Student Loan Scheme Amendment Act 2014
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From: robert mckenzie
Dear Ministry of Justice,
A request regarding the somewhat confusing and bizarre Student Loan Scheme Amendment Act 2014
I was wondering what the implications would be if a defaulting student loan borrower were to be arrested leaving NZ whilst travelling with their Australian or overseas born children, with the children traveling on foreign passports?
Would the children be taken in by the state while the parent awaits sentencing?
If the parent is unable to meet the bail or any repayment would they then be forced to stay in custody or NZ for the minimum of 3 months, if so would the children be housed, fed and schooled by the state during that period?
After 3 months how would the money be extracted from the probably now unemployed and stranded debtor?
Do the courts take into account that a borrower is travelling with children and the distress it would cause before a court order is issued to arrest an individual over what essentially isn’t a criminal matter (although cynically has been made retrospectively so)?
If the arrest is made how would the state manage the destitute and distressed child/children?
Is it a breach of human rights to prosecute and hold an individual whilst separating families because they are essentially too poor or unable to pay the state what is, in most cases, a very old debt consisting primarily of exploitative penalties and interest?
I understand that you will respond that the IRD has “hardship provisions” in place but from personal research and anecdotal experience the reality is that this is not the case.
With over 100000 NZ student loan borrowers now living overseas and the majority of those in default (around 70%) and a NZ prison capacity at roughly 10000 is this Kafkaesque practice really a serious and sustainable solution?
I look forward to your response.
From: correspondence, official
Ministry of Justice
I have passed your correspondence to the Inland Revenue Department, who are better able to respond to this. Officials from that department will respond in due time.
I hope this helps.
Ministry of Justice | Tāhū o te Ture
From: Commissioners Correspondence
Dear Mr McKenzie
Attached is Inland Revenue’s reply to your email of 1 August 2016.
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From: robert mckenzie
Dear Commissioners Correspondence,
Thank you for your reply,
However I don’t feel that you have provided me with an adequate response to any of my questions.
All your points are vague and ambiguous; however this is to be accepted given the number of amendments to the scheme since its inception a quarter of a century ago.
Your paragraph where you state that New Zealand student loan scheme is recognised as a very generous one is subjective to say the least. I for one would rather have a UK or Australian Student Loan over a New Zealand one due to the criminal charge element now written into it – UK student loans also expire after 25 years, Australian Student Loan payments are capped at 8 percent of earnings over 101,900 and above and start at 4 percent at $54,869. The only generous factor I can see is the they interest free for those still resident in New Zealand (which did not apply to the original loans which were gaining compound interest from day one )however this is far outweighed by the 12 percent of earnings over 19k which isn’t even a living wage. I simply cannot see how this scheme is generous compared to other OECD nations, not to mention the countries where education is free, Germany for example. (with the obvious exception of the US,that being nothing to aspire to), however I digress.
There is one question that you have failed to address which is of most importance.
As per my annotation:
Under section 26 of the New Zealand Bill of Rights Act 1990:
"26 Retroactive penalties and double jeopardy
(1)No one shall be liable to conviction of any offence on account of any act or omission which did not constitute an offence by such person under the law of New Zealand at the time it occurred.
How can an individual be charged and convicted of a crime when at the time of signing the student loan contract defaulting on the said loan was not a crime?
This is like fining a motorist for going 60km in a 60km zone that was later changed to a 50km zone then retrospectively fining them after the fact.
Does not the retrospective law change only apply to loans that were taken out after the law change?
One could argue than many students had they known that they could be arrested leaving New Zealand would never have signed up for these insidious loans.
Also do the IRD still have copies of all the original signed student loan contracts dating back to 1992 as proof of claim should the need arise?