Dunne Peter: Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill — First Reading 
Dunne Peter: Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill — First Reading 
[Volume:656;Page:5860] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill be now read a first time. 
 Later I intend to move that the bill be considered by the Education and Science Committee that the committee report finally to the House on or before 30 November 2009 and that the committee have authority to meet at any time while the House is sitting except during oral questions and during any evening on a day in which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 187 and 190(1)(b) and (c). The purpose of this motion is to bring forward the report back of this bill to ensure its enactment before Christmas. 
At the outset it is worth remembering that although this bill may be comparatively small in scope the student loan scheme represents over half a million borrowers and has a nominal value of about $9.6 billion. It makes sense therefore to take continuing steps to ensure that this substantial Crown asset continues to be managed in a way that is both efficient and consistent. With this in mind the bill introduces a suite of mainly technical changes to the student loan scheme repayment rules. Their purpose is to ensure that the law on the repayment of student loans is clear that it is consistent and that it operates as intended. 
The bill also extends interest-free loans to two special groups in recognition of the high value of tertiary education in building a strong economy. The first of these changes makes interest-free loans available to borrowers who live in countries that are part of the realm of New Zealand provided they are present in one of those countries for at least 183 consecutive days. This change will give borrowers from Niue the Cook Islands or Tokelau the same interest-free privileges as New Zealand - based borrowers. It recognises the importance of further education in building an informed and well-trained workforce in these countries which share a special relationship with New Zealand. As the Ross Dependency is also part of the realm of New Zealand borrowers who go there may also qualify for an interest-free loan. 
The 183-day requirement to be present in the country is the same criterion that has to be met by New Zealand - based borrowers to qualify for interest-free loan status. It was introduced on 1 April 2006 to encourage borrowers to remain in New Zealand or to return home from overseas and make their contribution to New Zealand’s economy. The bill also applies the same 183-day requirement to borrowers from what I would describe as realm countries so that they have an incentive to return home after their studies to make a positive contribution towards their own country’s future. 
Recognising the similar value that students who pursue study overseas bring to New Zealand the bill also extends interest-free loans to include students who further their education overseas through full-time study under formal exchange programmes or under formal agreements between New Zealand and overseas tertiary education providers. This has been an area of some debate in recent times and it will be a significant and welcome provision for a number of students currently studying overseas. 
The remaining changes in this bill are of a technical or a remedial nature to ensure that the bill works as it was intended. They include an amendment to correct an unintended change to the hardship relief provisions that were made by the Student Loan Scheme Amendment Act 2007. That unintended change had the effect of restricting the years for which hardship relief from repayments could be claimed. The bill restores the position that applied previously and allows hardship relief to be granted for any earlier tax year to borrowers for whom payment would cause serious hardship. 
To help ensure that borrowers pay their correct loan repayments the bill also introduces a change allowing the Inland Revenue Department to raise the compulsory repayment deduction rate from 10 percent to 15 percent. That change can be applied to borrowers who have not had the correct deductions made or whose repayments are overdue. 
A further amendment corrects a technicality so that borrowers returning to New Zealand who wish to fully repay their loans before they have met the 183-day requirement to qualify for an interest-free loan will be able to do so. It is simply absurd to penalise students who return home to New Zealand earlier than that and who want to start making repayments. This legislation corrects that anomaly. 
These amendments and the remaining technical amendments will help ensure that the student loan scheme works as it should and that it fulfils its purpose of maintaining a well-educated workforce for our country’s current and future needs. On that basis I am very happy to commend this small but significant bill to the House.