John MacDonald: The hardline stance on student loans is backfiring

I didn’t do any study after I left school —no university, no polytech— so I’ve never had a student loan. I know about debt though, thanks to the mortgage.  

And I reckon it would be very easy for me, as someone who has never had to pay off a student loan but who knows what it’s like to have the responsibilities of a mortgage, to dismiss what a former IRD prosecutor is saying today.  

A former IRD prosecutor who says we need to go a bit easy on New Zealanders living overseas who are way behind in their student loan payments and are too scared to set foot here because they think they’ll be arrested at the border.  

Dave Ananth is a tax barrister who has done work for IRD in the past. He says it’s crazy that, at a time when we want and need skilled people working here, we are so hardcore with these people that they’re just not coming back.  

Because they’re too scared to come back.  

And I agree with him. Which kind of surprises me because I’m normally big on people not shying away from responsibilities and all that.   

But when you consider some real-life examples, I reckon it’s very easy to appreciate the argument for change.   

Dave Ananth is saying it’s all very well going overseas, but that doesn’t mean people walk into well-paying jobs. The grass doesn’t always turn out to be greener.  

So what he’s calling for IRD to be lenient enough so that these Kiwis aren’t scared of coming back. He says a bit of leeway would go a long way.  

One approach he thinks could work is IRD talking to these people and seeing if they could apply for some grace on the basis of hardship. Or agree to letting them come back, pay a few hundred dollars for a start and see how it goes.  

And I don’t see anything wrong with that. Because what would you rather have? These people stuck overseas owing all this money? Or would you rather they were here making a genuine contribution to the country?   

It’s a no-brainer. As this tax lawyer says, if nothing changes, it probably means some of these people never setting foot in New Zealand because they could potentially be arrested.  

Kiwis who have expertise in the likes of engineering and technology. There are medical people he says would be here if they didn’t have the threat of arrest hanging over them.  

And he’s giving some real-life examples to back up his argument. Such as a New Zealander living in Australia whose loan has blown-out to $170,000, mostly because of interest.  

Back in 2014, this guy completed his pilot training but couldn’t find any flying work here, so he went over to Australia and worked as a commercial pilot for six years.  

Things got tricky for him when Covid hit, there was no more flying for him, and he had to take a low-paying job in a storage warehouse. Which meant he got way behind in his loan payments.  

Then there’s the case of a woman living in the United States. Her debt has blown-out to $70,000 —$55,000 of that from interest— and she isn’t coming home to see her sick mother because she’s terrified she’s going to be arrested at the border.  

As she says: "I've been petrified something's going to happen to my mum and she's going to pass away and I'm not even going to be able to go there."  

I was talking to someone this morning who said they went overseas for just a year, and it cost them $1,000.  

So there is no shortage of stories that show how this system just isn’t doing anyone any favours. It’s not doing the people with the student loans living overseas any favours and it’s not doing the rest of us any favours.  

Because these people have the skills and expertise we are crying out for.  

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Canterbury Mornings podcast with John McDonald
from News talks'b I.

Speaker 2 (00:14):
Didn't do any study after I left school. There was
no university for me, no polytech for me, so I've
never had a student loan. I know about debt though,
thanks to the thanks to the old mortgage mortgage, and
I reckon it would be very easy for me as
someone who has never had to pay off a student loan,

(00:35):
but someone who does know what it's like having the
burden and responsibilities of a mortgage. I think it would
be very easy for me to dismiss what a former
Ird prosecutor was saying today about us needing to go
a bit easy on New Zealanders living overseas who are
way behind in their student loan payments and they're too

(00:55):
scared to set for to here. Why is that because
they think they'll be arrested at the border. But I'm
not dismissing what this guy is saying, not at all.
In fact, I think he's making a very strong argument
for changes to the current system, which means anyone with
the student loan who goes overseas gets hit with interest,

(01:16):
which means only one thing more debt to pay off.
You see interest starts getting added. You might have been
through this and you'll know. But if you don't, interest
starts getting added to the student loan pretty soon after
someone leaves the country, and while they're out of the country,
don't just have the interest being added, they also have

(01:37):
to make two lump some payments every year. So Dave
Anninth or A ninth as a tax barrister who has
done work for ID in the past, he's saying, today,
it is crazy. Listen to this. This is the point
he's saying. It's crazy that at a time when we

(01:58):
want and need skilled people working here, it's crazy that
we are so hardcore with these people. They're just not
coming back because they're too scared to come back because
the student loan. And I agree with them, which kind
of surprises me because I'm normally big on people not
shying away from responsibilities and all of that. But look,

(02:22):
when you consider some real life examples, I reckon, it's
very easy to appreciate what this guy's saying today. In fact,
it's difficult, very difficult to argue against it. So David
Nantas saying, it's all very well going overseas but that
doesn't mean people walking into well paying jobs. The grass
isn't always greener overseas. That makes sense. So what he's

(02:44):
calling for is for IOD to be lenient enough so
that these kiwis just aren't spooked, they're not scared of
coming back. And he says a bit of leeway would
go a long way, and one approach he thinks could work.
You know, he's not just coming up with a call
for change. He's putting up some ideas. Anything's one way

(03:06):
that could work is ird talking to these people and
seeing if they could apply for some grace on the
basis of hardship, or IID could agree to let them
come back, not arrest them, let them pay a few
hundred bucks for a start, and to see how it goes,
give it a crack. And I didn't see anything wrong
with that, because what would you rather have these people

(03:29):
stuck overseas just because they are as money, or would
you rather they were here making a genuine contribution to
the country. Was it no brain? Or isn't it? Well,
you tell me whether it is or not. Because as
this tax lawyer were saying, if nothing changes, he's saying,
if nothing changes, it probably means a lot of these
people never setting foot in New Zealand ever again because

(03:53):
they could potentially be arrested. We're talking here about Kiwis
who have expertise and the likes of engineering and technology.
There are medical people he says, would be here if
they didn't have the threat to rest hanging over them.
And he's giving some real life examples to back up
his argument. I'm sold you might need further selling. Well,

(04:15):
let's start with a New Zealander living in Australia whose
loan has blown out to one hundred and seventy thousand
dollars mostly because of interest one hundred and seventy k.
What happened was back in twenty fourteen, this guy completed
as pilot training, couldn't find any flying work here in
New Zealand, so he went over to Australia and he
worked as a commercial pilot for six years. Got tricky

(04:36):
for him no when COVID hit no more flying a sopened.
What happened is he had to take a low paying
job in a storage warehouse, which meant he got way
behind in his loan payments because of the interest, getting
whacked on the debt because he's overseas. Then there's a
case of a woman living in the States. Her debt's
blown out to seventy thousand dollars, fifty five k of
that from interest, and she isn't coming home to see

(04:59):
a sick mother because she's terrified that she's going to
be arrested at the border. As she says, quote, I've
been pet tried. Something's going to happen to my mum
and she's going to pass away, and I'm not even
going to be able to go there. And look, I
was talking to someone likely this morning. You said they
went overseas for just a year and they got pegged
an extra thousand bucks. So there is no shortage of

(05:21):
stories that show how this student loan system just isn't
doing anyone any favors. It's not doing the people with
the student loans living overseas any favors, and it's not
doing the rest of us any favors either, because these
people have the skills and expertise we are crying out
for and we're shutting the door and it's nuts.

Speaker 1 (05:45):
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