Joyce defends student loan crackdown

FIONA ROTHERHAM
Last updated 11:03 17/05/2013

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Tertiary Education, Skills and Employment Minister Steven Joyce has defended the Government's move to crack down further on student-loan defaulters, including arresting the worst offenders as they try to leave the country.

Overseas-based borrowers who haven't met their loan repayments can be arrested at the border under new sanctions in the Budget which include introducing fixed repayment obligations and higher repayment thresholds.

Speaking at a post-Budget breakfast in Auckland, Joyce said today that about 82 per cent of student loans in default are from people based overseas.

He said the Government would begin matching passport information with student-loan debt so that a red flag would show up on the worst offenders as they left the country.

Joyce said the crackdown was aimed at those who were deliberately flouting the system and who had ignored every approach from the Inland Revenue Department about making repayments.

It wasn't aimed at those who couldn't afford to make repayments or for those who had got a bit behind in payments.

"One gentleman came into the country 12 times in two years and he owes a massive amount on his student loan and had made no effort to pay that." he said.

A private debt collection agency in Australia would be used to help trace the estimated 10,000 borrowers believed to be living there.

Joyce also told the business audience that the drop in ACC levies announced in the Budget was the "unsung success story of this Government".

The Government has pledged cuts to the ACC levies which could save the average worker up to $400 a year.

The plan is to reduce levies by $300 million in 2014-15 when the Government's books are planned to be back in surplus, and by $1 billion in 2015-16.

"We want to get it down to 60 per cent of the current rates," he said.

ACC has grown its reserves to more than $20 billion after a change in its funding model to cover the life-long cost of injuries which saw levies rise significantly.

The Government was advised by officials it could begin reducing the levies across all three accounts by April this year but it had chosen to hold off on doing so until next year.

Westpac chief economist Dominick Stephens, speaking at the same function, said the cut in ACC levies was the most significant change in the Budget.

"Practically, this is a tax cut," he said.

Stephens described it as a "hold the fort" Budget with Government still constrained on spending and that it would have a lot more choices to make on that front next year.

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- BusinessDay.co.nz

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