Dunne Peter: Student Loan Scheme Bill — Second Reading In Committee 
Dunne Peter: Student Loan Scheme Bill — Second Reading In Committee 
[Volume:675;Page:20695] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Student Loan Scheme Bill be now read a second time 
. This bill represents a significant shift in the way the student loan scheme is administered with the aim of making it easier for borrowers to manage their loans and to pay back what they owe when they should. Currently complying with this scheme is complex and its administration has its own complexities as well. Borrowers have to deal with different administrations at different stages of their loan which can result in confusion for borrowers about their immediate repayment obligations and their overall loan balance. The repayment system is also heavily dependent upon inflexible paper-based communication systems which make it difficult for the Inland Revenue Department to communicate with borrowers who move address frequently or who go overseas. Further the process of annual assessments for determining borrowers’ loan repayments results in complicated annual interaction with borrowers. 
This bill introduces a suite of measures to deal with these problems and to help the Government better manage this $11.1 billion Crown asset. To recap briefly the first of these measures sets the framework for consolidated loan information to be provided electronically to borrowers by the Inland Revenue Department. That will enable borrowers to access information on their loan balance and to manage their repayment responsibilities from anywhere in the world at any time. It also means that borrowers who are currently studying will no longer have to contact two agencies for this information as they do now. The overwhelming majority of borrowers will also benefit from the removal of the current annual end-of-year assessment if their income is from salary and wages only and if their before-tax income is over the pay period repayment threshold. The Inland Revenue Department will instead treat loan repayment deductions from a borrower’s salary or wages as being correct and final for the pay period although borrowers will be able to get a refund if they have significantly overpaid their pay-period obligation. The result will be a student loan system that is simpler easier for borrowers to understand and to comply with and more cost-effective for the Inland Revenue Department to administer. 
Finally the bill introduces changes to simplify the current penalty rules that apply when borrowers fail to make their loan repayments when they should. These include measures to help prevent penalties for non-payment or underpayment from reaching levels at which borrowers perceive them as an insurmountable barrier to paying off their debt. At the same time of course the bill recognises the importance of borrowers honouring their debt. Consequently a Supplementary Order Paper to the bill serves to strengthen the Commissioner of Inland Revenue’s ability to recall a loan in cases of serious non-compliance. These are the main features of the bill. 
I acknowledge the work of the Finance and Expenditure Committee when it considered the bill and I recall for the House the fact that while the bill was before that committee the Inland Revenue Department identified some measures where the original application dates needed to be delayed until 1 April 2013 to allow more time to implement changes in the Inland Revenue Department’s existing systems. The measures that are affected by this are the new interest and penalty rules that I have just mentioned certain payment priority changes and changes that will move the system away from the tax system’s period-based debt approach to a whole-of-debt approach which is more akin to a mortgage. Although the application dates of some parts of the bill will be delayed the application dates for the proposed changes that benefit borrowers such as the provision of a consolidated view of their loans will remain unchanged. 
As I say I acknowledge the work of the committee in its careful consideration of the proposed reforms and for the flexible approach it has taken to allow amendments to be made in order to help the Inland Revenue Department to implement the necessary changes the bill introduces. The result will be a simpler more effective way for borrowers to self-manage their loan responsibilities and a more efficient cost-effective framework for the Inland Revenue Department to manage its interactions with all borrowers in New Zealand and overseas. Therefore it is with great pleasure that I once more commend this bill to the attention of the House.