An information exchange agreement with the Australian Tax Office (ATO) has carried out its first match, locating 10,400 student loan borrowers living across the Tasman.
Inland Revenue last week sent an initial list of 104,000 names of New Zealand borrowers who are living overseas to the ATO. Those names matched with the contact details of 10,400 people living in Australia.
Tertiary Education, Skills and Employment Minister Steven Joyce says the information sharing agreement is another important tool to help Inland Revenue trace borrowers in default living overseas, and ultimately to get them back on track.
“Inland Revenue has achieved some great results over the past year, including a 32 per cent increase in compliance from defaulting borrowers. I expect this agreement will see a significant improvement in that figure over the next year.”
Inland Revenue will now analyse the information, identify those who are in default and start contacting them to resume repaying their loans. Inland Revenue will continue to work with the ATO to make further matches of the names already provided and will carry out frequent matches throughout the year and ad-hoc matches as required.
“This new information exchange agreement will be a huge boost in enabling Inland Revenue to get in touch with those borrowers who have been hard to track down and those who have been deliberately avoiding their obligations for a number of years.
“My advice to these borrowers is to do the right thing and get in touch with Inland Revenue so they can work out a suitable repayment plan. If they don’t, it’s likely someone will be knocking on their door in the next few months.”
Mr Joyce says Inland Revenue had some tough enforcement measures at its disposal, including legal action and potential arrest at the border if the borrower returned to New Zealand, but those options were only pursued as a last resort. Since January six warrants for arrest have been issued and three people have been arrested and appeared before the court.
At the end of June, the amount in default was $1,074 million. More than 90 per cent was owed by borrowers living overseas, even though they only make up 15 per cent of the total borrower population. A significant majority of overseas-based borrowers are believed to be living in Australia.
Revenue Minister Michael Woodhouse says Inland Revenue’s efforts in reducing student loan debt among overseas borrowers had made some impressive gains year on year.
“The campaign specifically aimed at problematic borrowers netted more than $100 million in the past year, and has passed the $300 million mark since its inception,” Mr Woodhouse says. “Overall, $216 million was paid by borrowers overseas last year.
“That’s a fantastic achievement but what’s even more pleasing is that Inland Revenue is reporting a turn-around in attitudes among many student loan borrowers who’ve previously been reluctant to engage with the department.
“It seems the message is getting through that if you leave the country for a few years, you can’t leave your student loan behind and hope it just goes away. Now really is the opportunity for defaulting borrowers to sort out their loans. They shouldn’t wait for Inland Revenue to contact them.”