Robertson Grant: Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill — Second Reading In Committee 
Robertson Grant: Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill — Second Reading In Committee 
[Volume:660;Page:9386] 
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.