Hughes Gareth: Student Loan Scheme Amendment Bill (No 3) — Second ReadingText is incorporated into the Bound VolumeHughes Gareth: Student Loan Scheme Amendment Bill (No 3) — Second Reading[Sitting date: 13 February 2014. Volume:696;Page:15954. Text is incorporated into the Bound Volume.]GARETH HUGHES (Green): Kia ora Mr Assistant Speaker.Ngā mihi nui ki a koutou. Kia ora. I think what the hundreds of thousands of students in New Zealand and overseas are hearing is that this side of the House is going to take them seriously. This side of the House is going to be providing solutions for the $13 billion student loan debt. This side of the House is going to support students because educated Kiwis are our future. But what those hundreds of thousands of students are also hearing is that this Government on that side is more focused on those punitive gimmicks that we know are not going to work and that are all going to be counter-productive. That is where National’s focus is.What we have seen in 5 years of National is universities consistently sliding down the international rankings. What have seen is this Government making tertiary education less accessible less affordable and in some cases downright impossible as it shuts the doors to new students. It is not just the over-55s; it is the capped enrolments. It is the IT sector for example which is crying out for new graduates but this Government says no—David Bennett: You would know about that now wouldn’t you?GARETH HUGHES: —it is going to cap your places in computer science. What this Government does is go “We’re increasing all science places.” Tell that to the IT sector Mr Bennett when people can study astronomy or wine science but they cannot get a place in computer science despite the industry calling out for them. Students and the tertiary sector know that National is no good—sliding down the rankings and making study less affordable less accessible and in some cases downright impossible.A lot of bills we see particularly in the tax space or the tertiary education space are kind of curate’s eggs. There are some good parts and some bad stuff and you weigh up the pros and the cons of the legislation. This bill the Student Loan Scheme Amendment Bill (No 3) is an egregious punitive bill. It is a bad bill. Plainly and simply it is a gimmick it is all about political spin it is a waste of time it is going to be counter-productive and it ignores the solutions. I am not trying to exaggerate but this is a bad bill that is not going to have the desired consequences.Remember back to Budget 2013. It was a forgettable Budget I will give it that but remember all the way back to Budget 2013 when one of the headlines was that this Government was going to get tough on student loan defaulters. This bill is simply serving a political purpose for Steven Joyce to try to look tough on students. It is easy to beat up on students with student loans particularly overseas students. It is easy for this Government to pick a victim and do a bit of bullying and beating for its own political objectives but now we are seeing the consequences because those political bullying tactics have to be ushered through this Chamber through legislation as we are seeing today.What we heard in the Finance and Expenditure Committee was a chorus of opposition to this bill because it is just not going to work. People know it is just going to be a gimmick. Let us look: we are talking about 3.2 percent of the $13 billion student loan budget currently being held overseas. What we are seeing is a complete waste of police time. This is what I and many of the submitters are particularly opposed to. We do not want to see the New Zealand police force act as quite simply debt collectors. We heard that not just from the New Zealand University Students’ Association but also from Treasury. It was Treasury that noted: “This proposal may have the appearance of the Police acting as debt collection agencies for Inland Revenue.” That is the heart of this bill. Quite simply all the Inland Revenue Department has to do is request an arrestwarrant from the police to get defaulters arrested at the airport. It is a bad look for the police who do not want to be looked at as debt collection agents; they want to be protecting us—the security of our borders and the security of our people. They do not want to be running around our airports trying to find student loan defaulters. It is not going to work. It is going to be a waste of time. This is what we heard in the select committee.What we heard in the regulatory impact assessment was that the impact of this policy on the compliance of overseas-based borrowers is uncertain and the faster recovery of loans from compliant borrowers under this proposal was not expected to generate any savings in the short term. There is no evidence it is going to work. In fact there is countering evidence that it will not work. What we know is that New Zealanders are going to feel uncertain about returning home to New Zealand. They are going to try to avoid it. What we are entirely going to see is a perverse incentive. New Zealanders are just not going to feel comfortable coming home. In fact I had my best mate who lives in Manly in Sydney emailing me on Facebook saying: “Has that law come through? Because I am really worried about what is going to happen.” I am sure thousands of New Zealanders are having this experience where they are feeling uncertain and—Hon Members: Pay it back.GARETH HUGHES: No no he is a New Zealander with a loan who is repaying his debt as I understand it but what your punitive approach has said is that all New Zealanders no matter what their situation or what they are doing with their loan do not feel comfortable because your objective is simply to scare those overseas borrowers for your own political gain. So Kiwis overseas with loans are concerned. They are worried about what is going to happen when they return. What we may just see is more people avoid repaying their loans avoid going to the Inland Revenue Department to try to renegotiate or simply stop paying off their loans.What we also know is that the way the loans and repayments are being calculated is inequitable and that is exactly what the officials have advised us. They say that this bill “creates an inequity whereby two loan borrowers with the same loan balances may have different repayment obligations …”. I believe it is a serious issue given the scale of the total amount of overseas loans but what we need to do is approach smartly. This—where you simply just pick a number and that is the repayment—is the exact opposite of taking a smart approach. It should be based on the person’s earnable income overseas. I asked the officials why our Government has not been in discussions with in particular the Australian and UK Governments given we know that is where the bulk of these loan holders are based. Why have we not had discussions with those Governments with whom we have very friendly relations and tax agreements in effect right now? Why are we not talking to them where those people could either calculate their earnings in those countries so we could have a fair and progressive loan repayment rate back to the Inland Revenue Department—or in fact why are we not even starting discussions so that those loan holders could pay off their loans through other jurisdictions’ pay away or other tax systems that they have? What I heard was that they said: “We don’t think it is ever going to happen. It’s too hard so we’ve not bothered.” What we need is some political leadership on smart solutions which are not these sort of broad-brush—I hate to say the word “dumb” but it seems incredibly dumb to just pick a figure and say that that is what everyone has to pay. It creates this inequitable solution.I want to also touch on the increase of the loan repayment threshold to $45000. Again what the officials have pointed out in the regulatory impact statement is that there is a risk that some previously compliant borrowers with balances greater than the $45000 will simply stop repaying their loans. So you have this chorus of opposition not just from the public and the student bodies but also in terms of logic and commonsense from the officials. When they look at this they know it is just simply a political gimmick. It is not going to work.What we need to do is be focusing on solutions to reduce that $13 billion millstone around students in New Zealand and on the world map. What we need to focus on is tax agreements with those other Governments as I talked about. We need to have a more open and flexible approach for overseas loan holders to renegotiate their loan and repayment obligation to the Inland Revenue Department. I understand that it is easier for companies in tax avoidance and arrears to be able to renegotiate a loan than it is for a student loan holder. We need to provide these graduates with more flexibility. We even need to do simple things like make it easier for those overseas loan holders to be able to communicate with the Inland Revenue Department either online or over the phone. For example many Government departments run 0800 numbers so that people who maybe cannot afford the phone call are able to communicate with their Government. Likewise we could also investigate ways that maybe accessing an Inland Revenue Department website from overseas could actually be charged back to the Inland Revenue Department similar to a 0800 number.What we need to do is focus on incentives on carrots not just this punitive stick-based political headline - grabbing approach. So what we need is those carrots not those sticks and this is what we are going to see as those student loans of $13 billion reduce. We need a new approach to tertiary education that puts students front and centre and that listens to them addresses their problems and reduces their challenges. Ultimately a New Zealand that is prosperous a richer New Zealand depends on educated Kiwis thriving. What we are seeing is the student loan scheme across its history have an incredibly perverse outcome on New Zealanders—on New Zealand families and particularly New Zealand women. It is high time years and years after this loan scheme was started that we actually start addressing it smartly and we actually focus on solutions—on carrots not just sticks. That is what you will see on this side of the House this election—a real choice for students and a real choice for those 500000 people with student loans in New Zealand.