Student Loan Scheme Amendment Bill (No 2)

I am grateful for the opportunity to speak on Part 2 of this Student Loan Scheme Amendment Bill (No 2). This part deals in particular with the issues around data matching, and the disclosure of arrival and departure information for the purposes of the Student Loan Scheme Act 1992.

I note that efforts have indeed been made to ensure that the amount of information given to customs officers is limited. New section 280H(4), which is inserted by clause 36, states: “If the Customs has arrival or departure information relating to a borrower, the Chief Executive may, for the purpose of this section, supply to the Commissioner any of the following … (a) the borrower’s name: (b) the borrower’s date of birth: (c) the borrower’s tax file number: (d) the time and date on which the borrower arrived in, or, as the case may be, departed from, New Zealand.” But the provision goes on to state, in new section 280I(3): “In accessing a database for the purpose of this section, the Commissioner—(a) may only search for arrival or departure information relating to pre-selected borrowers who are of interest to the Commissioner; and (b) must not search for—(i) any information other than arrival or departure information; or (ii) any information about a person who is not a borrower.”

In looking through the submissions on this bill from the New Zealand Law Society, I noted that although on the one hand the society commented that this was a very complex bill, and that the complexity of the repayment holiday and amnesty provisions was extremely difficult to follow and put into practice, on the other hand, with regard to data matching, the society said that the bill did indeed allow only limited data to be shared between the Inland Revenue Department and the New Zealand Customs Service. It said that it was desirable to allow the Inland Revenue Department access to immigration records—in and out of New Zealand by borrowers—and that it was also desirable to have a limited form of data match to ensure as best as possible that the correct individuals were identified.

The Law Society went on to say that the provisions around data matching are certainly appropriate. That can be reassuring to those civil libertarians who may be concerned that other inappropriate data is being checked up on at the same time. It is certainly reassuring to students, who might have fears that they will be set upon by a border guard or dog, and taken into custody or something similar. No such thing will happen—

💬 Hon Peter Dunne: That’s our next one.

Oh, that is the next one, is it—the trained beagles that then go on to something more sinister? Certainly, students can be reassured that this provision is only for the purposes of identification, and to ensure that the loan system works as well as possible.

We have only to reiterate that the initial reason for this legislation was that there were incentives for borrowers to go overseas and not to declare that they had an interest-free loan. They would not be charged interest if they went overseas and did not declare it, but if they did declare it they would be charged interest. It seems as if all the 15 submitters, and pretty well all the parties in Parliament, are comfortable with this data-matching system.

I guess the area we feel somewhat uncomfortable about is the fact that on the one hand the Government is saying that this might save us $24 million a year, but on the other hand there is a real basic cost of this scheme to New Zealand in terms of its priorities. Of course, that was identified by the OECD report into tertiary education in New Zealand. OECD officials described much of our system as being wonderful and having its own unique features. But in terms of prioritising, when there was a limited amount of money to spend on education, they questioned whether having this scheme was the right thing to do. Of course, one has to be sceptical about the Labour Government putting this in as an election bribe.

It is nice to speak to Part 2 of the Student Loan Scheme Amendment Bill (No 2). Yes, following on from my highly valued colleague Dr Paul Hutchison, I agree that this part is about the data match and how the mechanisms are consistent so as to be able to make this scheme work. I found it very interesting that such a low number had taken advantage of the provision to come clean and acknowledge their responsibilities. The Minister stood up and acknowledged that barely 800-odd people last year had done that. I will certainly be looking forward to a lot more of them doing that. Again, speaking for those people who have not had the privilege of going to university, and having to pay for everything, I take quite seriously some of the ramifications that could arise. So when we look at what is proposed in Part 2, we see that it is quite concise and clear again. However, there will have to be an education programme, because I am sure that although we are aware of where we are at this stage and time in this Chamber, a lot of people are still beavering about their business, totally unaware of what we are trying to achieve here—that is, the best of both worlds and a balance of what is fair and reasonable. So let us hope we do get some traction around people signing up. We can say that we are talking about thousands of people. I am sure that those people who are overseas enjoying that 3-year holiday will continue to do so, as is the tradition.

When looking at Part 2 we can see that it does impact on a number of other Acts of Parliament. There is, of course, the Customs and Excise Act of 1996. Well, it had to be that Act, because we need to have that data match, and we have to have some structure so that there will be some comfort that the information being shared is fit for purpose, that the situation is not being abused, and that there is clear understanding that the information being handed over is appropriate. We can see that specified in new section 280H of the Customs and Excise Act, inserted by clause 36. Effectively, the information covers the name, the date of birth, the tax file number, and the time and date on which the borrower arrives in, or, as the case may be, departs from, New Zealand. There has to be a written agreement that that information has been requested.

However, there is a lot more to the part than just that. There are also some levels of delegated authority, and information as to where that delegated authority is required—because the old commissioner would be run off his legs, would he not, with the thousands of people who are going to register and come clean with the money they owe? The commissioner is able to delegate that authority, although the record must be kept and the person who accesses that information must use a register. The register will carry the name of the person, the reason for accessing the database, and the identity of the persons who access the database and their reasons why.

I must admit that, generally speaking, I am very satisfied with the process. I must say to the Committee that it was a pleasure to deal with the Inland Revenue Department, because it saw clear lines of accountability. It was not mixed up with some of that fuzzy thinking that comes out of “those people should get this” or “should get that”. It seemed to relate quite well to an old shearer, who got paid only for what he did. If he owed some money he paid his bills.

I turn back to the consideration of the Chairperson and his thought about the best way forward for this bill. I would like to draw to the attention of members on the Government side of the Chamber that other steps have been taken to wipe off the penalties on childcare payments. It concerns me hugely that we could be taking another step towards that ultimate outcome, and I would be very, very disappointed if in actual fact we got to the stage of offering to young people the grandest of opportunities of going to the most highly esteemed learning institutions in our country, and we have to wipe off those student loans.

There is a slightly unfortunate assumption that all of these students who are going off overseas are university graduates, but of course that is not the case. Many of these students going off are at the other end of the tertiary education spectrum. They may be people, for example, who have dropped out of year 12 of their schooling because they are not having great success there, and they have gone off to their local polytech and done an acting course or something, have not necessarily completed it, and have ended up with a $10,000 student loan. We have to recognise that people with student loans are not all professional graduates who can possibly go across to England and get some pretty good money. That is the first thing.

This part is the second part of the quinella, and it actually makes the whole thing work. It works for all parties; it works for the Government, the taxpayers, and the Inland Revenue Department. It ensures that we do not have people taking off overseas with no one knowing they are there, so they are not paying any interest because it is assumed that they are still in New Zealand. It is fair on the taxpayer that the provisions for those who go off overseas are, in fact, applied to those people who go off overseas. But the provisions are also an advantage to those who go off overseas and inadvertently do not realise that they are leaving obligations behind them. We had a submission through the Education and Science Committee from someone who had done exactly that, and who thought that the income limits that applied in New Zealand also applied when someone was off overseas. Unfortunately, that person came back to a very hefty loan.

So New Zealand First believes that data matching is essential, and certainly through the select committee process we questioned very, very hard to make sure that it was to be used for only the purpose it should be used for. The provision for data matching is very tight, and I think everyone recognises that it is tight and that there is no opportunity for the information to be used for a variety of other reasons. In fact the select committee went so far as to check out what would happen with the information once a person was back in New Zealand and had paid off his or her loan. There was an expectation and a principle explained to us that the records would then be destroyed. Certainly, New Zealand First members believe it is only fair and reasonable that information used for the purpose it is needed to be used for should then no longer be kept and be open to misuse. However, we believe it is necessary to have this particular measure if we want to have the whole system to operate. Therefore we believe, as I say, that it is the second part of the quinella, and without this part we do not get the big prize that we are aiming for out of this legislation.

I appreciate the opportunity to speak to Part 2 of the Student Loan Scheme Amendment Bill (No 2). This is the part of the bill that, as the previous speaker said, makes it work. We are under no illusions about this at all; what we are dealing with here is an election bribe. I want to pick up on an interjection that Mr Donnelly of New Zealand First made when my colleague Paul Hutchison was speaking. There is no way that attention can be diverted from the actual intent that the Labour Government had with this legislation by describing a tax cut as a bribe. One cannot and does not bribe people with their own money. If there are people in this Chamber who have that view, then I would very, very strongly suggest that they think about the nature of representative government, and the purpose of taxation, and consider very, very carefully the morality and the integrity of a Government that collects huge sums of money off hard-working New Zealanders to keep in the fighting chest to buy an election.

The bill will not work without Part 2. It is important to deal with the issue of data matching. It is important to be able to match details of departures from New Zealand with arrivals. It is important that those people with student loan obligations get the message from Part 2 that the House is serious and that there is a determination to make this work. There are all the protections that are needed to protect the privacy and rights of individuals, because access to the data is limited and for a specific purpose. It is fair, and the protections are reassuring. Again, I think Part 2 reflects the excellent work done by the Education and Science Committee in preparing the bill to come back to the House.

In that regard I would like to join my colleague Colin King in paying tribute to the officials of the Inland Revenue Department. On the Education and Science Committee we deal with so much woolly stuff, particularly in the education sector—less so in the science sector—and it is very, very frustrating to sit there week after week, trying to get to the nub of an issue, and trying to get officials to get straight to the point and get rid of the “if onlys”, the “buts”, and “on the other hands”, and all the rest of it. To be working with officials who got straight to the point, were clear, precise, exact, and unequivocal, was certainly—for me—most refreshing. If that sort of culture and attitude could be inculcated in some of the other ministries we find ourselves dealing with on that select committee, that would be refreshing as well.

I will begin by thanking members who have expressed admiration for the contribution of officials. I work with these officials on a daily basis and I thoroughly concur with the sentiments that have been expressed. We are very well served by our Inland Revenue Department policy people, and their ability to go to the heart of complex issues and provide relatively clear solutions is, I think, unparalleled. So I appreciate the support that members from around the Chamber have given to them this evening.

I also acknowledge the work that the Education and Science Committee did—in particular the Hon Brian Donnelly as chair—in dealing with an issue that by its own admission was a little bit outside the norm. I think the committee has done a good job, and I am very grateful for the amendments that it has written into the bill.

I want to pick up on the question that has been raised by some speakers about the disclosure regime in the bill—the data matching and the very tight way in which it has been drawn. That is highly deliberate. The Tax Administration Act and the Income Tax Act have very tight provisions about access to taxpayer information, and most of that power resides in the commissioner. As Minister, I have very limited ability to access anyone’s tax details, and that is entirely as it should be. So when this provision was being drafted it was critical that it was described in such a way that the information being collected about individuals was relevant only to the issue at hand, and did not allow people to go on a wider fishing expedition to see what else those individuals had lurking in the background.

I think Mr King made reference to the child support scheme. I should just foreshadow that we are looking at a similar data-matching arrangement in respect of child support, to help us better match some of those people who are overseas with obligations that are outstanding—people whom we are not getting our hands on at the moment. I stop the analogy at that point, because Mr King did express a concern that we might end up writing off large amounts of student loan debt in the way we are alleged to be doing in regard to child support. I tell members that in the area of child support we are saying that if people enter into arrangements to repay, we will look to writing off a portion of the penalty provision of their debt rather than their actual principal. What we are saying here in regard to student loans is that we want people to enter into a voluntary arrangement with us to disclose, and we want them to take the holiday. At that point they will then become absolved of penalties for that 3-year period, but the interest payments will still apply to the loan and will need to be repaid once they return to New Zealand. So it is a different arrangement from the child support regime, but it does have the similarity of putting the onus on to, in this case, the borrower—and in that case, the liable parent—to meet his or her responsibilities.

This picks up a theme mentioned by speakers in the earlier debate. There is a balance between rights and responsibilities in this whole area. We do acknowledge the ability and the wish of young people to be able to travel and not be encumbered by debt. At the same time, we expect them to recognise their responsibilities. The mechanisms here with regard to the data match in particular will make it easier for us to track where they are so that they simply do not escape the coop altogether—as they are doing in too many numbers today. Again, as I said at the beginning, it is a pragmatic outcome, it is one that will work, and I am grateful for the support members have given it tonight.

Part 2 agreed to.

Clauses 1 and 2