Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill — Second Reading In Committee 
Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill — Second Reading In Committee 
[Volume:660;Page:9354] 
Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill 
Second Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill be now read a second time 
. The measures in this bill are part of continuing efforts to ensure that the student loan scheme is managed in an efficient and consistent way. They include a suite of mainly technical changes to the repayment rules to ensure that the law is clear and consistent and that it operates as intended. The bill also extends interest-free loans to borrowers from Niue the Cook Islands and Tokelau which share a special relationship with New Zealand that is sometimes referred to as their being part of the Realm of New Zealand. I note that when I used that term in an earlier debate Mr Hayes I think took some exception to it but I quickly reminded him that it is the phrase that the Governor-General often uses in such situations and without bringing him into the debate I think it is appropriate to follow his guidance. Because the Ross Dependency is also part of the Realm of New Zealand borrowers who go there may also qualify for an interest-free loan. 
The 183-day requirement for borrowers to be present in their country is the same criterion that must be met by New Zealand - based borrowers to qualify for interest-free loan status. That requirement is in place to encourage borrowers to remain in New Zealand or to return home from overseas to make their contribution to our economy and growth. The bill applies the same 183-day requirement to borrowers from what we now describe as realm countries so that they have an incentive to return home after their study and make a positive contribution towards the economic and social future of their particular country. 
This bill also acknowledges the value that students who pursue further study overseas bring to New Zealand and extends interest-free loans to include students furthering their education overseas through full-time study under formal exchange programmes or formal agreements between New Zealand and overseas tertiary education providers. 
I acknowledge the work of the Education and Science Committee on this bill; it made several worthwhile refinements to it. The first of these extends the overseas exemption to include those engaged in full-time study overseas if their New Zealand tertiary provider has confirmed that their studies cannot be completed in New Zealand but would count towards a New Zealand qualification at level 8 or above. The other small but important change provides greater clarity by defining the term “overseas tertiary provider” so it is clear what type of organisation borrowers must be engaged in full-time study with overseas in order to qualify for interest-free loan status. 
The remaining changes in the bill are largely of a technical or remedial nature to ensure that the law works as intended. Briefly they include an amendment to correct an unintended change to the hardship relief provisions made by the Student Loan Scheme Amendment Act 2007 a change that allows the Inland Revenue Department to raise the compulsory deduction rate from 10 percent to 15 percent to help ensure that borrowers pay their correct loan repayment amounts and the removal of a technicality so that borrowers returning to New Zealand who wish to fully repay their loans before they have met the 183-day requirement to qualify for an interest-free loan can do so. 
They are the main features of the bill. I record my thanks to the select committee for its detailed consideration of this matter and for its thoughtful recommendations which have made for further improvement and clarity in this bill. I think that overall these changes will help ensure that the student loan scheme works in the way that it was intended for both borrowers and the Crown and consequently with great pleasure I commend this bill to the House. 
Hon MARYAN STREET (Labour) 
: 
 I rise basically in support of the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill but to begin with I need to draw attention to the complete shambles that has developed in this House because of the taking of urgency. This may be the one bill in the whole panoply of bills that the Government has put up under urgency that actually warrants urgency because some action is required to be taken by 1 April. But this bill is about the only one that does. Even this bill was teetering on the brink of not being able to be introduced into the House for its second reading because there was not a competent Minister in the Chamber to move the motion. The Government whips had no sense of anticipation that because of the shambles that was developing over the previous bill under consideration they needed to alert the Minister in charge of this bill the Hon Peter Dunne to get to the House promptly so that he could take it up. In the event two Ministers the Hon Chris Finlayson and the Hon Paula Bennett were sitting in the House but neither of them had the wit to get up and even move procedurally or do some kind of form speech while waiting presumably for the whips to ring the relevant Minister’s office to get the relevant Minister to the Chamber pronto. 
This is a complete shambles. This is what happens when a Government tries to avoid question time when it has been trying to use the procedures of this House in order to defend indefensible Ministers. This particular bill warrants urgency. I am—and we in the Labour Party are—perfectly happy to acknowledge that it warrants urgency. We support this bill. But this cannot go past without some trenchant criticism of the process by which we have got to this moment. In the urgency motion there was a raft of legislation that did not need to be taken under urgency. It was clearly a ruse and a device that allowed the Government to let its panicked panicky Ministers—such as the Minister of Education Anne Tolley or the Minister of Housing Phil Heatley—to get off the hook and not be subjected to the kind of grilling their performance in the task of being a Minister of the Crown absolutely demands that they be subjected to in the process of question time. This cannot go past without comment. Although we are now at the second reading of the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill I have to say that it is only by the skin of its teeth and by some cooperation on our part that this bill is reaching this stage in any kind of order. That fact goes to the competence of the Leader of the House Gerry Brownlee and to the attention paid by the Government whips to what is actually transpiring in the House as we proceed. 
However there is one other thing I wish to raise in relation to the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. Between the time this legislation was first introduced into the House was referred to the Education and Science Committee and appeared for its second reading we have had a change of Minister for Tertiary Education. Although this is a bill that rightly comes under the purview of the Minister of Revenue it will be interesting in the Committee stage if the new Minister for Tertiary Education responds to some of this debate so that we can discover whether the Minister of Revenue has briefed him about this bill. This is about the student loan scheme it is about miscellaneous provisions and it refers to exemptions. It will be interesting to see whether the fact that the new Minister Steven Joyce—who was brought in to repair the damaged and broken relationships between this Government and the tertiary education sector which resulted from the stewardship of the previous Minister for Tertiary Education—has student loans in his sights has any bearing upon this current legislation. 
This legislation extends the student loan scheme to all those within the Realm of New Zealand and that is a good thing. We support that despite the fact that there are not many in the Ross Dependency who are likely to take this up—we may have the best educated penguins in the world. We are supportive of the extension of the scheme to people in Niue Tokelau and the Cook Islands. However I am somewhat at a loss to know quite what the direction of the student loan scheme will be under the new Minister for Tertiary Education. He has made it explicit that although he acknowledges it was a political call to maintain interest-free student loans—in other words the Government would have taken a real drubbing on this issue at the general election had it not decided to continue to support it—he has decided that he will make it harder for students to access student loans. This is clearly on the agenda of this Government under the new Minister. The previous Minister’s relationships with the tertiary sector were in such a parlous state that she was beginning to not even meet with them any longer. 
Carmel Sepuloni 
: She was in a helicopter flying over them. 
Hon MARYAN STREET 
: She was busy in helicopters. However the point is that we have had a change in direction around student loans from the new Minister. If he makes it harder for people to access student loans how does this legislation which extends student loans to people throughout the Realm of New Zealand in that old terminology square with the new Minister’s intentions? Will the loans be harder to access? 
One of the provisions in this legislation will permit the Commissioner of Inland Revenue to increase the standard rate of repayment deductions from 10c to 15c in the dollar where borrowers have failed to have correct deductions made or failed to pay any other due amount. I understand the Green Party’s objection to making that burden harder but I think it is also incumbent upon the Government to ensure that people are not abusing and misusing the scheme. The vast majority of students whom I know and to whom I talk have been deeply grateful for an interest-free student loan policy because they absolutely need this money to get through their studies. The amount of abuse is infinitesimal compared with the number of those who use the scheme for its correct purpose. 
We support the bill albeit recognising the Green Party’s objection in its minority report from the select committee. We are not objecting to incentivising people to pay back their loan. However I do not see how this legislation as it stands now will fit in with the Minister’s express desire to make it harder for students to access loans therefore making it harder for people to access tertiary education and therefore reducing the number of students in our tertiary institutions which will reduce the expense to the Government. I hope that the Minister of Revenue has already taken this up with the new Minister for Tertiary Education. Thank you. 
COLIN KING (National—Kaikoura) 
: 
 It is a pleasure to take part in the second reading of the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. I start off by pointing out that National did commit to keeping interest-free student loans in place. We recognise that the scheme is a very generous contribution by taxpayers to tertiary education students so we want to see that the whole process around the student loan scheme is tidy appropriate and fair. That is the very essence of this bill. It tidies up a number of areas enhancing the student loan scheme and giving people certainty and clarity. We need to do that because 500000 New Zealanders have student loans. Therefore the scheme has a significant impact on the Crown accounts as a debt to be managed. It is in the region of $10 billion. We want to ensure that those people who enter into a student loan get quality education and that the country in return receives the most benefit from those people’s higher education by way of completions success and the students realising their potential. 
One concern we have in Government on this side of the House is that under the previous administration there was a total lack of incentive to repay one’s student loan. In fact there was a general sloppiness in the behaviour of the tertiary education sector. That is why the Government in September introduced the 10 percent bonus repayment which means that if people pay over $500 of their loan above their minimum requirement we give them a benefit or a bonus on that. 
This bill has come through the House courtesy of the Minister of Revenue who has oversight of it. I encourage everyone in the House to go on to the website and download the annual report relating to the student loan scheme. It is quite staggering to read. The principle itself is a good balance. In the context of this bill and the student loan scheme there is an enormous amount of public good but done properly there is an even greater amount of individual good. That is what we want to see. 
I will get on to the bill and interest-free loans for residents of the realm countries. We do a lot to aid those countries within our region—and when talking about our region I am referring to the South Pacific effectively—be it Niue Tokelau or the Cook Islands. Those countries have rights under our laws and one of those rights is access to interest-free student loans. Up to this date when those students came to New Zealand that was the case but when they returned home it was not the case. This bill appropriately extends the provision so that students can continue to have interest-free loans when they return to their home Islands. That change is very good because it benefits not only the Islands but it also balances out students’ rights to the student loan scheme. Otherwise invariably those students would stay in New Zealand in order to keep that right. Those Islands have an enormous need to be supported and to grow economically and one hopes that those things are gained from the student loan scheme. The change will apply when the bill is brought into law. 
This bill deals with a very interesting aspect of overseas study. At present there is a gap in our education system. At times there is no ability for students to continue their studies overseas on an interest-free loans basis even though there may be a formal relationship between an institution in New Zealand and an overseas institution. This bill addresses that matter. Where there is a formal agreement between the New Zealand tertiary education provider and an overseas tertiary provider there will now be the opportunity to retain the status of an interest-free student loan. 
Up to this date as soon as a student left the country to study or work the calculator would start ticking away. I trust that we can manage this change. We will need to register what those institutions are and what courses are being taken. The education needs to be at that higher level and one that is not provided in New Zealand. That in itself is fair but we must remember that when the interest-free student loan scheme was implemented it came to the attention of the Minister of Revenue that some 40000 students overseas were claiming interest-free student loans but were not really deserving of them so that had to be tidied up. Exemptions are an important aspect of bill and we look to this amendment to tidy up matters respectfully around that issue because we want the full ambit of opportunities to be opened up to students whether they are doing a master’s degree PhD or whatever. 
The other aspect that I thought would be controversial with regard to the Green Party minority view is that the Inland Revenue Department will have the ability to increase the rate of repayment deduction from 10c to 15c in the dollar for borrowers who have failed to have the correct deductions made or to pay any other amount when it is overdue. It became clear under examination by the Education and Science Committee that that provision does not include the occasion when there is failure by the Inland Revenue Department to send out the appropriate notification of payments. It would be unfair to be ruthless and try to claw that money back in an insensitive way. However in many situations the department needs that flexibility. When we are talking about 10c to 15c in the dollar it is not just one or the other; it is a sliding scale. 
This is a small bill and although some speakers in the first reading debate said there was not a lot of substance to it it is an important aspect of the legislation going forward. The bill adds to critiques and improves the Student Loan Scheme Act 1992. It is a balanced bill and generally speaking on the select committee we worked collegially and the advice we received from officials was very appropriate. The bill in the form returned to the House is still in much the same vein as it was at its first reading. The committee made a couple of recommendations and it was good to see that the Minister has picked up on those. On that basis it is a pleasure to commend this bill to the House in the second reading. 
STUART NASH (Labour) 
: 
 My colleague Grant Robertson said to me a moment ago: “Get ready to jump up; it sounds like Colin’s winding down.” but he said that from about the first minute of Colin King’s speech. I wonder whether Colin King has any interest in education or whether he was given that speech and told to read it because we are 2 hours early due to the earlier stuff-up in the House. He should show a bit of passion about education. 
I think that education is the most important thing we can do for our children and our communities. That is why I stand now to speak in support of the second reading of the bill. It is hard to believe that the first reading was in August last year. Too many important bills affecting the people of New Zealand have been rushed through the House under urgency since then. Goodness me! We are only into the third week back this year and already we are rushing legislation through the House in what appears to be a slap-hazard way. I assume there must be some sort of plan or logic to the process— 
Chris Hipkins 
: That’s a bold assumption. 
STUART NASH 
: Yes I know. I certainly cannot follow it. I do not know whether Mr Hipkins can. Can anyone follow this? I do not think so. I do not think that the lack of process or progress is what the people of New Zealand voted for. There is a lot of stuff going on at the moment that I do not think the people of New Zealand voted for. 
This bill by and large is a technical bill. The previous speaker said it did not have much substance. Well it does have quite a bit of substance but it is a technical bill. It enshrines a couple of important philosophies that we as the Labour Party strongly value. That is one of the main reasons why I support this bill. The Labour Party has always seen the fostering of the economic development of our Pasifika brothers and sisters as one of its major responsibilities and goals. This bill also builds on Labour’s fantastic law of giving interest-free student loans to all students and what wonderful legislation that was. It was of course as we all know Labour legislation. 
Education has to be the cornerstone of economic development and in my humble opinion the interest-free student loans legislation was one of the greatest pieces of economic development legislation passed in a generation. It certainly passes the Nash test of: “Is it right for the people of New Zealand?”. 
Grant Robertson 
: I thought that was Harry Holland’s. 
STUART NASH 
: In talking of Harry Holland I had to smile last night in this Chamber when Mr Macindoe was putting words into the mouth of the great Harry Holland one of the Labour Party’s great early leaders. I mean no disrespect to the member from somewhere in Hamilton but those who know their political history will know that Mr Macindoe has a few more years of sweating blood for the people of New Zealand before he can even start to speak on behalf of the great Harry Holland. Sir Roger Douglas will know that will he not? Harry Holland was a great man but I digress. 
This bill makes some technical amendments but by and large it does three things. Firstly it allows those from the nations of Niue the Cook Islands and Tokelau and the Ross Dependency who have come to New Zealand to seek educational opportunities to return home in order to put their education and learning into practice. Secondly it provides an incentive to those currently resident in the aforementioned countries to come to New Zealand to be educated and then return home to families friends and jobs while achieving the same advantages as citizens domiciled already in New Zealand. Thirdly it provide opportunities to New Zealand citizens who may wish to travel to Niue the Cook Islands Tokelau or the Ross Dependency in order to pursue professional opportunities for any number of reasons. 
This bill also allows interest-free loans for students engaged in full-time study overseas under a formal exchange programme approved by the New Zealand Government or a formal agreement between a New Zealand education provider and an overseas tertiary education provider. In this day and age of globalisation that is a wonderful thing so I commend the Minister of Revenue for that. 
In my speech in the first reading debate I said I had a grave concern that the National Government would look to repeal the interest-free student loan provisions which would therefore necessitate my being back in this House within 2 years in order to repeal the amended legislation. Well why do we have it? I suppose Mrs Tolley was never going to do it. She had enough problems as it was and loading the repeal of the interest-free student loan scheme upon her already fragile shoulders would probably have just been too much. So Mr Joyce was given the task. Are we surprised? Absolutely not. 
I tell members that as soon as the Labour caucus heard that Mr Joyce was being appointed the Minister for Tertiary Education we knew that it spelt trouble for current and aspiring students. In fact it probably spells trouble for every person who has a student loan and is not paying interest at the moment. But at least Mr Joyce is honest. Well he is honest on this: he said that his supporting the student loan scheme when he was the campaign manager for the National Party was a political call. That is nice! There was no philosophy or idealism behind that; it was a political call. At least we know what he believes in—nothing. 
The irony about National’s planned removal of the interest-free student loans scheme is that the vast majority of members on that side of the House who went through the tertiary education system did so when it was free yet here they are taking away those opportunities for students who now want to study and better themselves. That is amazing actually. 
This bill as it stands is apparently aspirational. With regard to this bill the Minister of Revenue Mr Dunne said: “This is another positive step that will allow people to further their studies overseas in a way that will benefit New Zealand in the longer term.” and I totally agree with the Minister. That is one of the reasons as I said why I am supporting this bill. But with all due respect I ask this question: what about those who live here and want to stay and study in New Zealand? The National Government is about to steal the educational opportunities of thousands of New Zealanders and that is simply not fair. It represents incorrect priorities. Well let us see where the money has been stolen from. We are talking about just money stolen from education here not from elsewhere. There is the $11 million from the training incentive allowance that the Prime Minister Minister English and every other National MP Maori Party MP and ACT MP have stolen from those who can least afford to get into education. That is $11 million gone. I am talking about solo parents who make a proactive choice to engage in education whilst they are bringing up their children. They have suddenly had their opportunities taken away—gone. The Government has cut them out; it is unbelievable. Where are the priorities? That is dreadful. 
What else has been taken away? The guidelines for healthy food in schools have gone. The Government has slashed burnt cut and got rid of that. It has taken that away. Those members have taken away the funding for those who require it most. Where else has the money been taken from? It has been taken from high school night classes. It is unbelievable. Money has been taken from adult and community education. 
Where has the money gone? I can report that about $35 million has gone into private schools and I wonder whether that is fair. Thirty-five million dollars was stolen from the poor and given to the rich. 
Paul Quinn 
: What private school did you go to? 
STUART NASH 
: I tell Mr Quinn that I did not go to a private school. I believe in the State sector. I went to an incredibly good State school. 
This Government is Robin Hood in reverse. We have the modern-day Sheriff of Nottingham or the “Sheriff of Nothing”— 
Paul Quinn 
: Hey! I went to a private school and I’m proud of it. 
STUART NASH 
: And look what it did for that member. Goodness me! I would not mention the school’s name if I were Mr Quinn because it would be embarrassed to have him as an alumni; there is no doubt about that. 
What else is this Government doing? It is raising GST to 15 percent. That will help everyone will it not? I just cannot understand the logic. So $11 million has been taken from the training incentive allowance and $13 million has been taken from adult and community education classes yet $35 million has been given to private schools. Yeah that is about equality is it not? 
Amy Adams 
: At least they teach their kids to read. 
STUART NASH 
: Wow! That is an interesting assertion is it not? That member said that State schools do not teach their children to read but private schools do. That is a damning indictment on the teachers who teach in the State education sector. Imagine saying that; it is unbelievable. The reason that member would not send her children to a State school is that only the private sector teaches children to read—the State sector does not. I can inform the member that that is not true at all. The State sector has some of the best teachers in this country and it does an amazing job. I take that as a slight against every teacher who teaches in the State sector. It is unbelievable. 
National has never had a mandate or a belief system and that has just proven it. That is why those members can slash and burn and make those sorts of comments to such an extent without any conscience. I can tell this House that under the next Prime Minister the Hon Phil Goff Labour will bring principled spending back to education. We believe as we have always believed—it is what the Labour Party stands for—that the people of New Zealand demand and require the sound education system they had under Labour. The Government side of the House is taking away opportunities. This bill though provides opportunities and that is why I commend it to the House. Thank you. 
CATHERINE DELAHUNTY (Green) 
: 
 Tena koe Mr Assistant Speaker Roy. The Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill has some merit but the Green Party has looked at it closely and in context and on balance we remain opposed to some of its key provisions. We may be a lone voice in the House and easily dismissed as unreasonable because some good ideas are cemented by this legislation namely the extension of interest-free loans to borrowers from Niue the Cook Islands Tokelau and the Ross Dependency. The Green Party is delighted to see the principle of interest-free loans being expanded to these communities. We hope this indicates recognition by the Government that education can be made inaccessible by both geography and market principles and that the State can positively assist access to tertiary study. But under the new Minister for Tertiary Education we are not holding our breath and under the previous Minister we were not either. There may not be many students in the Ross Dependency at the moment but who knows? If we stick to the current pathetic climate targets the area may become warm enough in the lifetimes of our children for a whole university. 
The Green Party applauds also the modifications that have been made to the bill since the select committee process. They have resulted in the Inland Revenue Department accepting after a little bit of pressure that it made a mistake in not notifying some students about overdue loan repayments and therefore could not penalise them. There was a proposal to enforce a 15 percent repayment penalty on those students but fortunately—after some discussion at the Education and Science Committee which I was happy to persist with—the department withdrew support for that idea. This is a good example of the value of select committees in highlighting anomalous provisions that would create unintended consequences and unfairness and the change is well made. 
We remain concerned about this bill mainly because of the late payment penalties. As the New Zealand Union of Students’ Associations stated in its submission the increases proposed to the compulsory repayment deduction would be unmanageable and unacceptable. Student loan repayments kick in at the very low threshold of $19084 and now is one of the worst possible times to increase student repayment rates. Whatever the optimistic economists and politicians choose to say we are in recession. Many students are part of the low paid and underpaid. They are struggling to meet rent food and clothing costs let alone debt. This especially applies to women students and to former students who are yet to experience pay equity in many occupations let alone in the public sector. It is all so easy for  
Campbell Live 
 to focus on the minority of irresponsible young people who wasted their money on inappropriate goods and behaviours. However they are not necessarily the people who will be hurt by the increase in late repayment fees. Even they are merely reflecting back to us the lessons we have taught them: that they can have it all that they can borrow and spend and that they can live with debt because they are worth no real investment and they must bear the risks. 
The relationship with debt that the student loans scheme entrenches is one of the most insidious and destructive processes invented. In a world where shopping for the latest goods and experiences that global capitalism can provide is promoted to everyone on every screen we cannot blame the young for wanting it. Then we lend them money for their education. First there was the crippling interest on all those loans and all students and then there was interest on overseas students only. Now there are murmurings of more changes to the student loans scheme by the new Minister for Tertiary Education Steven Joyce. 
It is pretty clear that Mr Joyce was not given this portfolio just as something to do while eating his lunch in between building more unnecessary motorways and that the student loans scheme could always be made worse for students. This was also signalled in the Prime Minister’s statement to this House when he waxed lyrical and said he wanted “a careful look at … student support and allowances to ensure that taxpayers’ generosity is not being exploited”. What did he mean? He is really concerned about the public getting their money’s worth but students are also members of the public and they are not getting their money’s worth. Now Steven Joyce is rolling up his sleeves to see what can be done about it. The political risk of reintroducing interest on loans seems too high right now but as Steven Joyce said last weekend “we’re going to look at other requirements around those student loans”. What does Mr Key mean by taxpayer generosity? Does he mean that all of us older politicians who had no student loans are being awfully kind by indebting the next generation and that we will demand more blood? What does Mr Joyce mean? Could he be referring to eligibility to enter study or to remain there? Will that be tightened? None of this is good news for students. 
In the meantime this bill causes concern for the Green Party mainly because of new section 20A(2)(a) which allows for an increase in the standard deduction rate of 10c in the dollar to a maximum rate of 15c in each dollar. Clause 20 which relates to section 55 talks about hardship relief. Considering that many many students are in hardship they might need to think about this provision because it could apply to a lot of people the Government is about to impose extra penalties on. If the Commissioner of Inland Revenue considers that a repayment obligation would cause serious hardship he or she can offer hardship relief. But as serious hardship is not defined and would have to be proven very many people are unlikely to be able gain this form of protection from clause 20. 
We are very concerned about adding debt to people who are already failing to repay. It does not incentivise; it punishes. This is a bit like environmental pollution whereby the burden of proof is always on the citizen and not on the polluter. The burden is on students to prove they are in hardship. Students have no choice but to have a debt if they want to study and if they are not wealthy they cannot always earn their way out of it. At the select committee there was much talk about how students could earn their way out of debt. So many people I know who have left university are not earning their way out of it because they are barely managing to live let alone get a mortgage and their student loan is still a huge burden on them. They are not progressing financially in the way that my generation just took for granted. It is purely unfair. It is a real indication of the value we put on our student body and the value we put on our society as a whole. The poor cannot earn their way out of debt when they start off with debt as young people. That is something I did not experience. 
We oppose the additional burden and the burden of proof being on students to prove that they are in hardship. We are opposed to the provisions of the bill to such an extent that we have to vote against the bill. Although we thought there was good discussion at the select committee about all the different aspects of the extension of interest-free loans and we support that extension we are deeply in opposition to clause 20 which adds to the hardship. It is just not fair to use the student loan scheme as a way of keeping people in poverty. To say that it is a debt on the country is true but we have to take responsibility for the debt that was created. We created that debt when we created the student loan scheme. Many people out there today know what I am talking about because they have not earned enough. Women migrants and refugees tangata whenua Pasifika and people with disabilities have absolutely no chance of the high-wage economy that the student loan scheme assumes is behind people’s ability to repay loans. So the Green Party will continue to be consistent and principled in our attitude towards the student loan scheme and towards added burdens on young people in their education and in future life and we will not support this bill. Kia ora. 
LOUISE UPSTON (National—Taupo) 
: 
 I am very pleased to stand and speak in support of the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. That is the bill we are talking about. It is actually in the name of the Minister of Revenue Peter Dunne but unfortunately some of the Opposition members keep mentioning other Ministers in the House so it would be very helpful if they could remember that. This bill is in the name of the Minister of Revenue and it is a technical bill that makes some changes. I am very pleased that I am able to remind members on the opposite side of the House of that and to correct the error of their ways. 
I want to agree with other speakers today on one thing: I want to agree with an earlier speaker from the Labour benches who said that education is the cornerstone of economic growth. Clearly a National Government totally agrees with that: education is a massive platform for us in terms of growing our economy and we are extremely committed to having in place a student loan scheme that is balanced. But the important thing is also to put the right incentives in place to support and enable people to pay off their student loans faster than at present. 
I just want to put a bit of context around this bill in this second reading. We have heard from the Minister of Revenue that more than half a million New Zealanders have a student loan. Half a million—that is a huge number. On the one side it is fantastic that there has been that amount of uptake; obviously the number of people in tertiary education is high in this country and we need it to be. But one of the difficulties when as many New Zealanders as that have a student loan is that the scheme has a significant impact on our economy. I remind members on the other side of the House that hard-working New Zealanders who pay tax fund the student loan scheme. There are not just poor students with student loans; poor hard-working New Zealanders pay tax from their income to support the student loan scheme. That is another important context that I want to put across. For some people the Government’s money grows on trees and everyone gets to write fat cheques with it. No it is hard-working New Zealanders who fund the student loan scheme. 
When National came into Government it was concerned that under Labour there had been no incentives whatsoever for people to repay their loans earlier than they had to. That meant that loan holders were likely to be in debt for longer than was necessary which we know is not good for anyone. That has implications and flow-on effects for other areas of former students’ lives: delaying choices about whether to have a family when to have a family and whether to buy a house. National has fulfilled its election commitment to keep interest-free student loans for tertiary students. Part of that was also a commitment to build in a strong incentive for students to pay off their debts faster. That is great behaviour for us to reward because we believe that education is the cornerstone of economic growth. 
In effect there are three areas in this bill that I want to touch on. The first area relates to interest-free loans for the realm countries. This is particularly important to me as there is a large Pacific Island population in the electorate of Taupo so I am very keen to support the development of education for those people as well. The second area relates to the overseas study provisions and I want to talk about a case that I have had in my Cambridge office of a constituent who wanted to study overseas. The third area is the minor and technical amendments which for some reason members on the other side of the House seem to think are unimportant or boring but there are very important technical changes included in this bill. 
Let us look at the first area the interest-free loans for residents of realm countries. Many of the speakers today have talked about the importance of our support for Pacific countries. This means that borrowers in realm countries will be exempt from the requirement to be present in New Zealand in order to qualify for an interest-free loan. That is fair; it makes a lot of sense. It recognises the special relationship that we have with the realm countries. If we go back a step and look at the situation when interest-free loans were introduced in 2006 we see the scheme encouraged borrowers to remain in or come back to New Zealand. That was part of its intention. Niue the Cook Islands and Tokelau have a special relationship with New Zealand that gives their citizens the automatic right to reside and work here. So we wanted to extend the interest-free loans to borrowers who reside in these countries in order to recognise that special relationship. That is the first area of the bill—interest-free loans for residents in realm countries. 
The second area relates to overseas study and there was some very interesting discussion in the Education and Science Committee around this particular measure in the bill. One of the issues is that when people want to study overseas the situation generally is not that they want to study overseas but that they want to extend their existing study and sometimes the course that they are interested in is not available in New Zealand because of its speciality or because they want to pursue a very technical field. I have had a case of that very kind in my electorate. A constituent came to see me because her daughter wanted to study in a very specialised field and the course was not available in New Zealand. We do not want to be in the position where we restrict students’ choice by limiting their study options so this bill introduces an extension of the interest-free loan entitlement to students who are studying overseas full-time where the New Zealand Government has a formal exchange programme in place with the education provider. It means that students who want to pursue further studies in very specialised fields have that option available to them. In a case in my electorate of Taupo that was a very relevant consideration and this particular clause will be helpful for that student. 
The third aspect of the bill is the minor technical amendments. Members on the other side of the House may say that this is the not very exciting bit. Well I totally disagree with that. I think that the minor technical amendments are a critical part of this bill. Several matters are dealt with in this area of the bill. The Green member Catherine Delahunty spoke about hardship and it is fair to say that many New Zealanders are experiencing hardship at the moment. This particular measure looks at students who are repaying their loans and makes some minor changes. Currently the availability of relief is limited to the year that immediately precedes the current tax year. We as a Government want to make sure that students know about their obligations in terms of their debt. We have provided incentives for them to repay debts earlier. With regard to these changes there will be some students who unfortunately fail to have the correct deductions made or who need to pay amounts that are due so a change has been made in the deduction rate. There are also changes in some other areas relating to the early repayment of a loan and the grace period. 
This is important legislation and I am proud to support it in its second reading. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 I thank Louise Upston the previous speaker from National for her reminders on various matters during her speech. Members on this side of the House however were a bit disappointed that Maurice Williamson did not take that call because earlier in the debate we heard the great quote—probably the quote of the year actually—from Mr Williamson: “Slash and burn never hurt anyone.” 
Chris Hipkins 
: A bit of slash and burn. 
GRANT ROBERTSON 
: “A bit of slash and burn never hurt anyone.” If only Mr Williamson had taken a call then we could have heard a little bit more about what he meant when he said that a little bit of slash and burn never hurt anyone because that is really National’s agenda when it comes to tertiary education. I have respect for Mr Williamson; he says what he thinks. He says what the National Government really thinks—that a little bit of slash and burn never hurt anyone. Well we have certainly seen a little bit of slash and burn in the tertiary education sector and I think we will see a little more to come. 
The Labour Party supports this Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill because it is largely a technical bill although I admit as the previous speaker said that there are some important elements in the bill in terms of the exemptions particularly relating to the idea of people who are studying overseas on exchanges or scholarships. I think this is a good thing. It will allow people to continue their education in a way that New Zealand will benefit from. We will come back in the Committee stage to some of the technical amendments particularly the one relating to the changes to penalties. I understand the Green Party’s position on it and I would like to raise a few questions with the Minister of Revenue about how information will be communicated to borrowers so that they know about the increased penalty rates. That has been one of the major issues for people when they have been going overseas—not always understanding what requirements they have as borrowers. I think it will be very important if we are to take a more punitive stance that our borrowers know what they will be doing. 
Also with regard to the hardship grounds I think that potentially quite a good thing is being done there but we need to understand fully how that will work as well. Another one of the technical amendments is very technical. It is shifting the setting of the interest rate from regulations to the Student Loan Scheme Act. This seems like a minor amendment but there are some questions to be raised about that particularly in light of what happened this year with the setting of the interest rate. We just want to make sure that we are clear on how that will work. These technical matters tidy up some elements of the Act and the working of the scheme and we are pleased to support that. 
But it is difficult for us to stand here and be completely comfortable when it comes to talking about student loans and this Government because what we have heard in recent weeks with the appointment of Steven Joyce as the Minister for Tertiary Education is an absolute acknowledgment that National has never had a commitment to the interest-free student loan scheme. Steven Joyce said in the  
Press  
last Saturday that it was a “political call” to take on the interest-free student loan scheme. Those of us who were around when Labour brought in the interest-free student loan scheme are not surprised to hear that because at the time it was introduced John Key who was then I think the finance spokesperson for the National Party said that he would oppose interest-free student loans with every bone in his body. He said that with every bone in his body he would oppose them. 
Chris Hipkins 
: Can’t have many. 
GRANT ROBERTSON 
: Well there cannot be many bones at all— 
Hon Member 
: Spineless! 
GRANT ROBERTSON 
: —spineless some might say but not many bones at all. He told this very House that he would oppose interest-free student loans with every bone in his body but a political call came along and National adopted it. 
But we know that there is no commitment to the scheme because both Mr Key and Mr Joyce in recent weeks have said that things need to be looked at with regard to the student loan scheme and that there need to be changes. In the Prime Minister’s statement to Parliament Mr Key made it clear that he wanted to tighten up the rules for access to student loans. He talked in particular about people who may not be passing their courses and there was another very worrying phrase about people who were not moving into work quickly enough. We on this side of the House want to know what that means because it sounds like a huge restriction on the ability of people to undertake multiple courses or to perhaps change tack part-way through a course. Not everybody arrives at tertiary study instantly ready and knowing what they want to do for the rest of their lives. We need to invest in education and allow people to develop their skills and any tightening of the student loan scheme any limiting of people’s access to students loans—which is what the Prime Minister was talking about in his statement to Parliament—will be detrimental to New Zealand’s future. The Government really needs to explain where it is heading with student loans. 
Steven Joyce is a man whom I respect. He clearly has a good and quick understanding of how politics works and he has come into Parliament as a senior Minister but he has said some things that I think belie the fact that he understands the student loan scheme properly. He said in the  
Press  
last weekend: “The simple point is if you don’t pay interest on any loan—forget student loans for a second—then there is less incentive to pay it back than if you do pay interest.” The thing that Mr Joyce leaves out is that student loans are automatically deducted from one’s salary once one earns more than $19000 a year at 10 percent. That is the incentive. The law gives the incentive. What appears to be happening is that Steven Joyce in taking on this role is looking to wind back elements of the interest-free student loan scheme before I predict in the future National attempts to wind back the whole scheme. We have heard phrases coming out of the National Government about the generosity of taxpayers. That phrase was used by John Key in his speech to Parliament. Louise Upston used it before. This is the beginning of the Government trying to say that students do not deserve interest-free student loans. 
We know and it is actually implicit in this bill that the purpose of interest-free student loans in large part is to encourage people to stay in New Zealand. That is completely understood by this bill because we are extending the loans to people from other territories from Niue the Cook Islands and Tokelau and to anyone in the Ross Dependency as well. We are acknowledging that interest-free student loans are good in terms of the policy objective of keeping people in New Zealand and encouraging them to stay and contribute to our economy. National rejected that as a reason for interest-free student loans when they were first brought in but this bill recognises that that is an important part of developing our economy and making sure that people stay here and contribute to our economy. That will be undermined if the National Government goes ahead with starting to restrict access to student loans and winding back the interest-free policy which those members have never been committed to. Supporting it was a political call. It was a policy they would oppose with every bone in their body but they were forced into supporting it for electoral reasons. They look to slowly but surely undermine that policy and we on this side of the House will not stand for that. 
We have had some comments from members on the other side of the House about the importance of education and about National’s understanding of the importance of investing in tertiary education. But if we look at National’s record on tertiary education we see that there is no sign of that. Mr Nash has already spoken about the removal of the training incentive allowance. The last Budget took $60 million out of our polytechs at the very time that they were necessary and important in terms of giving people skills during the recession. If we look across the Tasman something that I know that National is very fond of doing we will see that Australia in response to the recession invested in skills and technology; it made sure that people had free access to the equivalent of polytechnics if they lost their jobs. That was a bold move to ensure that people kept up their skills in a recession and were able to contribute to the economy when the recession lessened. 
What we have from National is no investment in the tertiary sector. Where is the plan to say that because tertiary institutions are bursting at the seams which they are we will lift the cap because circumstances dictate that we want people to be training so that they can contribute to the economy? We have seen nothing of that; we have simply seen a consistent undermining of the tertiary sector the taking away of community roles on polytechnic councils and a lack of investment in the future of New Zealand. Although we support this bill because it includes some important technical changes we are very wary of the direction of the National Government on student loans and very wary that it will undermine interest-free student loans a policy that is important to our economy and important to our future. 
JO GOODHEW (National—Rangitata) 
: 
 I rise to speak on the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill and I note that this opportunity has been used for political statements so I intend to make a couple of my own. 
The first thing I want to say having been on the Education and Science Committee that examined this bill is that I am left with no illusions: the student loan scheme is extremely important to New Zealand and it is important that it is working appropriately and managed in an efficient and consistent manner. That is what this bill is all about. It is not about revisiting whether we should have student loans. It is not about trying to scare the horses which we have been listening to members from Opposition benches doing. This bill is about making sure that the student loan scheme works in an efficient and consistent manner. 
At the same time I take this opportunity to say that we need to send the right messages to our students. We need them to understand that the student loan scheme is important to them but also to New Zealand and that its value of $10.3 billion represents a significant asset to the Crown. We need them to be under no illusion that we see them also—the students of New Zealand—as a very very valuable asset and that is why they have the opportunity to take student loans. I am right in the midst of this at the moment with three daughters at university the last of whom headed off to university just a couple of days ago. One delivers one’s children to university and hopes like hang that they use that opportunity and understand the responsibility that they have to make wise decisions for their future. 
Of course the students who are going to university will be making decisions about whether they take out a student loan and whether they have a holiday job and about their future and what courses they will take. Some of them will make the wrong decisions and will revisit those decisions. But they will have in place a student loan scheme that National is committed to having in place and a student loan scheme that is balanced but at the same time puts in place incentives for those young people to pay their loan more quickly. 
One in four New Zealand graduates heads off overseas and that is really regrettable because we want those young people to stay here in this country. It is not just the correct settings on the student loan scheme that will enable that; we have to put a whole lot of settings in place. I note that yesterday there was an announcement by the Government to extend voluntary bonding to my own district health board of South Canterbury. I understand that that is yet another way that we can keep students and medical graduates in New Zealand by putting in place the right incentives. That is exactly what this National Government is doing—looking at all incentives to keep those valuable young people here. Who wants to think of their children being in another country—having a good job perhaps—and having to go and visit them and their grandchildren? This is something that is certainly coming home to roost to me. I really hope that our daughters will find good jobs in New Zealand. 
More than half a million New Zealanders have a student loan. Many have made long-term financial decisions on the basis of the current interest-free student loan policy and we want to assure them that they can plan with certainty. National however was concerned that under Labour there was no incentive for students to repay their loans earlier. That seemed pretty crazy to us. That meant that loanholders were likely to have their debt for longer of course which has implications for other areas of their lives—as well as implications for the Crown—such as when they are buying a house or starting a family. 
National has fulfilled its commitment to keep interest-free student loans for tertiary students. Back in September 2009 we passed legislation that provided for a 10 percent bonus for both New Zealand borrowers and overseas-based borrowers who make voluntary repayments on their student loans of $500 or more in a tax year which gives those students the opportunity to reap the rewards of saving and paying off their student loans earlier. 
This bill introduces mainly technical changes—and I will probably go into more detail about those changes in the Committee stage or third reading. It extends the grace period removes the hardship criteria and allows students who return to New Zealand 6 months of interest-free loan to fulfil our commitment to a balanced scheme that takes into account these more difficult economic times. I make no apology for making my share of political statements in my speech this morning. However we really need to get back to the reason for this bill. It is about managing the student loan Crown asset which is what it is in an efficient and consistent manner and I commend the bill to the House. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 It is a slightly strange feeling for me to be standing to speak in favour of a Government bill; it is something we do not get to do very often on this side of the House. It is nice to be able to support one of the initiatives that the Government has in place. The interest-free student loan scheme is one that I am particularly proud of and one that the previous Labour Government is particularly proud of. It is good to see that National has come round to supporting the interest-free student loan scheme albeit probably temporarily. We hope that it continues to support the scheme. We also think that there is actually a compelling case for passing this Student Loan Scheme (Exemptions and Miscellaneous Provisions ) Amendment Bill in a bit of a hurry because of the looming deadlines involved in this legislation unlike some of the other bills that have gone through the House under this current somewhat shambolic urgency session. 
I am pleased that the Minister of Revenue managed to get to the Chamber in time to make his second reading speech— 
Hon Member 
: Just. 
CHRIS HIPKINS 
: —only just—because we nearly missed the opportunity to debate it altogether. I am pleased that he made it here. He probably was not expecting the Government to completely mess up the procedural motions on the previous bill and he would have thought he had a little bit more time to get down here but he had to rush down to the Chamber instead. On behalf of the House I thank him for getting here in time so that we can debate this bill today as part of this urgency motion. 
I mentioned before that I was pleased that the Government seemed to have come around to the idea of interest-free student loans. In fact it seems to have come round to the idea of interest-free loans in general. Interest-free loans for Ministers who use ministerial credit cards appear to be the order of the day at the moment. I understand that the Government is a man down on the other side of the House today. The only real question is whether that member will pay interest on the money he is paying back. As the Government wants to make students who leave the country pay interest on their student loans I ask whether Phil Heatley will have to pay interest on the credit card money that he is paying back. 
I find it ironic that we are here talking about the interest-free student loan scheme at a time when the Government has already announced that it will be relooking at all of the issues relating to student support. The question that is on the minds of all students at the moment is what that means. Does that mean interest-free student loans are for the chop? Does it mean that their allowances are for the chop? Does it mean that the fees will go up? The students do not know because the statements coming from John Key and Steven Joyce are sufficiently vague that students have no idea what is looming round the corner. I am concerned that the Government is starting to soften up the ground in order to do away with interest-free student loans. I am pretty confident that it will not do it in this term of Parliament but I do not have any confidence that it would not do so in the next term of Parliament. 
When we look at the comments John Key made when the interest-free student loan scheme was introduced in the first place it is pretty clear to us that he was fundamentally opposed to the idea. What did he say? He said: “What a cost … What an unaffordable and irresponsible cost to the country!”. That was what John Key said when the policy was first announced. He called it “rushed and reckless”. He said: “Our caucus would never have signed off a zero percent interest rate because the economics are just so bad. It has never for us because we have standards.” 
Well I am not sure that the Government really wants to be talking about standards in education at the moment—not today. I am not sure that Government members will want to talk about standards in many areas today although at least we are having question time today at 2 o’clock—hopefully. I think the Government can expect a few more questions on standards in education during question time today. 
As my colleague Grant Robertson said John Key said that he would fight the interest-free student loan scheme with every bone in his body. 
Grant Robertson 
: We’re still looking for the bones. 
CHRIS HIPKINS 
: We are still looking for the bones because in this Parliament we have a bill that actually extends some of the provisions of the interest-free student loan scheme. They are sensible provisions. They are provisions that the Labour Party has supported and will continue to support such as extending interest-free student loans to borrowers in Niue the Cook Islands Tokelau and the Ross Dependency. The bill also extends interest-free student loans to students who are enrolled with a New Zealand education provider and are engaged in full-time study overseas under either a formal exchange programme approved by the Government or a formal agreement between a New Zealand tertiary provider and an overseas tertiary provider. 
I will flag one issue for the Minister for Revenue and he might like some advance warning that I will raise it during the Committee stage. I understand that although the interest-free student loan scheme will be extended to those studying overseas at the moment it covers diplomats living overseas on a posting but not their partners. Diplomats’ partners who move overseas on a posting are not eligible for an interest-free student loan but the diplomats are. It is possibly an anomaly in the scheme that the Government may want to think about correcting because ultimately the partner is on a posting as part of a Government contingent as well and I am not sure that there should be a distinction whereby diplomats’ partners do not get an interest-free loan when the diplomats do. I have not had time to check that out thoroughly but I am pretty confident that it is currently the case and I think it is something that the Government might like to look at. It seems to me to be quite consistent with the goals of this bill for that matter to be addressed during the Committee stage. We want to make sure that all New Zealanders who meet the criteria for interest-free student loans are able to get them and are not disqualified based on a technicality. 
I come back to the Prime Minister’s statement earlier in the year. John Key said he would “take a careful look at the policy settings around student support”. As I said everybody wants to know what that means and where that leaves the interest-free student loans policy. A lot of students will have heard the things that the National Government has said about interest-free student loans in the past and they will want to know whether they mean that interest is on the way back or whether other changes to the tertiary education system that will leave them worse off are likely. National’s track record on tertiary education is not actually all that flash and its track record on keeping its promises on tertiary education is not all that flash. 
I was not a tertiary education student in the 1990s but I can remember back that far. I remember when Lockwood Smith travelled the length and breadth of the country signing pledges that he would resign if student fees were not abolished altogether. Over the next 9 years that National was in Government student tuition fees increased massively and National introduced the student loan scheme as the way to pay for them. So not only did National weasel out of the promise it made to students but also it then found another way to impose more and more costs on students. That was how the student loan scheme came about. The whole student loan scheme is the result of a broken National Party election promise. 
When people hear National members saying they will not change the interest-free student loan scheme I do not think they will have much confidence in that when they also hear John Key saying things like the Government will take a careful look at the policy settings around student support all of which points to the fact that National is looking at the issue. Last year when Bill English and Anne Tolley were challenged by the Opposition over whether they had asked Treasury to look at the cost of abolishing the interest-free student loan scheme or at the potential revenue they would gain from abolishing the scheme they did not deny that they had done so. To this day National has not denied that it asked Treasury to put together the costings and the projections involved in removing the interest-free student loan scheme. That is something that students up and down the country will be worried about. 
The interest-free student loan scheme as I said at the beginning is a policy that we on this side of the House are very proud of. It allows students to repay their loans much much faster they would have done under the previous regime when interest continued to mount to the point where some students were struggling to even make the interest payments let alone to pay back the principal. Of course under the National Government that existed prior to 1999 students were charged interest even while they were studying. Although they had no ability to earn any income to pay back the loan they were still being charged interest and their loan at the time of graduation was significantly more than they had been required to borrow to pay for their fees or their living costs. There was cumulative interest over the 3 years or 5 years in some cases that they had been studying. Labour thought that was unfair and it was one of the first things the previous Labour Government did away with. 
We are pleased that this National Government has so far kept the interest-free student loans policy. We are worried that National appears to want to take that away and that all the things it is doing are preparing the ground for the reintroduction of interest on student loans and for the imposition of further cost on tertiary students which can act only as a barrier to our lifting the wage rates the productivity and the economic standing of New Zealand. An educated workforce is the way that we increase those things and interest-free student loans are an important part of the policy mechanism by which we encourage people into tertiary study. 
AMY ADAMS (National—Selwyn) 
: 
 I do not intend to take up much of the House’s time on this bill. I want to make a contribution about a point that my colleague Louise Upston touched on which is something I have not heard discussed so far in this debate. I come back to the fact that this bill is a revenue bill; it is in the name of the Minister of Revenue Peter Dunne. I just want to make a contribution wearing my Finance and Expenditure Committee hat I guess even though that committee did not consider this bill. 
One of the issues that the Finance and Expenditure Committee has been very much engaged in is the management of tax debt and I think that in looking at student loans we cannot overlook the fact that they are a $10 billion chunk of the Government’s books. They are a serious and significant part of the Government’s accounts and steps such as those in this bill will help manage that tax debt. We know that that debt is spiralling out of all control and Opposition members agree with us on that. We have to get a handle on tax debt. 
The part of this bill that introduces the ability of the Inland Revenue Department to put up compulsory payments from 10 percent to 15 percent when borrowers have been in default in terms of having the correct deductions made is an important part. It is important for managing our tax debt. The other thing it is important for is legislating consequences for borrowers who fail to live up to their obligations and that is something I fundamentally agree with. If borrowers do not ensure that correct deductions are made there should be a legislative consequence for that action. If that means moving to 15 percent until the indebtedness is cleared and if that encourages borrowers to be more compliant to be more aware and to take more responsibility for their obligations then that can be only a good thing. I commend the bill to the House. Thank you. 
CARMEL SEPULONI (Labour) 
: 
 I am very happy to stand and take a call on the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. I may be one of the few young members of Parliament who currently still have a student loan and are still paying it off. I am nearly there. It has taken me 9 years but I am nearly there. So I do have a heart for our students out there who are taking out student loans with the best intentions: trying to get ahead in this world and trying to do good things for themselves and their families. 
The Labour members are supporting this bill. I will talk first about aspects of the bill that we support. One of those is the fact that the bill extends interest-free student loans to borrowers who are resident in Niue the Cook Islands Tokelau or the Ross Dependency. I think that is a good idea. One of the things that we came across on the Foreign Affairs Defence and Trade Committee trip to Niue last year was the fact that Niue is suffering from depopulation. If we can encourage Niueans to go back and work and contribute to their economy there—and it is the same with the Cook Islands and other countries—then that is a good thing that New Zealand can do. Those countries talk about the fact that their Pacific people are contributing here in New Zealand so I think it is important that we allow them the opportunity to go back and contribute to their countries especially given that we have something like 22000 Niueans in this country and there are only 1000 in their homeland. 
Some of the concerns that have been raised in respect of this bill are about the National Government’s future plans for students loans. This kind of bill makes alarm bells go off in our heads. We are concerned about some of the comments that have been made on student loans recently by both the Prime Minister and the new Minister for Tertiary Education Steven Joyce. The fact is that the Prime Minister has recently said the Government will take a careful look at the policy settings around student support. The concern is that—and we do not trust the Government to take this scheme seriously—National members have talked many times about the number of students who are rorting the system apparently. Apparently we have heard from Government members and from the media students are doing things like taking out student loans then saving the money because it is interest-free. That is very much a small small minority of the students who access student loans. The vast majority are people who need the student loan scheme in order to have the opportunity to take up tertiary study in the same way that those who have money do. 
So it is concerning to hear the National members talk about student loans and changing the policy around them because we do not know how far down the track National will go. Of the something like 13 years that I spent living in Auckland I spent 11 years working at the University of Auckland or studying there. I have worked with a large number of students—Maori Pacific single parents—who rely on the fact that they can access student loans. If there are to be any changes down the track that jeopardise the accessibility of student loans then this country will be in huge trouble. 
Mr Key referred to the fact that some students do not take their study seriously or do not get a job quickly after qualifying. One thing that we need to recognise is that research shows that unfortunately Maori and Pacific students often take longer than other students to complete their degrees. The reason for that is not anything to do with their having lesser intelligence or anything like that; unfortunately what we see is that many of the Maori and Pacific students are still the first person from their family to go on to high-level tertiary education. The culture of the environment at universities is very foreign compared with what they have ever experienced in their lives. When they go into that environment many of them struggle to come to terms with being in it. It is completely strange and foreign compared with what they have ever experienced before. So if the Government does go down the track of putting limitations on student loans it will be those Maori and Pacific students and also—I will talk more about this shortly—solo parents who will suffer more than anyone else because of that. 
One of my colleagues has already talked about the fact that the training incentive allowance was cut. We have been receiving emails since that was announced in the May Budget from women who do not know how they will be able to cope with tertiary-level study with degree-level study if they do not have that tertiary incentive allowance. If we put limitations on student loans that will only further serve to marginalise that group. Those are aspects that we are concerned about. It is important that we alert members on the Government side of the House to those concerns so that when they are looking at the policy and when they are looking at further legislation they will take those considerations seriously. 
The Greens brought up their concern about increasing the amount that students who are in arrears will have taken from their earnings under this legislation. The increase will be from 10c in the dollar to 15c in the dollar. The Greens have raised a valid concern. But as my colleague the Hon Maryan Street referred to before we have to make sure that people are using the correct tax codes and are not trying to rort the system in any way. Again the thing that we need to be cautious about and that the Government needs to watch very carefully is that it is not certain groups that are affected by the introduction of this clause. We know that Maori Pacific people and women will earn less once they get out into the workforce after completing their tertiary studies. If they are solo parents with children to raise then increasing the amount from 10c in the dollar to 15c in the dollar may affect their ability to look after their families. Those are some of the things that the Government will need to watch very carefully. We do not want to push through legislation that may marginalise particular groups. That was one of the Green Party’s valid concerns. 
As I said before the direction that the Government seems to be taking with regard to student loans is concerning. As my colleague Chris Hipkins pointed out earlier the National Government does not have a good track record with regard to tertiary education—it does not have a good track record on tertiary education. Fundamentally underneath all the rhetoric National did not and it does not support access to student loans. As I yelled out before to one of the National Party MPs the chances are that the daughter she spoke of did not have to access a student loan. The chances are that anyone who is working here can afford to pay the fees for his or her child. Not everyone has access to that kind of support so we need to make sure as a country that we support those who do not have access to that type of money to go on to tertiary-level education. That is one of the things that we do not trust this Government to do. We do not trust this Government to make sure that every New Zealander has an equal opportunity to access tertiary education. That issue has come up in the past. National voted against policies that the Labour Government put forward in its 9 years. Those policies and legislation were conducive to ensuring that all New Zealanders have access to tertiary education. As we head into the future we are aware of the fact that if given the opportunity the National Government would make changes that would be detrimental to some of the more marginalised groups in New Zealand. 
I also say the Government needs to take aspects of the student loan scheme seriously. I saw many students come into my office over the years while I was working at the university who had been put back or affected negatively by some of the operational matters of student loans: some of the timeliness issues and things like that. When students have to wait for 6 weeks to receive money in the first semester of the year they are severely put back in terms of their ability to go to classes—sometimes they are actually shut out—and their ability to obtain their course outlines and everything else. That can have a detrimental effect on their success in that first semester or even in that first year. So there are other matters related to the student loan scheme that this Government needs to take very seriously and look at in order to make sure that the scheme works successfully and efficiently for students who need to access student loans. 
We have pointed out that at the end of the day if further changes are made to the student loan scheme and accessibility to it is affected by the Government’s ideology on whether student loans should be interest-free or on how accessible they should be it will be Maori Pacific and I think women students as well who will be most affected by any possible changes that the Government may go down the track of making. We are concerned about that. We have discussed it very broadly amongst our caucus. We are keeping our eye very closely on the situation to ensure that the groups that I have discussed are not affected negatively by the Government’s future policy on tertiary education and the student loan scheme. 
DAVID GARRETT (ACT) 
: 
 The Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill is a good bill but not a great bill and ACT supports it. 
A party vote was called for on the question  
That the amendments recommended by the Education and Science Committee by majority be agreed to. 
Ayes 113 
New Zealand National 58; New Zealand Labour 43; ACT New Zealand 5; Maori Party 5; Progressive 1; United Future 1. 
Noes 9 
Green Party 9. 
Question agreed to. 
A party vote was called for on the question  
That the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill be now read a second time. 
Ayes 113 
New Zealand National 58; New Zealand Labour 43; ACT New Zealand 5; Maori Party 5; Progressive 1; United Future 1. 
Noes 9 
Green Party 9. 
Bill read a second time. 
In Committee 
Part 1  Amendments to principal Act 
Hon MARYAN STREET (Labour) 
: 
 I rise to speak now to the Committee stage of the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill which is where we get down to some of the nuts and bolts around this legislation. But I have to say to begin with that it is very timely the legislation has reappeared on the Order Paper now because between the time this bill was first introduced and referred to the Education and Science Committee and the time when it has come back for its second reading a number of signals have come from the Government about tertiary students and in particular about the loan scheme. Here we have legislation that Labour will support but about which we are unsure there is a long-term prognosis. 
Most recently we have had the Prime Minister’s statement at the beginning of this session of Parliament in 2010 when he referred to the fact that the Government would “take a careful look at the policy settings around student support”. That led me and other Labour members to ask what on earth that meant. What does that mean? Will the Government make student allowances and loans harder to access? In the drive to cut costs is the Government seeing the cost of student loans and student allowances as simply an impost on the Government coffers without recognising the extent of the investment they represent in tertiary education? 
A Government of a different hue particularly if the hue were red might have seen fit in fact to invest more in tertiary education not less in order for New Zealand to escalate out of a recession and in order for us to equip ourselves as a country with the kind of economic growth and development we aspire to and with the kinds of wages and incomes we aspire to. But the only signals we have received from the Government are signals that contradict Part 1 of this bill and those signals are about making things harder for students. 
This bill—and most of the relevant provisions are in Part 1—in fact extends the scope of student loans to others who live in what has been quaintly called for a long time “the realm of New Zealand”. At least it now appears quaint but it is those countries such as Niue Tokelau and the Cook Islands which are constitutionally and in every other way dependent upon New Zealand and which will now be embraced and brought into the scope of the student loans provision that currently exists. 
So here we have a bill that extends the scope of student loans at a time when the Government is saying that it will cut back or look at cutting back on opportunities for people to access tertiary education. Let me just underscore that point for a moment by referring to a statement made recently an article in the paper that appeared recently about the Universal College of Learning the polytechnic centred in Palmerston North with satellite campuses in Wanganui and Masterton. Its chief executive Paul McElroy has been saying he will have to cut back on student admissions in order to meet the Government’s requirements—to cut back on student admissions and entry to the Universal College of Learning. 
That is a tragedy. Just at the moment when we are looking for people to upskill and reskill this Government is putting in place pressures and parameters that will make our tertiary institutions turn students away. The student cap is not something set in stone; it is something negotiated. This Government should lift that cap in order to ensure that we have the kind of skilled workforce that will take us into the future. People in tertiary education whether in a trade or an apprenticeship or at a polytech wananga or university will be the people who will provide the economic development of New Zealand and the future sustainability of that economic development. But that is being shut down by this Government at exactly the time when we are looking at legislation to extend access to tertiary education. 
We in Labour believe in extending that access. We also believe that students should pay back their loans. Loans are not called loans for nothing; they need to be paid back. Therefore there should be some incentives and this bill also provides additional incentives to encourage people not to default on their loans but to do their best to repay them. As a rejoinder a complementary clause in that respect the bill also extends the hardship provisions. This bill extends the hardship provisions so that in the case of students legitimately not being able to repay their loans at the rate that has been determined there is scope for the hardship provisions to be enacted beyond the immediate tax year. That is important. 
So we do not think that the bill is unbalanced in that respect. Yes it raises the cost of defaulting from 10c in the dollar to 15c in the dollar but it does provide additional hardship coverage. That represents an investment but this Government by its signals from the Prime Minister and more recently by the very explicit declaration of the new Minister of Tertiary Education Steven Joyce has shown that it wants to make it harder. The Government wants to make it harder to access skills and education and that is what the problem is here. The problem is that we have a Government talking out of both sides of its mouth and that is problematic. It will be problematic in the long term and it will be problematic in the short term for institutions that are under extraordinary pressure at the moment and that are in the situation like that of the Universal College of Learning of turning students away. 
That is not what should be happening in the escalation out of a recession. It is short-sighted of this Government and it will cost us dearly in the future. There are some things that a Government must invest in. Other Governments are doing so. Australia the United States and the UK are investing heavily in tertiary education. This Government is going in the opposite direction at 100 miles an hour and that is wrong; it is not appropriate. Although Labour supports this bill and the provisions in Part 1 we need to set this in context. A dangerous collision is about to happen in the Government’s tertiary education policy—a dangerous collision. We have people aspiring to upskill and to improve themselves. 
This is not just about going to university. This is about accessing tertiary education opportunities across the gamut. We have seen what the Government has done with adult and community education which is low-cost accessible education in the community. The Government has axed it. It has disappeared off the face of parts of our country and it limps on in a skeletal form in other parts. That is a disservice to the skills development that needs to occur in this country. This bill which Labour supports goes in a different direction. 
GARETH HUGHES (Green) 
: 
 Kia ora Mr Chair. He mihi nui ki a koutou kia ora. To answer Carmel Sepuloni’s question I am one who has a student loan and was a student last year and I am excited about the opportunity to participate in this debate. I will talk a little about the reasons why the Green Party is opposed to this bill. I first started studying in 2000 towards a Bachelor of Arts degree at Victoria University and of course because my parents are not wealthy I had to take out a student loan. Ever since then every couple of months I receive a new letter in the mail from the Inland Revenue Department saying how big my student loan is and it is so discouraging to have to look at that $30000 figure. Like many people of my generation I want to buy a house I want to start setting up a superannuation fund and I want to put money aside for my son’s education so that he does not have to take out a student loan and this letter is one of the most discouraging ones I ever receive in the mail. 
Ever since the student loan scheme was introduced students in New Zealand essentially have been paying an education tax. Every fortnight 10 percent of my gross pay is deducted straight away and paid towards my student loan repayments. What we are talking about in this bill is for some like a tax increase. I congratulate the decision made in 2005 to reduce the interest payable on student loans. When I first started studying in 2000 I had to pay interest on my loan while I was studying. I thought this was ridiculous. I think we need to listen to the students associations on this issue the other people who can talk for students who call this bill unmanageable and unaffordable. The student loan scheme is a public good. We cannot be looking at it as though it is just a cost to the economy. This scheme is a public good. If we are to increase our GDP if we are to race Australia in wage increases we need to make education more accessible. We need more people developing skills if we are to live in a sustainable and innovative economy. 
This bill makes some changes to the student loan scheme. Some are good some are all right and some are bad. I turn first to the good changes. The bill extends interest-free loans to borrowers in Niue the Cook Islands Tokelau and the Ross Dependency and to students enrolled with a New Zealand education provider or engaged in full-time study overseas under a formal exchange programme. This is a good move. It extends the interest-free student loan provision which was such a benefit to me to other students. This provision supports our Pacific neighbours and builds stronger relationships. I turn to the changes that are all right. This bill replaces the interest rate where applicable and sets it by formula. The proposed formula is identical to the formula currently in use. The change is to take it out of regulation and put it into the principal Act. We are fine with this provision. 
Then there are the bad changes. This bill enables the Commissioner of Inland Revenue to increase the standard rate for deductions from salaries and wages from 10 percent to 15 percent. For borrowers who have failed to have the correct deductions made the increased deductions will apply until any under-deductions including late repayment penalties have been fully repaid. Compulsory student loan repayments already kick in at a very low threshold. Increasing the deduction to 15c in the dollar will have a severe impact on some borrowers their families and their children. The current threshold is set at $19084 gross. I ask whether any members in this House could survive on seeing 15 percent of their gross income going straight back to the Inland Revenue Department on top of GST increases rent food and other costs. For some this is another tax increase that they will be seeing this year. An amount of $19084 is very hard to live on. I ask whether any members could live on that amount. 
What do we need to do with this bill? The Green Party believes that the student loan scheme is already a heavy burden on many students on low incomes and on students who do not have high-paying jobs after they leave tertiary education. We oppose all initiatives that increase that burden. Despite the useful technical amendments—and we support the idea that students in the Cook Islands Tokelau and others should have the benefit of interest-free student loans—we will not be supporting this bill. 
The CHAIRPERSON (Lindsay Tisch) 
: Before I call the next speaker I say to the member that when he goes for the call he must remain standing. If he were to sit down he would forfeit his right to speak. I knew the member was going for the call so I was happy to give it to the member. I say well done. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Firstly I acknowledge the member who has just resumed his seat Gareth Hughes. We enjoyed his maiden speech and it is good to see him participating in this debate as a student loan holder. I had a student loan too but it was in the bad old days when we had to get our loans from a bank rather than from the Government. Yes it did look discouraging for a pretty good while. 
Labour supports the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill and I might say I still do not understand why the Greens do not. Much of it is about extending the coverage of the student loan provisions and that has to be good. In particular we support the extension to students living in Realm of New Zealand countries because they deserve the same constitutional privileges in this regard as people living within the standard New Zealand territorial boundary. 
I will begin by taking a step back and positioning this bill within the general ethos of the Labour Party’s approach to the question of tertiary study. It is fundamental to us—and it will always I believe be fundamental to us—that all citizens have the same if you like ethical value and moral worth and they all deserve the same opportunities to thrive and to make the very best of themselves in life. That is why we are for the many not the few. We think that if opportunities are spread equally not only do we improve the welfare of our community and strengthen our economy because equal societies perform better economically but we provide social mobility. We provide the opportunity for the son or daughter of—I used to study in Wales—a miner to aspire to all the same opportunities as the son or daughter of a doctor does. 
That approach is something that many members in this House have benefited from. Even some members opposite make a big deal of growing up in a State house or benefiting from the State education. What angers us is when we believe that members opposite are pulling up the ladder after themselves. Those kids who went to the State school or benefited from the State house have an extra obligation to make sure that today’s generation has the same opportunities that they had. 
That is why we are always a little suspicious when there is I have to say some ambiguity. The ambiguity is not so much in the bill as in the statements that various Ministers and members opposite have made. The Prime Minister for example said that he wants to take a careful look at the policy settings around student support. Well we wonder what that actually means. The policy is pretty clear: a student can take out an interest-free student loan and approximately 75 percent of the costs of a student’s tertiary study in New Zealand is covered by the State. That is so we do not create worse barriers to all young New Zealand people having access to education. 
As the Opposition spokesperson on finance I am well aware that that could not be more important than during a recession. Large large numbers of young people are unemployed. Over 45000 15 to 19-year-olds—12000 more than at the same time a year ago—are unemployed. That number increases to over 72000 young New Zealanders if we include the 20 to 24 age group. As my colleague and friend Carmel Sepuloni noted Maori and Pasifika students and I would add students from migrant backgrounds are overrepresented in those statistics because in a recession it is last on first off. In my electorate of New Lynn which I am passionate about 13.5 percent of my constituents are Pasifika 9 percent are Maori and wait for it 23 percent are of Asian origin many of them brand new. By the way the average income of the Asian population in my electorate is lower than that of either the Pasifika or the Maori because they are the most recent arrivals and are struggling to make their way in the job market. It is absolutely essential if we are to walk the talk about being a proud independent egalitarian country that stands up for decency fairness and the Kiwi way that we have an education system that is open to all. 
Members opposite often talk about freedom. Well freedom is not just the absence of regulation folks. Freedom and personal responsibility can be real only if we are free to do something because we are empowered and resourced to do it. There is an old philosophical debate about the question “Am I free to dine at the Ritz?”. Well there is no law against it but guys if we cannot pay the bill we cannot eat there. You are free to dine at the Ritz and you are free to get a tertiary education—not you Mr Chairperson; I am sure you had a fine education—one is free to get a tertiary education only if one can get a student loan to meet the costs of attendance and if one is not charged exorbitant fees for the privilege of doing so. Labour is now will be tomorrow and will always be 100 percent supportive of a strong tertiary education system with universal access to it. 
I commend a couple of things in this bill. I have mentioned the extraterritorial extension. Also I echo my Green colleague in saying that as a former Associate Minister of Revenue I support the idea of moving the formula into the primary legislation and not leaving it in regulations. First the formula is too important and second I think moving it settles any argument about whether the regulation should be amended. It takes pressure off the Minister when it is Parliament’s voice that has set the formula. That reflects the importance that Parliament should accord to a good student loan scheme. 
As I have said the inbuilt irony—and I do not want to be unfair to members opposite—is that we keep getting mixed signals from National members about whether their hearts are really in it with regard to the student loan scheme. Steven Joyce admitted that endorsing it in 2008 was only a political call. Well it seems that for that Minister everything is only a political call. What would he support even if the focus groups told him not to? What is so sacrosanct to Mr Joyce that it is beyond polling? I do not know what it is—and he has been in this Chamber for 15 months. 
By the way I say to Mr Joyce—if he is listening—that a single millimetre of broadband in the ground would be a really good idea. There was about $300 million worth ready to go 15 months ago when he cancelled the Broadband Investment Fund. That of course is very important to students because they are high users of broadband. I slip that in there as they say—surgically insert that broadband point. It would be a diversion to go on about the parlous state of the telecommunications industry at the moment so I will stop there. I am sure Mr Joyce is having a very busy day—apparently not as busy as the Prime Minister’s however. He will be very concerned about the conduct of the House and the shambolic nature of the Government’s business. What an interesting week it has been for the Government has it not? It throws the House into urgency for such matters of colossal importance as this bill. Worthy though it is and supporting it as we are why are we debating it in urgency in the dead of the morning? Why are we doing it in urgency? Why could it not be accorded a normal legislative process? Is the Government’s management of the House so terrible that it has— 
Catherine Delahunty 
: Yes. 
Hon DAVID CUNLIFFE 
: Yes I believe it is. I think we have seen that demonstrated. I take the opportunity to commend our whips—Mr Mallard and Mr Hughes—and Mr Hipkins who has been supporting them. I think we have seen a pretty good example of constructive use by the Opposition of House procedure to assist the smooth functioning of the House. Of course we are very grateful for your role Mr Chairperson and that of the Assistant Speakers and the role of the Office of the Clerk in assisting the Government to get through its morning. 
I come back to the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. It is definitely worthy of support. Labour will support it because we are not about petty politics. We are about doing what is right for New Zealand and we are happy as an Opposition to see the Government doing things that we agree with. We are not here just to oppose carp and whine; we are here to do what is right for New Zealanders. The difference between the two sides of the House is that we are about the many not the few. Too often we see members opposite doing what is in the interest of the few not the many. Today we stand behind this small bill which further strengthens and broadens access to education for all New Zealanders. 
CATHERINE DELAHUNTY (Green) 
: 
 Tena koe Mr Chairperson. I was on the Education and Science Committee that examined the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill and I found it a positive experience. Green members have a positive view of the bill even though we are opposing it. We are not carping and whining as much as asserting the value of a student loan scheme that does not punish people who are already in trouble. That is why we are voting against the bill. 
There were only five submitters to the committee and only two of them made oral presentations. They all made valid points. Everyone was supportive of the extension of interest-free loans to borrowers from the Pacific and the Ross Dependency etc. In relation to those students undertaking full-time overseas study under a New Zealand Government - approved formal exchange programme there was some debate over the detail of that second proposal. 
The New Zealand University Students Association made some really important points when it appeared before us. As the body representing a large number of students its voice is regarded by us as being particularly pertinent to any bill that amends the student loan scheme. Many of us have theoretical or parental interest in how the scheme works but the New Zealand University Students Association is working on the front line of the effects on students of this credit and debt system. The association supported much of the bill including the technical amendment allowing borrowers returning to Aotearoa New Zealand who wished to repay their loans before meeting the 183-day requirement for an interest-free student loan to be able to do so. It strongly supported that amendment. However it strongly opposed the Commissioner of Inland Revenue being able to raise the compulsory repayment deduction from the salary and wages of borrowers to 15c in the dollar when payments were overdue. 
Green members were at least part of stopping the Inland Revenue Department from putting penalties on students whom the department itself had failed to notify of overdue debt. As the association pointed out this is the worse possible time with unemployment and especially youth unemployment increasing and the increasing cost of living to add extra penalties to people who are indebted. I know that some members of the select committee will never agree with me but some very poor people are not lazy and unmotivated. They just do not have enough money to cover all their costs. We have encouraged poorer people to see education as the solution to poverty and to go and get that education. We have made them pay for that education and now we are punishing those who are not able to keep up repayments. At the end of their studies there is absolutely no guarantee for many people including women migrants and refugees and tangata whenua and Pasifika people—let alone students with disabilities who are the most discriminated against group of people in this entire country in terms of employment opportunity—to get a well-paying job that will help them keep up with the level of debt and to have a consistent earning record that will allow them to keep up with their payments and not get overdue. 
Some of the discussion in the select committee expressed a highly punitive approach to the problem of unpaid student debt which is similar to comments I hear in this Chamber and elsewhere about beneficiaries. There are the good and the motivated but then there are the bad and the disorganised and the latter must be made to pay. This kind of thinking is a result of the scheme itself. It has not only created inequity but it has exposed inequity. Some of us were able to contribute to some part of our children’s educational costs and some of us were not but a loan is a loan and it must be repaid. All of this is inevitably unfair when the core of universality is abandoned in favour of market forces and the bloodless coup of the 1980s is still framing our education system and its debates our accident compensation our health debates and our economy as a whole. 
There is always one question to be asked of each bill before the House: who really benefits? In terms of this bill the Inland Revenue Department will benefit. But who really cares about the social chaos that ripples outwards for every increase in student debt repayment rates? On that basis we oppose this bill. 
CARMEL SEPULONI (Labour) 
: 
 I will touch on something that Gareth Hughes said in respect of commending the Labour Government for taking interest off student loans in 2005. I have to say as someone who had a student loan that prior to that happening I did not see my loan go down very much; I need to mention that. 
David Garrett 
: Did you graduate? 
CARMEL SEPULONI 
: Yes I tell Mr Garrett that I graduated. I will do something along the lines of what Maryan Street was doing and just look at aspects of this bill in relation to the public comments that have been made recently on the student loan scheme and the National Party’s history with respect to the tertiary education system in general. But I will do my best to stick to the bill. 
We have discussed Labour’s support for the aspect of this bill that will mean that those from territories of New Zealand—Niue the Cook Islands Tokelau and the Ross Dependency—will be able to have interest-free student loans. One thing has just come up in discussions with colleagues. I guess this question is directed to the Minister in the chair the Minister of Revenue; it would be nice if he were listening to my question. We support these students getting interest-free loans when they return to their homeland whether it be Niue the Cook Islands Tokelau or the Ross Dependency. My question is whether the Government has taken into consideration any additional measures or mechanisms that may need to be put in place to ensure that those students who return to the Cook Islands Niue Tokelau or the Ross Dependency—I do not know who lives there—actually have some sort of mechanism for paying back their student loans. That is one thing we do not see in the existing bill at this stage; I have asked my colleagues who were on the select committee and they are unsure about that one too. So we would like a response from the Minister with regard to that question. 
We totally recognise that it is important that those who wish to return to the territories of New Zealand have the opportunity to do so in order that they can contribute to their people and to their communities but we need to make sure that some measures are in place because if they go there for a lifetime and they have left this country with a $40000 student loan then we would like to see that it be paid back. 
That is one aspect that we have covered. I will just talk about that aspect too in relation to what we have seen recently with public comments on the student loan scheme. This bill is basically saying that we support our students from the territories of New Zealand and that we provide them with the same opportunities and provisions with regard to interest-free loans that those who live in New Zealand get. But I am concerned about the public comments that allude to the fact that this Government may go down the track of making student loans less accessible which will unfortunately affect those who are marginalised or under-represented in our tertiary education system as it stands. 
The reason I am raising it is that on the one hand it looks like we are supporting Pacific students from territories of New Zealand to be able to go back to their countries and contribute there but on the other hand it looks like this National Government is at the same time going down the track of limiting the opportunities for students who need to access student loans so that they can do that. That is a very valid concern and I am sure that even though we are in the Committee stage in discussing the bill public comments that have been made recently on the student loan scheme also need to be taken into consideration as in some ways it feels like there is a sense of contradiction in respect of what this bill is saying and what is being said publicly. 
When we look through Part 1 we see that another aspect of this bill is that late payment penalties will be put in place for those who are not using the correct tax codes and for those who may be perceived to be trying to rort the system in some way in respect of actually paying off their student loans when they get into employment. We support that aspect. 
KELVIN DAVIS (Labour) 
: 
 It is great to have an opportunity to speak to the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. In particular I make note of the part that extends our responsibilities to our relations from Niue Tokelau and the Cook Islands. I think that as a country we need to realise that we are not just an isolated island in the Pacific; we have responsibilities to other countries that depend on us. 
We also have a responsibility to Maori to make sure that Maori have full access to tertiary education so it was with some concern that we heard that the Minister for Tertiary Education Steven Joyce had his eye on student loans. We are not quite sure what that means. A lot of research describes how we need to make tertiary education more accessible for Maori and the Starpath research conducted out of Auckland University is something that we need to follow. We need to make it a lot easier for Maori to get into tertiary education—not just Maori but also our Pacific Island relations—instead of making it harder. 
I think it is really important that we realise that student loans are loans not gifts and that people who take out loans have to repay them. It is good to see in the bill that the Commissioner of Inland Revenue is able to increase the standard rate for repayment deductions from salary and wages from 10c in the dollar to 15c for borrowers who have failed to have the correct deductions made or to pay any other amount when it was due. The increased deductions will apply until any shortfall including any late payment penalties has been fully repaid. It is really important that we understand that that provision is in the bill. 
The Prime Minister has made the statement that he thinks that some students do not take their study seriously so they tend to drop out fail or not complete studies in the time they should. But many people do not know exactly what they will do when they finish university; they take different courses. My brother for example started his tertiary training doing a degree in business studies. Part-way through the first year he realised that it was not for him so he moved on and swapped to a Bachelor of Arts in Maori. That again was not enough for him. He ended up studying to become a lawyer and he is now a very successful lawyer. I was one of those people who went to teachers college and did not have to take out a loan. I went to teachers college after the system was in place that paid people to train to become teachers. I was in the middle of my training before the student loan system came about so I do not actually understand what it is like to have to repay a loan for study. I know that some people have loans that are bigger than many mortgages— 
Chris Hipkins 
: Bigger than  
Ben-Hur 
. 
KELVIN DAVIS 
: —bigger than  
Ben-Hur 
 as my colleague Chris Hipkins says. That is one of the factors that make it difficult for Maori to study at a tertiary level. The whole financial situation makes it really difficult. I am talking about a lot of friends and family up north; we struggle to get them to succeed at school in the first place. Then when they do succeed at school they find the financial barriers to move into university are too great for them and they do not go on to tertiary study in the first place. So the potential of the Minister to remove the interest-free element of the student loans would have a detrimental impact on the number of Maori who want to go into tertiary education. 
I was seriously concerned with the comment earlier on from the Hon Maurice Williamson that a bit of slash-and-burn never hurt anybody. The distance that some people on the opposite side of the Chamber have from folk on the ground who do struggle in these situations really concerns me. It is almost like saying that a bit of poverty never hurt anyone. 
JO GOODHEW (National—Rangitata) 
: 
 I move  
That the question be now put 
. 
MOANA MACKEY (Labour) 
: 
 I am very pleased to take a call on the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. I wanted in particular to ask the Minister in the chair the Minister of Revenue a question about the grace period clause in this bill which is clause 24. This seemingly small and innocuous clause is actually incredibly important. At the moment when student loan borrowers are advised of their outstanding loan balance if they repay that amount within 15 days then the interest over that period is cancelled. This bill extends that grace period out to 30 days. My question to the Minister is: how did that 30-day period came about? I know it is a nice round figure; it is a month. I would like to know what went into deciding that a 30-day period would fix this problem. It can be difficult for ex-students who are overseas to make repayments. I have had people contact me who find it extremely difficult sometimes to get their payment in particularly when they are in a country where they cannot wire money easily. I had a friend who was working in Africa who found it incredibly difficult to work out how to get the money back within the time frame. I am not sure that even 30 days would have been enough for my friend to qualify for this grace period. 
This is an issue that I would like the Minister’s response on. Even though it does not seem like an important issue sometimes it can be the difference between people deciding whether or not to come home. If they cannot send money easily if it is too hard and they will not be able to qualify to have their interest cancelled then that may be the point at which they say that they have all this interest piled up but it has been made a whole lot worse so they will just stay overseas and never come back to New Zealand. Then we would never have the loan paid off but more important we would not get value from the tertiary education that the New Zealand taxpayer has paid for alongside the person as well when he or she studied in New Zealand. I would appreciate the Minister’s comments on that. 
I will also briefly comment on extending this provision to New Zealand territories which I think is important. During the work that I have done with the Commonwealth Parliamentary Association I met someone from the Cook Islands who in October last year said to me how desperate they were for this provision to come in. I think we have always been good global citizens. We do not want to pull people away from their homes particularly when their own economic development is so reliant on their best and brightest being able to return home and not having a financial disincentive to doing that. 
I commend the contribution from the new member Gareth Hughes. It was nice to see him getting up on his pins so early in his parliamentary career. I know this has become a bit of a time for telling old war stories and one-upmanship but my colleague Grant Robertson and I went through university at the absolute worst time to go through which was in the 1990s. Mr Hughes and Carmel Sepuloni went through in 2000 which I understand was bad enough. I know how important the incentives are in this legislation for paying back a student loan. A lot of people who jump to their feet have never had a student loan and do not really understand what it is like to have one. They do not understand what it is like for students to feel when they graduate that they will die with this loan because it just gets bigger despite the fact that they are making repayments. The push to leave the country is then very very high. In my case I graduated as a scientist and scientists do not earn a lot of money in this country. Therefore I did not earn a lot of money and I had a loan that was growing day by day with compounding interest. 
That is why this legislation is so important. It is important for our Pacific colleagues and the people in the Ross Dependency which again is very useful for scientists. We do some fantastic climate change work down in the Ross Dependency. This may mean that ACT will vote against this legislation now but it is important that those students are also included in this bill and I am very pleased to support it. But I would appreciate an answer to my question on the grace period so we can be sure that it was arrived at by research and considered thought rather than just being picked because it was a month. 
I will also comment on the hardship clause and commend the Minister for this. I have had people come into my office to say that they have found the current hardship relief clauses which were unintended consequences of the previous changes to the Act very difficult to deal with and inflexible in dealing with their own particular hardship situation. This has become a far more difficult issue in the recession. I would be interested in the Minister’s comments as well around what else will be going on in this area. When people have to pay an extra 10 percent of their income towards a student loan that is a lot of money. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I take the call at this point because there have been some 10 speeches in this debate so far on the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. I think I have been asked three specific questions and there is one from the second reading that I also want to respond to. 
Before I do so it is perhaps important to place this debate in a wider context. A lot has been said about what may or may not happen with regard to the rules for eligibility and the way in which people might take out student loans in the future. The responsibility for this legislation and my responsibility as the Minister of Revenue rests with the administration of the student loan scheme whatever shape or form that might be in. As part of that portfolio I have to be mindful of a couple of facts. We have a student loan outstanding debt liability—call it what you like—of around $10 billion. We have somewhere in the order of 540000 student loan borrowers with outstanding balances. We have about 40000 student loan borrowers offshore and when we sought to identify them and get their up-to-date details a couple of years ago we managed to get just under half of those people back into contact with us. The point is that we have this massive debt which speakers on both sides have acknowledged that we need to manage. So these changes—and some other changes that were contained in a discussion document released late last year which will be the subject of legislation later this year—are about making it easier for people to meet what we all regard as their repayment obligations. 
It is against that backdrop that I will comment on the questions that have been raised so far. Carmel Sepuloni raised the question about the repayment mechanism for students in what we quaintly term the realm countries. Before I answer that I will comment on Moana Mackey’s point. I think she is absolutely right when she talks about the benefit for students in those countries of access to the student loan scheme. One of the drivers for me in being keen to promote that was a visit to the Cook Islands a couple of years ago. I talked to senior school students about their aspirations for their futures and about the practical difficulties they would face not in getting access to New Zealand universities but in funding their study when they came here. So that was a very important move. Carmel Sepuloni asked what will happen though once they complete their studies and return to their country of origin—hopefully to make that economic and social contribution that this is all about. I draw her attention to the provisions of the bill which I do not have right in front of me; it is a very long clause number. Students will be required to determine their income level and advise the Inland Revenue Department of that and then the process for getting their repayments on an annual basis will be put in place. This is a point I will return to in response to some of the other questions. 
I also make the comment that the changes we are contemplating at the moment will make it much easier for those students as well in terms of moving to an electronic base for repayment so that the system in time becomes more like the way in which we conduct our banking operations. Students will be able to access their balances and make their repayments as their circumstances fit. That will apply to all students but it will be particularly beneficial to students in the realm countries. 
Let me come to the question of the grace period. I have to say that there was no particular science to the choice of the 30-day period. 
We did think that because the major beneficiaries of this change will be students who are overseas 15 days was probably a little tight in the circumstances. But with today’s technologies and communications even using the member’s example of the deepest parts of Africa or somewhere we thought that 30 days was not an unreasonable choice. Once we bring in the next leg of this legislation which is in terms of the electronic basis for the system I think that that operation will become quite manageable but obviously all of these things will be kept under constant review. 
During the second reading debate Chris Hipkins raised the question of the partners of diplomats and whether they would be eligible for the extended provisions. That is a much more complicated question than first appears the case. We do not have within the student loans legislation a particular provision with regard to that category of person. What we do have is a requirement that a borrower or the partner of a borrower is also eligible if he or she is resident for tax purposes in New Zealand during that period. The particular problem that arises for all people who are offshore is the definition of “tax resident”. In respect of the specific question of the status of diplomats and their partners this matter has been considered by the Ministry of Foreign Affairs and Trade the Inland Revenue Department and the Ministry of Education. The conclusion that was reached was that this was an issue that was beyond the specific ambit of the student loans legislation to address but I guess that it is a matter that will be between those agencies and again kept under some form of review. If issues need to be addressed they will be picked up at that point. 
I conclude simply by going back to where I started and by pointing out to the House that what we are doing here is making a much more effective management process for a very large investment by the New Zealand taxpayer—$10 billion. The vagaries of Government accounting systems mean that that $10 billion is actually shown as an asset on the Crown’s books so it is incumbent upon the Crown to do what it can: first to recover that funding; and second to make it easier for those who are making repayments to do so. This legislation and the legislation I am foreshadowing later in the year will be all about achieving that objective. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I will briefly respond to the comments the Minister made regarding the partners of diplomats. I thank him for that explanation and I appreciate that it is obviously an issue that is far more complicated than something that can be dealt with in this bill. I hope it is an issue that will not fall through the cracks. Partners of diplomats are leaving New Zealand for the good of New Zealand to be part of representing New Zealand overseas and it seems very unfair that the person whom they live with could be eligible for an interest-free loan but they themselves might not be eligible for an interest-free loan. I hope that that in time is something that will be able to be addressed more fully. 
I pick up on a comment the Minister made about the size of the asset that is the student loan scheme. I agree it is a significant amount of money on the Government’s books but we also need to consider it in the wider context of the value of tertiary education as I am sure the Minister himself does. It is an investment in the people of New Zealand and in building up the skills of our workforce. If we want to have a much more productive economy one in which we all enjoy a higher standard of living then encouraging people to move into all forms of tertiary education whether it be universities polytechnics or even workplace training is something we want to encourage. I hope that whenever we talk about the student loan scheme we will consider it within that context. 
I want to talk about one or two of the technical amendments in the bill and in particular the increased deduction rate that is covered in clauses 6 and 7. In effect these changes will allow the amount deducted from a borrower’s salary and wages to be increased from 10c in the dollar up to 15c in the dollar. The amendment is aimed at borrowers who have failed to have the correct deductions made and have other overdue amounts. This is a change we support but I want to talk a little bit about the way in which the threshold at which somebody has to make those deductions is established. 
Every year up until last year the threshold at which somebody has to make deductions from their salary has been increased in line with I think the rate of inflation—it might be the consumer price index; I am not sure exactly what the mechanism is. But it has been adjusted each year so that that threshold remains the same in real terms and that was not done in 2010 and 2011. In the statement the Minister put out just before Christmas—I called him a Grinch at the time and I apologise to him for doing so; I think he is a very unlikely Grinch. [ 
Interruption 
] No he was Santa’s little helper I think in the photographs in the paper. 
In the statement he put out at the time he said that the decision to hold the student loan repayment threshold at the current level for the coming year takes into account the current economic climate and the very significant costs of this $9.6 billion asset to the Crown. I think we need to be clear that although we are talking about a fairly small amount of money the principle behind it is I think is a really important one in that we are asking the borrowers of student loans to shoulder an extra share of the effects of the tougher economic climate. 
The other point the Minister made in his statement is that although the impact on individual borrowers is likely to be minimal the effect of maintaining the current repayment threshold is expected to lower the overall costs of the scheme to the Crown. I think we need to be really transparent about that. If the Government is setting out to lower the cost of the interest-free student loan scheme then it should be really upfront—I know that the Minister was upfront in his statement but it is not something that many people have picked up on—because that will have an impact particularly for those who are just near the threshold for making repayments. It is more significant for them than for somebody who is earning a significant amount of money. 
Although we are talking about a fairly marginal amount of money it will be more significant for someone on a very low income right down there at that threshold level than for someone earning a higher income. We need to be really clear and upfront about that and I would certainly encourage the Government in future years to continue making those adjustments to the threshold and not to let this be seen as a precedent for future years. 
I can accept that it was probably a one-off for last year but we would like to see that issue addressed in future years. I hope that when it is addressed this year there will be some retrospective nature of that to catch up with the fact that that threshold was not adjusted last year. 
I turn now to the interest-free loans for borrowers returning to New Zealand. I refer to clause 16 which inserts new section 38AM. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 I will pick up on the questions around the increased deduction rate as well and I also have another question for Mr Dunne in that regard. We have heard from the Green Party already in this debate about its concern over the notion that the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill and clauses 6 and 7 in particular will allow the amount deducted from a borrower’s salary and wages to be increased from 10c to 15c in the dollar if the borrower fails to make deductions or has an overdue amount. Those on the Labour side of the Chamber can understand the motivation. New Zealand has an interest-free loan scheme it is a good scheme it is allowing people to pay their loans back a lot quicker than they previously have and it is a scheme driven by the motivation of having people stay in New Zealand. We are extending that in this bill to other countries in the Realm of New Zealand and that is good so that people will contribute to the New Zealand economy. The bill has two purposes and we understand that those purposes are important. The change in it in fact backs up the notion that it is important to stay in New Zealand and that we will create those incentives to do that. 
I note that clauses 6 and 7 will give the Commissioner of Inland Revenue the right to make judgment calls and that is what my colleague Mr Hipkins was speaking about before. Those judgments will be very important and significant calls for some people. I have had a particular case in my electorate office this year of a couple who went to the UK and did not make repayments while they were away overseas. They came back to New Zealand and for a variety of reasons had some issues with making further repayments. In some senses this change would offer them a path for how repayment could be made so in fact there is a positive to this. But my question for the Minister in the chair the Minister of Revenue is around how this change will be promoted. One of the big issues we have had with this scheme is people simply being unaware of what was required of them particularly when they went overseas. A number of people would ring up electorate offices and when I worked for the New Zealand University Students Association many years ago they would ring up; they were simply unaware of what the requirement was when they were overseas. Initially the scheme required people to pay back $1000 a year or one-fifteenth of their income while they were away overseas and people had difficulty making those kinds of adjustments and arrangements to their affairs. 
My question for the Minister really is having understood the logic of giving the Commissioner of Inland Revenue the right to make these increases in the deduction rate what will be done to ensure that people are aware of that that they understand what their obligations are and that they understand perhaps something of the criteria for how the commissioner will make those judgments? I think it is very important because already we see that there is an ability to reduce the payment if it will cause serious financial hardship and that is good. That is an important caveat to put on this but we do not want ourselves in a situation where we have a large number of people going overseas unaware that they could face increases in the deduction rate if they do not meet their obligations at the other end of the scheme. I look forward to the Minister taking a call on that and giving us some further information. 
Another of the technical amendments that I want to draw some attention to is the hardship relief provided for in clauses 19 20 21 and 22. This is something where the Government deserves to be congratulated. We have seen a number of situations in which people find it very difficult and ironically regarding the same couple who came to see me this could have been a legitimate area where they could benefit because the issues and problems they had with their income were not happening in the immediate year when they were seeking relief. The hardship relief clauses are an important amendment to the scheme because we should not fool ourselves that the student loans scheme is a complete panacea when it comes to supporting students through their study. The student loans scheme puts a very serious obligation on those people who borrow from it. They have to pay back the loan from their salary at 10c in every dollar and if they do not meet their repayments after this bill is passed it will be up to 15c in the dollar for some people. 
That repayment is a serious obligation and it brings me back to a comment I made in the second reading when Steven Joyce said that the Government would be looking at different aspects of the scheme and that it needs to tighten up some of the rules. He made the comment that this loan was unlike others because it did not have an incentive to pay it back. Well the incentive is the 10c in the dollar. The hardship provisions in this bill which effectively loosen those hardship provisions are a very important response to the fact that 10c in every dollar over $19000 earned has to be paid back. I think $19000 is a very small amount of money to be earning before paying back the loan so the hardship provisions provide an ability to make the student loans scheme a lot fairer. As I said the Government deserves to be congratulated because it has brought this up but we need to ensure we do not underestimate the importance of some people having access to those hardship provisions because for people earning $19000 it will be difficult to make repayments. 
STUART NASH (Labour) 
: 
 Mr Chair I hope the reason you have given me the call last out of the Labour members who were seeking it is not that the Hawke’s Bay Magpies have beaten the Southland Stags the last two times they played. But I would not make any such assertions and I do not propose to. 
I have a question for the Minister of Revenue. He mentioned that the estimate of student loans on the book is about $10 billion. It would be interesting to know whether there is any qualitative or even quantitative research on the opportunity costs to society of not introducing interest-free student loans or student loans at all. I suspect that the value to our society our communities and our economy is a lot higher than $10 billion. I am not suggesting that the Minister said it was not but it would be interesting to know whether there is any study around that value. 
I will talk about a couple of the clauses in the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. Clauses 10(2) to 10(5) 13 and 25(2) cover interest-free student loans for residents from realm countries. This bill introduces an exemption for borrowers in realm countries from the requirement that they be present in New Zealand in order to qualify for an interest-free loan. The Minister talked about this exemption a little earlier but I think we glossed over it a little. The reason I think this exemption is so great and aspirational is that potential students do not have to make a commitment to first of all come to New Zealand before they can qualify for a student loan. It is one of the reasons why I am a little disappointed that the Greens are not supporting this bill. I understand the Green Party’s opposition to student loans from a philosophical perspective but within the legislative framework in which we currently work I think this bill moves us forward quite a long way and it would be good if the Greens could view it from within that legislative framework and support this bill for those reasons. 
This change reflects a special relationship that has been talked about that realm countries—I like the words “realm countries”; I thought they were quite outdated but let us keep them in there—have with New Zealand and aims to encourage borrowers who want to remain and make a contribution to those countries to do so. We have talked about the costs and benefits of globalisation but I think nothing is more important than empowering communities certainly within the realm countries mentioned here. If students can go back and contribute to their communities in a way that their education allows it can only be good for their communities and their countries let alone their own professional development. 
The key feature of this amendment relates to section 38AE of the Student Loan Scheme Act 1992. As mentioned it is being amended to allow further exemption to the requirement that borrowers reside in New Zealand. It means that borrowers will qualify for the interest-free loan if they are present in a realm country—Niue the Cook Islands Tokelau or the Ross Dependency—for 183 days or more. There is a little bit of a catch—well not a catch. The purpose of the amendment is to encourage those who want to live in and make a contribution to these countries to do so which is very important. Their student loans will be interest-free as if they are still living and working in New Zealand. My colleague Kelvin Davis said he was of an era where he did not have a student loan so it is hard to imagine. I caught the very end of student loans with interest and when I bought my first house the interest rate on my mortgage was lower than the interest rate on my student loan so I just tacked it on to the end of the mortgage. Thank goodness those days are over. 
I will talk about something else as well. The bill introduces an extension of the interest-free loan entitlement to students engaged in full-time study overseas under a formal exchange programme approved by the New Zealand Government or a formal agreement between a New Zealand education provider and an overseas tertiary education provider. It corrects an oversight in earlier legislation that disadvantaged certain borrowers studying overseas. Again this amendment brings us back to where we see ourselves in the world the whole area of globalisation and importing talents and skills back to this country. In the past—and there are members of this Committee who have done this—students went overseas to study and felt that their real place in society was overseas marketing their skills in different areas. This amendment allows them to come back and contribute to society in a meaningful way. 
Let us look at a bit of background on this amendment. Provisions in effect from 1 April 2000 to 31 March 2007 entitled borrowers who were resident in New Zealand for income tax purposes to a full interest write-off if they were engaged in full-time full-year study. Part-time or part-yearstudentscouldalsoqualifyiftheirincome was below a certainlevel. The student’s New Zealand tertiary education provider was required to confirm the level of study. As this had the same effect as allowing a loan to be interest-free when the extension of the exemption to undergraduate study was made it was considered that these provisions were redundant and they were repealed. There is therefore a gap in interest-free loans for some students who are or were studying overseas. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I will take just a brief call to respond to some of the questions that have been raised since my last intervention on the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. Mr Hipkins raised some questions about the repayment threshold and the decision that was made late last year not to increase it for this year. There are a couple of things I would say in respect of that. Firstly members will see that the bill introduces a much more transparent set of provisions for setting the interest rate that is to be payable where required and that was because I felt that the previous system allowed for a bit of manipulation. This is a clearer and more transparent way of doing it. However with regard to the determination of the income threshold although the member might be able to make the same argument in practice the reality is that some other factors also have to be taken into account. My recollection is that when the calculation was done last year as to what an increase might be given other movements that had taken place it was very minimal. Although there was a cost of around $9.6 million or something of that order which I think the member quoted from my statement the actual benefit per person was from memory something in the order of a few cents per week. On that point given the economic circumstances and the practicality we decided not to proceed. We will have to go through the same calculation at the end of this year and obviously take this year’s circumstances into account in setting that. 
Mr Robertson raised a question regarding the hardship provisions and also a general question with regard to keeping people informed of changes. I want to be absolutely clear about the hardship provisions. They take us back to where we were prior to an unintended amendment a couple of years ago. The 15 percent rate issue which the member also spoke about will be applied only in circumstances where the borrowers are in New Zealand and are receiving wages and salaries. It will be taken on a case by case basis. This decision is not arbitrary; it is designed to deal with that situation when we are fairly certain that people are here but not paying what they should pay and there will be the capacity for the commissioner to draw attention to that. 
All of that leads me neatly to the next question that Mr Robertson raised when he said that that was all very well it was a good idea and he supported it etc. but then asked how people would be kept informed about it. I think that is a critical question. Over the last couple of years we have been tending to make much more use of interactive technologies to draw borrowers’ attention to their responsibilities. I remind the member that when we did the work in 2007 to try to get a handle on how many overseas borrowers there were we used popular websites like the  
New Zealand Herald  
website—we put sidebar advertisements on it—and from memory the Stuff website because they are sites accessed by people overseas. A lot of that will continue. The usual work in drawing borrowers’ attention to the new provisions at the time they become liable will also continue. 
Again I will just conclude with the comment I made in my first intervention. Once we change the whole system and the way in which it operates to become much more interactive over the next year or so then a lot of these things will become much easier to resolve. 
Hon MARYAN STREET (Labour) 
: 
 I want to make a couple of comments and first of all thank the Minister of Revenue for his comments about spouses of diplomats because that was something that has been discussed. I cannot remember whether we discussed it at the select committee itself or whether just the Labour members have been discussing it amongst ourselves. Certainly the Minister referred to keeping the issue under some sort of review. Amongst the agencies that have some interest here the Inland Revenue Department the Ministry of Education and the Ministry of Foreign Affairs and Trade it would be possible for that to slip through the cracks and I would urge the Minister that it not slip through the cracks. In fact although it is possible under this legislation as it currently stands for a partner or spouse of a diplomat to qualify by virtue of being part of an approved tertiary institution course that is recognised for the purposes of this legislation and in that way he or she could get in it would be useful to clarify that tax status so that we know for sure whether such spouses and partners would be eligible. I think that is also of benefit when one thinks that these are people who work in the service of New Zealand go offshore for a time and inevitably come back and if a partner or spouse can come back better skilled to contribute in his or her own right as well then we should facilitate that. I thank the Minister for that consideration and hope that it does not fall from view. 
The other thing I want to talk about is something I had referred to earlier when I spoke about tertiary institutions turning away students at the moment and I used the example of the Universal College of Learning. In fact it would appear that if the student demand continues as it is tracking at the moment at that college where there have been 500 more students than last year apply for courses which is something in the order of a 19 percent increase on its past roll if that continues then the chief executive officer of the college says they will have to close the doors some time between May and August. That is an issue that needs to be addressed by the Minister for Tertiary Education—admittedly—but again it underscores the point that this legislation is trying to make the student loan scheme accessible to more people at a time when the Government is not entertaining increasing student numbers lifting caps renegotiating them or any other way of investing in the tertiary education system. 
There is one particular exception and it goes to the speech that my colleague Kelvin Davis made earlier. I refer to—and the Chair will be pleased I am not going to seek to table it—an article that was in the Christchurch  
Press  
over the weekend on Saturday 20 February about the launch by Pita Sharples of a new guide for universities to support Maori students to succeed. Every indication we have had from the Prime Minister and the Minister for Tertiary Education to date has been that there will be closer examination of success and whether people will be able to continue to apply for and be eligible for student loans. Kelvin Davies and my colleague Carmel Sepuloni have expressed a concern from their own experience and that of their own whanau and whanaunga for Maori and Pasifika students who come perhaps not from a background in the majority of cases that is accustomed to tertiary education. There is not an embedded understanding within the family of what it takes to support somebody to succeed and therefore additional support from an institution is required. 
CHRIS TREMAIN (Senior Whip—National) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 69 
New Zealand National 58; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 53 
New Zealand Labour 43; Green Party 9; Progressive 1. 
Motion agreed to. 
Part 1 agreed to. 
Part 2 Consequential amendments to and revocations of other enactments 
Hon MARYAN STREET (Labour) 
: 
 Part 2 of the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill is technical in nature. The bill itself is technical in nature but Part 2 simply draws other legislation into alignment through a series of consequential amendments. The consequential amendments or the revocation of certain parts of legislation are now referred to in Part 2 in order to make the whole set internally consistent. There are amendments to the Tax Administration Act there are consequential revocations of enactments such as the Student Loan Scheme (Income Amount for Full Interest Write-off) Regulations 2005 and parts also from 2006 and 2009 are being revoked. 
The need to keep the legislation consistent is important. It is imperative but it also raises for me the same question that I have referred to previously and that is the extent to which the consistency reflected in Part 2 is the consistency reflected in the Government’s approach to tertiary education. Previously when I spoke about this it was clear from some of the interjections opposite that Government members thought that this was simply Labour saying again: “Spend spend spend and don’t make any cuts anywhere.” 
Government appropriations have always and ever been about the ordering of priorities. This party is saying that in order to be not only consistent but also progressive about tertiary education opportunities and the benefits that accrue to the country from giving more people access to tertiary education those opportunities should not be lost sight of and should be made consistent across Government policy. 
The consistencies that are reflected by Part 2 come into question when the whole approach to tertiary education policy is looked at. We are not any longer in the days that we were in when I first went to Victoria University some considerable time ago. I remember queuing to pay 10 percent of the course fees in the student union building at Victoria University. We have long since moved on from those days. I wish that our newest member of this House still had such a regime available to him but that is no longer the case. Now it takes active investment on the part of the Government to ensure that tertiary education is available to all. My father gave me $100 and my mother bought me a coat to cope with the Wellington winter and on the strength of those gifts and a bursary from high school I went to Victoria University. I was able on the strength of the facilities available at that time to give my father back the $100 at the end of my first year with some careful stewardship I have to say of the money that I did get. I did not emerge with a student loan. 
Times have changed without a doubt and I wish that things were easier for students now but they are not. That is why it is incumbent upon the Government to actively invest in tertiary education opportunities. The consistency of approach to tertiary education should mirror the consistency that the Minister has achieved in Part 2. Thank you. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 This Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill is relatively uncontroversial. I was lucky to be a member of the Education and Science Committee that was dealing with it at the time and I am pleased to be able to speak to Part 2. It is fair to say that relatively speaking Part 2 is the smaller part of this bill but it includes consequential amendments and areas that people need to talk about. I acknowledge that although we did not always agree with the policy and although some of the options that were put up were not picked up by the Government the officials did a good job. 
Some regulations are being revoked as part of this legislation. I say to the Minister in the chair the Minister of Revenue that it is good to use primary legislation to revoke regulations because it means that the provision is on the face of the legislation rather than people having to dive away to other areas to work their way through the particular issues. Frankly it is a bit sad that we need legislation for some of these things—such as clause 29 “Officers to maintain secrecy”—but we do. However the change there is a very small consequential amendment which omits “ (2AA)” from section 81(4)(g) of the Tax Administration Act. That is an effect of something else earlier on being revoked. It is fair to say that this legislation is in the tidy-up category of legislation. 
I have some problems with my colleagues from the Green Party over this legislation. Even though we all have the policy intention of heading towards free tertiary education the idea that those members would vote against consequential amendments in a relatively minor bill because they are opposed to people at university being charged fees I think goes beyond a stand on principle to a stance that is pretty hard to explain. I was slightly surprised at that. 
Hon Maryan Street 
: What sort of student were you? 
Hon TREVOR MALLARD 
: I was a student in the era slightly before that of my colleague Maryan Street I think—when I look at her—but I was at the same institution. I was of the group that did not do a seventh form year—or 6A I think they called it. I went to university at that stage. 
Hon Maryan Street 
: You’re a child prodigy! 
Hon TREVOR MALLARD 
: Well I was 16½; I was old enough. But as a result of my slightly better than mediocre work in my first year I ended up getting a bursary in my second year. That was the way that it worked. I cannot remember the bursary being an enormous amount of money but the fees— 
Hon Maryan Street 
: A late developer. 
Hon TREVOR MALLARD 
: Well I was an early developer actually. I ended up a year’s extra study ahead of my colleagues who had stayed at school we ended up with about the same bursary and I had had a much better time than they had had over that period. But how much of that time was at the— 
Hon Maryan Street 
: Did you join the students association? 
Hon TREVOR MALLARD 
: I think it was automatic at that stage. But I did “cafe honours” and it was good. Bob Moodie used to be there in his kaftan. Jim Baxter would be reciting poetry. I tell you what Jim Baxter’s poetry was nowhere near as interesting as this bill; there was some really interesting poetry but none of it came close to Part 2 of the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. He never came close. But I must say it was a particularly interesting time. 
CARMEL SEPULONI (Labour) 
: 
 I was really enjoying Trevor Mallard’s contribution to the debate and I hoped that he would seek a second call but he did not. Part 2 of the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill is basically about consistency. There is really not very much to discuss with regard to what is in this part so I will go back to some of the other things that we have discussed. 
A few members have discussed the fact that they accessed student loans and what that meant for them. We are seeing that student loans will perhaps be in jeopardy moving forward with some of the public comments that have been made by members opposite including the Prime Minister and also unfortunately the Minister for Tertiary Education. The newest member of Parliament Gareth Hughes pointed out the fact that he is another former student who is paying back his student loan. As I said earlier I am nearly there. After 9 years of trying to pay back a student loan—not after 9 years of a great Labour Government—I have nearly finished paying it off. 
One thing that has come up publicly again is the issue of students who do not necessarily finish their degrees diplomas or study on time and the fact that this Government may be looking to making it difficult for them to access student loans for the full extent of their study. I point out something that I pointed out earlier which is that unfortunately in this country Maori and Pacific people still take longer to complete their tertiary qualifications in terms of degrees and diplomas. That is not because of lesser intelligence— 
Charles Chauvel 
: Or greater beauty. 
CARMEL SEPULONI 
: —and not because of greater beauty as Charles Chauvel has pointed out but because many Maori and Pacific students are still the first in their family to go to university or to do higher-level tertiary study and it is a very very strange experience for them. Many of our people are not accustomed to it especially when other family members have not done it before and that can result in a few failures in the first year or the second year. 
Debate interrupted. 
Sitting suspended from 1 p.m. to 2 p.m.