10. HOLLY WALKER (Green) to the Minister for Tertiary Education, Skills and Employment: What official advice, if any, has he received about how increasing the student loan repayment rate will impact on young families and those on low incomes?

Hon STEVEN JOYCE (Minister for Tertiary Education, Skills and Employment) : The official advice was that those on low incomes, say about $25,000, will be required to contribute a further $2.27 per week towards paying off their loan, and those on a more middle income of, say, $48,000 would pay an additional $11.12 per week. Of course, the average student loan borrower will pay off their loan 4 to 5 months more quickly, and then they will not have to be paying those repayments any further. The unofficial advice was that using the member’s own figure of a person on the average full-time wage with a tertiary qualification—that is, a wage of $59,000—they would be permanently worse off under the Green Party’s tax policy than under our policy of paying off their student loan faster.

Holly Walker: Was he advised that the combined effect of last year’s Working for Families and KiwiSaver changes with the new 12 percent student loan scheme repayment rate will be a 7.6 percent increase in the effective marginal tax rate for working parents with student loans, and how will that affect young families trying to save?

Hon STEVEN JOYCE: No, I have not received that particular piece of advice, but again I want to point out to the member that it does feel a bit like crocodile tears when the Green Party’s tax policy—

Mr SPEAKER: Order! The member got away with that the first time around and I am not going to let him get away with it on that. The question was not provocative. It asked whether the Minister had received certain advice.

Holly Walker: How will the increased repayment rate affect polytechnic and other non-university graduates, who do not attract the 50 to 60 percent income premium he referred to in an answer to an earlier question?

Hon STEVEN JOYCE: The reality is that the repayments are income contingent, so they depend on the level of income. But I would point out that somebody with a mid-level diploma or certificate from a polytechnic is likely to get a premium of 20 to 30 percent over somebody who does not achieve anything in tertiary education.

Holly Walker: Would it not make more sense for student loan repayment rates to be progressive, as they are in many countries including Australia, so that those graduates who can afford to repay their loans faster do so, while those on lower incomes have a chance to find their feet first?

Hon STEVEN JOYCE: The difficulty with just cherry-picking one part of another country’s scheme is that you say “Well, on the one hand we want to keep all the good parts of our scheme, and on the other hand we want to keep the other country’s scheme.”

Hon Trevor Mallard: What’s wrong with that?

Hon STEVEN JOYCE: Well, if you have got limitless money, of course that is a very good idea, but if you have not got limitless money, that is not a good idea. If the member wanted to copy the Australian scheme, then you would have to actually CPI-adjust the value of the student loans for every student each year by 3 percent. You also would have to ban borrowing for living costs. My understanding is the member wants to make the current scheme here even more generous, and I would say that would just be fiscally irresponsible in the current climate.