Student Loan Scheme Bill — In Committee Third Reading 
Student Loan Scheme Bill — In Committee Third Reading 
[Volume:675;Page:20733] 
Student Loan Scheme Bill 
In Committee 
Debate resumed. 
Part 1 Preliminary matters loan advances and New Zealand-based and overseas-based borrowers ( 
continued 
)  
A party vote was called for on the question  
That Part 1 be agreed to. 
Ayes 67 
New Zealand National 57; ACT New Zealand 5; Maori Party 4; United Future 1. 
Noes 53 
New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C. 
Part 1 agreed to. 
Part 2 Repayment obligations of borrowers 
The CHAIRPERSON (H V Ross Robertson) 
: I wish to advise members that this is a debate on clauses 25 to 109 and it also includes debate on schedules 2 through to 4. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 I will raise some questions about exactly those clauses that you have helpfully outlined for the Committee which we are looking at now. 
Hon Ruth Dyson 
: Is that Part 2? 
GRANT ROBERTSON 
: It is Part 2 I say to Ms Dyson; yes it is. I have a question for the Minister in the chair the Minister of Revenue and I hope he will answer this one because it is a genuine question. In the first reading and during the select committee process on the Student Loan Scheme Bill a number of concerns were raised about the change in assessment for people who earn money while they are on the student loan scheme in terms of what they have to pay back. I was not on the Finance and Expenditure Committee but my reading is that a number of those concerns have been dealt with in the changes that have been made to Part 2. 
In particular when we look at clause 48 we see that there is now a change to the definitions relating to the exemptions for full-time students. As I read the change in clause 48 essentially it is trying to say that if a student works intensively in a holiday period and at that point earns more than the repayment threshold which currently would be $367 per week then returns to being a student they will be assessed on their whole year’s income rather than the period in which they earned that money. 
That change would resolve a significant concern raised by a number of people in the process of this bill coming to the House which was that there would effectively be a penalty on people who were trying to earn some money during their holiday period rather than having to work extensively through term time. Of course as many members of the Committee will know people’s studies are potentially put at risk if they have to work too many part-time hours. As I think I noted in an earlier intervention the commentary on the bill also talks about the fact that it may lead to people unnecessarily borrowing money. That is a different way of looking at the same concern so I am just seeking the Minister’s guidance on that point. 
Related to that issue I ask whether the changes that have been made in clause 76 and which go on from there address the concerns that were raised about whether moving from a full-year assessment to a pay-period assessment will penalise people who earn small amounts of money but then perhaps in blocks earn larger amounts of money. I ask whether they will then end up having to pay money back when in fact their total income will not reach the $19000 figure. That is the specific question that I have. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I was not expecting there to be such a short call on this part. Can I simply respond very quickly to the points the member has made. I simply answer yes in respect of both clauses. The position with regard to the changes introduced in clause 48 is that if within that period borrowers are above the $367 threshold then the member’s interpretation is absolutely correct but with the proviso that of course they do not breach the $19084 threshold. The provisions that follow from clause 76 merely give effect to that. So the short answer to his question on both counts is yes. 
Part 2 agreed to. 
Part 3 Excess repayments 
MOANA MACKEY (Labour) 
: 
 I will take just a very brief call on Part 3 and hopefully the Minister in the chair the Minister of Revenue will be able to respond. This part is about the issue of excess repayments which we touched on in Part 1. I am pleased to see that there will be some clarity around this point. As someone who overpaid her student loan I am pleased to see that there is an obligation— 
Paul Quinn 
: A donation. 
MOANA MACKEY 
: —trust me I say to Mr Quinn it was not a donation—in Part 3 on the Inland Revenue Department to contact student loan holders and inform them that they have met their obligations under the student loan scheme. In my particular case I felt that perhaps I had reached the point where I might have paid back my loan. I rang the Inland Revenue Department to find out the status of my loan only to be told that I had overpaid it by about $1000. 
I have a question for the Minister. In the past particularly when I have done my income tax returns if I have owed the Inland Revenue Department money the department has wanted it on very short notice. In fact it has been quite tight time frames within which I needed to meet my obligations to the Inland Revenue Department to make sure that I paid any tax that was underpaid. It took 4 or 5 months to get back from the Inland Revenue Department the money that I had overpaid on my student loan. In fact the department got quite snippy with me when I asked whether the money could possibly be paid back earlier. We heard from my colleague Iain Lees-Galloway earlier in the debate who also said that recently just this year he paid back his student loan. He found out that he had overpaid it by about $500. When he asked when he could have his money back he was told: “Well not at least until October.” 
I understand the Inland Revenue Department is a very busy department but it seems to me that for its own credibility when it comes down very firm and very hard on people who owe the department money that perhaps when the opposite case is true—in my case the department had not even informed me that I had met my obligations that I had overpaid my student loan and that I could stop paying—it would seem nice if it was reciprocal and the Inland Revenue Department was as speedy in returning money to people who have overpaid as it is with people who have underpaid. I think the Minister now has an answer so I am happy to sit down. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I do not want to deter the Committee unduly but I am comfortable answering very quick questions if we are to proceed in this manner. In response to the member’s question the short answer is that from the time that the excess payment has been identified the Inland Revenue Department has a 6-month period within which to negotiate with the borrower about whether the money is to be offset or repaid. 
As to the point that is behind the question which is whether that means that the Inland Revenue Department’s determination to seek payment is matched by an equal determination to make payment I can simply advise the member that it is a “best endeavours” situation from the point that a settlement is reached. 
Part 3 agreed to. 
Part 4 agreed to.  
Part 5 Matters of general application and miscellaneous matters 
The CHAIRPERSON (H V Ross Robertson) 
: I wish to advise members that debate is on clauses 181 to 218 and also includes debate on schedules 5 to 9. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 Part 5 begins with clause 181 as you have so accurately stated for the Committee Mr Chair. It is a clause rewritten by the select committee but essentially it introduces the new $40 administration fee. 
Earlier in the debate some members across the Chamber asked what difference $40 makes. It does make a difference because it is a new fee being included in the student loan scheme. It means it has to be paid back. This is a new fee. It is something the Government is introducing and there needs to be a reason for introducing it. What we seem to see when we look at the regulatory impact statement and when we look at the bill and the justification for it is that there is not a justification for a new administration fee for the scheme. 
We are told that the good changes that we have all approved in Part 1 to provide for electronic arrangements for communication more transparency about loan balances and a better ability to communicate loan balances will save money. More loan repayments will be made as a result of the changes in this bill and that is a good thing. We have also learnt that a new computer system is on the way and that it will enable better easier and faster processing of matters related to student loans. 
If we put those two things together why does a new administration fee need to be introduced? I do not think the reasoning stacks up which is why it is easy for us on this side of the Chamber to become suspicious that this is effectively the beginning of interest by stealth on student loans. We know that National does not believe that student loans should be interest-free. Those of us who campaigned at the 2005 election will all remember the attitude of the National Party at that time to interest-free student loans. 
In this House John Key who was not then the leader of the National Party but I think possibly the finance spokesperson at the time said that he would oppose interest-free student loans with every bone in his body. The bones have shattered have they not? The bones were weak. Calcium deficiency in those bones— 
Hon Trevor Mallard 
: Nothing wrong with having shattered bones. 
GRANT ROBERTSON 
: That is true I say to Mr Mallard. It is how one recovers from it I say to Mr Mallard; that is what it is. Unfortunately in the case of National members they have simply decided for political reasons to stick with the interest-free student loan scheme. 
Since National came into office in 2008 we have seen that its members bridle against that. Steven Joyce and John Key have both bridled against it saying that the policy of interest-free student loans does not make any sense. Steven Joyce has had officials desperately looking for ways they can—to quote him—“dampen demand for tertiary education”. What a ridiculous notion that is. It is being done through changes around the fringes of the student loan scheme. 
As has been mentioned earlier in this debate for instance the most recent of those changes is not allowing people over 55 years of age to borrow the living component of the student loan. I have had two people in my electorate office in recent times with concerns about the fact that they will not be able to retrain having gone out of the workforce in their 50s because they will not have access to that support. 
Those are the changes that have been made by this National Government around the student loan scheme but it cannot get to the interest-free part which is the bit it really wants to get to. So in clause 181 we have the replacement for that—the $40 fee. 
There is one good thing. It should be noted that under clause 181(2) if one is already paying the establishment fee—that is in the first year one sets up one’s loan—one will not have to pay the $40 fee. Well that is great. In the first year one gets away with just $60 but from the second year wherever one is it is effectively $100. It is effectively $100 when one adds the $60 and the $40. So borrowers are now being charged $100 for the management of their loan accounts. 
This is a new fee. I do not believe the Government has justified it sufficiently. I think that the evidence that came before the Finance and Expenditure Committee in fact shows that it is not necessary to introduce this new $40 fee under clause 181. 
I believe that it is a revenue grab. It does not make sense alongside the increased repayments that are expected to come in from this bill and it does not make sense alongside the savings that are meant to come in terms of efficiencies in other parts of the bill. 
DAVID SHEARER (Labour—Mt Albert) 
: 
 I will follow on from Grant Robertson and suggest why this extra money is being levied on students. As I was reading through the Student Loan Scheme Bill I realised that the implementation obviously depends on a very effective computer system—a computer system that is able to do all the things that we have been mentioning in the Chamber up until now. Well there have been some problems with the computer system and I would like the Minister in the chair the Minister of Revenue to comment on this. 
From my understanding $35 million was allocated by Cabinet to upgrade the computer system. We have spent as I understand it $21 million out of that $35 million on an Oracle-based system and that system now seems to not be working or not be adequate. I quote from an industry magazine  
Computerworld 
: the “deputy commissioner of business transformation says it became apparent during the design phase that extracting the loan history and migrating data from the old system to the new system was more complex and time-consuming than expected. … we have spent $21 million out of $35 million allocated by Cabinet”. 
Basically we have gone to the “Rolls-Royce” gold-plated computer system and it simply has not worked. I put a written question to Peter Dunne asking whether that was in fact the case. Mr Dunne replied that the department has gone back to the future inland revenue systems and technology (FIRST computer system) which is the old system of computing. He said: “Inland Revenue is delivering changes to Student Loans through FIRST rather than an Oracle-based system.” We spent $21 million on the Oracle system. That now seems not to have been money well spent; it has not delivered the outcomes that we wanted. We have gone back to the old FIRST computer system. I quote again from the  
Computerworld  
magazine: “Although this approach”—the Oracle-based system—“has been abandoned ‘the long-term plan is still to move eventually away from FIRST which is now more than 20 years old … Work done on FIRST in recent years along with planned modifications means we are confident it will perform …’ ” but will be eventually replaced. 
We have now spent on Oracle $21 million out of $35 million that has been allocated by Cabinet to upgrade the computer system so it can do all the things we have been talking about in this bill. We have spent that $21 million. We have now found that the Oracle system will not work so we have gone back to an older system the FIRST computer system. But we know that the FIRST computer system will be inadequate into the future and we will have to upgrade it. My question really is about what is going on here. It seems to me that $21 million of taxpayers’ money has been squandered on a new computer system yet again. We have had all sorts of problems with computer systems and $21 million—as I think you will appreciate Mr Chair—is a lot of money to waste or certainly to have not fulfilled the computing needs of the student loan system in relation to moving it into the 21st century. 
I would like the Minister to take a call on this and explain what exactly has happened to the $21 million what has happened to the Oracle system why we are back again on the FIRST computer system which we consider an old system and what the plan is for the future so that we can have some confidence that all the changes that we are supporting in this bill might in fact be allowed to go ahead. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I propose to take just a shortish call on the Student Loan Scheme Bill and follow on from some of the comments and questions raised by my colleague Grant Robertson in respect of clause 181 and the issue of the new administration fee—the annual administration fee—of $40 which as we have noted comes on top of the $60 establishment fee. So obviously there is a $100 cost to students or former students for their loans in an environment where the Government was absolutely determined it seemed to not be seen to be putting interest charges on student loans. 
The question I wanted to ask the Minister in the chair the Minister of Revenue is this. Clause 181(1) says that “If a borrower has a loan balance of $20 or more on the close of 31 March in a tax year—(a) an annual administration fee of $40 (or any other amount prescribed by regulations) must be charged by the Commissioner …”. I am seeking from the Minister some assurance. It has been known for fees like this to come in at that kind of level and then increase. Obviously we have the situation as mentioned where students have effectively a $100 cost for their student loans as a result of the establishment fee and now the annual administration fee. And of course we are well aware of changes in the Budget for students over 55 years that preclude them from student loans. So a cumulative cost is what I am concerned about and I would like the Minister’s assurance that that fee—as opposed as we are to it at $40—will not be increased by executive fiat. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 There are two streams of argument that I will respond to. The first relates to the $40 fee. I need to correct Mr Burns immediately. We are not talking about a cumulative fee of $100. There is a one-off $60 charge for the establishment of a loan and an annual charge thereafter of $40 for the ongoing administration of the loan. The borrower will pay $60 in year 1—that is $60—and $40 in subsequent years. A borrower cannot get a cumulative cost of $100 in 1 year which is what the member claimed and there is no way one can twist the argument to present that. 
Let me come to the point that Mr Burns raised about the wording of clause 181(1)(a) of the Student Loan Scheme Bill. Does this mean that there is some hidden agenda to increase that charge? The short answer to that is no. We have simply set that figure in there as a reasonable administration cost bearing a relationship to the establishment cost of $60. If we were intending to have a higher figure we would have said so frankly. 
Let me now come to the question that Mr Shearer raised because I think it is important to put on record exactly what is happening with the computer system. This will be somewhat of an ongoing theme not just in this bill but also in other tax legislation over the next little while. The future inland revenue systems and technology (FIRST computer system) was instituted in 1991. It was seen as ground-breaking at that time. It has served us remarkably well in the last 20 years. But in that 20 years we have grafted on to it in no particular order student loans KiwiSaver child support Working for Families and one or two other initiatives as well. The consequence has been that a system that was set up for a very discrete purpose is now taking on a whole range of other activities and that to get access to someone’s data in respect of any one of those activities requires a translation through all of them. So it is complicated. 
During the term of the previous Government we began a project to refine the nature of our technology if you like. We rejected then—correctly in my view—the idea of a complete systems rebuild. The Canadians and the Australians are doing that. The experiences the member lamented in respect of national computer programs are being repeated in both those countries: they both have $1 billion - plus price tags now for the work that they are doing. So we decided that we would start with the student loan project because firstly it was discrete and secondly there was an off-the-shelf product available from Oracle that could be purchased and effectively implemented whilst the broader process of what the future might hold for the FIRST computer system was conducted. The thinking at that point was that we would do the student loan project. We would then move on to other discrete projects within the system and over a period of time migrate away from the FIRST computer system to the new system. 
Because of the complexity of the FIRST computer system which I described right at the beginning what has happened in the subsequent period is that it has become clear that that initial objective was not able to be achieved as simply as we might have first imagined. I can assure the Committee that no money has been wasted. In fact the transformation with regard to student loans will occur from 2013 onwards. The problem is simply this: when this bill came to the House with an implementation date of 1 April 2012 it was on the assumption that we would be able to move from the FIRST computer system by that time. I was faced with a decision earlier this year around March or April from memory as to whether we pushed the implementation of this entire bill out to 2013 which would be contrary to the assurances we had given or to see whether we could proceed to a certain extent within the FIRST computer system and then let a certain set of other changes in the bill take effect at a later date under the newer system. That is the option we have followed in the bill. 
We will be utilising the FIRST computer system for a number of the changes as we migrate over in the next 2 to 3 years then the new system will take effect. But we wanted to honour the commitment contained in the bill and in the discussion documents that preceded it about the need to give some clarity for the administration of student loans in the interim. This is not a project to be concerned about in the sense of whether it will all happen—it will—but the time frame is simply taking a little longer than we might first have imagined. That is a good thing in a way because a lot of the issues that are being indentified through that will serve us well when we come to look at things like PAYE GST and various other aspects of the system as well. I can assure the Committee that within the scope of the FIRST computer system we will be able to deliver what is in this bill by 2012 and the bulk of it will come as the system changes from 2013 and beyond. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I do not want this debate to end prematurely. The question I have was stimulated by the Minister in the chair the Minister of Revenue. Some of the memories— 
Hon Rick Barker 
: Stimulated by the Minister? 
Hon TREVOR MALLARD 
: No it brings back memories some of which are pleasant and some of which are unpleasant. They relate to the period in 2000 when there was a look at the possibility of integrating the Work and Income computer system and the Inland Revenue Department computer systems in order to make sure that people were getting entitlements but also to make sure that they were not ending up with the sorts of bills that people were ending up with. I know that Working for Families has made some progress in that regard and there are better ways for people to avoid those bills. 
I do not think the Minister was Minister of Revenue at the time—I do not think he was in Government at the time—but there was quite a lot of discussion then about the benefits of having a system that worked together across student loans Working for Families the Liable-parent Contribution Scheme PAYE and things in that area—but not so much GST. There was discussion about getting a system that was integrated and worked well together. I think it fell down probably on the State Sector Act and in fact on Christine Rankin standing on her rights as the chief executive of the Department of Work and Income to have a separate system. I think it is fairly well on the record that a major breakdown occurred in the relationship around that discussion but it was too late because Work and Income was required to get a new system and the systems diverged. 
I just ask the Minister—the Minister is doing good work in this area and we are debating the charge not the general process—whether he is looking at going further and having a system that is effectively a Government income-relationship computer system given the good work that he is doing with education and whether it can be spread to the area of a more major challenge. 
Hon Peter Dunne 
: In short yes. 
Hon TREVOR MALLARD 
: Good. 
A party vote was called for on the question  
That Part 5 be agreed to. 
Ayes 67 
New Zealand National 57; ACT New Zealand 5; Maori Party 4; United Future 1. 
Noes 53 
New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C. 
Part 5 agreed to. 
Schedule 1 agreed to.  
Schedule 2 agreed to.  
Schedule 3 agreed to.  
Schedule 4 agreed to.  
Schedule 5 agreed to.  
Schedule 6 agreed to.  
Schedule 6A agreed to.  
Schedule 7 agreed to.  
Schedule 8 agreed to.  
Schedule 9 agreed to.  
Clause 1 agreed to.  
Clause 2 agreed to.  
Bill reported without amendment. 
Report adopted. 
Third Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Student Loan Scheme Bill be now read a third time 
. The measures contained in this bill are designed to make it easier for borrowers to manage their loans and to pay back what they owe which in turn will help the Government to better manage this substantial Crown asset. 
The first of these measures sets the framework for consolidated loan information to be provided electronically to borrowers by the Inland Revenue Department. Borrowers will be able to access information on their loan balance and manage their repayment responsibilities wherever they are and at any time. This includes borrowers who are currently studying so they will no longer have to contact two agencies for this information. In addition the majority of borrowers with income from salary and wages only will benefit from reduced compliance costs as a result of the removal of the current annual end-of-year assessment. However borrowers who have significantly overpaid their pay-period obligation will be able to apply for a refund. The result of these changes will be a simpler more effective way for borrowers to self-manage their loan responsibilities and a more efficient cost-effective framework for the Inland Revenue Department to manage its interactions with all borrowers in New Zealand and overseas. 
At the same time the bill recognises the importance of borrowers honouring their repayment obligations. To further encourage borrowers to take a responsible approach to their loan the bill simplifies the current penalty rules that apply when borrowers fail to make loan repayments when they should and strengthens the ability of the Commissioner of Inland Revenue to recall a loan in cases of serious non-compliance. 
These are the main features of the bill. I would like at this point to acknowledge those whose efforts have contributed towards the successful passage of this legislation so far. I thank my officials and the drafters who have worked on the detail of the bill and those who made submissions on the bill to help improve the practical application of the measures it contains. I thank the Finance and Expenditure Committee too for its consideration of the proposed reforms and its recommendations to give greater clarity to the legislation. 
As it now stands this bill will make it easier for borrowers to take responsibility for repaying their loans and will make it easier for the Inland Revenue Department to administer this important investment for the future. Consequently I have a huge amount of pleasure in once more commending this bill to the House. 
DAVID SHEARER (Labour—Mt Albert) 
: 
 As has been said before the Labour Party supports the Student Loan Scheme Bill. As we have said in both the second reading and the Committee stage this bill will assist in the collection of student loans. It streamlines the student loan system. It will mean that students are able to go online see their loan status pay online and keep in communication with the Inland Revenue Department much more effectively. 
Certainly the bill will improve the situation at the moment in relation to about $2 billion worth of loans held by students who have gone overseas. Although many of those people may not want to pay off their student loans many of them possibly would like to but have difficulty accessing the system. I suggest that the sum that this upgrade purports to save by 2014 could be significantly more than $22 million just from the fact that people will pay their loans back on time simply because it is easier to do. People who are working in Australia the UK or somewhere like that will be able to pay online. If they want to come back to New Zealand they may decide to pay off a bit more of their student loan because when they do come back to New Zealand they will have to do that. 
I remind members about the size of student loans in New Zealand. The nominal value of loan balances now is around $11 billion. About 587000 people have a student loan with the Inland Revenue Department for collection. The average amount borrowed is just under $7000 although as my colleagues have said we have heard of loans in excess of $15000 and $20000. Students who remain in New Zealand pay off their loans in about 4½ years once they are earning a salary and have reached the threshold of around $19000 which actually is not very much. Nevertheless they start automatically paying back that money at that time. 
For the Labour Party the issues around the implementation of this bill are certainly not its modernising the system and moving forward which are well accepted. A couple of issues though that have come up in the course of the debates particularly in the Committee stage are worthy of mention at this point. The first is the additional charges: the $60 one-off charge and then the $40-a-year administration charge. Given the fact that this system will save us money save New Zealand money I would argue that these charges are another imposition on students. Students are stretched at the moment. Coming through the House at the moment is the Education Amendment Bill (No 4) which limits levies but we know that levies in universities in particular will go up. We know that if the voluntary student membership bill goes through it will gut the students associations. Instead of a voluntary contribution to the students associations there will be a mandatory levy. It will be levied by the university because that is what has happened in every single case in both Australia and here. The students associations provide a plethora of different services that are valuable but they will not be able to do that. 
The other thing I want to point out with regard to student loans is that they apply to every New Zealander who wants to take out a student loan bar those aged 55 and over. So from here on in this legislation has absolutely no relevance to people aged 55 and over because they are not eligible for a student loan. I would like to say that the instrument that was brought in by the Budget this year is discriminatory against those aged 55 and over. They will not be able to access the same assistance and support when they go through university as everybody aged under 55. That is discriminatory. If we are talking about an education system that is meant to be serving everybody and if we are talking about an education system that will both upskill and provide people with in-job training so that they can take on and adapt to the changes that will happen in our workforce then that provision is a major step backwards. Although I believe that this legislation will certainly help those people with loans or people who will get loans in the future that luxury that right has been taken away from some members of our society who choose to go into tertiary education. They will not be assisted to do that. 
I would argue that 55 is a pretty young age in today’s world and in today’s workforce. We are looking at the retirement age being extended further and further out if we follow the trends of all other countries in the world. If that was to happen—and we know that people would like to work longer and longer as health improves—then those people who would like to retrain will simply not be able to do that if they require additional support and assistance. I come back to the point of this legislation which is smoothing the way upgrading our ability to get back student loans and assisting those who have student loans to repay their loans. That is a good thing. It certainly is not going to be the case for many. 
Lastly I want to touch on the point that the Minister of Revenue raised in the Committee stage regarding the computer system. There is a great deal of consternation out there that around $21 million out of the $35 million that was appropriated for upgrading the computer system has been spent on the Oracle system. I accept the Minister’s argument that it is a very complicated procedure to move so much information into one computer system but I should say that we have had follies of computer systems in the past. We have had a number of occasions to I guess warn us to keep a very very close eye on the spend for this particular project. We are now going back to the first system—the Oracle system as the Minister said will kick in a bit later—so that this legislation can take effect earlier which is in principle a good thing. I come back to the fact that computer systems and upgrading computers have been hugely traumatic and problematic in the past and I hope that does not happen with this computer system. Labour will be keeping a very close eye on it. 
In conclusion once again I would like to give the Labour Party’s support to this legislation. It improves the administration and hopefully the repayment of student loans. 
AMY ADAMS (National—Selwyn) 
: 
 I will take a call on the third reading of the Student Loan Scheme Bill but I do not want to traverse the ground covered in my contribution in the second reading debate when I went through in a nutshell the salient parts of the bill as I saw them. I will briefly touch on some of the blatant inaccuracies and misrepresentations from members opposite in this respect because I think they need to be addressed. The first of those is to do with the fees. Both Labour and the Green Party have expressed their concerns about those. They have expressed outrage and indignation about this one-off $60 establishment fee which is charged when the student loan is first taken out— 
Grant Robertson 
: It was 50. 
AMY ADAMS 
: —it was $50; that is right so it has gone up a whole $10 as a one-off fee—and about the $40 Inland Revenue Department administration fee. 
It is worth pointing out that the changes that this Government has made to the student loan system are about making the system sustainable into the future because the total debt is not in fact $11 billion as the last speaker David Shearer said. The student loan debt book currently sits at over $12 billion and within 3 years that will be well in excess of $14 billion. This is a huge item on the Government balance sheet and we have to ensure that it is sustainable as we go forward so the changes we have made have been very much about ensuring that. 
One part of that sustainability is being up front about the fact that there is a cost to run this system and that cost is around $17 million per year for the work done by the Ministry of Social Development which administers the StudyLink part which is covered by the $60 fee. So even previously there was a $50 set-up fee to cover those Ministry of Social Development costs of $17 million per annum. But the Inland Revenue Department has annual administration charges around the system of over $22 million a year so I think that having an administration fee of $40 per annum go towards that $22 million administration cost is absolutely justifiable and very sensible and as I say it goes to the sustainability of the student loan policy as we go forward. 
The other issue I want to touch on—and I touch on it only because Labour members have continually gone back to it albeit it is not in this bill—is the issue of borrowers aged over 55. A couple of points need to be made in order to set the record straight. Firstly those over 55 can still get student loans despite Mr Shearer’s repeated completely incorrect statements on that. They can get student loans for their tuition costs. 
Grant Robertson 
: They can’t get them for living costs. 
AMY ADAMS 
: Mr Shearer’s argument was that they could not access student loans whatsoever which is wrong. They can get student loans for their tuition costs. Do members know what is really interesting? Just a few days ago the media was reporting that the worst group for repaying student loans were the over-55-year-olds. The single worst group at making any repayments on their student loans were the over-55-year-olds. 
Let us be very clear that this bill does not in any way address the eligibility of over-55-year-olds. What it does is make the system sustainable as we go forward provide a contribution towards the administration costs of running the system and make the system easier for taxpayers to comply with and easier for student loan borrowers to comply with and that is to be commended. 
I encourage anyone listening to this debate to ignore the incorrect rhetoric coming from members opposite and focus on the fact that this bill is set up to make it easier for borrowers to comply and to make the scheme sustainable in terms of its administration costs. [ 
Interruption 
] Labour members can bleat and moan to their heart’s content but that is not what this bill is about and their contentions are simply wrong. With those few words I commend the bill to the House. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I will just pick up on some of the comments of the member opposite who has just resumed her seat Amy Adams about the over-55-year-olds and their capacity to learn and continue learning. It is essential if we want to encourage people to continue to learn have flexibility and pick up new careers that they should have access to training skills and higher education. Obviously we need only look at the number of career changes that people have in life—at 55 people may well be working for another 20 years with plenty of time to repay loans. I would like to see the evidence that those people aged over 55 were paying the least amount of their student loans because that would be absolutely out of line with everything that I know about that sector of the population who are generally regarded as being the most responsible people in terms of their debts and obligations to society. I would like to see evidence presented and we have not seen it. 
That matter is not at the heart of the Student Loan Scheme Bill. At its heart this bill is about encouraging the repayment of student loans. I support the notion that we must have a facility like the student loan scheme to allow people on to the staircase of higher learning and the reason for that is not just the higher incomes that it brings to them but also the higher productivity and prosperity it brings for us as a nation. I think we might be beginning to work out as a nation that we cannot simply make our way in this world with our hands; we need the skills from our heads and we need the highest possible educational outcomes and achievements from all in our society and that is why the student loan scheme has been an important mechanism. We acknowledge the costs that it represents and that is why Labour is supporting this bill. But we should not forget the principle involved which is that we want everybody in society to be able to go into tertiary education to upskill themselves so that they can contribute not just for themselves and their families but also for us as a nation and that is why we have a student loan scheme. 
On the costing of student loans we have had figures presented to us by the Inland Revenue Department and Treasury stating that it sits currently at about $11 billion - plus and is projected to go to $14 billion or $15 billion. Those are big costs. When we consider that the current education spend per annum is in the same order of around $11 billion - plus obviously the scale of the student loan debt is high. This bill is beginning to address some of those issues but I would also note some of the amounts involved. It was interesting I thought to see that the gain suggested in the order of $22 million over a total cost of $11 billion of the student loan portfolio is only about 0.5 percent and does not seem to be in quite the scale of things that might have been projected. 
This bill also recognises that we need technology to connect to students many of whom go overseas. I was very pleased to see that in his final speech to us as parliamentarians our outgoing Governor-General Sir Anand Satyanand used his iPad to read his speech to us today. I think that that is an acknowledgment. Sir Anand is probably somebody let us guess who may be in his 60s now. I do not want to be unkind or uncharitable but there is somebody who might well go on to yet another career despite the distinguished career he has already had. There he was using the technology of the 21st century and that is at the heart of this bill. We will see the Inland Revenue Department implement a system whereby we can go online check our balance make our payments and contribute back to the nation for the education that we have had in some part. That is why Labour is in support of this bill. 
I just note that the regulatory impact statement states that although most borrowers will benefit from the changes some will be disadvantaged. That is why Labour has picked up on the situation of some of those people during the course of this debate. It is the role of the Opposition to point out some of the holes and inadequacies in legislation. Yes a $40 administration fee per annum may not seem a lot but it does add up cumulatively over the time of a loan. We are talking about a normal loan period in the order of 5 years and obviously at first students are not very able to pay. Once they come into a job they are better off but it is still a fee that will cause some of them some disquiet. 
I was particularly pleased to see in the bill the move on the late-payment penalties because it really was a usurious rate when debtors were effectively being charged credit card interest rates at 19.5 percent per annum. If we want to encourage people we have to make it clear to them that they will be treated fairly and that was not fair. I think that basically it said to some people that they did not need to bother because it was too hard and the interest rates were too high. The interest rate has been pulled back to about 10.5 percent or about 8.6 percent if debtors go into instalment arrangements. That provides the correct sort of incentive and signal to former students that they need to take on their responsibilities and that the State will assist them with that not treat them as a credit card company might. 
As we have discussed we have $11 billion of debt in respect of the loan balances of the student loan scheme and nearly 600000 people owe money. We want to encourage more people to come into tertiary education not discourage them. The average amount of borrowing is only in the order of $7000. Obviously we have put all of the half a million - plus former students into a total which is why we are seeing the numbers involved and why the projections go to $15 billion by 2015. 
That is why Labour is supporting this bill’s passage through Parliament. We have some disquiet about some aspects of it. We have raised those concerns in the appropriate setting. We are particularly discouraged by the allied move in Budget 2011 to exclude over-55-year-olds from the potential to benefit from the changes made to this bill. We do not regard that as appropriate. That is a very very discriminatory signal to those in the 55-plus community who from the beginning of the year after next will not be eligible for the student loan scheme. That is a very negative signal. 
Aaron Gilmore 
: That’s not true. 
BRENDON BURNS 
: That is very clearly what will happen. The Minister’s announcements accompanying the Budget on 19 May were that from the beginning of the year after next—as of 1 January—students who are aged over 55 will not be eligible for living costs or course-related costs. 
Aaron Gilmore 
: Ah! 
BRENDON BURNS 
: The member opposite can tell me what other component of costs students face. That is exactly the point and it is at the heart of what we are saying. Those people are being disadvantaged and discouraged from trying to get themselves into another set of learning and acquire some extra skills. Therefore they will not have the opportunities that would then be in front of them to allow them to learn another career or another discipline and to move into another job. 
At the age of 55 people still have 15 or 20 years of working life ahead of them if they so wish. That is why Labour says that making students over 55 not eligible for the scheme is not an appropriate part of the Government’s moves on student loans. Those people should be eligible for loans and should be able to benefit from the changes made in this bill in terms of the greater flexibility that is provided for repaying loans—to be able to go online and repay them—and in the lowering of interest rates. Those are all positive changes which are welcomed and a tidy-up of the student loan debt profile will result even if it will be modest. 
We have considered the bill in great detail through the Finance and Expenditure Committee. In closing I acknowledge the work of the select committee under the previous chair Craig Foss and the incoming new chair Amy Adams. We have worked comprehensively as a select committee on this bill. I thank those officials from the Inland Revenue Department and other departments who have assisted us. It is a complex issue. I also acknowledge the work of my colleague Stuart Nash who is not able to speak on this bill today but who has put enormous work into this bill on behalf of the Labour Opposition. Thank you. 
KEVIN HAGUE (Green) 
: 
 My colleague Gareth Hughes would have liked to speak in the third reading of the Student Loan Scheme Bill but he is unable to. He has left me some notes in the form of writing on paper. 
Kia ora. It is good to be addressing student loan issues. However this bill although dealing with a few specific points ignores the elephant in the room which is the massive and growing student loan debt. The Green Party supports the general intent of this bill. However we will be voting against it because it increases the already huge student debt burden facing Kiwis. This bill increases and introduces additional student loan fees which will just add to the national student loan debt burden extend the time it takes to repay a loan and because it reduces the effectiveness of the voluntary repayment bonus take things further back. 
The national student debt is now in excess of $11 billion as we have heard and the loan burden facing hundreds of thousands of Kiwi students and graduates is having a negative effect on families society and the wider economy. The student loan scheme was established in 1992 and has been a failure. The current total debt as of 30 June 2010 is a staggering $11145000000 and is growing at $1 billion a year. 
For the more than 560000 New Zealanders who have a student loan this debate is not academic. The average individual debt is around $28800 which is close to the median New Zealand annual income and takes years to pay back. Meanwhile families are delayed homes are not invested in and graduates are struggling with the debt. 
We voted to support this bill’s referral to the Finance and Expenditure Committee for investigation because we acknowledge that there are common-sense parts to the bill that we support. However we have flagged our concerns regarding the new fees. We would like to repeat our thanks to submitters officials and members of the committee. 
There are some good aspects of the bill. This bill aims to make the student loan scheme simpler which will benefit students as well as graduates. It cuts down on the administration of loans. At the moment there are two bodies that share information—the Inland Revenue Department and StudyLink—and students and graduates have to go backwards and forwards between the two. So that change is an advantage of the bill. 
We also support greater electronic management of student loans. We think this is beneficial in terms of reducing administration costs for the Inland Revenue Department. But most important it will give students greater information and transparency around their loans and hopefully will encourage them to pay them back faster if they possibly can. 
It is incredible that it is not until this year 2011 that the New Zealand Government is transitioning to electronic management of loans. This change in particular makes it easier for overseas borrowers to access information and there are hundreds if not thousands of student loan refugees overseas—which creates an amazing skills deficit for our country—each with their own tale of how the student loan burden got out of hand for them. 
Those are the positives. On the other side of the ledger however is this: if greater electronic management and increased efficiencies are achieved as the Government intends then the Green Party cannot fathom why the Government would need to bring in new and increased administration fees. Surely if costs are reduced the Government should be reducing fees not increasing them. The increase to $60 for students drawing down a new loan and a new $40 charge for borrowers will add to the student debt burden likely increase repayment times and reduce the effectiveness of the voluntary repayment bonus. 
The Inland Revenue Department’s regulatory impact statement states that the proposed changes are occurring at the same time as the student loan computer redesign. Therefore there are no additional administrative costs. Why then charge new fees? Why then increase the fees if in fact costs are reducing? 
Many students and graduates who are struggling with debt high living costs and increasing fees are sceptical of these new charges. We heard in the select committee from student representatives that many students and graduates who are facing these additional fees will be cynical of this new tax as they see it. 
Although we acknowledge that this Government has not reintroduced interest on student loans in this term of Government—although National has not ruled it out should it be successful in achieving a second term—these new administrative fees are essentially interest by stealth. Interest-free student loans are hugely popular because they reduce the debt burden make repayment easier and faster and lastly are a fairer way of going about the business of tertiary education. Gareth Hughes has no doubt that National would reintroduce interest by lunchtime if it could but overwhelming public opposition means that it needs to look for stealthy solutions. 
These new fees will reduce the effectiveness of the voluntary repayment bonus. Those who make a voluntary repayment of $500 will receive a 10 percent repayment bonus of $50 but unfortunately this will just be eaten up by the administration fee. New fees—whether we call them a tax or interest by stealth—simply increase student loan debt perpetuating the unfair experiment that is crippling a generation with debt. 
The second part of the bill that the Green Party objects to is the pay-period change. We believe that the current annual assessment is fairer especially for those students who earn the bulk of their year’s income over the summer break and will be disadvantaged financially under this bill. Those who are say picking fruit or working in a freezing works or local cafe full time over summer will likely see 10 percent of their weekly income automatically deducted to repay their loan. Yet over the course of the year if they focus on studying during the academic year they will be disadvantaged. We are aware that there will be exemptions for this large body of students. However we expect not many will go through the rigmarole of applying for exemptions. 
Lastly this bill continues the F grade the Government is earning in this portfolio. From capped spending to discriminating against over-55-year-olds to capped enrolments to rising fees this Government is making it less accessible less affordable and in some cases downright impossible to be a student in New Zealand. Tertiary education is a smart investment. Australia—remember we are trying to catch up—is spending $5.3 billion extra over 6 years and setting ambitious targets setting a good model for New Zealand to follow. 
In conclusion we went into the Finance and Expenditure Committee with an open mind on this bill and we support electronic management of loans as a positive step. However we cannot support this bill in its current form—I guess its final form—as the administrative fees and pay-period changes primarily benefit the Inland Revenue Department at students’ expense. 
The Green Party will not vote to increase the student debt burden. The student loan portfolio is currently projected to grow to $14.5 billion by 2014-15. We are saddling an entire generation with crippling debt that could impact on all areas of their lives. It will only get worse unless we act now. New Zealand needs real solutions to student debt and this bill is not one of them. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 I was expecting some of the members on the other side of the House who have been interjecting freely through the process to take a call on the third reading of the Student Loan Scheme Bill but clearly only the interjections are required. 
I will speak about three or four elements of the bill in this third reading. Labour is supporting the bill. It is supporting the glass half-full rather than the glass half-empty side of the debate we heard from the speaker who has just resumed his seat Kevin Hague. Some elements in this bill are positive. Moving from a paper-based system to an electronic system is overdue for the student loan scheme and I have no doubt that the changes being made here in terms of that system will assist borrowers. They will be able to interact with the Inland Revenue Department far better. They will know much more about the balance of their loan. We hope—we are assured—that compliance costs will be reduced as a result of this legislation. And the quality of information will increase. 
Many constituency MPs will have been approached over the years by borrowers concerned about aspects of how the loan scheme operates. Certainly I myself as a borrower experienced this and I have also had people come to see me about it when overpayments occur and when information is not flowing between the Inland Revenue Department and what is now called StudyLink. People under this process will actually have much more control over their own loan accounts and I think that is a very good thing. 
There are some practical steps in the bill that tidy up one or two elements relating to overpayments interest rates and so on. Those steps I believe are good things and that is why we are prepared to support this bill. There are also some changes relating to obligations on borrowers who are overseas and I support that. 
I have had my concerns over the years with the loan scheme. I support a lot of what the Green member said about the costs imposed on people who have undertaken tertiary education but once someone has borrowed from the scheme I believe they should meet their obligations. That means that when they are overseas payments should be made in accordance with the law we are amending today. So I support the changes relating to obligations within the law. 
I believe problems still exist in this bill which is about to become law in relation to the question of the pay-period assessment versus an annual assessment for repayment. I appreciate the changes that were made in the Finance and Expenditure Committee on this matter and I think they go some way toward mitigating the concerns. I am not sure that the last Green speaker completely covered off the changes that the select committee made. The select committee took on board the concerns that were raised in first reading speeches and by submitters about the impact of a pay-period assessment on someone’s earnings versus an annual assessment if that person was a student or was to continue to be a student. This provision is needed because a lot of students try to work very very hard over breaks so that they do not have to either borrow extra money while they are studying or undertake more part-time work during a study period. The changes made by the select committee acknowledge that and ensure that a wider group of students who are also borrowers will be exempt from those repayment changes. 
However that exemption is still available only on application. The student still has to get an exemption from the Commissioner of Inland Revenue. I urge the Government to work with students associations as long as they still exist to make sure that students and borrowers are aware of the fact that they can get this exemption. Some of them may not be aware of that fact. They will work very hard in part-time jobs in breaks and may not know that they are now eligible under this law to be exempt from making repayments. I think the select committee has done a good thing in making this change with regard to students in a holiday break who under the current rules would have to make repayments if they earned more than $367 per week in that holiday break. That now will not occur but only if an exemption is obtained on application. I urge the Government to ensure that students and borrowers are aware of that change. 
Although we supported that particular aspect of the change it is still true that part-time students and people with irregular incomes will now potentially be caught by the pay-period assessment. Members on the other side of the House enjoy talking about movies such as  
The Hobbit 
. It is true that people who work in that kind of industry get large amounts of money at a particular time but perhaps will not earn over the threshold for a whole year. They will be making payments now on the basis of a pay-period assessment. That presents a difficulty. But I congratulate the select committee on having listened to those submissions. That is why bills need to go to select committees so that issues like this can be dealt with. 
I still foresee some issues relating to moving from an annual assessment to a pay-period assessment. I appreciate the fact that for some people there will actually be benefits but a number of students who will still need to apply for an exemption and other borrowers who will not be able to apply for that exemption will be caught by this change. 
The other matter I will refer to has been referred to a number of times in the debate and it is the question of the new $40 administration fee which has been introduced under this bill. We on this side of the House are not convinced that there has been a justification for this fee. We have been told by the Minister of Revenue and also in the regulatory impact statement that the cost savings from the earlier part of this scheme are such that we should in fact potentially see a reduction in any administration costs relating to this scheme. We have been told that the new computer system will save money in the long term so therefore the introduction of the $40 fee seems to have no basis other than revenue generation. 
It is in fact as other colleagues have said in the debate the reintroduction by stealth of interest on student loans. We know that the National Government would rather have interest on student loans. There is no doubt about that. I am sure that if National is elected to a future term it will look at bringing that in. Politically they know they cannot do anything about it right now but in reality that is what they want to do. Steven Joyce has pushed and pushed his officials to find ways of limiting access to the student loan scheme because he cannot do the thing he really wants to do which is to put interest back on student loans. John Key said he would oppose interest-free loans with every bone in his body. That is where the National Government really stands on student loans and that is what we see in this bill with the bringing in of this administration fee. 
It is a $40 fee. Some members on the other side of the House said we should not worry about a fee that is only $40 per year. But that money still has to be paid back. Up until this bill passes today students would not have to pay that money. Although we are supporting this bill because of the positive things it does with regard to the management of the student loan scheme which we do think in the end—we hope—will reduce costs on borrowers with this clause the costs on borrowers increase. It is very disappointing to see the $40 fee in this legislation. We do believe it is interest by stealth. 
But overall this bill does positive things. When the select committee made the change around the question of pay-period assessment versus annual assessment for repayments it certainly swayed some of my Labour colleagues in favour of supporting this bill because overall it does some good. But it still has within it problems around that and particularly the problem with the fee. 
I will finish my contribution to this debate in the last minute or so remaining by talking about tertiary education which is the core of why we have a student loan scheme. I have heard in this debate members on the Government benches talk about how we should not be investing as much money in tertiary education as we do. Well the truth is that we need to. To me nothing is more important than education in order for people to achieve their potential. 
For New Zealand to achieve its potential we need more people in tertiary education more people researching and more people coming up with the ideas that will drive a productive economy. We will do that only if we invest in tertiary education and if we see it as a public good. It is a public good. We all benefit from a more qualified educated population. We benefit in terms of the services that we get we benefit in terms of the social inclusion for people who get into education and we benefit because of the great new ideas that those people have. We must invest in tertiary education for the good of our country and we cannot afford to have Governments that take money out of tertiary education because that will limit all of our futures. I believe that investment in tertiary education is one of the most important things that a Government can do. We must continue to invest in our future. 
DAVID BENNETT (National—Hamilton East) 
: 
 An interesting final point was made by the previous speaker Grant Robertson. He said that we cannot have Governments that take money out of tertiary education yet that is exactly what the previous Labour Government did—take money out of tertiary education. It shifted money from tertiary education into the student loan scheme and those tertiary institutions have been paying the price since because of those Labour policies. Labour members start waking up now but it is too little too late because Labour does not have a desire for tertiary education or students in tertiary education. 
The Student Loan Scheme Bill is good for students because it takes advantage of students being able to manage their accounts online and that is very important for students who are aware of and use those new technologies all the time. This bill gives them the opportunity to do so. 
It is an important bill as well in the sense that it is part of that reform of the student loan package a package which meant that there was a limit on the number of students in our institutions a change which was brought in by the previous Government. That has directly affected the ability of New Zealanders to get into tertiary education. 
Grant Robertson 
: Did National remove that cap? 
DAVID BENNETT 
: A cap was brought in by Labour. Members on that side of the House know very well that Labour brought in that cap and reduced the number of students who could potentially go into tertiary education through its student loan programme. So I think when we talk about this bill that it is also important that we put into perspective some of the comments made by the Opposition that are completely wrong and do not reflect the reality of the situation. 
This is good for students. It is a good bill. It is good for the tertiary sector. It is part of a range of initiatives that the Minister for Tertiary Education has made that have been very effective in building a stronger tertiary sector. We look forward to this bill progressing through the House. Thank you. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I think the mask is beginning to slip on the National side of the House. We are finally starting to see what National’s true long-term agenda for tertiary education will be. David Bennett said that National does not regard money spent on the student loan scheme as money spent on tertiary education. That is a load of rubbish. The amount of money spent on the student loan scheme through interest-free student loans has made a massive difference to over 600000 New Zealanders who have a student loan balance and that is not including those who have already paid them off. We on this side of the House believe that spending money to improve the student loan scheme to lower the cost of borrowing to our students and our graduates is money well spent because it is money that encourages people to take up the opportunities of tertiary education to upskill themselves and to get better jobs. We think it is money well spent and we think it is a great investment in the future of our country. 
I want to talk a little bit about the loan scheme itself. Of course it is worth remembering when we are debating this quite significant overhaul of the student loan scheme legislation where the origins of the original legislation started back in 1992 when National promised to abolish fees for tertiary education but in fact increased them and introduced the student loan scheme to allow people to pay for it while simultaneously abolishing living allowances for students. Between 1992 and 2001 the number of students getting a student allowance dropped from 86 percent to 36 percent because of National’s broken election promises back in the early 1990s. 
As a result what we are talking about today with the Student Loan Scheme Bill is over 600000 New Zealanders who will be affected by these changes to the student loan scheme. The nominal value of student loan balances as it stood at the end of 2009 was $11 billion and it is forecast to increase to $15 billion by 2015. That is a significant amount of money. But I want to talk about repayment of student loans which is covered in this bill. When the last Labour Government introduced interest-free student loans National—spearheaded by John Key who said he was going to fight the policy with every bone in his body—campaigned by arguing that no graduate would repay their loan and that the time for repayment would massively increase as a result of the interest-free student loan bribe as National called it. 
I notice that the median repayment time for those who left study in 2006—which was of course when interest-free student loans were introduced—and who have remained in New Zealand is now forecast to be 4.6 years. When we introduced interest-free student loans we were looking at a median repayment time of up around 9 years. So we have seen a significant reduction in the amount of time that it has taken people to repay their loans and a big chunk of that is because of the interest-free student loans policy. That is something we should definitely welcome. It is something we on this side of the House are very proud of. 
There was a lot of debate during the Committee stage about students who work during their summer holidays and the impact that these changes in this bill will have on them. I am very pleased to hear that provision has been made for students who do their summer holiday jobs and earn a reasonably significant amount of money within a short period of time and then use that money over the course of the term to pay for their studies and their cost of living. There are provisions to exempt them from mandatory student loan repayments. I think that is a very welcome thing. I am concerned as my colleague Grant Robertson said that this will rely on them making an application and I hope that the Government will make that process very easy for students and also make sure that the information is readily available to them. Working during the summer holidays or during the term break in the middle of the year is something we want to encourage students to do because when they do that they are earning money that will result in their borrowing less. The more we can encourage students to borrow less the smaller their loan balance at the end of their study will be and the faster they will be able to pay it off once they finish their tertiary study. So I think we want to incentivise them for working during their study break not penalise them. That is really important. 
We are talking here about 58 percent of full-time students undertaking full-time work during the summer break. And 64 percent of full-time students undertake regular part-time work during the term. That figure increases to 90 percent for casual work. That provision is very very important. It would be great if we could get to the point where a student does not need to go through a large series of hoops in order to get that exemption. 
When I spoke at the Committee stage I talked about some of the problems with the way the student loan scheme is administered at the moment and how difficult it can be for a graduate or even a current student to get accurate information about their student loan balance. It is absolutely fantastic that the Inland Revenue Department will be able to do something about that as a result of the changes in this bill. That is very important because at the moment the student loan scheme is being administered by two different parties. StudyLink is administering it for the current year of study and the Inland Revenue Department is administering the historical part if you like. Those balances once they are transferred from StudyLink to the Inland Revenue Department are actually easier to keep track of but when they are with StudyLink if someone is still studying they obviously have two agencies to deal with to work out what the true extent of the student loan is. This bill will make that significantly easier for students by providing real-time information through the Inland Revenue Department where people will be able to look their information up online. 
That is good news not just for current students who will know where their loan is tracking; it will be also be good news for graduates who are overseas for a period of time but want to keep up their repayments. One of the things we want to encourage people to do is to keep up their student loan repayments while they are overseas. It is not a bad thing for graduates to want to go overseas do their OE and get some work experience in a different country. We want to make it easy for them to keep up their loan repayments while they are doing that. If they do not get into default while they are away overseas they are more likely to come back. If someone gets into default on their student repayments while they are overseas that then becomes a disincentive for them to come back to New Zealand. Making it as easy as possible for them to make their student loan repayments to check their balances and to do all those sorts of thing from overseas is really important. Electronic means are the best way to do that. It is a really welcome step for people to be able to log in and check their student loan balance and repayments just as they check their bank balance. I am really pleased this bill provides for that to happen. 
I have some concerns that some of this may be paving the way for National to implement the reintroduction of interest following the next election. National members have not yet made a concrete commitment not to do that. Before the last election they said they would not do it in their first term of Government yet they have been very silent about whether interest would be reintroduced in the second term of a National Government. I hope they will be very clear with the students and graduates of New Zealand about that prior to the coming election. We know very clearly that Steven Joyce privately—and around the corridors of Parliament—has said he would like to reintroduce interest on student loans even if it were at a nominal interest rate. He has been saying that and it would not surprise me at all if in a second term of a National Government that would be one of the things we saw coming through. I am very concerned that this bill may well be paving the way for that. 
Having said that I say that most of the provisions in the bill are pretty good. We oppose parts of it; we oppose the increase of the administrative fee for setting up a student loan. We think that is unnecessary given the Inland Revenue Department probably ending up saving money out of this but on balance Labour will vote in favour of it. 
AARON GILMORE (National) 
: 
 I am going to take only a very short call here because a lot of things have been said about the Student Loan Scheme Bill already. What this bill does is simplify the procedures for all those students out there across the country so they can access the information on their loans and we think that is a good thing. This bill also puts in place mechanisms to recover from those people who do not perform under the student loan contract. That is a good thing. It also puts in place a mechanism where those student borrowers throughout New Zealand and overseas pay some of the costs of the administration of that scheme. We think that is a fair thing. Those $40 annual administration fees will recover a fraction of the $22 million in annual administration charges paid by the Inland Revenue Department. If that turns out to be over-recovery in the future—and the Opposition seems to think that fear exists—there is the ability in regulation to lower the fee in time so it can be cheaper. Also with the $60 establishment fee that will be paid towards the $17 million that the Ministry of Social Development incurs there is an ability to reduce that fee in time should that be too expensive. All in all this is a good bill. It helps put in place a more efficient student loan system. We commend the bill to the House. Thank you. 
MICHAEL WOODHOUSE (National) 
: 
 I will take just a quick call—in fact my only call today—on the Student Loan Scheme Bill. In the debate we have referred to interest-free student loans and indeed the Government has accepted that the electorate says that interest-free student loans are important. The Government commits to them. But it strikes me that the term “interest-free student loan” is something of a misnomer because of course the loan is not interest-free. It is just a question of who pays the interest. At this stage it happens to be New Zealand taxpayers. So while they have the burden of paying the interest on behalf of students I think it behoves the Government to ensure that the scheme is administered well and that the repayment levels are optimal. 
That leads nicely on to the second issue that is being discussed today. The problem right now is not whether the loans are interest-free but whether the loans are paid back. The fact is that at the moment about 45 percent of the loans are written off. Mr Hipkins makes clever use of statistics about the speed with which those who do pay their loans off pay them off which is true but the fact is that nearly half of them do not. Many of those people are overseas. So I applaud the improvements in the bill that will ensure that graduates and other borrowers have better mechanisms by which to pay. Like Mr Robertson I received calls from people overseas who said they would like to come back but the burden of the student loan had become so great that they were reluctant to do so. 
The third and final thing I will touch on is the basis of the administration fee which as I understand it was introduced under the Labour Government. Therefore it is not a question of the principle but of degree. Certainly the costs of administering the scheme have improved dramatically but an annual collection of $8 million to $9 million in fees represents only about 0.75 percent of the total loan base. So I cannot agree with Mr Robertson when he says this is interest by stealth. 
Overall I think this is an excellent bill and I commend it. 
A party vote was called for on the question  
That the Student Loan Scheme Bill be now read a third time. 
Ayes 110 
New Zealand National 57; New Zealand Labour 42; ACT New Zealand 5; Maori Party 4; Progressive 1; United Future 1. 
Noes 10 
Green Party 9; Independent: Carter C. 
Bill read a third time.