2013-2014

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

 

 

 

SENATE

 

 

 

 

 

 

 

 

HIGHER EDUCATION AND RESEARCH REFORM AMENDMENT BILL 2014

 

 

 

 

 

 

 

 

SUPPLEMENTARY EXPLANATORY MEMORANDUM

 

 

 

 

 

Amendments to be moved on behalf of the Government

(Sheet numbers ES113, EH154, ES115, ES116, EH152 and EH151)

 

 

 

 

 

 

(Circulated by authority of the Minister for Education,

the Honourable Christopher Pyne MP)

Amendments to the Higher Education and Research Reform Amendment Bill 2014

 

 

OUTLINE

 

These proposed Government amendments to the Higher Education and Research Reform Amendment Bill 2014 (the Bill) address issues raised by the sector and the broader community, highlighted in the report and recommendations of the Senate Education and Employment Legislation Committee tabled on 28 October 2014 following its inquiry into the Bill. They reflect the outcomes of consultations with the community and the higher education sector which have informed the development of these amendments.

 

Some of these amendments have been suggested to the Government by individual Senators and the Government is happy to support these.

 

These amendments preserve the policy objectives of increasing opportunity for students and deregulating universities, including the extension of Commonwealth subsidies to sub-bachelor higher education courses and opening up higher education to non-university higher education providers, while maintaining the long-term fiscal integrity of the reforms.

 

They also address issues raised in relation to changes to indexation of Higher Education Loan Programme (HELP) debts, and in particular the impact on low income earners and persons who take time out of the workforce to care for children. The amendments provide for the introduction of HECS debt indexation relief for primary carers of children up to the age of five, providing access to loans at a lower cost than current arrangements.  This will be particularly beneficial for mothers of new-born children.

 

The amendments provide transitional assistance to assist universities, particularly those in regional areas, to adjust to the new arrangements and introduce a dedicated scholarship fund for universities with high proportions of disadvantaged students, particularly low socio-economic status (SES) students within the Higher Education and Participation Program. 

 

In addition, the amendments include technical amendments to clarify requirements relating to tuition fees for non-Commonwealth supported students, and make minor corrections to ensure the preserved funding arrangements for pre-existing students and the formula for calculating provider contributions under the Commonwealth Scholarship Scheme operate as intended.

 

PROPOSED GOVERNMENT AMENDMENTS

The Government proposes the following amendments to the Bill. The amendments are in six sheets - ES113, EH154, ES115, ES116, EH152 and EH151:

·          The amendments on sheet ES113 will retain Consumer Price Index (CPI) based indexation for HECS and other HELP debts while introducing an interest rate pause on debts for primary carers of children aged under five years who are earning less than the minimum repayment threshold.

 

·          The amendments on sheet EH154 will establish a structural adjustment fund of $100 million over three years to assist universities to transition to the new market.

 

·          The amendments on sheet ES115 will introduce a dedicated scholarship fund for universities with high proportions of low SES students into the Higher Education and Participation Program.

 

·          The amendments on sheet ES116 will change legislative guidelines so as to clarify that overseas and other non-Commonwealth supported students should not be charged less than the level of tuition fees and subsidies available for Commonwealth-supported students.

 

·          The amendments on sheet EH152 will make a technical correction to preserving current funding arrangements to ensure these are also available to students who had previously enrolled as Commonwealth supported students but who were on an approved leave of absence on Budget day.

 

·          The amendments on sheet EH151 will make a technical correction to the formula for calculating provider contributions to the Commonwealth Scholarship Scheme, to avoid providers’ comparison revenue being calculated at a level below they would have received for those students.

 

 

NOTES ON AMENDMENTS ON SHEET ES113

 

Schedule 3 to the Bill replaces the current indexation arrangements for HELP debts, which are based on CPI, with a new method based on the 10 year Treasury bond-rate, up to a cap of 6 per cent.

 

These amendments remove the bond-rate indexation and leave the current CPI indexation in place, while at the same time freezing or removing indexation of HELP debts for those caring for young children, with the objective of assisting women and families.

 

Amendment (1) omits items 1 to 4 of Schedule 3 and substitutes new items 1 to 6.

 

New item 1 inserts a new section 134-5 into the Higher Education Support Act 2003 (HESA) at the end of Division 134. New section 134-5 provides that debts relating to HELP debts are also dealt with in the HELP Debt Repayment Guidelines and that the provisions of Part 4-1 (Indebtedness) indicate when something is or may be covered by those Guidelines. A note explains that the HELP Debt Repayment Guidelines are made under section 238-10.

 

New item 2 amends paragraph 140-1(2)(a) of HESA to provide that HELP debts are indexed by CPI except for some cases for persons who were the primary carers of children in the preceding financial year.

 

Section 140-5 sets out how a former accumulated HELP debt is worked out.

 

New item 3 removes the words ‘is worked out by multiplying’ from subsection 140-5(1) and substitutes the word ‘is’.

 

New item 4 repeals and substitutes paragraphs 140-5(1)(a) and (b). The result of this is that a former accumulated HELP debt for a financial year is:

 

·          the sum that is the result of multiplying the amount worked out by using the section 140-5 method statement by the HELP debt indexation factor for 1 June in that financial year; or

·          the sum that is worked out using the section 140-5 method statement - which applies if:

o    the HELP debt indexation factor for 1 June in that financial year is more than 1; and

o    the person was the primary carer of a child aged under five in the immediately preceding financial year; and

o    the person’s repayment income (if any) for that immediately preceding financial year did not exceed the minimum repayment income for that immediately preceding financial year.

 

New item 5 adds a new subsection 140-5(3) to provide that the HELP Debt Repayment Guidelines can provide for a determination by the Commissioner of Taxation as to whether a person is the primary carer of a child under a particular age in a financial year - so that only one person can be the primary carer for that child for that financial year.

 

Section 238-10 provides that the Minister may make certain guidelines for matters specified in the table at subsection 238-10(1). New item 6 adds the HELP Debt Repayment Guidelines to that list.

 

 

NOTES ON AMENDMENTS ON SHEET EH154

 

Consultation with the sector has highlighted the challenges universities in thin markets face, especially regional universities, including regional universities that are research-intensive. Universities Australia has argued that such providers may face additional pressure as they may have less capacity to immediately achieve significant additional fee revenue.

 

Part 4 of Schedule 1 to the Bill concerns amendments of Guidelines. Amendment (1) amends the Other Grants Guidelines (Education) 2012 to repeal Chapter 6 ((Grants to support structural adjustment) and substitute a new Chapter 6 (Grants to foster structural adjustment or reform) to specify the Structural Adjustment Fund as a programme from which grants to foster structural adjustment or reform in higher education may be made under paragraph 41-10(1)(i) of HESA.

 

The objective of the Structural Adjustment Fund is to provide assistance for three years, following commencement of Schedule 1 to the Higher Education and Research Reform Amendment Act 2014 (once enacted), by way of grants to:

 

·          higher education providers operating in areas where there is low capacity to immediately achieve significant additional revenue

·          moderately research-intensive higher education providers in relatively low population centres with a relatively high proportion of students from a low socio-economic background and limited capacity to immediately redirect resources to maintain their research efforts.

 

Bodies corporate that are registered Table A higher education providers (see section 16-15 of HESA) are eligible for grants. A note explains that, when considering whether or not to approve grants to such providers under section 41-20, the Minister may take into account factors such as the market in which a provider operates and its capacity to achieve additional revenue.

 

The Structural Adjustment Fund will provide assistance for three years following commencement of Schedule 1 to the Bill (i.e. for the 2016, 2017 and 2018 calendar years). The maximum amount of available funding for grant years will be:

 

·          $53.5 million for 2016

·          $31 million for 2017

·          $15.5 million for 2018.

 

NOTES ON AMENDMENTS ON SHEET ES115

 

Amendment (2) adds a new Schedule 9A to the Bill.

 

Schedule 9A amends the Other Grants Guidelines (Education) 2012 (F2012L00281) (Other Grants Guidelines) which were made on 3 February 2012 for the purposes of Part 2-3 (Other grants) of HESA.

 

The amendments made by Schedule 9A repeal sections 1.40 to 1.85 of the Other Grants Guidelines (Higher Education Participation and Partnerships Program) and substitute new sections 1.40 to 1.86.

 

Higher Education Participation (Access and Participation) Programme

 

Sections 1.40 to 1.65 make provision for a new Higher Education Participation (Access and Participation) Programme (HEPAPP).

 

Section 1.40 explains that the objective of the HEPAPP is to help to increase the number of undergraduate and postgraduate domestic students from disadvantaged backgrounds who access, participate in and succeed in higher education through grants to support access, participation and success in higher education by prospective and current students from those backgrounds. A note explains this is consistent with Australia’s higher education obligations under the International Covenant on Economic, Social and Cultural Rights.

 

Section 1.45 explains the nature of HEPAPP grants, which is that, for the purposes of paragraph 41-15(2)(f) of HESA, they are grants for projects.

 

Section 1.50 sets out the extra conditions of eligibility for a HEPAPP grant.

 

Section 1.50.1 provides that it is an extra condition of eligibility for a grant that providers have a proportion of students from low socio-economic backgrounds. Note 1 explains that when the Minister approves grants under section 41-20 of HESA, the Minister may take into account matters such as a provider’s proportion of students from low socio-economic backgrounds and that it is expected these factors will be published on the Department’s website. Note 2 explains that, when the Minister determines the amount of a grant under paragraph 41-30(b), the Minister may take into account matters such the proportion of the provider’s students from low socio-economic backgrounds and their successful completion of units and that it is expected these factors will be published on the Department’s website.

 

Section 1.50.5 provides that another condition of grant eligibility is that providers give the Minister an Access and Participation Plan outlining their strategies for access and participation initiatives for students from disadvantaged backgrounds for the next three calendar years.

 

 

Section 1.55 sets out expenditure conditions for HEPAPP grants, which are that:

·          grants funding can only be spent on projects that meet HEPAPP objectives and fall within the strategies outlined in providers’ Access and Participation Plans

·          grants are to be spent within three years commencing on the first 1 January after the Minister approves a grant under section 41-20 of HESA.

 

Section 1.60 provides that it is a condition of grant that HEPAPP funding recipients report annually to the Department on the progress of activities that are funded by HEPAPP grants.

 

Section 1.65 provides that it is a condition of a HEPAPP grant that any interest earned on HEPAPP grant moneys must be spent on activities consistent with HEPAPP objectives.

 

A note explains that if a HEPAPP grant recipient breaches any conditions of grant under sections 1.55, 1.60 or 1.65, action may be taken against them under Part 2-5 (reduction or repayment of grants) or Part 5-1 (payment by the Commonwealth) of HESA - which could reduce grants, require repayment, or delay the payment of instalment payments.

 

Higher Education Participation (Scholarships Fund) Programme

 

Sections 1.70 to 1.80 make provision for a new Higher Education Participation (Scholarships Fund) Programme (Scholarships Fund Programme).

 

Section 1.70 explains that the objective of the Scholarships Fund Programme is to help to increase the number of undergraduate and postgraduate domestic students from disadvantaged backgrounds who access, participate in and succeed in higher education through scholarships for prospective and current students from those backgrounds. A note explains this is consistent with Australia’s higher education obligations under the International Covenant on Economic, Social and Cultural Rights. Another note explains that the yearly expenditure on the Scholarships Fund Programme will be the total of the amounts of grants determined by the Minister under paragraph 41-30(b) of HESA.

 

Section 1.75 explains the nature of Scholarships Fund Programme grants, which is that, for the purposes of paragraph 41-15(2)(f) of HESA, they are grants for projects.

 

Section 1.80 sets out the extra conditions of eligibility for a Scholarships Fund Programme grant.

 

Section 1.80.1 provides that it is an extra condition of eligibility for a grant that providers have a proportion of students from low socio-economic backgrounds. Note 1 explains that when the Minister approves grants under section 41-20 of HESA, the Minister may take into account matters such as a provider’s proportion of students from low socio-economic backgrounds and that it is expected these factors will be published on the Department’s website. Note 2 explains that, when the Minister determines the amount of a grant under paragraph 41-30(b), the Minister may take into account matters such the proportion of the provider’s students from low socio-economic backgrounds and their successful completion of units and that it is expected these factors will be published on the Department’s website.

 

Higher Education Participation (National Priorities Pool) Programme

 

Sections 1.85 to 1.86 make provision for a new Higher Education Participation (National Priorities Pool) Programme (National Priorities Pool Programme).

 

Section 1.85 explains that the objective of the National Priorities Pool Programme is to help to increase the number of undergraduate and postgraduate domestic students from disadvantaged backgrounds who access, participate in and succeed in higher education through grants for projects supporting the more effective implementation of equity policy in higher education through initiatives that have system wide focus with relevance to equity practices across the higher education sector.

 

A note explains this is consistent with Australia’s higher education obligations under the International Covenant on Economic, Social and Cultural Rights. Another note explains that when the Minister approves grants under section 41-20 of HESA, the Minister may take into account factors such as an annual investment plan and that it is expected these factors will be published on the Department’s website.

 

Section 1.86 explains the nature of National Priorities Pool Programme grants, which is that, for the purposes of paragraph 41-15(2)(f) of HESA, they are grants for projects.

 

New Schedule 9A also makes the following amendments to the definitions (Interpretation) in Chapter i of the Other Grants Guidelines (Education) 2012:

 

·          the definition of ‘Department’ is deleted (as it refers to the no longer existent Department of Industry, Innovation, Science, Research and Tertiary Education)

·          a definition of ‘HEPAPP’ is inserted (Higher Education Participation (Access and Participation) Programme)

·          a definition of ‘HEPAPP funding recipient’ is inserted ( a provider, a grant to which under the HEPAPP has been approved by the Minister under section 41-20 of HESA)

·          the definition of ‘people or student from a low socio-economic (SES) background)’ is deleted

·          a definition of ‘low socio-economic background’ is inserted ( people or domestic students are from a low socio-economic background if they are in the bottom quartile of the Socio-Economic Indexes for Areas (SEIFA) Index of Education and Occupation (IEO) published by the Australian Bureau of Statistics in 2013 and determined using Statistical Area 1 from the Australian Statistical Geographic Standard published by the Australian Bureau of Statistics in 2011

·          the definitions of ‘participation’ and ‘undergraduate’ are both amended to insert ‘except sections 1.40 to 1.86’ after ‘Chapter 1’

·          a definition of ‘students from disadvantaged backgrounds’ is inserted (students from any of the following groups: people from a low socio-economic background; people with disability; Aboriginal or Torres Strait Islander people; people from regional or remote areas; people from a non-English speaking background; and women in non-traditional areas of study).

 

Amendment (2) also includes a new savings provision. This provides that, despite the repeal of sections 1.40 to 1.85 of the Other Grants Guidelines (Education) 2012, those sections as they were in force before the repeal, continue to apply to decisions or grants made in accordance with those sections before the repeal.

 

Amendment (1) amends item 9 of the commencement table in clause 2 of the Bill to provide that Schedule 9A commences on 1 January 2015.

 

NOTES ON AMENDMENTS ON SHEET ES116

 

Item 204 of Part 4 of Schedule 1 to the Bill makes amendments to Chapter 7 of the Commonwealth Grant Scheme Guidelines to repeal and substitute the table in paragraph 7.5.1 to reflect new funding tiers.

 

Amendment (1) makes a further amendment to the Commonwealth Grant Scheme Guidelines to repeal Chapter 9 (Performance funding grant amount - facilitation funding, which ceased operation at the end of 2013) and replace it with a new Chapter 9 (Conditions relating to tuition fees for overseas and other non-Commonwealth supported students).  

 

Item 60 of Schedule 1 to the Bill repeals and substitutes section 36-55 of HESA.  As explained in the Explanatory Memorandum to the Bill:

 

·          the new section 36-55 provides that:

o    for any tuition fees a higher education provider charges persons who are not Commonwealth supported students, this must be done in accordance with the prescribed requirements of the Commonwealth Grant Scheme Guidelines (subsection 36-55(1); and

o    a higher education provider must not charge a Commonwealth supported student a tuition fee for a unit that forms part of an enabling course undertaken by the student (subsection 36-55(2)

·          the Higher Education Provider Guidelines currently include complex provisions to prevent international students being charged less than Commonwealth supported students. It is planned to replace these with more transparent requirements in the Commonwealth Grant Scheme Guidelines, to be implemented before the new tuition fee arrangements commence.

 

The components of new Chapter 9 are as follows:

 

Section 9.1 explains that the purpose of new Chapter 9 is to prescribe requirements for subsection 36-55(1) relating to tuition fees for non-Commonwealth supported students, so that fees for Commonwealth supported students and the Commonwealth contribution amounts are not used by higher education providers to subsidise non-Commonwealth supported students. A note explains that Commonwealth contribution amounts under the Commonwealth Grant Scheme are intended to benefit students primarily by subsidising the costs of their teaching and learning, thereby enabling providers to charge Commonwealth supported students lower tuition fees.

 

Section 9.5 provides that the tuition fee for non-Commonwealth supported students must not, unless exceptional circumstances apply, be less than the sum of the following:

 

·          the highest tuition fee the provider would charge a Commonwealth supported student for the same or comparable unit

·          the Commonwealth contribution amount under section 33-10 for the same or a comparable unit.

 

For those students enrolled in an employer reserved place, the tuition fee they are charged must not, unless exceptional circumstances apply, be less than the sum of the following:

 

·          the highest tuition fee the provider would charge a Commonwealth supported student for the same or comparable unit

·          the Commonwealth contribution amount under section 33-10 for the same or a comparable unit

·          the employer contribution amount.

 

Examples of exceptional circumstances for section 9.5 are overseas students undertaking studies in Australia on formal exchange programmes, or after having been awarded a scholarship on merit to undertake a higher degree by research as a result of a competitive application process.

 

A note says that the Department will, on a risk managed basis, monitor the tuition fees providers charge their non-Commonwealth supported students (including investigating student complaints). The note also indicates that, if providers cannot demonstrate compliance, action may be taken against them under Part 2-5 of HESA (reduction or repayment of grants).

 

Section 9.10 provides that Chapter 9 applies to all of a higher education provider’s enrolled students who are not Commonwealth supported students, including, but not limited to:

 

·          overseas students

·          postgraduate students in non-Commonwealth supported places

·          students enrolled in employer reserved places

·          students enrolled on a non-award basis

·          students who choose not to be Commonwealth supported.

 

NOTES ON AMENDMENTS ON SHEET EH152

 

Schedule 1 to the Bill preserves the current funding arrangements, including Commonwealth contribution rates and maximum student contribution amounts, for students who were enrolled as Commonwealth supported students, or those who had approval to defer the commencement of their course, on the day of the 2014-15 Budget (13 May 2014).

 

These preserved funding arrangements do not, however, extend to students who had previously enrolled, but were on an approved leave of absence. This is an unintended exclusion.

 

These amendments will alter Schedule 1 to the Bill to include, as preserved funding students, those who had previously enrolled, but were on an approved leave of absence from their course on the day of the Budget. This is in line with the Government’s policy as announced in the Budget.

 

Amendment (1) alters paragraph (3)(b) of item 178 of Schedule 1 to the Bill to add in, as preserved funding students persons in respect of whom, as at 13 May 2014, either of the following applied:

 

·          the person’s provider had approved their deferral of enrolment in the course of study

·          the person had enrolled as a Commonwealth supported student in a unit that formed part of a course of study and was on an approved break.

 

Amendment (2) deletes the words ‘deferring the commencement of, or taking leave from’ from paragraph (a) of subitem 178(5) and substitutes the words ‘taking leave from’.

 

NOTES ON AMENDMENTS ON SHEET EH151

 

Schedule 2 to the Bill creates a new Commonwealth Scholarship Scheme. According to Schedule 2, 20 per cent of a provider’s additional revenue from the deregulation of student contributions is required to be directed towards the new Commonwealth Scholarship Scheme. Additional revenue is calculated by comparing what a provider would have received under the current funding arrangements and their actual revenue in a deregulated market.

 

The application of maximum basic grant amounts as part of the general provisions for calculating Commonwealth Grant Scheme amounts payable could have the unintended consequence of calculating a provider’s comparison revenue at a level below the amount the provider would have received for those students. This could overstate the amount of additional revenue collected, requiring the provider to make a larger contribution to the Commonwealth Scholarship Scheme than intended.

 

These amendments will remove the maximum basic grant amounts from consideration when calculating a provider’s eligible revenue for the Commonwealth Scholarship Scheme.

 

Amendments (1) and (2) amend item 1 of Schedule 2, which inserts a new section 36-75 (New Commonwealth Scholarship Scheme) into Division 36 of HESA.

 

New subsection 36-75(7) explains that, for the purposes of new subsection 36-75(6), a provider’s revenue for year from Commonwealth supported students is the sum total of the following:

 

·          the grant amount payable to the provider under Part 2-2 for the year in question; and

·          tuition fees that are payable to the provider by its Commonwealth supported students for units of study with a census date in that year.

 

Amendment (1) omits the first of these bullet points (the grant amount payable to the provider under Part 2-2 for the year in question) and substitutes ‘the total of the amounts worked out under paragraphs 33-5(2)(a) and (4)(a) of the provider for the year’. Note that item 44 of Schedule 1 to the Bill repeals and substitutes section 33-5.

 

New subsection 36-75(8) explains that, for the purposes of new subsection 36-75(6), a provider’s comparison revenue for year from Commonwealth supported students is the sum total of the following:

 

• the grant amount that would have been payable to the provider under Part 2-2 for the year in question - if the whole of the basic grant amount for the year were worked out under Item 180 of Schedule 1 to this Bill (once enacted); and
• tuition fees that would have been payable to the provider by its Commonwealth supported students for units of study with a census date in that year - if all such tuition fees had been the maximum fees allowed under subitem 179(1) of Schedule 1 to this Bill (once enacted).

 

Amendment (2) omits the first of these bullet points (the grant amount that would have been payable to the provider under Part 2-2 for the year in question - if the whole of the basic grant amount for the year were worked out under Item 180 of Schedule 1 to this Bill (once enacted)) and substitutes ‘the total of the amounts that would have been worked out under paragraphs 33-5(2)(a) and (4)(a) for the provider for the year, if the applicable Commonwealth contribution amounts had been those taken to be specified in the table in item 180 of Schedule 1 to the Higher Education and Research Reform Amendment Act 2014’.