Dunne Peter: Student Loan Scheme Amendment Bill — In Committee 
Dunne Peter: Student Loan Scheme Amendment Bill — In Committee 
[Volume:678;Page:1419] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I thought I should take a call at this point because I am the one common link in the chain that the member opposite has referred to. I want to go back to the 2007 situation because he made some comments early in his contribution that really go to the core of what the issue is. Consequent upon the then Labour Government’s decision to introduce interest-free student loan repayments for domestic borrowers after the 2005 election and to retain an interest component for those who were overseas we had the immediate challenge of locating who the overseas borrowers were and where they were. The member may recall that we had a de facto amnesty at that point whereby we allowed borrowers to come forward and identify where they were so we could actually get them into the system because frankly a flat in Dunedin is not actually a good address for a lot of people in northern Europe and we had many many people in that case. What we discovered was that although a substantial number did come forward—around 14000 or 15000 from memory—there was a large group that we had not got. We still do not know where they are yet they still have a student loan responsibility.  
I guess the starting point that we would all agree on around this Chamber tonight is that people who take out a loan have a responsibility to repay it. I do not think there is any debate about that point. But it is not fair and I think we would agree on this to have a situation where some people are being forced to repay and others are not. So you start to move up the scale. What we did in 2007 was to say: “Well look there is a trade-off here. If the borrowers will effectively identify themselves as being absent from New Zealand before they leave we will give them a period of time where they are not required to make repayments.”  
I remember the quotation that has been attributed to me. It is dead right. It is utterly accurate. And it was a pragmatic solution because frankly Dr Cullen and I at that point did not have a clear sense of what a reasonable period of time was. We thought that 3 years seemed reasonable. We thought that was a good test of the New Zealand OE. But looking at subsequent experience—and one ought to be guided by experience; I have always found it to be quite a useful concept to value—what we have found is that most people who go overseas who are notified to us are overseas for less than 3 years. Most are actually overseas for less than 2 years. We also found that the time frame of the length of the holiday had little impact on people’s decision about when they repaid.  
So when you start to think about that; you start to think about the signals you want to send in terms of people overseas having a responsibility to repay; you bear in mind the fact that already their rate of repayment is about three times slower than that of domestically based borrowers and that they are our real problem; and when you look at the work we have been doing in Australia to track down recalcitrant borrowers to make them make payments and in some cases to take them to the court to achieve those objectives then you have to question the validity of retaining the 3-year holiday period. The conclusion that we reached in the context of the framing of this legislation was that for all those reasons 5 years down the track a 1-year limit was now more reasonable.  
I want to make some comments about the nominated person because these things go hand in hand. As I said earlier one of the problems we had was that for a large number of borrowers who had fled our shores with their last-known address a flat in Dunedin or somewhere there was no effective way of making contact with them. Parents were not all that inclined for obvious reasons to want to dob in their recalcitrant borrowing children. Various other people were not particularly inclined to give us information. So what we are saying effectively is that to be part of the scheme you need to nominate a person who will be a contact point. I agree with Mr Grant Robertson actually. I have heard many many stories and seen many many instances of the papers piling up and being ignored. That is pointless. The nominated person is designed to be a point of contact so that at least the Inland Revenue Department can go to them and say: “Who is responsible? Where is this person? How can we make contact with them?”. What we have also discovered over the last 5 years is that an increasing number—in fact a significant number—of our borrowers are in contact through various web pages the internet and various news sites etc. so a lot more focus is going in on that point as well. So I say to Mr Robertson and to others that the argument that we are somehow shifting the goalposts by changing the repayment period from 3 years to 1 year does not fit the current reality in terms of what people are doing overseas. It actually has no impact based on our experience to date on their ability and the timing of their willingness to repay.  
Thirdly one factor that is becoming increasingly obvious subsequently is that we are not operating here in a vacuum. The United Kingdom has just made significant changes to its rules regarding residency for people coming from offshore so many of the people who go over for their OE will not be in the United Kingdom for 3 years anyway. They will not be able to stay there. So the point of giving them a holiday that they cannot fully access seems to me to be a little beside the point.  
What we are seeking to do in this bill is to send the very clear signal that there is a responsibility to repay an outstanding loan—to send the very clear signal that it is not a game of how far you get away from New Zealand means the way in which your responsibilities reduce. I do not think it is at all acceptable that we have a really good rate of repayment for domestic borrowers and a very poor rate for overseas borrowers. The argument that it is difficult for them to make contact or that they are a long way away or that they feel out of touch with New Zealand these days—all these things that I have heard in the last few years—I think is utterly unacceptable. The basic commitment is if you have got a loan you are expected to repay it. What this bill does is seek to reinforce that basic precept.  
So the shift from 3 years to 1 year is in fact a recognition of reality. It is not going to deter people from having their time overseas. Coupled with the introduction of the contact person it makes it better for us and easier for the Inland Revenue Department to keep track of where they are. We will see over time a better rate of repayment. What that does is send a signal to those people who have repaid their loans on time conscientiously over the years that actually their sacrifice has not been in vain. It is simply not fair for some people to get away with paying little or nothing while others diligently at a time in their lives when they might well want to be doing something else are meeting their loan repayments. This bill is a—if I can use the member’s term—pragmatic response to the current situation. It is a common-sense solution and it will work. It goes without saying as I conclude that the amendments that he and the Greens have proposed will not be supported by this side of the House.