Student Loan Scheme (First Home Repayment Diversion) Amendment Bill

Members, when we were last on the Student Loan Scheme (First Home Repayment Diversion) Amendment Bill, the next call was to be a Labour call of 5 minutes.

I am very happy to rise to speak on the Student Loan Scheme (First Home Repayment Diversion) Amendment Bill and to confirm that Labour is very happy to support this bill through to select committee for further consideration. Why is that? It is because this bill is an honest attempt to deal with the biggest issue that young New Zealanders face in our country today, and that is the loss of the dream of one day being able to own their own home.

One of the reasons this bill in particular appeals to me is because I think of my own story. Back in the early 2000s, my wife and I, as a relatively young couple who were a few years out of university, did have the ability to make our start in life by purchasing our first home. It was a modest home in a modest part of my community in Mt Roskill. Back in the early 2000s, that was possible for a young couple who were on reasonable wages and who did a bit of saving—to get a foot on the property ladder and to put roots down in the community. But what we know, and what every New Zealander who is watching this debate knows as well, is that increasingly that dream of homeownership is out of reach. We can consider some of the statistics that point to this. We know the stories, but let us be very clear about this.

In New Zealand today, we have the lowest rate of homeownership since 1951, since Sidney Holland sat in this Chamber and spoke as the Prime Minister of New Zealand—since Sidney Holland was the Prime Minister, in the year of the great Waterfront lockout and strike. We have not had homeownership so low since that time. It simply is not good enough. The fact is that from that time onwards, both National and Labour Governments, until this National Government, supported that dream of homeownership—supported the dream of the great Kiwi property-owning democracy, in which everyone had a stake.

What I have learnt out of homeownership is that it brings stability to communities. When people can settle down and when they can put roots down into a community, they can give back. They can look forward to the future and think about their kid going to the local school. They can join local groups and make a contribution. They can make friends and neighbours. We build stronger communities when we have high rates of homeownership. It is not just about the individuals; it is about the kinds of communities that we want in New Zealand. But with the lowest rate of homeownership since 1951, which has happened on this Government’s watch, we have lost that.

It is particularly acute when it comes to the dreams of our young people. Back in 1991, 50 percent of under-40-year-olds in New Zealand were able to own their own home. That figure has halved, to 25 percent, and in Auckland it is just 20 percent.

When the Labour Party sees this bill from Mr Hughes and the Green Party, it sees, as I say, an honest attempt to deal with this incredibly serious issue. We believe that this entire House should, in good faith, pick up any attempt to deal with this housing crisis and give it the full weight of its consideration. This should not be about politics between parties in this House; this should be about the obligation that we owe to every single young New Zealander to give them a decent shot at homeownership.

💬 Jono Naylor: To pay for their house?

And, of course, there is some noise from the other side of this House. It is very comfortable for members of this House—including me—who start on a salary of $140,000 a year. But when we are talking about young New Zealanders just out of university—young New Zealanders who want to get their first home in Auckland when we have got suburbs across Auckland where the average price is a million dollars a year—we should be looking at every single avenue we have got to support them.

The bill is a relatively simple one. It picks up the model of the student loan holiday that we currently have if young New Zealanders with a student loan are travelling overseas, and it gives the opportunity to divert those student loan repayments into a separate account that can be used only for the purposes of a home deposit. It is relatively simple in its nature. There are potentially some issues in respect of tax treatment that need to be explored, the Labour Party believes, but a select committee is the place to do that, and this House, as I say, should have the focus on this housing issue to send it to a select committee to allow those issues to be explored.

In the previous speeches from the Government—the one previous speech we have had—we did not actually hear much about the housing issue, which is the driver of this bill. We heard about some of the support that we give to students currently. I just encourage members opposite to home in on that housing issue, which we hear the Government cares about. Here is a chance to do something about it. Let us send the bill to a select committee and continue the debate. Thank you.

It is actually a privilege to speak in opposition to the Student Loan Scheme (First Home Repayment Diversion) Amendment Bill. The ironic thing is that I am probably the only member close enough to it to remember what it was like to have a student loan and go through the process of purchasing their first home, and I can assure you that—

💬 Chris Bishop: Hey, hey, hey!

Oh, Mr Bishop, as well—sorry. But one thing I wanted to talk a little bit about is that this so-called housing crisis that exists, which the Opposition is upon every day in this House and every day out in the community, is very centralised into a couple of aspects of New Zealand that are experiencing high growth.

If you look at what is happening in places like Gore and Balclutha in Southland and on the West Coast and in other parts of New Zealand where there are plentiful jobs, great study opportunities, and really good lifestyle opportunities to start and bring up a young family, the people there do not see that as a housing crisis at all. The average house price in Gore at the moment is $201,000, the average house price in Clutha is $175,000, and the average house price in Queenstown is $900,000, but there are choices for people to go where the jobs are and to go where the study opportunities are. We talk to the Opposition members here about the trade-off that they say there is around getting a student loan and buying your first home. You can study at Southern Institute of Technology under a zero fees scheme and implement a deposit on your first home.

I suppose the point to talk about here—the point to consider and the reason why I oppose the bill—is that it is expensive and it is completely unnecessary, but also there is a lot of statistical research that has been demonstrated to show that the motivations behind the Green Party’s bill are not actually realised. So the presence of the size of a student loan does not appear to affect the probability of a couple having a mortgage. The presence of a student loan has no effect on a mortgage size; nor does the presence or the size of a student loan appear to reduce the number of children a couple has.

When you look at the contribution that the Government makes into subsidising and paying for the cost of study, the Government puts about $4 billion a year into tertiary education funding. Already, 28 percent of tertiary education funding goes to supporting students through their studies, including nearly half a billion dollars that goes into student allowances. The share of the full cost of tertiary education study per student over the duration of their lifetime is about 82 percent covered by the Government.

As a young New Zealander who has recently—not too recently, mind you—completed their studies and purchased their first home, I have got to say that the one motivation that I had to continue with my studies and to make sure I tried to do a good job, to the best of my ability, was the fact that I knew that my parents had made a contribution towards my studies and also that I would be having to pay a lot of that back myself. I think that if you are just getting everything for free, then what is the motivation to do well and to succeed and to get good results and good qualifications?

The other thing, looking at people in my position and students around my age, is that when you finish your study—the thought process that I went through was I wanted to pay off my student loan and then I wanted to embark on going into my first home. I think the pressure on young people to try to do both while they are trying to build a career, trying to build a reputation around the qualifications they have got if they have studied, and trying to look for and pay for a first home is an incredible amount of pressure, and I do not think that there would be many young people who actually want to try to duck-shove the cost burden of paying off their student loan even further just so that they can get into their first home.

I think that, at a fundamental level, what the Greens are proposing in this bill is jiggery-pokery. It is moving one level of debt from one column into another, and if you are a student, you are still going to have to pay it back by one means or another. That is the thing. I think that when you look at the fact that 10 percent of your salary is deducted to pay off your student loan, if you have that paused momentarily while you are generating a deposit for your first home and then that is automatically applied again, that is a significant cost burden, and it has high levels of cost burden on a new graduate trying to budget.

So these are the reasons why I oppose this bill, notwithstanding the fact that I am probably better placed to speak to it than some of the other members who are likely to be speaking following me—not to be making ageist comments or anything like that. But I thank you for the opportunity to make this contribution.

It is a pleasure to rise on behalf of New Zealand First to speak to the Student Loan Scheme (First Home Repayment Diversion) Amendment Bill. I am speaking on behalf of Tracey Martin.

First of all, we will not be supporting this bill for some very good, sound reasons, and I will get to those in a moment. The first thing—I think, the major one—that I have noticed sitting here just today is that all of the speakers are not really speaking too much about student loans themselves; they are speaking about the problem that they are trying to address, which is homeownership. I think that the main issue with this bill is that it is trying to address an issue by shifting debt through the student loan system, and New Zealand First does not agree with that. This bill is really not about student loans; it is about three things: it is about investment in young people, it is about the principles of the different parties here in this House, and it is about what we do for the overwhelming problems, challenges, and impossibilities that our young people face due to this mismanagement of the country by the National Government currently.

The first thing I want to talk about is investment. New Zealand First’s point of view is that we need to invest 100 percent in our young people, and we need to invest 100 percent in our young students. The problem with this bill is that it is not about 100 percent investment. What it does is it acknowledges a problem. We have heard the different speeches in the House today and previously and acknowledge the huge issue—it is a huge issue. I think it was mentioned in the House today that Auckland has got the highest affordability rate for houses in the world. So that is an issue, and we do need to address it. But this is not the way to do it.

Not only that, this is reacting to that problem. What New Zealand First believes in is not reactive policy but proactive policy. Unfortunately, what this means for the Greens is that they are showing that they have given up on the 100 percent investment in our young people. What will suffice for the Greens at the moment is a half-pie, ka pai solution. [Interruption] Half-pie is not ka pai.

The fact is that if we did not have a housing crisis, if we did not have a housing affordability crisis, this bill would not exist. That is the essence of the issue and the essence of why New Zealand First will not be supporting this concept. What we need to do instead is sort out the problem. We need to sort out that problem first—the housing issue and the housing affordability issue—and not create more debt for our young people. In essence, this is what this concept does. It delays the payment of debt, it deflects the payment of debt, and, more importantly, it just moves that debt around. It is not addressing the problem.

The second thing I want to talk about is the foundation principles of all the parties here. I know there are some people who are listening who might question whether the National Party does have principles, because they change so often. But New Zealand First certainly does have 15 fundamental foundation principles. We have had them for 24 years, and they have never changed. We have copped a lot of flak from all the different parties in this House about our standing up for our principles and maintaining those principles. The one that I am talking about is that education is an investment.

I would just like to read out our principle: “Money spent on education will be treated as an investment, not as expenditure. Educational advancement is both in the national and in the individual interest. Educational investment is critical for economic and social recovery.”

New Zealand First will not be supporting this bill, because, no matter what anyone says and no matter how much criticism we get from anybody or any party in this House, we stand by our principles. We stand by the fact that education is an investment. That is why we have got the Up Front Investment Tertiary Policy that Tracey Martin has put forward. We believe it is a social contract between the Government and the students. We want those students educated, we want those students skilled, and we invest in them 100 percent. What we want back is a skills debt to this country. That is what we believe is the solution to this problem—not just shifting the debt. That is why we will not be supporting this bill. Thank you.

I find myself in the unusual position of largely agreeing with the previous speaker, Darroch Ball. Putting that aside, National will be opposing this bill. I want to cover off on a few of the really important points we need to consider when we think about this.

This bill is seeking to solve a problem, but I think this is the wrong solution to that. There are other solutions that they should be looking at. That problem is around homeownership. I personally, and the National Government, do not believe that student loans are the issue at the heart of this. As the previous speaker said, this will simply move the debt around.

Keeping in mind what we have in terms of the settings for student loans, currently 731,000 people have a student loan—731,000 New Zealanders have a student loan; that is at 30 June 2016—and 40,000 students pay one off, every year. So 40,000 New Zealanders manage it and get on with their lives. At the same time, those 731,000 New Zealanders are investing in their future. They are investing in having a higher income, a sensible investment, and at the same time the taxpayer is investing in them, with some 82 percent of the cost of their tertiary education being met by the taxpayers of New Zealand. Remember too that 40 percent of the cost of those loans—the New Zealand taxpayers’ investment in these young people or people who have a student loan—is written off. That is quite high, but it is a good investment, in my view.

I have a personal interest in this: my husband and I have three daughters, all with student loans. They are paying them off. They have good jobs. They know that they have invested, as did we in assisting them a little bit, in their future. Their future will mean that they can manage their debt. One day they will have their own homes.

Since student loans came into being, half a million people have paid them off in full. I say that to keep in context the commentary about those borrowers who end up in bankruptcy. Those very same borrowers—and we are talking about 544, in the year to June 2016, ending in bankruptcy—also have significant other debt. It is not just their student loan.

In essence, the next thing I want to cover off on is the important part, about young people determining how they are going to spend their time in training and whether they will pick up a student loan. When I was overseas last week, at the United Nations Commission on the Status of Women, I was talking about various tools that New Zealand uses to help young people to choose the right occupation, to improve their economic independence.

This was a particular opportunity for me to share some really great things that are happening here in New Zealand. One of the things that I shared was the Occupation Outlook app 2017, which is the updated one. Today it has been quite topical, talking about midwives. A young person wanting to be a midwife can look at that app and discover that their income is going to be high, that fees to train are in the upper quartile of fees, that job prospects are projected to increase, but that they are still quite good right now.

So what I am saying, in essence, is that when a young person decides that in life they want to have a good job, they want to have their own home, and they want to have a bright future, then they will structure the time they spend and the investment they make in getting extra training, taking a student loan on board. But, in fact, that planning, to have a good income, will reap the rewards for them. As I have said, 40,000 New Zealanders pay off their student loan every single year—half a million since student loans were introduced.

We must not forget that the New Zealand taxpayer is significantly investing in these young people—largely young people—who are going to university or other tertiary institutions and taking out a student loan. This bill is a solution but not to this particular problem. This bill would simply mean that young people would park their debt in a place and then have to go back to it later. This is not going to solve any of the issues for young people looking to invest in a home, and therefore National will not be supporting it.

Labour is supporting this bill, and I want to thank Gareth Hughes and the Greens for approaching the problem of the housing crisis with a constructive, problem-solving attitude, because it is more than the National Government members can find in themselves after 8 years in Government. They have stood by and watched the dream of affordable homeownership come crashing down around the ears of Generation X and Generation Y.

We have the lowest rate of homeownership in the world. We have the most unaffordable housing in the world, according to The Economist magazine. That is an absolute disgrace, and this National Government has done nothing about it. It has been happy while our country’s biggest city turns into a speculator’s paradise, and only this morning did we see on the front page of the New Zealand Herald the fact that people are flipping houses at a rate of 300 a year, making an average of $70,000 profit on each one. There was one case in South Auckland last year where someone flicked off a house on the same day it was bought and made a million dollars’ profit on the resale. As if we needed any more evidence that National’s housing policy has failed. So at least the Greens have come to this House trying to offer some kind of solution.

When my wife and I bought our first home, in 1989, it cost us the equivalent of three times—three times—our household income. And that was the average at that time in the 1980s in Auckland. For Generation X and Generation Y—for our son, who is 27, and his friends’ generation—they face a median house price in Auckland that is 10 times the median household income. Housing has become three times less affordable now than it was 30 years ago, and this National Government has no interest in doing anything about it.

There was a really interesting story, actually, in the Sydney Morning Herald a couple of days ago. Paul Keating, the former Australian Prime Minister, gave a stonkingly good response to the announcement by the Australian Federal Government about an increase in homeowner subsidies.

💬 Chris Bishop: What a great Prime Minister.

And he was really having a go. I agree; Paul Keating is one of the giants of our time. And he was ripping into the Liberals in Australia for wanting to crack open superannuation savings, basically, and for allowing young people to take away their future savings and their future opportunities because the housing market had been allowed to spin so badly out of control. And Australia faces many of the same problems we do.

Keating’s speech underlined, for me, the importance of a Government that is willing to tackle the structural causes of a housing crisis, and that is not this National Government. It refused to do anything about tackling speculators. It has quite happily fallen—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! I have not heard “student loan scheme” mentioned in over 2½ minutes. I am not part of Generation X or Y, and I would actually like to hear something about what the actual subject is about, and the substantive nature of what this bill is about, which is the student loan scheme. Tying it into housing is what it is about, but how about mentioning the student loan scheme as well?

Thank you, Mr Assistant Speaker. The Student Loan Scheme (First Home Repayment Diversion) Amendment Bill—although we are supporting it to select committee, there is no doubt that it does fall into the category of policies that do not address the structural causes of the housing crisis. We need a Government that is actually willing to build houses, that will rewrite and reform the rules around renting, and that will actually genuinely reform the restrictive planning rules that choke off the supply of affordable housing. We need those things, because without them, Generation X and Generation Y will be forever condemned to a life of being tenants in their own land, something the former Prime Minister said would never happen.

Until we get a Government, later this year, that will make those reforms, that has the political courage to actually bust the monopolies and the rorts and the vested interests and actually fix the housing crisis and restore affordable homeownership—until we have that—then people are always going to be forced into a position where they have to bring these kinds of policy responses to the crisis.

We support this bill to select committee because we think it is worth debating these issues. It is not perfect. There are lots of issues that would need proper scrutiny at select committee. But we applaud the Greens for at least making constructive—

I am sorry to interrupt the honourable member. His time has expired.

Well, what I take from that speech by Phil Twyford is that the Labour Party does not really support this bill at all, because he did not talk about it at all.

I recently heard from some medical experts who have found a cure for voting for the Green Party, and it is called economic literacy. Every time you get a bill from the Green Party—and particularly from Gareth Hughes—it is economically illiterate. The last time he brought a bill to this House it was to set the price and set feed-in tariffs for solar electricity and, as it was explained in the House at the time, there are two ways to set a price wrong: too low or too high. Either way, you alienate either producers or consumers from the market, and end up with less of what you actually want.

This particular bill has even more economic problems than even that one. One of the most simple problems is: who will it benefit? Cui bono? Well, people who will benefit most from this bill are people who have the largest student loans—probably the people, statistically and, sadly, who went to the best schools and then got the most subsidies when they were at university. And now the Green Party—the champion of the poor; the friend of the working man—wants to give even more taxpayer dollars in the form of subsidies to some of the most privileged people in New Zealand society to get on the home ladder. What about all the working class and poor people who have not had the benefit of a tertiary education and cannot benefit from this particular scheme? What is wrong with the world when the ACT Party has to stand up for the working man because the Green Party cannot do it and the Labour Party did not mention them either?

Not only is this bill privileging but, to a large extent, it is self-defeating, because even though these people are going to get some measure of taxpayer money paying the interest on their loan while they are saving for their mortgage, what they are going to discover—and this is the kicker for people who think that there might be something in it for them—is that when they go to the bank to get a mortgage, the first thing the bank is going to ask is: “Do you still have a student loan?”. And if the answer is “Yes.”, then it is going to be so much more demanding on the terms of borrowing and the interest rate that can be secured. This is what I mean by economic literacy in the Green Party. Even when it tries to help people—even when it tries to help the wrong people—it cannot figure out how the economics actually work.

But I do want to say something about the structure of the housing market, and I regret that Phil Twyford beat me to it, because former Australian Prime Minister Paul Keating in his lovely Australian politician way said that allowing people to put more of their savings in, and creating policies that encourage young people to put more of their equity into the housing market, was ripping the backside out of Australian public policy. National, sadly, has done that with KiwiSaver HomeStart—making people put more of their superannuation savings into a housing market it thinks is overheated—and yet this bill is more of exactly that. It leaves people in a position where their net amount of debt in the housing market is greater than it would have been had they focused on paying off their student loan first. We are actually subsidising people to be in a worse financial position and more dependent upon a housing market that is overheated than they would be otherwise.

This bill is a failure on so many counts. It tries to help the wrong people, it is self-defeating in trying to help them, but it is worse than that, because there are real structural problems with the housing market and, as we heard from Phil Twyford and we hear frequently from the Minister for Building and Housing, or housing or social housing or whatever Nick Smith is these days, it is the restrictions upon land that you are allowed to build upon, put in place by restrictive land-use planning, that has driven up the price of housing for my generation, for Millennials, for Generation X and Y—whatever we are calling ourselves these days, and I am sorry to hear, Mr Assistant Speaker, that you are not one of us; it did come as a bit of a surprise.

The fact of the matter is that it is land-use restriction and urban planning that has driven up house prices in every Western city that has tried them—and which party in this House is most in favour of smart growth, urban density, urban containment, and the kinds of restrictions that have pushed up the price of housing for a whole generation? Can you believe it? It is the economic illiterates in the Green Party.

So the ACT Party proudly opposes this bill. It is inequitable, it is ineffective, and it misses the real structural problems in the housing market, which need to be addressed, and not only is the Green Party the last party to address them but, actually, it has an ideology that makes them worse. I really hope that Gareth Hughes does not get a bill drawn again, because it cannot possibly be worse—

Order! The member’s time has expired.

Well, that is quite rich, is it not—a lecture on economic illiteracy coming from the party that has driven trickle-down economics down the throats of New Zealanders since the mid-1990s despite its demonstrable failure, the fact that it has increased inequality, and the fact that we have got huge debt in this country. David Seymour is the person who can tell us about a flawed economic ideology that he and 0.1 percent of the population are clinging on to. That is what David Seymour can tell us about.

I am from Generation X. Kris Faafoi cruelly suggested that you may be from Generation A, Mr Assistant Speaker, which I think is very unfair. As a representative here of Generation X, I can say that Generation X was the generation that copped the beginning of having to deal with user-pays education. We are the generation that copped the beginning of that, and now, if the National Government has its way, we are the generation that cops the beginning of having to increase the age at which we are eligible for New Zealand superannuation. Generation X and Y do find themselves in the unique position in New Zealand of actually having enormous debt saddled on them simply for going on and getting their education.

I want to say to David Seymour that his criticism of the bill around whom it is helping shows just how out of touch he is. If he thinks that the only people with student loans are some kind of rich medical graduates or dental graduates, he is wrong. People with student loans include plumbers. People with student loans include carpenters. These are people who go and get their certificates at polytechnics, and they have student loans. So Mr Seymour might like to think that every student in New Zealand is a university student, but they are not; they are actually people who are trying to contribute to New Zealand and contribute to their own further advancement through education.

This bill is the intersection of the National Government’s failure. It is the intersection of a housing market completely out of control, with the worst homeownership rates since 1961, and with average house prices around New Zealand increasing by 15 and 20 percent. That is why it says in the title, for the benefit of Mr Muller, “First Home Repayment”; it is both—student loans and housing.

This is the intersection of the failure of National to address the housing crisis and its complete disinterest in the importance of education and training to New Zealand’s future development, because that is an investment. Everyone on that side of the House wants to call it a cost. That is the only way they can conceive of education—as a cost. It is not; it is an investment for all New Zealanders, and that is why the Labour Party is proposing 3 years’ free post-secondary school training and education, because we believe that every New Zealander should have the right to be able to take their education on and do the learning for life that we need in the future of work that we are facing up to. The current Government has sat on its hands in this area. It has not increased the amount of support that is available for students, it has let fees increase, and it has put more costs on to students. Those graduates are now coming out with massive loans and are facing a housing market that the National Government has let go out of control. It is the intersection of failure of this Government.

I congratulate Gareth Hughes on having drafted this bill. As my colleague Phil Twyford said, there are some issues with it, and it is a similar issue to the one with—[Interruption] There are some issues with it. It is similar to the one with KiwiSaver, where, actually, we are moving an ambulance around at the bottom of the cliff. That is what we are doing. We are saying to those young people: “This is how we are going to support you to be able to afford your entry to a first home.” But we think it is worthy of consideration. We think it is worthy of discussion; otherwise, all we have is David Seymour criticising—not a constructive idea, not a proposal to actually say: “How will we make housing more affordable? How will we reduce the cost of education?”.

So we welcome the opportunity to have this discussion, to openly and honestly say to Generations X and Y that we realise they have been hard done by and we want to do something about it. From the Labour Party’s point of view, our priority is to address the structural issues in the housing market to make sure that we both increase the supply of affordable housing through the KiwiBuild programme and crack down on speculators and, on the education side of this message, make sure that we reduce the debt burden on students and graduates by getting 3 years’ free tertiary education and training. If we get that package up, we will make housing more affordable, but in the meantime, we can support this bill to facilitate a good discussion.

It is great to be able to stand and speak against the Student Loan Scheme (First Home Repayment Diversion) Amendment Bill here this afternoon. Firstly, I just have some comments on the speeches that we have heard here today. Grant Robertson, who has quickly left the Chamber—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! You cannot mention the absence of a member.

He was just a bit too quick, Mr Assistant Speaker. I have not seen Grant Robertson that animated since he was the Otago student union president. He sits across the other side of the House and tries to take on the Government in the finance portfolio and barely creates a ripple, but when it comes to issues with respect to student loans and the history of his involvement in the education sector, he cannot help himself. He has a particular view that somehow the scheme is flawed. He fought against it when he was a young student president. He has not let it go; it has formed his political perspective regardless of the outcomes in terms of participation and the effect that it has in enabling people in this country to be successful—that is irrelevant from Grant Robertson’s perspective.

It was very nice to hear Phil Twyford reference the bill for 25 seconds. Ultimately, the Labour Party view is that this bill will not do anything to impact in any way the structural challenges that we are addressing with respect to housing challenges, particularly in the high-growth communities. It was quite a shock to hear Darroch Ball from New Zealand First. I think it is the first time in this House that I have said “Hear, hear!”. It was great to hear his rational perspective.

💬 Clayton Mitchell: I thought you were more intelligent!

It was quite extraordinary. From the Labour Party perspective—and we heard it from Michael Woods—the view is that somehow they want to position themselves as being fiscally responsible, but they are constantly supporting these Green Party ideas, which is more money, more spending, and a constant call on the State.

Let us just have a look at some of the actual cost implications of this bill. Let us assume that there is wide take-up—100 percent take-up—and the diversion period is for just 5 years. The annual operating cost of this proposal is $80 million to $200 million, plus the one-off impairment cost of about $1.2 billion. The annual operation cost is as much as $200 million. This is, yet again, an example of a party and an Opposition group that holds the view that the way we resolve issues in this country is just to throw more and more money on it.

I think David Seymour’s deconstruction of this bill is probably the best that I have heard in recent times. It does not work. It adds cost to the individual, because it is a debt that is deferred. [Interruption] Gareth Hughes, the debt is a debt; you actually have to pay it off. That is the deal. You actually cannot contract yourself out of that obligation. It is a very generous obligation that we have in place; 82 percent of the cost is covered by the taxpayer. This is a student loan scheme that is seen as one of the most generous in the world. It has facilitated extraordinary outcomes for New Zealand in the 25 years—25 years—now that this has been in place. It has worked extremely well.

There is this view that somehow—

💬 Hon Member: Rubbish!

It is not rubbish. There is this view that somehow having this debt has impacted homeownership. But a study from Victoria University of Wellington, looking at household wealth in New Zealand, and the Institute for Governance and Policy Studies reached the following conclusions—very explicit—that the presence and size of a student loan did not appear to affect the probability of a couple having a mortgage at all. The presence of a student loan had no effect on mortgage size, the loan size had only a very minor weak effect on the size of the mortgage, and it absolutely had no effect on the couple’s decisions with respect to children. It is seen by those who are entering our tertiary education sector as a very effective way of helping fund and facilitate them to a career that delivers better returns for them and their families. This is poorly thought-out legislation, and I am very comfortable to oppose it.

I speak on behalf of Gareth Hughes to the Student Loan Scheme (First Home Repayment Diversion) Amendment Bill, which is in his name, as he cannot be present today. I want to thank those parties that are supporting this bill. Labour and the Greens well understand the pressures that young families are facing every day in this simple task of finding a decent affordable home for them and their families to live in.

So this bill does make a very pragmatic proposal to the Chamber. That proposal is that we can give young families who have studied and obtained a loan and are now working the opportunity to choose, for a 5-year period, whether to save for a deposit for a house or to pay off their student loan. That is what we are doing here: a pragmatic option for young families that are right now struggling to pay off their student loans and to afford expensive, ever-increasing rents. Our bill just gives these young families the choice about what they want to do with that first 5 years after they finish their studies and are in the workforce.

Let us not forget that so many of these young people who come out of university, often with very, very high student loans, are young doctors, young nurses, builders, lawyers, and accountants—there is a wide range of people. These are people who are starting families. Many of them are partnered or are married. Many, many of them have children, and they are looking to provide security for themselves and their family as they start a new life after study in the workforce. We say we should give these young people and their families some flexibility in the repayment of their loans, just for a 5-year period, and just for the purpose of saving for a deposit, so that they can get a start, so they can build some security, and so they will know that when they start a new job and they send their kids to kindy, or to playcentre, or to school, they and their family are secure in a home that they can own. That is all that this bill is asking. It is not some radical reform, I agree—it is not radical reform here—it is an opportunity for young families to just get a start and have some choices in their life.

We know that homeownership rates in this country are the lowest that they have been in 66 years. How do we get to the situation where what used to be a minimum expectation—that a young family could get into a decent home to be able to start their life together, raise their children, and do good work—has now become so impossible for these young families in terms of simply starting with the basics: a decent job and a decent home? This bill will give those young families those choices.

So we urge members in the House to put aside their political assumptions—I understand there are bigger changes that we need to be making—and to put in their minds first and foremost those young families that we all talk to every day. Think about our own kids, who are in their 20s and who want to start their life, with a partner or without, but with their families and some security. Think about our own people whom we know and meet in our communities every day, who are desperate for some housing security so that they know that they can start a good life for their families. Let us just give them this choice so they can suspend their student loan repayments and save for a deposit for a home.

Let us not forget either that people are required to pay back their student loan when they earn just over $19,000 a year. So we are talking about very low-income people, often, who are really struggling to pay their student loan, to pay the costs of going to work, to keep their families well, and to be able to afford expensive rents. Let us give these families a break. Let us give these young families the same chances that we had to be able to live a decent life, take care of our kids, and have affordable, decent, secure housing. That is the job of this Parliament: to take care of those families and to do what we can to give them more choices.

So I urge the House to support this legislation—at least to select committee, so we can have the debate about the costs—and to put our young families first, please. Thank you.