Student Loan Scheme Amendment Bill (No 2) — First Reading 
Student Loan Scheme Amendment Bill (No 2) — First Reading 
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Student Loan Scheme Amendment Bill (No 2) 
First Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Student Loan Scheme Amendment Bill (No 2) be now read a first time. 
 At the appropriate time I intend to move that the bill be considered by the Education and Science Committee that the committee report finally to the House on or before 28 February next year and that it have the authority to meet at any time while the House is sitting except during oral questions during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 192 and 195(1)(b) and (c). 
The bill introduces a number of changes to the administration of the student loan scheme particularly in relation to borrowers who are overseas. Since 1 April this year student loans for most borrowers who live in New Zealand have effectively been interest-free. In practice their loans attract interest but it is written off at the end of the tax year. Borrowers who live overseas generally are not eligible for interest-free loans. The rationale for introducing interest-free loans was threefold: to reduce the costs to students of tertiary education to encourage tertiary-educated New Zealanders to stay in New Zealand and contribute to the New Zealand economy and to help encourage skilled New Zealanders to return home. 
A number of concerns about the operation of the student loan scheme rules have emerged both before and after the introduction of interest-free loans this year. The rules are not working as well as they might in relation to borrowers who go overseas. Compliance is low amongst borrowers overseas and the legislation may well be creating disincentives for them to return. As well it is probably unrealistic—in some cases at least—to expect young New Zealanders to repay their loans while they are doing their traditional OE. Furthermore under the current rules it is also difficult for the Inland Revenue Department which collects the repayments to know the whereabouts of borrowers if they go overseas. That problem which has existed since the student loan scheme began was brought into sharp focus by the introduction this year of interest-free loans. The introduction of interest-free loans has increased the incentives for people heading overseas not to tell the Inland Revenue Department as borrowers who are based overseas generally attract interest on their loans. 
So this bill introduces changes to deal with these and other problems and generally updates the legislation to make it consistent with the policy intent of interest-free loans. These are the main changes. The bill introduces a new set of rules for borrowers based overseas to come into force on 1 April next year. The new rules will make it easier for people overseas to repay their student loans and will offer the chance of a fresh start for those who have fallen into arrears. There will be a repayment holiday of up to 3 years for borrowers going overseas. During that time they will not have to make repayments although their loans will still attract interest. This change recognises the fact that it is not always easy for people to repay their loans while doing their OE or working overseas in holiday jobs. 
For overseas borrowers who are not taking a repayment holiday the bill introduces progressive repayment obligations that are based on the size of their loan balances. For many borrowers overseas that will mean annual repayment requirements that are lower than they are under current law. Interest-free loans for people studying overseas will be extended from postgraduates to undergraduates studying full-time to bachelor degree level. The measure will be limited however to loans that are held before leaving New Zealand. 
The amnesty on penalties declared last year for non-resident borrowers who are in arrears with their payments will be extended by 1 year to 31 March 2008. The extension of the amnesty will allow borrowers who are identified as a result of the proposed data-match which I shall describe shortly to come within the amnesty. It will therefore become possible for those who are in arrears to make a fresh start. If they meet certain conditions their loan balance will not increase except for interest and that should remove some of the fear of returning home for those who have not been meeting their obligations. 
These changes are all aimed at making it easier for borrowers who are based overseas to meet their student loan obligations. The changes also seek to deal more effectively with those who have fallen behind in their repayments thus making it possible for those who front up about their situation to return home without having to face an overwhelming burden of debt. 
The bill also introduces two important changes for all borrowers whether they are in New Zealand or overseas. First the late payment penalty will be reduced from 2 percent a month to 1.5 percent a month in order to make it less punitive. Second the hardship provisions in the Student Loan Scheme Act are being amended to give the Inland Revenue Department greater flexibility in administering them. 
A number of amendments in the bill are there to improve the administration of the scheme. The chief of these amendments is a change to the law to allow data matching between the Inland Revenue Department and the New Zealand Customs Service—a mechanism that is missing under current law. That change will make it easier for the Inland Revenue Department to know who is overseas and who is not and to ensure that only those entitled to interest-free loans are receiving them. The Commissioner of Inland Revenue has recently advised me that data matching is expected to reveal about 40000 borrowers who are or have been non-resident and who received interest write-offs to which they were not entitled for the tax years before 1 April 2006. Their loan accounts will have to be adjusted to reverse those write-offs. The bill provides however that any loan that was repaid by 13 November this year will not be reopened to adjust any incorrect interest write-off. 
These and other changes in the bill are described in detail in the separate commentary on the bill that has been distributed to members. I therefore commend the Student Loan Scheme Amendment Bill (No 2) to the House. 
Hon BILL ENGLISH (National—Clutha-Southland) 
: 
 National will support the passage of this bill at least for it to go to the select committee because it is an attempt to get to grips with a very complex and difficult administrative policy relating to interest-free student loans. This bill highlights the major problems that the Inland Revenue Department has had in applying any kind of consistency or fairness to borrowers who are resident overseas. I would be among many people who were alarmed to find that 40000 borrowers have apparently got lost. I am still slightly confused about what presumptions the Inland Revenue Department was making about those 40000 people who were not making repayments. Was the department assuming that those 40000 students were overseas when they were in fact here? 
Hon Brian Donnelly 
: Or the other way around. 
Hon BILL ENGLISH 
: Or was it the other way around—they were assumed to be here when in fact they were overseas—which tells us there are some very large holes in the system. I would like to make it clear to the Government and to the Inland Revenue Department that we sympathise somewhat with their predicament. The department has a computer system that I can recall being implemented—I think almost 15 years ago now—and fundamentally it has not altered. In that time it has had to take on family tax credits and Working for Families; the student loan scheme of course and all the changes to it which have been virtually every year; changes now in international tax; and probably the granddaddy of them all KiwiSaver. I will be interested to find out at the select committee whether these changes are dictated as much by the need to take some pressure off the Inland Revenue Department’s computer system by simplifying the system or whether further change will put so much pressure on the Inland Revenue Department that in fact it will need to make some fundamental changes or upgrades to its ability to administer student loans. Of course such an upgrade would no doubt lead to significant changes for all the other systems it has to administer. 
I spend a good a deal of time as an MP explaining to constituents that students who are getting an interest-free loan have to be charged interest and then have to have it written off. The fact that that is the process students have to go through tells me that the policy has moved well ahead of the administrative capacity to deliver. In behind that of course is a fundamental unfairness. This bill will extend the amnesty for a year. One of the reasons for extending that amnesty which the Government has not publicly stated is that only a couple of hundred borrowers have taken advantage of it in the first 3 months when there are evidently tens of thousands of people out there who have not been meeting their obligations. So the extension of the amnesty is necessary if only to give a long enough time for borrowers to understand it to realise they will be nabbed by the data match—which we support—and then to have time to work through with the Inland Revenue Department just what the effects of the amnesty are on them individually. 
Students will of course want to know individually what the effects will be. But the fact is that a significant number of students have always met their obligations on the way through and the Government needs to be very careful that the provision of this generous and lengthy amnesty will not undermine the perception of fairness among all those students. I accept that no doubt the Minister would argue that the amnesty is an amnesty only on penalties and that all the other obligations have to be met by the student. 
I will also be testing in the select committee the Government’s argument for that amnesty in respect of its incentive effect on borrowers going overseas. Much has been made of this in the political debate—the idea that every young person in New Zealand feels compelled because he or she has a student loan to head off to a stronger currency zone earn big money and pay off the loan and New Zealand is worse off for it. In fact the annual report on the student loan scheme shows that that is largely greatly exaggerated. At the scheme’s peak something like 8 or 9 percent of borrowers from any given year left and some of the figuring that I have done shows for instance that of those who left between 1996 and 1998 70 percent of them had returned by June 2006—and that was before any of these changes. 
So the idea that paying interest on one’s loan overseas and not paying it on one’s loan at home will have some dramatic impact on the behaviour of young people was I think a political convenience at the time. It fitted the public mood; it was a way of limiting the fiscal cost of a very expensive promise; but young people I am pleased to say are not as easily subject to the manipulations of adults and public policy as that. They will head off they will discover the world but the vast majority of them will come back to their homes and that is a good thing. 
As I have signalled at the select committee deliberation National will be testing particularly the capacity of the Inland Revenue Department to deliver on this. It is not necessarily part of the legislation but of course the legislation is only credible if the Inland Revenue Department can deliver on these changes in a way that it has simply not been able to do in the past. I think it is a warning to all of us who take an interest in the administration of the revenues of the Government—which are pretty important—that we have been putting in place student loan policy at least that cannot be effectively administered. I have not been involved in it to know whether officials assured ministers at the time—well they certainly did when I was Minister of Revenue—that they could administer it. But clearly those assurances have not been borne out and that warrants the select committee having a good hard look at it this time around. 
So this bill represents a number of steps in the right direction because it simplifies the administration of the policy and it brings in a data match that is long overdue. I wonder why National as a party actually did not put more pressure on this issue sooner. We will facilitate the passage of the bill to go to the select committee. 
Hon MARIAN HOBBS (Labour—Wellington Central) 
: 
 On behalf of Labour I welcome this bill and rise to support the Hon Peter Dunne’s work on it. An amendment bill rightly presumes that a problem has been identified and also that it needs to be tackled. The problem that has been identified in this bill is associated with the Kiwi rite of passage—namely the OE. It is rare in the early months of an OE for young Kiwi graduates to be earning enough and to be earning steadily enough to be in a position to repay their loans. As a result some have been growing their loans with penalties as well as with interest and that can become a disincentive for them to return home to New Zealand where we need and want them. 
The second problem that has been identified and that has been a problem since the beginning of the student loan scheme is that the Inland Revenue Department does not know who is overseas let alone whether those people are actually overseas. It does not know whether they are in Outer Mongolia or inner London. When interest-free loans were introduced there was an even greater incentive for people not to tell the Inland Revenue Department where they were. The interest-free policy applied only to those living in New Zealand so why would people tell the department they were going overseas? 
The Government has in this bill introduced some solutions. First up it has introduced a fresh start amnesty and that amnesty for non-resident borrowers—those overseas—with arrears will be extended to 31 March 2008. I welcome the fact that Mr English recognised that that amnesty is for penalties only. Penalties will be wiped if people apply for the amnesty—because they have to apply for it. They also have to meet certain conditions including making regular repayments based on new repayment rules for 2 years. 
Another thing we are doing is making it easier to repay loans. There will be a repayment holiday of up to 3 years for borrowers who are going overseas during which time they will not have to make repayments although their loans will still attract interest. This will also apply to those who have met the amnesty conditions. That is a recognition of facts. As I said before when young Kiwis go on their rite of passage overseas they do not always walk into Stg£50000-a-year jobs as they come off the plane. That is not what they get paid in bars in the various parts of London—or that is what they tell me anyway. 
The third thing we have done and worked very hard on is encourage overseas study. The Inland Revenue Department will be able to grant interest-free loans to undergraduates—not just graduates—who want to study full time overseas to bachelor’s degree level. As well we have brought in some other things. For example borrowers who had repaid their loans by 13 November 2006 and who had had an interest write-off to which they were not entitled will not have that write-off reversed. So borrowers who have repaid their loans will not be revisited; we will accept that the main thing has been done. 
Then there are some things that apply to all borrowers. The late payment penalty for all borrowers will be reduced from 2 percent per month to 1.5 percent per month. The change will apply to amounts subject to a late payment penalty on or after 1 April 2007. The Inland Revenue Department’s powers to grant hardship relief will be made more flexible by allowing the department to suspend payments during the year for borrowers who apply for relief—and that is very welcome indeed. 
We come to the issue of data matching. In future the Inland Revenue Department will know when borrowers go overseas. Again I am pleased to see that the National Party supports this. A law change will allow data matching between the Inland Revenue Department and the New Zealand Customs Service. This will ensure that only those entitled to interest-free loans have access to them. The only thing about which I feel slightly differently from Mr English relates to the data match being expected to reveal—it has not revealed as yet—that about 40000 borrowers are or have been non-resident so their loan accounts will have to be adjusted. We have yet to get the proof in the pudding about that. 
This bill sits in a context. Sure it is right to correct a problem that has been around since the introduction of the student loan scheme but the context is even bigger than that. I think that everyone in here acknowledges that New Zealand needs its graduates whether they are graduates of polytechs private training establishments or universities. We need those graduates with their skills intelligence creativity and energy. We want them to come home and stay home eager to contribute. We also want to increase the numbers of students who are graduating from our tertiary organisations so Labour has continued to make tertiary education more affordable. 
We have done that largely with the interest-free student loans policy for all New Zealand - based graduates that started this year. We have also increased the numbers of students eligible for student allowances and we have done that almost year by year as we have looked at those issues. We are making available bonded merit scholarships and we have increased the numbers of those scholarships. We saw that in Budget 2006. So we have done our best to make access to tertiary education for our people absolutely important. 
It is not only that; the Labour Government is moving very strongly with help from its partners to improve tertiary education. It is making a shift away from the numbers-only policy which was promoted largely by the previous National Government in response to figures showing that in the 1990s we had one of the lowest numbers in the OECD of students studying at tertiary level. The problem was that we concentrated on the numbers of students studying not on what they were studying so this is a shift in tertiary policy away from the numbers-only approach to a focus on what people are learning. 
There is a new approach to planning funding quality assurance and monitoring for all tertiary education. The new system for tertiary education will promote a much stronger focus on the quality and relevance of education and on research outcomes. It will ensure that tertiary education organisations identify plan for and meet the needs not only of students but of employers industry Maori community groups and other stakeholders. It will do this through investing in tertiary education organisations in order to support and reward quality and through requiring tertiary education organisations to demonstrate that their educational research is contributing to economic social cultural and environmental outcomes for New Zealand and New Zealanders. That is far more than just concentrating on the numbers who are studying at tertiary level. They are studying at tertiary level for a reason and the reason is about a better standard of life for us. 
Again it is not only that; in this new tertiary education reform we want tertiary organisations no longer to be competing or ending up all offering the most popular courses because doing that has not served New Zealand well at all. We are instead talking about collaboration about competing against standards—not against each other—and about valuing each other’s differences. Each tertiary organisation has a different contribution to make towards success for all New Zealanders. This legislation sits in the context of being utterly ridiculous for New Zealand to compete for low pay and low skills; we are interested in high pay high value and a highly skilled workforce. We must use our talents we must support our people to grow their talents and this legislation is part of that whole scene. Thank you. 
Hon BRIAN DONNELLY (NZ First) 
: 
 New Zealand First has long believed that the best immigrant is a New Zealander returning home and this legislation supports that philosophy. When I grew up the concept of an overseas experience was a trip to Australia in retirement although it has to be said that in virtually all generations there were some New Zealanders who did go overseas. I think Ernest Rutherford would never have split the atom at the University of Canterbury and Kiri Te Kanawa would never have become a world-leading diva if she had remained here in New Zealand. However for the present generation of young people an OE soon after the completion of educational qualifications is the norm—the rite de passage as I would say to my friend Marian Hobbs. This should not be seen as a bad thing for our society. In fact the experience these young people gain enriches them in many ways and possibly makes them better contributors to New Zealand on their return. 
The Hon Bill English brought up the good point I think that there has been criticism of the student loan scheme that sort of stated that the levels of student debt have driven our young people off overseas. However the evidence does not seem to validate that point. It seems that it is much more of a cultural element for our young people these days. So we should not be overly concerned about the phenomenon of a large proportion of young people indulging themselves in an overseas experience. What we must be concerned about however is ensuring that those young people come home settle down here and contribute to our society both economically and socially. 
The sad fact is that the way the student loan scheme has operated has often created strong disincentives for that to take place and for the return of our best and our brightest. Many young people have left our shores unaware that they are required to contact the Inland Revenue Department and to work out a means of regular repayments on their loans and if those repayments are not made then penalties accrue. So when those young people decide to return they find out that they have a whopping great bill. For many it means that remaining overseas becomes a rational choice and that cannot be good for the nation. This bill creates an environment that will eradicate many of these disincentives. 
There is a further complication. At present with no interest on loans students may believe that when they go overseas there will be no interest accruing on the loans that they leave behind. The problem is that the interest-free situation applies only to ex-students who remain in New Zealand so in fact those people are accruing interest on their loans while they are overseas. So this legislation makes the student loan scheme more user-friendly for ex-students who are going overseas. A remit payment holiday for 3 years will assist those who take on seasonal and low-paying work—working in pubs restaurants etc.—whilst they are overseas. Even though interest will accrue there will be no penalties for non-payment during that period of time. 
The legislation is also beneficial to the general taxpayer. At present the Inland Revenue Department does not automatically have knowledge of those with student loans who happen to take off overseas. It has depended upon ex-students themselves telling the department that they plan to travel. As the Hon Peter Dunne has said compliance is calculated to be very low. This legislation will ensure that the department is alerted to anyone with a student loan who has taken off overseas through data-matching with the Customs Service. The benefits of this are twofold. It prevents ex-students from inadvertently breaking the law and getting themselves into considerable debt and it also ensures that those who are deliberately flouting the law are identified and are made to pay what they are legally required to. As has been explained a large number of people have had interest write-offs to which they were not entitled. 
There will be some who say that this legislation is unfair because they have paid back what they had to and they ask why others should be let off. I would refer those people to the parable of the vineyard workers who contracted a deal to work all day with the owner. Halfway through the day the owner realised that he would not be able to harvest all the grapes so he contracted another group of workers for the same amount. Then with 1 hour to go the owner realised that he still would not be able to harvest all the grapes and he contracted another group of workers for the same amount. At the end of the day he paid all the workers the same and the people who had worked all day said that it was unfair. The owner pointed out to them that what he had contracted with them was fair at the beginning of the day and that it was still fair then. The fact that other people had been fortunate and lucky because of the circumstances in no way changed the fairness of the circumstances of the first group. 
As Peter Dunne has said the bill will go to the Education and Science Committee—a very good committee which is probably why we are sending it there although I am sure there are other reasons too. There is no doubt that the details will be looked at very carefully. I am pleased that Bill English mentioned that he was an ex - Minister of Revenue because he will be able to bring the knowledge and expertise from that experience to bear upon the scrutiny of this bill. I have to say that ensuring the provisions will be able to be put in place by April will put some time pressure on the committee to hear submissions and to do its considerations but I am sure that the committee members themselves—as I say the very good Education and Science Committee—will be looking forward to getting their teeth into the legislation. 
To summarise New Zealand First is supportive of this legislation. I say once again that as far as New Zealand First is concerned the very best immigrant is a New Zealander coming home and we believe that this legislation will support that position. 
NANDOR TANCZOS (Green) 
: 
 I rise to indicate that the Green Party also supports the Student Loan Scheme Amendment Bill. We welcome the bill and thank Mr Dunne for its introduction. In a sense we consider this bill to be a band-aid but we recognise that a band-aid is better than a bloody wound so we do support it. 
I think it is interesting to reflect on the political context. This bill is really about cleaning up some of the anomalies that arose out of the Government’s change of policy prior to the election with regard to interest on student loans for people who stayed in New Zealand. It is worth reflecting on that because it is an example of a situation where the small parties have set the political agenda. The Green Party has had a strong position on student loans for some time and has called for a universal student allowance a loan write-off and a capping of student fees. I know that student loans have been an issue of great concern to United Future and New Zealand First for some time and that the Maori Party has had a progressive policy around student loans as well. So I think it is fair to say that the momentum that was being generated by the small parties’ concern for what I would consider to be some of the real injustices and problems arising out of the student loan scheme set the agenda and made the scheme a political issue such that the Labour Party came out with its change of policy prior to the election. We can all take that as a victory for the important role that small parties can play in setting the political agenda around such very important issues. 
Having said that I reiterate that the Green Party policy is to go much further than this bill does. We will continue to support policies that are progressive around student loans and to support in particular a universal student allowance so that all full-time students get a decent living allowance and a loan write-off—especially for those who are unable to pay off their loans over a long period of time. I say that because my particular concern is not perhaps for some of the very highly paid graduates in law medicine or whatever their profession may be who can pay off their loans relatively swiftly regardless of the fact that their loans can be significant. My concern is in some ways much more about graduates who work in areas where they will face fairly low rates of pay to the end of their days in their professions—for example social workers. We desperately need those professions. In fact some of the debate we had during question time today around Child Youth and Family—the enormous pressure on social workers and the like the under-resourcing of that sector and the need for more well-trained confident people in that area—highlights the real issues we face with regard to people who require a tertiary education in order to do what will continue to be for the foreseeable future relatively low-paid jobs. 
As I said before we also support the capping of fees because the issue is about not just living costs but also the increasing fees that are driving up student loans. 
We have a great concern about student debt because we know that it skews the demographics. There is some interesting work that shows that student loans can be correlated with delayed fertility an issue we are facing increasingly in the world today. We know that student loans impact upon the ability of young people to borrow money to buy their own home. Of course that is exacerbated by the ridiculous property prices that we have seen in this country over the last few years but certainly coming out of tertiary education with a significant debt makes buying a home even more difficult than it would otherwise be. 
We know that the student loan scheme skews people’s study and career choices. I have indicated some ways in which I think that is a very significant issue for our country. It is also a philosophical issue because if we treat education as a private good and say that students should pay for it then the corollary of that is that they will treat education as their personal private good as well. The choices they make will be about maximising the benefit to themselves rather than keeping in mind the broader picture of the benefits to the country or the community. 
We face some very significant challenges in this country at this time. The Prime Minister’s statement of the need for New Zealand to become carbon neutral showed us just one challenge we face in order to overcome the ecological degradation in the world today. If we are to become serious about those kinds of ambitions—and I desperately hope and pray that we do—then we will need educated people who are able to think creatively about the challenges that we face. That does not necessarily mean that we need a lot more accountants and lawyers—no disrespect intended at all to my accountant and lawyer colleagues. We know that we have a real issue arising from a shortage of soil scientists in this country. We have an issue around attracting people into engineering. I talked before about issues connected with the likes of social workers. Those are important issues. 
The Hon Marian Hobbs talked about the shift in tertiary education away from a focus on numbers to a focus on quality and I welcome that. It is very important that we take a strategic approach to tertiary education in a country like New Zealand which is small and has to use its resources strategically. We have to remember that it is important to address not just the issue of the drivers of our tertiary institutions but also the issue of the drivers of student choice. That is where the student loan scheme is so significant. 
The bill does not address that situation at all. It does not really begin to fix the problems with the student loan scheme as a whole at that higher level. But it does do something to mitigate some of the anomalies and to patch up some of the holes—in the words of Bill English—and I think that is useful. So as I say we support this bill. 
Graduates are rightly going overseas on their OE. They are going overseas to work for better pay and conditions than they can get here. I agree with the Hon Brian Donnelly that that is not something for us to be afraid of. Actually there are real benefits for New Zealanders in going overseas. The connections they develop the networks they make and the expertise and experience they develop can be a vital contribution to New Zealand when they return. The crucial thing is that we make sure there are no barriers to them returning—that there are no disincentives for people once they have gone overseas to return and make their contribution to New Zealand. One of the problems with the current student loan scheme is that it does set up very real and expensive barriers to graduates who want to return home. That is why this bill is a welcome addition to the legislation. In part the problem is that the current regime is largely unaffordable for graduates overseas and they often return home to significant debt after both the interest and the penalties that are attached to the loans have been taken into account. 
Green Party members are very pleased with a number of the provisions in this bill—for example the 3-year payment holiday. During that period the repayment amount is set at zero and no penalty for failure to pay will accrue. The interest will still accrue but the penalties will not. That makes a lot of sense because as previous speakers have indicated when people go overseas—for the first period of time at least—they are doing casual work they are moving from place to place they are not really in a position to necessarily make repayments and of course they are enormously difficult to keep track of in any case. So that provision makes a lot of sense. After 3 years the hope I guess is that people will have got into a more steady career and be working overseas in a more long-term fashion. 
We are also pleased that the repayment amount will be calculated as a percentage of the loan rather than being income based. In reality there is no practical way to do an income-based assessment so a simple formula that is easy to understand and easy to apply is sensible both for us here in New Zealand and for those graduates so they can understand what their obligations will be. We are also pleased to see that late penalties where they do apply have been reduced a little and that the current amnesty period for people to notify the Inland Revenue Department that they are overseas has been extended for another year. Of course there are people who go overseas and do not notify the Inland Revenue Department of that because they are attempting to evade their obligations. But is seems to me that when people who have just graduated go overseas the last thing on their mind is telling the Inland Revenue Department where they are going. They are thinking about what they are going to be doing making their plans writing to their friends or doing whatever else is needed. It is quite obvious that many people fail to contact the department so I think that provision is important. 
In the brief remaining time that I have left for this speech I will also touch on the ability to grant an interest-free loan to borrowers who are studying full-time overseas at an undergraduate level. I think that is a useful thing as well. 
Brian Donnelly talked about fairness and about how some people who have paid all of their obligations think the provisions are unfair. He made the analogy that if the student loan scheme was fair at the beginning it was fair at the end. I take that slightly differently. I do not see the student loan scheme as ever having been fair; I see it as a case of intergenerational theft. Nevertheless that is not an argument for perpetuating an unfairness or an injustice. The bill does not solve the inherent injustice or foolishness of the student loan scheme but the Green Party supports the bill because it makes the process slightly easier for graduates. 
TARIANA TURIA (Co-Leader—Maori Party) 
: 
 Tena koe Mr Assistant Speaker tena tatou katoa. On 31 July this year the working-group on indigenous peoples in Geneva invited Aotearoa to share its views on Maori student debt. Nominated to represent Aotearoa was Potaua Biasiny-Tule of Tuhoe Ngati Pikaio Te Whanau-a-Apanui and Niuean descent. Potaua is a student of the world from anyone’s account. He graduated with a cooking diploma at Wairakei Polytechnic a Bachelor of Arts in political science from Canterbury a postgraduate diploma in Maori and Pacific development from Waikato University and is currently looking towards studying for a masters degree in public policy and administration at Victoria University. Potaua has assisted with research related to sustainable biotechnology and Pacific Island communities and in 1994 was invited to attend the Gallipoli reforestation project in Turkey. 
As the eldest son of eight children Potaua was born in Opotiki in a family that he describes as working class. He was raised in Ford Block Rotorua and nurtured to have big ambitions. It was a dream of his family to benefit from university education and Potaua now shares those same aspirations with his wife Nikolasa that their young son Atutahi may attend a good university a whare wananga and is able to live the life he dreams of. 
Potaua has travelled extensively but not this time to Geneva. For Potaua is saddled with a personal student debt of $75000. He is another statistic faced with the costs of user-pays—the loans incurred from a wish to enter the halls of higher learning. Potaua is one of almost 70000 Maori students who are faced with a cumulative student loan debt which is estimated at $1.225 billion out of a total student loan debt of $9 billion. 
That is the rude context—the reality—with which the Maori Party is able to receive the Student Loan Scheme Amendment Bill (No 2). The key focus of this bill is to remove barriers to student loan scheme borrowers who are living overseas but seek to return home. The bill aims to promote fairness in introducing a 3-year repayment holiday that takes account of the graduate student trend to go on OE. When the 3 years are up students will be able to take up a fairer progressive repayment scheme to support them in meeting their financial responsibilities. 
The student loan scheme is of particular concern to the Maori Party. Maori make up 21 percent of all borrowers who have had to rely on student loans to support their academic aspirations. The cost of repayments are however crippling. In 2000 nearly two-thirds of Maori and Pasifika students had not reduced their debt at all 3 years after study. This compares with 41 percent and 47 percent for European and Asian groups respectively. 
The reasons for this are complex. One key factor reported by the Ministry of Education last year is low income particularly income around the student loan repayment threshold. As the ministry states: “The average income for Maori with level 1-3 certificates is notably lower than for non-Maori with the same level of qualifications.” Does this sound like one law for all or one income level for all? How can one group of graduates be rewarded with an income that is “notably lower” than other students? Is this fairness? Is this equity? 
It gets even worse. The ministry states: “Maori who did not complete have notably lower incomes than non-Maori who studied at the same level without completing. This may in part explain the lower rates of progress in debt repayment for Maori who did not complete diplomas or bachelors degrees.” 
 The conclusions as explicit in the briefing from the Ministry of Education are that whether Maori complete qualifications or do not complete a particular course or study is irrelevant. Maori will still be rewarded with notably lower incomes than non-Maori. The Maori Party therefore comes to the 2006 annual report of the student loan scheme published just last month with a natural curiosity about whether issues of systemic bias or in this instance institutional racism are being tackled by the bureaucracy. 
It looked fine from a quick read of the principles for student support: to ensure equity and fairness; to ensure tertiary education is affordable for students; to ensure consistency with the wider income support system. Yes we thought we could all sign up to that. But hello! Institutional racism was absent from the report. The crisis of Maori earning notably lower incomes than non-Maori must be addressed and it must be addressed now. For what we also know is that Maori students are leaving study with some fairly hefty debts to repay. It does not seem to matter which profession; the student debts are really massive. 
A survey of 841 respondents working as early childhood or primary school teachers found that 70 percent of teachers reported stress because of their student loan and that 48 percent of teacher graduates who leave our shores cite their student loan debt as their main reason why.  
Teachers in Debt: A Report Card 
 stated that the average student loan debt was $19089 for Maori compared with $16035 overall. 
Then there are the medical graduates. Was it not just last week that headlines announced that the pandemic of diabetes was threatening the life chances of Maori? And was it not just yesterday that the Minister of Education agreed in question time in the House that “by Maori of Maori for Maori” is a worthwhile goal although he added some other comments? Yet “by Maori doctors of Maori medicine and for Maori communities” is clearly not something that this Government is investing in. 
It is around this time when the questioning gets uncomfortable that Ministers start saying that the issues are complex. What is so complex about prejudice covered up by words like “fair in the circumstances” which is code for “We are going to continue to deny you justice.”? What is so complex about that? What is so complex about politicians who espouse property rights and then collude in denying Maori in their rights to property rights? What is so complex about a Government that having seen how popular playing the race card can be then goes back on funding “by Maori of Maori for Maori” programmes and in terms of this debate removes the manaaki tauira funding programme for Maori students? That is not complex. That is simple political opportunism of the worst kind. 
The study of the effect of student debt on doctors entitled  
Doctors and Debt 
 recorded that the average debt for Maori graduates was $81250 compared with $68682 for Pakeha and $48180 for Asians. Over $80000 to pay off before one can even walk in the doors of a health clinic! I do not think so. 
The levels of student debt are a blight on this nation. Seven years ago in November 1999 the Prime Minister told the nation: “Tertiary fee rises are crippling our future. Labour is committed to first stabilising and then lowering tertiary fees.” Yet the average fees per student are now grossing $5000 a year. In the New Zealand University Students Association’s 2004 publication  
A Mortgage on the Future 
 it described the concept of free education as being a possibility. Most students in the Czech Republic Germany Norway Sweden Denmark Brazil Poland and Romania pay no fees. Indeed in Finland free education is a constitutionally protected right. The Maori Party wants to take part in a vision where Aotearoa is included in the list of nations where “Everyone has the right to education.” can be interpreted in such a way that there are zero fees that students will not be saddled with outrageous levels of student debts and that debt repayment is achievable because the levels of incomes upon graduation are sufficiently high to do so. 
We will of course support this bill because we believe that any incentive to prevent the brain drain of students leaving for overseas must be supported. But we remain on guard to ensure that the wider context of increasing fees and lack of access to student allowances is also given priority in this Parliament so everyone can truly enjoy the right to education. 
Bill read a first time. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Student Loan Scheme Amendment Bill (No 2) be referred to the Education and Science Committee 
referred to Education and Science Committee 
 that the committee report finally to the House on or before 28 February 2007 and that the committee have authority to meet at any time while the House is sitting except during oral questions and during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 192 and 195(1)(b) and (c). 
Motion agreed to.