Street Maryan: Student Loan Scheme (Repayment Bonus) Amendment Bill — Second Reading In Committee Third Reading 
Street Maryan: Student Loan Scheme (Repayment Bonus) Amendment Bill — Second Reading In Committee Third Reading 
[Volume:657;Page:6608] 
Hon MARYAN STREET (Labour) 
: 
 I would like to draw the Committee’s attention to some of the provisions in the Student Loan Scheme (Repayment Bonus) Amendment Bill but I would also like to inform the Committee about some of the advice that was received by the Education and Science Committee in consideration of this bill. The advice pointed out that borrowers with higher student loan balances in relation to their incomes and longer repayment horizons are less likely to benefit from this bonus offer. The advice given to members of the select committee was that these borrowers would clearly have less disposable income to make voluntary repayments over and above the required amount and that they would be less likely to be able to fully repay their loan in one payment. They face long repayment times typically and there is no incentive to repay earlier as the loan balance is not adjusted for inflation. 
One of the examples that were provided in this advice was the case of a fictitious woman with the name of Fiona. The advice stated that this fictitious person—fictitious but typical—was a recent graduate with a large student loan of $50000 and a modest income of $32000. A modest income is often where graduates start. A relative had come into some money or had won Lotto and that person decided to give Fiona the opportunity to pay off her entire loan so that she no longer had to make compulsory repayments and could be free of her student loan debt earlier than would normally be the case. At Fiona’s income of $32000 she could expect to repay her debt in 18.6 years assuming that her income grows on a basis of 5 percent per annum and assuming that the income threshold is 2.5 percent. In this time Fiona would have repaid $50000. If a family member who had won Lotto decided to pay off Fiona’s student loan it would be a silly thing to do. In fact that relative would do better to give Fiona the money which she could put in an account that was generating interest and develop a nice nest egg for her first home. Perhaps Fiona could take out a mortgage put down a deposit on a first house and be a lot better off. If she invested that money elsewhere—let us say at a lower rate of 5 percent for example—instead of repaying her loan she would be $15000 better off in today’s dollars. 
The financial logic is missing from this legislation. When one looks at particular examples it is perfectly clear that there is no logic to it. It is nonsensical. But if people are able to take it up the Labour Party will not stand in their way. The only thing that rescues this legislation is Trevor Mallard’s Supplementary Order Paper which I am pleased that the Government has accepted. It requires that a statement advising that financial advice be sought—a health warning effectively—be attached to all material that goes out with any promotion around this legislation. The legislation patently does not make financial sense and if people are wealthy enough to take it up then one assumes that they are wealthy enough to get the kind of advice that would tell them so. In the event the Supplementary Order Paper will provide some protection. It will provide protection so that people do not find themselves in the position of having misused their money if they are in the lucky situation of being able to afford additional repayments. 
I do not have a lot of enthusiasm for this bill. The only thing that makes it passable is the Supplementary Order Paper. Thank you.