OnPoint by Keith Ng

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OnPoint: Budget 2013: Bringing Down the House (Prices), but not really

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  • Lyndon Hood,

    Wellington • Since Nov 2006 • 1115 posts Report Reply

  • Fooman,

    Just a placeholder for my upcoming note of appreciation...


    Lower Hutt • Since Dec 2009 • 87 posts Report Reply

  • Gareth Ward,

    Resumption of contribution to the NZ Super Fund has been delayed, again.

    Booo. And frustratingly that seems to have widespread political support...

    Auckland, NZ • Since Mar 2007 • 1727 posts Report Reply

  • Phil Lyth,


    thanks Keith

    Wellington • Since Apr 2009 • 458 posts Report Reply

  • Idiot Savant,

    Aside from raising the amount of money which is collected, it'll also make it less attractive to try to flee your student loan debt, or to get into the situation where interest continues to accrue without payment, building up to the point where it becomes impossible for graduates to move back.

    OTOH, it also means that those already overseas will effectively be forced into permanent exile. I don't think that's a Good Thing.

    Palmerston North • Since Nov 2006 • 1717 posts Report Reply

  • Rich of Observationz, in reply to Idiot Savant,

    I also suspect that one day there'll be an overseas court challenge to NZ student loan repayments, whereby the expat and their lawyers will try and characterize the repayments as being a tax on non-residents foreign income (and thus unenforcable in the foreign state) rather than a civil debt. Changing the rules as part of government budgets would tend to reinforce this.

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • George Darroch,

    “Fixed repayment obligations and higher repayment thresholds for overseas-based borrowers” (I think they mean lower thresholds though. I think.)
    “[Extending] the child support border arrest system for the most non-compliant overseas-based borrowers”
    “Ongoing information-sharing agreement between IRD and Internal Affairs to collect contact details from passport applications”

    If I'm reading this correctly, ugh. I've been paying back close to my obligations, as I can. Fixed repayments could easily force me choose to between country and career.

    (Given that the NZ Government has chosen to neglect public health entirely, meaning ever fewer jobs for early-career professionals).

    WLG • Since Nov 2006 • 2264 posts Report Reply

  • Russell Brown,

    In a footnote somewhere, funding for Public Broadcasting Services has been cut by $3.08 million. Sigh.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Keith Ng, in reply to Idiot Savant,

    Well, if they're successful in chasing them to the ends of the earth (as long as they need a NZ passport), then there's no point in staying in exile. And with the fixed repayment obligations (i.e. Not related to income!) it might even be cheaper for them to come back. Maybe.

    Auckland • Since Nov 2006 • 543 posts Report Reply

  • Keith Ng, in reply to Rich of Observationz,

    Pretty sure I had to sign something to get a student loan. Marginally sure that something said that it was a loan, and that I had to pay it back.

    Auckland • Since Nov 2006 • 543 posts Report Reply

  • Chris Waugh,

    What the hell?!

    Student loan borrowers who have defaulted on their repayments could be arrested at the border under new sanctions in Budget 2013 in a drive to increase student loan repayments.

    So Corrections will be getting more money to build debtor's prisons?! But later in the article:

    The Government will extend child support border arrest sanctions to non-compliant overseas based borrowers with high levels of default on their student loan repayments.

    Earth to National: You want those loans paid back? Well, do something about the exchange rate and change the system to make it easier to pay. Surely you should be able to set up cooperative deals with other countries' tax authorities for them to collect repayments directly out of pay packets on IRD's behalf, starting with what surely must be the low-hanging fruit of Australia, UK, US, Canada and Ireland? Geez, I'd be quite happy for China's tax department to take loan repayments and sent them to IRD, save me several TEU loads' of hassle, expense, and worry. But this constant bashing of overseas based borrowers, waving big sticks at us and setting us up as public enemy #2 really doesn't help, especially considering how many of us left to get jobs in the first place.

    Wellington • Since Jan 2007 • 2401 posts Report Reply

  • Geoff Lealand,

    Equivalent funding for PTEs? That is bloody appalling!

    Screen & Media Studies, U… • Since Oct 2007 • 2562 posts Report Reply

  • Chris Waugh, in reply to Keith Ng,

    it might even be cheaper for them to come back. Maybe.

    Big maybe. There's a lot of us and reports are jobs in NZ are hard to come by.

    Wellington • Since Jan 2007 • 2401 posts Report Reply

  • Rob Stowell, in reply to Geoff Lealand,

    It's not a good budget for tertiary ed. We knew Teh Minister didn't like us much. But not how much :(

    Whakaraupo • Since Nov 2006 • 2110 posts Report Reply

  • steve black,

    Nice overview. Thanks Keith.

    There seems to be a bad link in for GFYS in:

    Signalling that Management, Commerce and Arts should GFYS: Other higher-cost subjects may see an increase in funding if necessary.

    of am I just being punished for not using Chrome? I presume this is Go Fund Your Self? ;-)

    sunny mt albert • Since Jan 2007 • 116 posts Report Reply

  • Rich of Observationz, in reply to Keith Ng,

    Right, but that was (or purported to be) a contract, so it was a loan. If the government then starts dicking around with the terms by statute, then it starts to take on more of the nature of a tax.

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Ben Austin,

    The Student Loan changes are a tad worrying, given the exchange rate doesn't seem to be going down any time soon.

    London • Since Nov 2006 • 1027 posts Report Reply

  • Isla T,

    It's higher repayment amounts for those with larger loans. So if you have a hefty loan, let's hope you have the income overseas that can cover the higher repayments. Fair enough (the out clause would be to come back to NZ of course).

    overseas and far away :( • Since May 2010 • 3 posts Report Reply

  • Ian Dalziel, in reply to Geoff Lealand,


    Equivalent funding for PTEs?
    That is bloody appalling!

    ...and I can't see how it is justifiable ?

    Oh , that's right, the 'market' is too big to fail !
    We have left 'unchartered' waters,
    Sharks ahead...

    Christchurch • Since Dec 2006 • 7953 posts Report Reply

  • BenWilson, in reply to Keith Ng,

    Pretty sure I had to sign something to get a student loan. Marginally sure that something said that it was a loan, and that I had to pay it back.

    Pretty sure that happened to me too. I signed something that had some fairly clear terms regarding when and how to pay back, interest rates that were pegged, an exclusion regarding having to pay back when overseas, etc. I read it all because the loan was going to be with me for a long time. Then a few years later, the government changed the terms of the deal I had signed, jacking up the interest rates. At that point I felt a little like Lando Calrissian:

    Me: But we had a deal!
    Government: I am altering the deal. Pray that I don't alter it any further....
    Me: This deal is getting worse all the time.
    <Into PA. Students of NZ, the Market Empire has taken control of your loans. I suggest you leave immediately><thousands of people flee>

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Tom Semmens,

    Whilst I understand the frustration of having students with debts flitting off all footloose and carefree on their OE, threatening to put them under some sort of house arrest if they dare set foot back in their homeland is a really, really bad idea. However, it is a near perfect distillation of the hubristic, vengeful and authoritarian spirit which animates this government from top to bottom. For a start, the ones who will not be coming home at all anymore represent the best and brightest of their generation, who we can ill afford to lose. Whether we like it or not, parental income is an excellent indicator of your future income and banishing pretty young Sarah from Epsom to foreign exile in London or Sydney or Hong Kong is to also permanently impoverish the future tax base. The bottom line is the country needs these young people more than they need New Zealand.

    Also, applying the sort of punitive measures that get Paula Bennett all moist when she does it to beneficiaries is not going to play well in the middle class suburbs, where such ill-thought out punitive measures are only applauded when they don’t apply to them. Our eponymous Sarah tearfully trecounting how she was detained trying to return to her high flying lawyer’s job in Hong Kong after attending her granny’s funeral because she owes 20K (which she won’t be able pay back on the dole in NZ) might get the superannuated tall poppy losers of the right wing talkback Taliban frothing in their baying approval, but it is going to be as popular as a pork chop in synagogue in places which are National party heartlands.

    Sevilla, Espana • Since Nov 2006 • 2217 posts Report Reply

  • Rich of Observationz, in reply to BenWilson,

    Yeah. So a bunch of students hire a mega-lawyer and contest the payment demands in a British or Aussie court, because what was a loan has morphed into a tax on the overseas earnings of non-residents. NZ doesn't have jurisdiction to do that (any more than the UK could suddenly send me a tax bill here).

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Rich of Observationz,

    Meanwhile, the government is obviously very relaxed about how the dairy sector paid $26mln in tax for the last available year, Google paid $165k in tax and all those people selling their million dollar houses for a substantial profit are paying a big round zero tax bill.

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Russell Brown,

    Apparently Len Brown gave an odd and distracted speech at the Auckland Writers and Readers Festival do last night. I'm guessing this would be why.

    The housing initiatives in the Budget appear to dump all over the government's draft agreement on housing with Auckland Council. It sometimes seems that these people wouldn't know good faith if it bit them on the arse.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • BenWilson, in reply to Rich of Observationz,

    They don't have jurisdiction, sure. But that doesn't mean those governments won't actually just honor the bills too, in some kind of reciprocal arrangement. I expect this will eventually happen. It's quite an amazing setup, really, that this kind of debt can hang over you in perpetuity. Any other kind of debt, if you stop making payments, they come after you fast, take whatever you've got, and bankrupt you if it's not enough. The possibility of that situation (that you might not have enough and will have to go bankrupt) is practically the only reason that lenders can justify charging substantially more than the basic inflation rate for loans. But for inescapable lifelong put-it-on-my-tab we-can-come-after-you-everywhere debt, this risk isn't really there, short of the actual death of the borrower. Yet they still charge market interest rates. Debt owed to the government really is, as you say, more like taxes. You pay, or you die.

    Ironically, it's also caused an inflationary bubble in education. The numbers of people taking up tertiary has only risen since loans came in. Because you can borrow against your future, you can get an education. Because everyone can, you have to get an education (or you aren't qualified to things). So it loops around. This is also an international phenomenon, far, far bigger in the US than anything we have here. Which is why I think eventually the enforcement of chasing it up will gradually be agreed on by the masters of the universe. The bubble will continue to swell, people will have to become more and more qualified to get access to the shrinking pot of real wealth, so they will have to take on more and more debt. I don't know where it ends. If it's a bubble, it bursts. Or it could just correct for a very, very long time, with hordes of very highly educated youngsters being unable to find work, unable to pay back any debt, flooding out to wherever there is work until all such locations are saturated. Then...I don't know.

    </end mostly off-topic work-avoiding rant>

    Auckland • Since Nov 2006 • 10657 posts Report Reply

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