Cunliffe David: Student Loan Scheme Amendment Bill (No 2) — In Committee 
Text is incorporated into the Bound Volume 
Cunliffe David: Student Loan Scheme Amendment Bill (No 2) — In Committee 
[Sitting date: 19 March 2013. Volume:688;Page:8674. Text is incorporated into the Bound Volume.] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Firstly may I record my agreement with the substantive points made by my learned colleague Dr David Clark. It is a matter of procedural nicety that the earlier Part 2 was inserted by Supplementary Order Paper 185 into Part 1 of the Student Loan Scheme Amendment Bill (No 2) as it were at the last moment and thus the offending “Henry VIII” clause has been embedded in Part 1—just for the benefit of the listeners. 
The CHAIRPERSON (Lindsay Tisch) 
: Let me just reply to that. We have actually dealt with Part 1 so let us just concentrate on Part 2. 
Hon DAVID CUNLIFFE 
: I move to the substantive Part 2 which is a collection of transitional provisions relating to other parts of the Student Loan Scheme Act 2011. Unlike the offending “Henry VIII” clause which delegates from the legislation a regulation-making power that is thus not subject to the oversight and supervision of Parliament or to the full measure of the democratic process these clauses are in fact in some cases perfectly sensible ways of handling the transition. 
If I might draw the attention of the Committee to clause 55 of Part 2 it says that it replaces a fixed nominal interest rate which is the late-payment interest charged on an unpaid amount which was in section 139(2)(a) and (b): “replace ‘0.843% of’ with ‘the late payment interest rate multiplied by’.” New section 139(3) makes clear that “late payment interest rate means the base interest rate plus 4% calculated as an equivalent monthly rate expressed as a percentage and truncated to 3 decimal places.” That is extremely useful for us to know because what it does is provides a living mechanism whereby the legislation sets the rule which is then automatically updated as the base interest rate and thus the late-payment interest rate which is the base plus 4 percent changes over time. That is an example of how to do a transitional provision without offending either the Regulations Review Committee or the estate of the late great Henry VIII. It is not delegating an opaque broad regulation-making power; it is delegating only a very specific numerical formula that replaces a formerly static number that of course became less and less meaningful over time because of the time value of money and inflation. 
It is a matter of some interest that the Minister in the chair the Minister of Revenue has presided over this piece of legislation which in one place offends the best principles of parliamentary scrutiny—as you say Mr Chairman quite rightly now vested by amendment in Part 1 of the bill—and here in Part 2 has other clauses that do not so offend the Standing Orders the Regulations Review Committee principles or the best practices of parliamentary democracy in the Westminster system and that would leave McGee for example perfectly comfortable with the mechanism being followed. The question is why the Minister has a bob each way in two different parts of this bill. If it was good enough to do it properly in Part 2 why did the Minister feel the need to insert an offending clause by amendment in the middle of Part 1? 
Mr Chairman I guess that brings the Committee back to matters that were the subject of debate before your colleague Mr Roy departed the Chair which was that this bill is a tinkering bill. Although on the face of it in general the Labour Opposition supports it because it does act toward the principle of fairness in a very small way it is mainly a bill of missed opportunities. 
We are tinkering with a student loan scheme that is bedevilled by two fundamental flaws. One is that it is building up a mountain of billions of dollars of debt much of which will not be repaid because the students concerned have become exiles overseas in what is the second-highest diaspora after Ireland of any country in the developed world. 
The second problem is that it is perpetuating by its inaction an intergenerational unfairness or inequity that has seen people of the Minister’s generation benefit from a free subsidised State education all the way to postgraduate level without having to take out huge student loans and getting paid a bursary just like I did whereas today’s students if they have the courage to take on the debt to get their way through tertiary education finish with a mortgage and no house—a mortgage and no house. 
We all know that New Zealand’s earning rates for graduates vis-à-vis say Australia are around one-third lower. They were 30 percent lower when the current Government came into office but the current Government promised New Zealanders it would close the gap with Australia and so of course inevitably it got wider. My latest understanding is that it is now about 37 percent different on a GDP per capita purchasing power parity basis. In other words in common English it is getting worse. The gap is getting wider and the implication is that more and more of our graduate students are leaving in order to be able to repay the student loans that are the millstones round their necks. That is a perverse consequence that this House is going to have to spend a whole lot more time on in the term of the next Government working together because the Minister in the chair is not prepared to do step change. He does only small change and all the Committee has today is small change. 
Let me draw the attention of the Committee to clause 53 which replaces section 119. It replaces the former meaning of “excess repayment”. It contains a number of subsections and paragraphs—(1)(a) (b) and (c) and (2)(a) through to (d)—which cover in some detail the penalties and obligations apportioned to excess repayment. There is a certain irony in this clause. How many of today’s recent graduates or current students are capable of so-called excess repayment? Excess repayment would be a fine thing when they can barely feed themselves or pay for the rent while they get their first jobs straight out of university with the millstone of a huge debt round their necks. And it is because of their inability to repay because of forces beyond their control like the fact that we are 270000 jobs short in this country and we have a Government that is doing precisely nothing to fix it—those are factors beyond their control—that there will not be much excess repayment under this clause in Part 2. 
Clause 56A amends section 145 which is about the application of different types of relief for borrowers. Well that sounds interesting. Perhaps it is a neck and shoulder massage. But no we see in the proposed new section 146 that the commissioner may grant relief from late-payment interest. That in our view is a very sensible provision to include in this bill because it gives the commissioner discretion to look at individual life situations on a case by case basis. Why is discretion important in the law? Because no two lives are the same and it would take volumes to try to write prescriptively all the criteria that a sensible and worthy commissioner should take into account if trying to decide every case off some fantasy rule book. Better to have a well-trained commissioner subject to proper principles and oversight and to delegate appropriate discretion. The same does not apply to “Henry VIII” clauses as have been vested by the Minister by amendment in Part 1. 
Summing up all in all the transitional provisions currently contained in Part 2 of this bill are somewhat underwhelming. They are for the most part sensible. They do not for the most part—in fact I do not think at all—offend the principles of Standing Orders such as that clause now vested in Part 1 which delegates a regulation-making power because the Government could not think its way properly through legislating. That is the problem. The problem is that as with the rest of the bill worthy though most of it is it is a bill of small changes whereas what we need is a step change. It does not address the yawning chasm of billions of dollars of student debt by any more than $7.5 million over 5 years—barely enough it might be said to cover the cost of Parliament’s time the implementing officers’ time and the compliance costs associated with the measure. It certainly does not solve a billion-dollar problem. Secondly it does nothing to resolve the intergenerational equity issues that have bedevilled today’s students.