Mackey Moana: Student Loan Scheme Amendment Bill (No 2) — Third Reading 
Mackey Moana: Student Loan Scheme Amendment Bill (No 2) — Third Reading 
[Volume:638;Page:8276] 
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.