Hutchison Paul: Student Loan Scheme Amendment Bill (No 2) — In Committee 
Hutchison Paul: Student Loan Scheme Amendment Bill (No 2) — In Committee 
[Volume:638;Page:8223] 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 Thank you Mr Chairman for the opportunity to speak on Part 1 of this Student Loan Scheme Amendment Bill (No 2). Part 1 is a substantial part of the bill which the Government has introduced and the National Party is supporting because it is there to encourage New Zealand students overseas to come home. But I must say there are some concerns about it. 
Clearly one of the issues of concern is the database issue. I think that everybody is in agreement that the database is worthwhile and that must be done if we are even to identify the number of students with loans. At the end of last year I understand the ministry had identified only a few thousand students but it had concerns that something like 40000 students were studying overseas. Because of the interest-free loans available to students living here it was not in those students’ interest to declare they were overseas because they would have lost their interest-free status. 
Of course this brings in the whole dilemma of New Zealand’s having introduced a very expensive interest-free loan scheme which costs $1.5 billion a year. The savings on bringing in this bill amount to about $9 million in the first year—2007-08—and I think $24 million the next year. But that amount is dwarfed in comparison with the $1.5 billion that the scheme is actually costing per year. 
I want to spend some time going over the clauses in Part 1 relating to the collection of repayments from overseas-based borrowers and those who are entitled to the 3-year repayment holiday. There are some concerns relating to the signals that such a system sends to the students themselves. These concerns were pointed out by representatives from Business New Zealand who said that the concept of a repayment holiday raises fundamental questions of fairness. Why should borrowers who have left the country effectively be rewarded when those who stay home in New Zealand who are meeting their repayment obligations and making an economic contribution to the country are not rewarded? [ 
Interruption 
] I am not too sure what the Green Party member MetiriaTurei is saying but we are talking about fundamental fairness and systems. 
I think I mentioned last night the point that we here in New Zealand are sorting out a very complex situation that has been imposed by the Government. We can compare ourselves to Singapore for instance. The Singapore Government has just invested $1 billion or more into encouraging elite young science graduates to go overseas to places like Harvard Johns Hopkins University Cambridge University and Oxford University. That Government will require the students to be bonded and if they do not come back to Singapore then they have to pay back their $1 million each. 
The Singapore Government’s reason for doing that is that it is extremely concerned that there be clear rules around whether those students come back. One must be concerned that here this has been a policy very much made on the hoof by the Labour Government to win an election. Now it has to put in machinery that is fair to those students who have gone ahead and paid off their loans here in New Zealand and fair to those students who have gone overseas and been caught up with the problem of repaying the loans. Some of the loans as everybody admits are very onerous to young students at a stage in their lives when hopefully they would be getting on to having jobs forming relationships and maybe later on wanting to save for a house etc. 
So there are a whole lot of conflicting issues here and I think Business New Zealand is absolutely right in saying that from a fundamental fairness point of view and in terms of getting the New Zealand economy going it is very important to be concerned about repayment holiday issues. 
Sitting suspended from 6 p.m. to 7.30 p.m.