Dunne Peter: Student Loan Scheme Amendment Bill (No 2) — First Reading 
Text is incorporated into the Bound Volume 
Dunne Peter: Student Loan Scheme Amendment Bill (No 2) — First Reading 
[Sitting date: 20 September 2012. Volume:684;Page:5538. Text is incorporated into the Bound Volume.] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Student Loan Scheme Amendment Bill (No 2) be now read a first time. 
 I nominate the Finance and Expenditure Committee to consider the Student Loan Scheme Amendment Bill (No 2). At the appropriate time I intend to move that the bill be reported to the House by 11 February 2013. 
This bill is a continuation of the Government’s work to bring greater value efficiency and fairness to the student loan scheme. It builds upon the reforms that were contained in the Student Loan Scheme Amendment Act 2012 which focused on encouraging greater personal responsibility and accountability on the part of borrowers towards their repayment obligations. To recap the changes in that Act included giving the Inland Revenue Department the ability to receive a borrower’s contact person details from StudyLink. The purpose of that change was to help facilitate the Inland Revenue Department’s contact with a borrower who is in default and who has not updated their current address details so that they can re-enter the repayment system. To further improve the repayment levels of overseas-based borrowers the 3-year holiday provision was reduced from 3 years to 1 year from 1 April this year. At the time I said that the changes would be a significant step towards improving the overall integrity of the student loan scheme by instilling greater fairness and accountability. 
The measures that are proposed in this second Student Loan Scheme Amendment Bill are designed to further consolidate the value of the student loan scheme. As was foreshadowed in Budget 2012 this bill introduces measures to broaden the definition of income that we use to determine the loan amount a borrower has to repay each year. Under the current rules only income that is taxed at an individual level is captured by the definition of income in the Student Loan Scheme Act. That current definition includes income such as salaries and wages income-tested benefits New Zealand superannuation interest or dividends and personal business profits. However for borrowers who receive other types of income such as payments from a trust the current definition of income may not always accurately reflect their actual earnings or the person’s real financial ability to repay their loan. 
So the purpose of the change to the definition of income proposed in this bill is to strengthen the integrity and the transparency of the student loan scheme by ensuring that the student loan repayment obligations of all borrowers are determined on an equitable basis irrespective of the type of income they earn. Drawing broadly upon the same definition of income that we use for the purposes of Working for Families tax credits and other social policy programmes also means we bring greater consistency to and establish more transparency across the whole spectrum of social assistance. 
To build on earlier measures to encourage personal responsibility for loan repayments by overseas-based borrowers this bill introduces measures to introduce an information match with the New Zealand Customs Service to identify at the border borrowers who are in serious default on their loan repayments. One of the biggest problems we face in fact in collecting repayments from overseas-based borrowers is access to current contact details and information about this highly mobile group of people. These borrowers can often fail to stay in touch despite best efforts by the Inland Revenue Department to identify them to locate them and just to encourage them to do so. So under the provisions in this bill the Customs Service will be able to identify serious defaulters when they cross the border and forward their contact details which will enable the Inland Revenue Department to get in touch with those borrowers in order to do what we might euphemistically describe as discuss their situation. 
They are the main features of this bill. The remaining measures it contains are aimed largely at improving the efficiency of administering the student loan scheme and refining the technical operation of the legislation. Amongst these proposed changes borrowers who have income other than salaries and wages will be required to make an end-of-year square-up repayment only if the non - salary and wage income is $1500 or more over the current annual repayment threshold of $19084. Currently the $1500 threshold applies to some borrowers but not to others depending on the combination of the different types of non - salary and wage income. The change we are proposing will therefore bring greater equity to the scheme by applying the $1500 threshold to borrowers consistently while at the same time making it easier for the Inland Revenue Department to administer the scheme overall. 
The other technical matters in the bill confirm the current late-payment interest rules and repeal certain changes that have been rendered obsolete as a result of changes in the Inland Revenue Department’s approach to administering the student loan scheme. 
These and other changes in the bill clearly demonstrate the Government’s commitment to the good governance of the student loan scheme as a major Crown asset and in that respect I draw to the House’s attention the figures that I released during question time this week. The write-off cost of the scheme has reduced from 48c in the dollar to just over 39c in the dollar as a consequence of a range of moves that we have taken over the last few years. What this all means for taxpayers is that they can be best assured that their investment in the future intellectual capital of this country is being used efficiently and responsibly. That in turn ensures the long-term sustainability of the scheme. 
For the overwhelming number of borrowers who do take their repayment obligations seriously it will not have a huge degree of impact but it will send a very powerful signal to them and to others that we are prepared to take the necessary steps to ensure that the system is transparent and fair for all borrowers and that the obligation to repay is paramount regardless of the overall circumstances of the individual. So against that backdrop it is with real pleasure that I commend this relatively procedural but important bill to the attention of the House.