Donnelly Brian: Questions for Oral Answer — Questions to Ministers 
Donnelly Brian: Questions for Oral Answer — Questions to Ministers 
[Volume:627;Page:22125] 
8.  
Hon BRIAN DONNELLY (NZ First) 
 to the  
Minister of Education 
: How much did student debt increase in the 3 years after the policy to remove interest on loans while studying commenced and how much is it estimated that student debt will increase as a result of the policy announced on Tuesday to remove interest on student loans for graduates living in New Zealand in the 3 years after its implementation? 
Hon TREVOR MALLARD (Minister of Education) 
: 
 On the first part of the question in 2001 the total amount borrowed was $909 million a 56 percent uptake rate. In 2004 it was $983 million a 55 percent uptake rate. If the member is talking about out-years in say the 2007-08 year under existing policy settings the close of year student loan balance would be $8422 million. Under this policy—because of course the interest does not keep being added on—the closing balance would be $7979 million. 
Hon Brian Donnelly 
: Does the policy announced on Tuesday mean that taxpayers will be paying the interest on the residue of lump-sum loans taken out by students in the period prior to the New Zealand First - National coalition Government in order to buy motorcars and stereos? 
Hon TREVOR MALLARD 
: That will be the case but I think it would be pretty hard to differentiate around the quality of borrowing 10 years previously. 
Dr Ashraf Choudhary 
: What is the estimated impact of the no-interest policy on the amount of time it takes to pay back a student loan? 
Hon TREVOR MALLARD 
: I will give a couple of examples. Someone with a debt of around $15000 which is pretty average and a salary of around $35000 which again is pretty average will pay back the loan 3 years sooner and save $7000 in interest. Someone who has a bigger debt—say $35000 which is not unusual—and earns a salary of around $45000 will pay back the loan 7 years sooner and save over $30000 in interest. It is no wonder Kiwis love this policy. 
Hon Bill English 
: If getting rid of interest on loans is such a good idea why does the Labour Government not pass a law that abolishes all interest on loans on the basis that it believes that it would make no difference to what people borrow or when they repay their loans and that lots of Kiwis would love that for their mortgage? 
Hon TREVOR MALLARD 
: Given the member’s background I am surprised he is taking such an Islamic approach to life. 
Hon Brian Donnelly 
: For ex-students who moved in and out of New Zealand—for example within 1 year for short periods like 3 months in Australia 4 months back here then off to England etc.—will the time they were out of the country be factored into calculations of interest owed and how many bureaucrats will be required to keep track of these calculations? 
Hon TREVOR MALLARD 
: The changes will involve a closer link between the migration authorities and the Inland Revenue Department. People will be allowed to be out of the country for 2 months except if they are out doing postgraduate studies in which case the nil interest will apply. There will be some set-up costs obviously but I expect that the process will be pretty much automated. 
Hon Brian Donnelly 
: Does the Minister agree that Parliament is the only body that has a constitutional right to levy taxes and that the public has the right to know what those taxes are for; if so why was this $300 million per year policy not announced in the Budgets so that it could be debated by Parliament? 
Hon TREVOR MALLARD 
: Because it is a Labour Party policy and it will be debated in the right place: on the hustings. But I must say that other than a couple of whinges from the other side of the House—[ 
Interruption 
]—and one down there I have not heard of anyone who opposes the policy.