Simpson Scott: Student Loan Scheme Amendment Bill — Second Reading 
Simpson Scott: Student Loan Scheme Amendment Bill — Second Reading 
[Advance Copy - Subject to minor change before inclusion in Bound Volume.] 
I want to say a little bit about the repayment holiday changes as I go on. We have seen already in the last 2 years a series of restrictions placed on tens of thousands of New Zealanders who have been cut out of higher education—55-year-olds and over new migrants pilot trainees part-time students—and John Key’s statement last week suggests that student loans are going to be reined in in a big way. The Government is not finished yet. 
This bill is more of an effort to tinker around the edges of student loans but it does at the same time affect the hundreds of thousands of Kiwis who depend on them. The bill would exclude investment and business losses from the calculation of net income in assessing student loan repayments. This presents a risk where there are significant losses for someone starting their own business soon after university who may then have to borrow more or make other arrangements in order to meet repayment requirements. Various submitters raised questions about this in the Finance and Expenditure Committee but the Government would not resile from it. 
The bill requires alternative contact details to be supplied as a precondition of accessing a student loan and presumably the thinking behind that is to provide an alternative contact point for tracking down defaulters. If that is handled in a way that is true to what we believe to be the intention of the bill as the Government has outlined it that will not be a particular problem as long as it is carefully policed and the Government remains true to its objective of merely tracking down those who are defaulting on their loans. But as we have seen the efforts so far have been generally in the direction of claw-back and so we retain a few nervousnesses around that. 
The changes around the repayment holidays are the ones that have been concerning to me. The members opposite wish to rein in the repayment holiday and make it just 1 year rather than 3 years. We argued in the select committee about the merits or otherwise of this proposal and we were clear that this would likely affect unfairly those who are second-chance learners—those who have perhaps already repaid a student loan and decide to go back and take on another one. If I was to take out a mortgage repay that mortgage carry on with my life for some period of time and then decide to take out another mortgage I would expect to face the same conditions with that second mortgage as with the first one I had taken out. 
With student loans in terms of what is proposed around this repayment holiday that is not the case. A person is not entitled to a second repayment holiday under this legislation. That will disadvantage disproportionately those who have gone out sought some education as a young person and decided that they could not cope or it was not for them at that stage. They have had gainful employment gradually paid down their student loan and then come back with a real ambition in mind determined to get ahead determined to make the best for themselves and their family by taking out a second student loan. Suddenly their opportunity set is restricted. This is the kind of change we have come to expect from the Government members opposite. We have challenged this. They said that this is something they are sticking to. We asked for further information on it; it was very slow in forthcoming. 
The mortgage repayment example is a fair one. I think that everyone should have the opportunity to have fair conditions when they take up their loan and expect to have the opportunity to face that loan in the same way as they would at any other point in their life. A few statistics: $17000 is the average student loan held currently and 58 percent of the borrowers are women. When I talk about those who are faced with that reduced opportunity set I think we should bear in mind that 58 percent of those who are borrowing are women. And 70 to 80 percent of eligible borrowers take on a loan. So this does affect a lot of New Zealanders. I think we should provide the opportunity for people to retrain particularly those who are motivated so to do. Restricting future options for our citizens who want to better themselves seems counter-intuitive. Labour is determined that the principles of fairness and opportunity should win out in this case as in all cases. 
The bill also inserts clauses 7B to 7E to reflect “current administrative practices regarding the repayment codes used for income tax and student loan repayments. The treatment specified in the Student Loan Scheme Act 2011 was designed in anticipation of changes to the Inland Revenue Department’s computer system which will now not be made.” These changes will not be made because that computer system was a flop. Millions of dollars were poured into the Oracle Corporation for mainframe redevelopments and they were subsequently written off. That raises a very important question around this to do with the major project that the department that will be administering this legislation is about to embark upon and that is an estimated spend of $1 billion to $1.5 billion overhauling a computer system to manage our tax take. That amount of $1 billion to $1.5 billion— 
Scott Simpson 
: Over 10 years. 
Dr DAVID CLARK 
: —over 10 years is not as big as Texas but it is certainly bigger than INCIS. So we need to be very careful when we are dealing with this new computer system that is being put in that it should I think be able to cope with the kinds of changes that were anticipated in the smaller investment in the Oracle Corporation for the original mainframe developments. It seems to me strange that we should be now making amendments to the legislation in order to cope with a computer system that did not work when a bigger one that theoretically should work is planned. One has to ask whether the Government has faith in its officials and in the contracts that it is letting and whether it is sure that it can carry out the work that it has promised with this amendment. 
My colleague Grant Robertson mentioned earlier that Treasury and the Ministry of Education had cast aspersions on the Inland Revenue Department’s calculations for estimated savings that are likely to eventuate. This is worrying because this legislation by one calculation will cost us—or cost the taxpayer I should say more correctly—approximately $2761000 to pass. That calculation done for me by the Parliamentary Library says that that is what it costs to pass a bill in this Parliament. We have to wonder in this case when we are passing a bill that hopes to regain $15 million from the taxpayer whether that is money well spent especially when the Ministry of Education and Treasury have questioned whether this bill actually achieves what it sets out to achieve. 
In order to conclude I wish to just recap that Labour will indeed support this legislation but it supports it with reservations and those are around the repayment holiday and the way in which that is intended to be put in place to restrict the opportunities of second-chance learners. That is because Labour always supports fairness and opportunity. We want to see people get ahead. Where they want to work hard where they want to take the opportunity to better themselves and better their lot for themselves and their families Labour wants to support that. We have seen from National restrictions to student loan eligibility which have seen tens of thousands of New Zealanders shut out of higher education and more is promised. John Key needs to come clean on what he is planning for student loans as hundreds of thousands of Kiwis depend on them. 
These restrictions that will be placed on 55-year-olds new migrants pilot trainees part-time students and so on are not the end of it. Labour wants to see fairness and opportunity not a bill that tinkers around the edge aiming to get back just 0.12 percent back in an estimate that has been described by officials as a guess. We want to see this money come back to New Zealand where it is due—that much is true—but we also want to see in place a system that is fair and that supports Kiwis who are working hard to get ahead and who are bettering themselves for the future of us all.