Lotu-Iiga Sam: Student Loan Scheme Amendment Bill (No 3) — Second ReadingText is incorporated into the Bound VolumeLotu-Iiga Sam: Student Loan Scheme Amendment Bill (No 3) — Second Reading[Sitting date: 13 February 2014. Volume:696;Page:15947. Text is incorporated into the Bound Volume.]Hon Peseta SAM LOTU-IIGA (Minister of Pacific Island Affairs)on behalf of theMinister of Revenue: I moveThat the Student Loan Scheme Amendment Bill (No 3) be now read a second time. This bill continues the Government’s focus on providing proper governance and oversight of the student loan scheme. Part of that means ensuring that borrowers are aware of their obligations to repay their tax-funded loans and that they honour those obligations. I am pleased to say that most borrowers do accept their responsibilities and that they should have no concerns about the principal measure proposed in this bill.This measure is targeted exclusively at a relatively small number of overseas-based borrowers who in spite of the Inland Revenue Department’s best efforts to encourage their compliance persistently ignore their responsibilities when it is clear they have the ability to repay their loan. This bill proposes to give the Inland Revenue Department greater powers to deal with these individuals including allowing the department to request an arrest warrant when the borrower attempts to leave the country after visiting New Zealand. This action would be taken only when dealing with the most serious cases of non-compliance when all other efforts by the Inland Revenue Department to persuade the borrower to make repayments have failed and only when borrowers can clearly afford to make those repayments. This is the principal proposal in the bill.The second major proposal will bring overseas-based borrowers’ repayment obligations more into line with their New Zealand - based counterparts. Under the current rules an overseas-based borrower’s repayment obligation is based on their loan balance. For New Zealand - based borrowers however their repayment levels are based on their level of income. This means the repayment obligation for an overseas-based borrower decreases as the person’s loan balance falls while a New Zealand - based borrower’s repayment increases as their personal income rises.In the interests of greater fairness the bill proposes a fixed repayment obligation for overseas-based borrowers based on their loan balance. Overseas borrowers with loan balances over $45000 will also have their repayment rates increased. This will speed uploan repayments for these borrowers and reduce the amount of interest they will ultimately have to pay on their loans.In bringing the bill to its second reading I want to acknowledge the Finance and Expenditure Committee for its consideration of the bill and in particular the chair Paul Goldsmith. I also welcome the committee’s recommendations to further improve the transparency of the offence and arrest provisions so it is absolutely clear what types of orders a District Court could impose upon a borrower. These might include for example ordering the borrower to pay the amount in default or to enter into an arrangement to do so as well as providing information about their contact details assets income and employment status.The committee has also recommended the alignment of the definition of “income” for student loan repayment purposes with that used for Working for Families tax credits. This is a very sensible efficiency measure that will align the definition with other legislation. The result will be fairer. It will result in a fairer more cohesive and efficient student loan scheme for all those involved. I commend this bill to the House.