Goldsmith Paul: Student Loan Scheme Amendment Bill (No 2) — In Committee 
Text is incorporated into the Bound Volume 
Goldsmith Paul: Student Loan Scheme Amendment Bill (No 2) — In Committee 
[Sitting date: 19 March 2013. Volume:688;Page:8664. Text is incorporated into the Bound Volume.] 
PAUL GOLDSMITH (National) 
: 
 I am very pleased to take a call on this bill the Student Loan Scheme Amendment Bill (No 2). I was intrigued to hear from the Greens spokesman Holly Walker that apparently the Government is being punitive in what it is doing with the student loan bill—punitive—which is amazing to me because the New Zealand student loan scheme is amongst the most generous in the world. If you look at some of the figures here—I have got figures from the latest distribution of public spending on student financial aid—New Zealand spends about 42 percent of its tertiary education budget on student financial aid. That is much higher than any of the other countries here. Australia spends only 32 percent Canada only 15 percent the United Kingdom 30 percent and the United States 20 percent. As a result as a part of our overall tertiary education budget we spend very very heavily on student financial aid primarily through the student loan scheme. 
It has been a very generous scheme and the previous Government in my view was reckless in its approach. It was just one of the many things that that previous Government did that left the country pregnant with financial deficits for the next 10 years because of all the promises and all the looseness and laxity that it engaged in. So although it might be a seductive notion to be generous with other people’s money it is not at all a worthwhile thing to leave the country heading on to an endless line of deficits. This Government had to do something about it. It has been working in all sorts of areas of the economy but the student loan scheme has not been left out. This Government has set about getting some realistic boundaries around the student loan scheme. Previously we reduced lending to borrowers who are less likely to repay loans. It makes good sense. We have introduced academic performance requirements for borrowers requiring students to pass 50 percent of their full-time courses over 2 years—again perfectly good sense. We have stopped lending to students who are in default on previous student loans. My goodness why would you not do that? We have limited borrowing to 7 full-time studying years. Well given the fact that every dollar that has been loaned out has been costing everybody else in society around 50c it is not an unreasonable thing to put some limit around the time. 
That has led to some significant progress over the past three Budgets. We have been able to reduce the costs to the Government of student loans from 48c in the dollar to about 39c today which is a very significant achievement. What that means is that every dollar that we loaned out was immediately written down by 48c in the dollar when we took over but now it is down to 39c which is still very significant but at least somewhat more affordable. This is another demonstration of National delivering on one of our key priorities—to responsibly manage the public finances. 
What does this bill do? As we have heard in the previous readings this bill contains three main elements. Firstly the definition of income has been broadened for student loan repayment purposes to align more closely with the income that we have used for determining Working for Families tax credits. So if you are based on an income you need to have a realistic view of income including trusts and so forth. That makes good sense. We have also introduced some information matching between the Inland Revenue Department and the New Zealand Customs Service and we have heard lots of whining from other parts of the House about that being unreasonable. How can it be unreasonable? If you are living overseas you are a New Zealander and you have been in default on your loans—i.e. you have been given money by New Zealanders and you are refusing to pay it back—how can it be regarded as unreasonable for the New Zealand Customs Service to share some basic information when you seek to come back to New Zealand or to renew your passport and so forth? I think that is something that New Zealanders would be shocked to discover we have not been doing. I absolutely agree that we should be doing that in this bill. Thirdly amendments are being made to revisit aspects of the design of the student loan scheme to ensure that its administration is as efficient as possible. 
So all in all I think National is making the student loan scheme sustainable into the future. We do believe that it is important to support students and we do believe that the sooner they pay back their loans the better it is for everybody not just for the nation which is lending the money but also for those students so that they can get on with their lives and we can prepare students for jobs in the future. We do have one of the most generous schemes in the world. 
Just in conclusion I think the best thing we can do is encourage students to borrow only very carefully and to pay it back very quickly. Thank you.