Hughes Gareth: Student Loan Scheme Amendment Bill — First Reading 
Hughes Gareth: Student Loan Scheme Amendment Bill — First Reading 
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GARETH HUGHES (Green) 
: 
 Kia ora Mr Deputy Speaker. Nga mihi nui ki a koutou. Kia ora. It is great to be addressing student loans again in this Parliament so soon after we debated the last student loan bill especially considering the crisis we are facing in this country. More than 600000 Kiwis collectively have a debt millstone round their necks of more than $12 billion. But of course this bill the Student Loan Scheme Amendment Bill is not dealing with the crisis of student loans in our country; it is just tinkering around the edges. 
I think it is important to discuss the bill given that yesterday was the Nationwide Day of Student Action where hundreds if not thousands of students protested at universities against this Government’s disastrous tertiary education policies and also given that the voluntary student membership legislation is about to pass with the support of National and United Future I understand. Along with the regulations delivered yesterday which were made possible with the passage of the Education Amendment Bill (No 4) we are seeing the Minister for Tertiary Education Steven Joyce not students deciding what is best for students. 
I will first comment on Amy Adams’ use of the word “generous”. I think this is a good example of the Crosby/Textor mantra that National and United Future keep reiterating which is that we are being overly generous to students. The fact is that our student loan structure and student fees structure mean that Government money is going via students via the student loan directly to the institutions. The fact is that we spend $3000 less on our students than the OECD average. It is unfair and it is a bit of political spin to keep calling the scheme particularly generous. 
The Green Party will be opposing the Student Loan Scheme Amendment Bill. We are not like Labour which is supporting it being referred to a select committee. We will be opposing the bill but we will go into the select committee deliberations with an open mind. The bill essentially does three main things. It tries to maximise repayments from New Zealand - based borrowers by excluding losses from the calculation of student loan repayments; it allows the Inland Revenue Department to ask for a contact details person; and lastly it shortens the repayment holiday from 3 years to 1 year and it now requires borrowers to apply for a repayment holiday. It is not the automatic system as we had when the current Minister of Revenue implemented the legislation in 2007. The Greens will be voting to oppose this bill. We support real action to tackle the student debt issue. We prefer an incentives approach to reduce the student debt burden. Obviously although there are parts of the bill we support on balance the Green Party cannot support it. 
I will quickly go through the three main elements of the bill. The first element is about excluding losses from calculations for the repayment for student loan purposes. It closes a loophole. I think the reason why people are exploiting it is that the 10 percent compulsory student loan repayment once someone reaches the threshold is quite significant. Ten percent of my salary is automatically deducted every week and it is the same for many New Zealand graduates and student loan holders. Essentially it is like a 10 percent tax increase on graduates in New Zealand. We cannot forget of course that there are legitimate loss-making reasons for companies. Some businesses especially start-ups run by keen graduates who are starting a business want to make a loss in the short term so they can build up the business over the medium to long term. This change essentially will mean that the Inland Revenue Department will get more money but it is the person who will receive less money and of course the business will receive less money as well. The irony of course is that we may see more Kiwi entrepreneurs heading overseas. But I do look forward to hearing a robust debate about it at the select committee. 
The second element is the contact person. This is the most uncontroversial element of the bill. We think it is a good common-sense idea. It is pretty amazing that no one has thought about it before over the long years the student loan scheme has been in existence. But we note that there will be no penalties in the legislation. It will be interesting to find out how the Inland Revenue Department is expected to deal with the fact that many people might just say: “Well I’m not going to tell you. What are you going to do about it?”. It is also good to know that they will not be chased up for the borrower’s current tax status—that will not be passed on—and that the contact person’s tax status will not be chased up by the Inland Revenue Department as part of this process. 
The third and most controversial element is the repayment holiday. Currently borrowers overseas automatically receive a 3-year repayment holiday. There are about 38000 Kiwis overseas who have a student loan and they have a total student loan balance of about $930 million. I will give a little bit of history. It was the Minister of Revenue Peter Dunne—the perpetual Minister of Revenue under no matter what colour Government—who introduced the Student Loan Scheme Amendment Bill (No 2) in 2007 which brought in this repayment holiday. Of course we cannot forget those borrowers overseas who are still paying an interest rate of around 6.6 percent. I went through  
Hansard 
 and found Peter Dunne’s first reading speech on the Student Loan Scheme Amendment Bill (No 2). Mr Dunne said: “The new rules will make it easier for people overseas to repay their student loans and will offer the chance of a fresh start for those who have fallen into arrears. There will be a repayment holiday of up to 3 years for borrowers going overseas. During that time they will not have to make repayments although their loans will still attract interest. This change recognises the fact that it is not always easy for people to repay their loans while doing their OE or working overseas …” 
In the first reading debate Nandor Tanczos representing the Green Party said that the Green Party was pleased with this and that the 3-year repayment holiday was good. He said that many of these people overseas are doing casual work and they are not necessarily in a position to make repayments. The Green Party then thought 3 years made a lot of sense. In the Committee stage of the debate Mr Dunne said: “The reality we face and what drove this legislation was the recognition that significant numbers of young New Zealanders were living overseas for a variety of reasons.” Of course many Kiwis move overseas. Some feel pushed and some are pulled overseas. But the fact is that the problem of Kiwis going overseas has not got any better under a National Government. In fact it has become worse. 
The problem we were trying to identify by bringing in this 3-year repayment holiday in 2007 has not got better in 2011. In fact it has become worse. In 2008 when National was campaigning at the election 2700 Kiwis were moving across the Tasman. Now we are seeing the highest figures since 1981. For the year ended July we saw 31600 Kiwis migrating to Australia. The arguments that Mr Dunne used to bring in a 3-year repayment holiday are stronger in 2011 when he is reducing the repayment holiday. When Mr Dunne said in the Committee stage that we needed to take a pragmatic approach to this and being someone who places a great virtue on pragmatism it struck me that the logical course of action was to derive the solution that we have to extend the holiday period for 3 years recognising the fact that young New Zealanders take that extended period overseas. I am not sure what it is. Is it less logical now? Is it less pragmatic? What exactly has changed? 
The fact is that 3 years is an appropriate and a fair length of time for the Kiwi OE. The traditional Kiwi OE is in fact greater than a year which is what the Student Loan Scheme Amendment Bill is changing. When we look at probably the only data that has studied Kiwis overseas the Kiwi Expat Association survey we see the largest block of time that Kiwis spend overseas is in the 3 to 5-year category followed by the 6 to 10-year category. In fact only a minority are overseas for 1 year. 
One particular element of the bill that I think is quite controversial and I hope it will not be—I hope it is just a simple drafting error or an error that has an official explanation—is the requirement for the 6-month application period. When we read the officials’ briefing it states: “To be considered an application must be received by the borrower before the borrower becomes overseas-based typically 6 months after the date of departure.” I am not quite clear what it is. Is it before the borrower becomes overseas-based or is it after the date of departure? It is absolutely not clear. I hope it is not that the borrower has to apply 6 months in advance of departing the country to get this overseas repayment holiday because that seems particularly stringent and particularly silly. 
What we are seeing in the bill is a grab bag of things. We agree with some we disagree with others and we are going to have a keen eye at the select committee to see how this bill goes. But I guess the key thing again is that we are ignoring the real issues to do with tertiary education and the decline. We saw last week five of our six universities decline down the world rankings we are seeing a lack of funding and we are seeing no will from the Government to tackle the student debt problem. The fact is that Peter Dunne has been a Minister in various Governments but he has still not been able to implement his key policy which the Green Party does agree with which is a bonding scheme—more carrots to help Kiwis reduce the student loan burden. That is where the priority of this House must lie.