Barnett Tim: Student Loan Scheme Amendment Bill (No 2) — Third Reading 
Barnett Tim: Student Loan Scheme Amendment Bill (No 2) — Third Reading 
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TIM BARNETT (Labour—Christchurch Central) 
: 
 I begin by commending what I thought were some very helpful comments made by my colleague Dr Ashraf Choudhary who having worked for some time in the academic sector certainly knows what he is talking about from the teaching side of the system. 
In this third reading debate on the Student Loan Scheme Amendment Bill (No 2) what I would like to do as well as initially commending the legislation is to take a bit of a snapshot of this issue. Firstly I will go back and speak for a moment from my personal history as the first person in my family to achieve tertiary education—in spite of my heavy Kiwi accent—in the United Kingdom. That takes me back to 1978— 
Hon Mark Burton 
: Warwickshire. 
TIM BARNETT 
:—to the Warwickshire County Council with a proud local education authority which in those wonderful days paralleled absolutely the tertiary system in New Zealand. The local education authority gave me not only full tuition fees not only full accommodation costs not only enough money to feed myself but also everything else besides. I had to work only in order to earn a bit of pocket money to do those extra things. That was an extraordinary period when I was absolutely supported to complete my tertiary education from point A to point Z. That was an extraordinary situation to be in and I know that many people in this House including I am sure a majority of our National Party opponents who oppose this legislation enjoyed a similar privilege. Those were the golden years in terms of tertiary education. 
Secondly I would like to flash forward to 1996 when I was elected as an electorate member of Parliament for Christchurch Central which is an area with a high number of students. What I found in that first flood of casework coming to my office was a story repeated again and again. That was a story of students—and in some cases graduates because by then the real student loan scheme had come in and some people had gone through the scheme—who had generated a very large debt. As a result they were in a situation whereby they had a massive debt—very often equivalent to the size of a mortgage—hanging around their neck. They were in that desperate state and naturally they came to their local member of Parliament to tell the story. At that sad stage Labour was in Opposition. We were not in the position to be able to do an awful lot to help their situation. But what we could do was to learn from their stories and develop policy in response to that. 
The harsh edge of that savage loan policy was the debt—which Hone Harawira spoke very powerfully of—which is now at a very high level. Those were the years when that debt started low at a national level and started to shoot up and up. It was an utterly unreal situation. I can remember for example a medical student who had a $120000 loan debt. She was a young woman who had developed a number of emotional illnesses while she was studying so she had a real lack of confidence that she could ever actually practice as a doctor. So she was faced not only with a massive debt without any scholarships to balance it against but also the real possibility that she could never do the job that would earn her the real money to pay back that debt. She worked out that she was spending about a quarter of her real income just to service the debt before actually starting to eat into it. 
That was in 1996. Now I will flash forward to 1999. I still remember being the first member of Parliament to turn up at the University of Canterbury during the election campaign. Obviously events in Christchurch often lead the nation. The students at the University of Canterbury occupied the Registry because their anger at the student loan debt was so great. I was the first lucky member of Parliament as an Opposition MP to arrive into that situation and to address the angry crowd. I was then taken into the boardroom where there was a midnight meeting for the students to try to present to me what the problems were all about. At the heart of the dispute then was the issue of student loans—obviously other issues were there besides. 
That occupation of the University of Canterbury really set the tenor for that election because Max Bradford who was then the Minister for Tertiary Education for the National Government had all sorts of extraordinary objects thrown at him as he visited one campus after another. He was chased off campuses. He really had to repeat endlessly the famous action of Lockwood Smith in climbing through what was it a storeroom window or a toilet window— 
Jill Pettis 
: The Joe Cocker of the National caucus. 
TIM BARNETT 
:—exactly the Joe Cocker of the National caucus—in order to escape angry students. Max Bradford in campus after campus was performing extraordinary escape acts to try to get away from the venom of an extraordinarily angry bunch of New Zealand citizens. 
That was in 1999. By then Labour had developed the policies to address this area. I see this legislation now as in a sense ending that legislative journey. What we did after getting into power in 1999—and again after intense debate after getting into power again in 2005—was to look at the situation see that debt continuing to rise and most important of all see the personal situations of extraordinary suffering that were causing our students not to look forward to the next stage of their lives but to fear what was going to happen. Of course in 1999 interest was accruing even as they were studying. The first thing we did on getting into power with a whole lot of other calls on our first Budget was to freeze the interest on loans while students were studying. After 2005 we froze all interest on loans so that any repayment was actually repayment off the interest. But there are some exceptions to that situation and that is really what the Student Loan Scheme Amendment Bill (No 2) is heavily focused on. That is what this third reading debate is all about today. 
This bill continues Labour’s effort to make that loan scheme fairer. The particular matter it focuses on is the fact that many graduates for a whole heap of reasons want an opportunity to go overseas. As has been mentioned earlier by Colin King some graduates want the chance to become missionaries or to follow their interest in overseas development work or overseas volunteer work for a while. The last thing they want while being overseas which would normally mean that interest would continue to be added on to their loan is to lose out financially through giving of their time freely to the wider world. Instead we want this legislation to be effective so as to allow those graduates to enjoy their overseas experience but we also do not want any disincentive for them to come home to use their skills in New Zealand. So first of all we need the information. Therefore this legislation introduces data matching between the Inland Revenue Department and the Customs Service to help ensure that the department knows about those with loans who are heading overseas. That information base was not readily available or accessible before. 
Secondly the legislation extends the amnesty on student loan penalties by just 1 year. That allows non-resident borrowers who are in arrears the chance of a fresh start. It is absolutely essential that incentives are built into this kind of system. It is all very well to tell graduates who come home to New Zealand after a number of years that they have a $150000 debt hanging around their neck. That will not be much of an encouragement to come back here even with the skills they have. So this bill extends the amnesty by 1 year. This enables New Zealand graduates with a debt who are overseas and who are paying a bit off or maybe not paying enough off an opportunity to play a bit of catch-up. 
The bill also makes the scheme fairer by introducing a 3-year repayment holiday for those borrowers living overseas. That is fundamental. It recognises that many of those borrowers who go overseas for their OE are not going to a secure salaried position with a certain income. It means we have recognition now in law that borrowers may not be in a position while on their OE because they have an uncertain income to make repayments while travelling. 
The last two points I make about this legislation are that it allows the Inland Revenue Department to give interest-free loans to undergraduate students who are studying overseas and that it also introduces a penalty rate when borrowers fall behind in repayments. It is with great pride in this legislation that I commend its third reading to the House.