Student Loan Scheme Amendment Bill (No 3)

Clause 1, of course, as we know, is the title clause, and this bill is called the Student Loan Scheme Amendment Bill (No 3). The critical element in that title is the number three, because we have been subjected in this House to the National Party’s tinkering with the student loan scheme. The National Government has come to this House repeatedly, since it came into office in 2008, to make small, incremental changes to the student loan scheme, because it did not have the guts to say to New Zealanders the thing that Steven Joyce and John Key believe, which is that the interest-free student loan scheme is wrong. They do not like it.

National Party members are fully entitled to their view that interest-free student loans are wrong, but if that is the view of National Party members then they should have the gumption to come to New Zealanders and to come to this House and say that they are putting interest back on student loans. But they have not done that, because they know that it is politically unpopular. So, instead, Steven Joyce’s approach is to introduce bills with innocuous titles, like the Student Loan Scheme Amendment Bill (No 3), and to make the changes that effectively limit the enabling mechanism that is the student loan scheme.

So the Student Loan Scheme Amendment Bill (No 3), as we have been traversing tonight, is essentially a set of slogans and gimmicks around the arrest at the border provision. It is the latest attempt by the National Government to come to this House and make changes that will restrict people’s ability to get loans and, in this case, it will actually provide a disincentive to paying them back. From day one, it is saying to students that the interest-free student loan scheme will not be available to people who are 55 years old or over, when it comes to living costs, and is saying to people that the $172.50 that is the living cost component of student loans will not be altered, despite the fact that rents are spiralling well ahead of that, particularly in Auckland and Wellington. The Government has put on an administration fee, which is effectively adding interest, because it is an administration fee that has no basis, and it has no justification. That has been added in an earlier student loan scheme amendment bill.

Little by little the eligibility for these loans has been restricted, while at the same time eligibility for the student allowance scheme, which is covered in the regulatory impact statement for this bill, has also been restricted. If you are over 40, you can have only 3 years of student allowances in your whole lifetime—only 3 years in your whole lifetime. If you are trying to do postgraduate study, you cannot have student allowances at all, no matter what your circumstances are.

These kinds of restrictions and limitations on loans and allowances are limiting the ability of New Zealanders to get a tertiary education. So it is all very well to propose a bill with an innocuous title like this, but it is one further step in limiting opportunities for New Zealanders. It is one further step in Steven Joyce’s stated desire in 2010 to dampen the demand for tertiary education, and to restrict, in other words, the number of people receiving tertiary education.

We on this side of the Chamber stand for the opposite of that. We stand for investing in tertiary education and investing in New Zealand’s future by encouraging people into study. We are proud of the fact that we expanded eligibility for student allowances and that we made loans interest-free, because we wanted to give New Zealanders an opportunity.

If you wanted to retitle this bill, it could actually be called the “Student Loan Scheme (Denying New Zealanders Opportunity) Amendment Bill”, because that is what this bill in effect does. It adds to a litany of decisions around the student loan and student allowance schemes that are actually limiting those opportunities for New Zealanders.

The other element of clauses 1, 2, and 3 is, of course, the question of the commencement date. There is a little bit of confusion about this because proposed new section 4 of the bill has a commencement date of 1 April 2012. I might be mistaken but 1 April 2012 was a couple of years ago now—I think that is right, is it not? I have not lost those years. It has been a terrible, terrible time over the last few years with a National Government, and I have tried to block out a number of the years that we have been through under National, but I am pretty confident we have been past 1 April 2012. That is because new section 4 effectively covers yet another mistake from this Government when it comes to the student loan scheme, having failed to deal with the way in which deductions occur from a borrower’s account. So we have got retrospective legislation within new section 4.

Then, proposed new section 6, which is the one around the repayment obligations that we have previously covered, comes into force on 1 April 2014, and well it might come into force on April Fool’s Day, because it is a foolish decision to set such an arbitrary repayment figure for borrowers who are overseas. The decision that has been made there is that, effectively, no matter what you are earning when you are overseas, you are subject to these flat rates. People who are actually meeting their obligations under the loans scheme will not even be able to pay their loans back, because of the flat rates. It is called flat-spotting. We went through it as borrowers in New Zealand before we introduced interest-free loans while studying.

💬 Dr David Clark: I got flat-spotting.

Flat-spotting was another of the things that happened in Dunedin, I think, Dr Clark, but in this case it means people who cannot even meet the interest payments on their loans.

What is needed here is some imagination from the National Government to try to come up with a scheme that is based on actual earnings, and to actually work with borrowers so that they identify their own earnings and then identify what they can pay. That would be an inventive way of dealing with this, but, instead, new section 6 of the bill, in coming into force on April Fool’s Day, simply implements an arbitrary repayment regime that I do not believe will improve repayment rates whatsoever.

Then, proposed new section 7, just to ensure that we do not get ahead of ourselves, comes into force, we are told in clause 2, on 1 April 2013. So it is back to last year for new section 7 of the bill, which is around late payment interest reductions. Here the Government is clearly covering up for yet another mistake that it made in one of its many student loan scheme amendment bills.

Clauses 1 and 2 of this bill highlight for me the fact that this Government has not got a clear idea of what it is trying to do with student loans and allowances. All Steven Joyce can see are costs that he wants to cut. He does not see the opportunity to invest in the future of New Zealand and in the potential of New Zealanders. On this side of the Chamber we see student loans and allowances as an opportunity for New Zealanders to get ahead. We will continue to support those.

We do need to review the student loans and allowances systems. They have not kept up with the changes in terms of the cost of living for people, and too many incremental changes have been made to it, so there are now loopholes. There are now places where people can hide money in trusts and get allowances for their children, while other people who cannot afford accountants do not get those allowances. Labour is committed to a review of this scheme, but it is a review that is about increasing the opportunities for people to study and to be supported while they are studying. We cannot support this bill, although we would like to see more legislation that actually helps people pay their loans back, and helps people get through tertiary education. This bill is not that.

I call Dr David Clark.

Thank you for the call, Mr Chair. I realise that out of the wealth of options you had before you that I should be honoured that you selected me to speak at this point in the debate.

The CHAIRPERSON (Lindsay Tisch): I am sure.

It is very touching. I rise really to support Mr Robertson’s suggestion that this Student Loan Scheme Amendment Bill (No 3) Bill be renamed the “Denying New Zealanders Opportunity Bill”, because I think that does aptly describe the general thrust of the bill. The Tertiary Education Union said in its submission—and this really clarifies the point—that this bill is a poor alternative to making education more affordable and accessible.

This bill uses Parliament’s time to refine a few rules in this legislation and, primarily, to put a gimmick in place that provides the provision to arrest at the border. We know it will see a few New Zealanders victimised at some stage when they are selected from those who owe money, when they are perhaps returning to the country to attend a family funeral or a wedding or other significant occasion. It is a distasteful gimmick. The police have said that they do not have the resources to implement it and we know that it is a crazy idea, but the Government seems determined to persevere with it, and so that is why we are here this evening.

This bill moves in the wrong direction. It is designed to make the scheme more punitive. We on this side of the Chamber support a review of student loans and allowances to ensure that they really do support every New Zealander to have the opportunity to make the best of their gifts and talents so that they can contribute to New Zealand in the way that they have the energy to do and in the way that they want to do. We do not think that the original intent of the student loan scheme was to turn New Zealanders in exile into enemies of the State—far from it. On this side of the Chamber we think the intent was to support students, and it should be strengthened in that regard rather than working our way through the kind of authoritarian posturing that has been put forward here by the Government members.

The one lighter note in all of this, of course, is the tongue-in-cheek additions and flourishes that the officials have put in there. I think that they really must be commended for their ingenuity. Making the commencement dates in the past and on 1 April really does highlight the point that this bill is a joke. It really does. I would like to tip my hat to the official who proposed these dates. I think that subtle sense of humour is the dignified way in which officials make it known that their political masters have reached the edge of ridiculousness, and that is certainly what we see in this bill, which is indeed all about denying opportunity.

We have heard this from others in the debate. Mr Goldsmith talked about an entitlement culture amongst students, essentially asking that students reform themselves, stop borrowing money to afford to live, and somehow magic their way through university. That was his contribution. We had Mr Bennett stand up and suggest that those who went to university or undertook tertiary education—even trade training—are some kind of socialist elite and, essentially, some kind of enemy of the State. That was a bizarre contribution, but that really has been the sum total of contributions from that side of the Chamber. Government members have not been prepared to stand up and defend this ridiculous notion that we ought to be arresting at the border those who do not have the means to repay their student loans. We on this side of the Chamber would like to see more constructive solutions put forward. Perhaps the Minister responsible—who is the Minister sitting in the chair, the Minister of Revenue—will finally take a call to defend this bill, because his silence at the moment is very telling and the words of the officials—those clauses coming into effect on 1 April—speak far louder than the Minister’s own contribution in this debate.

On this side of the Chamber we would really like to see the Privacy Commissioner’s concerns looked into more—the data-sharing arrangements behind the scenes for those who are in fact compliant borrowers. We would like to see a more generous student support scheme so that more New Zealanders are supported into education that betters their lot and the lot of New Zealand over time. We would like to see a New Zealand that is going forward and where everyone is benefiting and everyone has opportunities to get ahead, not just the wealthiest few who can afford to hire accountants to get around the laws in order to preserve their wealth and access the things that we would all want access to for our society.

The bill itself really is all about amending the interest-free student loan scheme, which was one of the achievements of the Clark Labour Government. I would like us all to reflect upon that great achievement of making studies more accessible, because the punitive and unsustainable interest charges from student loans that were introduced by the National Government were making education less and less accessible in the 1990s. We are seeing here a retread policy from the National Party as its members seek, once again, to exclude people. This is part of a broader package. We have heard from Mr Lees-Galloway about vets in his electorate who have been punished through this restriction of access to loans and allowances. I have mentioned the medical students in my own electorate who are struggling to get through their studies now that their time has run out. Mature students—in particular, those who have taken the time to have a broader education before getting into medicine—are amongst those who are particularly disadvantaged. Master’s degree students and those looking to retrain and make a contribution to society—having taken time off, perhaps to raise a family, and now returning to study—find themselves punished by this Government.

We on this side of the Chamber think that is not right. We think education should be something that is available to more and more New Zealanders, not fewer and fewer New Zealanders. We believe that there should be incentives in place for people to get amongst it, to do the hard yards, to study, and to contribute to New Zealand in new ways. We opposed, of course, the charges that National put in place as administration charges when National members realised that they could not put interest back on to loans—that it was not politically sustainable. Through gritted teeth they are trying to wean us off the loan scheme, but they have not got there completely yet.

I ask students everywhere in the country to note what is happening here tonight in this bill, to note the pattern of this National Government, which tries to restrict study, and ask themselves whether that is the right thing for our future in New Zealand, and to vote in the next election accordingly. This Government has a terrible track record in student support. It does not like supporting students from all backgrounds to get ahead. It does not think that education is something that everyone should have access to in the way that Labour does. Welcome again to the students of my electorate of Dunedin North who are arriving there this week. It is great. I look forward to seeing them tomorrow in Dunedin. It is always great to have students in Dunedin. They bring so much life to our town and I am very glad that they can still access an interest-free student loan, despite the wishes of this Government.

Can I just make the point that votes are taken in silence, because the noise is a distraction. I can hear the conversations.