Taxation (Budget Measures) Bill

I remember not long after I became a member of Parliament participating in a debate that introduced this very provision that we are now deleting, as set out in Part 3 of the Taxation (Budget Measures) Bill. I have to say that I welcome the National Party’s about-face on this. It has actually got it right at long last, because this repayment bonus was a total rort of the system when the Government introduced it, and it has finally worked that out. But is it not interesting what a difference a couple of years make? What were Government members saying when they introduced this piece of legislation? Well, we will start with the Minister in the chair, Peter Dunne, who said: “I say to the House that this is a significant incentive for students to pay their loans earlier.” And it gets better; it gets better: “I cannot fathom why anyone would oppose the introduction of such an incentive.” This is the Minister who is now in the chair deleting the very incentive that he could not possibly fathom how anybody would be opposed to, and now he is in the chair, doing away with that very same incentive.

Well, the Labour Party was right, because this is a rort. It is a total rort, and now the Government has got the officials’ advice to say that it is a total rort. What has the Ministry of Education said? It said: “In 2011,”—last year—“2,611 borrowers repaid their student loans in the same year they borrowed, receiving $1.8 million in bonuses … This resulted in a cost to the Government.” In other words, what the Ministry of Education is claiming is that people who did not need to take out the loans were taking out the loans in order to get the repayment bonus. It was a little kickback, so I am actually surprised that the National Party is doing away with this, because it is normally quite good on that sort of stuff—rewarding people and creating all these loopholes in the system. The National Party is normally quite good at that. That is normally what it quite enjoys doing, but thankfully in this particular case it has finally realised that it made an awful mistake when it introduced this ridiculous repayment bonus, which was only ever going to encourage people who did not need to take out student loans to take out student loans.

People have always been able to repay their loans faster. In fact, the National Government—the National Party, I should say, because it was not the Government at the time—opposed the very thing that halved the repayment times for student loans, which was making them interest-free. That halved the repayment times for student loans, and what did John Key call that? He called it a hoax, and he said that he was going to fight it with every bone in his body. Well, I am not sure how many bones he has left, but interest-free student loans are still here, and John Key did not put up much of a fight, and now he says that he is going to keep the interest-free student loans. So it was not really much of a fight. That was the thing that halved the repayment times for student loans.

Unfortunately, the National Party keeps trimming around the edges of the student loan scheme, but we know that eventually it will get to the point where it will say “Oh, we just can’t afford it any more.” It is softening people up for it. It is trimming all around the edges of student support, with its trimming of student allowance eligibility, and with its trimming of who is eligible to get a student loan in the first place. Let us bear in mind the fact that the student loan scheme was set up, in the first place, to ensure that nobody was prevented from entering tertiary education because of financial barriers. That is why the loan scheme was set up. Of course, the loan scheme was set up as a result of a broken promise by the then National Government back in 1990—or 1991, I think it was, when it technically did it—

💬 Hon Clayton Cosgrove: Who was that? Who was the Minister?

I am not going to get into that, but I do recall that the Minister at the time had campaigned up and down the country pledging to do away with university and polytechnic tuition fees, and that he would resign if he had not done so. So what did the Government do? It did away with the Government-established tuition fees, and instead introduced institutional tuition fees, which were higher than the ones that the Government had put in place. [Interruption] That is right. It introduced the student loan scheme to allow the students to pay for those, because the criticism at the time was—and it was a legitimate criticism—that those new fees introduced by the then National Government as another one of its broken promises were going to act as a barrier to participation. So it set up the student loan scheme in order to overcome some of those barriers.

The student loan scheme, I think, has improved remarkably since the then Labour Government back in 2005 removed the interest on student loans. That halved—more or less halved, give or take—the repayment times for student loans. I think that was a very positive thing. Those are the sorts of bold initiatives that a bold Government takes when it wants to change something. This Government would not know a bold initiative if it tripped over it in the street. We have not seen any bold initiatives in this Budget. This, most certainly, is not a bold initiative—

The CHAIRPERSON (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to leave the Chair.

Debate interrupted.

Sitting suspended from 10 p.m. to 9 a.m. (Friday)