Hague Kevin: Student Loan Scheme Bill — In Committee Third Reading 
Hague Kevin: Student Loan Scheme Bill — In Committee Third Reading 
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KEVIN HAGUE (Green) 
: 
 My colleague Gareth Hughes would have liked to speak in the third reading of the Student Loan Scheme Bill but he is unable to. He has left me some notes in the form of writing on paper. 
Kia ora. It is good to be addressing student loan issues. However this bill although dealing with a few specific points ignores the elephant in the room which is the massive and growing student loan debt. The Green Party supports the general intent of this bill. However we will be voting against it because it increases the already huge student debt burden facing Kiwis. This bill increases and introduces additional student loan fees which will just add to the national student loan debt burden extend the time it takes to repay a loan and because it reduces the effectiveness of the voluntary repayment bonus take things further back. 
The national student debt is now in excess of $11 billion as we have heard and the loan burden facing hundreds of thousands of Kiwi students and graduates is having a negative effect on families society and the wider economy. The student loan scheme was established in 1992 and has been a failure. The current total debt as of 30 June 2010 is a staggering $11145000000 and is growing at $1 billion a year. 
For the more than 560000 New Zealanders who have a student loan this debate is not academic. The average individual debt is around $28800 which is close to the median New Zealand annual income and takes years to pay back. Meanwhile families are delayed homes are not invested in and graduates are struggling with the debt. 
We voted to support this bill’s referral to the Finance and Expenditure Committee for investigation because we acknowledge that there are common-sense parts to the bill that we support. However we have flagged our concerns regarding the new fees. We would like to repeat our thanks to submitters officials and members of the committee. 
There are some good aspects of the bill. This bill aims to make the student loan scheme simpler which will benefit students as well as graduates. It cuts down on the administration of loans. At the moment there are two bodies that share information—the Inland Revenue Department and StudyLink—and students and graduates have to go backwards and forwards between the two. So that change is an advantage of the bill. 
We also support greater electronic management of student loans. We think this is beneficial in terms of reducing administration costs for the Inland Revenue Department. But most important it will give students greater information and transparency around their loans and hopefully will encourage them to pay them back faster if they possibly can. 
It is incredible that it is not until this year 2011 that the New Zealand Government is transitioning to electronic management of loans. This change in particular makes it easier for overseas borrowers to access information and there are hundreds if not thousands of student loan refugees overseas—which creates an amazing skills deficit for our country—each with their own tale of how the student loan burden got out of hand for them. 
Those are the positives. On the other side of the ledger however is this: if greater electronic management and increased efficiencies are achieved as the Government intends then the Green Party cannot fathom why the Government would need to bring in new and increased administration fees. Surely if costs are reduced the Government should be reducing fees not increasing them. The increase to $60 for students drawing down a new loan and a new $40 charge for borrowers will add to the student debt burden likely increase repayment times and reduce the effectiveness of the voluntary repayment bonus. 
The Inland Revenue Department’s regulatory impact statement states that the proposed changes are occurring at the same time as the student loan computer redesign. Therefore there are no additional administrative costs. Why then charge new fees? Why then increase the fees if in fact costs are reducing? 
Many students and graduates who are struggling with debt high living costs and increasing fees are sceptical of these new charges. We heard in the select committee from student representatives that many students and graduates who are facing these additional fees will be cynical of this new tax as they see it. 
Although we acknowledge that this Government has not reintroduced interest on student loans in this term of Government—although National has not ruled it out should it be successful in achieving a second term—these new administrative fees are essentially interest by stealth. Interest-free student loans are hugely popular because they reduce the debt burden make repayment easier and faster and lastly are a fairer way of going about the business of tertiary education. Gareth Hughes has no doubt that National would reintroduce interest by lunchtime if it could but overwhelming public opposition means that it needs to look for stealthy solutions. 
These new fees will reduce the effectiveness of the voluntary repayment bonus. Those who make a voluntary repayment of $500 will receive a 10 percent repayment bonus of $50 but unfortunately this will just be eaten up by the administration fee. New fees—whether we call them a tax or interest by stealth—simply increase student loan debt perpetuating the unfair experiment that is crippling a generation with debt. 
The second part of the bill that the Green Party objects to is the pay-period change. We believe that the current annual assessment is fairer especially for those students who earn the bulk of their year’s income over the summer break and will be disadvantaged financially under this bill. Those who are say picking fruit or working in a freezing works or local cafe full time over summer will likely see 10 percent of their weekly income automatically deducted to repay their loan. Yet over the course of the year if they focus on studying during the academic year they will be disadvantaged. We are aware that there will be exemptions for this large body of students. However we expect not many will go through the rigmarole of applying for exemptions. 
Lastly this bill continues the F grade the Government is earning in this portfolio. From capped spending to discriminating against over-55-year-olds to capped enrolments to rising fees this Government is making it less accessible less affordable and in some cases downright impossible to be a student in New Zealand. Tertiary education is a smart investment. Australia—remember we are trying to catch up—is spending $5.3 billion extra over 6 years and setting ambitious targets setting a good model for New Zealand to follow. 
In conclusion we went into the Finance and Expenditure Committee with an open mind on this bill and we support electronic management of loans as a positive step. However we cannot support this bill in its current form—I guess its final form—as the administrative fees and pay-period changes primarily benefit the Inland Revenue Department at students’ expense. 
The Green Party will not vote to increase the student debt burden. The student loan portfolio is currently projected to grow to $14.5 billion by 2014-15. We are saddling an entire generation with crippling debt that could impact on all areas of their lives. It will only get worse unless we act now. New Zealand needs real solutions to student debt and this bill is not one of them.