Luxon also addressed National\u2019s pledge to lower student loan repayments for graduates who stay in New Zealand, saying it was \u201csending a message [to graduates] that we want to make life easier for you\u201d.<\/p>\n
\u201cWe\u2019ve got some momentum and you want to be able to encourage young people to say, stay here, there\u2019s no need for you to leave and go off overseas,\u201d he said.<\/p>\n
Prime Minister Chris Luxon in studio with Newstalk ZB’s Mike Hosking.<\/p>\n
The change in repayments would give people another $1000 in their pocket each year, which over 8-10 years was \u201ca good chunk of a deposit for a house or starting up for a family\u201d.<\/p>\n
On the flip side, overseas debt collections on student loans had increased about 28% per year in the past two years, he said.<\/p>\n
\u201cFrankly, it\u2019s just not right that we have a heavily subsidised tertiary education system, you take the benefit of that, you go off and decide you\u2019re going to give your effort to another economy and then you\u2019re not going to pay your debt.\u201d<\/p>\n
The carrot-and-stick approach would cut compulsory repayments from 12c on the dollar to 10c for graduates who stayed put, while those moving overseas would face higher interest rates and harsher penalties for defaulting.<\/p>\n
National\u2019s finance spokeswoman Nicola Willis said on Saturday that the cut in repayments, which apply to every dollar earned above $24,128, would keep talented young graduates in New Zealand<\/a> and penalise those who left and refused to pay their loan back.<\/p>\n Annual interest rates on overseas-based balances would increase 1 percentage point to 5.6% under National\u2019s plan, with added penalties for sustained default on top of existing late-payment interest rates.<\/p>\n Responding to the announcement, Labour\u2019s tertiary spokesman, Shanan Halbert, said while any loan relief was welcome, National should be judged on its whole record, including raising the repayment rate from 10% to 12% in 2012.<\/p>\n \u201cOf course people should repay what they owe. But the bigger question is why so many young New Zealanders are struggling to get ahead and choosing to build their futures overseas.\u201d<\/p>\n Auckland University vice-chancellor Nic Smith told Hosking this morning that those changes would be \u201ca small step in the right direction\u201d but there was much more to do, including expanding research and development.<\/p>\n \u201cIf we can\u2019t retain our young and our talented \u2026 then we\u2019re going to end up 10 or 20 years down the track in a real problem. So we\u2019ve got to turn this around,” he said.<\/p>\n \u201cIt\u2019s being able to say I\u2019ve got a career that\u2019s going to be exciting, I\u2019m going to be part of a dynamic economy, I\u2019m going to be able to respond to the kinds of opportunities we\u2019re seeing as technology comes across the horizon.\u201d<\/p>\n Labour also released new policy on the weekend, promising to reform retirement village repayments if elected. Its plan would require villages to repay residents or their estates within three months<\/a> if they leave the facilities.<\/p>\n Law changes to be introduced by the current Government will require villages to pay the money back within 12 months.<\/p>\n National has also teased a \u201csurprise\u201d new policy on retirement villages<\/a>, with Luxon telling a recent public meeting that residents often had \u201cquite punitive settings\u201d for their units.<\/p>\nLuxon with National’s (from left) Greg Fleming, Nicola Willis, Simon Watts, Mahesh Muralidhar, and Penny Simmonds at Rocket Lab yesterday. Photo \/ Sylvie Whinray<\/p>\n