Williamson Maurice: Student Loan Scheme Amendment Bill — Second Reading 
Williamson Maurice: Student Loan Scheme Amendment Bill — Second Reading 
[Advance Copy - Subject to minor change before inclusion in Bound Volume.] 
Hon MAURICE WILLIAMSON (Minister for Building and Construction)  
on behalf of the Minister of Revenue: I move  
That the Student Loan Scheme Amendment Bill be now read a second time 
. The main purpose of this bill is to improve the efficiency and the fairness of the student loan scheme by encouraging greater personal responsibility and accountability on the part of borrowers towards their repayment obligations. The measures contained in this bill which I will now recap briefly are designed to achieve those objectives. 
To introduce greater fairness across the student loan scheme the bill proposes to maximise loan repayments made by New Zealand - based borrowers by removing the ability to offset losses against income in order to reduce their liability for student loan repayment purposes. As a consequence of this measure the bill also proposes to extend pay-period assessments to the earnings of all borrowers thereby removing the need for the annual square-up assessment of the salary and wage earnings of borrowers. Borrowers who have significantly overpaid their repayment obligations on a pay-period basis will still be able to apply for a refund while those who have significantly underpaid will have catch-up deductions made. 
To further improve borrower accountability the bill gives the Inland Revenue Department the ability to receive a borrower’s contact person details from StudyLink from 1 January next year. That person will be contacted only for the purposes of providing a borrower’s most recent contact details but will not be privy to details relating to the borrower’s loan balance. This will help facilitate the Inland Revenue Department’s contact with a borrower who is in default and who has not updated their current address details so they re-enter the repayment system. It will also help the Inland Revenue Department to maintain contact with borrowers who leave New Zealand to embark on overseas travel as well as New Zealand - based borrowers who may change addresses frequently. 
In a further measure to improve the repayment levels of overseas-based borrowers it is proposed to reduce the current repayment holiday provision from 3 years to 1 year. Borrowers must apply for the repayment holiday and as part of the application process provide a New Zealand - based contact person. As this measure has generated some discussion around the perceived fairness or otherwise of restricting the ability to take a repayment holiday while overseas I would like to further clarify the purpose of this change. The current 3-year repayment holiday is a generous one. It was introduced during the term of the previous Government when the focus first shifted to the number of borrowers overseas with significant student loan debts as a legitimate means of incentivising overseas-based borrowers to face up to their repayment obligations. It was in effect a trade-off allowing borrowers who had gone overseas to have a reasonable period of time during which their repayment obligations were suspended. However some years down the track we have taken the opportunity to review how the policy has been working in practice. Research conducted by the Inland Revenue Department in 2011 suggests that overseas-based borrowers generally travel and work casually in the first 12 months of their OE but after that they tend to remain in one city and seek permanent work. The changes contained in this bill are designed to recognise that and the emerging fact that as a result borrowers can easily lose track of time and their loan repayment obligations by the time the repayment holiday ends. The changes in the bill are therefore intended to act as a timely prompt to borrowers that they must repay their loan when the holiday comes to an end. 
For the vast majority of loan borrowers who do the right thing and repay their loans on time the changes proposed in this bill will be welcomed as bringing greater fairness and accountability to the student loan scheme. For the Government the measures in this bill are consistent with the need for good governance over this substantial Crown asset. With this in mind the Minister of Revenue has released a small change to the bill by way of Supplementary Order Paper 15 to clarify that the current commencement date of 1 April 2012 for most of the bill’s provisions will continue to apply in spite of the passage of time that has occurred since the bill was introduced last year. 
In bringing the bill to its second reading I want to acknowledge the work of the Finance and Expenditure Committee and its recommendations to further improve the content of the bill. The result is a bill that will add greater strength integrity and transparency to the student loan scheme for borrowers for taxpayers and indeed for the Government. It is therefore with great pleasure that I commend this bill to the House.