Walker Holly: Student Loan Scheme Amendment Bill — Third Reading 
Walker Holly: Student Loan Scheme Amendment Bill — Third Reading 
[Advance Copy - Subject to minor change before inclusion in Bound Volume.] 
HOLLY WALKER (Green) 
: 
 I am pleased to take a call at the final stages of the Student Loan Scheme Amendment Bill to once again reiterate the reasons for the Green Party’s opposition to this bill. I am proud to note in fact that the Green Party is the only party that has consistently opposed this bill through all its stages. As I have said in the debates on earlier stages there are some parts of this bill that we can live with including losses from the calculation of income for student loan repayment purposes being excluded and including allowing the Inland Revenue Department to ask for details of a contact person in New Zealand for borrowers overseas. We are comfortable with those provisions in the bill.  
What we cannot support is the reduction of the repayment holiday from 3 years to 1 year. We consider this to be a policy that has been made for ideological reasons in a vacuum of evidence and actually may see borrowers staying overseas and not returning to New Zealand and taking longer to repay their loans which is contrary to the intent of this legislation. We have heard from the Finance and Expenditure Committee submissions and in other stages of debate on this bill that if it saves any money at all which is a guess it will be a mere drop in the bucket of $5 million to $6 million in terms of what is collected from those on a repayment holiday in the context of the total student debt of more than $12 billion and even that as we have heard is guesswork. So we simply cannot support this poor decision-making this poor policy.  
To look at the repayment holiday why we have it and why it is important to keep it at 3 years I want to reiterate the current situation. If a student loan borrower stays in New Zealand they are not charged interest on their student loan and therefore they have got an incentive to stay and work in New Zealand and contribute to New Zealand and we totally support that. Their student loans are repaid automatically via their tax code. If they are travelling or living overseas on their OE they are charged interest but they can take a break from their repayment obligations for up to 3 years and that is the repayment holiday that we are debating tonight.  
We believe that it makes sense for that repayment holiday to be set at 3 years for a number of reasons. The first of which we have just heard from the previous speaker David Clark is that we know from research that it takes about 12 to 18 months for New Zealanders living overseas to set up in the new place where they are living and get established in a job or a career. So constricting it to 1 year will very much constrain the time that those borrowers overseas have; before they have actually even started work they may have to start making repayments on their loans.  
We also know from research by the Kiwi Expat Association or KEA that the average New Zealander is away on their overseas experience their OE for 3 to 5 years so it seems entirely consistent with that 3-year average for the repayment holiday on the loan to be 3 years. Furthermore we know and it is a contribution that has been made a number of times in this House by the Hon Nanaia Mahuta that in a number of the countries where it is common for New Zealanders to go on their overseas experiences they have working holiday visas that are set typically at about 2 years. So again it makes sense to be consistent with the provisions that govern people’s behaviour while they are living overseas that this should be at least aligned with the provisions of the working holiday visas.  
It is also important to have a repayment holiday because as we have heard as we have seen at the select committee and as has been discussed in previous stages the defaults and arrears late payment fees and interests that are charged on the loans of borrowers overseas can escalate to the point where their loan balance has become two to three times the original principal that they took out on their student loan. That gives people a very real disincentive if they are living overseas and they are straddled with a student debt that has now ballooned out to two to three times what they originally borrowed to return to New Zealand and repay that loan.  
If they do not return to New Zealand that is bad. It is bad for the country because the debt does not get repaid and it is also bad for the country because we do not get back our graduates whom we so urgently need and so many of whom we know are moving overseas and staying there for a long time.  
All these things I have just outlined are the reasons that were given by the very same Minister who is sponsoring this legislation the Hon Peter Dunne for introducing the 3-year repayment holiday in the first place back in 2007. I have posed the question a number of times and it has still not been answered of what has changed since 2007 that makes those reasons any less valid than they were then. Actually I would say that nothing has changed except the fact that even more graduates are going overseas and never coming back which would make those reasons even more valid than they were.  
There has also barely been enough time since the introduction of the 3-year repayment holiday for any research to be done to assess the impact that it has on borrowers’ behaviour. We can see from the select committee report that this was acknowledged. It was acknowledged in the hearing of evidence at the select committee that there has not been enough empirical evidence and very limited modelling of the impact of the 3-year repayment holiday on borrowers’ behaviour. So before we even know what impact we are having we are legislating to change it and it just seems like bad lawmaking to me to do so in such a vacuum of evidence.  
In fact it is not an entire vacuum of evidence though because the evidence we do have from the Ministry of Education and from Treasury is that actually it might discourage borrowers from returning to New Zealand because of the reasons mentioned. The way that late payments and arrears build up for borrowers overseas can actually create a real disincentive for them to return to New Zealand and the Ministry of Education said it could have a real impact at the margins on borrowers’ behaviour in terms of how quickly they repay their loans and how soon they return to New Zealand. All of this as I mentioned is in the context of more New Zealanders moving overseas than ever before.  
So it seems to the Green Party that this change makes absolutely no sense and is supported by no evidence. That is why I moved an amendment in the Committee stage. It was not ruled out of order; it was voted down unfortunately. But I moved an amendment to keep the repayment holiday at 3 years because of the lack of evidence that has been provided for any reason for the change and the very real concerns that in fact it would make things worse. I was pleased to see that Labour moved similar amendments and indeed I was very pleased to see that Labour has changed its stance on this bill to oppose it after the Committee stage because as Labour members have argued their concerns about the repayment holiday are significant as well.  
I want to briefly address the issue of retrospectivity which I think is quite concerning in relation to this bill. As I am someone who has been following these changes closely you can probably imagine my surprise knowing that I was due to debate the third reading of this bill in the House this week to open the  
Dominion Post  
yesterday and read on page 5 that the changes that this bill makes have already come into effect. Quoting an official from the Inland Revenue Department— 
Todd McClay 
: You can’t believe everything you read. 
HOLLY WALKER 
: Well you would not believe it if you had any faith in parliamentary democracy— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! When the member uses the word “you” you bring the Speaker into the debate. 
HOLLY WALKER 
: Mr Assistant Speaker you would not believe it either if you had any faith in parliamentary democracy that a bill that has not yet passed is being reported in the media as having come into effect. I know that the Minister of Revenue moved an amendment during the Committee stage to make parts of the bill retrospective—those parts that were not already retrospective in fact—and I queried that at the time but what I would like to put on record is that surely even a retrospective clause cannot be deemed to have come into effect until after the legislation has passed.  
I think we deserve an answer from the Minister or his officials about why Inland Revenue Department officials were quoted in the newspaper yesterday as saying that the changes had come into effect when the bill has not finished going through Parliament. I see that as a serious abuse of process and as one commentator called it it is “Legislating by press release”. It is disrespectful of this House and its processes and I think the Minister owes the House an explanation about that.  
So what we have seen in this bill is a shoddy process a rushed process a vacuum of evidence a poor decision unsupported by evidence and even if it has the effect that the Government thinks it might at the very very best guess it might save $5 million to $6 million a year in the context of a $12 billion student debt. It is shoddy lawmaking a shoddy policy and a shoddy process. All that I can think of to explain it is that this is consistent with the Prime Minister’s design to want to rein in student loans in a big way based not on what is best for students but on any way to clamp down on access to student loans without touching interest-free student loans because he is scared to go there politically.  
We have already heard about this freeze on parental income thresholds for the student allowance. That does not bode well and nor does this bill and I shudder to think what changes we are about to see in the student loans and allowance space in the coming months.