Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill

Hon PETER DUNNE (Minister of Revenue) Link to this

I move, That the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill be now read a third time. This bill includes a suite of mainly technical changes to the student loan repayment rules to ensure that the law is clear and consistent, and that it operates as intended. The bill also extends interest-free loans to borrowers from Niue, the Cook Islands, and Tokelau, which share a special relationship with us as part of the realm of New Zealand. As the Ross Dependency is also part of the realm of New Zealand, people who go there will also be eligible for an interest-free loan. There was some debate in the Committee stage about how many people would actually go to the Ross Dependency and be eligible for a loan, and whether we would be, in fact, producing a nation of well-educated penguins. The reality is that there will be some people on scientific exchange who will benefit from this provision. Although they will not be great in number, I suspect that their contribution to New Zealand in future years will be great in substance.

These borrowers will have to comply with the same requirement to be in one of those countries for 183 days, in the same way as New Zealand borrowers, so that borrowers from a realm country have an incentive to return home after their study, and to make a positive contribution towards their country’s future. That provision is probably of greater impact with regard to Niue, the Cook Islands, and Tokelau, than the Ross Dependency, but the same point applies nonetheless.

The bill also extends interest-free loans to include students who choose to further their education overseas through full-time study under formal exchange programmes or formal agreements between New Zealand and overseas tertiary education providers. There is some anomaly in this area at the moment and this change will be of considerable benefit to a number of New Zealand students, particularly as they go further through their studies.

The bill also includes a number of small refinements that provide greater clarity to borrowers. They were added at the select committee consideration. The first of those changes defines the term “overseas tertiary provider” so that it is clear what type of overseas organisation borrowers must be engaged in full-time study with in order to qualify for interest-free loan status. That will immediately deal with some concerns there might be about the bona fides of some of the organisations and institutions that people are enrolled with. The other change extends the overseas exemption to include those who are engaged in full-time postgraduate study overseas if their studies cannot be completed in New Zealand. When we talk about having a highly skilled nation and upskilling the intellectual capacity of our public, that ability to go overseas to complete postgraduate study when it is not available in New Zealand is particularly important. The purpose of these measures is to recognise the value that students who pursue further training and study overseas bring to New Zealand as well as encouraging them to take up the opportunities to do so.

The remaining changes that the bill introduces are largely technical or remedial in nature. They include an amendment to correct an unintended change to the hardship relief provisions that was made by the Student Loan Scheme Amendment Act 2007, a change that allows the Inland Revenue Department to raise the compulsory repayment deduction rate from 10 percent to 15 percent to help ensure that borrowers pay their correct loan repayment amounts, and the removal of a technical problem so that borrowers who return to New Zealand and wish to fully repay their loans before they have met the 183-day requirement to qualify for an interest-free loan can now do so.

There was some debate during the Committee stage about the adequacy of its title. A number of suggestions were made by members, particularly from the Opposition side of the House, to greatly extend the title of the bill to maybe more accurately, in their minds, reflect some of its provisions. But on balance, and I am sure the House will concur with me, having heard what this bill is about it was decided that the title Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill was, in fact, a more accurate, if less colourful, description of the bill’s title.

As the bill comes to its third reading, I acknowledge all of those who have contributed to its successful passage thus far. In particular, I acknowledge the policy officials from the Inland Revenue Department and our drafter for their work on the details of the bill. I acknowledge those who made submissions to the Education and Science Committee and others who made submissions aimed at improving the practical application of the measures. I want to record my thanks to the select committee for the detailed consideration that it gave the bill and for its recommendations, which have given greater clarity to the legislation. I also thank those who participated in what was, I think, a good-natured and constructive debate.

As the bill now stands, the measures that are contained in it will help to ensure that the student loan scheme works in the way that it should for both borrowers and the Crown. That has to be important, given that the opportunities the student loan scheme provides to so many students have to be matched by the Crown’s responsibility to manage what is now a multibillion-dollar asset in terms of outstanding loan liabilities. It is a balanced process. I think that it has been widely accepted by the House, and with that, I have great pleasure in commending the bill to the House for its third reading.

Hon MARYAN STREET (Labour) Link to this

I rise to support this legislation, which was introduced by the Minister of Revenue, who has just resumed his seat. At its third reading, I have to say that I have been feeling sorry for the Minister. This Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill should have been reasonably pedestrian legislation to usher through the House. It had the support of the Labour Party, and the only dissenting voice was from the Green Party, for the reasons that its members have described earlier in this debate. This legislation has been loaded into urgency for no good reason. It could have been dealt with in December; the report of the Education and Science Committee was presented to the House on 27 November, and, if I remember correctly, we sat quite late in December. It could have been dealt with in the ordinary scheme of things, with sufficient attention being paid to it, allowing it to be in force by 1 April, which is one of the critical dates.

However, for the reasons that we have described previously in this debate, the Government has seen fit to cover its own sins and inadequacies by putting this bill into an urgency motion that was sought predominantly to avoid question time, and to thereby protect weakened, ill-performing Ministers from the democratic scrutiny that occurs at 2 o’clock every day of parliamentary sittings. On top of that, I have been feeling sorry for the Minister about this, because—[Interruption] Members opposite might not have noticed, but we did not have question time yesterday. Because of the sting that the Government received from that in the media, it decided to give in today. But, more important, I have been feeling sorry for the Minister in his presentation of something that should have been reasonably pedestrian legislation, because since the select committee reported back on the bill to the House we have had an explosion of antagonism towards students by the Government. Now this Minister has to front a perfectly good bill in the context of several depth charges that have been dropped into the tertiary education arena by this Government. Let me cite three.

First of all, there was the Prime Minister’s statement at the beginning of this year, in which he said that the Government will take a careful look at the policy settings with regard to student support. Of course, that left everybody wondering what it meant. Does it mean that the Government intends to restrict access to tertiary institutions by not making them open entry for people over the age of 20? I will come back to that one in a moment. Does it mean that the Government is intending to make loans and allowances harder to access? I will come back to that one in a moment, too. The Government unleashed that set of imponderables to begin with upon this Minister and upon a perfectly ordinary piece of legislation. I say that without meaning to be dismissive of it at all, I tell the Minister. Secondly, the Minister for Tertiary Education was removed from that portfolio; Anne Tolley was taken out of that portfolio and replaced by Steven Joyce. Steven Joyce went on to say just last weekend in the Christchurch Press newspaper that the student loans policy was in his sights. What are we meant to take from that? I ask whether we are to assume that he is also inclined to make student loans harder to get, thereby limiting access to our tertiary institutions and limiting people’s ability to take up educational opportunities, and reducing the cost of tertiary education to the Crown. We on this side of the House say that the cost is justified, and that investment ought to be made by the Government and increased in line with other comparable nations as a way of promoting economic growth and development, and as a way of securing our future.

On top of that, the Government decided to support at its first reading the voluntary student membership bill, which was drawn out of the ballot and is Sir Roger Douglas’ member’s bill. That was an antagonistic gesture, as well. The Government will not say whether it will support that bill at its second reading. It will support the bill at its first reading, but it could have stymied it in its tracks, as it has done with other bills that have been drawn out of the ballot and not been given the privilege of being referred to a select committee. This Minister now has to field a bill in that context. Perhaps people are wondering why we have been getting so agitated about a bill that would not normally cause this much fuss. It is because it is being dropped into an environment that is now explosive for students. Students around the country have launched a website in response to the voluntary student membership bill. It is called Save our Services, and they are getting support in the process.

I will say a couple of other things, particularly about whether this Government intends to make it harder to access student loans—access that this bill expands. If that is the case, then let it say so. If it is the case that the Government wants to make it harder by virtue of ramping up the NCEA qualifications required to get into university, then that is one issue. If it wants to make it harder to access student loans by ramping up the requirements to pass while at university, wānanga, or polytech, then that is another issue. But let us be very clear that whichever way the Government goes about it, there will be people who will miss out. I will cite two examples of people who accessed education after the age of 20 or who accessed education not in the usual way of progressing from school, and I will demonstrate how important access to education is.

The first example is the chief executive officer of the Universal College of Learning, Paul McElroy, who is now in the position of having to turn students away because this Government will not renegotiate the student caps and it will not invest in additional student places in order to equip our country adequately for the future. That breaks his heart because of his own background. He said that he knows firsthand about second-chance education, because as a teenager he ran away from home without university entry qualifications. His life was transformed when Wellington Polytechnic took a chance on him. It took a chance on him. He did not come in through having UE or any kind of entry qualification, but the polytechnic in Wellington at that time took a chance on him, and it changed his life. If this Government is proposing that National Certificate of Educational Achievement (NCEA) qualifications be made more difficult or that the threshold be raised so it is more difficult for people to enter tertiary education, then members should look at Mr McElroy, who has now gone on to be the chief executive officer of a polytechnic.

The second person I will cite is somebody who came to New Zealand at the age of 23 years as a young mother. In fact, she needed to do something to improve herself and her prospects. She enrolled in education at Massey University, and in her first year she passed all her courses. It took her 4 years to complete her BA, and she was awarded a Massey scholarship as a top graduate in psychology. Later, after a series of courses and scholarships, having benefited from open entry after 20 years of age, she graduated with her PhD. The rest is a matter of public record: a lectureship at Massey University, a promotion, a move to Canterbury University, 6 years as a member of Parliament, and now 8 years of running her own research company. That person is, of course, Liz Gordon. Those are examples of people who have contributed to this country by virtue of accessing tertiary education. If this Government wishes to inhibit that—

COLIN KING (National—Kaikōura) Link to this

It is a pleasure to speak on the third reading of the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. It is very easy to look at the student loan situation in isolation. From listening to Opposition members, one would imagine that it was an enormous part of the overall context of things. I think that during this third reading it would be appropriate to give the wider context of the student loan situation as it relates to exemptions and miscellaneous provisions.

The scheme’s nominal value is $10.3 billion. According to the last financial report, the basic value of the student loan scheme is $6.5 billion. If members look at the situation in 1994, when the student loan scheme was put in place, they will see that only 252,000 people were accessing tertiary education loans. Today that number is approaching half a million. Even though collectively we might have our varying views on the scheme, this country has gone from having one of the very lowest rates of entry into tertiary study to having one of the very highest. That is laudable and applaudable. I say that is well done.

This bill in its context recognises the fact that education is portable and valuable, but we do not want to forget that the taxpayer is still picking up 70 percent of the cost of tertiary education. Half a million people have student loans. The desire of the bill is make sure that the student loan scheme functions as it is intended to.

Principally, the bill refines the process for two particular groups. Those two particular groups have been spoken about regularly in the House this afternoon. One group is those countries that are included in the Realm of New Zealand—principally, Niue, the Cook Islands, Tokelau, and the Ross Dependency. The second group is affected by an anomaly that the Minister of Revenue has brought to the House for speedy remedy. It relates to people who have gone on to an institution overseas to undertake a course of study above level 7 that is not available in New Zealand.

I will not go on too much further. I think matters have been well and truly canvassed. This bill will greatly aid the running of the student loan scheme, and I am sure that the Minister will feel more comfortable when it is passed in a speedy and responsible way. From that point of view, it gives me great pleasure to commend this bill to the House.

KELVIN DAVIS (Labour) Link to this

The Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill amends the Student Loan Scheme Act 1992 by extending interest-free loans to borrowers who are present in Niue, the Cook Islands, Tokelau, or the Ross Dependency for 183 or more consecutive days, in order to encourage borrowers from those countries or that territory to return to their country and contribute to its development. It also covers students who enrol with a New Zealand education provider and engage in full-time study overseas under either a formal exchange programme approved by the New Zealand Government, or a formal agreement between a New Zealand tertiary provider and an overseas tertiary provider. The bill also makes eight minor or technical amendments to the principal Act.

As has been mentioned numerous times, this is largely a technical bill, but that does not diminish its significance for those whom it affects. They are the students who have taken up interest-free student loans in order to support their decision to better themselves personally and professionally. It is a big call to choose to study. It involves time, money, and opportunity costs. I say, make no bones about it, the decision to study is the right decision for many young and old New Zealanders to make, and New Zealand benefits through having an educated, highly skilled workforce. That is why I say the interest-free student loan programme is one of the most progressive pieces of economic development legislation passed in this House. It helps to drive New Zealand’s economic development. An educated workforce is imperative in this day and age, as we will never compete—nor do we want to—with low-wage economies. That is why I am astounded that the National Government is making noises about cutting the scheme. How will the 75 percent of people who earn under $40,000 per year be able to afford to send their children to university and polytech, when they can barely afford to pay their power bills? They cannot, and that is why access to the funds those students need in order to further themselves is so important. In fact, it is vital. Education needs to be accessible to all Kiwis who wish to access it.

Why did the Prime Minister say recently he would take a careful look at the policy settings around student support? Why did Louise Upston, in her second reading speech, spend a few minutes telling members about how expensive the student loan scheme is for New Zealand taxpayers? Society bears this cost in the knowledge that the benefits to the country and to communities far outweigh those costs. Why did Amy Adams stand up to talk about the tax debt relating to student loans? I will tell the House why. It is because National is priming the public for the removal of interest-free student loans. Steven Joyce has told the Weekend Press that the student loan policy is in his sights. The Government’s intention is clearly to make it more difficult for tertiary students to get a loan to cover their fees in the first place.

If the Government starts to pick winners in the tertiary education system before people enrol, then those who have not done well at school for a variety of reasons, and who want to have a second chance at learning, should beware. I have a friend who is a doctor, and she said that when Labour introduced the interest-free student loan legislation it removed a weight from around her neck, as she was struggling to pay even the interest on her loan and was beginning to conclude that a move offshore was the only way to kill off her debt. She is now working at Wellington Regional Hospital, and she sees light at the end of the tunnel.

I will go back to the Prime Minister’s comments about taking a careful look at the policy settings around student support. What does he mean? The Government will make access to student loans and allowances more difficult. I suspect it will make tertiary education opportunities in universities and polytechs available for the few, not the many. Once again, legislating for the few at the expense of the many is simply not fair, and it takes away the aspirations that Labour works to foster in our communities. The Prime Minister referred to students who do not take their studies seriously, or who do not get a job quickly after qualifying. Who will determine which students those ones are, especially when there are students who go to a university or polytech and then find that the first course of study that they take is not exactly what they want? They can find that out only by going to university in the first place. As I said earlier on in the day, my brother was one of those students. He initially took business studies when he went to Waikato University, only to find that was not right for him. He then went on to get a BA in Māori, then after that he decided that a degree in law was what he after. He is now a very successful lawyer up north.

Will student support stop after students graduate with a degree, preventing them from choosing to do postgraduate study? What about the students who need more support to succeed, because they have started further back from the starting line than others? I refer to many Māori students, whom I have seen go through the schools I have been involved with, who take time, who do not succeed to the same extent initially as many other students, but who have the ability to go on to university. The problem is just that they start from a little further back than other students, especially financially. Most of the family and friends I know from up north are not financially well off, so it is a lot harder for young people to make the decision to head off to university, knowing that that will be a big strain on their family and on finances. A number of those family members and friends who go to university do really well in the first year, but they find that the financial struggle for their families is too much to bear and many tend to drop out. That is supported by the research of the Starpath project, based at the University of Auckland. We all know students who work at their studies and at part-time paid work, often for low wages, and who struggle to make ends meet. Setting out criteria for discontinuing student loans or allowances is dangerous and elitist territory. Again, I say it is about providing more of the same for the few, at the expense of the many.

John Key is threatening students, who put up with a low income now so they can study and contribute to the country’s well-being in the future. Right now it looks as though he will punish them for doing that, but first he will hit them with a higher rate of GST, just to make things even harder. What will happen if there are not enough jobs for graduates to go into? What about the redundant workers who want to enrol in courses in order to improve their skills, and who need allowances and loans to do that? What about students with disabilities who find it difficult to get employment, so continue to study in order to improve their quality of life? Over 45,000 Kiwi 15 to 19-year-olds are now unemployed; that is over 12,000 more than for the same period a year ago. That number increases to over 72,000 Kiwis once we include those aged 20 to 24. The danger now is that many of these young people will stay jobless for a long period of time, as the National Government takes away the opportunity for them to aspire to better themselves.

There is also the veiled threat of lifting the cap on the fees that institutions can charge students, contained in Mr Key’s reference to “an inflexible and bureaucratic funding and policy framework”. It looks as though tertiary education will soon become the sole domain of the rich, but New Zealand’s crying need is for the upskilling of the many, not the few. If Mr Key wants to see a step change in the New Zealand economy, where does he think it will come from, if not from post-compulsory education and training? He should be nurturing and investing in it, not threatening it.

The fact is that National, in its short time in office, has already proven it is no supporter of students. Here are just two examples of that. Firstly, the Institutes of Technology and Polytechnics of New Zealand revealed that about 6,000 aspiring students could be turned away from polytechnics as a result of the Government’s refusal to waive financial penalties if polytechs exceed their enrolment caps. This is another short-sighted decision by the Government, which clearly prefers to see people being stuck on the dole rather than engaged in the study and training required to ensure we emerge from the recession with a work-ready and productive workforce. Secondly, the Government has passed legislation that reduced the number of seats on polytech councils from a maximum of 20 to just eight. The legislation allows the Minister to appoint nominees to half the council positions. Requirements that Māori, staff, students, and the community must have a representative on polytech councils have been cut. This will enable the Government to take a much more dominant role and, disappointingly, will remove the existing provisions for almost all student, community, and academic staff representatives to sit on the councils.

CATHERINE DELAHUNTY (Green) Link to this

Tēnā koutou katoa. The Green Party will be voting against the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. As the only party opposing it at the third reading, I think it is important that we try to explain to others the reasons, rationale, and analysis behind that decision.

Firstly, I acknowledge what Kelvin Davis just said about unintended consequences, although he did not refer to it like that; he talked about recent education bills. The Education (Polytechnics) Amendment Bill is a good example. We were lobbied only yesterday by the New Zealand Union of Students’ Associations about the consequences of that bill in terms of reducing the number of students who anecdotally are not getting elected to the new polytech councils. Obviously the jury is still out and the elections are not all over, but already we can see the effects of that bill, and that more and more students are reporting back to that organisation that their campuses have no students on their councils. That is why we take a very precautionary view on any legislation that impacts on students, because we believe that we must take the big picture into account.

We are voting against this bill because of our consistent belief that despite the positive technical tinkering in parts of the bill, and the good intentions within the narrow definitions of the bill, the original student loan scheme itself remains one of the most oppressive pieces of legislation in the history of this House. It cannot compete with some of the mean-spirited colonising laws from our history, such as the Maori Prisoners Act or the Tohunga Suppression Act, but elements of this bill fit well with the retrogressive punitive pieces of law that have been selected recently from the ballot, such as the Minimum Wage (Mitigation of Youth Unemployment) Amendment Bill and the Education (Freedom of Association) Amendment Bill. We are talking about punishing people who are already in debt.

The student loan scheme was designed to make education a commodity and individuals responsible for the costs. Now the country has a $10 billion student debt, which is absolutely no surprise to anybody. The scheme has worked to silence collective student political power and to stop people from even objecting to it because they are too busy paying for it. It has led to a generation of people who believe that the common good is a fairytale, and that being in serious debt is the normal financial status of a young person. The idea of health and education being available for minimal cost is a foreign language to most young people. So big ups to the free-marketeers, who have achieved their goal. No one saw it coming.

Coincidentally, or perhaps conveniently, the global free market has promoted credit to young people and their right to new clothes and cheap travel, all paid for on the plastic. Many middle-class younger people would feel deprived if they had to dress out of op shops and sleep on mattresses on the floor, which was the norm in my student days. They have been sold materialism as a reward for debt. Other speakers have referred to many who are struggling to survive as students or are too intimidated even to start. That is why we look at the bigger picture in terms of this bill.

Many students have been persuaded to borrow against their future freedom to build a life beyond working to pay back that debt. However, it is now 2010 and the headless chickens who failed to stop the student loan scheme in the 1980s have sewn their heads back on and started to deconstruct what happened to tertiary education. Many of us have figured out that the credit and debt cycle distorts the opportunities of young people and gives them a burden that has been so normalised that they cannot really believe it when my generation talks about paying $150 a year for university fees and books. If members believe that the quality of what students are paying for is so much better than our free education, they cannot have been in a tertiary institution lately.

Our children and older learners do not need an increase in the repayment rate of their loans, especially if those children or older learners are already unable to pay. That is why we stand alone against this bill. It is a popular tactic to make the broke pay more. In this brave new world, anyone who can pay up front is automatically privileged, be it a parking ticket, a dog licence, or a university education. If you can pay now you are automatically better off.

TODD McCLAY (National—Rotorua) Link to this

It is a pleasure to speak in the third reading of the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. The National Government is committed to having in place a student loan scheme that is balanced, and at the same time to putting in place incentives for people to pay off their loans more quickly. More than half a million New Zealanders have a student loan, and many of those New Zealanders have made long-term financial decisions on the basis of current interest-free student loan policy. We want to ensure that they can plan with certainty.

Through this bill the National Government has fulfilled its commitment, made during the election campaign, to keep interest-free student loans for tertiary students. I support this bill fully. Thank you.

HONE HARAWIRA (Māori Party—Te Tai Tokerau) Link to this

Kia ora, Mr Deputy Speaker. The American poet, Robert Frost, once said about the privilege of a higher education that education that does not change life much, it just lifts trouble to a higher plain of regard. That is a cynical view, perhaps, but it is one that is no doubt shared by heaps of tertiary students here in Aotearoa. Although people prattle on about broadening horizons and the intellectual challenges of undergraduate and postgraduate education, the fact is that the issues that really matter for students are simple ones: access and affordability. Can they get in, and can they afford to stay there? The Māori Party believes that a good tertiary education is an investment in our country’s future, that it should be freely available to all, and that students should get an allowance that is set at the same level as the unemployment benefit. We are a long way away from that point at the moment.

The Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill raises the issue of eligibility. It allows students who live mainly in their homelands of Niue, the Cooks, and Tokelau to get interest-free student loans while they are here as a way of encouraging them to go back and help development in their homelands after they get their degrees. That is a notion that fits well with our kaupapa of supporting our whanaunga right across the Pacific to feel free to come here to gain the skills they require to help build their nations. Secondly, the bill enables students who are enrolled with a New Zealand institution, and who are on approved overseas study, to also access interest-free loans. That is welcomed by the New Zealand Vice-Chancellors Committee because it recognises the internationalisation of tertiary education and reflects the increasingly international nature of a great deal of university research. Both areas, of course, will increase the number of students who can get interest-free loans, which is a good thing in itself. Given the importance of tertiary education to our economy, that will, no doubt, receive support from right across the House.

Another reason the Māori Party supports this bill is that Te Mana Ākonga itself welcomes the commitment to look at increasing the income threshold for those getting a student loan, as well as the decision to shift the interest-rate mechanism from regulations to the Act, making it more transparent to understand and easier to monitor. The Māori Party still raises its concerns about the philosophy of user-pays continuing to dominate our thinking about tertiary education, when we should be more focused on investing and keeping our students here. We are concerned about the deplorable state of secondary education, which sees too many Māori students still leaving school without even the necessary qualifications for tertiary education, and about the cuts in funding for adult education and second-chance learning, which makes those inequalities even greater. But in the interests of opening up the tertiary sector to a greater number of students, we will be supporting this bill. Kia ora.

LOUISE UPSTON (National—Taupō) Link to this

I rise in support of the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill in the third reading. This bill is another example of great work done in the parliamentary process so that the outcome from the select committee process is that the majority of the parties in the House support the legislation, with the exception of the Green Party. I must add, though, for the benefit of people watching the debate, that Labour supports the bill. People who have heard some of the comments from the Labour side of the House would, I think, be quite surprised to realise that it is voting for the bill. I think it is important that when people listen to these speeches, they do have a clear view of who is voting for the bill, and Labour voted for this bill.

Labour members got distracted by some other stuff, but I think that the important point to notice is that we all recognise that tertiary education is a vital part of growing our economy and our country. As Hone Harawira from the Māori Party has just said, tertiary education is an investment in our future, and in this particular instance the Government is again delivering a brighter future for all New Zealanders.

Let us have a quick look at some of the numbers. The number of tertiary students as at July 2008 was approximately 460,000. Of that 460,000, 178,000 have student loans. The average student loan with the Inland Revenue Department as at 30 June last year was $16,213. The average time taken to pay off a student loan, according to the student loan scheme annual report of October last year, for students who left study in 1999, appears to be about 8 years. So in effect what we are doing with this legislation is making some improvements to the student loan scheme. There is nothing significant to it. It is basically looking at how we can improve what is already in place, recognising the importance of tertiary education to our economy and to our future.

In terms of the conversations we have had about the value of the debt, I want to reinforce the points we made earlier. The sum of $10.3 billion is a lot of money, in anyone’s book. So it is important that that debt is managed well and that we are able to look at improvements to the student loan scheme, and that we make sure that that Crown asset of $10.3 billion is managed in an efficient and consistent manner.

The other side of the Chamber has thrown some comments around, trying to do its usual tactic of scaremongering and going way off the topic in terms of this student loan bill, which has just some technical changes and improvements. I want to reiterate what the points were, because for those listening to some of the Labour members they probably have not realised exactly what this bill does. First of all, it extends the interest-free loan to two special groups in recognition of the high value of tertiary education in building a strong economy. It extends interest-free loans to borrowers who live in countries that are part of the realm of New Zealand. An important part of its improvements is to extend the interest-free loans to students who are furthering their education overseas. So, for example, if they are studying a course of a very technical or specialised nature that is not available in New Zealand they are able to still access the student loan through that process. There are a few technical and remedial changes to the bill, which I will not repeat, given that they have been discussed at length.

This bill will ensure that the student loan scheme continues to function as intended. It improves the student loan scheme. That is why I am proud to support this bill.

CARMEL SEPULONI (Labour) Link to this

I rise to speak on the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. I go back to something that Louise Upston, the member on the other side of the House, just said. She pointed out that she feels that members on this side of the House have gone way off the topic of the bill and in respect of the issues we have at hand. I think it is really important to note that this side of the House looks at these issues broadly in respect of public statements that have been made by the Government and past actions in tertiary education. We do not take just a narrow view when looking at legislation, like that side of the House. I thought that was a really important point to make before I get into what I would like to discuss about this bill.

This bill is largely technical, and Labour will support it. We agree with some things in this bill. We agree with them to such an extent that we actually support this bill. I want to discuss those things, but I will also discuss during this speech some of the concerns that we have with the direction that the Government is taking this country, with the actions it has already exercised, and with some of the statements its members have made about tertiary education.

One of the main things this bill does is amend the Student Loan Scheme Act 1992 by extending interest-free student loans to borrowers who are present in Niue, Cook Islands, Tokelau, or the Ross Dependency for 183 or more consecutive days in order to encourage borrowers from those countries or that territory to return to their countries and contribute to their development. We on this side of the House support that amendment. We think it is very important that our Pacific people from the territories of New Zealand have the opportunity to return to their homelands if they wish, in order to contribute to the social and the economic development of those countries, particularly Niue, Tokelau, and the Cook Islands. It has been mentioned that the population of the Ross Dependency is probably very small and we are probably talking about scientists wanting to come here to train rather than a population of people. We support that amendment.

Some issues arose during the Committee stage, and I have to say that the Minister in the chair, the Minister of Revenue, responded well to some of the questions that came up. One of them was on what mechanisms the Government might put in place to ensure that those who return to their territories have the mechanisms to pay back those student loans. I think the Minister addressed those concerns. There are still a few concerns. One that I was thinking about, but did not get the chance to discuss in full during the Committee stage on Part 1 of the bill, was about the Tokelauans. I was thinking of the large number of Tokelauans who work as public servants and who are based in Samoa for long periods of time. We know that Tokelau is very difficult to access. In terms of the public service that Tokelauans have, many of their workers are based in Samoa. So I wondered about the provision in the bill that states that students cannot be outside of New Zealand or any of the territory countries for more than 31 days. Samoa is not one of our territory countries, and that could affect Tokelauans down the track. I guess that issue will need to be discussed at a later date. We support that aspect of the bill, and we commend the Minister for putting it forward. We support it wholeheartedly.

We are concerned about not necessarily the aspects of this bill, but the general direction that the Government is taking tertiary education in this country. We have been disturbed by the lack of attention the National Government has paid to tertiary education. In our minds on this side of the House it would have made absolute sense to invest and to put a focus on tertiary education given the recession, and given the high levels of unemployment in this country. Instead, we saw, as Maurice Williamson likes to refer to, a slash-and-burn mentality. We saw cuts to adult and community education; we saw in a concerning way statements put out by the Prime Minister and the Minister for Tertiary Education that student loans will be looked at more closely. A number of other things have been very disturbing to this side of the House, and we are watching very closely.

With regard to what is happening in this bill, the irony is that we on this side of the House know that National does not believe in interest-free student loans. We know that in 2005, when the Labour Government introduced interest-free loans, the attitude of members opposite, including the current Prime Minister—who was National’s spokesperson on finance at the time, I believe—was that it was corrupt and it was irresponsible of the Labour Government to do it. I am sure that all those thousands of students out there would disagree with the opinions of the spokesperson on finance at the time and the Prime Minister now, John Key, on making student loans interest-free. For those of us who—and this has been discussed broadly across the debate, as well—have had to access student loans, the fact that interest was taken off those student loans and we were not charged interest along the way was a relief to us. It was an issue for those of us who were out working. All we saw every 2 months—or whenever it was when we got the statements—was increasing interest and very little paid off, despite the fact that money was coming out of our pay weekly or fortnightly. We have to commend the previous Labour Government for that change; we need to remind the National Government of it. Government members fundamentally do not believe in interest-free student loans.

This weekend just gone we heard Steven Joyce admit that it was a political call to endorse the interest-free student loan policy in 2008. The members opposite know that if they had made any changes they would have had big trouble with support moving forward. Last year they started to soften the ground for the removal of interest-free student loans with the introduction of the Student Loan Scheme (Repayment Bonus) Amendment Bill. The 10 percent top-up scheme favours high earners, who can afford voluntary repayments, although they might game the system and decide to invest their spare cash elsewhere and keep the interest-free loans. They are doubly advantaged, as the Government assists them to game the system.

The Prime Minister recently said the Government was going to take a careful look at the policy settings around student support. In our minds the question we straight away think of is what that means. Will the Government make access to student loans and allowances harder? Will it make tertiary education opportunities in universities and polytechs available for the few and not the many? I guess it goes back to what Hone Harawira said when he spoke on this bill: at the end of the day it comes down to access and affordability. We on this side of the House are definitely concerned with those things.

John Key has referred to students who do not take their studies seriously and who do not get a job quickly after qualifying. Who will determine who those students are? It has been discussed across the course of this debate that, unfortunately, the research shows that Māori and Pacific students take longer to complete their degrees. As I have discussed earlier, and as other people have also said, it is not due to lesser intelligence; for many, it comes down to their having come from backgrounds where university education, or higher-level tertiary education, has not been the norm in the family. Many of them are going through university—and I know this from having worked with many Māori and Pacific students—as the first in their families to undertake university study. It is a very foreign environment for many of our students who are going through. Why should they be the ones—

JO GOODHEW (National—Rangitata) Link to this

This debate on the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill has been really revealing. What a load of drivel we have had to listen to, at times. I will take a few moments to address some of the concerns that have been raised. We have heard in this House this afternoon concerns that students are having to buy their clothes at op shops. Well, that raised for me some really serious questions. I believe that students have an understanding of the cost of their education, their tertiary education, to this country. They certainly understand how much it is costing them, and in many cases costing their parents, as well. I can think of some really good examples of young people who in fact are very happy to go and get fantastic bargains from op shops or second-hand clothes shops.

In fact, I have a story from close to home, a story about a retro party that is happening tonight in Dunedin, at Otago University. My daughter has purchased a bright orange frock from an op shop, and she is adding that to her bright yellow shoes—so she tells me—and the wonderful pink tights I sent her away from home with. So there we go; what is wrong with young people understanding how to get a bargain? In fact, their tertiary education is a bargain, because, roughly speaking, they are being asked to contribute to about only a quarter of the cost.

Speaking of bargains, I have a story of my own. Prior to becoming an MP, I was walking along an Auckland street and I spotted a gorgeous jacket in a second-hand shop. I thought “My goodness, I will just see if that fits me.” It was a lovely jacket. I purchased the jacket, wore it for quite some time—again, prior to getting into Parliament—and one day I saw a photograph of a very famous person wearing that very same jacket. It crossed my mind: “Oh, my gosh, did Helen Clark own that jacket before me?”. Maybe! Who knows?

Anyway, we know that young people attending universities and polytechnics who have student loans have to learn how to budget. They have to learn the value of money. Hopefully, at the same time, they are getting an excellent tertiary education. But this bill is simply about maximising the benefit of the Crown’s $10.3 billion asset in student loans, because, really, we—and I confess I include myself—have been getting a little bit off-track. We have also heard suggestions that back in 2005 there were words that revealed that National at the time was not keen on Labour’s student loan policy. But hang on a minute! Times change. What we have now is a $10.3 billion investment. Let me repeat: National’s commitment is to having in place a student loan scheme that is balanced, while at the same time putting in place incentives for people to pay off their loans more quickly.

For young people to get out of debt more quickly, what can possibly be wrong with those sorts of levers? What can possibly be wrong with a fresh-eyed National Government looking at the student loan scheme and finding ways of improving it with the mechanisms used by the Inland Revenue Department, finding ways of improving it for those who are studying overseas, and finding ways of improving it so that it continues to function as the student loan scheme was intended to?

National is absolutely committed to the importance of tertiary education to build a strong economy, but at the same time there are settings all around that that we have to make sure are correct. That is why the Hon Peter Dunne has brought this bill to the House, why we are passing it now, and why, before very much longer—in fact, just shortly after the House meets again—it will be enacted on 1 April.

I reiterate National’s absolute commitment to having a fresh look at legislation, a fresh look that, I have heard, has meant that Ministers are competing against each other because they have so many bills they want to bring to the House, in order to make New Zealand a much more productive economy and a better place to live in, in the hope that our tertiary-educated students will continue to live here and be productive people in our economy. I am certainly looking forward to that, and hoping that it means that our three daughters will get that message, stay here in New Zealand, and bring up their children close to me. Thank you.

CHRIS HIPKINS (Labour—Rimutaka) Link to this

I listened quite carefully to that contribution on the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill from National member Jo Goodhew. I thought that what was quite revealing was not so much what she said but what she did not say. At no point did she commit National to retaining the interest-free student loan scheme beyond the end of this term. She responded to a lot of the points that Labour members had made, but at no point did she deny that some time in the future National wants to do away with interest-free student loans. It would not at all surprise me if that is what National wants to do, because it was so vocal in opposing the interest-free student loan policy when it was first introduced.

I will go back and respond to some of the comments that have been made. The debate in this third reading has ranged reasonably widely. I think that that is probably because, in the nature of urgency, we have canvassed a lot of the specific material of the bill already today. Members have talked a lot about the value of tertiary education as an investment in the future of our country, and I echo some of the comments raised by members—particularly by those on this side of the House, but even by some of the members on the other side of the House, as well. We cannot view investment in tertiary education narrowly and only in economic terms; we have to look at the investment we make in all forms of education, including tertiary education, as an investment in the development of New Zealand society. Not all of that investment will necessarily lead directly to an improved economic return. But, overall, if we build the level of social capital within New Zealand by having a more educated society, then in turn the effects of that will flow on to a more economically prosperous country—one with a higher standard of living, higher wages, fewer long-term health problems, and so forth. So we have to look at the investments that we make in education, including through the student loan scheme, with that very broad picture in mind.

With that in mind, I tell the House that there has been some fairly recent research. I have just been reading a book called The Spirit Level, which talks about the fact that countries that are more even—where there are higher levels of education, and where the gap between the rich and the poor is lower—generally tend to have far fewer other problems than other countries. They have lower crime rates, longer life expectancy, fewer health problems, and so forth. So investing in education, including tertiary education, is an important part of making sure we increase our social capital and decrease some of those wider social problems. The student loan scheme provides a step on the ladder into tertiary education for those who otherwise could not afford it. It is a fairly recent initiative; it extends back only as far as about 1992. Of course, we would not have the student loan scheme had National honoured the pre-election promise it made in 1990 to abolish all student tuition fees so that tertiary education would return to being free. Of course, that is what many of the members in this House received when they undertook tertiary study. They received their tertiary education for free, and a lot of them received some form of allowance during the time they were studying. Some of them may have been bonded during that time. I know that one of my parents received a tertiary education paid for by the State and was bonded as a teacher, as a result. There is a whole generation of New Zealanders who benefited from policies such as those, which have been taken away from the several generations that have followed.

I note that one of the reasons the student loan scheme was established was to make sure that, despite the increased cost of tertiary education, people can still access it. They are not excluded on the basis of cost. Having said that, I say that it is not the ideal mechanism. I, for one, hold out hope that one day we will return to a situation where tertiary education is far more accessible and the costs are not as prohibitive as they are now. I appreciate the economic realities of that; it will not happen overnight. I acknowledge that back in 1999, when the Labour Government was elected, we were not suddenly going to revert to the days when tertiary education was completely free. That is why, over time, I was very supportive of the initiatives that the previous Labour Government put in place to progressively lower the cost of participating in tertiary education. It began in the early days with the cap on student tuition fees, so that they did not continue to grow to the massive extent they grew in the decade prior.

There were other things, such as the abolition of interest on student loans while a student was studying. When I first entered tertiary study, one of the most frustrating things about the student loan scheme was that during the time I was studying I was accumulating interest on my loan, despite not earning anything and not having any ability to make any repayments. All of the money that I was earning through my part-time job—stacking bread for Quality Bakers—I was putting into reducing the amount of money that I needed to borrow in the first place. I was not making any student loan repayments, and in the meantime the interest was accumulating. When the Labour Government came in, in 1999, it put an end to that. I think that was a very welcome initiative, although it took another 6 years before the Government was finally in a position to do away with interest on student loans altogether. As somebody who was involved in the development of that policy, I can say that I am particularly proud of that. I know the huge impact that that has had on the repayment times for some of our student loan borrowers. When talking about discouraging people from leaving New Zealand—we want them to stay in New Zealand— we understand anecdotally that one of the things that drove people away was the huge, mounting student loan debts they had by the time they had finished studying. Removing the interest on their student loans if they stayed in New Zealand provided an incentive for them to stay here, contribute to the New Zealand economy, to our country, and to our society, and get rid of their student loans. I think that was a very, very good thing.

There were many other things in the overall mix, such as the Step Up Scholarships. Stepping up is a term that seems to have been adopted by members on the other side of the House these days, but it was the last Labour Government that introduced Step Up Scholarships to make getting into tertiary education a little bit easier for some people who had previously been disadvantaged. It should be noted, of course, that all of the initiatives that I have just talked about were opposed by the then National Opposition, and quite vocally so, as well. National opposed all of those initiatives. We have well and truly canvassed John Key’s pledge to fight the introduction of interest-free student loans with every bone in his body.

NICKY WAGNER (National) Link to this

I support the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill. As we have heard today in the House, it is mainly a technical bill, which includes, as everybody agrees, several useful technical amendments. It clarifies some exemptions for students living outside but within the realm of New Zealand, and for those who are studying overseas.

The bill also makes some very sensible changes to interest payments. It has a softening of the conditions for those students who are fully repaying their loans, and an extension of relief for other students on hardship grounds. But there is also a firming up of consequences for students who have failed to make payments, failed to correct deductions, or failed to pay any due amount. For those students, the Inland Revenue Department will be allowed to increase the standard rate of repayment deductions from 10 percent to 15 percent.

As we have heard in the House today, it is great that New Zealand students have the opportunity to have a student loan scheme, and it is great that it can help them to get a good tertiary education so that they have a future and a good career proposition. It is also great that the Government is joining with students to invest in their future. Thank you.