Donnelly Brian: Student Loan Scheme Amendment Bill (No 2) — Third Reading 
Donnelly Brian: Student Loan Scheme Amendment Bill (No 2) — Third Reading 
[Volume:638;Page:8281] 
Hon BRIAN DONNELLY (NZ First) 
: 
 In rising to speak to the Student Loan Scheme Amendment Bill (No 2) I just want to reflect upon a couple of the comments made by previous speakers. The first is a comment that was made by Dr Paul Hutchison in response to some comments that I had made in the Committee stage and in fact in the second reading stage. I had made the statement that many of our students went off overseas unaware of their obligations to the Inland Revenue Department to pay back part of their student loans. Dr Paul Hutchison suggested that it was not so much ignorance as in fact selective denial which I guess goes to show that Dr Paul Hutchison and the National Opposition has somewhat of a less generous view of young New Zealanders than I do and than New Zealand First does. I believe that many of our young people who are getting themselves into the situation that this bill is aimed at go overseas not fully cognisant of their obligations. 
I refer to Mr Peachey’s comments about the fact that the young people do have an obligation to pay back those loans and with regard to those people who try to get around that obligation I think of them as being nothing less than thieves. They have taken money from the taxpayers of New Zealand to get themselves an education and if they deliberately flout their obligations they are no better than people who are just stealing from the taxpayers of New Zealand. Mr Peachey made I thought a quite heartfelt picture of the scenario of low-income workers in multiple jobs and it is absolutely true that their taxes are helping to pay for the education of these young people and that their taxes are supporting the interest-free system that is in place for students. However the question the member did not answer was how much those families would have in their pockets per week with the tax cuts that National was offering at the last election. I suggest that it would be zilch. Therefore I believe he was going along a very unseemly track in suggesting that those people would have gained enormously out of it. 
The details of this particular legislation have been traversed quite a number of times both at the second reading and last evening through the Committee stage. They have been articulated by the Hon Peter Dunne who put this legislation together. It is probably a waste of the House’s time to go through and detail all the bits and pieces. So I think we need to look at the purpose of the legislation—what this legislation is trying to do and whether it will achieve it. I say once again that New Zealand First has long believed in a policy that the best immigrant is a New Zealander returning home. 
Opposition members have gone on and on about the this legislation being only about the interest-free loans; in fact this is not about interest-free loans at all. This legislation comes from circumstances that would still be in place even if there were no interest-free loans. I will just refer to one or two of the things that Mr Peachey talked about. He talked about a history lesson. The loan scheme was put in place in 1992 but back in 1996 when New Zealand First came into coalition with National and I became Associate Minister of Education with Wyatt Creech there were some real problems with the exercise of the student loan scheme. One of the problems was of course that 16 and 17-year-olds could go off and do courses at polytech. They could then take out a $10000 lump sum and take off to England. Their parents—and no one else in fact—could not prevent them from doing it and because of the contracts legislation they had no obligation to pay those loans back. It was something that New Zealand First and National worked on at the time. 
One of the silliest things of the lot that was occurring at that time which we had to try to apply a fix to was this sort of situation. Someone might write to the Inland Revenue Department and ask how much he or she owed. The Inland Revenue Department would write back and say that $1052.36 was owed. So the person gets the letter in the mail writes up a cheque and sends it off to the department. Well it takes 5 days to get there. Within 1 month that person gets a reply from the Inland Revenue Department that says that he or she owes 53c on the loan. That was the interest that had accrued in the interim period from the time the person had written to the department it had written back and the person had sent the cheque. That was how silly the system was. 
Therefore progressively administrations have picked up and fixed up bits and pieces of the legislation. The difficulties that people who go off overseas are facing particularly in terms of the penalties occur whether or not there is an interest-free loan situation. The interest-free loan policy has exacerbated the situation and it has done so in this particular way. It applies only to people who are in New Zealand or who are offshore doing charitable work. It applies only to those people. Many people have gone off overseas believing that they are carrying interest-free loans. It does not apply to them; those people go off overseas and there is an obligation under the current law for them to continue to make repayments. If they do not make those repayments then their penalties accrue. So after 3 years when they decide to come back to New Zealand and start paying off their student loan the student loan will have grown massively and people look at that as being a huge disincentive for them to come back. As I say the situation is not created directly by the interest-free loan policy but the interest-free loan policy has exacerbated it. So any suggestion that there is a direct flow-on is not correct. 
However the objective of this legislation is to encourage and provide incentives and to remove disincentives for our people who go off overseas to come back to New Zealand and to engage constructively in New Zealand society and in the New Zealand economy enriched by their experiences overseas. So that is what the 3-year holiday is about. People need to understand that that is all it is: a 3-year repayment holiday. They go off overseas but they still have to pay the interest that is accruing which will be building up on their loan. So when they look at their loan sheet at the end of 3 years it will be bigger than when they left. However no penalties will be accruing to them during that time. After 3 years they will have to start making continuous repayments back to the Inland Revenue Department; otherwise penalties will come. We think 3 years is a very sensible amount of time. It is about the time that somebody can go across and have that overseas experience and possibly do some postgraduate studies but then return. 
I just want mention that in the last 10 months I have had the good fortune of having my first two grandchildren born to me. One is very fair even though she is a registered member of NgaiTahu and the other one happens to be Niuean - Cook Island - Samoan who has a skin colouration that is very similar to that of Nanaia Mahuta. I refer to them as ebony and ivory. They are just gorgeous. I consider myself so lucky to have these two grandchildren living in Auckland and to be able to regularly see them and see them growing up. I feel so sorry for those people whose kids and grandkids are growing up across the other side of the world. From that particular point of view I have to say that there is some really good fortune in the objectives of this particular legislation and New Zealand First of course is very supportive of it. 
Mention has been made of the Education and Science Committee and the work it did. I have to acknowledge the work of Opposition members on that committee as well as Government members. It was really the select committee process rather than the select committee itself that led to some of those constructive changes—and we believe positive changes—to the legislation. That demonstrates how important select committee work is. That is where we get participatory democracy actually taking place within our Parliament. The rest of our Parliament is really representative democracy but at the select committee and through the select committee process we can refine our legislation and listen to the people and hear what they are saying. 
Once again I take the opportunity to congratulate the Hon Peter Dunne because I believe he has produced very good legislation. I congratulate the Inland Revenue Department officials. They were really really good to work with. I have mentioned the situation where they went back to a group of presenters who had got it wrong and they went out of their way to make sure that they understood the bill completely. That was going beyond the call of duty but it was representative of the way they approached the whole legislation. From this I hope—and I believe and New Zealand First believes—that the objectives will be met and there will be more incentives for our young people to return back home and participate constructively in our society.