Student Loan Scheme (Repayment Bonus) Amendment Bill — First Reading 
Student Loan Scheme (Repayment Bonus) Amendment Bill — First Reading 
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Student Loan Scheme (Repayment Bonus) Amendment Bill 
First Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Student Loan Scheme (Repayment Bonus) Amendment Bill be now read a first time. 
 At the appropriate time I intend to move that the bill be referred to the Education and Science Committee that the committee report finally to the House on or before 30 July 2009 and the committee have the authority to meet at any time while the House is sitting except during oral questions during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 187 and 190(1)(b) and (c). 
The student loan scheme was introduced in 1992 to make it easier for people to gain access to tertiary education. It allows tertiary students to borrow money to pay their fees and provides help with living costs for some of those students. Repayments for people who live in New Zealand are based on an individual borrower’s income after graduation. Although there have been some major changes since the scheme’s introduction the fundamentals of the scheme have remained largely the same. It would be fair to acknowledge however the increasing concern across the political spectrum and the wider community about the mounting level of student debt and whether it will ever be repaid. That concern led the previous Government to introduce the policy of interest-free student loan repayments for borrowers resident in New Zealand and led the National Party at the last election to commit to a repayment bonus scheme to incentivise early repayment. 
The current student loan scheme is administered by a number of agencies including the Ministry of Education and the Ministry of Social Development. The Inland Revenue Department is responsible for the collection of student loan repayments. Most repayments are made through the PAYE system by means of salary deductions. 
Since the scheme began nearly 800000 people have taken out a student loan. Today with over half a million borrowers and a nominal value of about $9.6 billion the student loan scheme represents a significant Crown asset—one that has to be managed in an efficient and cost-effective manner. 
One area of concern is that since the introduction of interest-free student loans in 2006 the number of voluntary repayments has been decreasing with borrowers tending to take longer to repay their loans in full. Not surprisingly this is because paying interest on the loan balance has been a big incentive to repay the loan as early as possible. Faster repayment of loans is of benefit not only to the individual borrower for obvious reasons but also to the Crown because the longer borrowers take to repay their loan the more expensive that borrowing becomes to the Crown. 
This bill introduces an incentive for faster repayment in the form of a 10 percent bonus for borrowers who voluntarily make extra repayments that total $500 or more in a tax year. Voluntary payments totalling $5000 for example would attract a bonus of $500. All borrowers including those overseas will be eligible for the bonus provided they meet all student loan obligations and have a loan balance with the Inland Revenue Department of $550 or more at the beginning of the tax year in which they make the extra payments. The bonus will be credited to their account at the end of the tax year. For those people who want to pay off their loan in full using a one-off payment the maximum bonus payable will be one-eleventh of that balance. For example if that balance is $1100 the borrower will make an extra payment of $1000 and the maximum amount of the bonus will be $100. 
Once enacted this bonus scheme will take effect from 1 April this year. The bonuses will be credited to borrowers’ loan accounts after 1 April 2010. This means that crediting will be retrospective for those who repay their loans in full before enactment and before the necessary systems changes have been made. Because there is no time limit on entitlement to the bonus borrowers who may be in a better position to make extra payments later in their working lives will be able to take advantage of the incentive when it best suits their financial position. 
I believe that the measures contained in this bill will provide a useful and welcome incentive to people who want to pay off their student loans early. I therefore commend the Student Loan Scheme (Repayment Bonus) Amendment Bill to the House. 
Hon MARYAN STREET (Labour) 
: 
 It is a pleasure to speak on the Student Loan Scheme (Repayment Bonus) Amendment Bill because there are a number of points in the bill and in the Minister’s introductory speech that I think need challenging. I thought the Minister would have understood the difficulties this bill presents. At first glance the bill looks like the usual efforts of National to support the well-off. If someone with a student loan pays $500 extra off his or her loan above the minimum requirement in any tax year that student gets his or her loan total abated by 10 percent of the extra money that was paid off—for example $50. The extra payments that qualify must be $500 and above. 
The Government says that its purpose is to encourage student loan borrowers to make extra repayments to repay their loans faster. It looks like a typical National Government bill which advantages those who can pay extra and disadvantages those who cannot. But it is on closer examination clearly a con. Why would anyone go for a 10 percent discount when the loan is attracting no interest? Any students from wealthy backgrounds who in practice would be the only ones with the resources to increase repayments would also be the ones most likely to have access to financial advice. This advice would point out to the students very quickly that they are better-off investing any extra money elsewhere and keeping their interest-free loan in its current state. So why would the Government introduce such a measure when it will not work for the less well-off which is to be expected from National but it also does not work for the better-off which one might have expected from National? 
There are two possible answers to that question. The first is that the National Government did not realise what it was doing in which case it was stupid. The second answer is that the Government knew exactly what it was doing but wanted to deflect attention away from a real agenda in the tertiary education portfolio therefore making the Government duplicitous. In that case the Government would be doing what it has done before and that is telling only half of the story. 
Just as an example from another portfolio we might recall announcements about improvements in health reforms in the National Party manifesto last year but the big missing feature which Tony Ryall at that time blurted out was that National’s intention was to lift the cap on general practitioners’ fees. He was very quickly slapped back into line for releasing something that National did not intend to release at that time. I use that as an example because I suspect that that is exactly what is happening in this case. 
It is time to remind people that National when last in office did the same thing to students. Back in 1990 it promised to scrap Labour’s student loan policy in its entirety but it failed to announce that it would be replacing it with a harsher one. What could the hidden agenda be? What could the real agenda for the tertiary education sector be? One possibility is that National might reintroduce interest on student loans because this bill makes sense only if interest is being charged on student loans. 
Another thing that National might do is lift the cap on student fees. It could consider doing that. Another thing it might consider is to stop the indexing of features of the student loan system such as the thresholds for loan repayments which are currently linked to the consumer price index and the movement in that. The Government could choose to take away the consumer price indexation and impose a freeze which as everybody knows with any increase in the CPI amounts to a cut. National consistently opposed every single measure the Labour Government took over the last 9 years to improve the affordability of tertiary education. It now quite frankly beggars belief that it would offer a discount for early payment of an interest-free loan without also having a secret agenda of reintroducing interest because that is the only circumstance in which such a bonus would make sense. 
Labour’s history in this area is to make the student loan scheme and more generally the funding of tertiary education more sustainable more reliable more stable and more predictable. This bill as it stands could be more correctly entitled the “Saving Incentives Bill” because it makes no financial sense to pay off more than is required of a loan that is generating no interest. Borrowers would be better off putting their extra dollars if they have them into an interest-bearing savings account for a deposit on a first home. When we take into account years of saving interest on that and compound interest on that we see that it makes more sense for those who leave university or a tertiary education programme and go into the workforce to put any extra money they have into an interest-bearing savings account for any other purpose than paying off an interest-free student loan. If they already have a house then they could pay more off their mortgage or anything else but the way this bill is structured makes no financial sense. If the Government has not been stupid about this bill the only alternative is to conclude that it has in fact been duplicitous. Labour opposes this bill. 
Hon ANNE TOLLEY (Minister of Education) 
: 
 I rise to support the Student Loan Scheme (Repayment Bonus) Amendment Bill. The bill contains measures that will provide incentives for student loan borrowers to make voluntary repayments to help them repay their loans faster. 
I cannot believe my ears when I sit in this House and listen to a Labour Opposition spokesperson exhorting the students of New Zealand not to pay off their student loans. The Labour Party talks about being the party of students but its members cannot get past the politics of voting for something that will help students pay off their debts sooner. In fact those members are standing in the House and telling students not to pay off their loans earlier. I am looking forward to going on to university campuses and telling students that Labour members stood in this House and would not support a bill that was designed to help students pay off their loans earlier. I am also looking forward to going out to the taxpayers of New Zealand who are providing those interest-free loans to students to help them get an education to say that the Labour Party believes that students should not pay off their loans and is not interested in any measures to help them pay off their loans faster. My email has run hot since this policy was announced with students saying that the scheme is fantastic and asking when it starts and when can they pay off their loans and get their 10 percent bonus. 
The student loan scheme helps students to pursue their education and life goals by removing some of the financial barriers to tertiary study. If those Labour members do not understand that students are concerned about their ability to pay off their loans then those members are out of touch. I cannot believe that after an election campaign in which that party constantly talked about duplicitous hidden agendas—and the public profoundly rejected all that and voted in the National Government—we have here a little bill that does an awful lot for students to help them pay off their loans but Labour is not backing it. 
Access to high-quality tertiary education enriches people’s lives and increases their employment prospects. It strengthens our economy by helping to build New Zealand’s skills base and that is all the more important at a time of economic recession. It is important that we keep our graduates here in New Zealand and contributing to our country and this Government is determined to put measures into place that can help them do that and pay off their loans. We are keeping our promise to students to help them retain those interest-free loans and this policy is a way of encouraging them to pay off their loans faster and enable them to participate and contribute to New Zealand’s society and economy. 
This Government is concerned especially at this time of economic recession that the interest-free policy has removed a strong incentive for borrowers to make extra repayments on their student loans. But the Labour Opposition of course supports that—“Don’t pay it back.” they have said; “Why would you pay it back?”. Since the introduction of interest-free student loans the proportion of repayments that the Inland Revenue Department has received from borrowers has declined. Students are listening to the Labour Party and they are not paying off those student loans. But we are keen to see those people pay off their loans as early as possible so that they then have more freedom in their lives to make those major life decisions that the previous speaker Maryan Street was talking about such as buying a house. 
The other thing the Labour Party does not seem to be in the least bit concerned about is that the cost of the student loan scheme to the Government has increased markedly in recent years as a result of non-repayments. The longer borrowers take to repay their loans the more expensive the borrowing is to the Crown. At the very time when we are concerned about the borrowing of the Crown that party is voting against a bill for political and ideological reasons rather than supporting early repayment methods for student loans. The current cost of every dollar of future lending is 39.15c; in 2002 the cost of every dollar lent was 23c. So this repayments bonus aims to address those issues by providing an incentive for faster repayment shortening repayment times and reducing the costs to the Crown. Students all over the country are delighted and have sent in messages expressing that and asking when they can start repayments. 
The Minister of Revenue in introducing the bill laid out the design parameters for it. National members believe that we have more than kept our promise since we went on the campaign. This bonus scheme is more widely available now than when it was promised prior to the election so we have over-delivered on that promise that we made to students. 
The scheme is now available to overseas-based borrowers as well as to domestic borrowers. During the election campaign we talked about only domestic borrowers but overseas borrowers in fact take even longer to repay their student loans and are more likely to have overdue repayments than are domestic borrowers. So this bonus will encourage faster repayments and greater compliance from people overseas who have loans. Large student loan balances are often perceived by expats as a reason to delay coming home to New Zealand or to refuse to come home at all. So this policy will give them the opportunity to pay off that debt quicker and hopefully to remove that barrier. 
In addition to that when we campaigned we talked about making a one-off payment of $500 on top of the normal repayments but now we have decided that we will spread that $500 over the year; on a weekly basis that is $10 a week. We will build that $500 extra and qualify borrowers for the basis— 
Hon Trevor Mallard 
: You’ll be ripped off more easily. 
Hon ANNE TOLLEY 
: That is less than a packet of cigarettes. I am not sure how much beer that will buy—I doubt that it will buy very much—but $10 a week is not a lot to save and that brings in a whole group of other students who might have found it difficult to make a lump-sum payment of $500 but who can now spread that over the course of a tax year. This is an example of the Government listening—listening—to the people out there in the community who wrote to us expressing concerns about having to find that lump sum of $500 and we have found a way to expand the range of borrowers who can take advantage of it. 
I turn to the third area where we have extended this policy. During the election campaign we talked about an eligibility time for the bonus of 10 years. We have decided that eligibility will not be limited to the 10 years as we originally stated so that means that the bonus will be available to those who are able to make those extra repayments later in their working lives for one reason or another. It is estimated that the measures in this bill will encourage about 14700 more borrowers to make those additional repayments of $500 or more on their loan. 
Hon Trevor Mallard 
: How many? Sorry can you repeat the figure? We couldn’t quite hear it. 
Hon ANNE TOLLEY 
: Certainly I am happy to repeat that. We believe that this bill will encourage about 14700 more borrowers to make additional repayments of $500 or more on their student loans. We estimate that this measure will reduce repayment times of those who take up the bonus by 1.5 years and we believe that it will decrease the upfront cost of new lending to 39.4c. How could anyone vote against that? The only reasons people could vote against a bill like that which proposes that scheme for the benefit of student loan borrowers and for the taxpayer in New Zealand would be ideological reasons. It would be because they just could not bring themselves to vote for something that National is proposing. 
In summary I tell the House that the measures in this bill aim to encourage more people to make extra student loan repayments over and above their compulsory obligation. Shorter repayment times will mean that New Zealanders will be debt-free earlier and the costs of the student loan scheme to the Government will be reduced. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I am caught betwixt and between things here. I cannot tell whether the Minister of Education is as financially illiterate as she pretends to be or whether she is a wolf in sheep’s clothing. I cannot tell which it is. Frankly I am very disappointed in the Minister of Revenue— 
Hon Anne Tolley 
: Whenever you lose an argument you resort to bullying. 
Hon Member 
: Calm down. 
Hon TREVOR MALLARD 
: No I will work my way through this situation slowly for the benefit of the Minister. 
I want the Minister to assume that someone has an income of $50000 a year and that that person is a new graduate with a $50000 loan. That person’s normal repayments would be $5000 a year—10 percent of his or her income. If for example that person could afford to pay another $1000 a year—we will keep the numbers nice and round—he or she would have a couple of choices. That person could take advantage of the scheme in year 1 and get a 10 percent additional bonus payment. Paying an extra $1000 would mean there would be a $100 bonus so an extra $100 would come off his or her loan. Or the person could choose to put the $1000 into the bank earn 7.5 percent for example—we will ignore the tax and ignore the facts that obviously the interest would compound and that the tax that came off it would be a factor. But if we ignore both of those factors after 10 years that $1000 would be worth $1750. 
I ask the Minister what sort of education system for tertiary students we would have if the graduates of that system chose to take the $100 discount instead of the $750 that they could apply at the end of their loan in order to pay it off. It is a matter of basic maths and basic logic and I am saying to National members that it makes no sense at all for any student other than a student who is in about the last 18 months of his or her loan repayment period to take advantage of this scheme. At any point earlier than that the student would be better off by putting the money into an interest-bearing account. 
There is one exception to that. I remind members that details of this exception come from the same member and the same sources from which I heard about Cabinet’s decision to reverse the tax changes which has now been more or less publicly announced by the Prime Minister. About a month ago I commented on that issue in the House. It was denied at the time but now of course it is accepted that that will happen. The same source—and I will make it very clear that it is not a Treasury source—has indicated to me that Ministers have Treasury working on papers to reverse the interest-free component of the student loan scheme. Treasury is currently working on papers to reverse the interest-free part of the student loan scheme. 
I tell the Minister of Education that if she has taken that decision or intends to take that decision then this legislation makes sense. I ask the Minister to deny that to me in the House. No she declines to deny it. The Minister of Education will not deny the fact that Treasury with the assistance of the Ministry of Education is working on papers—or may have completed the work by now because I have had the information for a little period of time—in order to reverse the interest-free student loan policy which was very heavily criticised by the current Prime Minister at the time when it was promoted and introduced. We will note we will put it on the record and we will make it absolutely clear that Anne Tolley was in the House. She was challenged to deny that that work is going on and she declined to do so. I will give her some credit for that because she is a basically honest Minister. But she is not very financially literate nor is she very good at deceiving people because she could not really explain why National was ripping off students in a way. Anne Tolley is not very competent but she is basically honest. She knew she could not deny that that work is currently going on within the Government. 
I will go back to the point I was making before I was diverted by Anne Tolley and I will address the Minister who is in charge of this bill the Hon Peter Dunne. I know that he is financially literate so I challenge him by way of interjection or response if he wants to to correct me on the logic of the assumptions I have made that people would be better off if they do not make extra repayments. No? There are some behavioural assumptions; for example the assumptions that people could put the money into the bank and leave it there or could pay it off their mortgage. The best possible thing they could do would be to pay it off their mortgage rather than pay it off their loan. But working on the assumption that people are able to put their money in the bank and leave it there for say a 10-year period and have the interest compounding they would be much better off under that year-by-year repeat return on their investment than they would under the one-off return that would occur as a result of using this scheme. 
I leave it to the Minister in charge of the bill to indicate whether I am wrong. He will not do that either because again he understands the position in this case. He is honest and has integrity in these matters. I admire him for his flexibility in working with a number of different parties. I know that even in the time of the previous Government the Hon Peter Dunne was involved in introducing or changing legislation that he was not particularly keen on. He may or may not be keen on this measure. I do not know his real position on interest-free student loans; it is not something I am familiar with. But I think I have gathered over the years that at least politically he was not prepared to oppose them. In this particular case I admire him for swallowing the rat—the dead rat—and being the person who has introduced this legislation. 
There is not a lot of point in going through the details of this bill. I think it was one of a number of National’s policies. I accept what the Minister of Education says; this was the National Party’s policy. No the guts of it were clearly spelt out before the election. It was criticised as being a rip-off at that stage. I think I was involved in drafting some things and certainly Pete Hodgson made some comments on the policy at the time indicating that intelligent graduates—intelligent former students—would not use the policy. The National Government has delivered; in fact it has over-delivered. It has made it easier for people to be ripped off by doing the repayments on a weekly basis or on a $500 basis rather than on an annual basis. It has to be $500 a year. The Government has made it easier to be ripped off because one can do the repayments on a weekly basis on a PAYE basis rather than on a one-off payment basis and it has extended the net to people who are overseas. 
I might say that is the bit where there is some logic because people who are resident overseas are still subject to the interest I think on the loans. The Minister of Revenue is agreeing with me. People who are overseas would be the group where there could well be some logic at some point in applying this measure because they would have the compounding effect of the reduction in the principal and therefore they would not have interest compounding over a period of time on their loan. Probably mainly because of tax factors that could well be something that would be of benefit to them rather than having the money in the bank and having the interest accumulate over time. I thank the Minister of Revenue for his nod on that particular matter. 
This is a sneaky little bill. It is designed to rip off people who have been students and I think that we do not have 14700 graduates of tertiary institutions who are stupid enough to be ripped off in this way in New Zealand this year next year or in any other year. 
JOHN BOSCAWEN (ACT) 
: 
 I intended to respond to the comments of Maryan Street but I will take even more delight in responding to the comments of Mr Mallard. Before I do so let me briefly explain to members of the public who are just joining this debate by way of television what this bill proposes to do. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I think you are probably aware that this member is a relatively new member. We cannot refer to people who are outside the House and are listening in the gallery watching the debate on television or listening to it on the radio. 
JOHN BOSCAWEN 
: I am happy to learn the rules of this House from Mr Mallard a member whose ability and experience I respect. 
The way that the Student Loan Scheme (Repayment Bonus) Amendment Bill operates is that it provides an incentive to people to reduce their student loan debt. Essentially it says that if students pay off a sum of $500 or more in excess of what they are required to do then they will get a 10 percent discount. They will get a 10 percent bonus and it will be an incentive for them to make that payment. That is the simple essence of what this bill does. 
When Maryan Street rose to speak she talked about that being a very foolish thing for them to do. Let us say a person makes a payment of $1000; then he or she would get a $100 reduction. Maryan Street argued that rather than making that payment they would be far far better off keeping the money and earning interest and in that regard she is absolutely right. 
What particularly interested me about Mr Mallard’s contribution is that he went on to illustrate that point in even more detail. He is absolutely right. He invited the Minister of Education to confirm that she is working on papers that will roll back the interest rate scheme but she was not prepared to do that. Mr Mallard then called on Mr Dunne. He said that Mr Dunne is a man of intellect of financial ability and he invited him to dispute his calculation. Mr Dunne was not prepared to do that. I say to Mr Mallard that I regard myself as a person of some intellect and of some intellectual ability when it comes to numbers. If you want to have your calculations confirmed I am happy to do them for you. You are absolutely correct. 
Mr DEPUTY SPEAKER 
: The member knows he cannot bring the Speaker into the debate. 
JOHN BOSCAWEN 
: I am sorry Mr Deputy Speaker. I was referring to you and I should have been referring to Mr Mallard. 
Mr Mallard is absolutely correct. The assertion he gave was an example of a person who intends to make a payment over a long period of time. Mr Mallard gave the example of 10 years. He illustrated that if the loan is to be outstanding for 10 years the person can make a one-off payment and get a $100 benefit or the person can put that money in the bank and—for the purposes of simplicity I say to Mr Mallard as he did—excluding tax on the interest and excluding compounding interest that person can earn $700 by banking the money. Alternatively he or she can have a one-off $100 benefit. I am happy to confirm to Mr Mallard that he is absolutely right. 
But the interesting point is that Mr Mallard also went on to say that it makes sense to make that payment only in the last 18 months. Again he is correct. If a student is coming up to the end of his or her repayment period then Mr Mallard is absolutely right. Eighteen months out from the time when a person expects to repay his or her loan that person should take the money out of the bank stop paying tax on the interest and pay it off the loan. 
Now let us go back to what Maryan Street said. She said that National opposed every single measure that Labour introduced to make education more affordable. Well was it not right to do so? I do not know about National opposing every single measure but National was absolutely right to oppose the policy of interest-free student loans. If we want an illustration of that all we have to do is listen to the debate. Maryan Street and the Hon Trevor Mallard have made it absolutely patently clear to the members in this House and to the people of New Zealand why it is an absolute rort to have interest-free student loans. 
Mr Mallard talked about graduates. He said that we do not have a decent education system if graduates cannot not work out after they graduate that they should not pay off this money. Well it is worse than that. Under the previous Labour Government’s interest-free student loan scheme—introduced as a bribe to try to get the Labour Government re-elected in 2005—it does not apply just to graduates. It applies to all university students. The very simple mathematics that Mr Mallard has illustrated this afternoon shows why it will be absolutely foolish for every single student of every tertiary institution and every parent of every student not to borrow the absolute maximum. That is what the previous Labour Government did in 2005. It incentivised every single parent. I notice that Mr Mallard is sitting there with his head hanging low. He was happy to comment on what the Minister of Education said but he is not prepared to deny his assertion. 
The reality is that the Labour members are sitting there knowing that every single student was incentivised to borrow the maximum amount possible. It is actually worse than that. I believe I heard Mr Mallard say that Mr Key opposed this policy when it was introduced in 2005. The tragedy about this policy is that in a desperate attempt—and I acknowledge it was desperate—National was prepared to put aside its principles and agree with them. In 2008 National went into the election campaign promising not to roll back the scheme. 
So National and Labour are both saying that we should have interest-free student loans. We will incentivise every single parent not to make a contribution to their children’s education. If they want to make a contribution to their children’s education they should put the money in the bank earn the interest or pay off their mortgage. They should do all the things that Mr Mallard so simply outlined this afternoon. 
I stand as a representative of the ACT Party. In 1984 just on 23 years ago Government expenditure per person in 2009 dollars was $11500 across the country. Ten years later in 1995 Government expenditure per person was $11300. It was $200 less. In other words there had been no increase in Government expenditure between 1985 and 1995. If we fast forward to 2009 we see that Government expenditure is $18800. It is a full $7500 higher over the last 14 years of combined Labour and National Governments. 
I would argue that we have had a huge amount of poor-quality expenditure. Students have been incentivised to borrow the maximum they can to pay their tertiary education fees. The only positive thing I have heard about in the debate this afternoon is Mr Mallard’s secret source who is now telling him that the National Government looks as if it will wind back the interest-free student scheme. Thank goodness for that because up until this afternoon I thought that the ACT Party was the only party in Parliament that had the courage and the honesty to say what the situation actually is. 
If the National Government wants to roll back the interest-free student scheme I say that that can not come fast enough. The Labour Party has pointed out why that patently should be the case. It is even more important because as Mr Mallard said Mr English is already back-pedalling on the tax cuts that National was elected to implement. If there was ever a need for those tax cuts it is today. There is a need to trim poor-quality spending. Mr English refers constantly to the entitlement society that Labour paraded but what we need to do is get rid of interest-free student loans and provide incentives. Maryan Street talked about affordable education. Why did we not just reduce student fees? We should have simply reduced university fees. If we want to make tertiary tuition cheaper and more affordable for families it is simpler to reduce student fees. Thank you Mr Deputy Speaker. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Deputy Speaker. Kia ora tatou. From having listened to Mr Boscawen deliver his korero I can very much appreciate a lot of the sentiments he expressed in the House today in terms of the bigger picture. The Maori Party is interested in kaupapa that allows more Maori people to enter into the tertiary sector and some of the ideas he has suggested about student loans and so on ring a bell. However I bring another perspective to the issue and it is a personal view in respect of the difficulties that many families face in terms of student loans and I hope it might paint a picture as to where the Maori Party wishes to head with this albeit that this the first reading of the bill. We will be supporting the bill at this stage pending other information and we look forward to the debate. 
I have five children three of whom are living a life influenced by the reality of a student-loan debt that has yet to be repaid. If we are to believe the analysis of the New Zealand Union of Students’ Associations it tells us that the average student debt is now something around $28800. For the Flavell family that equates to a burden of about $86500 so we are not talking small money for some families. Except for just one of my children after 7 years of tertiary education their loan has already topped $60000 so obviously we do not fit the average profile. As if that is not bad enough the data tells us that the burden is on an upward roll. The average student debt has risen by 54 percent since 2004 and I understand that it is now a staggering 147 percent higher than in 1998. There is a possibility that these costs will cripple the nation if they continue. They are huge issues of economic and social importance that are critical to an investment in the leaders of tomorrow. 
This Student Loan Scheme (Repayment Bonus) Amendment Bill amends the Student Loan Scheme Act to create incentives for student-loan borrowers to pay loans back. It is in that respect a response to the policy problem of the high debts being incurred by our student population. Over 60 percent of all students face high debt—a threshold that has remained relatively constant since 2004. 
What do we mean by high debt? Some 26 percent of students owe more than $15000 in debt before they even start looking in the job market. To some of us $15000 may not sound much but for students like my children it is a hell of a lot on top of things like food transport accommodation living expenses and general bills which are all expenditure items that in their own right have increased dramatically in the last 5 years. In just one area—the price of food—we might get a glance at the impact of rising student debt. According to the food price index the price of food rose by 22 percent in the 5 years from March 2004 to March 2009. No one in this House would deny that the cost of petrol for example has jumped a massive 39 percent in the same period and that has obviously taken a huge toll. 
So with all due respect this bill is very much a small drop in the bucket when one looks at the big picture and we really must look at the big picture. For the average student there will be very little capacity to make additional repayments and thus receive any kind of bonus under the scheme. 
The crucial information missing from this bill is as it stands what it would take for the average student to make additional loan repayments. What are the real costs of income tax GST mandatory student-loan repayments credit card debt KiwiSaver rent increased food and petrol costs and any savings to be made for a first-home purchase or maybe planning for children? For the average student there will be very little capacity to make additional payments and thus receive any kind of bonus under this scheme. 
I will make a point about the relationship of student-loan repayments to any other additional loan repayments. The issue of student debt cannot be seen as one of only student-loan repayments. The average debt of students has now forced the student population to look elsewhere for borrowings. We see a large increase in other loans including loans from parents and personal bank loans. The proportion of students with bank overdrafts has risen by 19 percent in the last 5 years and there has been a 32 percent increase in the amount owed on credit cards. When we consider this sort of information it is as if we can feel our pockets emptying pretty smartly especially when we consider our own children. I come back to whether this bill is the answer. 
The trouble with the bonus scheme concept is that it targets only income earners who are graduates earning at the sufficient level. The Union of Students’ Associations suggested that it really benefits only those who are already in a quite well-off position—the privileged few who will now get a 10 percent discount for early payback. We in the Maori Party are interested in another concept called “pay forward”: what is the investment we are making in the leaders of tomorrow? How will we ensure that those who are already facing disproportionately high levels of student debt—Maori Pasifika women—are also able to benefit? I ask what we are doing about them. 
If we look at just one part of the picture—that is Maori who studied for level 1 to 3 certificates—we get a sense of the scope of the problem. Nearly 70 percent of Maori who studied for level 1 to 3 certificates without completing and over 50 percent of Maori who studied at diploma and bachelor level without completing had made no progress in repayments 5 years later. A big factor in the lack of this repayment is basically low income especially income around the student loan repayment threshold. The average income for Maori who studied for level 1 to 3 certificates was just above the repayment threshold. The inequalities are entrenched with the average income for Maori with level 1 to 3 certificates being notably lower than for non-Maori with the same level of qualification. 
These are complex issues; issues that require a far more comprehensive and sophisticated response than simply a 10 percent bonus on repayments and what that can achieve. Although a scheme is a good idea it is a bare minimum and it will certainly not be effective in addressing the real underlying barriers to participation in tertiary education that we in the Maori Party are particularly interested in. 
We are certainly interested in the recommendation from Te Mana Akonga the national Maori student body which provides representation for all Maori student ropu at whare wananga nationwide. Te Mana Akonga has recommended that the preferred option is barrier-free education. By this it means that universal student allowances would be set at a living level a fee abatement scheme would be in place and every effort would be made to make it easier to invest in education. 
I would draw the attention of the House to the very useful piece of research from Raymond Torres published in November 2008 that concludes that social development is a powerful generator of productivity that leads to economic growth. If we are thinking of the future it will be education and health that will lead us out of the economic recession and it is in this respect that we must take up the opportunities to help address the harsh repayment obligations already confronting most loan borrowers. With such tough economic times we have to agree with Sophia Blair from the New Zealand Union of Students’ Associations who stated: “Helping to address the massive amount of student debt held in our communities is a key way the Government could choose to support families through this recession.” 
We will support this bill at the first reading because even a little drop in the ocean is a help we say but we are also putting on record our view that we must start thinking creatively and proactively about how we address the drivers of debt once and for all. We will be interested in the debate as it goes through the various stages of approval. Kia ora tatou. 
ALLAN PEACHEY (National—Tamaki) 
: 
 What an interesting debate we are having late on a Thursday afternoon when our thoughts really are turning to getting back to our electorates and families! Who would have thought that a bill as simple as the Student Loan Scheme (Repayment Bonus) Amendment Bill would become one of the defining points between what those of us on the Government side of the House believe and what those retrograde socialists over there believe? Who would have thought that members of Parliament representing the Labour Party— 
Hon Trevor Mallard 
: That’s specifically for me—for the electorate committee. 
ALLAN PEACHEY 
: —and I have Mr Mallard very very much in mind—wanted to define a very simple bill in terms of old-style class warfare? 
I believe that members of the electorate listening in to this debate will begin to realise just how irrelevant the Labour Party has made itself to the future of New Zealanders. What do we have over there? We have some very very young extremely left wing and naive new members of Parliament and we have a couple of beaten old warhorses who now have to live with the knowledge that they failed so badly in Government. If I were Mr Mallard I would not want too much attention drawn to my record of imposing mediocrity on the New Zealand schooling system. 
But let us just get back to this bill—a very simple bill. It is straightforward and logical. All it says is that if people do the right and decent thing and pay off their student loan—or part of it—early they get a 10 percent bonus. The bill goes right to the very heart of what the National Party believes in: individual responsibility. If students have borrowed the money they pay it back. It is an initiative and a reward for hard work. It was interesting to hear one of the former Ministers say in his speech earlier on that the bill is not good for poor people and it is not good for rich people either. What a load of nonsense! If members listened to what Mr Mallard said—and I wrote it down because I did not want to forget it—they would have heard him say it was a “rip-off”. 
Hon Trevor Mallard 
: Yes it’s a rip-off. 
ALLAN PEACHEY 
: The students are getting “ripped off”. 
Hon Trevor Mallard 
: No the graduates. 
ALLAN PEACHEY 
: The graduates are getting “ripped off”. 
Let us think about that idea for just a moment. If people borrow money they pay it back. That is the ethical decent thing to do. We all know that the easiest way to get ahead in this country is to get out of debt so anything that facilitates our young people in particular to get themselves out of debt a little more quickly is good for those young people good for graduates and good for New Zealand. I am actually appalled to hear what the socialist members of Parliament are saying—and they are socialists; maybe they need to go back and read Karl Marx again to remind themselves of what they actually believe in and get a bit of consistency into their argument. 
Who would have thought that a Cabinet Minister from the previous Government would get up in this Chamber and tell people not to pay back their loans but to use them to buy houses or cars instead? That is where this side of the House is so different from that side. The ethical thing to do—and dare I say it the decent New Zealand thing to do—is to pay back the money. 
Members opposite want to use the phrase “rip-off” but if one thinks about it one will ask who is actually getting ripped off. When a student borrows money to fund his or her education he or she is not borrowing money to have an overseas trip buy a car or contribute to a mortgage on a home; he or she is borrowing that money for the purposes of an education. How dare the members opposite say that graduates will get ripped off if they pay off their loans early? An individual can never ever be ripped off when he or she pays back debt. I want to stress this point. It does not matter whether an individual borrows money that is interest-free or is paying interest on it; one of the keys to prosperity is paying off debt as soon as possible. 
I reflect on my own electorate of Tamaki and particularly Glen Innes. It should not even be safe for me to walk in Glen Innes such has been the Labour control of that community for so long. But now increasingly residents are turning against their own and voting for me. Why? Because they have come to the realisation that the sort of socialism that the party opposite advocates—as it has in this House today—does not hold the key to the future of their children and young people. The debate this afternoon has demonstrated to New Zealand how far to the left and how far away from reality that party has moved and we will see that happen more and more. 
Let us just focus on the purpose of this bill and the values that are contained within it: for graduates to pay off student loans quickly and sooner than they might otherwise have done. The incentive is there a 10 percent bonus but in actual fact—[ 
Interruption 
] I am listening to Mr Mallard and I would be very very happy to match my majority against his any day. There is a 10 percent bonus for doing the right thing the decent thing the ethical thing—the New Zealand thing. I certainly do not want our young graduates thinking in terms of how they can rip off the taxpayer. The party opposite gave young graduates plenty of advice as to how to take advantage of other New Zealanders. But the interesting thing is that our young people do not actually want to do that. They know they have been given a huge step-up courtesy of the taxpayer to get their education. What really reassures me is the knowledge that our young people want to pay back the money they have borrowed. They want to pay it back as quickly as they can. They do not want to take advantage of the taxpayer. Above all else they want to do something that Labour will never understand which is to do the ethical decent New Zealand thing. 
STUART NASH (Labour) 
: 
 I stand here to speak against the Student Loan Scheme (Repayment Bonus) Amendment Bill. To tell the truth it is interesting—but predictable—that Labour MPs are the only ones standing up here to represent the views of the vast majority of hard-working New Zealanders who at this point in time are looking at ways of getting ahead—even keeping afloat. It is amazing to hear the former headmaster of one of our large State schools— 
Allan Peachey 
: Largest! 
STUART NASH 
: —largest State schools sounding so financially illiterate. What was Mr Peachey teaching his students there? It is amazing. The people of New Zealand are certainly not being represented by the current Government. Mr Peachey lost his touch before he even found it. 
It is like National’s tax cuts where $300 million tax cuts—or one-third—went to the top 3 percent of taxpayers. I ask Mr Mallard whether I got that right. Did one-third of tax cuts really go to 3 percent of taxpayers? That is nasty. That is hardly fair. Did I also hear right that if someone earns $40000 or less and has children he or she got no tax relief—nothing from the National Government tax cuts? That is not fair at all. 
It is like this bill. This bill is not aimed at ordinary Kiwis who forwent income to better themselves in tertiary education so as not only to enhance their own employment opportunities but to build on the nation’s competitive advantage of an educated workforce. I tell Mr Flavell that Sophia Blair said that “National’s voluntary repayment scheme [is] no bonus for most”. Goodness me! After listening to Mr Boscawen whose ideas were actually backed up by the Maori members raving on about the virtue of interest on student loans I worry—the virtues of interest on student loans? I assume that Mr Hide who is privy to Cabinet deliberations— 
Hon Trevor Mallard 
: Probably not actually. 
STUART NASH 
:—yeah probably not—has told the honourable member Mr Boscawen that this policy will reintroduce interest on student loans. I ask Mr Hughes whether I heard that right. Is that what he was talking about? 
Hon Darren Hughes 
: You heard it right. You heard it here first. 
STUART NASH 
: Goodness me! Labour has already rewarded those people burdened with student debt by removing interest on student loans. 
Hon Trevor Mallard 
: I’m just going to interject on the member. Richard Long had it in his column the other day. 
STUART NASH 
: Well we will get to Richard Long. I tell members that a very good friend of mine who is now a hard-working general practitioner in this wonderful Labour-held city of Wellington felt that he had an albatross around his neck and when Labour told him he would not have to pay interest on his student loan any more his decision whether to go overseas or stay in New Zealand was made. He stayed. He is now making a contribution in New Zealand as a medical doctor working with ordinary Kiwis because of Labour’s interest-free student loan legislation. 
Now we are at risk of having that legislation repealed. Shame! That man’s story is not unique to the thousands of New Zealand students all around the country with loans. Mr Peachey knows that well. 
Allan Peachey 
: Walter Nash would be turning in his grave. 
STUART NASH 
: Walter Nash is dead! Things are going well for students with loans because they are not paying interest. When I read with dread and loathing that a former chief of staff of the National Party— 
Allan Peachey 
: Walter Nash would be turning in his grave. 
STUART NASH 
: If Walter Nash were to hear that any Government would reintroduce interest on student loans and burden a generation with such debt he would rise from his grave come back into this House and tell that member off. 
When I heard Richard Long moot the idea of getting rid of interest-free student loans I thought: “Wow imagine that!”. Imagine the National Government getting rid of interest-free loans and going back to the days when students paid horrendous interest as the price of bettering themselves personally intellectually and professionally. [ 
Interruption 
] I tell Mr Quinn that Mr Long was one of National’s advisers. When I bought my first home I tacked my student loan on to the end of my mortgage because the interest I was paying on my student loan was higher than my mortgage rate. 
Hon Trevor Mallard 
: That would be right. 
STUART NASH 
: The interest on my student loan was higher than the market interest rates. I ask Mr English whether that is the future. Will that be a nasty surprise in the Budget? That will please the men and women of New Zealand! Imagine a Budget that removes promised tax relief and reintroduces interest on student loans—nasty. 
As mentioned this bill is aimed at those same individuals who gained the most from National’s tax policy. Is that what Mr Key meant when he said that those who receive tax cuts should donate them to charity? Is this bill another measure to favour the financially literate friends of the National Party? As my colleagues have pointed out this legislation will cause that number to dwindle even further. 
Let me tell members something about Kiwi student loan holders. A 2006 Statistics New Zealand publication entitled  
Student Loan Borrowers 1997-2004 
 stated: “Those who had studied at honours level or higher in their last year of borrowing had higher rates of full repayment … than average. … This could be attributed to higher levels of qualification leading to higher incomes. … This leads to faster rate of repayment.” Also the rates of full student loan repayment were highest for engineering and related technology courses. Funny that! I assume those graduates earn the most money. 
Students enrolled in food hospitality and personal service courses had the highest median amount of student loan. Those are not the jobs that bring in the huge dollars. Why does National not do something for those workers and reinstate Labour’s tax relief package? A quarter of student loan borrowers in 2005 were enrolled in society and culture courses. Are we saying that those graduates do not deserve any form of tax relief? Maybe they are the very lucky ones whose parents were in the top 3 percent of earners who received 30 percent of the National Government’s tax cuts. Nasty very nasty! 
The majority of borrowers identified themselves as European or Maori; however those who identified themselves as Pasifika people borrowed the highest amount. The number of borrowers at level 4 certificate was 6½ times more in 2004 than in 2007. Let me tell the members in this House that the statistics show that those most in need of student loan relief are young women especially Maori and Pasifika who have completed either bachelor or a level 1 to 3 certificate and who have studied at a private training establishment. I ask Mr Peachey whether this bill will help them. It will not at all and he knows it. 
Who will this bill help? I can tell Mr Dunne that it will not help those who need it. But then again none of his legislation has. I find it very difficult to believe that Peter Dunne once a Minister outside Cabinet in a Labour Government has such elitist philosophies at this time in the economic cycle. In fact I have an idea for him. Instead of this type of tax measure how about directing money into retraining for those whose dreams and aspirations have disappeared in the puff of redundancy? Why does Mr Dunne not do that? How about suggesting that to Mr English? 
I tell Mr Dunne of my real concern about how the Inland Revenue Department will be able to administer this bill given that National has cut 250 jobs from that department. Two hundred and fifty jobs from the Inland Revenue Department—and I hate to think what Mr Coleman is going to do to the Broadcasting Commission. It is going to have jobs slashed. Oh no! National says it is not going to sell Television New Zealand—this term. That is right! An accountant friend of mine phoned the Inland Revenue Department 2 days ago to organise payment for tax relief and he was told that he could not be dealt with for another 45 minutes and staff would phone him back. Yeah right! The old saying: “Don’t call us we’ll call you.” takes on a whole new meaning. I ask Mr Dunne again how the Inland Revenue Department will administer this bill with 250 fewer jobs. 
In conclusion I speak against this bill because it is inequitable unfair and not targeted at those people who really need the student relief package. This bill is also—I ask Mr Quinn to listen to this—a prelude to the reintroduction of interest on student loans. Mrs Tolley could not deny that Mr Peachey knows that Mr Boscawen signalled this and the Maori Party backed us. I will say that again: this bill is a prelude to reintroducing interest on student loans. I say to Mr Dunne that that is nasty. 
We on this side and all those hard-working Kiwis we represent had hoped that the honourable Minister who worked as the Hon Dr Michael Cullen’s junior would have seen some of Dr Cullen’s social democratic philosophies rub off on him. We had hoped that Mr Dunne might have developed a conscience and put forward a bill to help all those people with student loans and not a bill that is a prelude to the reintroduction of interest on student loans. That Minister is a true Tory. That Minister has shown his true colours. This is a true right-wing bill and heaven help that National Government when interest on student loans is reintroduced as this bill has signalled. Thank you. 
COLIN KING (National—Kaikoura) 
: 
 It is with some disappointment that we had to tolerate the presentation from the previous speaker Stuart Nash. When he first came to the House he could not control himself. He leapt to his feet and told us that he was the most qualified person in the House to speak on anything to do with education because he was engaged in a masters’ degree in education. That must count for something. 
Stuart Nash 
: I raise a point of order Mr Speaker. I did not actually inform the House of that. I said that I had been— 
Mr DEPUTY SPEAKER 
: No that is not a point of order. That is a debating point. 
COLIN KING 
: My apologies to the member over the other side if I did misrepresent what he was qualified to do. 
However I want to say how passionate we are on this side of the House to ensure that we streamline the process for people to pay off their student loans. The purists might talk about the best economic way forward but I remind those members on the other side of the House that 28.3 percent of people are still paying significant amounts off their student loans. The members on the other side can call them whatever they wish to. From that point of view it may be a reduced field of support but it is wonderful to see that opportunities are being offered by this side of the House. When we start talking about the Student Loan Scheme (Repayment Bonus) Amendment Bill it is quite important that the select committee address the issue. It is effectively around the Student Loan Scheme Act and a new section 45. Did I hear the Minister correctly that the report back date was July the— 
Hon Peter Dunne 
: 30 July. 
COLIN KING 
: OK so that is what we should be aiming at. When we look at the Government initiatives so far we have talked about improving literacy and numeracy by introducing standards. We have looked at the way we can improve the teacher registration the vetting of adults in unsupervised situations the introduction of trade academies and now we are looking at improving and creating incentives for people to repay their student loans. 
When we stop and think about the student loan we see that it was introduced in 1992 it was introduced by the National Government and at that particular time we had one of the very worst levels of engagement around tertiary education. We now find ourselves at the other end of the scale whereby we have one of the better levels. I took the opportunity to look up the University Students Association’s website. It is with huge concern to see those numbers rolling over and a total student loan debt of close to $10 billion. 
Quite often we hear from the other side of the House from members who have been here for many years—say 15 to 20 years—that they got a free tertiary education courtesy of the taxpayer. The point I would like to make is that what we have done around the student loan scheme is broaden out an enormous opportunity to people who otherwise would be shut out of tertiary education. That is something I have had to change my view on. As I have been a person who has not actually been involved in a student loan and have not undertaken exceptionally high levels of tertiary education—I backed myself and I made my living with my hands—I have had to review my thinking because today is not what it used to be. Today it is very important when our children leave school in year 13 that we have got them up to a threshold where they have high standards of literacy and numeracy so they can make a choice about where their career pathway will take them. 
I want to make the point which is quite relevant to the Student Loan Scheme (Repayment Bonus) Amendment Bill that there is an old argument about public good versus private good. That means if you support the idea that all students should have free education at tertiary institutions— 
Mr DEPUTY SPEAKER 
: Order! 
COLIN KING 
: Sorry my apologies. Whoever supports that idea deems that free education at tertiary institutions is appropriate and that the public good is being served by the taxpayer who therefore should pay the entire amount of tertiary education. If one backs the side of the argument that says tertiary education is solely for private good then really one is saying that people should be able to make a choice around their education in such a way that it aids them to empower themselves to a level whereby they are able to make a commercial decision and be able to repay the student loan. 
Effectively at the moment we are sitting in the middle of this way. We see that there is public good and that there should be private good. I think during the economic times of today with regards to tertiary education student loans and the like we will see far more considered measured managed and focused decisions around careers. From that point of view I believe that we are living in a time that is far more sensible and more balanced. What I saw from my own observation was that young people at school-leaving age maybe 18 years were not too sure of where they wanted to go as far as a career was concerned or what they might want to do after school. So these people defaulted into further training and so on. Quite often it was university because that is where their buddies went. One cannot blame them for that because it was part of the transition process and that is always the hardest part of life. 
If we apply these thoughts to the student loan scheme we see that people have large debt. They have quite a lot of costs. We see that over a period of time virtually 600000 to 700000 people have entered into student loans. A lot of those loans are being paid back. The student loan scheme will not get to the stage where it will actually flatten out and the amount owed start to slowly reduce until about 2014. Interestingly it was early on before the interest-free side came in that the loans were taking up to 9 years to repay. That time has now been reduced to 7 years. We like to think we will see some greater improvement in that. 
It is with some fear and trepidation that members of select committees receive bills that are referred to them. It is very important that we do this work effectively because the Minister will be relying on us to send the bill back to the House for its second reading. He will want to make sure there are no loopholes in it so that it cannot be defrauded. That is why it is very appropriate that payment regimes have to be locked in very seriously so that there is no way such things as money paid to students from StudyLink will qualify for bonuses. Effectively we want to see this worked on to improve those people’s opportunities to clear their debts. When they do so they will be able to take on a loan in a commercial discipline and really contribute to the nation with the quality of their education. 
It is a pleasure to stand and support this bill. I believe that the 28 to 29 percent of people who are conscientiously reducing their student loan debt will be encouraged to take advantage of this measure. We look forward to supporting this bill and returning it to the House for its second reading. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 Let us be clear what the Student Loan Scheme (Repayment Bonus) Amendment Bill is about. This bill is a precursor to the abolition of the interest-free student loan policy. That is exactly what this bill is about. We know that the National Party did not support interest-free student loans. National members hated that policy when it was introduced and we know that they cannot wait to get rid of it. They would not be introducing this bill into the House unless they intended to get rid of interest-free student loans. 
As long as we have interest-free student loans this bill does not make any sense because under this bill graduates would be better off to leave their money in the bank earning compound interest until they were close to repaying their total loan then make a lump-sum payment at the end. The bill does not necessarily discourage early repayment but it certainly does not encourage it which is what the bill purports to do. This is another half-baked half-thought-out on the hoof election policy from the National Party. We know that it will not work because why would anybody go for a 10 percent discount when his or her loan already attracts no interest? Students from a wealthy background who in practice would be the ones with the resources that make them more likely to be in a position to take up such an offer would also be likely to have the financial skills needed to work out that they would be better off if they invested their money elsewhere and kept their interest-free loan in its current state. 
This bill will not work. There is no evidence to suggest it will work and we know that it is a stalking horse for the abolition of interest-free student loans. We know that because one of the National Party’s chief cheerleaders Richard Long a former National chief of staff— 
Hon Darren Hughes 
: He used to run the show. 
CHRIS HIPKINS 
: —in fact he was one of the “Hollow Men”—said in his column that National should do away with the interest-free student loan scheme. He urged National to break many more pre-election promises and he said: “National may have promised not to privatise in the first term but it could probably get away with the partial sale of selected SOEs … It could axe superfluous bureaucracies.” 
Hon Darren Hughes 
: Like press secretaries! 
CHRIS HIPKINS 
: Maybe or those private purchase advisers that National has just engaged. Here is the kicker: “It could remove Labour election promises”—even though the National Party had promised that it would not do so—“such as interest-free student loans.” 
We know as my colleague Trevor Mallard has revealed that Treasury is working on policy documents that would do just that. The National Government has Treasury working on doing away with interest-free student loans. Why would the Government do that? 
Hon Trevor Mallard 
: They didn’t deny it at all. 
CHRIS HIPKINS 
: It was put to Anne Tolley and she did not deny it. It was put to Peter Dunne that graduates would be better off to leave their money in the bank rather than to pay off their student loans early and he did not deny that either. 
Clearly there is an agenda here that those members want to get rid of the interest-free student loan policy. We know that because John Key did not support it in the first place. In November 2005 when Labour was passing the interest-free student loan policy he said of it: “What a cost to the country! What an unaffordable and irresponsible cost to the country!”. That was what all the National members said. We know that they want to get rid of it. John Key went further than that. He called it “rushed and reckless thrown together in desperation”. He then turned around and said that he actually thought it was quite a good idea he quite liked it and he was going to keep it if National won the election. But we know that National never had any intention of keeping that promise. When it comes to tertiary education National is not very good at keeping its promises. 
Let us go back further. There are two very good examples. I have to be very careful not to bring the Speaker into the debate but I recall that in 1990 a certain former National Minister travelled the length and breadth of the country saying he would resign unless National abolished student fees. And what happened? National increased student fees. There is already a history. Let us go back to 1996 when National members travelled the length and breadth of the country with New Zealand First and said they were going to introduce a universal student allowance. Did they do that? No—we are still waiting. Instead they tried a little sleight of hand and tried to rename all the other funding that went into tertiary education as a “student allowance”. They thought that students would be stupid enough to think that it was an allowance. Of course students were not getting a cent extra. In fact they were paying massively higher fees and interest on their loans even while they were studying under the last National Government. Even when students were in a position where they could do nothing to repay their loans they were paying interest under the last National Government. 
Debate interrupted.