Donnelly Brian: Student Loan Scheme Amendment Bill (No 2) — In Committee 
Donnelly Brian: Student Loan Scheme Amendment Bill (No 2) — In Committee 
[Volume:638;Page:8226] 
Hon BRIAN DONNELLY (NZ First) 
: 
 I do not think that we want to spend a great deal of time going over all the detail in this legislation; it has been traversed. But I think it is an opportunity to explain some of the issues that this bill brings to bear. 
I start off by talking about the charities part of the legislation in the new section 38AEA inserted by clause 12 which the previous speaker Mr Colin King talked about. What the bill does—in fact this was inserted through the select committee process—is to actually apply the criteria that were adopted in 1978 by Cabinet about what charitable donee status is. So in other words if somebody goes overseas the interest-free loan still applies to that person if he or she is working in a charitable organisation. But unfortunately that included for example people working as proselytisers or preachers going out and trying to get adherents for a particular religion—as distinct from somebody who for example was working as a teacher in a Seventh-Day Adventist school overseas or working on a project to build a hall or classrooms etc. So this bill clarifies that if someone is doing one of the latter then he or she falls into the charitable donee status and therefore he or she has an interest-free loan while he or she is overseas doing those things. But people donning a white shirt and tie running around the roads and knocking on doors with a Bible under their arms unfortunately do not fall into that status. The Education and Science Committee and certainly New Zealand First totally agree with that. 
This part brings in the 3-year repayment holiday. That really is the crux of the whole issue because even prior to the interest-free loans there was a real problem with people going overseas and not understanding their obligations. They go to come back and whoops-a-daisy find that not only interest but a whole lot of penalty payments have been put on top of their loans as well. With the interest-free loans that applies only to people who stay in New Zealand not to people who go off overseas with the exception of the charitable donees. So people believe that they can go off overseas and they do not have to pay interest. The problem is that not only do they have to pay interest—I think it was one-fifteenth but it has now changed to the figures mentioned before—but they then get clobbered with the penalties. So when it comes time to come back their loans are much much larger because of that and there is a disincentive to return to New Zealand. 
So this says that people can go off overseas and that there will be interest on their loans but they will not be required to make any repayments. People picking fruit in North Viet Nam for example and earning 1000 dong per day will not be able to make repayments as was required under the past system—however they are getting a great deal of experience etc. They will not have to make repayments but the interest will be accruing. That really is the crux of it because as New Zealand First has said time and time again the best immigrant is a New Zealander returning home. We want those young people to come back home with the experience that they have gained while they were overseas. 
Paul Hutchison talked about Business New Zealand. It asked why we made it different—the changes really create an incentive to go off overseas. I think it failed to understand the difference between those who go off overseas who still have to pay some sort of interest rate and those who stay behind who do not. So in fact the incentives are really to stay in New Zealand under the system that exists. Also there was another proposal that we should have an income-related formula that depends upon where people work. I ask members whether they can imagine 140 or 150 different countries trying to gain information as to what people earned in those countries and then relating them to income limits back here in New Zealand. It would be completely and utterly unworkable so New Zealand First does not support that. 
The only other issue was really the interest-free loans for borrowers studying full-time overseas at an undergraduate level. A number of the submitters to the bill got the idea that if they went across and did postgraduate level study they could utilise the New Zealand loan scheme. In fact they were wrong. Last night I praised the officials because the officials I believe went out of their way and made the effort to go out and meet up with those people and groups in order to ensure that they actually fully understood. So I take my hat off to the officials because I think they went beyond the call of duty. 
Finally the last thing is that the application of care and management is a fundamental Inland Revenue Department principle; it does not apply to students. When the Inland Revenue Department has mucked up and got the thing wrong there should not be a penalty against the student who carries a loan. That principle is now to be applied to students under student loans and that is a good thing.