Audio Transcript - Nandor on Student Loans

Today is the New Zealand University Students’ Association's day of action on student debt. Today we are seeing people gather all over the country to protest the Government's continued policy to support the student loan scheme. Today we will see people gather in Hamilton, Auckland, Palmerston North, Wellington, and Dunedin to protest this Government's policies. It is good to see students hitting the streets, because the reality is that students will get nowhere on their demands for a universal student allowance until they get active, until they take to the streets, and until they make their voices heard. They can take their lessons - from the students of the past - the student activists of a few decades ago such as Mr Maharey, Phil Goff, and Helen Clark who took to the streets in their time to make known their issues. So I totally support this campaign to draw attention to the disaster that is the student loan scheme, and the disaster that the student loan scheme represents for New Zealand students and for New Zealand as a country.

Two weeks' ago, the Green Co-Leader Rod Donald presented a petition to this Parliament on behalf of more than 35,000 New Zealanders who put their names in support of the campaign by the University Students Association. That petition said that those people recognised that the current system of student allowances discriminated against those under the age of 25, and forced students to borrow to meet their basic living costs. They therefore called upon the Government to immediately adjust the allowances of parental income limits for inflation since 1992, institute a system of a living allowance for all tertiary students, and set the level of the student living allowance equal to that of the unemployment benefit.

What that petition represented was really a new level of activity among students. Because, what was notable was that signatures on that petition were not just from students, they were from New Zealanders as a whole. Students are starting to gather support across the population for their campaign because more and more New Zealanders are waking up to the realisation that the student loan scheme is not just a student issue. It is actually an issue that affects our entire country, and affects everyone in it. There are a huge number of issues that it involves.

I would like to draw the House's attention to the words of Brian Easton, in looking at the sustainability of student loans. He pointed out that student debt is not simply a liability, such as a mortgage or an overdraft, repayment is contingent upon the income-stream for the debtor, and that income-stream is uncertain. So, in effect, it is a contingent liability. But he points out that proponents of the scheme are very hesitant to call it a contingent liability because that would display to the world that essentially the scheme is no more than a raising of the income tax levy on some parts of the population, that is, those with a contingent liability from the student debt, in order to lower taxes for the rest of us, particularly those of us who got a free tertiary education or who have been able to payoff their contingent liability loan. That would include many, many members of this House, and many members of the Government.

He also pointed-out that there is a second reason there is a hesitancy to call it that because it shows that the net worth shown in the Crown balance is not as healthy as it first appears. In looking at the 2000 figures he talked about the net worth being $8.2 billion made up of $60.9 billion of assets, less $52.6 billion of liabilities, but at that time $3.4 billion of those contingent assets were dependent on the students, for whom they are contingent liabilities, earning sufficient income to pay them off, not going bankrupt, not disappearing out the country, and not disappearing out of the Inland Revenue Department's records, and the like. That debt is now $7 billion dollars - doubled from that time. Therefore, slightly half of the so-called net worth of the Crown is covered by the contingent assets of the student loan scheme.

We know that if we go around the country and talk to people we hear about other kinds of impacts of the student loan scheme as well. We know that in rural communities people are finding it harder and harder to get professionals to practice because they can’t pay the high fees needed for people to pay off their student loans. We know about the ‘Brain Drain’. This is something that New Zealand has always had to some degree; young people going overseas. But more and more of them are going overseas and less and less of them are coming back.

We know that it is becoming harder to start up a business because of the impact of the student loan scheme on getting credit. We know that young people are finding it hard to raise mortgages because of the student loan scheme. And in fact, while it’s not a direct causal link, the Real Estate Institute says that the number of New Zealanders owning a home is down from 73% to 65% in recent years. We suspect that it affects fertility. Childless couples will become the most common family unit within the next three years, according to Statistics New Zealand, due to an ageing population but also younger people putting off having children. And Professor Ian Poole (Demographer, Waikato University) has said that large student loan debt encourages women to work longer and put off having children and in fact he’s described the student loan scheme as the most anti-natalist piece of legislation that he’s seen.

So the student loan scheme is not just a problem for students, it’s a problem for the whole of society. It affects every single one of us. The student debt is now $7 Billion dollars and over half of that was borrowed just to pay for living costs. And it is ludicrous that students are not recognised as being independent from their parents, until they reach the age of 25. This is unlike any other piece of legislation or regulation that I can think of. And if they’re under the age of 25 they can only get a full student allowance if their combined parental income is under $28,079. Or if they earn over $50,752, there is no allowance available. That figure has not been adjusted since the student loan scheme was first introduced in 1992. And even if your parents are separated, both parents incomes are taken into account. That is absolutely unreal.

The other thing is the interest on the student loan scheme. Students are paying 7% interest on their student loans and that’s more than I pay on my mortgage! It’s absolutely outrageous that students are paying above commercial rates for the ‘privilege’ of borrowing money to pay for their education.

The Greens say the Government must commit itself to a Universal Student Allowance. That wont eliminate student debt, but it will reduce it’s growth considerably. If the Government is committed to a knowledge economy, if the Government is considered to a wisdom society, if the Government is committed to an Econation, it must re-instate the Universal Student Allowance. And if the Government is committed to keeping its commitments of the past it must do it as well, because in 1995 Helen Clark, in a speech to the New Zealand Labour Party Conference said “These days students and parents are making incredible sacrifices to be educated and trained, they need more help. My aim is to return to a Universal Student Allowance”. She said that in 1995, we want to see her hold to that commitment in 2004.

The Government must reinstate a Universal Student Allowance.