Foss Craig: Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill — First Reading 
Foss Craig: Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill — First Reading 
[Volume:656;Page:5862] 
CRAIG FOSS (National—Tukituki) 
: 
 It is a pleasure to speak on the first reading of the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. The bill has two parts. I acknowledge the two previous speakers Peter Dunne and Maryan Street and I generally endorse their comments. I think the previous speaker alluded to the fact that Labour will be supporting the bill being referred to the Education and Science Committee. 
Hon Maryan Street 
: Yes. 
CRAIG FOSS 
: Yes it will and I appreciate that. I also note the Minister of Revenue’s comment in his introductory speech that this bill will hopefully pass through its stages and become law before Christmas. That is very good and sensible. 
As the two speakers said the bill is very useful and timely. They noted as I do that it introduces a number of remedial and technical changes to ensure the student loan scheme continues to function as intended. The bill also extends interest-free loans to borrowers who live in countries that are part of the realm of New Zealand; I have not actually heard the term “realm” for quite some time. 
I turn to some of the numbers. The impact of the student loan scheme on our economy and on our accounts—on the books if you like—is very very significant. There are over half a million borrowers under the student loan scheme and the nominal value is something around $9.5 billion to $10.5 billion. It is quite a significant Crown asset and it should be managed in the best way possible just as any other asset of the Crown—or of the taxpayer at least—should be managed in an efficient and consistent manner. 
We all know that the interest on student loans is now zero percent yet they are still an investment. Yes there is a financial impact on the Crown’s accounts depending on how that interest is written off from day one—how the opportunity cost of that interest is foregone. It goes without saying—I will say it anyway—that the lower interest rates across the economy are the less the investment in interest-free student loans costs our economy. None the less the scheme is still an investment. It is an investment in the future of New Zealand and in future taxpayers. So anything we can do to make it more efficient better more transparent and fairer—as this bill does—we should continue to do. 
The Minister outlined a number of technical aspects in his first reading speech. Interestingly the bill will make interest-free loans available to borrowers who live in countries that are part of the realm of New Zealand—as I said before Niue the Cook Islands Tokelau and the Ross Dependency. 
The Ross Dependency part interests me and it may also interest you Mr Assistant Speaker Roy as your electorate is a bit closer to that part of the world than where I live is. It is a simple change to align borrowers there with other New Zealand borrowers who must meet the requirement to be present in one of those countries or in New Zealand for 183 days. One could argue that those in the Ross Dependency have their interest frozen if you like or that it is on ice—to be a bit light-hearted about this bill. 
Hon Maryan Street 
: Good try! 
CRAIG FOSS 
: Yes it is. 
A taxpayer-friendly piece is also proposed in the legislation and that is a change that allows the Inland Revenue Department to increase the standard repayment reduction rate from 10 percent to 15 percent where borrowers have failed to have the correct deductions made. The higher rate will apply to the under-deductions including any late-payment penalties to be fully repaid. The taxpayer has on-lent to borrowers at zero interest cost so there is already a significant subsidy or advantage to write-off for or investment in—whatever one likes to call it—the borrower. I think most parties across the House will applaud anything to make the scheme more efficient fairer for other student loan borrowers and more transparent. I think we have heard that so far. 
A point I would like to pick up which one of the other speakers spoke to is one of the technical changes. It makes student loans interest-free for borrowers who return to New Zealand and fully repay their loans before they have been back 183 days which is of course the tax residency threshold. That is welcoming home New Zealanders who return and pay off the loan early. Technically before this bill is passed that is actually the case. From the taxpayers’ point of view we do not want that liability on the books if we do not need it. From the borrowers’ point of view they have been overseas have done their OE and have got some money together. They come back to New Zealand with some capital and lo and behold if they are able to pay off the loan within 183 days they fully qualify for the interest-free provision. That is a very very good part of this bill. 
The bill has only two parts. As other speakers have noticed it is quite short. I look forward to speaking on the rest of the bill during its passage through the House. Thank you Mr Assistant Speaker.