Dunne Peter: Student Loan Scheme Bill — In Committee Third Reading 
Dunne Peter: Student Loan Scheme Bill — In Committee Third Reading 
[Volume:675;Page:20738] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 There are two streams of argument that I will respond to. The first relates to the $40 fee. I need to correct Mr Burns immediately. We are not talking about a cumulative fee of $100. There is a one-off $60 charge for the establishment of a loan and an annual charge thereafter of $40 for the ongoing administration of the loan. The borrower will pay $60 in year 1—that is $60—and $40 in subsequent years. A borrower cannot get a cumulative cost of $100 in 1 year which is what the member claimed and there is no way one can twist the argument to present that. 
Let me come to the point that Mr Burns raised about the wording of clause 181(1)(a) of the Student Loan Scheme Bill. Does this mean that there is some hidden agenda to increase that charge? The short answer to that is no. We have simply set that figure in there as a reasonable administration cost bearing a relationship to the establishment cost of $60. If we were intending to have a higher figure we would have said so frankly. 
Let me now come to the question that Mr Shearer raised because I think it is important to put on record exactly what is happening with the computer system. This will be somewhat of an ongoing theme not just in this bill but also in other tax legislation over the next little while. The future inland revenue systems and technology (FIRST computer system) was instituted in 1991. It was seen as ground-breaking at that time. It has served us remarkably well in the last 20 years. But in that 20 years we have grafted on to it in no particular order student loans KiwiSaver child support Working for Families and one or two other initiatives as well. The consequence has been that a system that was set up for a very discrete purpose is now taking on a whole range of other activities and that to get access to someone’s data in respect of any one of those activities requires a translation through all of them. So it is complicated. 
During the term of the previous Government we began a project to refine the nature of our technology if you like. We rejected then—correctly in my view—the idea of a complete systems rebuild. The Canadians and the Australians are doing that. The experiences the member lamented in respect of national computer programs are being repeated in both those countries: they both have $1 billion - plus price tags now for the work that they are doing. So we decided that we would start with the student loan project because firstly it was discrete and secondly there was an off-the-shelf product available from Oracle that could be purchased and effectively implemented whilst the broader process of what the future might hold for the FIRST computer system was conducted. The thinking at that point was that we would do the student loan project. We would then move on to other discrete projects within the system and over a period of time migrate away from the FIRST computer system to the new system. 
Because of the complexity of the FIRST computer system which I described right at the beginning what has happened in the subsequent period is that it has become clear that that initial objective was not able to be achieved as simply as we might have first imagined. I can assure the Committee that no money has been wasted. In fact the transformation with regard to student loans will occur from 2013 onwards. The problem is simply this: when this bill came to the House with an implementation date of 1 April 2012 it was on the assumption that we would be able to move from the FIRST computer system by that time. I was faced with a decision earlier this year around March or April from memory as to whether we pushed the implementation of this entire bill out to 2013 which would be contrary to the assurances we had given or to see whether we could proceed to a certain extent within the FIRST computer system and then let a certain set of other changes in the bill take effect at a later date under the newer system. That is the option we have followed in the bill. 
We will be utilising the FIRST computer system for a number of the changes as we migrate over in the next 2 to 3 years then the new system will take effect. But we wanted to honour the commitment contained in the bill and in the discussion documents that preceded it about the need to give some clarity for the administration of student loans in the interim. This is not a project to be concerned about in the sense of whether it will all happen—it will—but the time frame is simply taking a little longer than we might first have imagined. That is a good thing in a way because a lot of the issues that are being indentified through that will serve us well when we come to look at things like PAYE GST and various other aspects of the system as well. I can assure the Committee that within the scope of the FIRST computer system we will be able to deliver what is in this bill by 2012 and the bulk of it will come as the system changes from 2013 and beyond.