Tertiary Education Report: Budget 2010 student support changes: permanent residency stand-down exemptions

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1 22 This document has been released under the Official Information Act 1982 (the Act). Some information has been deleted as it is out of scope. You have the right under sections 19 and 28(3) of the Act to ask an Ombudsman to review this decision. 11 March 2011 ED Tertiary Education Report: Budget 2010 student support changes: permanent residency stand-down exemptions Executive summary This paper [out of scope] seeks agreement to an additional exemption to the Government s policy of a 2-year stand-down for new permanent residents. [out of scope]. It would also address an oversight that omitted an exemption for sponsored family members of protected persons. The 2-year stand-down was introduced for Student Loans in Budget The purpose of the stand-down is to require new residents to show their commitment to New Zealand before receiving fee and income support through the student loan scheme, consistent with existing rules for both student allowances and benefits. [out of scope] Ongoing exemption for the family of protected persons The impact of the change to exempt the sponsored family members of protected persons is to enable these family members of people who were at risk of torture or human rights abuses

2 overseas, to study soon on their arrival in New Zealand, if needed. This ongoing exemption will have a very small impact on total expenditure, as the Department of Labour estimates that fewer than ten people per year will be eligible. This change requires Cabinet decision as it creates new policy for both student loans and allowances, and requires a change to the Student Allowance Regulations We recommend this change be included in the Budget 2011 student loan package for Cabinet consideration. Recommendations We recommend that the Minister for Tertiary Education and Minister of Revenue: a. note that this paper provides two approaches to broaden exemptions from the Government s policy of a 2-year stand-down for new permanent residents before they are eligible for student loans or allowances; [out of scope] The families of protected persons h. note that due to an administrative oversight, Budget 2010 did not provide for an exemption to the two-year stand-down for the families of protected persons recognised under the Immigration Act 2010, which has created an inconsistency in respect of student loans and allowances between the sponsored family members of protected persons and 2

3 sponsored family members of people with refugee status who are granted residence in New Zealand; i. note that an exemption would affect an estimated fewer than 10 students per year, at an implementation cost of $0.067m in 2011/12; j. agree that the Budget 2011 student loan package should include funding for system changes for an exemption for the sponsored family members of protected persons, also to cover student allowances; and, AGREE / DISAGREE AGREE / DISAGREE k. forward a copy of this report to the Minister for Social Development and Employment and Minister of Immigration. Karl Woodhead Acting Group Manager Ministry of Education NOTED / APPROVED Hon Steven Joyce Minister for Tertiary Education / / Hon Peter Dunne Minister of Revenue / / 3

4 Tertiary Education Report: Budget 2010 student support changes: permanent residency stand-down exemptions Purpose of report 1. This paper proposes extending the interpretation of an existing temporary exemption, and seeks agreement to an additional exemption from the Government s policy of a 2-year stand-down for new permanent residents: a. [out of scope] b. A second proposal addresses an oversight that omitted an exemption for family members sponsored by protected persons. Background 2. In Budget 2010, Government agreed to introduce a two-year stand-down for eligibility for student loans for new permanent residents and Australian citizens, to apply from 1 January Under this policy, which is consistent with eligibility criteria for Student Allowances: a. a permanent resident or Australian must be ordinarily resident in New Zealand and have resided in New Zealand for two years b. a permanent resident must have held a residence class visa for at least two years (under the Immigration Act 2009), in effect having been entitled to live in New Zealand indefinitely for at least two years c. refugees and their family members, and protected persons under the Immigration Act 2009, are exempt from the stand-down d. permanent residents studying in 2010 continue to be eligible under a temporary provision for a student loan through to the completion of the qualification that they are currently undertaking, or for a maximum of two years from 1 January 2011 whichever occurs first. 3. The purpose of the stand-down is to signal Government s expectation that new residents demonstrate their commitment to working and living in New Zealand before they can receive the benefits of the Student Loan Scheme. Importantly, it aligns student loan eligibility with eligibility for benefits and student allowances in order to reduce the potential for misuse of student loans as income support for new migrants who cannot receive other forms of income support. Compassionate exemption 4. In response to concerns raised by student loan applicants in particularly difficult personal circumstances, and who had long-standing plans to study in 2011, Ministers with Power to Act for Cabinet in December 2010 agreed to a further compassionate exemption for student loan applicants who: 4

5 a. can demonstrate they have been committed to undertaking study commencing between 1 January and 30 June 2011 for some time b. would not be able to undertake that study without a student loan c. should be granted an exemption on compassionate grounds due to their personal circumstances d. meet the eligibility requirements in all other respects. 5. The compassionate exemption was designed to apply only to a very few applicants, who were in particularly difficult circumstances and who had been surprised by the timing of the policy change. The examples provided to Ministers were victims affected by sexual abuse or domestic violence with no other sources of income and clear intentions to study. Officials stated their expectation that no more than 50 exemptions would be granted. The agreed communications to students and providers relating to this exemption have stated that it recognises that unusual, undeserved or disproportionate pain, distress or suffering would occur if an exemption was not approved. [out of scope] 1 1 [out of scope] 5

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8 The families of protected persons 25. The current two-year stand-down for student loans and allowances provides an exemption for protected persons under the Immigration Act 2009, who are people considered at risk of torture, death or cruelty if deported, and for refugees and their sponsored family members. 2 It does not include an exemption for the sponsored family members of protected persons, which is due to an administrative oversight at Budget An exemption for the family members of protected persons would make student support consistent with other Government policies to support this vulnerable group. 3 The Department of Labour has advised that there are likely to be very few applicants in 2011, possibly only one or two. 27. This change would require Cabinet decision, as Cabinet set the original exemption criteria and this group is clearly not included in the current exemption. It would also require an amendment to the Student Allowances Regulations 1998, in respect of regulation 12(1)(a)(iv). We recommend the proposal be included in Budget 2011 Student loan proposals that will be considered by Cabinet Business Committee on 28 March Officials will make this change effective as soon as possible following Cabinet consideration of the amended regulations. We estimate we can implement this change during June It would require changes to StudyLink systems and website and phone communications. Some StudyLink systems cannot be changed in time for first implementation, but StudyLink can manage any applications received until final system changes are completed, planned for August StudyLink will absorb the ongoing administration costs, but will seek funding of $62,000 through the Budget 2011 student loan package to make one-off system changes, as follows: COSTS Fiscal 11/12 Fiscal 12/13 Fiscal 13/14 Systems $ 62,000 TOTAL COSTS (EX GST) $ 62,000 $0 $0 $0 Fiscal 14/15 and Out Years 29. The proposal has only a minor impact on lending and allowances, based on only a few applicants per year being eligible, so we do not propose changes to appropriations for loans and allowances. 2 A Protected person is defined under section 130 or 131 of the Immigration Act 2009 as the following: under the Convention Against Torture, there are substantial grounds for believing that he or she would be in danger of being subjected to torture if deported from New Zealand under the Covenant on Civil and Political Rights, there are substantial grounds for believing that he or she would be in danger of being subjected to arbitrary deprivation of life or cruel treatment if deported from New Zealand. 3 For example, the schooling sector provides the same benefits to all refugee background students, which includes quota refugees and any family members they have sponsored into the country. Immigration policy exempts refugee sponsors from undertaking to support their relatives for the first two years (except in relation to accommodation) and social security policies provide hardship assistance for this unique group of migrants within their first two years. 8

9 Consultation 30. StudyLink has contributed to the development of this report and agrees with the recommendations. The Treasury, Inland Revenue and the Department of Labour (Immigration) have been consulted. Next steps 31. If you agree with the proposals of this report, the next steps are: [out of scope] c. Agencies to include an exemption for the sponsored family members of protected persons in the draft Cabinet paper for Budget 2011 student loan proposals. This exemption would also include student allowances. 9

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