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 third time. The measures contained in the bill are designed around two principles: that the student loan scheme should be fair and transparent, and that borrowers should be responsible and accountable for the repayment of their loan. In relation to the first principle of ensuring fairness across the scheme, the bill removes the ability for New Zealand - based borrowers to offset losses against income in order to reduce their liability for student loan repayment purposes. The bill also proposes to extend pay-period assessments to the earnings of all borrowers and remove annual square-up assessments for borrowers’ salary and wage earnings. To maintain fairness, borrowers who have significantly overpaid their repayment obligations on a pay-period basis will still be able to apply for a refund, whereas those who have significantly underpaid will have catch-up deductions made.

In relation to the second principle, that of encouraging borrowers to take responsibility for their loan repayments, from 1 January 2013 the Inland Revenue Department will be able to receive contact details provided to StudyLink by all new loan applicants as a condition of securing a loan. This will help the Inland Revenue Department to maintain contact with borrowers who leave New Zealand to travel overseas, or who change addresses frequently. Finally, the bill reduces a current repayment overseas holiday provision from 3 years to 1 year. Again, this measure is designed to encourage overseas-based borrowers to resume their repayment obligations within a reasonable time frame.

These are the main features of the Student Loan Scheme Amendment Bill. The measures were part of a suite of changes announced in Budget 2011 to take effect from 1 April this year. Although the general election and resulting lapse of legislation has had the effect of delaying the passage of this and other bills, 1 April is the date that employers and the Inland Revenue Department have worked towards for implementing the proposed changes. In the interests of cost-effectiveness for employers and certainty to borrowers, 1 April 2012 should therefore remain the date upon which the measures in the bill become effective. For some time now, the Inland Revenue Department has been preparing to implement these changes, and this will be completed by this weekend—by this weekend.

As always, I am grateful for the efforts of all those who have contributed towards the passage of this bill so far. My thanks go to the officials across several agencies who have collaborated on the policy development work, and the drafters who worked on the detail of the draft legislation—thank you very much for working so closely with me and, of course, with the Hon Peter Dunne. I also want to thank those who made submissions on the bill to improve its application in practice.

💬 Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think one of the terrible things—I am not going to draw to your attention something that I am not allowed to, but can I just ask that as the Minister does it, he makes the changes to indicate he is reading it on behalf of someone else.

The ASSISTANT SPEAKER (Lindsay Tisch): The Minister is making a speech. I called the Hon Phil Heatley to make the speech; I did not call the Hon Peter Dunne or say “speaking on behalf of the Hon Peter Dunne.” The Hon Phil Heatley can continue his speech in the manner to which he has become accustomed.

I again reiterate that I thank the officials for working very, very closely with me and also with my colleague the Hon Peter Dunne. I also want to thank those who made submissions, and I wish to thank the Finance and Expenditure Committee for its consideration of the proposed reforms and its recommendations to improve their overall effect. As it now stands, we have another very practical mechanism for achieving greater integrity and transparency across the student loan scheme, and it is with great pleasure that I again commend this bill to the House.

For the benefit of those listening, the previous speaker was not the Hon Peter Dunne; that was the Hon Phil Heatley. It is perhaps interesting that Mr Dunne did not give that speech, given some matters, which I will come to shortly, about what has previously happened with the matter of the student loan repayment holiday. I just want to pick up on one matter that the Minister mentioned in this speech about the question of exactly when the Student Loan Scheme Amendment Bill was going to be enacted.

Those listening may not be aware that most of the ideas and changes in this bill were actually part of Budget 2011. So there has been quite a length of time for the Government to get its act together and decide on the changes that it wanted to make. The bill has wended its way through the process and finally found its way back here from the Finance and Expenditure Committee just last week. There was an attempt made by the Government—we quickly did the second reading and the Committee stage—but it did not quite get the third reading through in time. So we now have two retrospective subclauses in the commencement clause in this bill. I think that as a matter of principle it is worth putting on the record that retrospective commencement clauses are perhaps not ideal. I think Mr Williamson would agree with that. Yes, he is nodding. They are not ideal in Government. The Government actually should have its act together—

💬 Hon Maurice Williamson: Suboptimal.

—suboptimal indeed—to make sure that it actually gets a bill ready in time.

So what we now have in the commencement clause is a retrospective subclause. It caused some consternation on this side of the Chamber during the Committee stage when it appeared that it was a retrospective subclause that was going to remove the ability not to charge interest on loans. It turns out that that is to do with the transfer of arrangements between StudyLink and the Inland Revenue Department. It was just a pity that during the Committee stage there was no Government Minister able to actually explain that at the time, which perhaps raises some questions about how much the Government members actually knew about the bill. But now, as a result of the disorganisation of the National-led Government, we have a second retrospective subclause (4) in the commencement, and that is stating that “The rest of the Act”—other than the provisions set out in the earlier subclauses—“is deemed to have come into force on 1 April 2012.”, an appropriate date, some might say; 1 April has obviously passed. And if you look at the Inland Revenue Department’s website you will see that it was expecting the bill to be in place by 1 April. It was telling graduates about what their obligations would be under the clauses of this bill. But the Government, in its hopeless organisation of the House, has failed to get this bill passed and so has to put a second retrospective subclause into this bill, and that does it no credit.

When we come to the content of the bill itself, issues have been traversed in the debate that the main purpose of this bill, the substantive part of this bill, is to reduce the student loan repayment holiday from 3 years to 1 year. In 2007, as has been previously quoted in debates, a person named the Hon Peter Dunne, who was then the Minister of Revenue under the Labour Government, talked about the fact that the 3-year repayment holiday represented a pragmatic approach to dealing with what we have commonly come to know as the good old Kiwi OE. The interest-free student loan scheme was put into place, but it was acknowledged that people would still want to undertake their OE. Most New Zealanders who undertake their OE come home. They undertake their OE to get that experience and want to come back to New Zealand to contribute. Mr Dunne said in 2007: “We needed to take a pragmatic way through this, and, being someone who places great virtue on pragmatism,”—Mr Dunne told the House—“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;”. That was a very pragmatic decision. However, Mr Dunne has changed his mind 5 years on and is now proposing to reduce that repyament holiday to 1 year. The Labour Party—and, indeed, the Green Party—proposed amendments in order to keep it at 3 years, but we also proposed an amendment to compromise at 2 years. The reason we proposed that amendment was that most New Zealanders—by far the majority of New Zealanders who go overseas to have their overseas experience—go to the United Kingdom, and in the United Kingdom they are, for the most part, eligible for a 2-year visa. So actually this bill runs counter to the reality of what graduates are doing at the end of their degrees.

It is unfortunate that that pragmatism has been let go, but what is more unfortunate is that the advice that Treasury and the Ministry of Education actually gave the Government about this is that the bill is not even going to do the things that the Government would like it to do. Treasury told it that there is “Little evidence that this proposal 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 Treasury actually said: “It is not going to do what you think it is going to do.” The Ministry of Education followed that up. It said that “This can be expected to have a negative impact at the margin on borrowers’ decisions regarding whether to return to New Zealand.”, and that will result in an ongoing increase in the student loan debt held by the Government of about $12 million each year. So the whole policy is flawed.

In the Committee stage debate Mr Dunne went through what he considered to be a logical process for why we should not have the 3-year repayment holiday, and in doing so he actually created an argument for not having a repayment holiday at all, because he wanted borrowers to be treated exactly the same wherever they live. Well, if borrowers are going to be treated exactly the same wherever they live, then there should be no repayment holiday and, frankly, actually, everybody should be being charged interest or everybody should not be being charged interest. We should not have either of those situations. It is not realistic, it is not pragmatic, and I think it is really unfortunate that the Government has chosen to do this when there is no real positive outcome for it in terms of the policies that it is trying to achieve. So, ignoring the possibility of leaving the repayment holiday at 3 years, or indeed the compromise that the Labour Party proposed of 2 years, I think it is extremely sad that this Government has done that, and it has led to the Labour Party opposing this bill.

There are other elements of the bill that are OK. I think that they could be helpful in ensuring that we follow up with borrowers overseas. On this side of the House I want to make absolutely clear that, whatever concerns at an individual level some of us might have with the student loan scheme, once people enter into those loan contracts I do believe they should be paying their loans back, and we do need to follow up those people internationally who do not. Some of the changes that are being made in this bill to facilitate that include a much greater role for the contact person who is listed by a borrower when they go overseas. We asked Mr Dunne during the Committee stage of this debate to ensure that with regard to those borrowers who nominate a contact person, those contact people are now aware of their increased responsibility, because they do have increased responsibilities as a result of the clauses in this bill. We got some assurance about that from Mr Dunne, but we certainly were looking for a greater assurance that when people—mainly parents, I have to add—become the registered contact person, they are aware of what their responsibilities now are. I do hope that the Inland Revenue Department and the Minister follow through on that, lest we have some parents getting somewhat surprising letters and phone calls. One thing, for instance, is that when a contact person moves, they now have to let the Inland Revenue Department know that they have moved. I am not sure many people will be aware of that, and that is now an obligation in law. So it is actually something that needs to be looked at very closely.

I regret the fact that the Labour Party has to oppose this bill, but we do feel the Government has failed to listen to reason around the student repayment holiday. I would just finish by saying that this bill really does very little in terms of the student loan scheme. The amount of money that will actually be coming back now is so small that it is—what is it—0.12 percent of the nominal loan value.

💬 Dr David Clark: That’s on the optimistic end.

That is the optimistic end, Dr Clark tells me. This bill is not actually going to do a lot to reduce student loan debt, and, unfortunately, I think where we are heading with the student loan scheme under this Government is greater restriction on its use. We know that in the Budget we are going to be seeing more changes around student support. The National Party has a policy that says it wants to ensure that students who borrow from the scheme are working towards qualifications that can attract an income that allows them to pay back the loan. That sounds to me like this Government is planning to restrict access to student loans for certain types of courses. That is part of Steven Joyce’s agenda to “dampen down demand for tertiary education”. On this side of the House we want more people in tertiary education. We want more people getting skills and training. Limiting access to the student loan scheme—limiting access to opportunities—is not the path forward. This bill, although it tinkers around with the student loan scheme, is, I fear, merely a forerunner to much more significant changes that will be negative for tertiary education and students in New Zealand.

I rise to support the Student Loan Scheme Amendment Bill. The ACT Party supports this bill, because it is tackling a very real problem. Well, it is tackling a very real problem at the margins only. That problem is that not enough graduates are repaying student loan money lent to them by hard-working taxpayers across the country. Last year taxpayers loaned out $762 million more than they got back in repayments. Much of it they will never get back. The same gap is forecast to be $1.1 billion by 2030 if we do not make changes.

The Ministry of Education calculates that for every $1,000 lent, over $450 will never come home. As one of my ACT Party predecessors recently wrote, the taxpayers would be better off just giving students a $400 loan that they never have to pay back, rather than loaning students $1,000 under the current scheme. This scheme leaks money like a sieve. It leaks money like a sieve. The sieve is the system by which it is funnelled out to so-called students, and the number of students is falling. So in a country that is borrowing to pay the bills—approximately $250 million a week—substantially from the Chinese to pay for the Crown account, how can we afford to continue to fund this when it is not actually working? It is not getting more tertiary students into tertiary education.

This bill is a step in the right direction—and I support my benchmate Peter Dunne in his endeavours—but the real issue is that interest-free loans are a problematic issue for this country. This bill makes only small changes; it does not solve the problem. Someone must stand up in this Parliament and say that we cannot continue to fund these payments to students when it is not working at getting more students into the tertiary sector, and many of them are taking out the loans and walking away from them. For every $1,000 handed out, only $450 will come home.

Everybody in this House knows that interest on student loans is the emperor’s missing clothing. The Labour Party knows this, because in Government in 2005 it moved to introduce interest-free student loans, which was the biggest election bribe in history. That is what it was in 2005. This is the biggest election bribe in history. It got the vote. The Minister of Education knows it. I quote from the regulatory impact statement prepared for this bill: “the current Government … does not want to reverse the interest-free student loan policy. This is a significant constraint on the options available [to the current Government] to contain government expenditure and improve the performance of the Scheme.”

The uptake of loans has increased dramatically following the interest-free loan structure, from 56 percent in 2006 to 71 percent in 2009. So the uptake is increasing, the number of students in tertiary education is decreasing, the number of loans is increasing, and the number of repayments is decreasing. We have a bill in Parliament, which I support, but it tinkers at the margins. And who is earning this money to lend to students? The same farmers who milk cows night and morning on the farms are earning this money to lend to the students, who are not necessarily using it for tertiary education but to do all sorts of other stuff, when the number of students is decreasing and they are not paying back the loans. These are hard-working taxpayers.

The Labour Party members, of course, are apologists for this, because they are the people who put in place interest-free student loans, and no one else gets it. Graduates shoot through after a world-class education, and some do not come back to the country. So I say to the Government good on you for putting in place some structures that are going to deal with some of this. Interest-free student loans are middle-class welfare for middle-class graduates. That is what they are: middle-class welfare for middle-class graduates. They are a back to front Robin Hood policy that steals from the poor to give to the rich—middle-class kids. And the poor—hard-working people up and down the country—are funding this.

I sum up the ACT Party and this bill. We know that the student loan scheme sieve needs to be plugged, and we commend the Minister of Revenue for this attempt. We say good on him. But we also know that the real problem is too much borrowing and not enough repayment. Students are borrowing too much, they are not repaying enough, they continue to borrow, and the number of students in tertiary education continues to decline. And the loans are interest-free. What about the retailers in Nuffield Street in my electorate, in Epsom? They do not get interest-free payments.

Sitting suspended from 6 p.m. to 7.30 p.m.

Treasury Budget advice has stated that the student loan restrictions passed by the Government over the last 2 years are likely to see 25,000 current borrowers lose access to student loans and will likely mean that they cannot afford to study any more.

I rise to speak following Mr Banks, who made a number of observations, many of which I would wish to disagree with. I will select a few, just to put on the record some concerns about the general direction he would like to take this loans scheme. Mr Banks suggested that loans have been growing and tertiary student numbers have been declining. As far as I am aware, there would not be a long-term data set that would indicate that student tertiary numbers were in decline. I am not sure which particular data set he has been reading, or perhaps what country he has been living in, but perhaps recently—

💬 Hon David Parker: ACT Party pass rates.

The member suggests the ACT Party pass rates have been declining, but I cannot comment further on that matter. That may or may not be true. I am also advised that Mr Banks had his pilot’s licence at 16 years of age. I am aware that the student loan restrictions that have now come in have restricted access to loans for training in just that area, and there is a deep irony in that.

Labour will be opposing the Student Loan Scheme Amendment Bill, and that is unfortunate. It is because the National Party was unwilling to consider a very reasonable amendment that we put forward to ensure that the student loan repayment holiday remained at 3 years. The current Government wishes to cut that to 1 year. It fits, I guess, with its general approach, which is to further restrict access to loans and to allowances. We have recently heard about thresholds not being adjusted with inflation, and this is because its view about this is fundamentally different to ours.

The Labour Party believes that education should be something that is accessible to all people, because for the Labour Party it is about fairness and opportunity. It is about making sure that people have an opportunity to make the best of their talents and are then able to make their best contribution to our society. This is something that benefits all New Zealanders. When people make their best contribution, it benefits us socially, it benefits us individually and in terms of our own well-being and that of our families, and it benefits the economy more widely. There is plenty of evidence that suggests that those who are from less fortunate backgrounds ought to be fully supported into tertiary studies, as our country can afford it because the returns to GDP are so strong.

Unfortunately, National does not seem to wish to listen to this logic, and over the last couple of years it has made a series of further restrictions to student loan eligibility. That has seen tens of thousands of New Zealanders shut out of higher education, and that is a great shame. The unfortunate thing too is that it has declared it is not finished yet. Its leader, John Key, recently suggested that National would rein in student loans in a big way—that it is not finished yet. He should come clean, I think, sooner rather than later, to let students know just how much further access is going to be restricted for study purposes, because people are being shut out of the opportunity of tertiary education and shut out of the opportunity to better themselves and to better their lot for them and their families and for our country as a whole.

We are particularly concerned as a party about clause 17 of the bill, which slashes this student loan repayment holiday. To use an example, when one takes out a mortgage and repays the terms of that mortgage, it is quite legitimate to go and get another mortgage with a bank and receive similar terms and conditions. The National Party here is putting forward a situation where, if you have taken one student repayment holiday on your loan, you will not get another. The terms and conditions change. That will adversely affect second-chance learners. I think that is a great shame, because second-chance learners are often those who have been through hard times and who have, through no fault of their own, perhaps not appreciated the opportunities the first time round and are determined to make the best of their opportunities next time round. The more people who are shut out of tertiary education, the worse it is for our country.

It is also true that it will shut off people from taking longer overseas experiences as young people, and that will restrict the contacts they can build up during their time overseas. It will also restrict their ability to mature in their particular industries and bring that experience back to New Zealand. Some studies suggest that it is 12 to 18 months, on average, before a person on an overseas trip finds their niche, finds relevant experience in their chosen field, and finds an ability to repay their loan balance effectively and also the requisite opportunities to better themselves in order to come home to New Zealand and contribute further. So Labour opposes this cutting of the repayment holiday from 3 years to 1 year. It opposes the restrictions on young New Zealanders and the putting in jeopardy of that overseas experience, which is so rich in our cultural imagination and so beneficial to those who undertake it.

The worst point of all—a point I have not yet made—is that these changes risk forcing New Zealanders not to come back. We already know that many New Zealanders, once they incur interest overseas and once it starts getting a wee bit out of hand, choose not to come home. We lose the benefits of their education and their experience by making this all too difficult. We should be looking for ways to make it easier for New Zealanders to come back and make their contribution, not easier to stay away.

It is interesting that this repayment holiday proposal has been put forward by Mr Peter Dunne, who just 5 years ago had a very different view. To put it on the record I will quote, if I may, Peter Dunne on his Student Loan Scheme Amendment Bill (No 2) in its Committee stage in March 2007. Mr Dunne said: “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. 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;”.

Well, as we know, the Labour Party put forward an amendment to the current proposal to ensure that that 3-year provision stayed in place. We are yet to hear a convincing argument—

💬 Michael Woodhouse: I raise a point of order, Mr Speaker. I apologise for interrupting, but I do want to remind the speaker with the call of the Speakers’ rulings around referring to amendments put forward in the Committee stage and defeated, which is that they should not be referred to in the third reading. I wondered whether he was straying into that area.

The ASSISTANT SPEAKER (H V Ross Robertson): Well, this is a third reading. It is generally a wrapping up of what has gone on in the Committee and times before.

💬 Michael Woodhouse: I raise a point of order, Mr Speaker. I am just aware of Speakers’ ruling 123/1: “On the third reading of a bill a member cannot discuss—… (3) the merits of an amendment proposed by the member and ruled out of order in committee;”, and I do fear—[Interruption]

The ASSISTANT SPEAKER (H V Ross Robertson): Order! When we have a point of order on the floor, it is heard in silence.

💬 Hon David Parker: I raise a point of order, Mr Speaker. I think the mistake of the senior whip for the National Party is that the amendment was not ruled out of order, but it was voted down. It is a different matter.

The ASSISTANT SPEAKER (H V Ross Robertson): Yes, I had just noticed that. I would ask the member to continue his speech and just be careful.

Thank you very much, Mr Assistant Speaker. We are wrapping up here what has happened through the stages, and the general point I am trying to make is that the National Party continues to put barriers in the way of access to tertiary education, whereas the Labour Party wishes to make tertiary education more accessible to more people to ensure that we have the kind of social mobility in our society that we would like to have. It is true that we do not have the social mobility that we would desire. We know that the greatest determiner of a tertiary level of success for a student—and studies have shown this—is the mother’s level of education. It dictates how likely a student is to achieve tertiary success. The second biggest determinant is the father’s level of education. Socio-economic status is indeed up there as well, but not quite as high. So there are various barriers already in place. Socio-economic status is one of those, and it is significant, and restricting access to loans and allowances moves in exactly the wrong direction when we are trying to achieve access to tertiary education.

The worst part about this bill is that Treasury and the Ministry of Education have both said that it is unlikely that the gains expected will be realised in terms of restricting this holiday. It is unlikely that money will be recouped, and that the coffers will be the richer for this policy that is being enacted, so it is a bit of a farce. We are spending $2.6 million worth of parliamentary time, which is what one estimate on this particular bill is, and the estimates that the Inland Revenue Department has provided is that it will recoup $14 million for the taxpayer. The Labour Party supports efforts to make sure that those who have debts pay them—make no mistake about that—but these estimates from the Inland Revenue Department are not supported by other departments, and it appears that they are based on a best-guess scenario. That is what we were told in the Finance and Expenditure Committee. We were told that there was an element of guesswork in just what would be recouped through these changes to the student loan scheme legislation.

So I put it to you that there would be better ways of ensuring that we achieved the goal of making sure that people pay their debts. This bill is something that the Labour Party will oppose, because we believe in fairness, in opportunity, and in access to tertiary education. Thank you.

I am pleased to take a call at the final stages of the Student Loan Scheme Amendment Bill to once again reiterate the reasons for the Green Party’s opposition to this bill. I am proud to note, in fact, that the Green Party is the only party that has consistently opposed this bill through all its stages. As I have said in the debates on earlier stages, there are some parts of this bill that we can live with, including losses from the calculation of income for student loan repayment purposes being excluded, and including allowing the Inland Revenue Department to ask for details of a contact person in New Zealand for borrowers overseas. We are comfortable with those provisions in the bill.

What we cannot support is the reduction of the repayment holiday from 3 years to 1 year. We consider this to be a policy that has been made for ideological reasons in a vacuum of evidence, and actually may see borrowers staying overseas and not returning to New Zealand, and taking longer to repay their loans, which is contrary to the intent of this legislation. We have heard from the Finance and Expenditure Committee submissions and in other stages of debate on this bill that if it saves any money at all, which is a guess, it will be a mere drop in the bucket of $5 million to $6 million in terms of what is collected from those on a repayment holiday, in the context of the total student debt of more than $12 billion, and even that, as we have heard, is guesswork. So we simply cannot support this poor decision-making, this poor policy.

To look at the repayment holiday, why we have it, and why it is important to keep it at 3 years, I want to reiterate the current situation. If a student loan borrower stays in New Zealand, they are not charged interest on their student loan, and, therefore, they have got an incentive to stay and work in New Zealand and contribute to New Zealand, and we totally support that. Their student loans are repaid automatically via their tax code. If they are travelling or living overseas on their OE, they are charged interest but they can take a break from their repayment obligations for up to 3 years, and that is the repayment holiday that we are debating tonight.

We believe that it makes sense for that repayment holiday to be set at 3 years, for a number of reasons. The first, of which we have just heard from the previous speaker, David Clark, is that we know from research that it takes about 12 to 18 months for New Zealanders living overseas to set up in the new place where they are living and get established in a job or a career. So constricting it to 1 year will very much constrain the time that those borrowers overseas have; before they have actually even started work they may have to start making repayments on their loans.

We also know from research by the Kiwi Expat Association, or KEA, that the average New Zealander is away on their overseas experience, their OE, for 3 to 5 years, so it seems entirely consistent with that 3-year average for the repayment holiday on the loan to be 3 years. Furthermore, we know, and it is a contribution that has been made a number of times in this House by the Hon Nanaia Mahuta, that in a number of the countries where it is common for New Zealanders to go on their overseas experiences, they have working holiday visas that are set typically at about 2 years. So again it makes sense, to be consistent with the provisions that govern people’s behaviour while they are living overseas, that this should be at least aligned with the provisions of the working holiday visas.

It is also important to have a repayment holiday because, as we have heard, as we have seen at the select committee, and as has been discussed in previous stages, the defaults and arrears, late payment fees, and interests that are charged on the loans of borrowers overseas can escalate to the point where their loan balance has become two to three times the original principal that they took out on their student loan. That gives people a very real disincentive, if they are living overseas and they are straddled with a student debt that has now ballooned out to two to three times what they originally borrowed, to return to New Zealand and repay that loan.

If they do not return to New Zealand, that is bad. It is bad for the country because the debt does not get repaid, and it is also bad for the country because we do not get back our graduates, whom we so urgently need and so many of whom, we know, are moving overseas and staying there for a long time.

All these things I have just outlined are the reasons that were given by the very same Minister who is sponsoring this legislation, the Hon Peter Dunne, for introducing the 3-year repayment holiday in the first place back in 2007. I have posed the question a number of times, and it has still not been answered, of what has changed since 2007 that makes those reasons any less valid than they were then. Actually I would say that nothing has changed except the fact that even more graduates are going overseas and never coming back, which would make those reasons even more valid than they were.

There has also barely been enough time since the introduction of the 3-year repayment holiday for any research to be done to assess the impact that it has on borrowers’ behaviour. We can see from the select committee report that this was acknowledged. It was acknowledged in the hearing of evidence at the select committee that there has not been enough empirical evidence and very limited modelling of the impact of the 3-year repayment holiday on borrowers’ behaviour. So before we even know what impact we are having, we are legislating to change it, and it just seems like bad lawmaking to me to do so in such a vacuum of evidence.

In fact, it is not an entire vacuum of evidence, though, because the evidence we do have from the Ministry of Education and from Treasury is that actually it might discourage borrowers from returning to New Zealand, because of the reasons mentioned. The way that late payments and arrears build up for borrowers overseas can actually create a real disincentive for them to return to New Zealand, and the Ministry of Education said it could have a real impact at the margins on borrowers’ behaviour in terms of how quickly they repay their loans and how soon they return to New Zealand. All of this, as I mentioned, is in the context of more New Zealanders moving overseas than ever before.

So it seems to the Green Party that this change makes absolutely no sense and is supported by no evidence. That is why I moved an amendment in the Committee stage. It was not ruled out of order; it was voted down, unfortunately. But I moved an amendment to keep the repayment holiday at 3 years, because of the lack of evidence that has been provided for any reason for the change, and the very real concerns that, in fact, it would make things worse. I was pleased to see that Labour moved similar amendments and, indeed, I was very pleased to see that Labour has changed its stance on this bill to oppose it after the Committee stage, because, as Labour members have argued, their concerns about the repayment holiday are significant as well.

I want to briefly address the issue of retrospectivity, which I think is quite concerning in relation to this bill. As I am someone who has been following these changes closely, you can probably imagine my surprise, knowing that I was due to debate the third reading of this bill in the House this week, to open the Dominion Post yesterday and read on page 5 that the changes that this bill makes have already come into effect. Quoting an official from the Inland Revenue Department—

💬 Todd McClay: You can’t believe everything you read.

Well, you would not believe it, if you had any faith in parliamentary democracy—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! When the member uses the word “you”, you bring the Speaker into the debate.

Mr Assistant Speaker, you would not believe it either, if you had any faith in parliamentary democracy, that a bill that has not yet passed is being reported in the media as having come into effect. I know that the Minister of Revenue moved an amendment during the Committee stage to make parts of the bill retrospective—those parts that were not already retrospective, in fact—and I queried that at the time, but what I would like to put on record is that surely even a retrospective clause cannot be deemed to have come into effect until after the legislation has passed.

I think we deserve an answer from the Minister or his officials about why Inland Revenue Department officials were quoted in the newspaper yesterday as saying that the changes had come into effect, when the bill has not finished going through Parliament. I see that as a serious abuse of process, and, as one commentator called it, it is “Legislating by press release”. It is disrespectful of this House and its processes, and I think the Minister owes the House an explanation about that.

So what we have seen in this bill is a shoddy process, a rushed process, a vacuum of evidence, a poor decision unsupported by evidence, and even if it has the effect that the Government thinks it might, at the very, very best guess it might save $5 million to $6 million a year in the context of a $12 billion student debt. It is shoddy lawmaking, a shoddy policy, and a shoddy process. All that I can think of to explain it is that this is consistent with the Prime Minister’s design to want to rein in student loans in a big way, based not on what is best for students but on any way to clamp down on access to student loans without touching interest-free student loans because he is scared to go there politically.

We have already heard about this freeze on parental income thresholds for the student allowance. That does not bode well and nor does this bill, and I shudder to think what changes we are about to see in the student loans and allowance space in the coming months.

Just before I call the next member, can I just advise members that every time a member uses the expression “you”, the member is referring to the Chair. The member must refer to the Minister or to another member as “the Minister” or “that member”, which is in the third person. I suggest that members have a look at Standing Order 104. You cannot bring the Speaker into the debate.

It is a pleasure to speak in regard to the Student Loan Scheme Amendment Bill. As for the Labour Party there, and its last member of the student loan scheme, Chris Hipkins, I ask whether he has repaid his student loan.

💬 Chris Hipkins: I have.

You have. Good on you!

The ASSISTANT SPEAKER (H V Ross Robertson): Order!

When we look at this bill, I think that the big part of it is that it brings in the requirement to have a New Zealand - based contact person. That is important because it gives a point of contact for the Inland Revenue Department. The contact person regime in itself does not mean that there will necessarily be a repayment, but it is one of those things that, once set in motion, will lead to a situation where people actually follow the rules.

💬 Dr David Clark: Tinkering!

Contrary to the view of the new member from Dunedin, most citizens in New Zealand do their best to engage and be successful and deal with issues, especially their obligations to the Inland Revenue Department. If they have a contact person who gives them a reminder of those obligations, they are willing to comply with them, and that will lead to greater enhancement of the system.

I think it is a bit strange that the Labour Party and the Green Party have such a problem with this bill when, really, what it is doing is trying to make sure that those people who have used the system and have benefited from it actually repay that money so that somebody else can get that benefit and somebody else can use that Government funding for their education purposes. It seems a bit unfair that the Opposition is against people getting an education and is against people having that opportunity. Labour members would rather think it is just for them—that once they have done it, that is it. They think it is all about them and not for the best interests of the community.

This is a bill that will encourage repayment, and encouraging repayment is good for education because it increases the opportunity for other people to get education and those opportunities. When we remember the student loan scheme, we must recall how Labour put a cap on the number of students in our system. By bringing that interest-free student loan scheme in, it effectively capped the number of New Zealanders who could get that education opportunity. That cap is a limitation, yet in this House tonight we hear comments against this bill, which actually will be a way that we can get more money coming into the system so that we can get more people going through, rather than having the capping arrangement, which the Labour Party is fond of in regard of students, because Labour wants only some people to get an education, not everybody. Thank you.

Kia ora, Mr Speaker. Thank you very much. I rise on behalf of New Zealand First to speak in favour of the Student Loan Scheme Amendment Bill. I do so because there is common sense in this bill. This is about debt reduction. This is about people actually facing their responsibilities no matter where they are on the planet and saying: “We owe this money to the New Zealand public, and we will repay it.” However, it disappoints us that there are wider mechanisms—and for a short moment there I was very afraid that I was going to actually agree with the Hon John Banks, but I am pleased to say that no, I do not—that could be used to actually reduce the $12 billion worth of student debt here, and they are not all punitive.

However, to start with, let us just take the repayment holiday in this bill. I want to address some of the comments that my colleague the member from the Green Party has made. Let us not forget that the New Zealand overseas-based borrowers in the current repayment holiday do not get an interest-free period; they just do not have to make a repayment. But New Zealand graduates who stay in New Zealand do not get the benefit of any break from their repayments. If they are working and they are earning above the threshold, no matter what happens in their daily lives, they cannot apply for a break from that repayment, whether it be 1 year or whether it be 3 years. Considering that 56 percent of the people affected by the student loan scheme are women, I have already outlined instances where we believe that it would be beneficial for the repayment holiday to apply to New Zealand - based graduates just as much as it applies to overseas-based graduates.

I will note the other part of the bill that we find very interesting, and I have to say that it is the bit that surprises me, so let us just touch on that first. I am new here and I realise that I am new here, but I certainly did not come into the House thinking that we would pass legislation after it had already been implemented by a Government department. I find that particularly interesting and somewhat disturbing. I hope it is an anomaly, but I am picking up that possibly there is a trend here. It is certainly something that New Zealand First will be keeping its eye on. We seem to be pushing through legislation in this House to meet predetermined time lines that suit other people, and we heard about Fonterra earlier this evening.

I want to quote the Hon Maurice Williamson from the second reading of this bill, and at that time he said: “The main purpose of this bill is to improve efficiency and the fairness of the student loan scheme,”. I have just touched on the fact that actually overseas-based New Zealand graduates have something that New Zealanders who stay here and work here and keep their skills here do not get. But the next part is around the situation where the repayment holiday is attached to the individual. Again, I touched on that at the Committee stage of this bill. New Zealand First believes that the repayment holiday should be attached to the loan. What happens if you gain the loan and you do what we ask of you, which is to repay it, and if you have had to take a repayment holiday during that period because of your circumstances? I used the example of a woman in her 20s who has gone and got a student loan, has graduated, has gone and got employment, has got married, has had her first child, has had a year’s break there while the new family sorts out its finances—she does not stop working, necessarily; they just need to re-sort their finances—and over time, after that year’s repayment holiday, she picks up, comes back, and pays off that loan. It is quite common in this day and age that a woman in her 40s who has raised her family goes back for further or higher education to improve her own circumstances, the circumstances of her family, or whatever. Let us say that that woman in her 40s has now got a student loan. She is back out working, but perhaps her husband gets ill. Perhaps she needs to take a repayment holiday again. She has proved herself to be a good debtor. She has already proved herself to be a responsible New Zealand citizen. Surely by paying off that loan and proving herself to us she should have the benefit of being able to, in those circumstances, take another repayment holiday. I believe that this legislation will be back in the House. I believe that there will be further amendments, and at that time New Zealand First will actually cast its eye and put forward some contributions towards those sorts of thoughts.

The other part we need to remember is that there is $12 billion worth of student debt. My understanding is that it is not all overdue debt, and it is not all debt of people who happen to be overseas. It is just $12 billion worth of debt in total. If this bill and the amendments to this bill had considered how we could reduce that debt in a wider context, and if it had looked at the New Zealand First dollar for dollar debt repayment scheme, that would have brought in $6 billion—the same amount of money we are selling assets for; the same amount of money, between $5 billion and $7 billion, we will get by putting up for sale our State-owned assets. If the New Zealand First dollar for dollar debt reduction scheme was applied now to this $12 billion worth of debt, we could keep our power stations. Not only that, we would have those skills back here in New Zealand. They would be retained in New Zealand, because to gain that dollar for dollar student reduction, those graduates keep their skills here. They work for this country, they pay PAYE, they pay GST, they pay fringe benefit tax if they are lucky enough to get a car in their job, and they pay resident withholding tax if they are lucky enough to save any money.

New Zealand First is supporting this bill, because it is a bill of responsibility that all people with debt must face. But we are saddened that it has not thought wider. It is a shame we were not here to participate in the select committee process, because we could have brought these concepts and possibly improved this amendment bill at that time. But for now we support this responsible bill, and we will be looking to the bill in the future. Thank you.

It gives me pleasure to rise and speak on the Student Loan Scheme Amendment Bill, and a very important piece of legislation it is. I thank the last speaker from the New Zealand First Party, Tracey Martin, for confirming that her party will be supporting this bill. I believe it is an important decision that it has made. Why is it important? The sum of $1.6 billion was lent by the Government in student loans in 2010-11, and $690 million was repaid in that same period of time. That means the taxpayer has provided an additional subsidy of $940 million during that time.

We talk about this as Government money, but we must remind ourselves in this House that it is not always Government money that is being offered or lent to New Zealand students. It is money that has been provided by hard-working New Zealanders, by businesses, by taxpayers, and we are providing that to people so they can have a brighter future: work hard in universities, polytechnics, and technical institutes around New Zealand so they can raise the level of skill within the workforce, and then go out and improve the New Zealand economy through their hard work. But in so doing they have obligations back to the taxpayer, and I believe that this piece of legislation helps them with those obligations.

The sum of 54.75c per dollar is lent, and the Government writes down 45.25c of that. In essence, what that means is that hard-working New Zealanders who pay their tax are not seeing the return that they should see on this investment in New Zealanders and their education.

As of 30 June last year borrowers overseas represented 15 percent of all borrowers; 50 percent of those were in default, and 70 percent of the amount they owed was overdue. It is important that New Zealanders have a chance to go overseas—to travel, to gain experience, to work. As with many members of the House I too spent some time overseas working. But when I was overseas I had an obligation to a bank through a loan. I had a mortgage when I was there, and never once did the bank give me a holiday. I entered into a relationship, a contract, with the bank and every day I had to work hard to make sure that I met that obligation and paid it back.

So in this instance we are saying to New Zealanders, young or old, that if they want to travel that is a good thing, and we recommend that they do. They have a year to travel and if they return home they will then meet their obligation, and if they are overseas for more than a year they must remember the obligation they have—not to the Government, not to this House, but to the New Zealand taxpayer, the mums and dads who are working hard and providing their taxes to the Government to lend to students so that they can better their lives.

I think this bill does not ask too much. It merely reminds them of their obligation and helps them with that. I look forward to voting for this bill shortly. I commend the bill to the House. Thank you.

I am pleased to be able to make a contribution in the third reading debate on the Student Loan Scheme Amendment Bill. I want to make it very clear to those people listening that Labour supports the obligation of borrowers to pay back debt in the form of a student loan for their education. But it could be done better, and we were simply making that point. When we look at this particular amendment bill, on the back of piecemeal changes by National that have limited access to student loans, we are simply saying that the signals are all in the wrong places. At the time of a recession it makes absolutely no sense to cap places in our tertiary institutions. We should be signalling that we want a highly skilled, highly valued, highly paid, and productive workforce, and now, during this period of recession, is the time to train and upskill. Those are the types of signals that are absolutely necessary.

If you listened to members of the Government you would be quite easily forgiven for thinking that those people who have student loans do not want to work. But, in fact, what I find the most demoralising when I go into my local Work and Income office is story after story of highly skilled people, graduates, who are looking for work so that they can pay off their student loan but simply cannot find work. This is demoralising, because the Government, alongside its solution for generating a highly skilled, highly valued, and highly paid workforce, should be also presenting a plan for jobs, and it simply cannot do that. In order for students to repay debt they have to have employment, and there should be an active Government principle by which it is talking about how regional development is occurring and talking about where the jobs are, and those highly skilled graduates that we currently have in the workforce should be able to capture that job market, but they simply cannot.

If we think about education purely in terms of debt, then we are missing the point of investing in education. Yes, there is $12 billion worth of debt out there, but the human capital and the lost potential of that capital not returning its skill set back to the New Zealand economy in some shape or form is a far greater debt, I would say. We cannot leave that human potential to languish. It is a very important part of what will make New Zealand a thriving country going forward.

But the signals are in the wrong place. I want to highlight that, because contributions before mine have highlighted the lack of access for a number of groups that, one would think, under a scheme to encourage repayment, would bring a greater return—for example, if mature students had access to student loans. Many mature students do know what it is like to have a mortgage. They do know what it is like to balance the budget. They do know the importance of a savings record, and therefore they have a debt reduction payment plan. But the National Government has limited the access of mature students transitioning from one career to another to student loans. The signal is in the wrong place.

The other signal that is in the wrong place concerns repayments for those borrowers who go overseas. We have had this debate quite clearly in the House through the second reading and the Committee stage, and this is the point where Labour really started to think again about its position. We do want those students who have got a qualification to go and have their OE and to experience life overseas. It is funny how when you go overseas you do appreciate your own country more. Too few New Zealanders go overseas to be able to have that experience.

We thought that, actually, when you look at the repayment holiday, it was an arbitrary decision around the setting of the 3-year period, so why not align it to 2 years, when most working holidays are kind of for that duration? We thought it was a common-sense approach. It was certainly supported, by and large, by current practice, but the Government failed to recognise its virtues and did not support that particular amendment put forward by Labour. We thought it was a practical, common-sense amendment that sent the right signals to those students travelling overseas to go and have their experience over there, enjoy what there is to offer over there, but come back. Having that repayment period looked at in the kind of way that Labour was proposing, we thought sent the right signal for the right reason. We do want our skilled people to return to Aotearoa New Zealand so that they can make a contribution in this country.

I also heard contributions, in a very loose sense, around the profile of the student borrower. The New Zealand Union of Students’ Associations put out a report some years ago that showed that the average profile was a 35-year-old Polynesian woman. In that regard, to the extent that the repayment of student loans is something that this particular bill focuses on, I would think—and I would tend to align myself with the comments made by New Zealand First—that if you are going to give a repayment holiday, consideration certainly should be given to that same provision, in the spirit of fairness, applying here in New Zealand. Because for women, in particular, when they go and study, simple things—by way of having children, by way of putting their own needs aside for their family’s needs—present very real challenges for women who are taking up tertiary study and may need support such as that. For that reason alone I certainly support the direction of thinking that could be pursued going forward.

It is also a really important point, because at a time when we do know that this is the average profile of students going into tertiary study, what did National do? It cut the training incentive allowance, which allowed access for a contribution towards higher-level courses. So there are more women going into debt because of actions that the Government has taken to remove the training incentive allowance. That has increased debt for many women, and it has actually made it a higher barrier for women to get a higher qualification. Again, it sends the signal in the wrong place. It will not lead to a higher skilled and more productive economy. It will just put barriers up.

There was some debate in the House also on the contact person provision. I want to limit, I guess, my particular focus to contact persons of those currently with student loans—those parents who might have put their names down and said, yes, they would be the contact person. This bill will present new obligations. I asked for clarification during the Committee stage about what the Government will do to ensure that those contact persons of existing borrowers are informed of their new obligations and whether they will have the opportunity to opt out. They may be obligations going forward that they had not quite considered. Let us face it: sometimes when your child goes away and leaves home you generally do not know what they are up to. It is just what happens.

Finally, I would really like to impress on this House and on those listening that Labour supports the intent of the bill and the repayment obligations of borrowers. We just think it can be done in a better way. By and large, these amendments in this particular bill, against the backdrop and panacea of piecemeal changes that the Government has made in the space of tertiary education, which certainly send the wrong signals, do not support what Labour believes is the future for New Zealand. We think that is a highly skilled, high-value, productive workforce of people who can contribute to making our country a great, thriving nation. On the basis of the repayment holiday provisions that were not supported by National, Labour will oppose this bill.

I rise to speak to the third reading of the Student Loan Scheme Amendment Bill with great pleasure. As a member of the Local Government and Environment Committee, I have heard some of the issues that other people in the committee have had against this bill. I would like to remind them that New Zealand has one of the most generous student loan schemes in the world, and although we want to keep it that way, we also need to ensure that students know what they are getting into when they take up a loan. If you have a loan, it is exactly that. It is something that you have to pay back. I think that is something that the Opposition has often lost sight of. It is a loan; it is not a gift. In an effort to make our very generous student loan scheme more sustainable and not to have to borrow more, as others would want to do, we need to be able to be pragmatic and to look at how to fund it as a nation. We have introduced a number of performance criteria. They have been focused on targeting the money towards those who need it and are, importantly, prepared to pay it back, whether they go overseas or not. These are very fair and very reasonable changes.

A lot has been made of this idea of having the reduction in the amount of time from 3 years to 1 year for a repayment holiday for students overseas. I think that is fair and reasonable and I utterly support it, but a lot of time has been spent on that. So let us look at some of the other changes that have been made. The basic criteria for eligibility for the student loan have been tightened up in a number of ways, which I think make the scheme more sustainable and fairer. So we are requiring, for example, students to pass 50 percent of their courses over 2 years to continue borrowing. What is wrong with that? If you are a failed student, why should you continue to get money for something that you are just not actually delivering and performing on?

I think that limiting borrowing to 7 full-time studying years for undergraduate degrees is only fair. How long does it take to get a 3-year degree? If you are up there at 7 years, it may be OK for the other side of the House, who think that they can stay on benefits and allowances for the rest of their adult lives, but it is not actually the way of the future for this nation. It is unsustainable.

We have also introduced administration fees. They cover more of the administration costs of the loan. So you borrow, you pay for it. It is not as bad as all that. A voluntary repayment bonus, I think, is an excellent thing to do.

I am all in favour of people having a nominated contact person. The previous speaker spoke of the fact that a parent might agree to let their child persuade them to be the person who can be contacted if the loan is in default and that the parent might want to get out of that obligation, because it might be onerous. I think that is a crock, frankly. I think that basically if you stand as somebody who is able to be a contact person for someone, you should do that. Let us face it: even if the people on the other side of the Chamber were in default of their loans and had skived off and not bothered to pay them back, a call from the mother, or the father, or someone whom they had put forward as their mentor—

💬 Todd McClay: An auntie.

—or an auntie—could, in fact, be the spur that they need to do the right thing and be honest, and actually repay the money that they need to pay. That is what it comes down to—personal responsibility. Some, of course, on the other side of the House shirk that on every level. But the Inland Revenue Department and StudyLink having access to a compulsory contact person is, I think, a very fair thing. It will counter the problems that have occurred when you are trying to trace these people. The Inland Revenue Department holds overseas addresses for less than a quarter of the estimated 91,000 overseas-based borrowers. In addition to that, it also holds details for nominated people for some borrowers overseas. This is very fair. This is not an onerous responsibility. It is the Inland Revenue Department getting in touch with you and saying: “Look, we’ve lost contact with this person. They have given us a fake address, or they have moved on from there. We need to get in touch with them to remind them of their obligations.” A loan is a loan; it is not a gift. This is something that has been missed on a number of occasions from the questions that have been put when we have been in the select committee.

I again remind the people on the opposing side that this is a very important thing. A break from compulsory repayments is a privilege rather than a right. Todd McClay has spoken already about the statistics around this. The number of people who actually do not bother to pay back their loan is mostly the borrowers overseas. Fifty percent of those who are overseas are in default. Seventy percent of the amounts overdue are from borrowers overseas. We need to bring these people back into line. We need to have a compulsory ability to get in touch with the people who are the ones who hold the addresses. These are not unfair and unreasonable demands at all. Although opposers might say that we are in a situation where we are trying to make it difficult for people to get an education, it is actually anything but. They are missing the point, but there you go. That is what happens in a democracy. We are prepared to listen to their viewpoints, but we are determined to proceed on the track of making the amendments to the student loan scheme go through in the way that they have. The changes that have been made are full and fair, and not too difficult to follow. So I rise happily to support the third reading of the Student Loan Scheme Amendment Bill.

When Maggie Barry started speaking I thought I had entered a parallel universe in which all of the legislation to do with student loans was considered by the Local Government and Environment Committee. I am not entirely sure what is going on over there. As far as I know, the Student Loan Scheme Amendment Bill has never been to the Local Government and Environment Committee. Perhaps they have a little bit too much Roundup going on over there.

I think that the language Maggie Barry was using was quite revealing. When National members start talking about education as a privilege, I think they start to reveal their true colours and what they really believe about education, which is that it is a privilege. That is what National is all about. National is the party of privilege. It is the party that stands for those who can afford things and for those who have the money, but not for those who are trying to work their way up the ladder of opportunity. In fact, this Government is all about pulling the ladder up. Once it has got to the top, it will pull the ladder up and rob those who come behind it of that opportunity.

This student loan scheme is incredibly important in the sense that it offers many people who would not otherwise be able to participate in tertiary education the opportunity to do so. It means that cost is not a barrier. However, we should never forget that the student loan scheme was put in place ultimately because an intergenerational compact was broken down whereby previous generations who had their tertiary education for free decided to start charging future generations for that. Under the last Labour Government we saw a lot of progress towards turning that clock back a little bit. We saw the interest-free student loans coming in, we saw an increase in student allowances, and we saw a cap on tertiary tuition fees—a number of things all designed to reduce the overall cost of participating in tertiary education.

If we want students—graduates—repaying their loans faster, which this bill purports to do, one of the things we should be thinking about is how we stop them borrowing so much in the first place. Unfortunately, under this Government they are going the other way. We saw, just this week, the Government announcing that it is not going to increase the parental income thresholds for student allowances in line with inflation. It is an arbitrary cut to the number of students who can get a student allowance. We are going to see more of that under this National Government. That is going to result in more borrowing. It is not going to result in less borrowing; it is going to result in more borrowing. If we want less student loan debt and students repaying their loans faster, then avoiding their borrowing money in the first place is a really important way of doing that, and, unfortunately, this Government does not want to go anywhere near that.

There are some sensible provisions in this bill that the Labour Party supports, and we canvassed those in the Committee stage. I am going to focus only on the area where we really disagree with the Government, and that is to do with the repayment holiday for those who travel overseas. I think the ground has been well covered on this particular issue. It was a very sensible decision to introduce a repayment holiday when interest-free student loans were introduced in the first place, to allow people who were travelling overseas doing their OE to not have to make repayments on their loans. What we saw over a period of time was people travelling overseas racking up huge penalties on their loans while they were away, which acted as a huge disincentive for them to return home. Initially, that repayment holiday was set at 1 year. Some actually argued that that was probably too much and that, in fact, it should have been shorter than that.

I know there was a lot of internal debate within the then Labour Government about what the appropriate time frame was. Michael Cullen, who was the Minister in charge of implementing the scheme at the time, set the repayment holiday at 1 year. He was right to set it at 1 year at the time. In fact, it probably was not long enough; therefore, a pragmatic decision was made to increase it to 3 years. We know it was a pragmatic decision, because “Mr Pragmatic” himself, Mr Peter Dunne, argued in favour of that as the Minister of Revenue. In fact, I think he sponsored the bill to increase the repayment holiday from 1 year to 3 years. He waxed lyrical about how he was all about pragmatism and how this was such a good thing, yet now here we are with another bill sponsored by Peter Dunne that actually reverses it, which I think just goes to illustrate that Peter Dunne’s view of pragmatism is whatever it takes to keep him his ministerial job. It was pragmatic for him to support this amendment today, because, pragmatically, that is what he has to do to remain a Minister in this Government. Common sense is basically what is required in order for Peter Dunne to stay a Minister. That seems to be the acid test for Peter Dunne these days: “Will I still get to keep my ministerial job if I vote for it? Yes, I will. Oh, gosh, that must be common sense. I’m going to vote in favour of it, even if it was common sense when I voted against it last time.”

It is a bad provision in the bill, and that is the reason why the Labour Party is going to be voting against this piece of legislation.

Kia ora. Ngā mihi nui ki a koutou. It is great to rise to take a call on the third reading of this bill, the Student Loan Scheme Amendment Bill, which the Greens will be opposing. We would like to thank the officials, thank the submitters, and, I guess, in this very short call, round up some of the debate.

The bill does essentially three things. Firstly, it requires you to have a contact person for your student loan. I do not think anyone in the country, let alone this Parliament, could disagree with this common-sense move. It changes some loopholes around the New Zealand - based borrowers from excluding losses. Again, we support closing this loophole. But the third thing, and it is a point that I have not heard being raised in the debate by the National members—of course, they just want to focus on the non-controversial parts—is reducing the repayment holiday that borrowers overseas can apply for, down from 3 years to 1 year. That is why this bill really more accurately should be called the “Kiwis Moving Overseas Bill”.

We know that at the moment we have record numbers of Kiwis moving overseas. We have a deficit in our net migration figures, so we have more Kiwis leaving than people immigrating. Despite members opposite when in Opposition trumpeting on about this issue, now we have got more Kiwis going overseas, and what members opposite want to do is put legislation in place that will see more Kiwis move overseas and more Kiwis stay overseas.

At the moment those students who have graduated—they have got a student loan and they move overseas; they are already being charged interest—can apply for the repayment holiday, which, as we have heard in the debate, Peter Dunne introduced as a very pragmatic measure. But what we are going to see is this repayment holiday being reduced from 3 years to 1 year. We know that the average is between 3 to 5 years, not 1 year, and we know it takes 18 months for the average Kiwi to get set up in an overseas country, start earning, and start repaying their student loan.

We are going to see student loans balloon. That is what we heard from Treasury, and that is what we heard from the Ministry of Education. We could see loans balloon to two to three times their original size, because when you add up the interest, when you add up the fees, and when you add up the penalties we are going to see these massive loans that sometimes hit the headlines of our newspapers. Those Kiwis who have these massive loans are not going to come home. They are going to stay, and it is going to worsen our student loan balance book. It is going to worsen the country and our economy going forward.

We heard from Holly Walker about the fiasco about the law coming into effect before this Parliament has even passed the third reading and we have seen the Royal assent given. There was a precedent I found in my researching the Maui’s dolphin question today. In fact, Prime Minister Muldoon was taken to court in 1974 when he prematurely, before legislation had passed, announced changes to the superannuation legislation. He was taken to court. What we know is that the law is the law until the law is changed. The law has not changed, and the Inland Revenue Department is absolutely inappropriate. It is a shoddy process for it to be advertising that the law has changed when the law has not changed. In fact, it is illegal.

We would like to welcome Labour’s change of heart on this bill. Unfortunately, we did not see the amendment to reduce the 3 years to 1 year changed back to 3 years. That was not successful, but good on Labour for changing the vote. But what we are seeing in this debate, with this tinkering around the edges in this bill, which will only see more Kiwis go overseas and stay overseas, is that National has a fundamental hatred for interest-free student loans, but with the fundamental popularity of interest-free student loans in New Zealand, it cannot get rid of them. The politics is too strong. So what National is trying to do is water it down around the edges, along with the other changes to the sector, which have seen tertiary education become less accessible, less affordable, and in some cases downright impossible as it slams the door to students with its capped enrolment, and as it slams the door to access to student loans for the over-55s.

This Government is doing everything it possibly can to reduce the numbers. Basically, the principle is that the Government does not mind those higher-income Kiwis, whom they are representing in this House, getting an education, because their families can afford it. The gap between the rich and the poor has grown under National. Those lower-income Kiwis have to fend for themselves. If they are on Struggle Street, they are going to stay on Struggle Street because this Government is not doing enough to help them, and this bill is just another measure to make it harder for Kiwis to get an education.

We could have gone down a different track. We could have looked at ways of paying off debt for those Kiwis who stay in New Zealand—I know New Zealand First has a policy like the Greens’ there—and we could have actually put some carrots instead of these punitive sticks in front of New Zealanders. We could have even looked at agreements with overseas countries, like the UK or Australia, where we could see taxes paid by Kiwis working in those countries paying off their student loans. Why are we not sending delegations to those Governments to try to negotiate those points? That would be better for the country, better for the economy, and better for students. It is a pity that the Government has put its focus on this bill.