Hipkins Chris: Student Loan Scheme Bill — First Reading 
Hipkins Chris: Student Loan Scheme Bill — First Reading 
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CHRIS HIPKINS (Labour—Rimutaka) 
: 
 It is a pleasure to follow on from Aaron Gilmore in this particular debate on the Student Loan Scheme Bill. I noticed he said that when he tried to repay $1 of his loan he was always 3c or 4c short. Well we in the Labour Party have been saying that Mr Gilmore is short of sense for quite some time— 
Aaron Gilmore 
: I raise a point of order Mr Speaker. I found that mildly offensive and I think the member should apologise. 
The ASSISTANT SPEAKER (Eric Roy) 
: I think the member got pretty close to breaching some conventions of this House. I ask him to debate the bill. 
CHRIS HIPKINS 
: I am very happy to do that. I am very proud to rise as a Labour speaker on a student loan bill because I think Labour’s track record when it comes to keeping our promises regarding student loans stands in pretty stark contrast to the promises made by National. 
Let us go back and have a little bit of a history lesson. Back in 1992 how did we end up with the student loan scheme in the first place? We ended up with the student loan scheme because National broke its promise. Lockwood Smith went up and down the country signing pledges saying that if he did not do away with student fees altogether he would resign as Minister of Education. In fact he did not do away with student fees at all; the fees went up. He increased them he introduced the student loan scheme as the way that students would be able to pay the fees and he cut eligibility for allowances by introducing parental means-testing. That was how we ended up with the student loan scheme in the first place—because National broke its promise. 
What did National do at the last election? It promised that it was going to keep the interest-free student loan scheme. That was after John Key had said it was a hoax it was a bribe it was recklessly irresponsible and he was going to fight it with every bone in his body—that was what he said. 
Iain Lees-Galloway 
: Every bone in his spine. 
CHRIS HIPKINS 
: Well one would not find many there. But then Mr Key decided that he was going to keep the interest-free student loan scheme because it was very popular. National promised to keep it. 
What is National doing with this bill? National is increasing the annual fee that a borrower has to pay from $50 to $60. The annual fee was never in existence until National came into Government. It was never there. It is a new tax introduced by National on student loan borrowers. Of course it is a form of interest because it is an annual fee but it is a very regressive form of interest. Students pay the same fee regardless of what their loan balance is. So the people who have quite small loan balances are more disadvantaged by having to pay what will now be an annual $60 fee. It is a broken promise. National said it was not going to change the interest-free student loan scheme. It has broken that by introducing this annual—I do not know what National is calling it—administration fee or whatever. As my colleague Damien O’Connor said it is a new tax introduced by the tax-cutting National Government. We could add up several new taxes that National has introduced and this is yet another one. 
As I have established here Labour has a pretty proud track record of keeping our promises when it comes to student loans. We promised interest-free student loans and that is exactly what we delivered. We delivered interest-free student loans in 2005. Prior to that we promised to remove interest on student loans while a student was still studying and we kept that promise. We are very proud of our track record and we think it is in pretty stark contrast to National’s track record when it comes to student loans. 
I will talk about some of the facts of the student loan scheme. I think it is important that we know what we are talking about here. As of 30 June 2009 student loan debt totalled $10 billion. When I was at university and involved in student politics back in 2000 and 2001 we were running campaigns to raise public awareness about the $3 billion of student loan debt. It is now up to $10 billion and it is continuing to grow. One of the things that was really interesting during that period of time is that we got the Ministry of Education to release its projections showing at what point the student loan scheme would break even—would collect back the equivalent of what it was paying out. I think the ministry said that it will be about 2025 before the overall debt stops growing. When Labour introduced interest-free student loans that date came back quite a long way and the scheme was going to reach the break-even point at a much earlier point in time. I would be interested to see and I hope the Minister for Tertiary Education will provide them to the select committee some revised projections based on the settings provided in this bill and on the other changes that the National Government has made in order to find out the exact point that the student loan scheme will stop ballooning out becoming a larger and larger item on the Government’s balance sheet. I hope the Minster will provide that information to the select committee when it is scrutinising this bill. 
We are talking about a significant number of New Zealanders. Back in June last year over half a million people had a student loan balance with the Inland Revenue Department. I am assuming that there will be more on top of that because for the first year a student’s loan balance is administered by Work and Income; it is not transferred to the Inland Revenue Department until the following year. So each year the new borrowers do not move over to the Inland Revenue Department for a period of time. Potentially we are talking about at an estimate at least 600000 New Zealanders who would have a student loan. There were 57000 new student loan borrowers in the last year which would suggest that we are looking at about 600000 people with a student loan balance. 
The average amount borrowed by each student each year is about $6900. For a lot of students that will simply be their tuition fees and that is the way they manage their studies. They work or they receive an allowance to pay their cost of living or they stay at home with their parents but they use their student loans to cover their tuition fees. Of course for students who have to borrow to live the average loan balance would be significantly higher. The average student loan debt held by the Inland Revenue Department is about $11000. 
I will talk about the number of student loan borrowers who are overseas because I think that is particularly important. Fifteen percent of student debt holders are based overseas. These are the people whom John Key said he would bring back. In the bright future that he promised New Zealand everyone was going to come flooding back to this country if we had a National Government. I am not sure what happened along the way but we have not seen this huge tide of people queuing up at the airport at Heathrow to come back to New Zealand now that John Key is the Prime Minister. Fifteen percent of our student debt holders are still based overseas. 
But one thing this bill does—and this is one of the reasons why Labour supports it—is to make life a lot easier for those people who are overseas to get up-to-date information about their student loan balance. Going online is the way that we have to go. I am one of the online banking generation. I do all of my banking online. I do not get paper statements from my bank any more. I would like to think New Zealanders can get their student loan balances electronically and can do away with paper-based statements. Potentially there is a saving there for the Inland Revenue Department. Actually I suspect there is quite a big saving there for the department because although I was fortunate enough to pay off my student loan 2 years ago every year the department in its good charitable way sends me a new student loan balance sheet that says I have a zero loan balance. Normally it sends me two or three and they are normally sent a few days apart. So I get duplicate student loan balances every year telling me that I have a student loan account that has a zero loan balance. If we move to an electronic system I think the department could save a bit of money on postage and printing at the very least. 
Hon Peter Dunne 
: We’ll just send you emails instead. 
CHRIS HIPKINS 
: Yeah that is right—the Inland Revenue Department could spam me instead of wasting money on postage. I think that would be a very welcome addition to the student loan scheme and it is something we would support. 
However I do raise a concern having now read a bit more detail about what this bill will do about the repayment provisions that it introduces. Moving from a yearly threshold for repayments to a pay-period threshold for repayments means that students who are still borrowing and who work hard over their summer holidays to earn enough money to live off so that they can borrow less will be disadvantaged because they will have to make repayments on their student loan during their holiday employment. If we were to let them keep that money for a little bit longer they would be able to reduce the amount that they borrow in the first place. Therefore at the end of their study they could potentially pay off that amount a little bit faster. I think we should stick to the threshold of $19000 a year or so and only when students go over that yearly threshold should they have to start making mandatory student loan repayments. Calculating it on $367 a week will capture all those students who do seasonal work. It may be fruit picking. I do not know what seasonal work students do down in Invercargill Mr Assistant Speaker Roy but I am sure that they do some down there— 
The ASSISTANT SPEAKER (Eric Roy) 
: Heaps. 
CHRIS HIPKINS 
: There is heaps of seasonal work in Invercargill which they would be doing to help pay for their tertiary study. Of course if they are at the Southern Institute of Technology they would not be paying fees at all because it has zero fees. Either way I think it is important that we encourage students to do holiday employment and we should make it easy for them. Therefore I do not think they should have to make student loan repayments while they are doing it. 
Labour is supporting this bill’s referral to the select committee and we are looking forward to the debate.