Horror Files: StudyLink’s Definition of Income. Students, Debt, Keynes ...

Sitting in a grey, dimly lit roomful of tax (stereo)types at the Timaru TEO 2015 tax updater course last week, a topic came up which caused as much rebellion rumination as I’ve seen; alarming, indeed, to witness the ordered world of double-entry sundered so outrageously with the unsightly uncrinkling of bowed necks and a vigourous nodding of balding heads raised in surprise over document filled desks attesting to lives lost amongst Section, (Subsection), and (Clause; (nested sub-clause)), and the unspoken bored angst of wrong career turns and stunted inner lives. Noting I don’t use a word like ‘vigourous’ of such a gathering lightly. Or stunted. Indeed, it was a matter of such extreme emotion that the course convenor rashly rushed (blasphemy given this context) to judgement of the perpetrator: ‘stupid’.

Regardless of your view on the state in education, and mine is as dimly lit as that room was, students have an entitlement – that’s the contract for their parents paying tax and their own futures doing so - to an allowance which abates according to how much their parents earn. The problem is some of the most deserving of their entitlement are being refused or abated in their allowances due solely to StudyLink’s incompetence in not being able to grasp some basic concepts about the nature of income.

In defiance of accounting definition and any category of good sense, StudyLink class a businessperson/couple’s drawings in excess of their income for a year, and thus loan drawdowns to cover drawings if the owners have no savings, as income.

For example:

Business couple X are struggling: over the year their business only generated a net profit, that is, gross taxable income (akin to a gross wage), of $30,000. Because their personal outgoings were higher than that - paying the mortgage on their house, tax payments on the previous year’s income which was higher, plus provisional tax for current year, also two of their three children still at high school with books, uniforms and school camps to provide for, and extraneous unexpected dental and medical expenses over the year - they had to extract drawings from their business of $40,000. Of course that was not possible out of income, and as they had no savings, the excess $10,000 funds were supplied via their bank overdraft. So at the end of the year they are that much more in debt than at the beginning.

The problem for their third child applying for an allowance to complete her first year of tertiary study, is StudyLink's equation here is parental income equals the $40,000 drawings, not the $30,000 income earned from their business: apparently their additional debt makes them better off than before they drew it down.

In confirmation of this fact, the last StudyLink officer I talked to several weeks ago had rung to ask me if the parents concerned in that case had drawn down any loans over the year, intending to increase their parental income by such new loans. I told the officer this was ludicrous, ‘what the hell was she thinking’ then asked if she had felt rich with a surplus of income the year she pulled down her mortgage … alas, she was renting.

I no longer know how many ways in which to write how fatuous and wrong-headed this is. Albeit I’m willing to admit what a wonderful world it would signify.

Below is one of the most expensive cars money, or love, can buy; it’s called a Maserati.

It’s getting to the stage only $600,000+ incomed and salaried bureaucrats, lawyers and Kim Kardashian can afford them unfortunately, although, in StudyLink’s fantasy world I could, in theory, buy one, and none of that old-time having to chore away at the day job for years first, foregoing current pleasures to save for future goals, because according to StudyLink debt is income, therefore buying the Maserati creates the income required for the purchase.

Brilliant! Who says our bureaucracies aren’t innovative.

What a pity StudyLink’s policy in no way connects with reality. Worse, even more so than the frustration of dealing with ACC, where after the final internal injustice victims at least have recourse to the district court, there doesn’t appear to be a review process for StudyLink decisions. It's impossible to go outside StudyLink to get an independent, knowledgeable, oversight on falsehoods such as this which parents and students are having enforced on them, which will be ensuring some of the most deserving families Parliament meant to have student allowances, will not be.

Although there’s an even funnier twist in the tail of my sorry tale. Essentially, to continue the fantastical theme, this deluded free-lunchism based on an orgy of debt – and the assumption must be on it being income it doesn’t need repaying, (that’s certainly where the Greek socialist Finance Minister is heading toward) - is the basis our Western command economies have been largely managed on for some decades, after the political class have been convinced by that socialist fraud JM Keynes they are the answer to all societal ills. While destroying our literature and arts as a culture of individualistic resistance to unbridled state power, Keynes was at the same time preaching the Big State to those loving the notion of the power to exact it on us, conceiving of economies not as complex structures based on human ingenuity, needs, desires, and voluntary transactions, but a simpleton’s machine with levers that can be manipulated by our all-knowing simpletons in the Fortress of Legislation and Central Banks, while turning the screw to extract taxes to fill the intellectual deficit of fiat money and irresponsible state spending and growth. That’s how the West has become yet another cage, because you can’t live free of your economic self, and it explains the debt leveraged civilised human calamity being wrought, again. We are not the generations living at the peak of a Western Civilisation that was built on self-reliance, freedom and capitalism: we are the generations living in the ruins of it, waiting for the next crony tyrannies which are already bred and well learned in their evil craft of domination and surveillance over my volition.

So, StudyLink warns us of the end of the civilised world: unsurprising. Fortunate the world has this blog. Off to buy my Maserati and a holiday in Greece: see you in debtors court.

The Kafkaesque StudyLink - Open Letter to Minister of Social Development.

Update to Below Post:

Credit where credit is due, a MSD staff member phoned me this afternoon after being made aware of this post. He was not only competent, but most agreeable. Indeed, he was genuinely disappointed to hear of these problems, most of which have come about because of changes in the way parental income is scoped from 2012 - so politicians again :) So big ups for the phone call, I don't think my clients will be having problems into the future due to processes set in place.

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It doesn’t matter where you stand politically on the matter of student loans and allowances, if we are going to have such a system, then it needs to work better than under the uber-bureaucracy operating it currently. That department is a working example of why you wouldn’t want a government running anything: labyrinthine - it’s easier doing the paperwork for a million dollar bank mortgage than a $14k student allowance - and as with the public sector, a culture that has no notion of the importance of privacy. The below is simply a letter with names taken out to be an open letter.
 

 ________________________________________________

 

StudyLink

 

To whom it may concern.

 

Re:       [Student Name]

 

Contents:

 

[List of documentation, verified, including taxation summaries, relevant financial statements, et al, relating to student's parental income (parents being my clients).]

 

Notes:

 

Please note I’m at my wits end dealing with Studylink. You have had all of the above information from me, particularly a statement of income with full disclosure as to the nature of the Family Trust, beneficiary income, trustee income, etc. More particularly, that statement of income had my full contact details, and a specific request handwritten on and underlined to ring me if further information is required - as on particular clients I needlessly lose so much time on this process year after year - but despite this StudyLink continues dealing with the student, sending form letters that all have to be relayed to me, and often containing only partial information that is applicable, while relisting as needed all the information that you already have. If you require anything further from this point, can you please ring me direct so any further documentation matters can be dealt with quickly. (Moreover, when you do send form letters to the student involved, please provide a direct dial number to the officer working the application, or even an email address, so that we humans on this side of the Berlin Wall of your telephone system - the worst of any government department I’ve ever dealt with - are not driven to utter distraction. In fact I will not use the StudyLink 0800 number: it is a waste of my time.)

 

Concerns as regards privacy:

 

It has long concerned me that the way StudyLink operates constitutes a breach of parents’ privacy. Not all parents are comfortable with their children knowing the complete details of their income – (I certainly wouldn’t be). There are, indeed, some situations where children should not have this knowledge, nor knowledge of family trusts that may have been set up specifically with regard to errant behaviour on their behalf. The Kafkaesque routines of Studylink aside, I guess parents, or myself, could try to supply details of their parental income direct to StudyLink, although the way the loan/allowance application process works this would seem outside the formal route, namely:

 

The statement of parental income has to originally be stapled to the student's allowance application, the rest of which the student completes. Thus the parental income figure, and breakdown of this income, always ends up given to the child/young adult to be sent with their application, meaning in every case the child learns these details.

 

Secondly, as stated, when StudyLink want further information regarding parental income, or information verification, then it never corresponds with me or the parents, but the student.

 

This is not only a privacy breach of confidential information between parents and their children, but when details are needed from parents who are separated, then this quickly devolves to a very difficult situation, as the parent whom the child is living with can use it to find out their ex’s income. That is a charged situation which can lead to pressures and stresses which are unhelpful, to say the least.

 

Although I am the last person, normally, to promote departmental information sharing, because no taxpayer has privacy before the state, anyway, the simple solution to all the issues above would appear to be that StudyLink, as ACC do, get a tape of all applicable parental income direct from IRD.

 

In frustration, yours faithfully …