Hipkins Chris: Student Loan Scheme (Repayment Bonus) Amendment Bill — Second Reading 
Hipkins Chris: Student Loan Scheme (Repayment Bonus) Amendment Bill — Second Reading 
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CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I have to say after listening to Louise Upston pouring her heart out about student debt and about how hard up students are that I am absolutely staggered that National voted against every measure that the previous Labour Government put in place to make the financial position of students a little bit better. Those members voted against freezing fees to stop fees going up massively by thousands of dollars a year as they did the last time National was in Government. They voted against removing interest on student loans while students were still studying and not able to make repayments. And they voted against making student loans interest-free altogether. 
Louise Upston just a few moments ago called that measure a massive bribe. She called it a massive bribe. But she is not alone in thinking that interest-free student loans are a massive bribe because what did John Key say about interest-free student loans? He stated: “What a cost to the country! What an unaffordable and irresponsible cost to the country!”. He called it “rushed and reckless thrown together in desperation” but here is the really good one. John Key stated: “Our caucus would never have signed off a zero percent interest rate because the economics are so bad. It was never for us because we have standards.” That is what John Key said about interest-free student loans. I do not think that Louise Upston was fully briefed on John Key’s position on interest-free student loans before she stood up to speak which is not unusual I think for National members. 
I have to say that I hope this bill fails and that not many people take it up. I say that because the more people who take it up the more concerned I would become about the very very alarming rate of financial illiteracy in New Zealand. Anybody who took it up would have to be completely financially illiterate because it makes much more sense for people to hold on to their money and put it in the bank even if it is earning only 1 percent or 2 percent interest than to go for this bonus and therefore lose out on the potential to earn interest. It would make sense in the last few months of their student loan repayments; if it was used for the final repayment of a student loan then it might make sense. 
The only reason that providing a bonus for repayments would make sense is if interest on student loans were going to be reintroduced. It would make sense only if interest were going to— 
Louise Upston 
: It makes sense because you’re reducing debt. 
CHRIS HIPKINS 
: Louise Upston said that it makes sense. She said that reintroducing interest on student loans makes sense. National’s position all along has been that charging interest on student loans makes sense. That is what Louise Upston has just told us. I do not agree with that. The Labour Party does not agree with that. 
Louise Upston 
: I raise a point of order Mr Speaker. The member has incorrectly represented the words that I used. 
The ASSISTANT SPEAKER (Eric Roy) 
: That is a debating point. 
CHRIS HIPKINS 
: Thank you very much. This is a bad bill. This is a bad bill that will not leave students better off financially and will not lead to their repaying their loans faster. 
We in Labour are certainly committed to making life a bit easier for students. We took several measures over the last 9 years in order to do so. We took a lot of measures in the last 9 years to make life easier for students because we want tertiary education to be available to all New Zealanders; we do not want cost to be a barrier to tertiary education. Unfortunately National voted against every single one of those measures to make tertiary education more affordable for students. 
National promised at the last election that it would not reintroduce interest on student loans. That was one of its key promises. But we know that when it comes to tertiary education National is not very good at keeping its promises. I recall a former Minister of Education under a National Government going up and down the length and breadth of the country prior to a general election saying that he would resign as the Minister of Education if tertiary student fees were not abolished full stop. 
Sue Moroney 
: And did he? 
CHRIS HIPKINS 
: Did he do it? No he did not. He not only did not abolish fees; he increased them and he introduced the student loan scheme so that people could pay for them. He never resigned because the National Party’s election promises are not worth the paper they are written on. That is a proud history that the National Party continues to adhere to. 
Louise Upston said earlier that interest-free student loans were the biggest election bribe out. The total cost of the interest-free student loans policy was a couple of hundred million dollars a year as opposed to the billions of dollars’ worth of tax cuts that the National Party promised at the last election. It promised billions of dollars’ worth of tax cuts but it broke that promise too. It passed tax cuts legislation under urgency and then it went back into urgency to take them away. If Louise Upston thinks interest-free student loans are the biggest election bribe out at the cost of a couple of hundred million dollars a year what on earth does she think the billions of dollars’ worth of tax cuts were? That was a much much bigger election bribe and one that the National Party never intended to keep. 
Allan Peachey talked earlier about clearing debt being the key to somebody’s future. I actually agree with the idea that people should aim to clear their debts. I think that is a very admirable goal. But this bill will do nothing to help students clear their debts. In fact if students take up the bonus repayment option up it could result in their taking longer to repay their student loans. As I said in the beginning of my speech that would highlight a level of financial illiteracy that was very alarming. 
The other thing is that this bill will disproportionately benefit graduates on higher incomes because they are most likely to be in the position to make additional repayments. Students with large debts—who have struggled their way through university working part-time then gone into Public Service jobs social work jobs or anything like that—are not likely to have the level of disposable income one would require in order to take up the bonus repayment option. People on higher incomes who are financially illiterate may decide to take up the option but unfortunately it is only those on higher incomes who will benefit; it will not help those on the lowest incomes who may have quite a high student loan debt. 
If someone pays $500 extra off his or her loan—above the minimum repayment requirement each year—that student would have his or her total loan abated by 10 percent. This bill is a typical National bill in that it advantages those at the top of the income scale but it is a con. Why would anyone go for a 10 percent discount when the loan is attracting no interest at all in the first place? If National wanted to encourage higher-income earners to repay their student loans more quickly there are other ways it could do that without introducing this sham called the bonus repayment option. Anybody in the financial position to be able to take it up is likely to be financially literate enough to know that he or she would be completely mad to do so. 
As I have said the National Party consistently opposed every measure the previous Labour Government took to reduce the cost of studying for students. It opposed the cap on student fees. It opposed no interest while studying. It opposed interest-free loans altogether. So it is not surprising that it is now putting in place a measure that will make sense only if it reintroduces interest on students loans which I suspect is part of National’s long-term agenda. Do not be surprised if we are back in this House at some point in the next few years debating the reintroduction of interest on student loans. 
Debate interrupted.