CHRIS HIPKINS (Labour—Rimutaka) Link to this
Let us be clear what the Student Loan Scheme (Repayment Bonus) Amendment Bill is about, once and for all. This bill is a precursor to the abolition of interest-free student loans. The policy of interest-free student loans is one we know that National opposed, and it is still opposed to it. John Key called it reckless and irresponsible. National never wanted to see it enacted in the first place, and it is getting ready to do away with it. We know that National will use the economic downturn to simply turn round and say that the policy is not affordable any more and that the Government will get rid of it. We know that this bill is a precursor to that because the only way that this bill makes any sense whatsoever is if we do away with interest-free student loans. If that is not the case, then there is absolutely no reason why anybody would want to take up the option in this bill. Why would students take up the repayment bonus when they are better off leaving the money in the bank earning interest, and then making a lump-sum payment at the end? We know that this bill does not make any sense unless interest-free student loans are done away with.
We know that the National Government wants to do that, and it will just be yet another one in the long line of broken tertiary education promises by National Governments. Let us go back to 1990, when National broke its promise to students. National members went around the country saying National would abolish student tuition fees. What happened? National got into Government, and tuition fees went up. The then Minister of Education, who travelled the length and breadth of the country saying that he would resign if student tuition fees were not abolished, put fees up. He went up and down the country signing pledges at every university campus that said he would resign if tuition fees were not abolished. What did he do? He put them up. Did he resign? No, he did not.
It gets worse. Not only did the National Government keep the tuition fees but it put up the parental means test for allowances, so that fewer students got allowances. And it got worse.
National increased the age for means testing from 20 to 25. None of this was in National’s manifesto. It was going the opposite way to what their manifesto said. Then we go to 1996, when National promised students a universal student living allowance. Did it deliver that? No! Thirteen years on, students are still waiting for the universal student living allowance that they were promised. Instead of delivering that, in the 1998 Budget the National Government changed the name of all funding for tertiary education—calling it the universal tuition allowance.
Hon Annette KingWhat a hoax that was, because students did not see one dollar of the money that the National Government promised them.
This bill is yet another example. What about when Max Bradford went around the country in 1999 and said that the overall size of debt was not the issue because loans are an investment by the undergraduate? We know that that is what National thinks. Its members think that students should pay interest on that investment. Those members think that tertiary education is purely a private good, therefore anybody undertaking it should be forced to pay interest not only when those students graduate but also while they are still studying. That was the position of the previous National Government.
The Labour Government did away with interest on student loans while students are studying, and then it did away with interest in loans altogether. It was a policy that John Key called “reckless” and “irresponsible”. We know that National wants to do away with interest-free student loans, because those members never supported it in the first place. We are fully prepared for this to be yet another one of the National Party’s broken election promises. Its members went the length and breadth of the country during the last election, making all sorts of promises that they just knew they were not going to keep. We have seen tax cuts go by the wayside in the last few days, and keeping the interest-free student loans policy—implemented by the previous Labour Government—is likely to be the very next one to go.
MICHAEL WOODHOUSE (National) Link to this
I am delighted to rise in support of the Student Loan Scheme (Repayment Bonus) Amendment Bill. This is the last call in a debate that has been quite robust but, frankly, in the case of the Labour Opposition, somewhat nonsensical. It really beggars belief, does it not, that Labour members can stand up and claim, with straight faces, that this bill is not good for students who are saddled with debt. We have just heard from the member for Rimutaka, Chris Hipkins. He is so keen that he will take a call on just about anything and argue against it. He argued that, in effect, this bill is so good that there must be a hidden agenda. He has seen through it; there is a hidden agenda. This Government actually wants to encourage students to get out of debt sooner so that they can get on with their lives under less of a burden. That is it; that is all.
But the most extraordinary call came from Labour’s tertiary education spokesperson herself, Maryan Street. In her best Sylvester the Cat elocution, she accused the Government of being duplicitous. How on earth the Government sticking to its campaign promises and delivering its policy agenda in a timely manner is duplicitous, only she could explain. I will tell members what is duplicitous. It is duplicitous when a Government spends 8 years barely mentioning a policy then rolls it out 4 weeks before an election, as the previous Labour Government did with its cynical universal student allowance policy—8 years. I searched the Labour Party’s website for any reference to a universal student allowance, and I found none.
As recently as August last year the then tertiary education spokesperson, Pete Hodgson, incurred the wrath of the New Zealand University Students Association at a conference in Dunedin by saying that the policy was not on Labour’s agenda. Even in this Chamber a couple of months previous to that, in a debate about the concerning levels of student debt, when asked by a New Zealand First member whether Labour would introduce a universal student allowance Mr Hodgson said “… I have other priorities. I need to pay attention to the quality of tertiary education. I need to ensure that the completion rates continue to rise.”—and here is the real kicker—“I need to ensure that access—especially for Māori and Pacific Island students, which is well below par—must be increased. These things all cost money and I happen to place them above the move to a universal student allowance.”
Well, that must have really warmed the hearts of Te Ururoa Flavell, who spoke in this first reading debate, and his Māori Party colleagues. He must have been encouraged by such commitment but then destroyed by the announcement on 14 October last year, at a rally in Dunedin, that this not only was part of Labour’s agenda but also was a long-held vision of the then Prime Minister. That is duplicitous.
Ms Street also claimed in her speech that “it makes no financial sense to pay off more than is required of a loan that is generating no interest.” Hang on, is she not a member of the same Labour Party whose former member Mark Gosche said in response to accusations that an interest-free scheme would be abused: “It is like saying that all the students will go and borrow this money because it is free.” I am glad to say that very few people think like that. We now have Labour members saying “It’s free! Don’t worry about paying it back.” That is duplicitous.
Is this the Labour Opposition’s new approach to debt reduction? We know that New Zealand household debt is high in comparison with other OECD countries. It increased fivefold in the last generation, and more than doubled as a percentage of disposable income. But 24 hours after the previous Minister of Finance made his valedictory speech expressing concern that the Government “still has not grasped the significance of the profound contribution that the growing gap between saving and borrowing economies has made to the present economic crisis”, Ms Street is telling people not to bother getting out of debt, even when they are incentivised to do so—24 hours after the second parent departs, the Labour children are acting like the Lost Boys.
The member for Hutt South is a very clever and experienced politician and I take the opportunity to congratulate him on his return to the front bench—out of the cold of Coventry and back into the sunlight of the front. He probably could not resist the opportunity to take a call to say that black is white, that night is day, and that this opportunity would not be picked up by students, because they pay no interest on their debts. He said that smart students will take the money they would otherwise earn in interest, put it in the bank, and not pay down the interest-free debt. He challenged the accountants amongst the National caucus to say that this would not happen.
I am a chartered accountant, so I will give my professional opinion. This is an outstanding opportunity for students, and here is why. Let us say that the member for Hutt South has a mortgage—he is clearly far too old to have a student loan.
By some serendipity the bank offered him a zero interest rate that required him to repay the principal by regular instalments. Any extra payments would be supplemented by a kindly benefactor, thus reducing the number of regular payments he has to make, and getting him out of debt sooner.
Trevor Mallard would have us believe that he had turned down the supplementary principal payments because the interest is free. It does not make sense. Even he, who was giving a quite convincing performance, does not believe his own speech. He got a good way through the speech and then let the cat out of the bag by saying that graduates could save the money, earn the interest off it, and then pay their loan. I think he said that they could do it in the last 18 months or so. What he did not say was that the only way a graduate could take advantage of this would be if the bill was passed into law. I accept that he supports it; he just does not want to say it. All power to any graduate who is disciplined enough to do the savings thing and then repay it at the end, but I expect most will be happy enough to take advantage of the Government’s incentive to reduce debt quicker. Mr Mallard is really telling the House that he thinks this is a good bill; he just has to shout it down like a good Opposition member.
It is also interesting to note which Labour members were not there. Where was Iain Lees-Galloway, whose electorate is very much dependent on students? Where was Pete Hodgson, the Dunedin North MP? Where was the Labour member for the electorate that has the largest university in the country? Oh, hang on—she lost her seat, so she is next on the list. Well that is rejuvenation for you! I think those people are not taking part in this debate because they know that they will have to front up to their student electorate and explain why they oppose this very sensible legislation. Instead we have people like Mr Hipkins and Mr Nash, a fellow who became a bit confused about following like sheep, and tried to put us all to sleep like we were counting them. If his name was a bit different he would, in all likelihood, be on this side of the House, because his lack of enthusiasm certainly suggests he does not support this bill.
Although this bill is being introduced in the name of the Hon Peter Dunne—and I acknowledge the excellent work he has done in bringing the bill before this House—I also pay tribute to the hard-working Minister of Education, the Hon Anne Tolley, for her sterling work not only in bringing this very important National policy to this point but also for the timely manner in which she is delivering on the promises that National made prior to the election around the education portfolio. I strongly support this bill. It will be good for students. It will arrest a mildly concerning rise in student levels of debt. I look forward to its passage through the House, for the benefit of our students and all of our graduates. Thank you, Mr Assistant Speaker.
A party vote was called for on the question,
That the Student Loan Scheme (Repayment Bonus) Amendment Bill be now read a first time.
Ayes 68
Noes 52
Bill read a first time.
Hon PETER DUNNE (Minister of Revenue) Link to this
I move, That the Education and Science Committee consider the Student Loan (Repayment Bonus) Amendment Bill , that the committee report finally to the House on or before 30 July 2009, and that the committee have the authority to meet at any time while the House is sitting (except during oral questions), and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 187 and 190(1)(b) and (c).