Robertson Grant: Student Loan Scheme Bill — Second Reading In Committee 
Robertson Grant: Student Loan Scheme Bill — Second Reading In Committee 
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GRANT ROBERTSON (Labour—Wellington Central) 
: 
 It is a pleasure to rise to speak on the Student Loan Scheme Bill. As other Labour speakers have indicated we are supporting this bill albeit with some concerns about a couple of matters which I will go into in a moment. First I will respond to some of the comments made during the debate. I start with my colleague Gareth Hughes from the Green Party. I want to make clear that we on Labour’s side of the House are very proud of the changes Labour made to the student loan scheme when we were in office. 
When I was a borrower in the student loan scheme we were charged interest on our borrowings while we were studying—while we had absolutely no means of being able to pay it back. It created this phenomenon called flat-spotting which means that people could earn and earn and earn money but the interest would keep going up and they could not pay it off. Labour made sure that we removed interest on student loans while people were studying. Then we moved on to remove interest completely from student loans. I am proud of that. I am proud that that achievement has made it much easier for people to pay off their loans. It has worked in trying to keep graduates in New Zealand. That was actually the purpose of the change: to incentivise people to stay in New Zealand because interest is still charged when a borrower is overseas. 
We also made tertiary education more affordable generally. We introduced the fee maxima policy. I sat on a university council in New Zealand in the mid-1990s. In 1 year fees went up by 18 percent and the next year fees went up by 15 percent. That made it really difficult for people to afford tertiary education. When Labour came into office we introduced the fee maxima policy which meant that institutions could not put up their fees by more than 5 percent per year. That demonstrably helped students by keeping the cost of their education down. We also extended eligibility to student allowances which meant that fewer people were borrowing from the student loan scheme. That was very important to the academic success and welfare of many students. So I say to Mr Hughes that although he may have ideals for further changes to the way tertiary education is funded—and I too want to see it become more affordable—I think the Labour Government’s record on tertiary education in its last term of office is something to be proud of. 
In terms of Sir Roger Douglas we heard a familiar speech from him. My only response to it is that the reason why I support investing in tertiary education is so that the children of the truck driver from Otara can have a tertiary education. Why should we limit their opportunities? We need to invest in tertiary education so that everybody has the chance to improve themselves no matter where they come from. Tertiary education in my mind—and I know that Sir Roger will disagree with this—is a public good for the most part. In the mid-1990s the Todd task force which looked into tertiary education tried to come up with a balance between the public and the private good in tertiary education. The truth is that there is not a scientific formula for that but the reality is that we all benefit from tertiary education because we benefit from having people with skills who can then go on to be part of our productive economy. It is an investment in all of our futures. It is especially an investment in the future of someone who comes from a background where they may not have the resources themselves to pay for tertiary education. I think we should have the ambition for the people from Otara to be able to be part of the tertiary education system which is why we need to invest in it rather than trying to see it portrayed as some kind of middle-class benefit. 
I will now return to the bill itself and say as other speakers have said— 
Chris Hipkins 
: Return to it? 
GRANT ROBERTSON 
: I say to Mr Hipkins that I was responding to comments in the debate. I will now return to the bill itself and say as other speakers have said that there are some good elements in this bill. I particularly support the idea of a more electronic-based system for the loan scheme. As I said in the first reading debate when I was looking at some of the forms being used for student loan borrowers when a constituent visited me in my office with a problem with their loan I recognised the forms as ones that I had been part of designing as a student politician in the mid-1990s. So there is absolutely no doubt that the time has come to update the systems. 
As Mr Lotu-Iiga said an electronic system will be very helpful for people overseas and we want people who are overseas to be able to pay back their loans and to interact with the Inland Revenue Department in a sensible way. I have one issue around the electronic system which is the question of how it interacts with the redesign of the computer system at the Inland Revenue Department. It is quite clear that historically Government agencies have struggled with large computer projects. Need I mention INCIS—the integrated national crime information system—to the House? As we go through this debate and in the Committee stage I have a number of questions for the Minister around the interaction between these changes to make electronic payments easier and the overall change of the Inland Revenue Department’s computer system. But overall that is a very good aspect of the bill and it is certainly one that we can support because it will help borrowers manage their loans and help with consistency of treatment between different borrowers. That change is important to make. 
The two areas I want to speak about in the remainder of this call—and I will certainly come back to them in the Committee stage—are the administration fee changes and the changes to the pay period assessments. It is difficult to understand exactly what the Government is doing with the administration fee. We have an increase to $60 for the fee for students drawing down a new loan and a charge of $40 for borrowings. A new charge is being introduced here. 
Chris Hipkins 
: Full of interest. 
GRANT ROBERTSON 
: Well that is the question I say to Mr Hipkins because when we look at the actual costs in front of us we need to ask whether any new increase in costs would justify a change. According to the regulatory impact statement there will not be any new cost. In fact the new computer system should save money in the long run subject to the questions that we will ask the Minister of Revenue. So money will be saved. The whole thing should lead to quicker repayments of loans so there is no additional cost there. We have to ask ourselves why a new fee is being introduced when the costs of running the scheme look like they might be going down as a result of this bill. 
The conclusion that has to be drawn here is that the National Government has been desperate to reintroduce interest to student loans. This was the policy that John Key said he would oppose with every bone in his body and now we have a new fee being introduced. It does look like the reintroduction of interest by stealth on student loans. That is what this new fee looks like. There is no actual justification for putting it in place. When we get to the Committee stage of the bill we will certainly want to ask questions about how justifiable this new fee being introduced under this bill will be. We do not believe that it is justifiable; we believe that in fact it is the introduction of interest by stealth by a Government that wants to reintroduce interest. John Key and Steven Joyce have both gone as close as they can to saying that they would like to reintroduce interest on student loans but they know that politically they cannot say so. So by stealth we have a new $40 fee being introduced here for borrowers. I believe that it is the equivalent of interest. Although we support the positive changes around the electronic system we do not support the introduction of that fee. 
The other matter as I have said is the question of the repayment period. I acknowledge the work the Finance and Expenditure Committee has done on this matter. A number of concerns were raised both in the first reading debate and then by submitters about the fact that this change would be penalising students particularly those who work intensively in holiday periods so that they do not have to work while they are studying. If they were to earn more than $367 a week in one of those holiday periods for instance under the bill as introduced they would be forced to make repayments on that. That would be unfair because that is the money they would be saving to be able to use during their study period. 
I acknowledge that there have been changes to the bill particularly to clause 48 that I think will largely deal with that concern and there are changes to clauses 73 to 89 that also deal with this matter. But when the Minister is in the chair in the Committee stage I would like to ask him some questions because I was not on the select committee. I would like to ask some questions during the Committee stage as to whether we have dealt with the question of making sure that those people who work intensively in their holiday periods will not be penalised under this law by moving from an annual pay assessment to a pay period assessment. I think that is important because we do not want students working undue hours during their study period; we want them to be able to focus on their study. In the commentary on the bill I think there is a statement about not wanting people to borrow unnecessarily either. That is a different way of looking at it. I think the select committee has made some good changes that will allay a lot of the concerns that we on this side of the House have about the way in which the assessment is changing from an annual assessment to a pay period assessment. But there are still questions to be answered to make sure that students are not unfairly penalised. 
Overall we support this bill but we do have concerns around the administration fee and the repayment period and we will be raising those in the Committee stage.