Hutchison Paul: Student Loan Scheme Amendment Bill (No 2) — Third Reading 
Hutchison Paul: Student Loan Scheme Amendment Bill (No 2) — Third Reading 
[Volume:638;Page:8274] 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 Thank you for the opportunity to speak on the Student Loan Scheme Amendment Bill (No 2). National is supporting the bill because we feel it is very important to help student loan borrowers living overseas to return to New Zealand wherever possible. But this is a very complex bill and that point was outlined by the Law Society in its submission. 
The Labour Government made the bill even more complex when it brought in its $1.5 billion-a-year interest-free student loan scheme. That gave students a clear incentive not to let the Inland Revenue Department know when they were out of the country. This is the sort of thing that Dr Cullen and Labour just did not think about when they brought in that legislation—or maybe they did think about it but just did not care. In fact one would suggest that Dr Cullen and the Labour Government would have been prepared to sell their souls to win the last election. Certainly they were prepared to show extraordinary largesse with New Zealand taxpayers’ money. 
It is absolutely correct that the Education and Science Committee worked very well on this bill—although I was not there for very much of it—and I certainly heard about the excellent chairmanship of Brian Donnelly. The bill was unusual in that it was the first-ever Inland Revenue Department bill to be brought before that select committee. 
It is important to reiterate some of the aims of this bill fairly carefully. The first is to introduce an affordable repayment regime for overseas-based borrowers. The emphasis should be on an affordable repayment regime because we certainly have heard about some students who have mounted up huge debts and some of those students have slipped off overseas and had a wonderful old time. I look at the tan on Moana Mackey and wonder whether that is the residue of her trips to Colorado and other places like that and whether she is still paying off her loan. 
Darren Hughes 
: She always looks as good as that. 
Dr PAUL HUTCHISON 
: She does indeed. One must try to make sure that there is a sense of reality about the affordability of this scheme and that again is one of the reasons why National is supporting the bill. 
The second aim of the bill is to give overseas borrowers who have not been meeting their repayment obligations the chance of a fresh start by extending the current amnesty to 31 March 2008. It is very important once again to stress the basic philosophy that the people of New Zealand are our most valuable resource and we do want to do everything possible to encourage our brightest and best to return here to work in New Zealand to live in New Zealand and to increase the productivity of this country—which is so sadly lacking under this Labour Government. It will take bright well-trained educated young New Zealanders coming back with a huge amount of enthusiasm and energy to overcome the decreases in productivity caused by this Labour Government. 
We often hear stories from parents that all of their children have left New Zealand. I was talking to one of my constituents just last weekend. Four of that person’s children are now living in Western Australia and that person is pretty sad about this. I think we all realise what a wonderful country this is and what wonderful opportunities we have yet we have seen this huge exodus over the last 6 to 7 years to the extent that 10 times more New Zealand graduates live overseas than do Australian graduates. That has to be an indictment on the basic policy settings of this Labour Government. 
The other issue about the aims of this bill is that although the new repayment rules have been designed to cover the situation of the majority of borrowers—those who return to New Zealand after a short OE—they do mean there will be lengthy repayment periods for some long-term absentees. We are told that the Inland Revenue Department will continue to recommend to borrowers that they make voluntary payments so that they save themselves interest and retire their debt earlier. 
I think it is very important that the students who take out these loans understand the conditions of the loan and the consequences of it. The Inland Revenue Department stated that it will look at ways to make it easier for borrowers to make repayments from overseas such as by establishing bank accounts in foreign countries and by offering different repayment choices such as a table mortgage type of arrangement. 
The department went on to state that many repayment options are not possible due to the department’s current information technology system constraints. It was quite a revelation when one of the department’s commentators pointed out that the information technology system that that department uses is the one it had in 1992. That system is starting to reel and croak under the tremendous pressure it is getting from the various machinations of the Labour Government the latest ones being the KiwiSaver scheme the international tax regulations that it has just whipped in—much to the fury of many New Zealanders who are serious investors—and of course the Working for Families package. One does indeed wonder whether the department is saying that its information technology systems are constrained. Surely it should be thinking about that and surely the Labour Government after 7 years should be thinking about something as fundamental as the department’s information technology systems. 
It is important to point out that everyone agrees that data matching is reasonable. Even the Law Society said that in its view data matching was quite appropriate that civil liberties issues were not encroached on because of it and that it was purely a way to recognise the fact that something like 40000 New Zealanders who had taken up loans were overseas and the department was not aware of them. It was pointed out that a sample data match with the Customs Service suggested that once this scheme was going nearly 90 percent of student loan borrowers crossing the border would be identified. Well 10 percent will still get away with it. That is a substantial number. Ten percent of 40000 is about 4000 a year. That leads one to worry as to how well the Labour Government organises such very important departments as the Inland Revenue Department. The department itself is breaking into a cold sweat over the constraints of its information technology machines and here it is admitting that it will not be able to track down at all something like 4000 students a year even after this bill is passed. 
It is important to reiterate what the student loans scheme itself has done. In essence it has ensured that the number of people accessing tertiary education in New Zealand has pretty well doubled if not come close to trebled over the last 15 years. That has made a very significant contribution. 
I thought it was interesting yesterday when Brian Donnelly said he was a little concerned that some of those 40000 students might have just forgotten as they slipped across the border that they had obligations to the Inland Revenue Department. As I pointed out technically that is known as denial. It is clear-cut denial. It is very important that students realise that there are reciprocal responsibilities associated with the great privilege it is to embark on tertiary education. National supports this bill but is concerned about the complexities of it.