Fenton Darien: Student Loan Scheme Bill — Second Reading In Committee 
Fenton Darien: Student Loan Scheme Bill — Second Reading In Committee 
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DARIEN FENTON (Labour) 
: 
 It is a pleasure to take a call in the second reading of the Student Loan Scheme Bill. As my colleagues have said Labour supports this bill albeit with some reservations. It has been very interesting listening to the debate and I think the Committee stage will be very interesting. There are certainly a couple of questions that we want addressed. 
It has also been interesting listening to people reminisce about their university days. I come from a generation who did not have student loans and student fees. I was not the best of students. I studied in the 1970s when it was quite fashionable to drop out. I hate to admit the fact that taxpayers paid for me to go to university and I did not complete my studies though I did go on later to do trade union and labour studies with my colleague Sue Moroney. I did not need a student loan for that study because my union paid for me to do it. So I have never had to experience a student loan. I am very grateful to former generations for allowing me to do that initial study which I do not think was completely wasted but also to complete studying later on. However my son has experienced a student loan. He has just returned from San Francisco this week on a temporary visit and he will be very interested in how much easier it will be for him to communicate with the Inland Revenue Department and to make his repayments. 
One of the things we hope for from this bill and the changes it will make is that it will make it more likely that some of the former students who are overseas will be able to repay their debts and bring their skills back home to New Zealand. Unfortunately I think an awful lot more than just student loans is keeping our best and brightest overseas. We know that it is to do with the low wages in New Zealand and the fact that we have a huge gap between here and Australia for example. Opportunities for jobs are so much better in many other countries. 
The purpose of this bill is to amend the student loan administration system to an electronic format. That seems very sensible. The purpose is to make it easier for borrowers to communicate with the Inland Revenue Department wherever they are. As the Green member Gareth Hughes said it is interesting that it has taken a while for the Inland Revenue Department to get student loan administration on to an electronic system. I understand that the student loan scheme as it is currently administered is pretty unwieldy is expensive to maintain and has limited ability to accommodate further changes. It is good to see the system moving to the modern era and to see the Inland Revenue Department being able to move student loans to a system that is much easier for students who have borrowed money. The repayment method is also being simplified to avoid the end-of-year square-ups for most borrowers and late repayment penalties are being simplified and eased. 
As I have said already Labour supports this bill as we believe that it will improve debt repayments. Student loan debt is a major factor driving graduates overseas and as I have said already it is one reason they do not come home. We want them to come home and bring back their skills so if this bill helps we welcome that. However we do have a couple of concerns which will be outlined in my contribution and also in the Committee stage. 
The student loan debt held by overseas graduates is a real problem. It is something we have to address. To this end we particularly support the changes in the bill to late payment penalties from a total of 19.56 percent interest per year to just 10.6 percent or 8.6 percent if the student enters into instalment arrangements. Treasury expects these changes to increase student loan receipts by up to $22 million a year by 2014. That is a positive step forward but we do have to ask why then we need to have an increase in the student loan establishment fee from $50 to $60. As other speakers have said this is an attempt to introduce interest by stealth. It seems completely unnecessary when this bill will actually improve repayments. We need to understand and we will be asking questions about why this is necessary and why the Government thinks it has to reintroduce interest by stealth. It will add an extra financial burden on those who are already struggling to pay their bills and who have incurred substantial debts as a result of their studying. 
Similarly another concern we have is that it appears unfair that a borrower who due to the new pay period deduction system unintentionally makes excess repayments of over $500 in a year is not able to apply for the 10 percent excess repayment bonus at the end of the year. It appears that the Government has not really fully thought out the impacts of this simplification plan. Perhaps a simpler and fairer way of dealing with it is to say that no student has to repay debt while they are participating in full-time study. 
This bill does take a positive approach to managing student loan debt but I have to say that there will be tens of thousands of students to whom this bill does not apply. I cannot help but reflect on that in my contribution. At a time when we should be investing in tertiary education for all we are seeing caps cuts and a dampening of demand for all tertiary education. 
Carmel Sepuloni 
: All we’re seeing is food stamps. 
DARIEN FENTON 
: All we are seeing is food stamps. That is all we are seeing. Yes that is right. But I am also very very concerned about the exclusion of 55-year-olds from loan access. It sends the message to older people that there is no point in them reskilling and no point in adult education. Of course that does not apply in this bill. These people are excluded from this bill which makes this whole policy pretty questionable. A policy that excludes over-55-year-olds is very short-sighted punitive and harsh. We are in a country with an ageing workforce. We are told repeatedly that people will have to change their jobs many times during their lifetime. They will have to reskill as things change. We know that the jobs we are training our younger students to do today do not yet exist. Yet here we are telling older people that they are on the scrap heap and not worthy of adult education. I think that is really unfair. 
We are also concerned about the removal of the fee maxima— 
Amy Adams 
: Also not in this bill. 
DARIEN FENTON 
: That is not in this bill of course but it is one of the things we are very concerned about. —and replacement with an annual fee movement limit. National members can go on and on about the delights of this bill—and I really loved David Bennett’s contribution; he was talking— 
Grant Robertson 
: I missed it. 
DARIEN FENTON 
: Oh Mr Robertson missed it. It was all about what a wonderful job this Government is doing on student loans and how students all around the country will be thanking this Government and be very very grateful to it. They are not grateful; they are very very concerned about some of the policies of this Government and the things it is doing like the removal of the fee maxima. 
As I said at the beginning Labour does support this bill. We have some concerns about a couple of questions which we will be asking during the Committee stage. I have a final word for Sir Roger Douglas. His contributions on these things are always eminently predictable. It is a long time since he represented the people of Otara. The people of Otara want their children to study and they want them to do well. Those children are as entitled as anybody else in the country to have decent and affordable study. If Sir Roger talked to any of the Pacific families in Otara he would find that out. They are ambitious for their children. They do not deserve to be treated or talked about in any way that is different from anybody else in this country. Those children are our future and we need to look after them.