Transtasman link to grab student cash

By VERNON SMALL deputy political editor

New Zealand and Australian tax officials will begin a data-matching project next month aimed at recovering loans from students who have left the country.

But early indications are that the two tax-collection systems are not compatible, making comparisons between New Zealand's list of student borrowers and Australia's list of taxpayers difficult.

It is understood New Zealand might have to pay a fee to Australia to have it collect the loans.

Inland Revenue estimates 1000 New Zealanders with student loans live in Australia, while many of the 35,000 borrowers who are overseas, but untraced, could also be over the Tasman.

Last March it was estimated that loans of $136 million were outstanding to students who had registered as living overseas.

Of that, $11 million was in arrears.

By December, the amount owed by students living overseas had climbed to $175 million, representing about 12,000 students.

The issue is considered sensitive in Australia, and Prime Minister Helen Clark and her Australian counterpart, John Howard, were playing down progress yesterday after two hours of talks in Auckland.

Helen Clark said they had not discussed recovering student loans from New Zealanders in Australia, but early exploratory talks were being held between officials.

The move is part of a planned international clampdown by IRD.

Young New Zealanders have already been asked to give details of their student loans to the British High Commission before it approves working holiday visas.

They must provide a statement from Inland Revenue outlining their repayment obligations when they apply for a visa.

Two-year working visas are granted for applicants aged under 28 to spend the majority of their time holidaying, although 12 months of casual work is allowed.

The commission does not reject applications because of the size of a loan, but someone who required fulltime work in Britain to meet repayments would not qualify.

Commission spokesman Bryan Nicolson said the requirement on visa applicants was introduced after stories of "people fleeing overseas to service their loans from afar."

Former students are supposed to contact Inland Revenue before travelling overseas to arrange repayments of their loans.

The tax department can levy penalty charges of 2 per cent each month on outstanding loans if debts are ignored.

It is understood Education Minister Trevor Mallard has already had discussions with the British Government to develop a system for tracking down student debtors there.