Flavell Te Ururoa: Student Loan Scheme (Repayment Bonus) Amendment Bill — First Reading 
Flavell Te Ururoa: Student Loan Scheme (Repayment Bonus) Amendment Bill — First Reading 
[Volume:653;Page:2818] 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Deputy Speaker. Kia ora tatou. From having listened to Mr Boscawen deliver his korero I can very much appreciate a lot of the sentiments he expressed in the House today in terms of the bigger picture. The Maori Party is interested in kaupapa that allows more Maori people to enter into the tertiary sector and some of the ideas he has suggested about student loans and so on ring a bell. However I bring another perspective to the issue and it is a personal view in respect of the difficulties that many families face in terms of student loans and I hope it might paint a picture as to where the Maori Party wishes to head with this albeit that this the first reading of the bill. We will be supporting the bill at this stage pending other information and we look forward to the debate. 
I have five children three of whom are living a life influenced by the reality of a student-loan debt that has yet to be repaid. If we are to believe the analysis of the New Zealand Union of Students’ Associations it tells us that the average student debt is now something around $28800. For the Flavell family that equates to a burden of about $86500 so we are not talking small money for some families. Except for just one of my children after 7 years of tertiary education their loan has already topped $60000 so obviously we do not fit the average profile. As if that is not bad enough the data tells us that the burden is on an upward roll. The average student debt has risen by 54 percent since 2004 and I understand that it is now a staggering 147 percent higher than in 1998. There is a possibility that these costs will cripple the nation if they continue. They are huge issues of economic and social importance that are critical to an investment in the leaders of tomorrow. 
This Student Loan Scheme (Repayment Bonus) Amendment Bill amends the Student Loan Scheme Act to create incentives for student-loan borrowers to pay loans back. It is in that respect a response to the policy problem of the high debts being incurred by our student population. Over 60 percent of all students face high debt—a threshold that has remained relatively constant since 2004. 
What do we mean by high debt? Some 26 percent of students owe more than $15000 in debt before they even start looking in the job market. To some of us $15000 may not sound much but for students like my children it is a hell of a lot on top of things like food transport accommodation living expenses and general bills which are all expenditure items that in their own right have increased dramatically in the last 5 years. In just one area—the price of food—we might get a glance at the impact of rising student debt. According to the food price index the price of food rose by 22 percent in the 5 years from March 2004 to March 2009. No one in this House would deny that the cost of petrol for example has jumped a massive 39 percent in the same period and that has obviously taken a huge toll. 
So with all due respect this bill is very much a small drop in the bucket when one looks at the big picture and we really must look at the big picture. For the average student there will be very little capacity to make additional repayments and thus receive any kind of bonus under the scheme. 
The crucial information missing from this bill is as it stands what it would take for the average student to make additional loan repayments. What are the real costs of income tax GST mandatory student-loan repayments credit card debt KiwiSaver rent increased food and petrol costs and any savings to be made for a first-home purchase or maybe planning for children? For the average student there will be very little capacity to make additional payments and thus receive any kind of bonus under this scheme. 
I will make a point about the relationship of student-loan repayments to any other additional loan repayments. The issue of student debt cannot be seen as one of only student-loan repayments. The average debt of students has now forced the student population to look elsewhere for borrowings. We see a large increase in other loans including loans from parents and personal bank loans. The proportion of students with bank overdrafts has risen by 19 percent in the last 5 years and there has been a 32 percent increase in the amount owed on credit cards. When we consider this sort of information it is as if we can feel our pockets emptying pretty smartly especially when we consider our own children. I come back to whether this bill is the answer. 
The trouble with the bonus scheme concept is that it targets only income earners who are graduates earning at the sufficient level. The Union of Students’ Associations suggested that it really benefits only those who are already in a quite well-off position—the privileged few who will now get a 10 percent discount for early payback. We in the Maori Party are interested in another concept called “pay forward”: what is the investment we are making in the leaders of tomorrow? How will we ensure that those who are already facing disproportionately high levels of student debt—Maori Pasifika women—are also able to benefit? I ask what we are doing about them. 
If we look at just one part of the picture—that is Maori who studied for level 1 to 3 certificates—we get a sense of the scope of the problem. Nearly 70 percent of Maori who studied for level 1 to 3 certificates without completing and over 50 percent of Maori who studied at diploma and bachelor level without completing had made no progress in repayments 5 years later. A big factor in the lack of this repayment is basically low income especially income around the student loan repayment threshold. The average income for Maori who studied for level 1 to 3 certificates was just above the repayment threshold. The inequalities are entrenched with the average income for Maori with level 1 to 3 certificates being notably lower than for non-Maori with the same level of qualification. 
These are complex issues; issues that require a far more comprehensive and sophisticated response than simply a 10 percent bonus on repayments and what that can achieve. Although a scheme is a good idea it is a bare minimum and it will certainly not be effective in addressing the real underlying barriers to participation in tertiary education that we in the Maori Party are particularly interested in. 
We are certainly interested in the recommendation from Te Mana Akonga the national Maori student body which provides representation for all Maori student ropu at whare wananga nationwide. Te Mana Akonga has recommended that the preferred option is barrier-free education. By this it means that universal student allowances would be set at a living level a fee abatement scheme would be in place and every effort would be made to make it easier to invest in education. 
I would draw the attention of the House to the very useful piece of research from Raymond Torres published in November 2008 that concludes that social development is a powerful generator of productivity that leads to economic growth. If we are thinking of the future it will be education and health that will lead us out of the economic recession and it is in this respect that we must take up the opportunities to help address the harsh repayment obligations already confronting most loan borrowers. With such tough economic times we have to agree with Sophia Blair from the New Zealand Union of Students’ Associations who stated: “Helping to address the massive amount of student debt held in our communities is a key way the Government could choose to support families through this recession.” 
We will support this bill at the first reading because even a little drop in the ocean is a help we say but we are also putting on record our view that we must start thinking creatively and proactively about how we address the drivers of debt once and for all. We will be interested in the debate as it goes through the various stages of approval. Kia ora tatou.