Hipkins Chris: Student Loan Scheme Bill — In Committee Third Reading 
Hipkins Chris: Student Loan Scheme Bill — In Committee Third Reading 
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CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I think the mask is beginning to slip on the National side of the House. We are finally starting to see what National’s true long-term agenda for tertiary education will be. David Bennett said that National does not regard money spent on the student loan scheme as money spent on tertiary education. That is a load of rubbish. The amount of money spent on the student loan scheme through interest-free student loans has made a massive difference to over 600000 New Zealanders who have a student loan balance and that is not including those who have already paid them off. We on this side of the House believe that spending money to improve the student loan scheme to lower the cost of borrowing to our students and our graduates is money well spent because it is money that encourages people to take up the opportunities of tertiary education to upskill themselves and to get better jobs. We think it is money well spent and we think it is a great investment in the future of our country. 
I want to talk a little bit about the loan scheme itself. Of course it is worth remembering when we are debating this quite significant overhaul of the student loan scheme legislation where the origins of the original legislation started back in 1992 when National promised to abolish fees for tertiary education but in fact increased them and introduced the student loan scheme to allow people to pay for it while simultaneously abolishing living allowances for students. Between 1992 and 2001 the number of students getting a student allowance dropped from 86 percent to 36 percent because of National’s broken election promises back in the early 1990s. 
As a result what we are talking about today with the Student Loan Scheme Bill is over 600000 New Zealanders who will be affected by these changes to the student loan scheme. The nominal value of student loan balances as it stood at the end of 2009 was $11 billion and it is forecast to increase to $15 billion by 2015. That is a significant amount of money. But I want to talk about repayment of student loans which is covered in this bill. When the last Labour Government introduced interest-free student loans National—spearheaded by John Key who said he was going to fight the policy with every bone in his body—campaigned by arguing that no graduate would repay their loan and that the time for repayment would massively increase as a result of the interest-free student loan bribe as National called it. 
I notice that the median repayment time for those who left study in 2006—which was of course when interest-free student loans were introduced—and who have remained in New Zealand is now forecast to be 4.6 years. When we introduced interest-free student loans we were looking at a median repayment time of up around 9 years. So we have seen a significant reduction in the amount of time that it has taken people to repay their loans and a big chunk of that is because of the interest-free student loans policy. That is something we should definitely welcome. It is something we on this side of the House are very proud of. 
There was a lot of debate during the Committee stage about students who work during their summer holidays and the impact that these changes in this bill will have on them. I am very pleased to hear that provision has been made for students who do their summer holiday jobs and earn a reasonably significant amount of money within a short period of time and then use that money over the course of the term to pay for their studies and their cost of living. There are provisions to exempt them from mandatory student loan repayments. I think that is a very welcome thing. I am concerned as my colleague Grant Robertson said that this will rely on them making an application and I hope that the Government will make that process very easy for students and also make sure that the information is readily available to them. Working during the summer holidays or during the term break in the middle of the year is something we want to encourage students to do because when they do that they are earning money that will result in their borrowing less. The more we can encourage students to borrow less the smaller their loan balance at the end of their study will be and the faster they will be able to pay it off once they finish their tertiary study. So I think we want to incentivise them for working during their study break not penalise them. That is really important. 
We are talking here about 58 percent of full-time students undertaking full-time work during the summer break. And 64 percent of full-time students undertake regular part-time work during the term. That figure increases to 90 percent for casual work. That provision is very very important. It would be great if we could get to the point where a student does not need to go through a large series of hoops in order to get that exemption. 
When I spoke at the Committee stage I talked about some of the problems with the way the student loan scheme is administered at the moment and how difficult it can be for a graduate or even a current student to get accurate information about their student loan balance. It is absolutely fantastic that the Inland Revenue Department will be able to do something about that as a result of the changes in this bill. That is very important because at the moment the student loan scheme is being administered by two different parties. StudyLink is administering it for the current year of study and the Inland Revenue Department is administering the historical part if you like. Those balances once they are transferred from StudyLink to the Inland Revenue Department are actually easier to keep track of but when they are with StudyLink if someone is still studying they obviously have two agencies to deal with to work out what the true extent of the student loan is. This bill will make that significantly easier for students by providing real-time information through the Inland Revenue Department where people will be able to look their information up online. 
That is good news not just for current students who will know where their loan is tracking; it will be also be good news for graduates who are overseas for a period of time but want to keep up their repayments. One of the things we want to encourage people to do is to keep up their student loan repayments while they are overseas. It is not a bad thing for graduates to want to go overseas do their OE and get some work experience in a different country. We want to make it easy for them to keep up their loan repayments while they are doing that. If they do not get into default while they are away overseas they are more likely to come back. If someone gets into default on their student repayments while they are overseas that then becomes a disincentive for them to come back to New Zealand. Making it as easy as possible for them to make their student loan repayments to check their balances and to do all those sorts of thing from overseas is really important. Electronic means are the best way to do that. It is a really welcome step for people to be able to log in and check their student loan balance and repayments just as they check their bank balance. I am really pleased this bill provides for that to happen. 
I have some concerns that some of this may be paving the way for National to implement the reintroduction of interest following the next election. National members have not yet made a concrete commitment not to do that. Before the last election they said they would not do it in their first term of Government yet they have been very silent about whether interest would be reintroduced in the second term of a National Government. I hope they will be very clear with the students and graduates of New Zealand about that prior to the coming election. We know very clearly that Steven Joyce privately—and around the corridors of Parliament—has said he would like to reintroduce interest on student loans even if it were at a nominal interest rate. He has been saying that and it would not surprise me at all if in a second term of a National Government that would be one of the things we saw coming through. I am very concerned that this bill may well be paving the way for that. 
Having said that I say that most of the provisions in the bill are pretty good. We oppose parts of it; we oppose the increase of the administrative fee for setting up a student loan. We think that is unnecessary given the Inland Revenue Department probably ending up saving money out of this but on balance Labour will vote in favour of it.