Student Loan Scheme Amendment Bill (No 2)

Thank you, Madam Chair, for the opportunity to speak on the title and commencement of the Student Loan Scheme Amendment Bill (No 2). We have heard that all the major parties of Parliament are in agreement that it is appropriate to get this bill through the House. We have heard that the Education and Science Committee members worked well together, under the chairmanship of the Hon Brian Donnelly, and we have also heard that the Inland Revenue Department has been very forthcoming in being open and helpful towards fixing this very, very complex tangle that the Labour Government has got itself into with regard to having brought in interest-free student loans.

One might ask what other names we could we call this bill. Maybe we could call it the “Labour Government (Let Us Dream up Another Complex Bureaucratic Fix to Our Election Bribe) Bill”, or maybe we could call it the “When You Sin by Bribing It Will Come Back to Bite You Bill”. There is no doubt that the title “Student Loan Scheme Amendment Bill (No 2)” does not convey the complexity of the bill. I think it is worthwhile to again point out the complexity created by the Labour Government’s machinations in order to get into power.

What did the Law Society say? Its submission has a section headed “Complexity of the Repayment Holiday and Amnesty Provisions”. In it the society states: “The provisions of the bill that provide for a borrower’s entitlement to a 3-year holiday, and in particular the way the amnesty eligibility ties in with that entitlement, are unnecessarily complex.” The society goes on to state: “A review of the provisions proposed for Part 9 of the Act shows that borrowers who are wishing to ascertain their amnesty and/or repayment holiday entitlement will be required to work their way through a series of cross-referenced and complex provisions in the Act.” It notes further: “…this complexity may be a barrier to borrowers being able to simply, and with certainty, ascertain their entitlement to amnesty and/or a repayment holiday.”

So it certainly seems as though the Labour Government, true to form, has once again woven a tangled web of highly complex bureaucratic arrangements. I hope that the Minister Peter Dunne will take a call later on and explain to the Committee what he intends to do to ensure that the amnesty arrangements and the provisions for extension are clearly made public and clearly made understandable to future student borrowers.

We have this major problem in New Zealand of a diaspora of 1 million, and for a population of 4 million that is fairly extensive. I understand that perhaps even more serious is the fact that our diaspora of postgraduates is something like 10 times the number of Australian postgraduates who are overseas. That is the reason National is supporting this bill. Despite its complexity, and the machinations of the Labour Government to stay in power, etc., we are concerned about our students. We want our brightest and best to come back to New Zealand to live, and to have highly productive lives here, rather than live overseas. There is no doubt that the basic thrust of this legislation is indeed to encourage our students who have gone overseas to come back here to New Zealand.

But I think we must not forget that this bill is the result of consequences of actions taken by the Labour Government to stay in power. Organisations like Business New Zealand have pointed out as well that this bill certainly is not perfect in any way.

In speaking to the title, I say that the Student Loan Scheme Amendment Bill (No 2) could be called quite a number of things. As my most valuable colleague Dr Paul Hutchison has alluded, it could be called the “Database Matching Student Loan Scheme Amendment Bill”, or it could be the “Evidence-based Student Loan Scheme Amendment Bill”. It could even be the “Poor Choice of Education Student Loan Amendment Bill”, or the “Poorly Supported Student Loan Scheme Amendment Bill”. I certainly hope the bill is not given that last title, because we do want to see a strong uptake on this. As citizens of New Zealand we want to see the thousands of people who have student loans take up this scheme.

As my learned colleague and chair of the Education and Science Committee has corrected me—and I stand corrected—a number of shearers did theatrical training with student component funding, and I can say that it did help their footwork; they were very good. But it did make the instructor scratch his head at times and think on what planet was the person who advised the young adult to take it up and spend that money. I would like to think that there has been a lot more maturing of thinking around the value of tertiary education in the last 10 years, and that in actual fact people are making better choices today. I think that another title we could probably give to the bill is the “Final Solution Student Loan Scheme Amendment Bill”. On that basis I want to say how much of a pleasure it has been to work with the select committee on this bill.

It is interesting to note that those people who have an obligation to repay a student loan and who have been overseas since the provision for interest-free loans was rolled out by the Labour Government—as my colleague Dr Hutchison has so accurately informed me, it was an election bribe—have cost the country $143 million. This is from the time when it was signalled that there was to be an interest-free loan provision, providing one stayed at home and committed oneself to this nation. There could be another title, and it is possibly the foundations of a policy that I might take from New Zealand First—the “Best Immigrant Who Ever Comes Home is a New Zealand Citizen Bill”. It could also be called the “New Zealand Citizen (Return Home) Bill”.

However, whatever it is called, I hope it does not become the beginning of a very long and drawn-out saga of disappointments and utter failure. I am quite confident it will not, because what I have seen around this student loan scheme stuff is that $1 billion has been written off in bad debts. With the way it is going, by 2014 or 2015 we will have something like $12.7 billion of debt. So I would not like to see that included in the title in any way.

In fact, student debt is growing at an alarming rate of $66 million a year. When we look at the total outstanding loan balance—which would not be a very nice title for the bill—we see that it is forecast to increase at an average of 5 percent a year. That 5 percent a year on the total is $526 million a year. In terms of the title of this bill there is an enormous amount of expectation from those of us who have been fortunate enough not to have to go to university and suffer some of the failures of education. We hope that those students who avail themselves of a 3-year repayment holiday do so fully informed. As they learn to access all the in-depth research, process, and structure around getting a PhD in something, we hope that they know how to pay their loan back.

I do not have a lot more to add, but I have been very blessed with the privilege of being able to have my say on behalf of those without student loans, who are doing their utmost to be successful and to pay our taxes. I am sure, as my information tells me, that for those with loans, the fact that they have a loan does not stop them from doing an awful lot, regardless of what they owe.

I am happy to stand up and talk on the title of the Student Loan Scheme Amendment Bill (No 2). Any bill that contains the words “student loan scheme” followed by the word “amendment” in the title will, under a Labour-led Government, be a good bill. This bill is absolutely no exception.

We have heard some interesting contributions on the title. Maybe we could call this bill the “Student Loan (Does Anyone on the Other Side of the Chamber Remember It Was Actually the National Party that Brought in this Scheme) Bill”, the “Student Loan (Continuing to Clean up the Muck-ups of Dr the Hon Lockwood Smith) Bill”, the “Student Loan (Labour Government Continues to Improve the Onus on Student Loan Borrowers) Bill”, or anything like that. I very distinctly have the impression that a lot of new National members have forgotten the history of their own party, the role it played in the student loan scheme, and the incredibly unfair conditions it placed on the young graduates of New Zealand. Apart from the fact that we now no longer know whether National members support this bill, maybe we could call the bill the “Student Loan (Will the National Party Keep Labour’s Policy of Interest-free Student Loans?) Bill”. There is silence, absolute silence. There was raucous debate, then suddenly there is silence when we ask National members what their policy actually is on this bill.

This is a very good bill, and the title accurately reflects that. I agree that this bill should be brought through the House quickly so that we can get the benefit from it as soon as possible and we can make sure that our graduates who are overseas for 3 years will be able to have a repayment holiday while they are there. That will give them the incentive to let the Inland Revenue Department know that they are going overseas. Overall, this is the kind of bill that will bring our graduates home to New Zealand.

National members are all getting very raucous now. Once again I ask them whether they will keep Labour’s policy of interest-free student loans. Will they keep Labour’s policy of interest-free student loans? No. The National members say that it was a bribe, but that their policy of spending $7 billion on tax cuts was not a bribe. They say that, no, that was fine, because it was giving people their money back. Of course, the National Party records and measures everything in terms of money and wealth. If one is rich one is worth something, and if one is not then one is not. We in the Labour Party and in those parties that are supporting this bill believe that policies like this do the entire country good. Policies like this help our families, our graduates—

💬 Simon Power: The Labour Party knows what’s best for everybody.

Well, this is great. I look forward to Simon Power turning up at the university he went to and paying back the 75 percent that the Government paid for him to go to university.

💬 Simon Power: I raise a point of order, Madam Chairperson. Despite the member’s lack of humility, she might be interested to know that I was the first member of Parliament to arrive in this House with a student loan—to the sum of $27,000. So she cannot tell me that I am unaware of what is going on and should be repaying my loan. She can be assured that I paid back my loan in full, with interest.

The CHAIRPERSON (Ann Hartley): As the member well knows, that was not a point of order.

In true Simon Power style he did not actually listen to what I said, which was not that he did not have a student loan, or did not pay it back, but was that the Government actually provided a large proportion of his tuition fees. I was inviting Simon Power, who had suggested that maybe the Government should not be involved, to go ahead and repay the money the Government had paid—

💬 Simon Power: Where did the member go skiing when she was at university?

I have never been skiing. I invite the member to pay back that money if he thinks that no tax should be taken and that tax is not worthy in this country. He can pay that money back. I am sure the Hon Dr Michael Cullen will be happy to receive his cheque.

The member also brought up another very interesting National Party attitude towards students, which is that they all take out their student loans so that they can go on ski holidays. It might surprise Simon Power to know that a large number of students actually use their student loans to pay for fees, rent, and the cost of living. Although I suspect that it is National-supporting students and Young Nats who take out all that money to pay for such things as ski holidays, I can assure him that the very serious, studious, and worthy Labour-supporting students who take out student loans do so because they need to in order to attend university. I understand that it is sometimes hard for parties like the National Party to understand that some people cannot afford things, that their families cannot pay for everything, or that their families may not be able to pay back money on behalf of the students themselves. But Labour is interested in passing policy and bills that represent all New Zealanders—not just those who can afford to pay for university themselves or to pay their loans back quickly, but all New Zealanders.

💬 Hon Maurice Williamson: Speak fast, think fast.

Maurice Williamson—what can one say, really? He is an intellectual stalwart of the National Party. He was around at the time this scheme was introduced; he was a great fan of it. This scheme has brought a lot of damage to our country. It is funny that National members rant and rave about this bill but are voting for it. This is another flip-flop. In conclusion, I suggest that this bill be called the “Student Loan Scheme (Another National Party Flip-Flop) Bill”.

I just reflect upon the fact that this debate was going along in a very decorous fashion. It was being advanced, but then Moana Mackey came into the Chamber and made one contribution and, within the first 30 seconds, caused all hell to break loose. One has to ask oneself what is going on here: like mother, like daughter. Those people who know Les Misérables will know that wonderful tune “Bring Him Home”, and possibly this bill could be called the “Bring Them Home Bill”.

First, I will reflect upon a statement I made that seems to have touched a nerve. The members of the Opposition were continuing to claim that the interest-free loans policy was an election bribe. I said that yes, it was, just before they got in with their tax cuts bribe. It seems I touched a nerve. I have to let those members know that I believe that the interest-free loans policy was an election bribe, and that New Zealand First does not agree with interest-free loans. We believe that what is happening under those circumstances is that the Government is giving away money to people who are going off to tertiary institutions. By the time they pay a loan back, they will never have paid back what they initially received, because of the very nature of inflation, etc. Allan Peachey made a very valuable contribution when he talked about the fact that people have to pay taxes and make that contribution in order to enable the interest-free loan scheme to operate.

New Zealand First says that at the very least, interest on the loans should be charged at the rate of the increase in the consumer price index, if not more. It certainly should not be charged at the 7 percent rate, which was fairly punitive. At the same time, we have to say that anybody who does not believe that the tax cuts policy was an election bribe should read The Hollow Men. We do not want people to be painting too hallowed a picture of themselves under these circumstances.

Let us go back to the objectives of this bill. Some of the issues around the bill may have been created by the interest-free loans policy, but the objectives of the bill are to ensure that those of our young people—and older people—who have student loans do not stay overseas indefinitely. It creates incentives for them to come back. What we really have to ask ourselves is whether this legislation will do what it sets out to do. That is why there is universal support for it around the Chamber. Although we can play games and argue up hill and down dale, I think everyone agrees that the bill will in fact achieve its purpose of reducing the disincentives for people to return home and increasing the incentives for them to do so. Therefore, New Zealand First has provided support for it all the way through, because, once again, we have always said that the best immigrant is a New Zealander who is returning home. I have to publicly congratulate Peter Dunne on the work he has done in order to get a bill that, when it passes into law, will achieve the purpose of bringing more and more of our young people back home, enriched by their overseas experiences.

I appreciate the opportunity to make, possibly, the final contribution to this debate, and to speak to the title and commencement of the bill. For a little while I thought we would have a bit of fun with the title for 5 minutes, but then the Labour speaker came in and raised a couple of interesting issues. I realise that I am a new member of this House, and I understand that the Standing Orders do not allow me to refer to the absence of members from the Chamber. So somehow I need to say to the Labour member that had she participated in the debate earlier on, she might well have had cause to reflect a little on some of the things she had to say.

Let us look at the title for a moment. The bill is the Student Loan Scheme Amendment Bill (No 2). It is appropriately named, for a couple of reasons. It amends a principal Act called the Student Loan Scheme Act 1992. It may just be wise to remind the Committee that in 1992, when that Act was passed, New Zealand was in the middle of a major economic crisis. The country had been brought to its knees by the policy of a Labour Government, in which the current Prime Minister was Deputy Prime Minister during the 1989-1990 period. So if the Labour member wishes to give the Committee history lessons, I suggest she get her history right. Let us look at the title a little more closely. What does “No 2” tell us? It tells us that the Government got the No. 1 bill wrong. What does “No 1” tell us? It tells us the Government got the original legislation wrong. Let us not lose sight of that.

Before I refer to the commencement, I come back to two things that I have referred to already when I spoke tonight, which obviously escaped the Labour member who spoke earlier. The first was the reminder that I gave to borrowers to respect the fact that the money comes from other New Zealanders. I remind the Labour member of the time that I spent with half a dozen mums and dads who, between them, share three and four jobs each, all lowly paid, just to feed their kids and get them to school and pay the rent. Their plea to me was that they should just be allowed to keep some more of their own money. Let us just talk about taxation and bribery for a moment. I repeat, for the benefit of the socialists over there on the Government benches, that to give people their own money back is not bribery. People cannot be bribed with their own money. It is difficult for me to hide the contempt I feel for politicians who do not understand the nature of representative government and government by consent. It would be a good idea if the Labour members opposite who are screaming and shouting would just pause to think a little about the nature of representative democracy and whom they are accountable to when they sit in this Chamber.

In terms of the commencement dates, I think clause 2 sums up the complexity of the bill. Again, I come back to the great work done by the Education and Science Committee and the Inland Revenue Department officials in guiding us through all of that. The great bulk of the bill is due to come into force on 1 April 2007. I guess I could use up a bit of time by talking about April Fool’s Day and all the rest of it, but that is kind of obvious, because everybody knows what the Labour Government has done with regard to this bill. This is not good, sound, thought-out, logical policy. It is a bribe to buy an election—nothing more. So maybe 1 April is appropriate. Other sections come into effect on 1 October 2007, and others on 1 April 2008. Gosh, there is that date again—1 April! How many weeks will it be until Labour members lose office?

I have listened with interest to the very creative suggestions made by a number of members about the title of the bill. I have thought seriously about whether we should adopt some of those titles, but I say to the Committee that, with respect, I decline to accept any of that advice. I think the title set out here, the Student Loan Scheme Amendment Bill (No 2), is probably the most accurate title. It does really say it all.

💬 Hon Maurice Williamson: It says it all.

I am comforted in the choice of that title by the support of Mr Williamson. I take the view that on this issue at least, what he says goes. He is happy with the title being the Student Loan Scheme Amendment Bill (No 2), and I will go along with that more than happily.

In the midst of all the frivolity that passed for the debate on the last couple of clauses, one or two members raised questions about what will be done to let students know that this bill has been passed. There are a couple of things. There will be a publicity programme—

💬 Dr Paul Hutchison: Free wine!

It would be a nice thought, but I do not think so.

💬 Dr Paul Hutchison: For Moana.

Members can provide their own wine if they like. There will be a publicity programme that will draw to the attention of borrowers the provisions of the new scheme. We will certainly be doing what we can to make contact with borrowers through the records we have, and through the records obtained through the data match. Already, since the bill was introduced, we have been indicating to a number of people, particularly parents who have written on behalf of students overseas to inquire about students’ indebtedness, the changes that are likely and the steps they will need to take in order to draw to the attention of their son or daughter the provisions that will apply. So there will be a concerted effort to draw to the attention of those up to 40,000 students what the changes are, how they will be affected, and the steps they need to take.

I do not think there is much more that I need to say on that, other than to acknowledge the support that all members have given to this bill, and to thank them for the comparatively speedy time in which we have been able to consider it this evening.

Clause 1 agreed to.

Clause 2 agreed to.

Bill to be reported without amendment presently.