Dunne Peter: Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill — Second Reading In Committee 
Dunne Peter: Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill — Second Reading In Committee 
[Volume:660;Page:9384] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I take the call at this point because there have been some 10 speeches in this debate so far on the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. I think I have been asked three specific questions and there is one from the second reading that I also want to respond to. 
Before I do so it is perhaps important to place this debate in a wider context. A lot has been said about what may or may not happen with regard to the rules for eligibility and the way in which people might take out student loans in the future. The responsibility for this legislation and my responsibility as the Minister of Revenue rests with the administration of the student loan scheme whatever shape or form that might be in. As part of that portfolio I have to be mindful of a couple of facts. We have a student loan outstanding debt liability—call it what you like—of around $10 billion. We have somewhere in the order of 540000 student loan borrowers with outstanding balances. We have about 40000 student loan borrowers offshore and when we sought to identify them and get their up-to-date details a couple of years ago we managed to get just under half of those people back into contact with us. The point is that we have this massive debt which speakers on both sides have acknowledged that we need to manage. So these changes—and some other changes that were contained in a discussion document released late last year which will be the subject of legislation later this year—are about making it easier for people to meet what we all regard as their repayment obligations. 
It is against that backdrop that I will comment on the questions that have been raised so far. Carmel Sepuloni raised the question about the repayment mechanism for students in what we quaintly term the realm countries. Before I answer that I will comment on Moana Mackey’s point. I think she is absolutely right when she talks about the benefit for students in those countries of access to the student loan scheme. One of the drivers for me in being keen to promote that was a visit to the Cook Islands a couple of years ago. I talked to senior school students about their aspirations for their futures and about the practical difficulties they would face not in getting access to New Zealand universities but in funding their study when they came here. So that was a very important move. Carmel Sepuloni asked what will happen though once they complete their studies and return to their country of origin—hopefully to make that economic and social contribution that this is all about. I draw her attention to the provisions of the bill which I do not have right in front of me; it is a very long clause number. Students will be required to determine their income level and advise the Inland Revenue Department of that and then the process for getting their repayments on an annual basis will be put in place. This is a point I will return to in response to some of the other questions. 
I also make the comment that the changes we are contemplating at the moment will make it much easier for those students as well in terms of moving to an electronic base for repayment so that the system in time becomes more like the way in which we conduct our banking operations. Students will be able to access their balances and make their repayments as their circumstances fit. That will apply to all students but it will be particularly beneficial to students in the realm countries. 
Let me come to the question of the grace period. I have to say that there was no particular science to the choice of the 30-day period. 
We did think that because the major beneficiaries of this change will be students who are overseas 15 days was probably a little tight in the circumstances. But with today’s technologies and communications even using the member’s example of the deepest parts of Africa or somewhere we thought that 30 days was not an unreasonable choice. Once we bring in the next leg of this legislation which is in terms of the electronic basis for the system I think that that operation will become quite manageable but obviously all of these things will be kept under constant review. 
During the second reading debate Chris Hipkins raised the question of the partners of diplomats and whether they would be eligible for the extended provisions. That is a much more complicated question than first appears the case. We do not have within the student loans legislation a particular provision with regard to that category of person. What we do have is a requirement that a borrower or the partner of a borrower is also eligible if he or she is resident for tax purposes in New Zealand during that period. The particular problem that arises for all people who are offshore is the definition of “tax resident”. In respect of the specific question of the status of diplomats and their partners this matter has been considered by the Ministry of Foreign Affairs and Trade the Inland Revenue Department and the Ministry of Education. The conclusion that was reached was that this was an issue that was beyond the specific ambit of the student loans legislation to address but I guess that it is a matter that will be between those agencies and again kept under some form of review. If issues need to be addressed they will be picked up at that point. 
I conclude simply by going back to where I started and by pointing out to the House that what we are doing here is making a much more effective management process for a very large investment by the New Zealand taxpayer—$10 billion. The vagaries of Government accounting systems mean that that $10 billion is actually shown as an asset on the Crown’s books so it is incumbent upon the Crown to do what it can: first to recover that funding; and second to make it easier for those who are making repayments to do so. This legislation and the legislation I am foreshadowing later in the year will be all about achieving that objective.