Walker Holly: Student Loan Scheme Amendment Bill — In Committee 
Walker Holly: Student Loan Scheme Amendment Bill — In Committee 
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HOLLY WALKER (Green) 
: 
 I am pleased to take a call in this Committee stage of the Student Loan Scheme Amendment Bill and I am proud to move an amendment to this bill via my first Supplementary Order Paper in this House. I spoke yesterday in the second reading debate about the Green Party’s concerns about this bill particularly our concern about reducing the duration of the repayment holiday for overseas borrowers from 3 years to 1 year. So I am very pleased to move an amendment today to retain the maximum duration of the repayment holiday at 3 years.  
I am also pleased to see that great minds think alike and that Labour has also moved substantively similar amendments. I hope that Labour will be supporting mine. I also challenge the Labour Party if these amendments that we have both proposed are defeated in this Committee stage tonight to vote against the bill when it comes up for the third reading.  
I would like to revisit why we have a 3-year repayment holiday in the first place. A repayment holiday is an automatic suspension from the repayment obligations of your student loan while you are living overseas. A borrower still accrues interest but is not required to make repayments and therefore cannot fall into arrears. This is important because as was noted in the Finance and Expenditure Committee’s report a typical borrower overseas may face interest and arrears obligations after a repayment holiday that amount to two to three times the original value of their loan and that could militate against the likelihood of their ever returning to New Zealand or repaying their loan. It is very important that we get policy settings right—policy settings that incentivise people to firstly pay off their loans and secondly return to New Zealand.  
 It has been quoted extensively in the debate on this bill but I think it is worth repeating once again. The reasons that Minister Dunne had for introducing the 3-year repayment holiday in 2007 are no less relevant in 2012 and those reasons are to help remove a potential disincentive to skilled New Zealanders from returning home. We have heard the quote: “The reality they all faced was a very massive debt upon their return to New Zealand which in some cases would be enough for them to make the decision not to come home at all and our country would be the loser.” That is still the case.  
I want to address the Minister’s contribution earlier. He said that 5 years is a long time that things have changed since then and that it is a recognition of reality. Well I sat in on the select committee while it was hearing evidence on this bill and we heard from officials that very little research has been done on the impact of having a 3-year repayment holiday. It has been only 5 years since it was introduced so there has been only one full 3-year period for people within that 5 years to take a repayment holiday. There has been very little research to address what impact it actually has on borrowers’ behaviour. I will quote again from the select committee report: “there was not enough empirical evidence to evaluate the effect of the three-year repayment holiday introduced in 2007 and that limited modelling has been done on the likely effect of curtailing the holiday as borrowers’ response to the change is uncertain.”  
It just seems like bad lawmaking to me to be making this change in a vacuum of knowledge. It seems to be based solely on ideology and—if I may borrow the phrase that has been used earlier—it is completely the opposite of a pragmatic approach. The Government we know is looking for ways to rein in student loans without touching interest-free student loans and this just seems to me to be its attempt to do that.  
My Supplementary Order Paper 16 aims to prevent this bad lawmaking by retaining the maximum duration of the repayment holiday at 3 years. I invite members to support it and as I mentioned before I challenge the Labour Party that if these amendments do not pass and if Labour really believes that the repayment holiday should be kept at 3 years then it should not be supporting this bill through the rest of its stages through this House. The reasons given in 2007 from the Minister are no less relevant now and the fact is that we could be creating policy settings that will make it less likely for people to return to New Zealand and pay off their loans.  
I would like to note that one thing that has changed since 2007 is that even more New Zealanders are moving permanently overseas and we know that the figures for this in this year are the highest they have ever been. So in that context it seems very important that we make careful law that is based on evidence that does not fly in the face of advice that has been received and that has actual empirical backing behind it. We just have not had the chance since 2007 when this was introduced for that to be the case. It is irresponsible to be reducing it down to 1 year. So I invite the House to support my amendments. Thank you.