Adams Amy: Student Loan Scheme Bill — Second Reading In Committee 
Adams Amy: Student Loan Scheme Bill — Second Reading In Committee 
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AMY ADAMS (National—Selwyn) 
: 
 I am going to take just a quick call on the second reading of the Student Loan Scheme Bill. People who are listening at home and who heard the last speaker David Shearer might think that the scope of this bill is considerably wider than it is. In fact it is a reasonably straightforward bill that enjoys wide support. As the Minister of Revenue has said very well in his opening contribution the bill really is about making this part of the tax system simpler easier to understand and easier for taxpayers to comply with their student loan obligations and about making sure we have a tax system that works in the best interests of the stakeholders who use it. This has been an ongoing work programme for the Minister and I commend him for that work across the tax system. 
This bill represents the student loan scheme parts of the tax system. If I remember back—many many years it seems now—when I had a student loan I can certainly attest that one of the most frustrating parts of the process was not being able to get any sort of sense from the Inland Revenue Department about what the loan balance was. It was all compartmentalised into different years and one would be in credit in this year and would have a debit from last year and one could not set the debit off against the credit. It seemed to me even then that it was nonsensical and I wondered why we could not run these systems in more of a simple bank-loan way where one had a consolidated real-time balance that one could access easily and contribute to easily. Finally under the National-led Government and under Minister Dunne we are moving to a system where that sort of common-sense easy-to-use process will come into being. I think student loan borrowers for many years to come will be very grateful that we have that sort of certainty. 
I want to touch on two other matters very briefly. The first is around the pay-period certainty we are providing where the majority of student loan borrowers who are on PAYE for salary and wage payments can have some certainty that when they make their weekly fortnightly or monthly contributions that is the sum total of their obligation. Each pay period if they pay the required amount then they can be certain that their obligations are met and they will not face the risk of getting a bill at the end of the year for some changes in accounting during the year. They will not suddenly find that a bill arrives on their doorstep. As long as each pay period the right figure is paid then they can relax in the certainty that their obligations are met. Again that is the sort of peace-of-mind easy compliance that we certainly want to support. 
The final point is around the changes to the penalty rates and as Minister Dunne noted this is one of the areas where the Finance and Expenditure Committee heard and accepted the fact that the dates will need to be pushed back while there is some work done in the Inland Revenue Department to get its systems in place. But it is a good system we are moving to where we are changing from effectively penalty rates of up to 20 percent per annum on unpaid student loan contributions to rates that are effectively going to be closer to around 10 percent per annum and in fact as low as 8 percent per annum if non-compliant borrowers enter into instalment arrangements with the department. So I think we are certainly getting into a much more usable and supportable penalty regime that will not see these debts spiralling out of all control but still of course have that incentive for the borrowers to repay the debt. 
This is excellent legislation. It is the sort of making-it-easier-to-comply legislation we need to support in this House and I am very happy to commend it to the House.