UPDATED: Arrested student loan defaulter claims to be Cook Island PM’s relative

Previous Revenue Minister Todd McClay

Should serial student loan defaulters face arrest?

Yes
77%
No
23%
Total votes: 244

Update 11.30am: The man arrested for defaulting on student loan repayments on Monday as he tried to leave the country says he’s the nephew of Cook Island PM Henry Puna.

Ngatokotoru Puna, who’s 40, has reportedly said he is the maths department head of Rarotonga's national college and was in New Zealand as a result of an invitation to a conference.

Thanks to what was described in Manukau District Court this morning as a "significant" repayment of his loan – $5000, according to one report – police have returned his passport so he can leave the country.

Mr Puna is reported as saying he’s never been spoken to by IRD about issues over his loan, while the government agency says it made “strenuous” efforts to contact him.

He’s also reported as saying that, due to a $30,000 salary, a $300,000 mortgage debt and having five daughters, repaying the loan will be a struggle (RNZ is reporting that Mr Puna had a $40,000 student loan when he left New Zealand, which has since ballooned to $130,000 due to interest).

New Zealand University Students Association acting president Laura Harris has said the arrest points up a basic flaw of the repayment scheme, in that it is based on what’s owed by the borrower and not their income.

Earlier: A student loan defaulter was arrested at the New Zealand border on Monday for ignoring requests to repay his debt, in the first example of a long-promised crackdown.

Last July the IRD announced it was monitoring and considering the arrest of 20 individuals who had consistently failed to make loan repayments.

This followed a March 2014 law change enabling arrest warrants to be issued for serial defaulters to prevent them from leaving the country until their arrears are resolved.  

The arrested man, who has been living overseas for the past 11 years and has a debt in excess of $20,000, was bailed to his parent-in-laws’ house after an initial court appearance and is due back in court today.

In a statement, an IRD spokesman said that it utilised its powers to arrest the loan defaulter as “a very last resort,” after having fruitlessly tried to contact the man and agree on repayment arrangements.

As of May last year, student loan borrowers numbered more than 730,000 – or about 16% of New Zealand’s population. The 15% of borrowers living overseas are estimated to owe $3.1 billion, while total student loan debt is $14.8 billion.

The IRD has been running a campaign targeting those overseas borrowers who are not repaying their loans for the past five years.

Last year then-Revenue Minister Todd McClay noted that, “for those defaulting borrowers who don’t call, their contact details will start coming in from next year and Inland Revenue will follow these up.”

The defaulter arrested this week is unlikely to garner much in the way of sympathy from NBR subscribers.

In a poll run on the issue last July, over three-quarters (77%) of those voting said they believed that serial student loan defaulters should face arrest, while just 23% thought they shouldn’t.

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45 Comments & Questions

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Good job! I know several smug idiots who fled shortly after graduation thinking they'd got away with a free education while the rest of us struggled for years to repay our loans. See how smug they are now that they realise the true cost of their actions. Pay up or stay away, either is fine with me.

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Agreed, it is fraud, tax evasion, theft, you name it.

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As a student loan borrower (and dedicated repayer), I wholly endorse this arrest. The Kiwi mentality of dodging Government debt and trying to extract maximum public funds as a sport needs to stop.

You wouldn't expect the banks to roll over on overdue loans or defaults, so why is the Government any different? If you cannot see the long-term consequences of such short-term decisions, then you should not enter into debt deals.

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In the first instance we should be giving these people a bad credit rating as that will put some focus on the future as most would want to come back later. Saves chasing them.
We just need to be able to get a bad credit rating in the country they live in to really make life difficult.

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good job, all that education and yet ignorant to the simple fact you must pay what you owe.

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mixed feelings on this one.

Yes they definitely should be arrested.

but at the same time for those who've received free tertiary education, I don't feel they've earned the right to complain about student loan defaulters.

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Yeah, as someone who was a uni student when student loans/user pays tertiary education was introduced, I still bridle somewhat at boomers who benefitted from a free education system and yet now pontificate about the moral imperative of paying one’s own way. At the time, when various degree-laden politicians declared that “We’ve been living beyond our means too long,” I remember thinking, “Hang on, *you’re* the ones who've been running up these bloody bills, I only just got here.”

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I'm a baby boomer who paid for my education because I delayed my start at university until after user pays were brought in. Prior to that I was working and paying tax. I was paying for all the other baby boomers to have a free education. I in effect have paid twice. Do I care? I couldn't give a toss. And I have repaid my student loan in full. There, you happy now?

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The boomers paid 66% income tax in return for their "free" education, and they are funding 75% of the current generations' education.

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I'm a boomer who got my education free - and was given a living allowance as well when I was an adult student.

I vividly remember a tutor telling me how society as a whole benefits the more of its citizens are well educated.

I certainly feel for those younger who had to pay.

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It's good to see a sympathetic boomer.

I can see a certain level of antipathy from the youngest generations toward boomers:

"Boomers had free education, meaningful living allowances, government benefits merely for having kids, cheap land, and even government provisions in housing (cheap leasehold land etc.). Yet they call us - who have none of these things - lazy spendthrifts, and whine bitterly if anyone mentions raising the pension age."

Housing affordability has never been worse than today. Education is more expensive than it has ever been.

Yes, the old way was economically unsustainable, but the upcoming generations are certainly not getting the same shrift boomers did.

Back on topic: student loans must be repaid.

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Why shouldn't the children (and the families) of the greatest generation not benefit from the sacrifices they made during the war? They fought for a better world, they won, and their kids got to benefit because that is what they want. Get over it.

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The point is not that they should not benefit from it.

The point is that they should be more self aware, and quit whining about how "back in my day things were hard" and "these new generations don't know how easy they've got it", because the facts just don't support that.

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Grow up. That just sounds like the mad rantings of a bigot.

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but times have changed!

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Well, exactly.

For most of the last 70 years, NZ's top tax rates were over 60% - in the mid 1980s, our top tax rate was still 66%. This helped fund the great lifestyle boomers enjoyed - the free education, subsidised housing, etc. Many were able to buy their first house in the mid 80s thanks to a taxpayer funded "rent to own" scheme, or cheap government-funded leasehold land.

However, it seems once a nice lifestyle was firmly achieved that generation dropped the top tax tier to 33%, and decided future generations should "Do what we did and pull yourselves up by your own bootstraps! You don't know how hard we had it!"

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Why should student loans be different from any other loans ? You owe, you pay back !

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So the NZ taxpayer should subsidise those students who go offshore but don't earn large incomes or have other large debts??

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And are irresponsible enough to have 5 kids on a low salary....didn't he learn anything? No sympathy.

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It's a slap in the face to those parents who work hard to ensure their children don't have to take out student loans (as mine did), that people like this guy thinks its a right to walk away from debt you incur..

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Agree with all, pay the Student Loan off. Why doesn't he do a debt consolidation, add it to the mortgage and pay off over 20years at today's low interest rates. We the tax payers in NZ want our loan repaid.

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So what if I owed this bludger and the rest of them money. Would they write it off if I said I couldn't pay them back. Fat chance. They owe me and every other tax payer. Pay up of be send to the debtors prison.

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He lives in Rarotonga and is on the princely salary of 35k a year, and has a family to support and a 300k mortgage. How is he going to pay the loan back? By way of irregular shipments to the IRD, of taro and cassava?

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Bought a house at 10 times his income? That explains his inability to repay right there....voluntary.

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He should have considered that before he took out a 300K mortgage, most of us only borrow what we can afford to repay, but not so these highly educated modern "Dumb Dumbs" it would seem, so this tells us all that his extra Education was a complete waste of money and a Student loan!! as he hasn't a clue on how to budget the repayments, just another student telling us to shove the Taxpayers money where the Sun doesn't get to.
Most of the "Boomers" off spring were not clever enough to pass the University Entrance exams to gain entry into a Uni for further study, but these unqualified off spring, were clever enough to work hard in unskilled work for meager pay rates, and save hard buy their own homes, and here they are today, still being condemned for doing so, and being told most of us were from the chosen era.....what a load of absolute "Bulldust"!!!!

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How is that my issue as a tax payer - Who happens to be in their 20's -

If I incur a debt I must pay it, and I know I have to live within my means, how he got that larger mortgage with a unpaid debt is surprising. Honestly it is his problem I object to my tax being wasted giving degrees to ungrateful bludgers

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A comment from a claimed former student of his, seen elsewhere online:

"So this guy is my former calculus teacher. I know that he was definitely earning above the threshold prior to 2010... I don't think for a second he didn't know his repayment obligations and I'm pretty sure he may have mentioned them in class once."

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Funny how the first arrested is not in the core National Party voting demographic, plenty of HK/New Zealand passport holders with student debt outstanding - just saying....
Mind you they probably fly in and out on another passport and NZ gumint is non the wiser....

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NZ already sends aid to Rarotong - enough is enough ....

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Good point. Just deduct the debt from the next aid payment and let the Raro government collect it.

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Who cares about whose son he is !!
Wonder where the $300K is secured, that would buy a flash house in Raro - maybe it is Auckland secured on a decent sized property, with very good capital value, rented out to some other hanger on??

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Exactly. This matter has the very strong odour of fish...and it not fish

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Excellent observation, as is the one asking how did he get the loan whilst owing this debt? I think the "bankers" due diligence could well shed some light on the "subject".
This guy is not a good "Islander" and should not be teaching "maths" to any young person.

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I'm sorry I just don't accept his excuse that "he’s never been spoken to by IRD about issues over his loan". When you borrow money and make no effort to repay it, you are no better than a thief.

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He got what he deserved.

While I suppose free education for those who contribute to the NZ workforce, anyone who benefits from our education system owes a duty to the taxpayer.

Someone working overseas, and not paying back the fees, should get what they deserve.

Time for the government to bring in tax incentives for businesses to bond students for a period of time to cover the student fees.

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Lots of keyboard warriors on here complaining about money owed and not paid off. You owe us and the my taxes paid for you rhetoric echos the bad old socialist NZ of yester-year. What I don't see here or on any of the other online sites are any complaints about how poorly governed the loan program is and has been. Why in today's internet age has the govt (labour and national) not made serious efforts to track down all these overseas renegades? The default option is wait 20, let interest and penalties escalate, record theses amounts as inflated assets of the government and then chase a bigger debt at the border armed with an arrest warrant. That's just plain dumb govt policy. Efforts to collect should have happened long before now. Also, there needs to be some mechanism to deal with genuine hardship, which to my understand there is not. Finally, NZ has element of dole bludging and welfare abuse in our society. People in this category never pay or contribute. We must also recognize the student population will also reflect that problem as well so some loans despite ardent efforts by all will forever remain uncollected.

Overseas graduates are subject to interest rates and penalties whereas the domestic students are not. This is discrimination in its most basic form. Additionally, even for those in NZ the repayment expectations are simply overbearing. I fail to see the logic of why it is necessary to make repayments at such aggressive levels. If all the government wants is it money back then make it easy to make repayments from outside NZ. Arm the IRD call centres with helpful people that will positively contribute to the loan collection process not thugs issuing threats because we all know Kiwis respond well to aggression don't we.

Long term overseas residents typically have multiple passports so revoking loan defaulters NZ passport is just plain dumb. It also opens up the debate overseas around whether these individuals and their children will want a relationship with NZ moving forward. You people should think monetary benefits to NZ not just familial and culture aspects of that relationship on this point.

Debts have a natural and legal terms and failure to attempt to collect renders the loan effectively dead after the passage of sufficient time. While the government can weld a hammer in NZ based on legal changes enacted to suit its own needs there is sure to be a pool of smart, talented graduates outside NZ that will seek redress via the courts of their newly adopted country. The likelihood of full and compete settlement of offshore loans will then be low as precedents will be set offshore and enforcement efforts will basic fall on deaf ears.

Until now, NZ has had a positive relationship with its overseas kin. Not anymore. This is discrimination of overseas graduates and the aggression repayment levels on domestic and foreign graduates alike is a major policy failure and Kiwis living in NZ will learn that lesson over time.

Unless the loan program is improved and or the cost of attending tertiary education is lowered in real terms, NZ will suffer a major skill shortage of white collar workers in the near future. Yeah, yeah I know it doesn't matter to local Kiwis she'll be right because you can always bring in more immigrants or not? After all who wants to emigrate to a country with a declining standard of living,

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"Until now, NZ has had a positive relationship with its overseas kin. Not anymore."
What are you talking about? Ex pats are coming home in droves thanks to our stable and sensible Gov. (and)
Not all ex pat kiwis are carrying student loans. (and)
NZ can do very well without the sort of character in above article.

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"Until now, NZ has had a positive relationship with its overseas kin. Not anymore."
What are you talking about? Ex pats are coming home in droves thanks to our stable and sensible Gov. (and)
Not all ex pat kiwis are carrying student loans. (and)
NZ can do very well without the sort of character in above article.

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Ok John et al we have been down this route before. Don't say you weren't warned.

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After seeing this man on television and hearing what he had to say, it's hard to conclude that he is anything other than a straight out bludger who has now been caught by the short and curlies.

When I finished my studies at university, I had a student loan of approx 20k. My first job out of university was in the USA and as an entry level position with a large training component it wasn't particularly highly paid. Did I continue to make student loan repayments while I was living overseas? You betcha I did. And when I returned to New Zealand I continued to repay my student loan until it was eventually paid off in full.

If it's good enough for me to do it, then it's good enough for every other person who has a student loan and who is living overseas to do it as well.

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For the Head of Maths Department this absconder is showing an appaling lack of numeric capacity and awareness. God help us.

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The guy is an idiot we all know that. He and his family have now been completely humiliated and for what a $5,000 recovery. Imagine the discussion with his mum and relatives. He's got pain coming for sure.

Anyway, the loan system and collection system are clearly broken. He initallly owed $40,000 from memory and on $35K (Kiwi I assume) there is no way he could pay back the principal in less than 10 years let alone the current loan balance.

Only problem is repayment rates will not be met at IRD mandated levels so penalties will apply. Then more interest (he's offshore - see my posts above) on principal, more penalties for late payments, interest on interest and interest on penalties. What a scam it's like a cash register for the gov't! Only problem is this is a phantom gov't asset and they will be lucky to have recovered $40,000 in the next 10 years. The rest just needs to be written as unrecoverable. He's a bad debt.

So based on the above you guys want to: a) throw him in jail (wasn't aware NZ still had debtors prison), b) confiscate all his assets, which would put his kids on the street, and other draconian actions because we had it hard growing up or other such diatribes.

If he can't pay he can't pay. What can you really do about it?

If any of you can express a reasonable and coherent policy thought on how to manage debts that have ballooned then please share.

I will leave you with one thought before I head off to bed. John Key is a very smart man. To my knowledge no NZ PM has won 4 terms and I am sure he knows that. The global economy is slowing down and so to will NZ soon enough. Voters typically vote with their wallets. This student loan will become a big deal moving forward. Key with all his cunning has thrown Labour a hand grenade that is sure to open just when they get into office. Alternatively, even if Key wins he won't serve a full term so the next fool will have to clean up his mess. You have to hand it to Key's he is an excellent investment banker.

Good night.

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This package of loans is a seriously impaired credit on the governments balance sheet, much of which might yield only cents in the dollar in actual recovery - at some point write offs will have to occur no matter how angry it makes your average jandal wearer.

Meaningful recovery of large sums from overseas based debtors is fantasy. You can detain and mug them at the airport for single payments but that ensures they will never return again. You cannot jail them (foreign citizens) without diplomatic consequence as non payment of debt is only a civil offense outside NZ. If you privatize the debt it cannot be pursued overseas. If it can be pursued legal hurdles abound (local statute of limitations, international law, human rights). And if you get beyond that it can then be discharged into bankruptcy in the foreign country.

The other scandal no one is yet talking about is the cost of chasing down the debtors. At present the arrest tactics and scary Facebook messages are yielding low hanging fruit, but once you start pursuing the less risk averse the costs of this global cat and mouse game will begin to dwarf the amounts recovered

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Manfred thank you. That is an excellent perspective.

I particularly like the reference to being mugged. As an overseas Kiwi that's exactly how I would see it.

I wonder what happens if Kiwis return home on a foreign passport? Maybe they get mugged but the diplomatic fallout is not good. Also as a Kiwi friend of mine noted today "it's not a good look" on the tourism angle is it.

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John Morrison please read Manfred ' s piece.

Let me guess: bring it on?

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