Burns Brendon: Student Loan Scheme Bill — In Committee Third Reading 
Burns Brendon: Student Loan Scheme Bill — In Committee Third Reading 
[Volume:675;Page:20743] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I will just pick up on some of the comments of the member opposite who has just resumed her seat Amy Adams about the over-55-year-olds and their capacity to learn and continue learning. It is essential if we want to encourage people to continue to learn have flexibility and pick up new careers that they should have access to training skills and higher education. Obviously we need only look at the number of career changes that people have in life—at 55 people may well be working for another 20 years with plenty of time to repay loans. I would like to see the evidence that those people aged over 55 were paying the least amount of their student loans because that would be absolutely out of line with everything that I know about that sector of the population who are generally regarded as being the most responsible people in terms of their debts and obligations to society. I would like to see evidence presented and we have not seen it. 
That matter is not at the heart of the Student Loan Scheme Bill. At its heart this bill is about encouraging the repayment of student loans. I support the notion that we must have a facility like the student loan scheme to allow people on to the staircase of higher learning and the reason for that is not just the higher incomes that it brings to them but also the higher productivity and prosperity it brings for us as a nation. I think we might be beginning to work out as a nation that we cannot simply make our way in this world with our hands; we need the skills from our heads and we need the highest possible educational outcomes and achievements from all in our society and that is why the student loan scheme has been an important mechanism. We acknowledge the costs that it represents and that is why Labour is supporting this bill. But we should not forget the principle involved which is that we want everybody in society to be able to go into tertiary education to upskill themselves so that they can contribute not just for themselves and their families but also for us as a nation and that is why we have a student loan scheme. 
On the costing of student loans we have had figures presented to us by the Inland Revenue Department and Treasury stating that it sits currently at about $11 billion - plus and is projected to go to $14 billion or $15 billion. Those are big costs. When we consider that the current education spend per annum is in the same order of around $11 billion - plus obviously the scale of the student loan debt is high. This bill is beginning to address some of those issues but I would also note some of the amounts involved. It was interesting I thought to see that the gain suggested in the order of $22 million over a total cost of $11 billion of the student loan portfolio is only about 0.5 percent and does not seem to be in quite the scale of things that might have been projected. 
This bill also recognises that we need technology to connect to students many of whom go overseas. I was very pleased to see that in his final speech to us as parliamentarians our outgoing Governor-General Sir Anand Satyanand used his iPad to read his speech to us today. I think that that is an acknowledgment. Sir Anand is probably somebody let us guess who may be in his 60s now. I do not want to be unkind or uncharitable but there is somebody who might well go on to yet another career despite the distinguished career he has already had. There he was using the technology of the 21st century and that is at the heart of this bill. We will see the Inland Revenue Department implement a system whereby we can go online check our balance make our payments and contribute back to the nation for the education that we have had in some part. That is why Labour is in support of this bill. 
I just note that the regulatory impact statement states that although most borrowers will benefit from the changes some will be disadvantaged. That is why Labour has picked up on the situation of some of those people during the course of this debate. It is the role of the Opposition to point out some of the holes and inadequacies in legislation. Yes a $40 administration fee per annum may not seem a lot but it does add up cumulatively over the time of a loan. We are talking about a normal loan period in the order of 5 years and obviously at first students are not very able to pay. Once they come into a job they are better off but it is still a fee that will cause some of them some disquiet. 
I was particularly pleased to see in the bill the move on the late-payment penalties because it really was a usurious rate when debtors were effectively being charged credit card interest rates at 19.5 percent per annum. If we want to encourage people we have to make it clear to them that they will be treated fairly and that was not fair. I think that basically it said to some people that they did not need to bother because it was too hard and the interest rates were too high. The interest rate has been pulled back to about 10.5 percent or about 8.6 percent if debtors go into instalment arrangements. That provides the correct sort of incentive and signal to former students that they need to take on their responsibilities and that the State will assist them with that not treat them as a credit card company might. 
As we have discussed we have $11 billion of debt in respect of the loan balances of the student loan scheme and nearly 600000 people owe money. We want to encourage more people to come into tertiary education not discourage them. The average amount of borrowing is only in the order of $7000. Obviously we have put all of the half a million - plus former students into a total which is why we are seeing the numbers involved and why the projections go to $15 billion by 2015. 
That is why Labour is supporting this bill’s passage through Parliament. We have some disquiet about some aspects of it. We have raised those concerns in the appropriate setting. We are particularly discouraged by the allied move in Budget 2011 to exclude over-55-year-olds from the potential to benefit from the changes made to this bill. We do not regard that as appropriate. That is a very very discriminatory signal to those in the 55-plus community who from the beginning of the year after next will not be eligible for the student loan scheme. That is a very negative signal. 
Aaron Gilmore 
: That’s not true. 
BRENDON BURNS 
: That is very clearly what will happen. The Minister’s announcements accompanying the Budget on 19 May were that from the beginning of the year after next—as of 1 January—students who are aged over 55 will not be eligible for living costs or course-related costs. 
Aaron Gilmore 
: Ah! 
BRENDON BURNS 
: The member opposite can tell me what other component of costs students face. That is exactly the point and it is at the heart of what we are saying. Those people are being disadvantaged and discouraged from trying to get themselves into another set of learning and acquire some extra skills. Therefore they will not have the opportunities that would then be in front of them to allow them to learn another career or another discipline and to move into another job. 
At the age of 55 people still have 15 or 20 years of working life ahead of them if they so wish. That is why Labour says that making students over 55 not eligible for the scheme is not an appropriate part of the Government’s moves on student loans. Those people should be eligible for loans and should be able to benefit from the changes made in this bill in terms of the greater flexibility that is provided for repaying loans—to be able to go online and repay them—and in the lowering of interest rates. Those are all positive changes which are welcomed and a tidy-up of the student loan debt profile will result even if it will be modest. 
We have considered the bill in great detail through the Finance and Expenditure Committee. In closing I acknowledge the work of the select committee under the previous chair Craig Foss and the incoming new chair Amy Adams. We have worked comprehensively as a select committee on this bill. I thank those officials from the Inland Revenue Department and other departments who have assisted us. It is a complex issue. I also acknowledge the work of my colleague Stuart Nash who is not able to speak on this bill today but who has put enormous work into this bill on behalf of the Labour Opposition. Thank you.