Student Loan Scheme Amendment Bill (No 3)

In the first of what I suspect will be a number of contributions on Part 1 of this bill, the Student Loan Scheme Amendment Bill (No 3), I just want to sketch out where Part 1 takes this Committee. On the Labour Party’s side of the Chamber, we would very much like to come to Parliament to support practical measures to ensure that student loans are paid off. On this side of the Chamber we believe that when people borrow from the student loan scheme they do have an obligation to repay those loans. It is within the original loan contracts that students sign that they will make those repayments. What I believe this Committee should then be doing is working out the best and most appropriate way to ensure that repayments come in, and that we actually achieve the goal that the taxpayer who has been part of loaning this money to students will see that money returned. That should be the goal of this legislation—what is the best way of making sure that that money comes back into the system.

Sadly, the reality is that this bill falls well short of actually making meaningful progress on that matter. What this bill does is simply implement a slogan or a gimmicky policy and says that that is the answer to where we are going. Obviously, in that regard I am referring to the matters that are contained within clause 8 of the bill, and that is around the question of creating a criminal offence around default of overseas-based repayment obligations and the process through which a person liable under that provision can be arrested. It is quite clear to us on this side of the Chamber that the time has come for a much more comprehensive review of how we ensure that we get timely repayments. This current Government has introduced a number of measures that are designed to try to increase the amount of repayments that are coming back, yet the debt overseas has continued to rise during the term of this Government. So it is clear that although there will always be a measure of stick, the carrot here is missing, or the other kinds of ideas that might be put on the table are missing. I will certainly return to those as we work through the debate.

Where I want to start is on the first part of clause 8, which contains the idea that there is now going to be an offence for borrowers who have not made repayments in the way that they are expected to. This is the new offence in new section 162A. I want to refer members to the submission of the Legislation Advisory Committee to the Finance and Expenditure Committee on this particular part of the bill. There is an offence that has been created in clause 8, and I will just read it out briefly. Clause 8 inserts into the bill a new offence for borrowers, and it says: “Every person commits an offence who is in default of his or her overseas-based repayment obligation and who, having been notified by the Commissioner that he or she is in default, knowingly fails … to make reasonable efforts to pay the amount in default or to make arrangements with the Inland Revenue Department to pay the amount in default [by the due date specified in the notification].”

We will work through those words, but what the Legislation Advisory Committee essentially says is that moving from what is now a civil matter and making it a criminal matter is actually a very significant change. It is actually fundamentally changing the nature of the relationship that student loan borrowers have with the Crown. What the Legislation Advisory Committee said when it was commenting on this bill was: “The [Legislation Advisory Committee] considers that this”—inclusion of the offence—“is an unprincipled basis on which to create an offence.” It is extremely strong language from the Legislation Advisory Committee to say that this is an unprincipled basis on which to include a new offence, because the offence is created simply so that the Inland Revenue Department can apply for an arrest warrant. So, rather than making a case based around the severity of an offence or the damage incurred to the country or an individual or person—

The CHAIRPERSON (Lindsay Tisch): Sorry to interrupt the honourable member, but the time has come for me to leave the Chair for the dinner break.

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

The CHAIRPERSON (Eric Roy): Members, the House in Committee on the Student Loan Scheme Amendment Bill (No 3) is resumed. Before the dinner break we were debating Part 1 and Grant Robertson had the call. He has half a minute remaining.

Half a minute hardly seems enough to be able to go through this. As I was saying before the dinner break, the Legislation Advisory Committee made a very direct reference to the change that is occurring in new section 162A, which effectively takes what is currently a civil matter—the non-repayment of loans—and turns it into a criminal matter. The Legislation Advisory Committee said that it considers that “this is an unprincipled basis on which to create an offence.” That is a very serious thing for the Legislation Advisory Committee to say—that this is an unprincipled basis for creating an offence. What it is referring to is that the only reason the Government is introducing this provision, on behalf of the Inland Revenue Department, to create this new criminal offence of not repaying your loan, is so that it can do the arrest at the border provisions. It is not based, as I said before the dinner break, on any particular injury that is occurring to the public, any particular set of circumstances that warrant a criminal offence; it is merely so the arrest at the border provision could come into play.

I think that we should take the words of the Legislation Advisory Committee and its chair, the Hon Justice Sir Grant Hammond, seriously here. There is nothing behind this provision that is in the way of principle. It is quite simply a gimmick. It is a gimmick designed to look like the issue of a repayment of student loans is being taken seriously by creating a criminal offence and then a set of arrangements for which people can be arrested at the border, but in reality it will make very little difference to the repayment of loans. As I said at the start of my last call, on this side of the Chamber we support initiatives that will provide for an increased rate of repayment of student loans. We want to see people pay their loans back, both because that is what they signed up to do in the contracts that they signed and also because it is good for the New Zealand taxpayer. But this bill is not it and clause 8 does not provide for this.

We know from what we heard in the Finance and Expenditure Committee that although there is a great deal of threat and a great deal of concern among people, in terms of the actual number of arrests nobody knows what is going to happen. The police have quite clearly said they do not have the resources to involve themselves in arresting people at the border. We do not actually know, other than that there is some indication that the Inland Revenue Department would like to make an example of some people. As I raised in my second reading speech, a number of us on this side of the Chamber have been approached by people living overseas who have been, perhaps, in dispute with the Inland Revenue Department about their loan and who want to come back to New Zealand for a family event—for a wedding, for a funeral—and are now in fear that they will not actually be able to do that. So this bill, rather than acting as some kind of encouragement to young New Zealanders to come home and to contribute to New Zealand, actually will act as a deterrent, without achieving the goal that the Government has set itself of increasing the rate of repayment. It is the worst of all worlds to have a bill, and, in particular, clause 8, that creates a criminal offence out of what is essentially a civil matter, for no real purpose whatsoever.

In the Finance and Expenditure Committee we were challenged by National Party members to say what we would do to help increase the rates of repayment. Well, we could start by actually talking to the borrowers concerned and working out a repayment plan that works for them, because another clause that I will come back to in this bill is around how it is that the repayment obligations of overseas-based borrowers are calculated. At the moment it is an extremely blunt instrument, which simply says that it is a percentage of your loan and you have got to pay it back. It does not matter how much you are earning.

If we really were serious as a Parliament about increasing the rate of repayment, we would work on arrangements that were actually based on the earnings of people overseas and that gave them an incentive to pay back. It is so big, it is so difficult, it is so out of proportion to what people are earning overseas they give up and they say: “I can’t be bothered with it. I’m not going to deal with this.” Every year those people stay away from New Zealand, every time the Government introduces a gimmicky provision like this, means they will be less likely to return to New Zealand and less likely to pay back their loans. We on this side of the Chamber would love to support a bill that came before us that was full of new and good and interesting ideas about how to encourage overseas-based borrowers to repay their loans, but this bill is not that.

In clause 8—

💬 Dr David Clark: The research.

We will come to that, Dr Clark. In clause 8 the new sections 162A and 162B have been slightly altered by the select committee. I will credit the select committee with removing one of the most egregious elements of this, which was in what was the new section 162B(2)(d), which actually allowed the court to apply any order it liked to somebody who was arrested under these provisions—anything at all. The court could have thrown them in jail, it could have taken away their assets—it could have done anything. Thankfully that has now been removed, but the extent—

I look forward to making this contribution on the Student Loan Scheme Amendment Bill (No 3). I am pleased to have received the call so soon, although I also look forward to hearing what my colleagues around the Chamber have to say, and, indeed, the possibility of the Government defending this particularly indefensible piece of legislation. As Mr Robertson has alluded to, this bill is a distasteful gimmick on behalf of the Government, which has no real plan to effect any change other than one of perception, and even then it is skating on thin ice.

We did look at this issue in depth in the Finance and Expenditure Committee. We asked questions about whether overseas payments would increase, would be likely to increase, and what kinds of estimates the Inland Revenue Department might be able to make about the increase in payments as a result of putting in an arrest at the border clause. It was very, very hard to get chunky, useful information because, of course, the department has been put in a very difficult position by the Minister of Revenue with this political posturing. The department, to its credit, acknowledges that it is very difficult to try to draw any sensible conclusions from this piece of literature we have in front of us in the form of a bill, where it talks about the nature of arrest at the border.

Specifically, we are talking about new sections 162A and 162B, inserted by clause 8. The new sections describe how the arrest might happen and what kind of conviction might apply, including fines, and who might issue such arrest warrants—a District Court judge, we read in section 162B. New section 162B(1) states: “A District Court Judge, or, if a District Court Judge is not available and the case appears to be urgent, a Registrar may, on an application in writing by the Commissioner, issue a warrant for the arrest of a person (the liable person) if the Judge or Registrar (as the case may be) is satisfied that the person has committed the offence in section 162A and is about to leave or attempt to leave New Zealand.”

That is where this is activated, and we debated vigorously in the select committee whether this was a useful addition to the legislation. I think that the argument was strongly in favour of it not being useful. It really makes no describable change other than giving the commissioner discretion to act, presumably at the Minister’s behest, for political posturing. That seems unprincipled and without real merit.

On this side of the Chamber we are keen to support the notion that people be encouraged in practical ways to repay their debts. We very much support the collection of what is owed in terms of the borrowed money, because we believe in paying forward. We understand that those who have benefited from the scheme and have themselves bettered their own lot, the lives of their families and communities, should be paying back what they owe so that other families and communities can benefit likewise. Unfortunately, this Government does not particularly like this scheme, and it struggles to come to grips with it and is constantly putting forward such things as this distasteful gimmick.

We know that a National Government put in place the loan scheme in the first place. Labour made it interest-free, which has benefited a generation of students. Then National sought to introduce punitive fees on top of the interest-free segment, calling it an administration fee. You can see which direction the National Government wants to take this. It wants to make it a more punitive scheme and make it less available to people of certain age groups. Here we have punishments designed to create headlines so that people will realise that National is being as stingy as it possibly can be about sharing the love when it comes to the future education of our people.

Labour members think that this bill, the Student Loan Scheme Amendment Bill (No 3), with its punitive measures, should be opposed, and so we are opposing it. We are very much distressed that the police also have indicated that they do not think they have the resources necessary to even implement the changes as proposed. This bill is a distasteful gimmick and, therefore, wasteful, because we are using parliamentary time to pass something that is merely posturing and can never be implemented, we were told, or, if it is implemented, will be implemented on a purely discretionary basis with few principles outlined or able to be outlined in the select committee process. We got told that it would probably be for more significant cases or cases where the commissioner felt there were other factors involved and so on. It was very difficult to hear through the noise any real principle that lay behind it. It is certainly not going to be effective. It just is political posturing.

Meaningful change from improved student loan repayments from overseas borrowers, in our view, requires looking at options such as repayments based on earnings and negotiated payment agreements, including with third-party involvement—parents in particular—but unfortunately the Government is not considering these as part of the legislation. What we have is a situation where some young New Zealanders are effectively exiled as enemies of the State, because, often, they have got themselves into a position where they cannot pay back their loan.

If they have been overseas in order to better themselves, or to get a view of the world that is broader, and they find instead that they have spent some time working in a pub and have not earned the kind of money that might be owed, they are stuck overseas. They are stuck overseas; they cannot return. If there is a family funeral or tragic personal circumstances, they are now living in fear that they will be that one person who is picked off at the discretion of the commissioner, at the beckoning of the Minister, in order to make a distasteful example of their situation. It is a kind of draconian measure—an impractical one and an unprincipled one.

It is also worth noting that we do not have any real idea—as a select committee, we were left none the wiser—as to how much money was likely to be retrieved. There is a lot of information we do not know about overseas borrowers. That is part of the real issue. There are information-sharing provisions that are being looked at. I understand the Privacy Commissioner has had some issues with the sharing of data on compliant borrowers. It seems to be where the focus has gone. The Big Brother approach to things has predominated under this Government, and, in fact, those who are not compliant, about whom we know very little, are not being captured with this information. We know only that they are going to be more wary about returning to New Zealand to share their skills and to meet with their loved ones.

We also know, obviously, that there are 200,000 of them in Australia—over that number since this Government came to office. They are not all students, admittedly, but they have left this country because this Government has not given them hope. How this bill will give them more hope is very difficult to see. This is a Government that is intent on clamping down politically on anything it sees as an easy target. It is not interested in constructive ways of supporting the betterment of New Zealanders. New Zealanders are recognising more and more that this is a Government that is out of touch and has really not understood the benefits of an interest-free student loan scheme that will accrue to a generation, pay forward to a future generation, and mean that we have a better tomorrow.

I hope that the Minister in the chair, the Minister for Primary Industries, does take a call to try to explain this populist policy and the benefits that might accrue from it, but I fear that, instead, we will have David Bennett on a rant about how the Labour Party is soft on borrowers and is not constructive and so on and so forth. Look, I would hate to steal his thunder, but we do support constructive measures to get those loans back and we support the scheme, unlike the National members, who do it through gritted teeth. We support it wholeheartedly because we see the benefit in education as an investment for future generations for the betterment of this country.

So I do look forward to Mr Bennett’s contribution. I hope it is more constructive than what occasionally he is tempted to deliver, and more than just a closure motion, because these are important issues that New Zealanders need to discuss and need to understand. We want to have a student loan system that works, we want people to pay forward, we want better education for our children for the next generation, and we want a better society, and we are saddened to see that this Government is intent on creating a few tragic examples in order to make a political gimmick stick.

It is very disappointing to see that the Labour Party will not support the Student Loan Scheme Amendment Bill (No 3) tonight. This is not a gimmick or anything like that, but this really shows the true nature of the Labour Party. It is a party of socialist elite that believes that those who get a tertiary education should be treated differently from anybody else in this country. It is a party of socialist elite that believes that people who go overseas should get a free ride. It is a party of socialist elite that thinks it has the opportunity to tell people what they can do.

This bill sets some stringent requirements on those who get a benefit from this country and this Government. Why should they not pay their loan back? What is the difference between a New Zealand borrower who stays in New Zealand and one who leaves New Zealand? If the Labour Party was not just looking after the socialist elite it would be offering those incentives to those who stay, not those who leave. The Labour Party talks about negotiation with the parties. The Labour Party talks about having requirements of repayment based on earnings—things it is giving to people who leave this country, who take their skills overseas, and who build other countries stronger. They are going to get a free ride from the socialist elite that is the Labour Party, rather than giving it to the people who stay here, work here, and make this country strong.

What about those young men and women who work in the farms and the factories and who pay for people to go through that education? They do not get that benefit, do they? But the socialist elite wants its own people to have the ability to take that money, take that benefit, not contribute to New Zealand, and not even pay it back. That is what the Labour Party stands for. It does not care about the people who really do the hard work. It does not care about the people who want to build New Zealand. It cares only about the people whom it thinks it represents—those people who can afford to have an education and think the way it does, rather than the people who understand what this country is built on. The people who want to get an education, then stay here and build this country stronger are the people we should be rewarding, not the people who take advantage of our system and then leave. Shame on the Labour Party!

Look at some of the numbers here. New Zealand - based borrowers make up 84 percent of borrowers; overseas-based borrowers make up 16 percent. If you look at those in default, New Zealand - based borrowers are 13 percent; overseas-based borrowers are 71 percent. New Zealand - based borrowers owe $78 million in default; overseas-based borrowers owe $543 million in default. Why do we give those people who owe $543 million a better ride than we give those people who stay here and who go work in our schools, go work in our hospitals, go work in our industry, and go about being part of building a stronger productive economy for New Zealand? What gives the Labour Party the right to say that those people who stay here and make this country stronger should be worse off than those people who go overseas and work in a pub for 2 years? What gives the socialist elite of the Labour Party the right to say that? Nothing gives it that right. That is why it is out of touch.

This is not a gimmick. This is about sending a signal to those young people who go overseas that we expect them to repay their debt to this country. We would love it if they stayed here and paid their debt by working in New Zealand, for New Zealand, and to the benefit of New Zealand, but, if they do go overseas, they should not forget the debt that they owe the people who are here, who have paid for that debt, and who are working for that debt—day by day paying the interest on that debt.

But that is not the case for Labour Party members. They believe that their sons and daughters—that sort of socialist elite that was born to rule—will be people who can go overseas and not have to do anything about it. It is sickening to see the Labour Party do that—a Labour Party that should stand for fairness for those people who are working in the base industries of New Zealand and that should be looking after those lower-income earners. But, in fact, it wants to give more to those who can earn more. It wants to give to the rich and take from the poor. That is the Labour Party of old. That is the Labour Party that is coming back. It is great to see the Labour Party show its true colours when it comes to a bill like this.

Kia ora, Mr Chairperson. That last speech was fascinating. I think the people of New Zealand have just seen slogan No. 1 for the 2014 election campaign—well, at least the one in Hamilton, where Mr Bennett will be campaigning. I find it fascinating that Mr Bennett has actually read some of the figures to do with the Student Loan Scheme Amendment Bill (No 3). I think that is great. Thank you very much, Mr Bennett; that is an improvement on past performances. Losing the light show that we just had, let us go back to the real world and the practicalities of how this bill will affect New Zealanders, as opposed to the little bit of electioneering we just saw. I am really pleased that there is a Minister in the chair—the Minister for Primary Industries. I hope the Minister may be able to answer these questions, although I am not sure that it is the right Minister who is in the chair.

Let us get real. We are talking about new sections 162A and 162B in clause 8. This is the clause in Part 1 that we are going to focus on to start with, and it is about arresting citizens at the border. Let us talk practicalities, shall we? Let us talk about the fact that as a New Zealand citizen who has an overseas debt comes into the country, they swipe their passport. That is no different from when a New Zealand citizen leaves the country and they swipe their passport. I am going to make a huge leap here. I am going to make an assumption here that the passport you swipe coming into the country is exactly the same passport you swipe as you go out of the country. That means that if an alarm can go off on your way out, an alarm can go off on your way in.

I would ask the Minister to address the question that New Zealand First has. As a previous debt collector, I am looking for practical ways for us to actually collect debt from the people whom we are trying to collect it from. If a New Zealand citizen swipes their passport on the way into the country and they have an outstanding debt, an alarm will go off—not a physical alarm but a bleep in a computer system somewhere that says to the Customs Service “Uh-oh. We need to actually hold this person for a moment, because there is something that the Government wants to talk to them about.” If you do that on the way into the country, the person can now possibly provide you with details of bank accounts, can now provide you with a third-party contact list, and can now actually sit down before they go off to their wedding or their tangi or whatever it is and come to an arrangement.

If there is a mistake in the record-keeping of the Inland Revenue Department—and I know that many people think that might be far-fetched, but, believe me, it is true. The Inland Revenue Department does make mistakes. If there is an error in the data from the Inland Revenue Department that says this person owes a debt and yet they do not, we have avoided a situation in which that person would then be pulled from a line if they are leaving the country and lose their flight, and their family—I am not sure I would leave without my husband and my children if I was leaving the country and he was hauled off by the police because of some debt that apparently he owed the New Zealand Government. If we do that on the way into the country, there is no loss of airfares, there is the time that there is to actually sort out the problem if there is an error by the Inland Revenue Department, and there is time to complete paperwork—all in a practical and very supportive way for a win-win situation.

I would like the Minister to answer why the point of exit was chosen, as opposed to the point of entry. I would love for the Minister or anybody who was actually on the Finance and Expenditure Committee to tell me whether that was discussed. Was it ever discussed?

💬 John Hayes: Why don’t you ask Winston?

Because I am asking you, Mr Hayes. You are the people putting up the bill. If you do not know it, then who does? It is the National Government that is putting forward this bill, and it is for the National Government to explain to the people of New Zealand why it will arrest them as they leave their country. It is not for me to explain your policies. It is for you to understand why your Government has decided to arrest New Zealanders as they leave, as opposed to creating exactly the same system, exactly the same amount of cost, exactly the same amount of paperwork, and yet the possibility of a truly win-win outcome. So I ask the Minister whether he will stand and answer why the concept of actually identifying these people on entry, as opposed to exit, is not inside this bill. If you can justify it, that is brilliant, but I am picking, from Mr Hayes’ contribution, that you cannot actually justify it.

Let us go to point No. 2; perhaps the Minister can explain this. What is the rush? What is this rush to force this through the Committee stage and the third reading—to push it through?

💬 Joanne Hayes: $2 billion of debt.

I will tell you what. I know the answer to that same question, Mr Hayes, but I am quite sure you do not. It is because on the StudyLink website it is already advertised. It is already advertised as being in law that this Government will arrest New Zealanders. So we now have to rush in this House and go into extended hours and so on and so forth, to put into place legislation so that what has already been placed on the StudyLink website, what is already concerning New Zealand citizens overseas, can actually be a law. Right now this is fraudulent. This is fraudulent because it is not law. There is no guarantee it will pass, except that this Government is arrogant enough to believe that not one of its minor parties will have the audacity to actually change its view.

Let us talk about Mr Bennett talking about hard-working people, etc., etc. It is actually not young people whom most of this debt belongs to. Fourteen percent of this particular debt that we are talking about is from borrowers from 1992, so let us not place this on young people again, shall we? These are the figures inside the Government’s own report that, unfortunately, it would appear that the Government has not read. Fourteen percent of the outstanding amount is from borrowers from 1992. What this tells you is that it is unlikely you are going to get that amount of money—and that is 14 percent of the number of borrowers, not 14 percent of the amount overdue outstanding.

Let us go to the outstanding. Let us go to the fact that—and perhaps the Minister would like to answer this—the Inland Revenue Department recognises debt as overdue debt only when it is 5 years overdue or more. Just recently we changed the repayment holiday for overseas-based borrowers to a 1-year repayment holiday, but prior to that it was a 3-year repayment holiday. Why on earth would you not recognise at the end of that 3-year period that this is now an overdue debt? For a debt collector, the reality is that the longer you do not make contact with that person, the less likelihood there is that they will pay it. So where inside this bill or any legislation, or in any discussion, is it stated that the Inland Revenue Department has been told to recognise overdue debt in the future as that that is perhaps 14 months old, so that it starts making contact in a time frame in which it is possible to collect?

The next point is how has the passing of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 affected the ability of borrowers to repay? Has anybody asked? The banks are currently looking at that. The banks are currently looking at the four groups of our citizens that have been disadvantaged by that particular Act—the money-laundering Act. It is an unintended consequence of that Act that if you are overseas and trying to send money back to New Zealand, there is now a great deal more paperwork and a great deal more cost to you to do so. So has the Inland Revenue Department or the advisers to the Minister looked at how that 2009 Act has affected the ability of these people to pay? Is it about assisting our citizens to pay or is it, as the Labour Party says, merely a political ploy for this election?

Is it the fact that there is actually nothing else the Government can get tough on with regard to crime—because it does not want to fund police and so on and so forth—so now we are going to just start putting forward sound bites like arresting our citizens at the border for debt? You get situations like with Mr Bennett, who stands and rants and raves, generally having never read the bill, and generally having no concern at all for the New Zealand public or any student anywhere whom I have ever seen. But he stands there and starts to use clichés to try to spin what this bill is so that the New Zealand public thinks the Government is doing something. I can guarantee the New Zealand public—particularly if the Minister does not get up and answer these questions—that this Government is not doing something, apart from putting in place another nuance to being able to actually arrest its citizens at the border when it sees fit.

That is where we start to tend towards more of a police State. There is more and more and more of this insidious creep, I think it is called, where this Government starts to chip away and chip away and chip away at things that New Zealanders can do. New Zealand, I implore you to listen to people like Mr Bennett, listen to him very, very carefully and see that there is no content whatsoever to what Mr Bennett said, and have a look at what they are chipping away, because this will be your son, this will be your daughter, and this will be your grandchild before you know it.

I rise to take a call on the Student Loan Scheme Amendment Bill (No 3). I want to assist my colleagues on this side of the Chamber to point out something that I find very troubling about this bill—specifically, clause 8, in particular new sections 162A and 162B. I speak, of course, of the criminalising of people who have student loans and of arresting them at the border for a problem, if they have defaults on their loans. Although I fully support the taxpayers of this country requiring us to repay what is clearly owed to them for the benefit of having a loan to support our study, I think that we should be making it easier for students to repay this loan. It appears to me that we have missed several steps in this process in order to achieve a heavy-handed, big-gun populist approach—a gimmick that sounds like it will achieve the objective, but, really, it will achieve very little.

Specifically, in terms of clause 8, who is going to enforce these arrests at the borders? And I wonder how stretched our border authorities already are. Will it be the police, then? Well, I hear that they have already stated quite clearly that they do not have the resources to enforce it in the way that this bill is proposing. The bill, and this clause in particular, is punitive and, basically, takes what should be a matter for civil jurisdiction and turns it into a criminal matter. But that is not the only point that I want to make.

The point I want to make is that this would not be required as an enforcement tool if we looked at intervening in this pathway a lot sooner in the process. If we are serious about ensuring that our students repay their student loans, we need to be prepared to facilitate it by making it as easy as possible and without the threats potentially hanging over their heads. What kind of message do we send to our students? The potential for being criminalised for taking advantage of a student loan scheme—an interest-free scheme that I am proud to say was part of a Labour-led initiative and one that, despite the fact that the National Party does not really like it, National is currently not prepared to ditch, because the scheme does a great job of supporting people into education.

Many Pacific students have taken advantage of this very scheme. It is vital for our Pacific communities that they have the opportunity to access the student loan scheme, and it is a great opportunity for Pacific students to attend higher learning and for those younger Pacific students to see that it is possible to hold tertiary qualifications. However, as we have heard spoken about, when the provisions are to arrest at the borders and we see Pacific people who are likely to be moving around our borders in that regard, does it not then beg the question of who might be potentially most at risk?

I worry about the message that we are sending to our students when we say: “If you get into trouble with your loan, watch out. You will have to provide security, you will have to surrender your travel documents, or you will be arrested at the border.” What a massive disincentive to our student population, and why would you even consider studying in this environment of threat and retribution? It goes to the very heart of the very Kiwi institution of the great OE, whereby many of our young people have taken it directly after their study and travelled overseas. Like many Kiwis, they have taken up employment in other countries, and as Kiwis have a reputation for being conscientious and hard-working folk, innovative and clever, so our people are sought after. What do we do with this knowledge and experience that they have picked up in the overseas working environment? Do we bring this knowledge and experience back home to benefit the local businesses, the academic institutions, and the research organisations? Well, we should, but only if we welcome our people home, rather than disincentivising them to return with their skills and experience. Let us face it. We are not the biggest country in the world, and bringing ideas and knowledge home after testing it on the world stage is only going to be good for this country.

So we are, in effect, making refugees of our own people because they are, in fact, exiled overseas, unsupported, and are not helped to return home to repay the loans as they should. Do we need any more evidence of a Government that does not understand the needs of its own citizens and that could permit a section of its citizens to become criminals, rather than taking a rational approach to the issue?

I move, That the question be now put.

I am happy to take a call on these amendments to the student loan scheme, but I want to start by responding to some of the comments from David Bennett. I just cannot let them go unanswered. I want to start my contribution on the Student Loan Scheme Amendment Bill (No 3) by saying that it is somewhat ironic to be lectured by a Government that has clocked up a bigger Crown debt than any other Government in New Zealand’s history. It is lecturing us about debt repayment, yet it has clocked up a bigger debt than any Government in New Zealand’s history, which will take generations—generations—to repay. At the end of this parliamentary term, New Zealand will have more debt than we had at the end of Muldoon’s term in Government, and that is Bill English’s legacy for New Zealand and John Key’s legacy for New Zealand.

David Bennett talked about the people who really do the hard work and then, of course, excluded anyone with a tertiary education from that definition. He basically said that if you have a tertiary education in New Zealand, by definition you are not one of the people who does the hard work and contributes to the New Zealand economy. You are one of the socialist elite if you have a tertiary education. That is just the typical anti-intellectual reverse elitism that we get from the National Government, which hates anybody who might have an independent opinion and be able to think for themselves. In fact, we do not have even a Prime Minister who can think for himself. He relies on Cameron Slater to tell him what he should think, and we know that for a fact because he admitted it the other day.

Well, actually, I think that if more New Zealanders had a tertiary education, they would be able to see through the hollow spin that so frequently comes from this National Government, and they would know that having a Government that is dictated to by Cameron Slater is not good for the health of the New Zealand democratic system. David Bennett seems to ignore the fact that we all benefit from an educated society. So, yes, the people who do not get out a student loan because they may get their education through a trade, for example, still benefit as part of a society from the people who do get a tertiary education.

💬 David Bennett: Oh socialist elite—socialism.

Oh, and this makes me part of the socialist elite! I am part of the socialist elite if I point out that somebody who does not have a tertiary education but might have a trades qualification, for example, which they got through an apprenticeship—and that is fantastic—still benefits from the contribution to society made by the people who do get a degree or take out a student loan in order to support their study. And, of course, David Bennett ignores the fact that many tradespeople have student loans as well. Actually, many, many tradespeople have student loans as well. So I think that David Bennett’s anti-intellectualism does not contribute very much to this debate at all.

I want to talk to the specific provisions in the bill and, in particular, what I would like to do is examine the regulatory impact statement, which Treasury, helpfully, has released. The regulatory impact statement is one of the most useful resources that we get as parliamentarians. It enables us to look at the options that were canvassed by the Government, to look at the pros and cons of each option and the reasons why the Government chose one option or the other, and to weigh up the legislation before the House in light of the other alternatives available.

I was interested to see, for example, what the pros and cons were for the arrest at the border provisions in this bill. Somewhat helpfully, Treasury has redacted all of the analysis of the pros and cons of that particular provision, which, of course, begs the question: what on earth is the point of a regulatory impact statement that is supposed to inform intelligent debate on a bill if it is all redacted and if it is all withheld from the people who are going to be taking part in the debate? It actually means that the regulatory impact statement is worse than useless, and we have to ask what the point of it is. So, unfortunately, I cannot canvass in any great detail, really, the pros and cons of the alternatives that were considered by the Government, because Treasury has not supplied them.

It could well be, of course, that the Government did not consider any alternatives, because we know that this is, in fact, a fairly hollow measure. It is not exactly going to suddenly result in a massive decrease in student loan borrowing or student loan debt. In fact, it will have a negligible impact. This is more that the Government wants to be seen to be doing something about something. It fills up the legislative programme and makes the Government look busy. It does not really make a heck of a lot of difference, but it makes the Government look busy and makes it look tough on all of those mean, nasty people who do not repay their student loans. Of course, we know that there are actually very few people in that category.

I was very interested in looking at clauses 10 and 11 of this bill, which deal with the sharing of borrowers’ contact details that are received from their passport renewals. For example, under the current arrangement, if somebody applies for a passport, the Inland Revenue Department can obtain the contact details that they supply with their passport application only if they are in default on their student loan. This provision extends to everyone, even if they are not in default on their student loan.

I think that there is a very legitimate question to ask about this provision. Why would the Inland Revenue Department have the right to obtain somebody’s passport application details if they are not in default? If they have not done anything wrong, what right does the Inland Revenue Department have to obtain their personal, private information? I do not think the department does have the right. I do not think that there is a good reason for doing that. There is no case.

I have read the regulatory impact statement. I have read this little document here—the commentary on the bill, which Todd McClay, the Minister of Revenue, has put out. The case has not really been made at all as to why details can be given to the Inland Revenue Department in respect of somebody who has done nothing wrong, has made all of the student loan repayments that they are required to make, and applies for a passport because they want to go away on holiday. What right does the Government have to give that information, which is submitted for a passport application, to the Inland Revenue Department for the purposes of student loan administration when that person has done nothing wrong and when their repayments are up to date? There is actually no good reason for that. No case is made for that. This is just a case of the Government sharing people’s information willy-nilly. It may as well give it to the ACC and then everybody could have it.

💬 Grant Robertson: Or just give it to Judith Collins.

Or just give it to Judith Collins—

💬 Grant Robertson: Or Cameron Slater.

—or to Cameron Slater and then he could publish it, and then John Key would know what everybody is up to, of course, because we know that that is one of John Key’s main channels of information. Actually, no case is made for this information sharing. I think that Government departments should share information where there is good reason to do so. There is no good reason for sharing this information in the cases where people are not in default on their loans. If they are meeting all of their repayment obligations, the Government should just leave them alone. And as long as they continue to do so, good on them, and I do not think that the Government has any right to be delving into their private, personal passport applications.

I want to come now to the arrest at the border provisions. I think that one of the really important messages that we want to send to student loan borrowers who are living overseas is that we want you to come home.

💬 Grant Robertson: Come home.

We do want you to come home. We want you to contribute to New Zealand society. You are valued members of New Zealand society and we want to make it as easy as possible for you to come back. But, of course, what this Government has done is, first of all, made it more likely for people who are away overseas to get into default in the first place. Previously there was an amnesty or a holiday period from repayments. Those who went away on their OE, for example, might take 18 months off. That was fine. But this Government has reduced that period. People who go away on an OE might intend to be away for only 1 year, but, of course, things happen. Things happen while people are away on their OE and they extend it. They might extend it to 18 months or 2 years, but suddenly, without ever having really thought about it before they left home—because they were only ever intending to be away for a year—they will find themselves in default on their student loan repayments.

Most graduates go away for a year on their OE, and I encourage them to do it because I think that they are better contributors to New Zealand society when they get back, and that sense of perspective that somebody gets from travelling is good for New Zealand. So I would encourage them to do that. They go away for 1 year and they do not really think about their student loan, and nor should they really need to because if they are away for only 1 year, then there are no penalties for non-repayment. But previously that period was 3 years, and it did allow for those situations.

Of course, I do not know what the overall experience of members of the House is, but most of the people I know who go away overseas for a period of time are normally back within a couple of years. They go away—they might do a bit of a working holiday, they do a bit of an OE—but then they do come back, and when they come back they start repaying their student loans. These are the people who are now going to be captured by this Government’s somewhat Draconian and punitive measures. What it does is send a message to them that New Zealand does not want them back. Actually, we do want them back. We do want to make it possible for people at the end of their study or at some point—they might have worked for a few years to save some money beforehand—to travel overseas and then we want to make it as easy as possible for them to come back. But not this Government—this Government does not seem to be interested in that.

So I think that this bill is window dressing, but it is actually sending the wrong messages in its window dressing. Yes, people should repay their student loans, but simply being punitive about it, and threatening to arrest people at the border is not a progressive, forward-looking move. It is actually quite retrograde. That is one of the reasons why the Labour Party is opposing this bill.

I move, That the question be now put.

Despite Mr Bennett’s very strange rantings in this Committee tonight, nobody on this side of the Chamber disagrees that people who have borrowed money through the student loan scheme should pay back the money that they owe. I do believe that New Zealanders living overseas who have taken out a student loan should make their repayments, just like I did, just like many of us on this side of the Chamber did. That is not what our opposition to the Student Loan Scheme Amendment Bill (No 3) is about.

I suggest that Mr Bennett, rather than trying to be a one-man band rewriter of the Crosby/Textor line book by coming up with his new slogans and trying to get some traction on them for 2014, should actually stop and listen to our objections to this bill. Our objection to this bill—and why we are not voting for this piece of legislation—is that it will not work. This bill is a gimmick, it is window dressing, and it is not going to do what it purports to do, which is to increase the rate of repayment of outstanding debt on the student loan book. It just simply is not going to work.

There are a number of clauses that I want to look at tonight in Part 1 of this bill. I want to look at clause 4, clause 6, and, of course, clause 8, which a number of my colleagues have traversed in the course of this debate. The first one that I want to turn to is clause 4. Clause 4, and I think that Tracey Martin alluded to this in her speech, is where we have this Government enacting yet another piece of retrospective legislation. It has already put these rules in place. This is legislation playing catch up because it is a Government that is not keeping up with its legislative agenda. This bill has taken a very long time—since Budget 2013—to come to this Committee, and yet the Government has already put this into play. So that is one of the things I object to.

Then I want to turn our attention to clause 6—which I think Grant Robertson alluded to—which is the very blunt tool that has been put in place around how borrowers who are living overseas are expected to repay their loan. So if you have a loan and you are living in New Zealand, then your loan is repaid according to how much you earn, but if you are living overseas, your repayments are calculated on the balance of your loan. Although previously there was a three-step repayment threshold, under this legislation this is now increased out to five steps. It means that if you have a loan of over NZ$60,000, you are liable for repayment of NZ$5,000 per year, no matter what you are earning. If you are earning £150,000 and you have got a loan of NZ$61,000, you will pay back NZ$5,000 on your loan each year. If you are earning £12,000 working in a pub somewhere in London and you have got a loan of over NZ$60,000, you will also be required to make a repayment of NZ$5,000 per year. This is setting people up to fail. This is setting people up to get into trouble with their loan, and then, you know what? It will be “catch them if you can”, because you can arrest them at the borders when they come back in.

We are not setting in place a scheme that incentivises and makes it easy for New Zealanders who are living overseas to repay their loans. On this side of the Chamber we have supported it when the Government has put in place measures that we think will work to increase the number of people who repay their loans and make it easier for them to do so. We supported the measure around making it easier to make repayments through the Inland Revenue Department website. We thought that was a good measure and we gave our support to that because it simply was going to improve how people do it.

But in increasing the thresholds under clause 6 of this bill in concert with what we have already seen in previous amendments to the Student Loan Scheme Act—I think it was amendment bill No. 2—which was about contracting the repayment holiday that was available for students, we are simply setting traps for people to get into trouble. When Labour put in place the interest-free student loan scheme, when we were last in Government, it was done for several reasons. One was to address the amount of money that people had to pay at the end of their education.

I move, That the question be now put.

I rise to speak to the Student Loan Scheme Amendment Bill (No 3). I want to focus on the border aspect as well as on the fantastic, bright, young people who have moved away for better wages and better conditions and to get a broader experience so that they can come back to New Zealand some time. There is a whole range of scenarios for the people who have left. We know that economics have driven a lot out. It seems to be unusual that here we are putting something up to discourage some young people from coming back—but it is not “we”; it is National. National is discouraging our best and brightest from possibly come back. They will possibly end up paying amounts of money that are just not fair, because the ones back here are paying something different—or maybe that is the incentive. It is a little bit hard to work it out.

At the same time, the elite of National are keeping wages down in New Zealand by making it easy to bring in more and more temporary migrant workers and to keep wages down in order to look after its elitist farms and its elitist businesses, to make money, and to hold wages down for New Zealanders. It then keeps our brightest young people overseas or makes them pay money in a wholly disproportionate way. It is a damned mess and it keeps—[Interruption]

💬 Tracey Martin: Ignore him.

—yes—the inequity of repayments for New Zealanders overseas compared with those at home. Then we keep wages right down and conditions right down—disgusting situations. We bring people in by the truckload for our horticulture and our agriculture, and we keep our New Zealanders overseas or we penalise them.

It is very interesting because this is a gimmick in another way, and yet it is holding back a batch of good Kiwis as well. It is holding them down. It is going to be penalising them inappropriately. The figure, I am told, is that this will target 3.2 percent of the $13 billion student debt. This is all about that 3.2 percent. We will have police acting as debt collectors at the border to discourage or to catch young New Zealanders—and older New Zealanders as well, as we have heard.

I think this Government needs to have a deep look at itself and ask what it is doing.

💬 John Hayes: Oh, nonsense.

Oh yes! We have seen the big line-up and the multimillionaires splattered across here. They can send their kids overseas. They do not have to worry about student debt. But the others—the real New Zealanders, the ones doing the grunt and the work—have to pay bloody heaps of interest. This lot does not. No, no—they can send their kids through because they are just all right, thanks, mate. So that is the issue. That is the issue [Interruption] The members making the noise over here—continual noise—do not have a real idea of what it is like for a lot of people. They do not care, because they have got the money. So we need to look at some positive incentives for decent wages and conditions and not use these punitive methods to try to address a very, very small amount of the student debt. Thank you.

I move, That the question be now put.

I raise a point of order, Mr Chairperson. I believe that when someone moves a closure motion, all that they are allowed to say is: “I move that the question be now put.” After you called John Hayes, he said: “Mr Chair, I move that the question be now put.” I do not think that that is in the Standing Orders.

No, it is quite OK. You are allowed to address the Chair.

💬 GRANT ROBERTSON: After a member has already been called?

The CHAIRPERSON (Eric Roy): Yes. You are allowed to acknowledge the Chair.