Dunne Peter: Student Loan Scheme Amendment Bill (No 2) — In Committee 
Dunne Peter: Student Loan Scheme Amendment Bill (No 2) — In Committee 
[Volume:638;Page:8229] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 First I thank the members who have contributed to the debate so far. They have raised a number of interesting points and I want to respond to as many of them as I can in the time available to me. 
The first point of substance raised related to the question of why the bill penalises the honest. I think Dr Hutchison answered that question in his last contribution when he referred to the “unfortunate realities” of this bill. That is the truth. Wherever we draw the line there will be people who fall either side of it. 
The reality we face and what drove this legislation was the recognition that significant numbers of young New Zealanders were living overseas for a variety of reasons. Some were on their classic OE some had a fear of returning and some had no intention of returning. But for a number of them the meter was ticking in regard to their student loan indebtedness. 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 and being someone who places great virtue on pragmatism 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; to have better tracking at the border of where people actually are through the procedures contained in the bill to match immigration data and student loan data; and to rule that in that 3-year period when interest will accrue to their accounts the penalties that hitherto have applied will not apply so that when they come back to New Zealand they start paying their loan plus accumulated interest. 
A question was raised earlier about how many people we are talking about. It has certainly been estimated that potentially around 40000 students are living overseas at the moment. Reference was made to the fact that some 765 people had entered into voluntary arrangements. That figure was given at the end of last year. I am not in a position to update that figure for this simple reason: we never actively pursued those people. So the people who declared themselves in this category did it out of the goodness of their own hearts and their own sense of integrity and conscience. 
Through the mechanisms contained in this bill we will now be in a position to pursue much more actively those students who are overseas. We will certainly be making contact with their parents and with their flatmates at their last known points of abode in New Zealand to make sure that we can send information to these students about what this bill means for them and the responsibilities it imposes upon them. 
One or two speakers have referred to the issue of students working overseas for charitable organisations. We have applied the same definition of charitable organisation and charitable status as applies generally in regard to donee status. It is quite a tight test and I should tell the Committee that whenever an organisation is recommended it is actually considered by the Inland Revenue Department and a formal process that goes right through to Cabinet approval of those organisations ensues. We are always trying to make sure that the genuine get through. Once the registration process of charities under the Charities Act is completed—which is a separate issue—the process will be all that much more rigorous. 
The final point that a number of speakers have commented on is the issue of obligations. There are obligations here. I think it is absolutely correct to say to students that this is not a free lunch that although they are being given the opportunity to have that traditional overseas experience for a New Zealander for up to 3 years they will still be incurring some obligations. They need to know what those obligations are and that we expect them to meet them. 
This bill is designed to strike a fair balance between the obligations and the overseas experience. The situation we have at the moment of students simply finding it easier to escape and become refugees is clearly unacceptable. This bill strikes a reasonable balance and I am grateful for the support that members have shown on that point this evening. 
Part 1 agreed to.