Walker Holly: Student Loan Scheme Amendment Bill (No 2) — First Reading 
Text is incorporated into the Bound Volume 
Walker Holly: Student Loan Scheme Amendment Bill (No 2) — First Reading 
[Sitting date: 20 September 2012. Volume:684;Page:5546. Text is incorporated into the Bound Volume.] 
I want to focus my comments in this first reading debate on two aspects in particular. The first is the fact that this bill is a missed opportunity in that although it does align the definitions of income for Working for Families and the student loan scheme it actually misses the opportunity to align those in a way that would be meaningful and would actually increase fairness in terms of access to both of those schemes. The second thing I want to focus on is the greater risk I think that this bill introduces in terms of data matching between the Customs Service and the Inland Revenue Department of disincentivising young New Zealanders to return to live here and to contribute. 
First of all let us look at the definition of income because that is one of the more significant changes that this bill makes: to align the definition of income for the purposes of the student loan scheme with the definition that is used in relation to Working for Families. Although it does that we in the Green Party think that there is still a fundamental problem that remains unaddressed by this bill in terms of the definitions of income that are used. This was highlighted earlier this year when the Government introduced changes to increase the student loan repayment rate. What that highlighted was that because Working for Families entitlements are calculated on net income before student loan repayments are taken into account or deducted increasing the student loan repayment rate as was done in the Budget has a real detrimental effect on many families who are working hard to make ends meet and on the weekly budgets of those families because effectively it is a tax increase and it is not taken into account when their Working for Families entitlements are calculated. There was no corresponding increase in Working for Families entitlements and the net result is bad for the weekly budget and the back pockets of families with young children. So in seeking to align these income definitions this problem needs to be addressed and although the bill does align the definitions it does not address the fundamental problem that Working for Families entitlements are calculated before student loan repayment rates are taken into account and that just entrenches and compounds the negative changes already made in the Budget. 
 Another way that the bill entrenches and compounds negative changes that have already been made as I have outlined is in its provisions to allow greater information-sharing between the Customs Service and the Inland Revenue Department in an effort to crack down on overseas borrowers who may have defaulted on their loans. Although we have no problem per se with measures designed to encourage overseas borrowers to keep up with their student loan repayments we cannot support punitive measures to track them down at the border unless we have corresponding enabling provisions that recognise the importance of spending time overseas the important experience and skills that spending such time overseas can give to an individual and provide that individual and that potential gain to New Zealand when the individual returns from their OE. Those gains are well documented and what we do not want to do is discourage people from returning when they have spent a period of time living overseas. That is why the repayment holiday when it was 3 years was such a good idea because it allowed for individuals to spend time overseas for a period in which they were not required to meet their student loan repayment obligations and therefore were not racking up penalties and fines that might put them off returning to New Zealand. 
We thought 3 years was a good period of time to have a repayment holiday because it recognises the reality of how long most young New Zealanders spend overseas on their OE. We thought it was a realistic reasonable and appropriate time frame. Now that it has been reduced to just 1 year we have real concerns about the provisions in this bill to allow greater information-sharing between the Customs Service and the Inland Revenue Department because we think that the change that has already been made to the repayment holiday means that there will effectively be a greater number of people who through no particular fault of their own—because it is very difficult to meet your student loan repayment obligations while you are overseas—will be defaulting on their loans. And introducing this information-sharing provision means there is a much greater chance of them being pinged with huge penalties and extra debt when they return to New Zealand. 
The cumulative impact of this policy with a shortened repayment holiday and other policies that have been introduced incrementally by this Government to crack down on overseas borrowers has we feel put at real risk the decision that many New Zealanders who are living overseas have to make at some point about whether they return or not. In the Green Party we want them to return and I think no one could disagree that that should be a major priority for policy design at a time when we have record numbers of New Zealanders moving overseas every week. We want to make sure that those people come back and we need to design our student loan policy to ensure that we are not creating disincentives for them to do so. We are concerned about the cumulative impact of this bill with other changes and that the net effect of those changes will be to put talented young people off returning to New Zealand and making a contribution here. 
If the Green Party was making amendments to the student loan scheme I would like to give you an idea of what a better improved student loan scheme might look like. Bearing in mind that we continue to have fundamental concerns about the existence of this scheme at all there are ways that it could be improved. First of all we need to guarantee that it remains interest-free and that needs to be guaranteed for future borrowers and for borrowers who sign up to loan contracts now. That interest-free status of that loan needs to be guaranteed into the future. 
Secondly it needs to be freely accessible to all including students who are over the age of 55. We heard I think a particularly upsetting example from Grant Robertson earlier in the debate of exactly how punitive that policy to remove access to student loans for students over 55 is in the context of an economy where we are seeing greater job losses and reduced opportunities for people to upskill and retrain. What kind of life do we condemn people to if we do not allow them opportunity to upskill and retrain at a time when they have lost their job at a mid-point in their career? 
Thirdly there would be a reduced need to borrow for living costs because student allowances would be more widely available and they would not be tested against parental income. For financially independent adults who are well into their 20s and often have other adult obligations including children it is absurd to test their eligibility for a student allowance against their parents’ income. Student allowances also would need to be reinstated for postgraduate students. We also heard from Grant Robertson earlier about the punitive impact that that has had on postgraduate students and the fact that they now have to borrow to meet their living costs and cannot even borrow the amount that they were eligible for before when they could receive a student allowance. 
Fourthly when the time comes for graduates to repay their loan there would be a progressive repayment scheme so that rather than raising the repayment rate across the board as the Government did in the Budget earlier this year graduates’ repayment obligations would be based on their ability to pay. It is absurd at the moment that when a graduate is earning less than the full-time equivalent of a minimum wage they have to pay 12 percent of their income straight back on to their student loan. Student loan repayment rates should be progressive and they should be based on the individual’s ability to pay. 
Finally as I mentioned earlier in my contribution income definition should be aligned not in the way that this bill does but so that the impact of the student loan repayment does not negatively impact on the budgets of young families. Until we see a student loan amendment bill that makes these kinds of amendments the Green Party will oppose the Government’s punitive tinkering with the student loan scheme and will oppose this bill.