests that for talented students from lower socioeconomic backgrounds in fact the State should pay the whole amount of their tuition because not only is that better for the individuals concerned— 
Paul Goldsmith 
: It’s not the State. 
Dr DAVID CLARK 
: —but also it is better for their families and better for society as a whole because GDP goes up Mr Goldsmith and we are all better off because of that if we grow the economy. This Government is so unfamiliar with growing the economy that this may be a challenging concept to wrap one’s head around on the other side of the Chamber. But it is true that if we grew the economy we could afford better social services and we could continue to move towards providing free education from which we all benefit not only economically but also socially. So the paucity of information is something that definitely needs to be addressed and I believe that the measures in this bill if they can be successfully implemented will go some way towards improving that situation and towards collecting money that the taxpayer has loaned in good faith not necessarily all to people from modest backgrounds in order to retrieve it. 
There is no doubt that the Government will struggle to implement this bill. It would not have needed or felt the need to put a “Henry VIII” clause in if it thought it was something that could be implemented— 
The CHAIRPERSON (Lindsay Tisch) 
: Order! Can I just remind the member that we have actually passed clause 39. That was in Supplementary Order Paper 185. 
Dr DAVID CLARK 
: It’s in Part 2. 
The CHAIRPERSON (Lindsay Tisch) 
: No it is not; it is Part 1. Most of your first call was actually on Part 1 and now you are coming back to Part 1 again. We have dealt with Part 1; we are now on Part 2. 
Dr DAVID CLARK 
: Well I’m very briefly— 
The CHAIRPERSON (Lindsay Tisch) 
: No. In fact the member’s time has expired.