Robertson Grant: Student Loan Scheme Amendment Bill — In Committee 
Robertson Grant: Student Loan Scheme Amendment Bill — In Committee 
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GRANT ROBERTSON (Deputy Leader—Labour) 
: 
 And I recognise the Chair too. I have seen him somewhere before. Thank you very very much for giving me the call on this bill. Part 1 of this bill is in fact pretty much all of the bill. It is all of the substantive clauses of the bill. In this first call I am going to make some general remarks around what is contained in the bill and where it is going then perhaps move on to some more specific issues coming up that I have concerns about.  
The first thing to note about this bill is that there are a large number of mainly technical amendments contained within the bill that are essentially around tidying up matters to do with the student loan scheme. The student loan scheme frequently needs legislation like this because it is a complex beast. The interaction between the tertiary institutions StudyLink the Inland Revenue Department and StudyLink’s predecessors have always caused some difficulties and issues and from time to time things happen like the Inland Revenue Department deciding to change its computer system and that means the law has to change. I sometimes think we have got things a little bit wrong in the student loan scheme when that is the case but there are some matters in here that are of very limited controversy and we do sometimes wonder whether they really need legislative change and whether there is not some other mechanism that could be used to advance the changes that are in here. Those issues are not going to get a lot of attention. They are to do with things such as changes in the names of the repayment codes and the way in which certain types of earnings are treated.  
The issues that are going to get more attention I suspect in this debate are around the issues to do with the changes to the repayment holiday. Before I come to those one major issue that has been picked up in this bill is the question of a contact person for a borrower who is overseas. When we look at the student loan scheme and the interest-free element of it the key element that the interest-free loan scheme has had is that if somebody remains in New Zealand they will not be charged interest; if they go away overseas they will be. But we have had from the beginning of the loan scheme the issue of what happens when borrowers go overseas. I am actually in principle no great fan of the student loan scheme but since it exists we do need to make sure that there are robust processes in place to ensure that people are making the repayment that they are obliged to do.  
There have been examples of people travelling overseas and not making the loan repayments that we would expect them to make and that is unfair on other borrowers. So no matter what someone like me or anyone else might think of the student loan scheme in principle we need to ensure that borrowers who are making repayments do not look at other people see them and say “Why is that person not making a repayment just because they have gone overseas?”. If a borrower is overseas I think it is a reasonable expectation that they will make arrangements to make payments. There will be many parents around New Zealand who no doubt will be glued to their crystal sets right now listening to this debate. They will be saying “Yes I am familiar with that.” I know that my own mother for many years received the student loan information relating to my brother who had long since left New Zealand—he was making repayments I hasten to add. But parents all around New Zealand will be familiar with the fact that they have remained the contact point effectively for their children when they have gone overseas. Many of them are very diligent in making sure that payments are made and that information is kept up to date.  
However what this bill does is ensure that it elevates essentially the role of a contact person and I do think there are some questions about that. I certainly believe that some people when they see the changes that have been made to the role of a contact person will start to think “Do I want to be that contact person?” because this means that they will have regular communication. There will be communication right at the beginning about what their roles and responsibilities are. I do not think the reality is that it is greatly different from the situation now but I do think it will elevate what that person’s role is. It does beg the question as to whether over time there may be some intent to have some liability for that person but that is not I suspect the intent at this time. But I do think it is worth the Committee taking just a little bit of time to consider what it means now for somebody to be listed as a contact point. It will not as I say greatly change that role but it does mean that the person will be contacted regardless of whether the borrower has defaulted on their payments. At the moment that would be pretty much the only situation in which a contact person would be contacted. Now they will be contacted as a matter of course once the person is listed. A person has to be listed so therefore it does increase the attention that a contact person will get.  
I just think the Committee does need to reflect on that. We do not want to set up a situation where for instance parents feel that they do not want to be a contact person for their children because it is going to lead to some kind of increased scrutiny on them. I do not have a problem in principle with having to supply some kind of contact details and contact information but I do think there are some matters here to consider in that regard.  
I want to move now to the question of the repayment period changes that are listed in this particular bill. On the Table are amendments of a remarkably similar nature from the Green MP Holly Walker and me thinking alike here about the change the Government has made. To clarify this for those watching the Government is proposing to reduce the repayment holiday which currently stands at 3 years to 1 year. The repayment holiday comes into force when someone goes overseas typically a young New Zealander on their OE. They go overseas and they are not obliged under the repayment holiday provisions to make repayments on their loans. They are accruing interest because the term of the interest-free student loan scheme is that if you are overseas you will accrue interest. So they are not getting a free ride; they are actually accruing interest. What the repayment holiday has acknowledged is that New Zealanders have a long tradition of going away overseas often shortly after they graduate taking some time to experience the world and then coming back to New Zealand.  
The Minister in the chair the Hon Peter Dunne understood this in 2007 when as a Minister in a Labour Government he oversaw the repayment holiday period going to 3 years. I want to quote the Minister because I do think what he said here is important. He was talking about graduates overseas and he said: “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. We needed to take a pragmatic way through this”—this is the Minister in the chair—“and being someone who places great virtue on pragmatism”—I do not think there is any doubt about that—“it struck me that the logical course of action was to derive the solution that we have: to extend the holiday period for 3 years recognising the fact that young New Zealanders take that extended period overseas;”. I could not agree more with the Minister. It is a pragmatic response to do that.  
Hon Peter Dunne 
: Five years ago. 
GRANT ROBERTSON 
: Five years ago—it has all changed in the 5 years for the Minister.  
Unfortunately it was 5 years ago and now the pattern of movement of young graduates going overseas is actually exactly the same. The country that many New Zealanders go to for their overseas experience is the UK and the UK allows for 2 years there.  
Andrew Williams 
: And Finland.  
GRANT ROBERTSON 
: And Finland—that is good Mr Williams. We do have a working holiday visa exchange with Finland.  
Hon Clayton Cosgrove 
: We used to.  
GRANT ROBERTSON 
: We may not any more after this week but we did have it. But typically most graduates would find their way to the UK and they will spend that 2-year period and possibly a little longer; most people know that it is possible to get extensions on those visas when you are away. It seems to me that this change that is being proposed by the Government actually flies in the face of what is the typical behaviour of graduates overseas. That is what makes it wrong.  
But it has also been pointed out to the Government that it actually is not going to achieve the things that the Government wants it to do. Treasury told the Government in the Budget documents that there is little evidence that this change will improve repayments. It is actually likely to increase the debt held by overseas borrowers discouraging them from returning and therefore increase the annual student loan impairment. That is the very point and Mr Dunne noted that the pragmatic way through this the thing to do to actually encourage people to come back to New Zealand was to leave a period of either 3 years or—and I have got two amendments. One is for 3 years but we could compromise Mr Dunne between 1 year and 3 years and go for 2 years.  
Dr David Clark 
: That’s pragmatic.  
GRANT ROBERTSON 
: That is pragmatic. There is also that amendment on the Table because I think that is more realistic.  
Moana Mackey 
: Common sense.  
GRANT ROBERTSON 
: It is more common sense Moana Mackey—that is right—to actually fit it around what graduates actually do. But we have to bear in mind that Treasury is pointing out that what this is likely to do is increase debt and therefore discourage people from coming back to New Zealand.  
So the two things that we would have thought the Government wanted to do in a bill like this—reduce the debt and get the New Zealanders who are overseas back home—are both worked against. It was not just Treasury; it was also the Ministry of Education which said “This can be expected to have a negative impact at the margin on borrowers’ decisions regarding whether to return to New Zealand.” Simply this bill is wrong both in terms of the fact that it does not make common sense and it is also not going to achieve the goals.