Student Loan Scheme Amendment Bill

on behalf of the Minister of Revenue: I move, That the Student Loan Scheme Amendment Bill be now read a second time. The main purpose of this bill is to improve the efficiency and the fairness of the student loan scheme, by encouraging greater personal responsibility and accountability on the part of borrowers towards their repayment obligations. The measures contained in this bill, which I will now recap briefly, are designed to achieve those objectives.

To introduce greater fairness across the student loan scheme, the bill proposes to maximise loan repayments made by New Zealand - based borrowers by removing the ability to offset losses against income in order to reduce their liability for student loan repayment purposes. As a consequence of this measure, the bill also proposes to extend pay-period assessments to the earnings of all borrowers, thereby removing the need for the annual square-up assessment of the salary and wage earnings of borrowers. Borrowers who have significantly overpaid their repayment obligations on a pay-period basis will still be able to apply for a refund, while those who have significantly underpaid will have catch-up deductions made.

To further improve borrower accountability, the bill gives the Inland Revenue Department the ability to receive a borrower’s contact person details from StudyLink from 1 January next year. That person will be contacted only for the purposes of providing a borrower’s most recent contact details, but will not be privy to details relating to the borrower’s loan balance. This will help facilitate the Inland Revenue Department’s contact with a borrower who is in default and who has not updated their current address details, so they re-enter the repayment system. It will also help the Inland Revenue Department to maintain contact with borrowers who leave New Zealand to embark on overseas travel, as well as New Zealand - based borrowers who may change addresses frequently.

In a further measure to improve the repayment levels of overseas-based borrowers, it is proposed to reduce the current repayment holiday provision from 3 years to 1 year. Borrowers must apply for the repayment holiday, and, as part of the application process, provide a New Zealand - based contact person. As this measure has generated some discussion around the perceived fairness or otherwise of restricting the ability to take a repayment holiday while overseas, I would like to further clarify the purpose of this change. The current 3-year repayment holiday is a generous one. It was introduced during the term of the previous Government, when the focus first shifted to the number of borrowers overseas with significant student loan debts, as a legitimate means of incentivising overseas-based borrowers to face up to their repayment obligations. It was, in effect, a trade-off, allowing borrowers who had gone overseas to have a reasonable period of time during which their repayment obligations were suspended. However, some years down the track we have taken the opportunity to review how the policy has been working in practice. Research conducted by the Inland Revenue Department in 2011 suggests that overseas-based borrowers generally travel and work casually in the first 12 months of their OE, but after that they tend to remain in one city and seek permanent work. The changes contained in this bill are designed to recognise that and the emerging fact that, as a result, borrowers can easily lose track of time and their loan repayment obligations by the time the repayment holiday ends. The changes in the bill are therefore intended to act as a timely prompt to borrowers that they must repay their loan when the holiday comes to an end.

For the vast majority of loan borrowers, who do the right thing and repay their loans on time, the changes proposed in this bill will be welcomed as bringing greater fairness and accountability to the student loan scheme. For the Government, the measures in this bill are consistent with the need for good governance over this substantial Crown asset. With this in mind, the Minister of Revenue has released a small change to the bill by way of Supplementary Order Paper 15 to clarify that the current commencement date of 1 April 2012 for most of the bill’s provisions will continue to apply in spite of the passage of time that has occurred since the bill was introduced last year.

In bringing the bill to its second reading, I want to acknowledge the work of the Finance and Expenditure Committee, and its recommendations to further improve the content of the bill. The result is a bill that will add greater strength, integrity, and transparency to the student loan scheme for borrowers, for taxpayers, and, indeed, for the Government. It is therefore with great pleasure that I commend this bill to the House.

Hello, Mr Deputy Speaker. It is good to be back here discussing the Student Loan Scheme Amendment Bill. What I would say in response to Mr Williamson is that everyone on this side of the House wants to see people who are overseas paying back their loans. In fact, when the interest-free student loan scheme was introduced, the key element of it was the fact that it was interest-free when you were still in New Zealand. It was a way of incentivising people to stay in New Zealand after they graduated, and to contribute to our economy. What we see now is yet more tinkering from the Government—yet more tinkering around the edges, trying to achieve the stated goal of the Minister for Tertiary Education, Skills and Employment of dampening the demand for tertiary education. That was the very first thing Mr Joyce said when he came in to be the tertiary education Minister, when Anne Tolley was removed from that post. The very first thing he said was that his goal was to dampen the demand for tertiary education. What “dampening demand” means is taking away the opportunity from New Zealanders to get further education.

So what we see in this bill that has come back is more of the tinkering.

💬 Simon Bridges: This member’s still got a student loan.

What was that, Mr Bridges?

💬 Simon Bridges: Have you still got a student loan?

No, no. I paid my student loan off—I might add, before Labour’s interest-free student loan policy came into place. I was one of those students who suffered under the National Government’s student loan scheme. I paid interest while I was studying. I paid interest while I was studying, which meant that I had absolutely no ability to pay that money back. My loan increased. I became what was known as a flat-spotter, which meant that I spent a period of time earning when I did not even get close to meeting the interest payments. I did not even get close. But then the Labour Government came along—and I thank Mr Bridges for giving me the opportunity to recite this—and said “No. We will remove interest while you are studying, because that is unfair. That is unfair.” Then the Government followed that up by removing interest altogether, and saying to people “What you borrow is what you will pay back.” That is a fair system. It is a system that was designed to encourage people to come and stay in New Zealand and make sure that they contribute to the economy.

What this Government has done since it has been in office is tinker around the edges. I do think it is worth reflecting at this time that the most insidious of the changes that the National Government has brought in is stopping people aged 55 years and over from borrowing for the living cost component of student loans. These people, who have been in my electorate office, have been laid off from their jobs—laid off from their jobs—and they now want to go and retrain. What is this Government saying to them? It is saying “We are not going to support you to do that. We are not going to support you. We would rather you stayed on a benefit. We are not going to support you to contribute.” That is the kind of change this Government has made a priority when it comes to the student loan scheme. It is not looking at the way in which the loan scheme can be used to support students. It just wants to dampen the demand for tertiary education.

Well, when we look at the bill, Mr Williamson did dwell a little bit on this question of the change to the repayment holiday, and it disappointed—I am not allowed to say what I am about to say, Mr Deputy Speaker. I would have liked to hear from the Minister of Revenue on this matter, because just a few years ago, when he was also the Minister of Revenue in a previous Government, Mr Dunne waxed lyrical about the importance of the repayment holiday. This is what he said: “The reality [faced by students] was a … massive debt upon their return to New Zealand, which in some cases would be enough for them to make the decision not to come home at all, and our country would be the loser.” Mr Dunne went on to say “We needed to take a pragmatic way through this,”—he likes pragmatic ways, does Mr Dunne—“and, being someone who places great virtue on pragmatism, it struck me that the logical course of action was to derive the solution that we have: to extend the repayment holiday period for 3 years,”—

💬 Andrew Little: Who said that?

—this is Peter Dunne—“recognising the fact that young New Zealanders take that extended period overseas;”.

So Mr Dunne thought it was pragmatic in 2007, but now he has changed his tune. Simon Bridges has got to him over there on the National Party side. He said to him “No, take that holiday off those people. Take that holiday off those graduates. Reduce it down from 3 years to 1 year.”

Well, this is not going to work. It is completely unnecessary, and it is not going to work. Treasury has actually told the Minister in the Budget documents that there is “Little evidence that this will improve repayments. It is likely to increase debt held by overseas borrowers, discourage them from returning and therefore increase the annual student loans impairment.” So this wonderful idea from the Government to help improve the loan balance and get more money back actually turns out to increase it. It actually turns out to increase the annual student loan impairment. That is what Treasury told the Government, yet the Government has decided to pursue this change. The Ministry of Education has gone on to say as well “This [change] can be expected to have a negative impact at the margin on borrowers’ decisions regarding whether to return to New Zealand.”

So that is what the Government has managed to do with its tinkering and its changes to the student loan scheme. It has actually pushed students away from coming back to New Zealand and contributing to our economy.

I want to make it clear again that there are elements of this bill that this side of the House sees as useful. These are changes that will help tidy up what happens when students go away overseas. But to say, as Mr Williamson did, that the change around the repayment holiday will somehow help with getting money back is absolutely not the case. Treasury has said it is not the case; the Ministry of Education has said it is not the case.

💬 Andrew Little: They know best.

Well, they are the ones that advise the Government, Mr Little, and unfortunately on this particular matter the Government has decided not to take that advice. So we have a situation where, once again, the tinkering, the changes that Mr Joyce is making, actually is not helping graduates come back to New Zealand and make a contribution.

The other matter—

💬 Simon Bridges: This sounds like you’re going to vote for it, Grant.

What was that, Mr Bridges?

💬 Simon Bridges: Sounds like you’re voting for it.

Well, no, I have already said that we will be voting for the legislation to go through this stage, but just wait until the Committee stage, Mr Bridges—just wait until then. And then, when we get to the Committee stage, we can assess whether Mr Dunne will be the Mr Dunne of 2007 or the Mr Dunne of 2012. Which will it be? Clearly—

💬 Hon Maurice Williamson: He’s in two minds.

He often is in two minds, Mr Williamson. That is right; he often is in two minds. It will be a little bit of back to the future for him to see whether he can cope with the fact that his pragmatism of 2007 is suddenly dispensed with in 2012, in the face of ruthless radicalism from Simon Bridges, who says “No, I don’t want those graduates coming back to New Zealand. I don’t want to see those New Zealanders contributing to our economy. I would much rather they stayed away, seeing their debt increase—no incentive to return to New Zealand.” That was not the pragmatism of Peter Dunne when he was with the Labour Government. It is the hard, right-wing attitude of Simon Bridges that is now finding its way into legislation.

All of the changes that have been made by this Government to the student loan scheme fail to actually contribute to getting more students into tertiary education, because that is not its goal. Its goal is the stated goal of the Minister for Tertiary Education, Skills and Employment: to dampen demand. We saw that with the changes around the over-55s that I have already mentioned. I do think it is important to remember that in an environment of high unemployment, where people in their 50s are losing their jobs and are expecting to work on into their 60s—and up to 70 for some people—to say to those people “No, you cannot have any support for living costs under the student loan scheme.” is effectively to say to those people “We don’t want you to retrain. We don’t want you as part of the workforce.” I know that Grey Power and other groups are very concerned about the impact on their members of these kinds of changes.

The other changes that have been made, again, tinker around the edges and do not actually make a substantive difference to the loan balance. I am aware from the Finance and Expenditure Committee’s report to us that, in fact, the additional revenue that is going to be coming back to the Government from this “represents about 0.12 percent of the total nominal loan balance of approximately $12 billion, of which … $2.5 billion is owed by student loan borrowers currently overseas.” That is it—all of this for 0.12 percent of the loan balance. This Government is tinkering at the edges. It is not actually going to be doing anything in this legislation that will support more people going into tertiary education. Although there are some matters in here of merit that will, in fact, allow more information to be held by the Government about where borrowers are, overall it does some minor things and one very non-pragmatic thing around the repayment holiday. We look forward to contributions in the Committee stage where we can, in fact, see whether we can get Mr Dunne to return to the pragmatic roots that he had in the Labour Government, rather than following the radicalism of Simon Bridges.

Like the member who has just taken his seat, Grant Robertson, I went through university in what some might consider the bad old days of interest on student loans—it was not ruthless, it was “Ruthanomics”. I worked three part-time jobs: I waited tables, I put books on shelves, and I worked at Te Atatū South Foodtown, and I paid my loan back.

💬 Grant Robertson: Did you walk barefoot?

I walked over hot coals and broken glass to get to university. I lived in a hut made of stone. But they were not the bad old days; they were the good old days, because they gave me the moral fibre that I now have. We are, of course, keeping the interest-free component, because, contrary to basically everything that the members opposite have said, actually we want to see people in universities and polytechnics and wānanga.

I have to say that despite all that heat and light we just heard from Grant Robertson, this bill proceeded through the Finance and Expenditure Committee very peacefully, and that is because what we are doing makes sense. It is common-sense stuff, and it really is about just putting back a bit more personal responsibility into the student loan regime so that the students of today do have a little bit of moral fibre.

The bill does three things. Let me just canvass them very, very briefly. Firstly, repayment holidays go from 3 years to 1 year. I think that just emphasises that a repayment holiday, when you are off in London, or New York, or Sydney—wherever it may be, doing whatever you are doing—is a privilege and not a right. It is not something tradesmen get when they buy something on hire purchase from Noel Leeming, or anywhere else. They do not get a repayment holiday. I think it is right that we do have one, but we are shortening it from 3 years to 1 year, and I agree with that.

We are also requiring borrowers to make clear a contact person. They must have a contact person. Be very clear, there is no requirement on the contact person to have to front up. There are no penalties on the contact person, but there must be one. I can understand members asking what the point is. Actually, it is quite clear that by having that there, we will see repayments. There is a level of accountability and we believe that will make a difference.

Finally, we are excluding investment and business losses from the calculation of net income of borrowers in assessing student loan repayments. That just brings an element of consistency here, and it will raise some money.

Mr Robertson asks what the point of this bill is. He says it is just tinkering. Actually, this bill alone will raise an additional $14 million, conservatively speaking. But even more important are the behavioural changes that it will make for those who decide to take out a student loan. When they finish and they get around to repaying those loans, we want them to do it quicker. We want them to have greater personal responsibility. So this is a very good bill, which members of the select committee worked cooperatively on, and I am proud to stand and support it.

I rise, following that very mediocre speech from the member opposite, Simon Bridges, to outline a few points about why we would support such a bill despite its various inadequacies. Look, Labour supports all attempts to make sure that people do pay back what they have been loaned, that it is done in a fair way, and that everyone pays their fair share. But the way that this Student Loan Scheme Amendment Bill is structured begins to hint at some of the other things that we have seen recently in terms of restricting access and opportunity.

I want to say a little bit about the repayment holiday changes as I go on. We have seen already in the last 2 years a series of restrictions placed on tens of thousands of New Zealanders, who have been cut out of higher education—55-year-olds and over, new migrants, pilot trainees, part-time students—and John Key’s statement last week suggests that student loans are going to be reined in, in a big way. The Government is not finished yet.

This bill is more of an effort to tinker around the edges of student loans, but it does, at the same time, affect the hundreds of thousands of Kiwis who depend on them. The bill would exclude investment and business losses from the calculation of net income in assessing student loan repayments. This presents a risk where there are significant losses for someone starting their own business soon after university, who may then have to borrow more or make other arrangements in order to meet repayment requirements. Various submitters raised questions about this in the Finance and Expenditure Committee, but the Government would not resile from it.

The bill requires alternative contact details to be supplied as a precondition of accessing a student loan, and presumably the thinking behind that is to provide an alternative contact point for tracking down defaulters. If that is handled in a way that is true to what we believe to be the intention of the bill as the Government has outlined it, that will not be a particular problem, as long as it is carefully policed and the Government remains true to its objective of merely tracking down those who are defaulting on their loans. But, as we have seen, the efforts so far have been generally in the direction of claw-back, and so we retain a few nervousnesses around that.

The changes around the repayment holidays are the ones that have been concerning to me. The members opposite wish to rein in the repayment holiday and make it just 1 year rather than 3 years. We argued in the select committee about the merits or otherwise of this proposal, and we were clear that this would likely affect unfairly those who are second-chance learners—those who have, perhaps, already repaid a student loan and decide to go back and take on another one. If I was to take out a mortgage, repay that mortgage, carry on with my life for some period of time, and then decide to take out another mortgage, I would expect to face the same conditions with that second mortgage as with the first one I had taken out.

With student loans, in terms of what is proposed around this repayment holiday, that is not the case. A person is not entitled to a second repayment holiday under this legislation. That will disadvantage disproportionately those who have gone out, sought some education as a young person, and decided that they could not cope or it was not for them at that stage. They have had gainful employment, gradually paid down their student loan, and then come back with a real ambition in mind, determined to get ahead, determined to make the best for themselves and their family by taking out a second student loan. Suddenly, their opportunity set is restricted. This is the kind of change we have come to expect from the Government members opposite. We have challenged this. They said that this is something they are sticking to. We asked for further information on it; it was very slow in forthcoming.

The mortgage repayment example is a fair one. I think that everyone should have the opportunity to have fair conditions when they take up their loan, and expect to have the opportunity to face that loan in the same way as they would at any other point in their life. A few statistics: $17,000 is the average student loan held currently and 58 percent of the borrowers are women. When I talk about those who are faced with that reduced opportunity set, I think we should bear in mind that 58 percent of those who are borrowing are women. And 70 to 80 percent of eligible borrowers take on a loan. So this does affect a lot of New Zealanders. I think we should provide the opportunity for people to retrain, particularly those who are motivated so to do. Restricting future options for our citizens who want to better themselves seems counter-intuitive. Labour is determined that the principles of fairness and opportunity should win out in this case, as in all cases.

The bill also inserts clauses 7B to 7E to reflect “current administrative practices regarding the repayment codes used for income tax and student loan repayments. The treatment specified in the Student Loan Scheme Act 2011 was designed in anticipation of changes to the Inland Revenue Department’s computer system which will now not be made.” These changes will not be made because that computer system was a flop. Millions of dollars were poured into the Oracle Corporation for mainframe redevelopments and they were subsequently written off. That raises a very important question around this to do with the major project that the department that will be administering this legislation is about to embark upon, and that is an estimated spend of $1 billion to $1.5 billion overhauling a computer system to manage our tax take. That amount of $1 billion to $1.5 billion—

💬 Scott Simpson: Over 10 years.

—over 10 years is not as big as Texas but it is certainly bigger than INCIS. So we need to be very careful, when we are dealing with this new computer system that is being put in, that it should, I think, be able to cope with the kinds of changes that were anticipated in the smaller investment in the Oracle Corporation for the original mainframe developments. It seems to me strange that we should be now making amendments to the legislation in order to cope with a computer system that did not work, when a bigger one that theoretically should work is planned. One has to ask whether the Government has faith in its officials and in the contracts that it is letting, and whether it is sure that it can carry out the work that it has promised with this amendment.

My colleague Grant Robertson mentioned earlier that Treasury and the Ministry of Education had cast aspersions on the Inland Revenue Department’s calculations for estimated savings that are likely to eventuate. This is worrying because this legislation, by one calculation, will cost us—or cost the taxpayer, I should say more correctly—approximately $2,761,000 to pass. That calculation, done for me by the Parliamentary Library, says that that is what it costs to pass a bill in this Parliament. We have to wonder in this case, when we are passing a bill that hopes to regain $15 million from the taxpayer, whether that is money well spent, especially when the Ministry of Education and Treasury have questioned whether this bill actually achieves what it sets out to achieve.

In order to conclude, I wish to just recap that Labour will, indeed, support this legislation, but it supports it with reservations, and those are around the repayment holiday and the way in which that is intended to be put in place to restrict the opportunities of second-chance learners. That is because Labour always supports fairness and opportunity. We want to see people get ahead. Where they want to work hard, where they want to take the opportunity to better themselves and better their lot for themselves and their families, Labour wants to support that. We have seen from National restrictions to student loan eligibility, which have seen tens of thousands of New Zealanders shut out of higher education, and more is promised. John Key needs to come clean on what he is planning for student loans, as hundreds of thousands of Kiwis depend on them.

These restrictions that will be placed on 55-year-olds, new migrants, pilot trainees, part-time students, and so on are not the end of it. Labour wants to see fairness and opportunity, not a bill that tinkers around the edge, aiming to get back just 0.12 percent back in an estimate that has been described by officials as a guess. We want to see this money come back to New Zealand where it is due—that much is true—but we also want to see in place a system that is fair and that supports Kiwis who are working hard to get ahead and who are bettering themselves for the future of us all.

The Green Party will continue to oppose the Student Loan Scheme Amendment Bill. The main reason for our opposition to this bill has not changed after discussions at the Finance and Expenditure Committee, and that is the very poor, contradictory proposal that is supported by no research or analysis to reduce the repayment holiday from 3 years to 1 year. We have heard in the debate so far about the repayment holiday. It is when borrowers living overseas receive an automatic suspension from their obligations to repay their loans while they are living overseas. If we want to understand why we have a 3-year repayment holiday in the first place, who better than the Minister who introduced the repayment holiday in the first place to explain the reasoning for it. I am quoting here, as we heard earlier, Peter Dunne from 2007: “The new rules will make it easier for people overseas to repay their student loans, and will offer the chance of a fresh start for those who have fallen into arrears. There will be a repayment holiday of up to 3 years for borrowers going overseas. During that time they will not have to make repayments, although their loans will still attract interest. This change recognises the fact that it is not always easy for people to repay their loans while doing their OE or working overseas …”.

I would like to ask the Minister, although he is not here, and the parties that are supporting this bill, including the Labour Party, what has changed since then to make that statement any less true or relevant. I can tell the House one thing that has changed since the Minister made that statement, and that is that more New Zealanders are moving overseas than ever before. If we want them to ever come back, we should be making our policy settings in such a way that encourages them to do so.

So we might fairly ask what impact this bill will have on borrowers’ decisions to come back to New Zealand, and we have had advice from the Ministry of Education on this bill that “This can be expected to have a negative impact at the margin on borrowers’ decisions regarding whether to return to New Zealand.” Mr Dunne’s arguments about recognising the importance of the OE and offering a fresh start so that people are incentivised to come back to New Zealand after travelling are even stronger in 2012 than they were in 2007.

We have seen in the select committee report that a typical borrower based overseas may face interest obligations after a repayment holiday that amount to two to three times the original value of the loan. So that is a huge disincentive for that person to ever pay that loan back or, indeed, to return to New Zealand. It is really important to note that the advice of the Government’s own officials is that this bill will have a negative impact on people repaying their loans and then returning to New Zealand. I really challenge those on the Government benches to explain why on earth we need this change.

I think it is very important to note that the original 3-year repayment provision for a repayment holiday has not been in place for very long; the repayment holiday was introduced in 2007. So it is not actually a very long time in which to analyse the evidence of how that repayment holiday has been used and what impact it has had on people’s repayments in order to make a considered judgment about whether or not it should be shortened. The select committee heard about this. It quizzed officials about the level of evidence and how much research has been done into the impact of the 3-year repayment holiday, and they said: “there was not enough empirical evidence to evaluate the effect of the three-year repayment holiday introduced in 2007, and that limited modelling has been done on the likely effect of curtailing the holiday, as borrowers’ response to the change is uncertain.” They described their best estimate as a guess in the select committee.

So why are we doing this? Why are we shortening the term of the repayment holiday from 3 years to 1 year, when there is not enough empirical evidence, there is limited modelling, and the best that officials can provide is a guess as to how much it might change people’s behaviour when it comes to repaying their loans? It seems to me to be an ideological attempt to rein in the student loan scheme, with no credible analysis of the impact and a very real risk that it will in fact influence borrowers to stay away, not return to New Zealand after their OEs, and not repay their student loans.

The fact that the Government is pursuing this change with no research to back it up and against the advice of officials seems to support what we heard recently from the Prime Minister when he was speaking to an audience of property developers—and he obviously thought he was in a safe space—that he wants to rein in student loans in a big way. We have already seen some examples of the Government doing this, like cutting the access to living costs for those over 55, like restricting access to StudyLink for permanent residents. It has begun already, and I am very concerned about what the Prime Minister might be referring to when he says he wants to further rein in student loans in a big way.

It is a shame that Simon Bridges has left the Chamber, because he said earlier—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! The member twice has mentioned the absence of members. You cannot mention that a Minister is not here, which was the first indiscretion earlier on, and I did not pick you up on that, but you cannot refer to the absence of a member from the Chamber.

Thank you, Mr Assistant Speaker. I apologise for that. I did want to point out that Mr Bridges said earlier that National is keeping interest-free student loans because it wants to see more students at university and polytechnic. I am sorry to break it to Mr Bridges, but that is not the reason that National is keeping interest-free student loans. John Key said why when he spoke to the audience of property developers. He said that it is about the only thing that will get young people out of bed before 7 o’clock at night to vote, but it is not politically sustainable to put interest back on student loans. So although we have heard from Simon Bridges that it is all about wanting to see more students at university, it is in fact all about what is best not for students but for National’s votes. That is what the Prime Minister revealed to the property developers—his real attitude towards students and young people.

I am also disappointed to see that the select committee decided not to proceed with the fruitful discussion about allowing people who have paid off their loans in full to take a second repayment holiday, which was an interesting idea that came out during the hearings and which I think deserved better consideration. If someone has paid off their loan in full and they later enrol to do a second degree or course and take out a second student loan, why not reward the behaviour that we want to incentivise—that they have paid off their first loan in full—with the opportunity for a second repayment holiday? As the select committee noted in its report—or as some of the members of the select committee noted—this could be especially helpful for women and for second-chance learners, and I think it is a shame that the select committee did not see fit to recommend this helpful change, or, indeed, as the previous speaker referred to, to consider it seriously.

The Green Party will continue to oppose this bill. There are, as we have heard from our colleagues, some provisions, such as providing a contact person back in New Zealand for overseas borrowers, that we think are sensible, but like our colleagues in the Labour Party, there are some parts we can support but there are also some parts we cannot support, and those are enough for us to vote against this bill.

The changes to the repayment holiday are significant. They are not well researched. They are not well analysed. They are not supported by officials, and they will probably result in people taking longer to pay off their loans and staying away from New Zealand. So the Green Party will not support this bill.

I rise to speak in favour of this bill, the Student Loan Scheme Amendment Bill, which implements reforms announced in Budget 2011 and builds on earlier Acts passed last year. These are modest changes to a very expensive scheme. The costs have ballooned since Labour’s cynical act during the 2005 election campaign—to promise interest-free student loans. Now every dollar that we lend is immediately written down to around 54.75c, and borrowers are naturally in no hurry to repay their loans when the money is free. But of course the money is not free. It has to be paid for by taxpayers and the rest of the population. So this bill will help turn things round a little and reduce the burden on the rest of society for the cost of this scheme.

I am amazed to hear members from the other side—members from the deep south, whom, I would have thought, would be concerned about rioting students jumping on the roofs of houses—complaining about the provisions of this bill. If anything, it could be going further.

In detail, what we are looking at here is a bill that makes it mandatory to provide a New Zealand - based contact person when applying for a repayment holiday, and that holiday will be cut from 3 years to 1 year. This is very simple stuff that I do not think anybody reasonably could object to. The student loan Budget package includes a change requiring every new loan received by StudyLink to include that contact person as a condition of getting a student loan. This bill would allow for that contact information to be used by the Inland Revenue Department. That is important. It is a very, very small thing, but there is just a practical detail of trying to contact someone who has gone overseas and disappeared without a trace, and to be able to talk to the parents, most likely, and to catch up with where that person is will make a very significant improvement to the way we collect these student loans.

The latest bill also includes a very important provision in relation to excluding losses from the calculation of net income. To maximise repayments from New Zealand - based borrowers, the bill makes amendments to exclude losses, such as rental losses, from the calculation of net income for student loan repayment purposes. Again, this is an important feature in terms of just trying to be more realistic about what the net income of the student is and to raise the repayment rates for the loans, which are costing the rest of the country a great deal of money to maintain.

We have heard also that the prediction is that this may be increasing repayments by around $14 million a year. It is not a large amount compared with the overall loans, but it is quite a significant increase—about 2 or 3 percent—on the repayments that we are getting on a regular basis. So that is very worthwhile. It is getting extra money in to repaying what is a very large debt to the rest of the community. I am in favour of this bill, and I am looking forward to hearing further about it in the Committee stage. Thank you.

I stand on behalf of New Zealand First to provide our conditional support for this bill, the Student Loan Scheme Amendment Bill, to the next phase of the House.

💬 Tim Macindoe: Unconditional?

Conditional support, sir. We note that one of the purposes of this bill is to improve compliance and to encourage personal responsibility around loan repayments. [Interruption] Mr Goldsmith, New Zealand First is a party that believes in personal responsibility, and as a previous credit controller whose working life was spent in the pursuit of those who were avoiding paying debt, I also understand some of the necessities of this bill. But today we are talking about student debt.

Students are those young New Zealanders, who, we all in this House agree, are the future of this nation—those young New Zealanders to whom we consistently send the message that they must seek higher education and must prepare for their own financial future through recognition of their achieved skill levels, and that can be via a university or a unitech. We as a society send this message again and again and again: “Go and get some higher education.”, and when they take our advice, we charge them for it. We give them a debt. But, ultimately, the purpose of this bill and its amendments is to lower the levels of student debt and to encourage repayment of student loans.

We note that there are several administrative clauses, such as the recommended insertion of clause 30B, which would amend schedule 1. We would like to draw the attention of the House to the fact that this requirement had originally been included in the Student Loan Scheme Act 1992, but it got omitted from the Student Loan Scheme Act in 2011 through an oversight. We would respectfully suggest that this is what happens when legislation is rushed through the House to meet a predetermined, predescribed, politically comfortable date as opposed to the goal being good legislation that then does not need to come back into this House a second or a third time for amendment. However, New Zealand First sees the logic of the provision for a New Zealand - based contact person for borrowers. We are sure that there will be many a mum and a dad, or any other contact person out there, who will be breathing a sigh of relief to read that by becoming that New Zealand - based contact person, they will bear no liability for the loan repayments, although we are unclear as to the enforcement that might be suggested if they choose not to provide borrowers’ current contract details.

There are two points that New Zealand First would like to bring to the attention of this House. We take this opportunity to remind the House that since the tertiary education fees were introduced in 1989, student debt has, as has been mentioned, spiralled out of control. The latest figure is $12.07 billion, affecting 621,000 New Zealanders. New Zealand First advocates that not only are some of these amendments required to tighten a bill rushed through in 2011 but it is actually time for a change of direction around some of the tools used in student debt reduction.

I sit on the Education and Science Committee, and I have heard from the National Institute of Water and Atmospheric Research, the Ministry of Science and Innovation, and AgResearch. Each of them has explained to that committee about the need to encourage more studies in science so that this nation can move forward with greater economic development, and the need for the retention and return of those graduates to this nation and those industries. We hear the same in the area of medicine and education, but rather than trying to pick “winner and loser” industries, which history has taught us is very dangerous, New Zealand First believes that the authors of this bill should consider the inclusion of New Zealand First’s dollar for dollar student debt write-off scheme for those graduates who remain and work in New Zealand. We should recognise that those who participate in such a scheme will be working and paying taxes in New Zealand—all taxes, not just PAYE but GST on every purchase, fringe benefit tax if they happen to get a good job with some perks, and resident withholding tax if they manage to save some money. But by removing some of the administrative cost on pursuing debt collection—people like me are quite expensive when we seek out debt—it is possible that this scheme may well, to coin a phrase from the National Government, become fiscally neutral.

The second point that we want to draw the House’s attention to, and it has already been mentioned by our Labour and Green colleagues, is new section 107B(3)(a) in clause 17. We see this as a serious flaw in this amendment bill. This section refers to the ability of an individual to access repayment holidays, and from our reading—and I am pleased to see that it has been picked up by others—it restricts repayment holidays. I quote subsection (3): “a borrower reaches the borrower’s limit if—(a) the borrower has had 1 or more repayment holidays, granted under this Act, for a period of 365 days or for periods that total 365 days;”. We note in the commentary, which is at the front of the bill, that the Finance and Expenditure Committee considered how this might affect second-chance learners and women. For some reason that is not mentioned in the commentary, although there is a paternalistic comment towards the end about protecting people from themselves, this access has been restricted.

It is worth pointing out that this is not suggesting that a borrower can take a repayment holiday and another repayment holiday. These are people who have already paid off their loan; they are the very people we want to encourage to use the system. It is exactly what the Government is trying to do—get people to repay the loan. So those people have already proved themselves to be reliable creditors. They have taken advantage of the repayment holiday for the period, then they completed the contract, and that contract was between themselves and the State in that moment. I do not know of any other contractual law where you go to borrow money, pay it back, and prove to be a good creditor, and then suddenly somebody says they are now going to remove something from you. So those people have achieved what was asked of them. They have upskilled themselves and have repaid their financial debt to the nation.

I ask the House to consider that section again with particular attention, and I draw its attention to the reality of what this means in women’s lives. It is very, very likely and is a reality of our world that a young woman will go to tertiary education, and as we have heard already 58 percent of the people we are talking about here are women. She will go to tertiary education and will seek a higher qualification using the student loan scheme. Just as with her male counterpart, she will then, if there are any jobs, go out and actually find herself a job, and repay her loan during that time. She might take a loan holiday, let us say on the birth of her first child, just while she and her family readjust. That does not mean she is not working, but it may mean that she wants to take that 365 days while they get over the birth of their first child, re-suss out their financial priorities, reset their budget, and move on. Later on in life, and as a more mature woman I can speak to this, after we have looked after our families and fed our husbands, and our children have grown up a bit, we might like to upskill a bit more. That means we might need to go and reaccess the student loan scheme. Unfortunately, if my husband leaves me and I now need another 365 days to figure out how the children and I are going to live and just readjust our financial circumstances, I do not get a repayment holiday. I do not think that the reality of these circumstances has been considered by the select committee. I would ask that they be considered, before we come to the Committee stage.

Just to close, New Zealand First will be supporting this bill, but the support will be conditional—I must repeat, conditional—on some of these issues, and possibly we could have discussion on these issues prior to the next level. Thank you.

That was a very interesting speech from the New Zealand First member, who talked about debt spiralling out of control, yet at the same time New Zealand First wants to give extended repayment holidays and it wants to bring in a one-for-one debt write-off ratio. The things do not match, and I guess that is the truth of its policy as it goes out there and says what it thinks it wants those voters to hear, but does not deliver actual policy that is real and constructive.

That is the problem that this Government has had to deal with in the student loan area. It was a process done by the previous administration—interest-free student loans—and it led to support amongst the student body, as you would no doubt expect, but also it meant that there were a couple of problems with that policy. The first problem was that it created a huge debt for New Zealand going forward, and my colleagues talked about how nearly half of the amount of money lent on student loans has been lost. So that is a major contributor to the Government’s economic situation.

The second thing that it did is that it created a situation where you needed to have a cap on the number of students. So we often hear that our opposition talks at universities about caps on students and blames the Government, but it was actually brought in by Labour as part of this interest-free student loans policy. I think that is something that needs to be made clear. Labour capped the number of students in New Zealand who could get education. Labour deliberately limited the number of New Zealanders who could get those educational opportunities. It is a bit rich for those members to come into the House now and say otherwise.

When we look at this bill, the Student Loan Scheme Amendment Bill, this is an attempt to try to get some of that money back that the student loan budget faces, in the sense that we are requiring borrowers to provide details of a contact person to StudyLink. That will give the opportunity for the Inland Revenue Department and StudyLink to then be able to follow up and look at those borrowers, and will lead to a situation where there will be more repayments.

As with anything in this area it is not a case where you can necessarily say that that will implicate a certain number of repayments; it is something that relies on the individuals. Setting up a system where you get as much information as possible and setting the process will lead to a better repayment outcome. In essence, you will probably see that there is a greater repayment to the Inland Revenue Department and through StudyLink by virtue of people having to put down a contact person.

There are also some changes around excluding losses from the calculation of income for student loan repayment purposes, and that is also to assist in a greater recovery of that loan repayment. Reducing the repayment holiday from 3 years to 1 year is another part of that process. Requiring borrowers to apply for their repayment holiday and provide a New Zealand - based contact person when they go overseas is important as well.

In essence, this bill is an attempt, and will be a successful attempt, to get some more repayment of that student loan debt. It is something that political parties in this House obviously agree with, apart from the Green Party. We look forward to the bill progressing through the House.

The contribution of David Bennett before me raised a very important point around the issue of capping student numbers. He put a fine point on the fact that—

💬 David Bennett: Labour brought it in.

Yes, Labour did do it, but you have to understand the context of the time. When Labour was in Government significant tertiary reforms were needed. At that time unemployment was sitting at around about 3.2 percent, from memory. So we did not have high unemployment; we had low unemployment. We needed a skilled workforce, and we needed a tertiary sector that was better aligned and was specialising in areas that aligned to labour market needs. That is the context that that member failed to comment on.

So when we are talking about the challenge ahead of this country to reduce student debt, by the same measure we need, in times of recession, to lift the skills of our people. We can do that only by investing in our people and sending the right signals to say that, in a time of recession, now is the time to upskill so that we can ensure that productivity can be increased so that we have a highly skilled workforce able to meet the demands of the newer economic challenges. At least, that is the vision that Labour sees. We see that as a very serious challenge that is partially understood by National, but not fully embraced. The signal that National is sending, indeed, is that it wants to reduce student debt, it wants to continue to put caps on tertiary education at a time when we should be lifting them, and it wants to limit the numbers of people who can access student loans to get a higher education. All the signals are in the wrong place.

We will be supporting the Student Loan Scheme Amendment Bill because we do believe that efficiencies can be gained in terms of reducing the student loan debt. However, there need to be incentives. A regulatory measure, in itself, will not do a great deal to send important signals to our people that by reducing their student loan debt, and by ensuring that the student loan scheme continues to be available to them, they can continue to upskill and increase their skill set to become more productive in an economy that would be thriving if the National Government had a plan. But under Labour there is hope—under Labour there is hope.

I want to pick up on some of the comments that were raised by speakers before me. Firstly, there was the reduction in the student loan repayment holiday. The one question that I had—and I am not a member of the Finance and Expenditure Committee—concerns the arbitrary rationale in terms of reducing the student holiday from 3 years to 1. If you look at the bilateral agreements that New Zealand has with other countries in terms of working holidays, they all exist for about a 2-year period. So even then, common sense would say that if the working holiday schemes exist for 2 years, the holiday period should be for 2 years, and they would align. That way you are sending signals to those young people who want to have their OE, maximising on our bilateral partnerships with other countries, that say: “Look, have the holiday for a 2-year period, and, you know, get a job, and if you can repay, then repay.” But the signals are all in the wrong direction and there is no strong rationale for the reduction in the repayment holiday. I think some very important questions were raised in this House that should come out in the Committee stage and be answered by the Minister of Revenue around the rationale for the reduction.

The other point that I wanted to comment on is the profile of those people who have access to student loans, and looking at how flexible types of arrangement might be a greater incentive to mature people going back into study, and to mums and women going back into study. They will want to ensure that they do meet their debt obligations, and they will want to earn a track record, but also they want some flexibility around just some everyday life challenges that come up. If we take that kind of approach in working with people and being more responsive to their life context and challenges, then I think we have a fully functioning student loan scheme that is operating on a high-trust basis, on an incentive basis, and on a basis where people are actually saying: “Look, it is good to continue to make repayments. I can earn a track record here with the Inland Revenue Department, and there will be an opportunity in the future to continue to take up student loans should I wish to upskill in the future.” Those are all very real questions when people start to consider whether or not to go back to a tertiary institution to upskill and get a qualification. They are all very real considerations that I think underpin a broader context for considering the New Zealand student loan scheme.

There were other comments made by speakers before me around the Government’s changes and the way in which they are restricting those over 55 years of age, new migrants, and part-time students from accessing the student loan scheme. Again, the signals are all in the wrong place here. What we need more than ever before is for an ageing workforce to continue to ensure that their skills are relevant to the new workforce labour market demands, and we can only assure them of that if they have pathways into higher education. For a lot of people, especially a lot of mature people whom I certainly come across who have a family and who have to weigh up the cost of taking up tertiary education with that of looking after their family, student loans sometimes become a option. They can manage with, maybe, their partner who is working part-time, and then they go back to study. So I think people cannot simply shake their head and say that that is not a reality, because it is a reality for many. I think the needs of upskilling young people are just as important as upskilling a maturing workforce who actually can continue to work at 50 and 55 if they are upskilling and transitioning, perhaps to a new career pathway, through a supportive loan scheme.

There are a lot more questions here to be asked, and a dearth of responses from the Government on some very fundamental challenges that certainly Labour set it, which are that in a time of recession we should be sending signals to New Zealanders to say that they matter and we want to invest in ensuring that they have access to be able to improve their skill set in order to be part of a productive economy in a labour market that will be able to ensure that there is a place for them.

Again, the thing I am most concerned about in the contributions from the Government today is that this is all just about reducing debt. Well, if it is all just about reducing debt then you can tick the box on this bill, but it has to be about people at the end of the day. If we are serious about investing in people and lifting their skills so that they continue to be a part of a productive economy, then all of the signals are in the wrong place and we are certainly not going in the right direction. We do support efficiencies in the Student Loan Scheme Amendment Bill, but we have concerns and we want to raise them so that during the Committee stage those questions can be responded to by the Minister. Kia ora.

It gives me pleasure to rise to speak on this bill, the second reading of the Student Loan Scheme Amendment Bill, and I want to do so pledging that without reservation, without additional questions, and without complaining I will be supporting this bill. We continue to hear these sorts of things from the Opposition: all the reasons why we should not do things in New Zealand, yet they are going to support it, none the less. I will be supporting this bill and I say so at the beginning because I believe it is an important piece of legislation. I note that with the exception of the last speaker, Ms Mahuta, for whom I have a huge amount of respect, it is good to see that the Opposition has got the B team out today for such an important piece of legislation.

Can I say a couple of points here. We have heard from the Opposition that this is about another cap on student places. I can say without any doubt at all that the National Government is focused on more opportunity for students so that they can do more and they can learn more. We have funded more core student places in universities, polytechs, and private training providers than at any time before. It is a very positive and important thing. But this legislation is about saying to New Zealanders that they have an obligation to each other and to themselves to repay. This is around the rules of how they will repay.

The reason it is important is that $1.6 billion was lent by the Government in student loans in 2010-11, and $690 million was repaid in that period of time. So our commitment to New Zealanders who study is absolutely clear. That cannot be called into question. But what must be called into question is the ability for a Government to continue to find more money to pay into a system so that people can study and go overseas and enjoy themselves, learn, and come back again, and the burden that that places upon the taxpayer. This is one degree; we will take another step forward in making sure that those who study, who are supported not by the Government but by the taxpayer—because this is taxpayers’ money that is borrowed on behalf of the taxpayer, and it is the taxpayer who, therefore, has the obligation—that they must meet an obligation to the taxpayer to be productive and to pay that money back.

I want to finish here because there will be opportunities later on to go into some of the greater detail. I think it is not too much to ask that when people go overseas they provide good contact details for somebody whom the ministry or the Inland Revenue Department can correspond with to make sure that they can be involved with them and pay their money back.

But I want to give an example of a time when the Opposition party—the Labour Party—when in Government was in favour of only a 1-year repayment holiday. Now it is saying that there are lots of reasons for it to be longer than a 1-year repayment holiday. Cast your mind back to just after 2005 when all of New Zealand said to the Labour Government of the time: “You have used almost a million dollars of our money to put a pledge card out there to get re-elected.”, and Labour took a 1-year repayment holiday before it changed the law so that what it had done was not illegal any more, and paid the money back anyway. So when it suits Labour to have only a 1-year repayment holiday, that is fine. That was the taxpayers’ money it used. In the case when we lend money to New Zealanders to study, it is a good use of money; back then, for Labour to borrow from New Zealanders for 1 year was not. But I commend this bill to the House, and I look forward to more from the B team on the other side. Thank you.

The next call is a split call: Labour and the Greens.

If that was Todd McClay’s audition for Cabinet, I would not be making an appointment to see the Governor-General just yet. In fact, Todd McClay talked about the 2005 election. That is kind of ironic, because at the 2005 election I seem to recall the current leader of the National Party going up and down the country promising to fight interest-free student loans with every bone in his body. John Key must have become a bit of a jellyfish these days, because interest-free student loans are still here after 3 years of a National Government.

We do not know for how much longer they are going to be here, of course, because we know that Steven Joyce does not like them, and at every opportunity that he gets Steven Joyce takes a pot-shot at interest-free student loans. The real question is who is going to win out in the end of that. Will it be Steven Joyce, or will it be John Key? I suspect Steven Joyce is going to be around a little bit longer than John Key is, so I suspect that Steven Joyce might just get there by attrition. But, of course, the question is when John Key goes. If he goes before the next election, which is very possible, then Steven Joyce might get his way. Of course, if John Key holds out to the next election, which he is bound to lose, then Steven Joyce will not get his way, because there will be a Labour Government, and interest-free student loans will be here to stay.

💬 Hon Maurice Williamson: Ha, ha! It’s good to see a member with a sense of humour.

We know that Maurice Williamson does not like interest-free student loans. He was another one who railed against them when the Labour Government introduced them, yet now he is sitting there supporting interest-free student loans. Maurice Williamson, of course, is one of the National Ministers whom we can always rely on to say what he actually thinks, rather than what he is told to say, so if I was Maurice Williamson I would not be making an appointment to see the Governor-General for a position in Cabinet either. He has been—

💬 Hon Maurice Williamson: Oh, really?

No, I really would not. I move to the substance of the Student Loan Scheme Amendment Bill and the issue of the repayment holidays, which the current Government is decreasing from 3 years to 1. I thought it was interesting to go back and look at why they were increased in the first place from 1 year to 3. Of course, that was done only back in 2005—

💬 Moana Mackey: Dunne!

It was only “Dunne” back in 2005, and there were some very, I think, pragmatic words offered to explain that at the time, back on 27 March 2007 during the Committee stage of the debate. A member of the House who was arguing in favour of it said—and I think this is really good, so I am going to quote from it; I know other members have quoted from it as well—“The reality they all faced was a very massive debt upon their return to New Zealand, which in some cases would be enough for them to make the decision not to come home at all, and our country would be the loser.” I agree with that sentiment. I think that if you create these huge penalties, there is a risk that people will simply not come home, in order to avoid them. But the quote goes on: “We needed to take a pragmatic way through this, and, being someone who places great virtue on pragmatism, it struck me that the logical course of action was to derive the solution that we have: to extend the holiday period for 3 years, recognising the fact that young New Zealanders take that extended period overseas;”. I thought those were very sage words of advice—

💬 Moana Mackey: Common sense.

Common sense, in fact, from “Mr Common Sense” himself, Mr Peter Dunne. Unfortunately, Peter Dunne’s pragmatism these days tends to go along the lines that the pragmatic approach is to vote for whatever the Government—whoever the Government is—is proposing in order to pragmatically hold his ministerial warrant. That seems to be the Peter Dunne approach these days.

💬 Andrew Little: Well known.

That is right—that well-known pragmatic principle of supporting whatever is required in order to keep his ministerial job.

I think Peter Dunne was right the first time. Peter Dunne was right the first time, when he said the pragmatic thing to do was to extend the repayment holiday to 3 years. I assume that he is going to vote in favour of this new pragmatic decision to reverse his earlier pragmatic decision, because, if he is not going to—if he is going to stick with his first pragmatic stance—then the Government presumably will not have the numbers to pass this bill, because, of course, it needs Peter Dunne’s vote to pass this. So I would invite Peter Dunne to, in fact, reverse his position and go back to the position that he held before. We will be testing that in the Committee of the whole House stage, I am sure—

💬 Moana Mackey: To see which Peter Dunne.

—to see which Peter Dunne will be coming out to play when this is debated in the Committee of the whole House stage.

The reason why this is important is that all New Zealanders revel in the opportunity to go overseas at some point. Many people do that after they have studied, and I want to make sure they come home again.

Ngā mihi nui ki a koutou. Kia ora. I rise to take a call and oppose this bill, the Student Loan Scheme Amendment Bill. I would like to thank the submitters, the Finance and Expenditure Committee staff, and the officials who worked on it.

The Green Party is the only party—I am not sure about New Zealand First—that is opposing this bill, and we have been clear throughout the whole process of this bill from first to second reading that we are opposed to this bill, because of the repayment holiday, first and foremost. We are opposed because it has not been analysed, we are opposed because it has not been recommended by officials, and we are opposed because what we are going to see is more Kiwis moving overseas. That is going to be the outcome. It is not an outcome that we want to see on this side of the House, and that is why we will be voting against it.

The bill does three key things. The first is closing the loophole around the pay-period changes for repayment. The Green Party supports that. We think that is common sense; it is about time we did it. Secondly, the bill introduces the requirement to have a New Zealand contact for a person going overseas. Again, it is common sense, and the Greens support it. We do not know why we did not do it more than 10 years ago, because I think it is uncontroversial, and everyone in the House could support it. However, the third key part of the bill, the repayment holiday, is the reason we will be voting against this bill.

It is coupled with the other changes made on the Government benches to tertiary education, which have seen it become less accessible, less affordable, and in some cases downright impossible. The Government, for the first time in our history, is slamming the door on prospective students with its capped enrolment, and is not even giving students a heads-up that they cannot enter university and that it has slammed the door on our open, egalitarian system. At a time of huge economic questions and huge social questions, when we are struggling for a big-picture economic strategy that is actually going to deliver prosperity and will be able to lift our kids out of poverty, the Government has dropped the education ball. It has made it less affordable, less accessible, and in some cases impossible to be a student in New Zealand, to get upskilled, and to contribute to our economy.

Instead it has gone down the path—and Minister Heatley knows all too well about this—of the “drill it, mine it” approach. Coupled with the “cut it, sell it” approach, these are the only ideas the Government has: to sell off our assets, to cut our essential services, and to dig up the ground.

In a sector where we already spend $3,000 less per student than the OECD average, when we are dropping down all the international tertiary education rankings, this Government, coupled with that ideological solution in search of a problem, the voluntary student membership legislation, is all about trying to harm the sector, and that is our big fear in terms of the Student Loan Amendment Bill we have in front of us now.

What we have heard from the Greens spokesperson on education, Holly Walker, is that there has been no empirical research and no analysis of the impact of the repayment holiday changing from 3 years to 1 year. We know that the officials advised against it, and we know we are actually going to see Kiwis going overseas. National was elected and ran on a platform of seeing fewer Kiwis going across the Ditch, of closing that gap with Australia, yet what it is doing is legislating bills that are going to see more Kiwis move overseas. It is self-evident common sense that if people go overseas for an OE—and we know the average, from the New Zealand Kea survey, is actually between 3 and 5 years, not 1 year—we are going to see Kiwis stay overseas. We are not going to see Kiwis diligently run home to start their repayments because the Government has changed the rules from 3 years to 1 year. What we are going to see is Kiwis move overseas, and that is the advice from officials. A key question I would like to see resolved in the Committee stage is what happens to those students who apply right now or tomorrow, or who applied a month ago, for a 3-year exemption holiday. What happens? Do they automatically go down to 1 year? Do they exist on the 3-year current regime?

In a nutshell, what we are seeing is bad law, with no empirical analysis, ignoring the advice from officials, and actively seeing more Kiwis move overseas. We will be having none of this, and this is why we are the only party opposing this bill.

That was exactly the same speech that the member Gareth Hughes gave, I think, during the last time we amended the student loan scheme provisions, particularly in respect of the student loan repayment bonus. Remember what the Greens said about that? They said it was bad law, it had not been researched, there was no empirical analysis. Only, what we know is that it worked. It worked by reducing the amount of debt that these students had to repay when they graduated.

Let us just disavow ourselves of one notion, and that is, debt is not interest-free. The only question is: who is paying the interest? Under the present legislation it is interest-free to the borrower, the student, when they are there. But that does not mean it is not interest-free. It is not the State that pays it. The State might pay it, but it is on behalf of every single taxpayer in this country—hard-working, earning New Zealanders and pensioners who have income through interest and other investments are paying for these student loans, and it is only right to expect that good value is gained from that investment.

At a time of recession we are seeing more people going into tertiary education than ever before. The pass rates are higher, and the amount of student debt that is accumulated is now finally starting to slow because of the very sensible policies that have been put in place by this Government.

It is a really straightforward thing. Do not you think, if you are going to borrow, should not one actually repay the debt? Only, the previous Government did not do anything about the number of people who were going overseas, with a repayment holiday for at least 3 years, and then creating such a debt burden that they were not prepared to come home to face it. Well, if Mr Hughes is so concerned about that, if he is so concerned about the number of graduates who are going away overseas, he should be supporting this bill, the Student Loan Scheme Amendment Bill, because this is exactly what this bill is going to do.

I thank the Finance and Expenditure Committee for their careful consideration, and the officials who helped us. I really look forward to debating this bill clause by clause in the Committee stage. Then we will see what this will really do for our students. I commend the bill to the House.