Robertson Grant: Student Loan Scheme Amendment Bill (No 3) — In CommitteeText is incorporated into the Bound VolumeRobertson Grant: Student Loan Scheme Amendment Bill (No 3) — In Committee[Sitting date: 18 February 2014. Volume:696;Page:16022. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): In the first of what I suspect will be a number of contributions on Part 1 of this bill the Student Loan Scheme Amendment Bill (No 3) I just want to sketch out where Part 1 takes this Committee. On the Labour Party’s side of the Chamber we would very much like to come to Parliament to support practical measures to ensure that student loans are paid off. On this side of the Chamber we believe that when people borrow from the student loan scheme they do have an obligation to repay those loans. It is within the original loan contracts that students sign that they will make those repayments. What I believe this Committee should then be doing is working out the best and most appropriate way to ensure that repayments come in and that we actually achieve the goal that the taxpayer who has been part of loaning this money to students will see that money returned. That should be the goal of this legislation—what is the best way of making sure that that money comes back into the system.Sadly the reality is that this bill falls well short of actually making meaningful progress on that matter. What this bill does is simply implement a slogan or a gimmicky policy and says that that is the answer to where we are going. Obviously in that regard Iam referring to the matters that are contained within clause 8 of the bill and that is around the question of creating a criminal offence around default of overseas-based repayment obligations and the process through which a person liable under that provision can be arrested. It is quite clear to us on this side of the Chamber that the time has come for a much more comprehensive review of how we ensure that we get timely repayments. This current Government has introduced a number of measures that are designed to try to increase the amount of repayments that are coming back yet the debt overseas has continued to rise during the term of this Government. So it is clear that although there will always be a measure of stick the carrot here is missing or the other kinds of ideas that might be put on the table are missing. I will certainly return to those as we work through the debate.Where I want to start is on the first part of clause 8 which contains the idea that there is now going to be an offence for borrowers who have not made repayments in the way that they are expected to. This is the new offence in new section 162A. I want to refer members to the submission of the Legislation Advisory Committee to the Finance and Expenditure Committee on this particular part of the bill. There is an offence that has been created in clause 8 and I will just read it out briefly. Clause 8 inserts into the bill a new offence for borrowers and it says: “Every person commits an offence who is in default of his or her overseas-based repayment obligation and who having been notified by the Commissioner that he or she is in default knowingly fails … to make reasonable efforts to pay the amount in default or to make arrangements with the Inland Revenue Department to pay the amount in default [by the due date specified in the notification].”We will work through those words but what the Legislation Advisory Committee essentially says is that moving from what is now a civil matter and making it a criminal matter is actually a very significant change. It is actually fundamentally changing the nature of the relationship that student loan borrowers have with the Crown. What the Legislation Advisory Committee said when it was commenting on this bill was: “The [Legislation Advisory Committee] considers that this”—inclusion of the offence—“is an unprincipled basis on which to create an offence.” It is extremely strong language from the Legislation Advisory Committee to say that this is an unprincipled basis on which to include a new offence because the offence is created simply so that the Inland Revenue Department can apply for an arrest warrant. So rather than making a case based around the severity of an offence or the damage incurred to the country or an individual or person—The CHAIRPERSON (Lindsay Tisch): Sorry to interrupt the honourable member but the time has come for me to leave the Chair for the dinner break.Sitting suspended from 6 p.m. to 7.30 p.m.The CHAIRPERSON (Eric Roy): Members the House in Committee on the Student Loan Scheme Amendment Bill (No 3) is resumed. Before the dinner break we were debating Part 1 and Grant Robertson had the call. He has half a minute remaining.GRANT ROBERTSON: Half a minute hardly seems enough to be able to go through this. As I was saying before the dinner break the Legislation Advisory Committee made a very direct reference to the change that is occurring in new section 162A which effectively takes what is currently a civil matter—the non-repayment of loans—and turns it into a criminal matter. The Legislation Advisory Committee said that it considers that “this is an unprincipled basis on which to create an offence.” That is a very serious thing for the Legislation Advisory Committee to say—that this is an unprincipled basis for creating an offence. What it is referring to is that the only reason the Government is introducing this provision on behalf of the Inland Revenue Department to create this new criminal offence of not repaying your loan is so that itcan do the arrest at the border provisions. It is not based as I said before the dinner break on any particular injury that is occurring to the public any particular set of circumstances that warrant a criminal offence; it is merely so the arrest at the border provision could come into play.I think that we should take the words of the Legislation Advisory Committee and its chair the Hon Justice Sir Grant Hammond seriously here. There is nothing behind this provision that is in the way of principle. It is quite simply a gimmick. It is a gimmick designed to look like the issue of a repayment of student loans is being taken seriously by creating a criminal offence and then a set of arrangements for which people can be arrested at the border but in reality it will make very little difference to the repayment of loans. As I said at the start of my last call on this side of the Chamber we support initiatives that will provide for an increased rate of repayment of student loans. We want to see people pay their loans back both because that is what they signed up to do in the contracts that they signed and also because it is good for the New Zealand taxpayer. But this bill is not it and clause 8 does not provide for this.We know from what we heard in the Finance and Expenditure Committee that although there is a great deal of threat and a great deal of concern among people in terms of the actual number of arrests nobody knows what is going to happen. The police have quite clearly said they do not have the resources to involve themselves in arresting people at the border. We do not actually know other than that there is some indication that the Inland Revenue Department would like to make an example of some people. As I raised in my second reading speech a number of us on this side of the Chamber have been approached by people living overseas who have been perhaps in dispute with the Inland Revenue Department about their loan and who want to come back to New Zealand for a family event—for a wedding for a funeral—and are now in fear that they will not actually be able to do that. So this bill rather than acting as some kind of encouragement to young New Zealanders to come home and to contribute to New Zealand actually will act as a deterrent without achieving the goal that the Government has set itself of increasing the rate of repayment. It is the worst of all worlds to have a bill and in particular clause 8 that creates a criminal offence out of what is essentially a civil matter for no real purpose whatsoever.In the Finance and Expenditure Committee we were challenged by National Party members to say what we would do to help increase the rates of repayment. Well we could start by actually talking to the borrowers concerned and working out a repayment plan that works for them because another clause that I will come back to in this bill is around how it is that the repayment obligations of overseas-based borrowers are calculated. At the moment it is an extremely blunt instrument which simply says that it is a percentage of your loan and you have got to pay it back. It does not matter how much you are earning.If we really were serious as a Parliament about increasing the rate of repayment we would work on arrangements that were actually based on the earnings of people overseas and that gave them an incentive to pay back. It is so big it is so difficult it is so out of proportion to what people are earning overseas they give up and they say: “I can’t be bothered with it. I’m not going to deal with this.” Every year those people stay away from New Zealand every time the Government introduces a gimmicky provision like this means they will be less likely to return to New Zealand and less likely to pay back their loans. We on this side of the Chamber would love to support a bill that came before us that was full of new and good and interesting ideas about how to encourage overseas-based borrowers to repay their loans but this bill is not that.In clause 8—Dr David Clark: The research.GRANT ROBERTSON: We will come to that Dr Clark. In clause 8 the new sections 162A and 162B have been slightly altered by the select committee. I will credit the select committee with removing one of the most egregious elements of this which was in what was the new section 162B(2)(d) which actually allowed the court to apply any order it liked to somebody who was arrested under these provisions—anything at all. The court could have thrown them in jail it could have taken away their assets—it could have done anything. Thankfully that has now been removed but the extent—