Student Loan Scheme Amendment Bill (No 2) — Third Reading 
Student Loan Scheme Amendment Bill (No 2) — Third Reading 
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Student Loan Scheme Amendment Bill (No 2) 
Third Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Student Loan Scheme Amendment Bill (No 2) be now read a third time 
. The purpose of this bill is to remove the barriers to borrowers who are overseas returning to New Zealand and to ensure that all borrowers receive their correct entitlements under the principal Act. 
To ensure greater compliance amongst borrowers who are overseas the bill introduces targeted measures to make it easier for this group to pay their student loans. In so doing the bill will help to remove a potential disincentive to skilled New Zealanders returning home. For this group the main changes include the introduction of a repayment holiday of 3 years for borrowers going overseas. This measure acknowledges the reality that it is not always easy for people to repay their loans while they are having their OE. For borrowers who are overseas and not taking a repayment holiday the bill introduces progressive repayment obligations based on the size of their loan balances. Interest-free loans for people studying overseas will be extended to undergraduates studying full-time at bachelor degree level. This will apply only to an existing loan they had before leaving New Zealand and it does not mean that people will be able to take out a loan for study that is undertaken overseas. 
 The amnesty on penalties declared last year for non-resident borrowers who are in arrears with their payments will be extended by 1 year to 31 March 2008. The purpose of that is to allow borrowers who are identified in the proposed data-matching between the Inland Revenue Department and the New Zealand Customs Service to come within the amnesty. 
The second group of changes contained in the bill apply to all borrowers whether in New Zealand or overseas. The purpose of these changes is to update the legislation so that it is consistent with the intent of the interest-free student loan provisions which came into effect from April last year. Data matching between the Inland Revenue Department and the New Zealand Customs Service will be introduced thus making it easier for the department to identify who is overseas and to ensure that only those entitled to interest-free loans actually receive them. The late payment penalty will reduce from 2 percent a month to 1.5 percent a month. The hardship provisions in the Student Loan Scheme Act are being amended to give the Inland Revenue Department greater flexibility in administering them. 
For overseas borrowers to qualify for an interest-free loan on the basis that they are working overseas as volunteers or for token payment as the employee of a charitable organisation this bill provides that the borrowers must establish that the organisation applies its funds to one or more specified charitable purposes. 
Finally to protect the integrity of the tax system an administrative amendment to the Tax Administration Act is being made to ensure that care and management provisions apply to the Student Loan Scheme Act in relation to interest as well as to repayment obligations. As a package these changes will make it easier for borrowers to comply with their loan obligations and for the Inland Revenue Department to administer the student loan scheme fairly. 
In bringing this bill to the House for its third reading I acknowledge those who have contributed to its successful passage thus far. They include the policy officials and the drafters who have worked on the detail of the legislation; the members of the public and the tertiary education organisations that made submissions on the proposed legislation; and finally the Education and Science Committee for its consideration of the bill and for the recommendations it has made for improvement of the finer points of detail. I now have great pleasure in commending the Student Loan Scheme Amendment Bill (No 2) to the House. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 Thank you for the opportunity to speak on the Student Loan Scheme Amendment Bill (No 2). National is supporting the bill because we feel it is very important to help student loan borrowers living overseas to return to New Zealand wherever possible. But this is a very complex bill and that point was outlined by the Law Society in its submission. 
The Labour Government made the bill even more complex when it brought in its $1.5 billion-a-year interest-free student loan scheme. That gave students a clear incentive not to let the Inland Revenue Department know when they were out of the country. This is the sort of thing that Dr Cullen and Labour just did not think about when they brought in that legislation—or maybe they did think about it but just did not care. In fact one would suggest that Dr Cullen and the Labour Government would have been prepared to sell their souls to win the last election. Certainly they were prepared to show extraordinary largesse with New Zealand taxpayers’ money. 
It is absolutely correct that the Education and Science Committee worked very well on this bill—although I was not there for very much of it—and I certainly heard about the excellent chairmanship of Brian Donnelly. The bill was unusual in that it was the first-ever Inland Revenue Department bill to be brought before that select committee. 
It is important to reiterate some of the aims of this bill fairly carefully. The first is to introduce an affordable repayment regime for overseas-based borrowers. The emphasis should be on an affordable repayment regime because we certainly have heard about some students who have mounted up huge debts and some of those students have slipped off overseas and had a wonderful old time. I look at the tan on Moana Mackey and wonder whether that is the residue of her trips to Colorado and other places like that and whether she is still paying off her loan. 
Darren Hughes 
: She always looks as good as that. 
Dr PAUL HUTCHISON 
: She does indeed. One must try to make sure that there is a sense of reality about the affordability of this scheme and that again is one of the reasons why National is supporting the bill. 
The second aim of the bill is to give overseas borrowers who have not been meeting their repayment obligations the chance of a fresh start by extending the current amnesty to 31 March 2008. It is very important once again to stress the basic philosophy that the people of New Zealand are our most valuable resource and we do want to do everything possible to encourage our brightest and best to return here to work in New Zealand to live in New Zealand and to increase the productivity of this country—which is so sadly lacking under this Labour Government. It will take bright well-trained educated young New Zealanders coming back with a huge amount of enthusiasm and energy to overcome the decreases in productivity caused by this Labour Government. 
We often hear stories from parents that all of their children have left New Zealand. I was talking to one of my constituents just last weekend. Four of that person’s children are now living in Western Australia and that person is pretty sad about this. I think we all realise what a wonderful country this is and what wonderful opportunities we have yet we have seen this huge exodus over the last 6 to 7 years to the extent that 10 times more New Zealand graduates live overseas than do Australian graduates. That has to be an indictment on the basic policy settings of this Labour Government. 
The other issue about the aims of this bill is that although the new repayment rules have been designed to cover the situation of the majority of borrowers—those who return to New Zealand after a short OE—they do mean there will be lengthy repayment periods for some long-term absentees. We are told that the Inland Revenue Department will continue to recommend to borrowers that they make voluntary payments so that they save themselves interest and retire their debt earlier. 
I think it is very important that the students who take out these loans understand the conditions of the loan and the consequences of it. The Inland Revenue Department stated that it will look at ways to make it easier for borrowers to make repayments from overseas such as by establishing bank accounts in foreign countries and by offering different repayment choices such as a table mortgage type of arrangement. 
The department went on to state that many repayment options are not possible due to the department’s current information technology system constraints. It was quite a revelation when one of the department’s commentators pointed out that the information technology system that that department uses is the one it had in 1992. That system is starting to reel and croak under the tremendous pressure it is getting from the various machinations of the Labour Government the latest ones being the KiwiSaver scheme the international tax regulations that it has just whipped in—much to the fury of many New Zealanders who are serious investors—and of course the Working for Families package. One does indeed wonder whether the department is saying that its information technology systems are constrained. Surely it should be thinking about that and surely the Labour Government after 7 years should be thinking about something as fundamental as the department’s information technology systems. 
It is important to point out that everyone agrees that data matching is reasonable. Even the Law Society said that in its view data matching was quite appropriate that civil liberties issues were not encroached on because of it and that it was purely a way to recognise the fact that something like 40000 New Zealanders who had taken up loans were overseas and the department was not aware of them. It was pointed out that a sample data match with the Customs Service suggested that once this scheme was going nearly 90 percent of student loan borrowers crossing the border would be identified. Well 10 percent will still get away with it. That is a substantial number. Ten percent of 40000 is about 4000 a year. That leads one to worry as to how well the Labour Government organises such very important departments as the Inland Revenue Department. The department itself is breaking into a cold sweat over the constraints of its information technology machines and here it is admitting that it will not be able to track down at all something like 4000 students a year even after this bill is passed. 
It is important to reiterate what the student loans scheme itself has done. In essence it has ensured that the number of people accessing tertiary education in New Zealand has pretty well doubled if not come close to trebled over the last 15 years. That has made a very significant contribution. 
I thought it was interesting yesterday when Brian Donnelly said he was a little concerned that some of those 40000 students might have just forgotten as they slipped across the border that they had obligations to the Inland Revenue Department. As I pointed out technically that is known as denial. It is clear-cut denial. It is very important that students realise that there are reciprocal responsibilities associated with the great privilege it is to embark on tertiary education. National supports this bill but is concerned about the complexities of it. 
MOANA MACKEY (Labour) 
: 
 I am very happy to stand up and support the third reading of the Student Loan Scheme Amendment Bill (No 2) that is before us today. I thank the Minister of Revenue the Hon Peter Dunne who brought this bill to the House; the Education and Science Committee of which I am a member which worked on this bill; its chairperson the Hon Brian Donnelly; and also of course the officials who helped us with the questions raised by submitters. 
In terms of student loan bills I think this bill is relatively straightforward. As we can see there seems to be quite wide consensus in the House that it is a good step forward. In particular I support the amnesty period being extended. I personally know a lot of people for whom it took a while to find out about the amnesty to hear about it. Often disseminating that information to people who are living overseas even through their family members can take some time. It is a good idea to extend the amnesty so that those who are overseas and who have not been making the payments they are legally required to make can come back to the Inland Revenue Department in New Zealand put those arrangements in place and not suffer huge penalties because of it. 
We certainly know that when people go overseas and start to accrue a large number of penalties that becomes a very good reason for making the decision not to come back to New Zealand. They have to pay off not only their student loans but the interest on those loans plus large amounts in penalties. This step will make a big difference to what I believe we all want to achieve in this House—that is to assist graduates for whom the taxpayers of New Zealand have paid a large amount of money to educate to come back to New Zealand. 
As we go through this debate it is important for members in this House not to get too caught up in the fact that people will leave New Zealand from time to time to work overseas. We actually want that. We want people to be able to go overseas and get a broad range of experience. In some areas such as medicine and scientific research it is incredibly useful for New Zealand scientists New Zealand doctors and nurses—in fact any health professionals—to go overseas and learn from what is being done in other countries and then bring that knowledge back to New Zealand. We are well aware that other countries use New Zealand in that regard as well. Of course the Education and Science Committee also has the privilege of looking at many of the scientific organisations in New Zealand and we certainly find that our Crown research institutes are held in very high regard internationally. Many of them get a large continual flow of overseas scientists coming in to study all the great things we are doing in New Zealand particularly in terms of nuclear and geological sciences and agricultural sciences. So I think it is very easy to get caught up with the fact that people leave; what we need to be concerned with in this House is how we can make it as easy as possible for those graduates in whom we have put an awful lot of investment to come back to New Zealand and to use their knowledge for the benefit of the New Zealand economy and all New Zealanders. 
I am also incredibly supportive of making it easier for students overseas to repay their loans because when students are paying off loans in New Zealand payment is based on the students’ incomes—it is a percentage of their incomes. Well that can be quite difficult to manage when they are overseas making sporadic payments and trying to work out how much they have to repay according to the interest and the exchange rate. It might take a bit longer if they are trying to send cheques home. Something might happen and the exchange rate might change and we can see how some people might just simply think that they will take the risk of not repaying the money. 
I take on board the point that Dr Paul Hutchison made. People might know that they have to make these repayments but I certainly do not think that they necessarily know the process the consequences or the level of penalties if they do not make them. That is not necessarily the information they are given when they head overseas. So moving to a system where a student’s repayment for a year is based on the size of the student’s loan is I think very sensible. One of my friends who has a student loan and who lives in the UK came back for a wedding recently. She said that this system would make it a lot easier for her to plan the repayment of her loan. She has already taken advantage of the amnesty. She said that now she can see a clear path to returning to New Zealand—which I think is really the purpose of this bill. 
A number of other changes have been made in this bill. The data matching between the Inland Revenue Department and the Customs Service I think is very sensible. The committee had some concerns about what that data could be used for and about making sure that once student loans had been paid off those details were no longer used. We were certainly satisfied in that respect—that all use of that data was going to be appropriate. 
Whenever student loan legislation comes into the House I always find the attitude towards students very very interesting. There tends to be a kind of attitude that students and young people in general cannot be trusted and if they are given anything well they are just going to rort it. Certainly that was the attitude we experienced towards Labour’s policy of interest-free student loans which is a policy that many of us in the Labour Party particularly those of us who came through the youth section had been lobbying for for a very very long time. Having a large number of people in the Labour Party and in the Labour Party caucus who have had student loans we knew that it was the interest on those loans that made repayment most difficult. There were a whole lot of other issues as well around student support and student loans in general but really the one factor that made it difficult was the interest. 
For those of us who were charged interest while we were studying it certainly was difficult. We really were not in a position to go out and work—not without compromising the quality of the study we were paying for. We then came out of university with a much bigger loan than we went in with and of course the interest was compounding daily. Then if we went into a job—as I did as a laboratory technician which does not pay an awful lot of money—often the interest was higher than our 10 percent repayments were. So to be repaying our loans but to be consistently seeing them get bigger and bigger was very disheartening. 
What we want is for these loans to be paid back. We want to make sure that the loans are not a reason that people use for staying overseas once they have gone on their OEs or overseas for work. At the end of the day any policy that provides an incentive for young people to pay their loans back is going to be good not only for young people and for their families but for all taxpayers. As I have said before student loans have had an enormous impact on some of the things that we take for granted in this country. 
In terms of superannuation we may see a generation of young people who have come out of university with large student loans and who have put off buying a house—and of course the increase in value of the housing market has not made that any easier. If these people get to retirement and do not own freehold homes then it will be very very difficult for them to survive on the level of superannuation provided. That is something that will be an issue for Governments in the future if it is not addressed now. 
I am very pleased that this Labour-led Government has taken the initiative to address the student loan issue. Obviously it was a very large policy promise of the Labour-led Government during the last election campaign. I have no doubt that it made a huge difference and I am very proud of it. It is a policy that I have been advocating for a very long time and of course as with all our election promises it is a policy that has been delivered to the students and to the families of New Zealand. It is another promise kept. In that regard I am sure that many many people out there in New Zealand are extraordinarily grateful for Labour’s policy. 
Other comments have been made about some of the reasons why people go overseas and stay there. Of course wage differentials between countries do make a big difference. But they make a big difference because people often go overseas when they want to pay off their student loans—they want to get rid of them. They are more likely to think: “If I go and work in the UK or if I go and work in Australia where I could potentially get paid more for doing the same job that will allow me to pay off my student loan.” So simply to say that people do not consider that a student loan is a major issue when people go overseas is slightly disingenuous. If one questions why any young person is going off on his or her OE to a country that has higher wages I bet that if that person has a student loan the first answer to the question will be to pay off his or her student loan. Of course when people get there and have differing demands on their money and when it might be a bit difficult to make the arrangements to pay the loan back things change. 
But this bill will make that a lot easier. This bill provides a particular amount for people to pay back. It makes the system of paying the loan back easier. The amnesty means that those who go overseas and who already have a number of penalties can now wipe the slate clean with the Inland Revenue Department and start to make arrangements to pay those back. There is also an incentive for letting the department know when a student is going so that he or she can get the 3-year repayment holiday. Again I need to reiterate to those people who said that the 3-year repayment holiday should also be given to students in New Zealand and that it was unfairly advantaging those who left that the interest that accrues on those loans whilst people are overseas is still in place for overseas students whilst students who remain in New Zealand or return to New Zealand benefit from Labour’s policy of interest-free student loans. 
 In conclusion I commend this bill to the House. I am very pleased to see it going through today and to know that we have been able to get it through in a timely fashion so that it can come into force from 1 April 2007. This is an important bill as are all student loan amendment bills. I look forward to more of them in the future to make it even easier for those graduates who have student loans to repay them faster so that the loans are not so much of an onus on students’ lives and on the decisions they make. 
ALLAN PEACHEY (National—Tamaki) 
: 
 The National Party is supporting the Student Loan Scheme Amendment Bill (No 2) because we desperately need to send the message that we want our best and our brightest back in New Zealand. However that does not mean that we have not and will not continue to debate this bill vigorously. Let us be very very clear about what we are dealing with here. This was not—is not—carefully thought out logically worked through planned policy. It was policy made on the run announced 8 or 10 days before an election for the sole purpose of gaining an advantage in what was a very tight closely fought race. Let us never ever forget that. The people of New Zealand have not had the opportunity to sit back and reflect in order to determine whether this is really what they wanted to do and the House in passing this legislation needs to be respectful of that. 
During the debate we had quite an interesting little exchange about the nature of parliamentary representation and the role of taxation. I want to come back to that for a moment because I used the example—and it is important that this House is respectful of the people I am about to talk about—of a group of mums and dads whom I met in the Glen Innes part of my electorate the other day who wanted to talk to me about their circumstances. All of them have children in schools. All the mums and dads between them were doing three or four jobs—often meaning they did not spend enough time with their children—just to make ends meet. It is the taxation of those sorts of people as well as other New Zealanders that is going to pay for what some call an election bribe. 
At the moment when one talks to these people and looks into their eyes—and I will come to tax cuts in a moment Mr Assistant Speaker—one sees tears; soon we will see anger. It is important that when this House legislates to spend taxpayers’ money it respects the taxpayers who are putting up that money. Many of the children in those families will not have the opportunity to benefit from this legislation. They will not miss that opportunity because they are unintelligent for these children are intelligent nor because of the fact that their parents live in State homes—although they do live in State homes. Neither will they miss this opportunity because their parents are victims of a low-wage high taxation economy. They are missing this opportunity—and this is what their parents have difficulty understanding—because too many of them are trapped in schools in which they are not learning. Too often the children in schools that have the protection of teacher unions will not reach a level of achievement that will enable them even to think about university. 
Before anybody mocks and laughs at what I have just said I will give a practical example of what I am dealing with at the moment. In 2005 76 percent of year 11 Maori students at a secondary school in my electorate of Tamaki failed to achieve level 1 National Certificate of Educational Achievement. Most of the parents of those young men and women pay taxes. It is those children’s misfortune to be in a school where the academic performance is well below what it is reasonable to expect. Those youngsters do not have the opportunity to aspire to a university education. So when this House— 
Darren Hughes 
: Point of order— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I know what the member is going to say. I was about to bring the member to order. He has to address the bill. He cannot go too wide of it. I ask the member to desist and to come back to the bill. 
ALLAN PEACHEY 
: Thank you Mr Assistant Speaker. I bow to the superior wisdom of the junior Government whip. 
Darren Hughes 
: Get used to it! 
ALLAN PEACHEY 
: “Get used to it!” he says. I say in coming back to the bill that we are spending taxpayers’ money. It is very important that those young men and women who will benefit from for example the 3-year holiday are duly respectful of the taxpayer and the money that will contribute to that. 
This bill comes out of the principal Act the Student Loan Scheme Act of 1992. In the debate when we canvassed the evolution of the student loan scheme and that sort of thing it was necessary to deliver a bit of a history lesson to members on the other side just to point out to them that the student loan scheme was born in a time of major economic crisis for New Zealand—a crisis that resulted from the behaviour of the 1987-90 Cabinet. We should never ever lose sight of that. When listening to young members in this House talk about how people like themselves will benefit from this legislation—and they will—let us not lose sight of the fact that we are spending taxpayers’ money. 
I issue a challenge. When I spoke in the second reading debate the speaker for the Greens got up and responded to my speech with haughty indignance. I invite the Green Party to take a call and tell this House that when I talk about respect for taxpayers I am not wrong—that I am not wrong about the young New Zealanders who will not have the opportunity to benefit from getting a tertiary education travelling overseas and taking a 3-year holiday on their loan. Yet their parents are contributing to make this bill policy. I invite that party to take a call and tell this House and the people of New Zealand that I am wrong. In fact I issue a wider invitation to any apologists for the present Government whatever party they may come from to get on their feet in this House and tell members I am wrong. 
The passage of this bill will ease the administration of the student loan scheme and that is good; it is most unusual that things coming from a Labour Government are made easier. It was very very complex legislation for the Education and Science Committee to deal with. The committee was very very well led by Mr Donnelly who was ably assisted by officials from the Inland Revenue Department and I would like to believe that members on this side of the House actually played a significant if largely unacknowledged role in helping to unravel what we all know is a little bit of a mess and at least made it tidy. 
This bill sends a very clear message to graduates with loans. We want them back in New Zealand. We need them back in New Zealand. We understand that they want to travel. We actually want them to travel. We encourage them to broaden their experience but we also want the young graduates with loans to understand that they have a responsibility: if you borrow the money then you pay it back. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member is referring to the Speaker. 
ALLAN PEACHEY 
: Sorry Mr Assistant Speaker; it is my inexperience as you will understand. It is important that borrowers understand that there is an obligation and an expectation on the part of their fellow New Zealanders that they pay the money back. That is why the select committee has agreed to include in the bill the ability for the Inland Revenue Department to match information with the Customs Service so that a better clearer and fairer record can be kept. 
But in conclusion let this House be very very clear about what it is doing today. It is legislating to fulfil a bribe given by a Government to buy a closely fought election. 
Hon BRIAN DONNELLY (NZ First) 
: 
 In rising to speak to the Student Loan Scheme Amendment Bill (No 2) I just want to reflect upon a couple of the comments made by previous speakers. The first is a comment that was made by Dr Paul Hutchison in response to some comments that I had made in the Committee stage and in fact in the second reading stage. I had made the statement that many of our students went off overseas unaware of their obligations to the Inland Revenue Department to pay back part of their student loans. Dr Paul Hutchison suggested that it was not so much ignorance as in fact selective denial which I guess goes to show that Dr Paul Hutchison and the National Opposition has somewhat of a less generous view of young New Zealanders than I do and than New Zealand First does. I believe that many of our young people who are getting themselves into the situation that this bill is aimed at go overseas not fully cognisant of their obligations. 
I refer to Mr Peachey’s comments about the fact that the young people do have an obligation to pay back those loans and with regard to those people who try to get around that obligation I think of them as being nothing less than thieves. They have taken money from the taxpayers of New Zealand to get themselves an education and if they deliberately flout their obligations they are no better than people who are just stealing from the taxpayers of New Zealand. Mr Peachey made I thought a quite heartfelt picture of the scenario of low-income workers in multiple jobs and it is absolutely true that their taxes are helping to pay for the education of these young people and that their taxes are supporting the interest-free system that is in place for students. However the question the member did not answer was how much those families would have in their pockets per week with the tax cuts that National was offering at the last election. I suggest that it would be zilch. Therefore I believe he was going along a very unseemly track in suggesting that those people would have gained enormously out of it. 
The details of this particular legislation have been traversed quite a number of times both at the second reading and last evening through the Committee stage. They have been articulated by the Hon Peter Dunne who put this legislation together. It is probably a waste of the House’s time to go through and detail all the bits and pieces. So I think we need to look at the purpose of the legislation—what this legislation is trying to do and whether it will achieve it. I say once again that New Zealand First has long believed in a policy that the best immigrant is a New Zealander returning home. 
Opposition members have gone on and on about the this legislation being only about the interest-free loans; in fact this is not about interest-free loans at all. This legislation comes from circumstances that would still be in place even if there were no interest-free loans. I will just refer to one or two of the things that Mr Peachey talked about. He talked about a history lesson. The loan scheme was put in place in 1992 but back in 1996 when New Zealand First came into coalition with National and I became Associate Minister of Education with Wyatt Creech there were some real problems with the exercise of the student loan scheme. One of the problems was of course that 16 and 17-year-olds could go off and do courses at polytech. They could then take out a $10000 lump sum and take off to England. Their parents—and no one else in fact—could not prevent them from doing it and because of the contracts legislation they had no obligation to pay those loans back. It was something that New Zealand First and National worked on at the time. 
One of the silliest things of the lot that was occurring at that time which we had to try to apply a fix to was this sort of situation. Someone might write to the Inland Revenue Department and ask how much he or she owed. The Inland Revenue Department would write back and say that $1052.36 was owed. So the person gets the letter in the mail writes up a cheque and sends it off to the department. Well it takes 5 days to get there. Within 1 month that person gets a reply from the Inland Revenue Department that says that he or she owes 53c on the loan. That was the interest that had accrued in the interim period from the time the person had written to the department it had written back and the person had sent the cheque. That was how silly the system was. 
Therefore progressively administrations have picked up and fixed up bits and pieces of the legislation. The difficulties that people who go off overseas are facing particularly in terms of the penalties occur whether or not there is an interest-free loan situation. The interest-free loan policy has exacerbated the situation and it has done so in this particular way. It applies only to people who are in New Zealand or who are offshore doing charitable work. It applies only to those people. Many people have gone off overseas believing that they are carrying interest-free loans. It does not apply to them; those people go off overseas and there is an obligation under the current law for them to continue to make repayments. If they do not make those repayments then their penalties accrue. So after 3 years when they decide to come back to New Zealand and start paying off their student loan the student loan will have grown massively and people look at that as being a huge disincentive for them to come back. As I say the situation is not created directly by the interest-free loan policy but the interest-free loan policy has exacerbated it. So any suggestion that there is a direct flow-on is not correct. 
However the objective of this legislation is to encourage and provide incentives and to remove disincentives for our people who go off overseas to come back to New Zealand and to engage constructively in New Zealand society and in the New Zealand economy enriched by their experiences overseas. So that is what the 3-year holiday is about. People need to understand that that is all it is: a 3-year repayment holiday. They go off overseas but they still have to pay the interest that is accruing which will be building up on their loan. So when they look at their loan sheet at the end of 3 years it will be bigger than when they left. However no penalties will be accruing to them during that time. After 3 years they will have to start making continuous repayments back to the Inland Revenue Department; otherwise penalties will come. We think 3 years is a very sensible amount of time. It is about the time that somebody can go across and have that overseas experience and possibly do some postgraduate studies but then return. 
I just want mention that in the last 10 months I have had the good fortune of having my first two grandchildren born to me. One is very fair even though she is a registered member of NgaiTahu and the other one happens to be Niuean - Cook Island - Samoan who has a skin colouration that is very similar to that of Nanaia Mahuta. I refer to them as ebony and ivory. They are just gorgeous. I consider myself so lucky to have these two grandchildren living in Auckland and to be able to regularly see them and see them growing up. I feel so sorry for those people whose kids and grandkids are growing up across the other side of the world. From that particular point of view I have to say that there is some really good fortune in the objectives of this particular legislation and New Zealand First of course is very supportive of it. 
Mention has been made of the Education and Science Committee and the work it did. I have to acknowledge the work of Opposition members on that committee as well as Government members. It was really the select committee process rather than the select committee itself that led to some of those constructive changes—and we believe positive changes—to the legislation. That demonstrates how important select committee work is. That is where we get participatory democracy actually taking place within our Parliament. The rest of our Parliament is really representative democracy but at the select committee and through the select committee process we can refine our legislation and listen to the people and hear what they are saying. 
Once again I take the opportunity to congratulate the Hon Peter Dunne because I believe he has produced very good legislation. I congratulate the Inland Revenue Department officials. They were really really good to work with. I have mentioned the situation where they went back to a group of presenters who had got it wrong and they went out of their way to make sure that they understood the bill completely. That was going beyond the call of duty but it was representative of the way they approached the whole legislation. From this I hope—and I believe and New Zealand First believes—that the objectives will be met and there will be more incentives for our young people to return back home and participate constructively in our society. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
Tena koe Mr Assistant Speaker tenatatou katoa i te Whare. First of all I would like to say I am quite amazed at how the public talk has changed. A few years ago when people were jumping up and down about how all our kids were disappearing overseas people first of all tried to make out that that was not happening and that it was not the reality. Then as the statistics started coming out the brutal reality kicked in that yep our kids were doing a runner. Now all of a sudden the Government is talking as if it recognised that our kids needed to get away for a few years and that it will try to encourage them to come back home. 
Let us not con ourselves here folks—our kids are running away overseas because they have had a gutsful of being driven into the ground by this massive student debt. They get out of college and in their first adult years they are trying to get a degree so they can do something with it but we are making them build up a debt as big as a house mortgage. They are getting on the plane and running away; they are not playing society’s game about going overseas to get a bit of this and a little bit of that then coming back and bringing back all this worldly experience. 
So we should stop conning ourselves. Our kids are doing a runner on the massive student debt that has been imposed upon them by this Government and by the previous Government. We should at least be honest with ourselves about what is going on around here. We should stop conning ourselves and stop lying to our kids. 
Just about a year ago Professor RodolphoStavenhagen was here and he presented his report on human rights and indigenous issues in Aotearoa to the Economic and Social Council of the United Nations. Paragraph 62 of that report pretty much sums up the Student Loan Scheme Amendment Bill (No 2) from the Maori Party perspective: “The Maori Students in Tertiary Education of Aotearoa complained to the Special Rapporteur that a limitation to their progress to higher programmes in tertiary education is the high burden of student debt and decreasing public funding to support Maori students.” 
That is what the United Nations was told and that is what the world now knows about the situation facing Maori students. Mind you that is what Maori have known ever since this crippling student loan facility was first created—student debt will overburden those who already carry the burden of high expectation from their whanau limit their future options and lead to years of continued debt repayment. 
When I spoke during the second reading of this bill I mentioned comments I had received from an old Pakeha guy. This is a lovely statement. He asked: “If education is the transfer of knowledge from one generation to the next then who are we to charge our children for something that we”—those of us in this House anyway—“got for free?”. When I went to varsity it cost $120. I did not get anything but that was all it cost. 
This bill aims to amend the student loan scheme in order to encourage students with loans to come home. But the $9 billion—and ever rising—student debt will not change a heck of a lot when many of our students will not come back because they are now getting way more than they could ever get here. When students commit to improving their knowledge and the Government commits to supporting their endeavours everybody benefits. But when our students’ commitment is matched by a Government driving them into debt we should not be surprised when we lose them. The way to get our kids to come home is to slash the debt. We would then maximise our return from the productivity of those who would come back tomorrow in a flash if the Government had the courage to slash the debt. 
Maori of course are finally figuring higher in student debt because of their higher participation over the last few years in tertiary study. Maori are finally beginning to turn back decades of educational disconnection. I believe the recent increase in Maori tertiary study is very much the result of wananga enrolments and I take this opportunity to record the Maori Party’s heartfelt thanks to the wananga pioneers: people like emeritus Professor Whatarangi Winiata Dr RongoWetere and Professor HiriniMoku Mead and to those who have taken on the mantle on their behalf. Yesterday’s statistics are a clear reminder of the very very impressive results that the three wananga in particular have achieved in improving Maori tertiary qualifications noting a massive jump of 10000 Maori who have achieved bachelor degrees or higher over the past 5 years. That is not to undermine the excellent work our whanaunga are doing in universities polytechnics colleges of education and other tertiary institutions as well but it is more of a recognition of the genuine relevance of wananga to Maori learning. 
So Maori are there in bigger numbers than ever before but I ask whether it will make a difference. Will there be jobs for our kids when they graduate or will their first choice still be Auckland International Airport? Ministry of Education data tells us that for Maori their getting a degree does not actually lead to them getting a job but it does lead to a big student debt. That brings us back to the whole matter of the debts that Maori accrue under the student loan scheme—currently $1.5 billion and climbing—which the Government dismisses as just a consequence of higher participation by Maori in tertiary education. But its implications for the financial well-being and future prosperity of those Maori students and their whanau simply cannot be ignored. 
When high schools fail Maori—and 50 percent of Maori go into tertiary study with no formal school qualifications—it is not hard to see why so few choose tertiary study as an option. And when they do choose tertiary study before they can enrol in it they get into debt right away in just getting the high school equivalent qualifications that their high schools failed them at. 
When Maori do not like to apply for student loans because they are worried about debt levels it is not hard to see why Maori struggle to get through tertiary study. When Maori do get loans and end up with bigger debts than non-Maori it is not hard to see why getting into debt is such a big issue for them. When the average Kiwi earns $24500 but Maori get only $21000 it is not hard to see why the debt repayment issue is such a big deal for them as well. 
So when all those factors combine it is not hard to see why it takes Maori a whole lot longer than non-Maori to repay their student debt. When that is the experience on which they base their future then the cost of an airfare to Aussie becomes a positive choice for far too many of our young people. 
Finally although we will support this bill to try to get our kids to come back home I have to speak against the snooping culture that has surfaced in this bill too. This bill introduces data matching between the Inland Revenue Department and the Customs Service to determine which repayment rules the students leaving the country will be subject to. But it also leaves out there the distinct possibility that that information might be put to a whole lot of other less positive uses. 
I will leave it there but I wanted to raise the Maori Party’s concern about the Government’s continued invasive use of computer-generated data in order to keep tabs on our own citizens. Using information to develop our strengths as a nation is good but using it to snoop on our kids who are trying to get ahead in life is quite simply unacceptable. Tena koe Mr Assistant Speaker. Tenatatou katoa. 
DIANNE YATES (Labour) 
: 
 I rise to speak in the third reading of the Student Loan Scheme Amendment Bill (No 2) and note that most of it comes into effect on 1 April 2008. I thank the previous speakers for their support for this bill and I thank members for the unanimous support for this bill throughout the Parliament. I feel somewhat concerned about some of the content of the speech of Mr Allan Peachey. I think perhaps he feels somewhat frustrated and maybe wants to get his previous job back because he tended to speak more about schools and his previous job than he did about this bill which is about the student loan scheme. I suspect Mr Peachey is not the only person in the National Party who feels frustrated at the moment. He talked about taxes and about schools but not about the tertiary student loan scheme. This bill is about a 3-year repayment holiday for students who go overseas and it is about non-penalty clauses; it is not about relief from interest. 
I notice that the previous speaker Hone Harawira also talked about people running away overseas yet the commentary on the bill talks about the tradition of young New Zealanders going overseas once they have finished their tertiary education. It used to be called OE. People would say: “Have you done your OE yet?”. So this is not something that has come about since the establishment of the student loan scheme; it has gone on from before the student loan scheme. It is not new but is a tradition and for people to want to go overseas and get that experience has very little to do with the student loan scheme. 
The people who come back with overseas experience contribute greatly to New Zealand. In some cases they have to go overseas. I think of people like eye surgeons and so on. In order to become registered as an eye surgeon in New Zealand someone has to have had some experience and qualifications from overseas. For some people it is a requirement of their job. It is not something that is new. What is new and is in this policy is that young people are to be enabled to have that overseas experience without being penalised. 
Mr Peachey talked about an election bribe. I do not think that Mr Peachey understands what policy is because his party does not have any. I say to him that policy is what one goes to voters with before an election and it says what one is going to do. It is extremely cynical on the part of someone like Mr Peachey to think of policy as a bribe but no doubt if he is here in the House for long enough and if the National Party is creative at some particular stage it may come up with something called policy and he may then understand what it is. If he is around long enough he may understand that policy is important and that if one is going to stand for election one has to have policy to put before electors. Mr Peachey talked a great deal about tax cuts but I notice that National’s deputy leader Bill English has said that a National Government could not afford tax cuts. So that is another flip-flop by National. 
When we talk about this bill it is important to note that Mr Peachey said that people would not be going to university. For someone of his age he needs his memory to be jogged a little. Maybe I am a bit older than he is but when I was younger—if one can talk about the old days—only 2 percent of people went to university. I remind Mr Peachey that a large number of people now go to university or into tertiary education. In 2005 around 76000 young people went to universities in New Zealand—that is New Zealand - born New Zealanders—nearly 50000 went to polytechs and institutes of tertiary education 2000 went into teachers’ colleges and 6500 went into wananga without including other forms of tertiary education. That is an amazing improvement and I am proud to be part of a Labour Government that puts a great deal of emphasis on education and the fact that large numbers of people are now accessing tertiary education. 
What has enabled so many people to access tertiary education is the student loan scheme. Children from working-class families who many many years ago gave away the whole idea of going to university especially if they lived in country areas are now able to go to university because of the student loan scheme that we are amending. That is a tremendous improvement. I think the member opposite is so involved with his own little foibles and his own little hobby horse about schools that he may be better employed if he goes back to a school and makes some of the improvements he thinks should be done within his own school and if he also encourages people to access the scheme that is there. 
As we have said with regard to this bill the loan scheme enables people to have a holiday from repayments. It also has some aspects that allow those who hold loans to be exempted while they are studying at an undergraduate level overseas as well as at a graduate level so that is a change. 
Another point that I think is very very important has not been mentioned. Some young people do not want to go overseas to take on employment but they want to work for a charity. Many young people do that. They want to work in another country—to volunteer their services through Volunteer Service Abroad or whatever other organisation they choose. There is a clause in the bill that allows young people to have interest-free loans while working overseas for a charitable organisation. The bill puts in the conditions that need to be met by those who do that. I remind people that if they are going overseas and working for a charity as a young person proof has to be provided that the work done as a volunteer for or for token payment from a charitable organisation was for one or more of the following purposes: to relieve poverty hunger sickness or the ravages of war or natural disaster—so that would include people wanting to work in tsunami relief—or to improve the economy or raise the educational standards of a country that is recognised by the United Nations as a developing country. People who wish to do that need to provide the commissioner with the information prescribed in the bill. 
I think that provision is very very important. We have talked a lot about young people going overseas to make money yet we have forgotten that many young people are much more altruistic than we give them credit for. Many of them do want to go overseas while they are young to work for a charitable organisation. That opportunity is a very very important part of the bill and I know that many young people will be relieved to be able to take it up. 
I hear a lot of people talk too about young people going overseas and say what a great advantage that is etc. As we know most young people go overseas for a period of 3 years. They go for experience and that is not new. It happened before the student loan scheme was established and it has happened since then. It is not a new thing. Those people do come back to New Zealand. They want to live here they want to settle here they want to have their children here and they bring back with them valuable information and experience. 
I thank the chair of the Education and Science Committee Brian Donnelly for his good work in chairing the committee. I thank the submitters particularly the young students who came to submit. I think it is very important that young people make submissions to select committees so I thank the student organisations the teacher organisations and all those who made submissions. I thank the select committee staff for the good work they did and I thank my colleagues on the select committee. We all worked together and there was unanimous support for the bill. Some of the people who made submissions made them on a number of things that were not to do with the bill but they used the opportunity provided by the bill to raise them. Generally those who made submissions focused on the content of the loan scheme. I think all the submitters were in favour of the bill. The select committee is in favour of the bill and we look forward to its final reading and adoption into law. 
COLIN KING (National—Kaikoura) 
: 
 That was the former member for Hamilton East Dianne Yates. She made a far greater contribution in the Education and Science Committee than she did in her third reading speech on the Student Loan Scheme Amendment Bill (No 2). 
I speak from the point of view that National supports this bill in its third reading. The bill’s gestation has been very short. It would be naive of us to ignore the fact that it is absolutely necessary and that the Inland Revenue Department basically had no way of managing a policy that was thought of for the purposes of its vote-catching capacity. In actual fact when we looked at the details of it in the select committee we saw in the highlights section of the annual report on the student loan scheme that the number of borrowers living overseas was 27000. With further research we found that the figure is 40000–odd. 
We got down to the task very quickly under the fine and admirable chairmanship of the Hon Brian Donnelly. Dealing with this bill was a very interesting experience. It has given me an insight into the process around select committees because it is one of the first bills I have worked on that has come right through and that we could wrestle with before it becomes law. On that basis I acknowledge the appropriateness of the submitters and the fact that we sat during recess one time to make sure it all worked. The way the Inland Revenue Department officials were able to bring clarification to the complex subjects being dealt with was also refreshing. The process was interesting from my point of view because it was not clouded with that warm fuzzy thinking that comes from the left when the Labour Party is totally bereft of any real straightforward thinking. From that point of view it is appropriate that we should bring into line the runaway abuse of a system. 
However I am incredibly sympathetic towards the overloaded and overburdened Inland Revenue Department with the workload it has to carry. We are asking an enormous amount of the department. We might be showing a degree of blind faith to believe that with a couple of amendments here and there under the name of the Student Loan Scheme Amendment Bill (No 2) we will block all the abuse of the system. 
I go back to what the very valuable member for Tamaki Allan Peachey alluded to which was the 2 million - odd taxpayers in New Zealand who fund the student loan scheme. We do not want to take them for granted; we want to see a lot of responsibility being taken by those people who have taken up student funding and gone on to get tertiary education. 
A lot of people have paid back their loans. We see in the highlights section of the annual report on the student loan scheme that 665900 people have taken loans and 193393 have paid them back. However at this point in time—or at the time of the report on the 2006 student loan scheme—470507 people still had a student loan. Some interesting fiscal figures around the student loan scheme going forward are that by 2015 borrowings will be in the region of $12.7 billion and it will not be until 2034 that repayments exceed borrowings. Over the next 15 years there will be some fiscal implications and we just have to note those. The total amount of borrowing is forecast to increase by 4.7 percent a year which is $66 million. On average the balance will increase by 5 percent. That is the really large figure because that 5 percent is actually going to be $526 million each year. It is a serious matter we are talking about here. Again it just emphasises the implications of the $1.5 billion election bribe that was handed out. 
From the time the interest-free loan scheme was signalled until today the number of people who have gone overseas and whom the Inland Revenue Department did not know about has cost the taxpayer another $143 million. Again it just emphasises the huge fiscal implications upon the economy. I want to emphasise that we are not begrudging that; we just want to see an enormous growth in the level of responsibility of those people who have taken other options like going on to tertiary education learning a trade or skill or working with an industry training organisation or training provider where they can earn while they learn and get very very valuable skills. As previous speakers have said we have high expectations for our young people. We want them to aim for the stars and to excel. We do expect them to make educational choices around the tertiary scene that will add value and make our economy resilient into the future. 
Another statement I want to make is that there is a significant level of private benefit around the tertiary education side of things. I do not think we are focusing enough on that. The fundamental thinking around the student loan scheme is that it is for the private good of the individual. The State still pays an enormous amount of the tertiary education bill. There needs to be an incentive around the choices we make so that that value is realised. When we stop to think about it we realise that with any investment there is a short-term sacrifice and that to get the long-term benefit we have to be able to cope with that short-term sacrifice. To quote what Benjamin Franklin said—and I fully endorse the statement—“If a man empties his purse into his head no man can take it away.” That applies to women as well I say to Dianne Yates. 
Any investment in knowledge always pays the best returns. Certainly tertiary education is hugely important. The student loan scheme has been the foundation for it and on that basis I recognise that this bill is the best attempt of a number that will come before us to try to ensure that those people who take on the obligation of a student loan either stay in New Zealand and deliver the value back to the taxpayer that we know they will or if they go overseas stick to their repayment obligations. It was interesting to get the figures from the Inland Revenue Department that show that this scheme in itself will actually start to improve the level of payment—$9 million in the first year and something like $24 million in the second year. 
Just on a finishing note I draw everybody’s attention to the noble submission made by intern doctors. It talked about their need to stay in New Zealand for another 3 years. When we look globally at the moment at the issue of getting employment as a doctor we see that in the UK for example the number of doctors is being reduced by some 20000-odd and we are very mindful that it looks as though the worm may turn. We will get back a lot of our wonderful people and that would be absolutely outstanding. 
It gives me great pleasure to stand here and speak on behalf of the National Party. I am proud of the fact that we have largely tidied up an area that was a shambles after the interest-free student loan policy was brought in. Thank you. 
Dr ASHRAF CHOUDHARY (Labour) 
: 
Alaikum salaam. What brought me to politics was the excesses of the National Party in the 1990s. What hit me was the class system that was brought to New Zealand politics particularly in the area of education. Some people could afford to go to the universities but those who could not afford to had to get loans and they had to pay interest on that while they were studying or after their graduation. 
So I am delighted that Labour has since 1999 started to reverse some of those policies particularly in this area of education where we pretty much started a campaign to rectify the excesses that were brought to us in the 1990s. First of course we got interest-free loans while students were studying. This is the second stage of that campaign to have interest taken off altogether when students have graduated and while they are working in New Zealand. I am delighted to rise and support this bill because it is designed to bring a fair and just society particularly in the area of education so that our young people can afford to go to universities polytechnics and other tertiary education institutions. 
I would like to make some comments on the speech made by my colleague over there Hone Harawira about Maori education and how students of Maori extraction are having difficulty in studying. Unfortunately I have to say that I think that speech was very cynical. I know the Maori Party supports this bill but that speech was very cynical in a way. I will tell the member why I say that. It is because education is fundamental to human development. Education is what makes us understand what is around us. It makes us understand the nature of things and makes us better at decision making. I will tell members about education and Asian people. Why do so many Asian people come to New Zealand? One of the major attractions is to get their children educated in New Zealand because we have one of the world’s best education systems here. They come here to get their children educated so that they can do well in life. 
I am surprised that the member of the Maori Party Hone Harawira has been very cynical about the loan scheme. Today of those students graduating from our high schools 50 percent more Asian students than Pakeha students obtain university entrance. That is because Asian students and their parents value education. I think the message there is that the parents have to make sure their children go to high school and to universities or other tertiary education. It is important for the State to make sure that these students have the opportunity to go to higher education. It is important that every family has the opportunity to send their sons and daughters to tertiary education. Among the ethnic communities nowadays we see a whole lot of young people who have more opportunity to go to university now with this scheme where students can have access to loans and do not have to pay interest. The ethnic community including the Asian community and particularly the new arrivals is usually at the bottom of the heap in economic terms. So this scheme allows them to make sure their children go to universities and get higher education. 
 Now with the interest-free student loan scheme we have more students in tertiary education than ever before. That allows for these students not only to study here but also to go overseas. Previously postgraduate students alone were registered but under this bill undergraduate students are also able to go overseas and enhance their study. I think of some areas in this country like science technology and engineering—and sometimes other areas like health for example which was highlighted earlier in terms of eye surgeons and other surgeons—where some of our universities do not have all the facilities available. I am delighted that this scheme allows students to go overseas for up to 3 years and enhance their education particularly in the postgraduate area and in the areas of technology engineering and medicine. For example my own young son is becoming a vascular surgeon and he is planning to go overseas because some of his education is probably not fully available here. I am sure he will be coming back to help us here in this country. 
Labour’s policy is to make sure that we have quality and relevance in our education because previously in the 1990s it was all about “bums on seats”. Now we are working towards improving our tertiary education so we can have a funding allocation for our institutions that allows better quality and relevance for students in education. 
This bill I must say is very important particularly in relation to the amnesty of 1 year on student loans. This will also allow non-resident borrowers in arrears the chance of a fresh start. That is very important because some of the students who have gone overseas cannot afford to repay their loans while they are working. As has already been highlighted some graduates go overseas to do not only postgraduate work but also some kind of community work—for example in the United Nations—or in similar organisations or non-profit institutions in developing countries. 
It is important to realise that this bill allows for data to be matched between the Inland Revenue Department and the Customs Service so they can make sure they have information available about the graduates who go overseas so that on their return they can be assessed for repaying their loan. It is very important that these steps carry on for our young students so that we can give opportunity to our future generations to get educated. 
I particularly come back to the point I raised earlier in relation to Maori education. In the Education and Science Committee right now we are doing an inquiry into making every child successful. I know that the member from the Maori Party is making a very good contribution in terms of understanding why some children are failing. We all know that at the moment at the bottom of the heap a quarter of the students who are failing are more likely to be either Maori or Pacific Island students and it is important for the parents to make sure our children are getting education. Schemes like the interest-free student loan scheme are enhancing the opportunities for study. 
Finally I say the select committee has done a marvellous job under the chairmanship of Brian Donnelly who is a very good chairman. The Opposition members in the committee have been working very well and have been contributing hugely. I am delighted that we are working very cooperatively and well. Thank you very much. 
TIM BARNETT (Labour—Christchurch Central) 
: 
 I begin by commending what I thought were some very helpful comments made by my colleague Dr Ashraf Choudhary who having worked for some time in the academic sector certainly knows what he is talking about from the teaching side of the system. 
In this third reading debate on the Student Loan Scheme Amendment Bill (No 2) what I would like to do as well as initially commending the legislation is to take a bit of a snapshot of this issue. Firstly I will go back and speak for a moment from my personal history as the first person in my family to achieve tertiary education—in spite of my heavy Kiwi accent—in the United Kingdom. That takes me back to 1978— 
Hon Mark Burton 
: Warwickshire. 
TIM BARNETT 
:—to the Warwickshire County Council with a proud local education authority which in those wonderful days paralleled absolutely the tertiary system in New Zealand. The local education authority gave me not only full tuition fees not only full accommodation costs not only enough money to feed myself but also everything else besides. I had to work only in order to earn a bit of pocket money to do those extra things. That was an extraordinary period when I was absolutely supported to complete my tertiary education from point A to point Z. That was an extraordinary situation to be in and I know that many people in this House including I am sure a majority of our National Party opponents who oppose this legislation enjoyed a similar privilege. Those were the golden years in terms of tertiary education. 
Secondly I would like to flash forward to 1996 when I was elected as an electorate member of Parliament for Christchurch Central which is an area with a high number of students. What I found in that first flood of casework coming to my office was a story repeated again and again. That was a story of students—and in some cases graduates because by then the real student loan scheme had come in and some people had gone through the scheme—who had generated a very large debt. As a result they were in a situation whereby they had a massive debt—very often equivalent to the size of a mortgage—hanging around their neck. They were in that desperate state and naturally they came to their local member of Parliament to tell the story. At that sad stage Labour was in Opposition. We were not in the position to be able to do an awful lot to help their situation. But what we could do was to learn from their stories and develop policy in response to that. 
The harsh edge of that savage loan policy was the debt—which Hone Harawira spoke very powerfully of—which is now at a very high level. Those were the years when that debt started low at a national level and started to shoot up and up. It was an utterly unreal situation. I can remember for example a medical student who had a $120000 loan debt. She was a young woman who had developed a number of emotional illnesses while she was studying so she had a real lack of confidence that she could ever actually practice as a doctor. So she was faced not only with a massive debt without any scholarships to balance it against but also the real possibility that she could never do the job that would earn her the real money to pay back that debt. She worked out that she was spending about a quarter of her real income just to service the debt before actually starting to eat into it. 
That was in 1996. Now I will flash forward to 1999. I still remember being the first member of Parliament to turn up at the University of Canterbury during the election campaign. Obviously events in Christchurch often lead the nation. The students at the University of Canterbury occupied the Registry because their anger at the student loan debt was so great. I was the first lucky member of Parliament as an Opposition MP to arrive into that situation and to address the angry crowd. I was then taken into the boardroom where there was a midnight meeting for the students to try to present to me what the problems were all about. At the heart of the dispute then was the issue of student loans—obviously other issues were there besides. 
That occupation of the University of Canterbury really set the tenor for that election because Max Bradford who was then the Minister for Tertiary Education for the National Government had all sorts of extraordinary objects thrown at him as he visited one campus after another. He was chased off campuses. He really had to repeat endlessly the famous action of Lockwood Smith in climbing through what was it a storeroom window or a toilet window— 
Jill Pettis 
: The Joe Cocker of the National caucus. 
TIM BARNETT 
:—exactly the Joe Cocker of the National caucus—in order to escape angry students. Max Bradford in campus after campus was performing extraordinary escape acts to try to get away from the venom of an extraordinarily angry bunch of New Zealand citizens. 
That was in 1999. By then Labour had developed the policies to address this area. I see this legislation now as in a sense ending that legislative journey. What we did after getting into power in 1999—and again after intense debate after getting into power again in 2005—was to look at the situation see that debt continuing to rise and most important of all see the personal situations of extraordinary suffering that were causing our students not to look forward to the next stage of their lives but to fear what was going to happen. Of course in 1999 interest was accruing even as they were studying. The first thing we did on getting into power with a whole lot of other calls on our first Budget was to freeze the interest on loans while students were studying. After 2005 we froze all interest on loans so that any repayment was actually repayment off the interest. But there are some exceptions to that situation and that is really what the Student Loan Scheme Amendment Bill (No 2) is heavily focused on. That is what this third reading debate is all about today. 
This bill continues Labour’s effort to make that loan scheme fairer. The particular matter it focuses on is the fact that many graduates for a whole heap of reasons want an opportunity to go overseas. As has been mentioned earlier by Colin King some graduates want the chance to become missionaries or to follow their interest in overseas development work or overseas volunteer work for a while. The last thing they want while being overseas which would normally mean that interest would continue to be added on to their loan is to lose out financially through giving of their time freely to the wider world. Instead we want this legislation to be effective so as to allow those graduates to enjoy their overseas experience but we also do not want any disincentive for them to come home to use their skills in New Zealand. So first of all we need the information. Therefore this legislation introduces data matching between the Inland Revenue Department and the Customs Service to help ensure that the department knows about those with loans who are heading overseas. That information base was not readily available or accessible before. 
Secondly the legislation extends the amnesty on student loan penalties by just 1 year. That allows non-resident borrowers who are in arrears the chance of a fresh start. It is absolutely essential that incentives are built into this kind of system. It is all very well to tell graduates who come home to New Zealand after a number of years that they have a $150000 debt hanging around their neck. That will not be much of an encouragement to come back here even with the skills they have. So this bill extends the amnesty by 1 year. This enables New Zealand graduates with a debt who are overseas and who are paying a bit off or maybe not paying enough off an opportunity to play a bit of catch-up. 
The bill also makes the scheme fairer by introducing a 3-year repayment holiday for those borrowers living overseas. That is fundamental. It recognises that many of those borrowers who go overseas for their OE are not going to a secure salaried position with a certain income. It means we have recognition now in law that borrowers may not be in a position while on their OE because they have an uncertain income to make repayments while travelling. 
The last two points I make about this legislation are that it allows the Inland Revenue Department to give interest-free loans to undergraduate students who are studying overseas and that it also introduces a penalty rate when borrowers fall behind in repayments. It is with great pride in this legislation that I commend its third reading to the House. 
JILL PETTIS (Labour) 
: 
 It is with real pleasure that I rise to speak to the bill because the whole student loan scheme is an issue that I feel very passionate about. Like most parents around this House who are roughly my age we have children who have been students. And we have been students ourselves so many of us know personally what the former loan scheme used to be like for students in the very early 1990s before Labour came into Government and was able to institute a much fairer loan policy. 
I could regale the House with the many many stories that my children’s friends used to tell me about the impact the former loan scheme introduced by the former National Government meant for them personally. One of the huge differences I noticed when Labour came into Government was how the constituency work and the topics which were some of the major issues that came through our offices changed. One of the issues that did change dramatically was the amount of work that my office was doing around issues connected with student loans. Once Labour’s policy came into force the amount of work we were doing on student loan issues dropped away markedly. In fact I cannot remember the last time I did a case concerning student loans. That is great for students and it is good for New Zealand. 
This bill really is a continuation of Labour’s policies to make the student loan scheme fairer. Basically that is all that the people who came to see me and my children’s friends who were talking to me were asking for. They were not asking for a free ride. They knew that tertiary education was expensive and they were just asking for a fair deal. That is one of the reasons why I have always felt so strongly about our student loan policy and it could not have come in quickly enough as far as I was concerned because New Zealanders and young New Zealanders were really just asking for a fair go. This further extension covered in the bill—this continuation of making the student loan scheme fairer—is all that people were asking for. 
Part of the improvement in tertiary education that I am proud that our Labour Government has been able to deliver is the funding of institutions on the basis of quality and relevance. I well remember when we were in Opposition how the old market-driven model that National applied was basically about “bums on seats” as we say. Our tertiary education institutions were forced by the previous National Government’s onerous and draconian tertiary education policy to concentrate on numbers rather than on quality and relevance. I am delighted that the improvement in our tertiary education policy has enabled tertiary institutions to refocus on quality and relevance. 
It is not easy for those who deliver tertiary education services. We always know that demand exceeds supply. One of the things we can say about education in general in New Zealand is that all of those who are involved in delivering education in New Zealand want to do only their very best. They want to deliver only the best for their students from early childhood education right through to tertiary education degrees and the doctorate level. If one wants to get rich one should not work in the education sector. People who work in this sector do so because they are passionate they are driven and they are committed. They want to improve New Zealand and they want to leave this country a better place. The way they are able to do that is by being in front of a lecture theatre or classroom or leading young people and imparting to and sharing with them the knowledge they have gained over the years regardless of what stage of the education process those students may be at. 
I am grateful for the altruism shown by the people who work in the education sector because it is a huge commitment; it is not an easy task. I want again and I have done this many times to take this opportunity to extend my personal thanks to those who are involved in educating our society. 
Colin King 
: You are starting to repeat yourself! 
JILL PETTIS 
: It is worth repeating. It is worth saying thank you to those people who are sharing their knowledge with young New Zealanders. That member who is generally regarded as being fair has just had I am sure a momentary slip in his normally pretty good attitude. I am happy to say thank you as many times as it is required. One of the things about our culture in New Zealand is that sometimes we are great at criticising but we are not as flash at saying thank you. They are two very simple words and I am happy to say thank you as many times as possible. So just in case that member missed it I say thank you to all the people who are sharing their knowledge with young people in New Zealand and improving the lot of our society. 
 It is a pity that member interjected because I did not intend to dwell on the National Party as there is really not much to say about it. But I accept that one is forced to respond to a careless and out of character interjection. What cannot go without being asked is the question: “What’s National’s policy?”. Can those members opposite give us a policy? Do they have a policy? There is silence—not a dicky-bird! The only message I can hear from National on its tertiary education policy is—listen—ratatat-tat! That is Mr Key’s flip-flops. That is Mr Key flip-flopping all over the show on yet another lack of policy and that is National’s position on tertiary education. 
Mr Key has several views. I ask members to bear with me for just a moment. In one of his statements he said: “Labour’s no-interest loan scheme is rushed and reckless thrown together in desperation before the election.” Then ratatat-tat! Further down the track as he was flip-flopping Mr Key said—perhaps to a different audience because I understand that he changes his response depending on the audience he is standing in front of—“We’d have a look at it. Let’s just see what conditions they put on it and what impact it has.” Well I wonder what audience he was standing in front of when he said that. 
Let us see what sort of a direction that is coming from somebody who thinks he will be a leader of this country. It is kind of like those hats with two peaks we see some people wearing—“Take me to your leader.”—because he’s never quite sure which way he’s going. We are talking about education which is one of the most important sectors in our society and today we are talking about tertiary education. Fancy the main Opposition party not having a clear policy on tertiary education! Have members ever heard anything so vacuous? Have they ever heard anything that is so—oh we are not allowed to say that word? Have they ever heard of such lack of direction about a policy area that is so critically important to New Zealand’s future? The main Opposition Party—well the party that purports to be the main Opposition party—does not have a clear unequivocal policy on tertiary education. I tell the National Party that it should get up to speed and get a policy. I ask it to give us a policy—on anything! 
NATHAN GUY (National) 
: 
 What we heard from that member over there Jill Pettis—“rat-tat!”—was the drum roll when Chester Borrows rolled her out of the electorate of Whanganui by a handsome majority. “Rat-tat!” was the sound of people in that electorate applauding when Chester Borrows replaced that member. That member over there the previous member for Whanganui spent a good portion of her speech saying thank you. Well that is what the people of the Whanganui electorate said to Chester Borrows when he won that seat so handsomely. 
I wish to take a call on the Student Loan Scheme Amendment Bill (No 2). The main points I wish to raise are that we have a million people overseas and some of our youngest and brightest are leaving our shores to work and further their education overseas. That is of real concern to the National Party. A lot of our youngest and brightest—the brain drain—are heading overseas. But National is supporting this bill for the reason that it is pretty much tidy-up legislation. In particular it will actually allow the New Zealand Customs Service and the Inland Revenue Department to do further data-matching which I think is very very important. 
This is just a short call from the National Party to say that although we have some concerns we support this bill because it is really a tidy-up of legislation that has been a little bit messy and not well-thought-through. 
Bill read a third time.