Tolley Anne: Student Loan Scheme (Repayment Bonus) Amendment Bill — First Reading 
Tolley Anne: Student Loan Scheme (Repayment Bonus) Amendment Bill — First Reading 
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Hon ANNE TOLLEY (Minister of Education) 
: 
 I rise to support the Student Loan Scheme (Repayment Bonus) Amendment Bill. The bill contains measures that will provide incentives for student loan borrowers to make voluntary repayments to help them repay their loans faster. 
I cannot believe my ears when I sit in this House and listen to a Labour Opposition spokesperson exhorting the students of New Zealand not to pay off their student loans. The Labour Party talks about being the party of students but its members cannot get past the politics of voting for something that will help students pay off their debts sooner. In fact those members are standing in the House and telling students not to pay off their loans earlier. I am looking forward to going on to university campuses and telling students that Labour members stood in this House and would not support a bill that was designed to help students pay off their loans earlier. I am also looking forward to going out to the taxpayers of New Zealand who are providing those interest-free loans to students to help them get an education to say that the Labour Party believes that students should not pay off their loans and is not interested in any measures to help them pay off their loans faster. My email has run hot since this policy was announced with students saying that the scheme is fantastic and asking when it starts and when can they pay off their loans and get their 10 percent bonus. 
The student loan scheme helps students to pursue their education and life goals by removing some of the financial barriers to tertiary study. If those Labour members do not understand that students are concerned about their ability to pay off their loans then those members are out of touch. I cannot believe that after an election campaign in which that party constantly talked about duplicitous hidden agendas—and the public profoundly rejected all that and voted in the National Government—we have here a little bill that does an awful lot for students to help them pay off their loans but Labour is not backing it. 
Access to high-quality tertiary education enriches people’s lives and increases their employment prospects. It strengthens our economy by helping to build New Zealand’s skills base and that is all the more important at a time of economic recession. It is important that we keep our graduates here in New Zealand and contributing to our country and this Government is determined to put measures into place that can help them do that and pay off their loans. We are keeping our promise to students to help them retain those interest-free loans and this policy is a way of encouraging them to pay off their loans faster and enable them to participate and contribute to New Zealand’s society and economy. 
This Government is concerned especially at this time of economic recession that the interest-free policy has removed a strong incentive for borrowers to make extra repayments on their student loans. But the Labour Opposition of course supports that—“Don’t pay it back.” they have said; “Why would you pay it back?”. Since the introduction of interest-free student loans the proportion of repayments that the Inland Revenue Department has received from borrowers has declined. Students are listening to the Labour Party and they are not paying off those student loans. But we are keen to see those people pay off their loans as early as possible so that they then have more freedom in their lives to make those major life decisions that the previous speaker Maryan Street was talking about such as buying a house. 
The other thing the Labour Party does not seem to be in the least bit concerned about is that the cost of the student loan scheme to the Government has increased markedly in recent years as a result of non-repayments. The longer borrowers take to repay their loans the more expensive the borrowing is to the Crown. At the very time when we are concerned about the borrowing of the Crown that party is voting against a bill for political and ideological reasons rather than supporting early repayment methods for student loans. The current cost of every dollar of future lending is 39.15c; in 2002 the cost of every dollar lent was 23c. So this repayments bonus aims to address those issues by providing an incentive for faster repayment shortening repayment times and reducing the costs to the Crown. Students all over the country are delighted and have sent in messages expressing that and asking when they can start repayments. 
The Minister of Revenue in introducing the bill laid out the design parameters for it. National members believe that we have more than kept our promise since we went on the campaign. This bonus scheme is more widely available now than when it was promised prior to the election so we have over-delivered on that promise that we made to students. 
The scheme is now available to overseas-based borrowers as well as to domestic borrowers. During the election campaign we talked about only domestic borrowers but overseas borrowers in fact take even longer to repay their student loans and are more likely to have overdue repayments than are domestic borrowers. So this bonus will encourage faster repayments and greater compliance from people overseas who have loans. Large student loan balances are often perceived by expats as a reason to delay coming home to New Zealand or to refuse to come home at all. So this policy will give them the opportunity to pay off that debt quicker and hopefully to remove that barrier. 
In addition to that when we campaigned we talked about making a one-off payment of $500 on top of the normal repayments but now we have decided that we will spread that $500 over the year; on a weekly basis that is $10 a week. We will build that $500 extra and qualify borrowers for the basis— 
Hon Trevor Mallard 
: You’ll be ripped off more easily. 
Hon ANNE TOLLEY 
: That is less than a packet of cigarettes. I am not sure how much beer that will buy—I doubt that it will buy very much—but $10 a week is not a lot to save and that brings in a whole group of other students who might have found it difficult to make a lump-sum payment of $500 but who can now spread that over the course of a tax year. This is an example of the Government listening—listening—to the people out there in the community who wrote to us expressing concerns about having to find that lump sum of $500 and we have found a way to expand the range of borrowers who can take advantage of it. 
I turn to the third area where we have extended this policy. During the election campaign we talked about an eligibility time for the bonus of 10 years. We have decided that eligibility will not be limited to the 10 years as we originally stated so that means that the bonus will be available to those who are able to make those extra repayments later in their working lives for one reason or another. It is estimated that the measures in this bill will encourage about 14700 more borrowers to make those additional repayments of $500 or more on their loan. 
Hon Trevor Mallard 
: How many? Sorry can you repeat the figure? We couldn’t quite hear it. 
Hon ANNE TOLLEY 
: Certainly I am happy to repeat that. We believe that this bill will encourage about 14700 more borrowers to make additional repayments of $500 or more on their student loans. We estimate that this measure will reduce repayment times of those who take up the bonus by 1.5 years and we believe that it will decrease the upfront cost of new lending to 39.4c. How could anyone vote against that? The only reasons people could vote against a bill like that which proposes that scheme for the benefit of student loan borrowers and for the taxpayer in New Zealand would be ideological reasons. It would be because they just could not bring themselves to vote for something that National is proposing. 
In summary I tell the House that the measures in this bill aim to encourage more people to make extra student loan repayments over and above their compulsory obligation. Shorter repayment times will mean that New Zealanders will be debt-free earlier and the costs of the student loan scheme to the Government will be reduced.