Delahunty Catherine: Student Loan Scheme Bill — First Reading 
Delahunty Catherine: Student Loan Scheme Bill — First Reading 
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CATHERINE DELAHUNTY (Green) 
: 
 Tena koe Mr Assistant Speaker Roy. He mihi nui ki a koutou katoa. I rise to take a call on the Student Loan Scheme Bill. The Green Party will vote to send it to the Finance and Expenditure Committee for further investigation. As with all tax legislation the devil is in the detail and we look forward to the submissions. Although we support the bill on its first reading our continuing support is not guaranteed. 
The national student loan debt is over $11 billion. The loan scheme is a major disaster and a giant experiment gone wrong. This particular technical tax bill although introducing some common sense and some uncontroversial ideas as well as some ideas that are more controversial fails to tackle the elephant in the room—the scheme itself. This bill fails to address the debt problem and continues to value and measure the loan burden as a national asset. While we fiddle Rome for the indebted generation is still burning. 
Perhaps I should stop at this point and congratulate Sir Roger Douglas and the men of his time who introduced the student loan legislation. We have created a generation of people who are economically disempowered by this model and who no longer believe that their Government their country and their elders think that education is something worth investing in. It is all up to them as individuals. They are on their own. The consequences of the ideology that we are all on our own can be seen right across the board in our communities today and it is not a pretty sight. 
The student loan scheme was introduced in 1992 under a previous National Government and it was a giant mistake. The current total debt is $11236962000 and is growing by the second. Total debt is growing by a billion dollars a year. Surely that is not sustainable at the national macroeconomic level especially not for the individual students and families affected. Gareth Hughes MP is one of the more than 560000 New Zealanders who have a student loan. I am lucky; I do not have one. I am too old. I got a free education so I feel very reluctant to punish those who did not. However my daughter has a debt and so do the children of many other parents here. Gareth’s debt is on a similar scale to the 2008 average individual debt which was $28000. 
I come back to the bill itself. The Student Loan Scheme Bill sets out changes to the way that student loans are handled by the Inland Revenue Department replacing the current Student Loan Scheme Act 1992. The bill seeks to make the system electronic-based and under the realm of one provider the Inland Revenue Department. It tightens up penalties for non-payment which some of us are very dubious about and replaces the annual assessment for the vast majority of borrowers whose income is largely from salary or wages only with a pay period assessment. 
There are some complex counter-productive implications in this proposal which have been touched on by some of the Labour speakers. We hope the select committee will take those seriously and address them. But let us start with the good things in the bill. It does not fundamentally alter the interest-free loan status introduced in 2006 by the previous Labour Government. That was probably the biggest change to the scheme since its introduction yet it still did not alter the unfair experiment that is crippling this generation and future generations with debt. No matter how much lipstick one puts on it it is still a pig in a sow crate. The bill aims to make the student loan scheme simpler and this will benefit students as well as graduates. It cuts down on the administration of loans. At the moment two bodies share the information—the Inland Revenue Department and StudyLink—and they and we who are trying to find out about the level of debt in our families have to go back and forth between those bodies. So focusing it in the Inland Revenue Department is a step forward. 
Gareth in his previous speeches on this talked about not knowing how much he owes. It is a bizarre situation when we are all supposed to be so economically savvy that we cannot know how much we owe. That is because he cannot not go online and check it out. It is a big step forward if he can do that. It is amazing that it has taken till 2010 to see an electronic version and be able to access the amount of the loan. 
This in particular makes it easier for overseas borrowers to access information. There are hundreds if not thousands of student loan refugees overseas each with their own tale of how the student loan bill got out of control. I will quote an article from the  
New Zealand Herald 
 of 4 September 2010 about somebody known as Trev. “Trev is not this Kiwi loan refugee’s real name but that’s what we’ll call him because he wouldn’t be too happy to be outed and get a knock on his Queensland door from a debt collector thanks to a small loan he took out as a 19-year-old largely to buy a stereo. That loan has spun out of control and looks set to plague the New Zealander”—now living in Queensland—“for the rest of his life. Five years ago the original $7000 had risen to $157000 and was accelerating so fast Trev fears the total is likely to be approaching $250000 by now.” I mean talk about an unintended consequence. Trev “can’t face looking anymore and as he hasn’t a hope of affording the huge monthly repayments he has decided to put his head in the sand.” That is the legacy of a system for overseas borrowers based on interest. It means that many New Zealanders are now permanently alienated from their home country. If members think that is a good thing they might like to reflect on the consequences for future generations of this kind of debt-based punitive system. 
The bill sees the student loan as a Government asset not a Government burden and it introduces an admin fee. The Minister knows he cannot mess about with the popular interest-free loans policy so he is trying to get round it by charging interest by stealth. The Minister has floated the idea of an annual $50 charge to all former students with an outstanding loan balance. This would affect 500000 New Zealanders and net the Government about $15 million per year. It seems unnecessarily punitive to hit all these people with an extra annual fee that they cannot avoid. However why are we surprised? This whole system was always about a punitive view of getting education. Believe it or not there are countries in the world that invest in their young people that value education and that do not see it as something they should punish young people for by creating a permanent debt for them. But we are not in the modern world when it comes to this; we are still in punitive mode. 
However the Greens do think this bill will make the administration of a loan cheaper. That is where the saving should come: better administration and more electronic process not more fees and burdens on students. Otherwise it is just a continuation of this Government’s cold-blooded approach to the student debt issue and failure to recognise that student loans are an investment in education and the future of our economy. One area we seek to investigate in detail is the process for people earning under the $19000 compulsory repayment exemption level. The process appears difficult and puts the onus on the student or graduate firstly to know about it; secondly to approach their boss about it; and thirdly to obtain a certificate for exemption. I think many younger people have thrown up their hands at the bureaucracy and complexity of the existing situation and they will not embrace or understand any more changes. There is the possibility that it may be easier for graduates to get caught out with repayments. 
One very worrying clause allows for “Further means of recovering amounts that remain unpaid.” We are guessing that means reading between the lines debt collection. As the  
New Zealand Herald  
editorial pointed out we need a fair approach to student loans and calling in one’s burly debt collector mates will just see more spent on debt collection than is collected. We do not use debt collectors for those who skip overseas and skimp on child support do we? 
The portfolio is currently projected to grow to $14.5 billion by 2014 driven by growth in the number of new borrowers. Thus we are saddling an entire generation with crippling debt that could impact on all areas of their lives and will only get worse unless we act now. We need real solutions to student debt and the sector in general. 
As Gareth has made the Minister for Tertiary Education aware we are seeing a cut in the tertiary education spend which is seeing institutions shut their doors to prospective students. The Minister has also introduced a lifetime limit for access to student loans. This Minister is limiting those who want to do a double degree change midway through their studies study a long course like medicine or take a while—like the Minister himself—to get their zoology degree. That means the system is very inflexible and very rigid and we need to give it a D. 
So in summary the Greens will be voting to investigate and possibly amend this bill at the select committee on the basis of the issues that I have raised. Our support is not guaranteed. I have to say that I agree with Grant Robertson that the quote of “dampening demand”—a comment made by the Minister for Tertiary Education—is an appalling comment from that Minister. If he wants to talk the language of the market obsessively—like so many people do in this House as if there was no other reality— he should at least understand that education is an investment. The Green Party is very concerned and at every opportunity with every student loan bill we will lay this concern on the table while also supporting the positive things that are in the tidy-up legislation as far as it goes. So we are watching this space. Thank you.