Mallard Trevor: Student Loan Scheme (Repayment Bonus) Amendment Bill — Second Reading 
Mallard Trevor: Student Loan Scheme (Repayment Bonus) Amendment Bill — Second Reading 
[Volume:657;Page:6305] 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I hesitated as I rose to speak because I thought that the Minister of Education Anne Tolley might have got to her feet in order to make a contribution to this debate on the Student Loan Scheme (Repayment Bonus) Amendment Bill. It is often the case in these matters which are technically the responsibility of the Minister of Revenue that the policy is driven out of education. This was certainly part of National’s education policy at the last election. But I see that she has not chosen to participate in this debate to date and therefore I think it is important that we proceed notwithstanding— 
Hon Darren Hughes 
: The de facto Minister is here! 
Hon TREVOR MALLARD 
: Mr Peachey has been pointed out as being in the House and I want to compliment him on the way he ran the select committee. There are not many people who can run a select committee on a bill on which there is division such as this in the way that he has in good humour. It is also worth saying thank you to the officials who made a real contribution to this. For such a small bill there was quite a lot of extra work for them—getting background information and reports and working off a variety of different assumptions around interest rates to give some different models. 
In the end none of that work was able to convince the Labour Opposition that this bill is a good one. In fact when is comes to the Committee stage we will be considering whether it would be appropriate to rename the bill. It could be the “Bill for Economically Illiterate Former Students” or the “Bill for Making a Generous Contribution to the Taxpayer Over and Above the Tax that You are Liable to Pay”—or one of a number of approaches like that. That is because depending on the interest rates at the time someone with a student loan and with somewhere between 21 months and 36 months—there is a debate as to the time—left to repay it would be foolish to take the benefit of the scheme. People would be better off putting their money in the bank collecting the interest from it paying their tax on that and making a contribution out of the net amount at the end of the time when it is appropriate for them to repay their loans. 
If the bill is passed I think we will see students working very very carefully around getting the timing right. There is a point depending on the interest rates and the direction they take when it would be of benefit to students to take advantage of this scheme. As I said there is a debate around 21 months or 36 months depending on the models and some of the assumptions as to when that point is met. From the Minister of Revenue’s point of view the problem with that situation is that if students can understand it and work it really well the taxpayer ends up being worse off rather than better off. The Inland Revenue Department ends up being worse off net over the period of the loans than it would in other cases. The Minister shrugs his shoulders and I agree with him. The way revenue goes up and down and round in circles it will not make any difference. The Government will not be making decisions about another $1.5 billion of broadband based on this decision. 
Hon Peter Dunne 
: It makes a difference to the students. 
Hon TREVOR MALLARD 
: The Minister is right; it can make a difference to the students if they get it right but there is a very fine point where it works for them. As the loan comes down and time winds out there is a point where the right thing to do is to take advantage of the scheme but it is relatively late in the loan rather than something that can and should be done as a matter of course by the students if they for example have 9 or 10 years to go. Anyone who has 9 or 10 years to go on their loan and pays an extra $500 or more in this is a mug. It would be stupid and foolish. 
Hon Sir Roger Douglas 
: Not necessarily; there are other reasons. 
Hon TREVOR MALLARD 
: I accept Roger Douglas’ point and he made it in the select committee. He is right; there are other reasons people pay it off. Sometimes people are given gifts that are tied. For example grandparents might decide to give a contribution to pay the loan off. The most generous grandparents would put the money into an account let the grandchild get the interest and pay off the loan with that interest. But there may not be a high level of trust between the grandparents and the grandchildren and I think many of us especially those of us who have been Ministers of Education or who have had kids and have been involved in this loan scheme know that people play at the edge of the rules. People do not always do what is the right or the fairest thing to do. I accept Roger Douglas’ point that it could be a good thing for grandparents to get a bonus on their payments for their grandchildren on the way through or on an inheritance or the like. 
From my perspective and I want to address the Minister of Revenue now in a serious way something that could unblock Labour’s opposition to the bill is if material sent out about the scheme from the Commissioner of Inland Revenue recommended that people seek advice before they take advantage of it. I am not saying that people have to pay for that advice or that who they get it from should be defined but I want people before they go into the scheme to talk about it with someone who might know a little bit more about interest rates present values and that sort of thing. I think people can then go into it with an informed decision. I agree with Sir Roger that there can be some good reasons for going in it. They are extraneous reasons; they are not proper economic reasons. There could be some good reasons for going in and they could overbalance or outweigh the economic decisions. 
I have an amendment on the Table of the House that was supplied to the Minister’s office some time ago. It is a relatively simple one that would require the commissioner to advise people to seek financial advice. In my opinion it would not be a big thing—the forms are yet to be printed—to include a line on those forms. I am tempted to go back to Sir Roger’s friend Ruth Richardson and her line “What’s the mischief in it?”. What is the problem with the Commissioner of Inland Revenue suggesting—not requiring just suggesting—that people get advice? I cannot see that there is any problem at all. If the Government took up that suggestion then on balance the bill becomes so trivial that we would support it and we would help it go its way through the House in a relatively rapid fashion. Our major objection to the bill the problem of people picking it up in an ill-informed way would be lessened and therefore we could support it. So I am interested to hear from the Minister of Revenue. I leave him time between now and the Committee stage to think about whether the suggestion in my amendment is an appropriate thing to do. Even if he does not really think it is appropriate I would like to hear what he thinks the harm in it would be and I look forward to his response. 
Again I thank Allan Peachey and the officials for the work that was done on the bill. As I say there are divided opinions on the bill but in the select committee that situation was handled very well by Mr Peachey. Thank you Mr Assistant Speaker.