Explanatory Memorandum
(Circulated by the authority of the Parliamentary Secretary to the Treasurer, the Hon Bernie Ripoll MP)Chapter 5
National Vocational Education and Training Regulator Act 2011
Outline of chapter
5.1 The Bill amends the National Vocational Education and Training Regulator Act 2011 (NVETRA) to limit the circumstances when executive officers including directors, can be held personally liable for the offences of the company in the circumstances listed in section 133A of the NVETRA.
Context of amendments
5.2 There are numerous provisions in the NVETRA that impose personal criminal liability on executive officers, which includes directors and other officers as defined in section 3 of NVETRA, for breaches of NVETRA by the corporation.
5.3 The Report on Corruption in the Provision and Certification of Security Industry Training, by the Independent Commission Against Corruption identified a level of corruption in security industry training where both Registered Training Organisations (RTOs) and students were complicit in deceiving the registering authority. RTOs were falsely claiming that students had passed examinationsand had adequate levels of English.
5.4 Australia's National Vocational Education and Training Regulator, known as the Australian Skills Quality Authority, is delegated broad monitoring and enforcement powers under the Education Services for Overseas Students Act 2000 (the ESOS Act). A number of submissions to the Baird Review of the ESOS framework alleged instances of gross misconduct by education service providers, who willingly mislead international students with false and misleading information.
5.5 Australia has a highly regarded international education sector. Instances of training providers exploiting international students or offering substandard education threaten Australia's international reputation.
5.6 The retention of personal criminal liability in relation to the NVETRAis justified on the basis that there are compelling public policy grounds in the protection of vulnerable people, and that corporate penalties alone are not likely to be effective in deterring the prohibited practices.
Summary of new law
5.7 Section 133 of the NVETRA applies personal liability for executive officers to all offences under the NVETRA. Currently, an offence is committed by an executive officer if their organisation has committed an offence, the officer knew the offence would be committed, could prevent the conduct, and failed to take all reasonable steps to do so.
5.8 The Bill amendssection 133 such that it applies only to offences committed under the sections listed in section 133Arather than to all offences under the NVETRA.
Comparison of key features of new law and current law
| New law | Current law |
|---|---|
| Section 133 of the NVETRA extends derivative liability to offences specified in Section 133A of the Act. | Section 133 of the NVETRA extends derivative liability to all offences under the Act. |
| Notes in the NVETRA draw attention to section 133, which indicates where personal liability is imposed on an executive officer of a body corporate. | Provisions in the NVETRA do not currently explicitly highlight where personal liability is imposed on an executive officer. |
Detailed explanation of new law
5.9 Section 133 of the NVETRA provides that an executive officer can be personally liable for an offences under the NVETRA where:
- •
- an organisation commits an offence;
- •
- the officer knew the offence would be committed;
- •
- the officer was in a position to influence the relevant conduct; and
- •
- the officer failed to take all reasonable steps to prevent the commission of the offence.
5.10 The types of offences covered by the NVETRA broadly relate to a registered training organisation acting outside the scope of their registration, or failing to meet duties specific to such registered organisations. Consequently, in practice these offences apply to only a small set of corporations.
5.11 The Bill amends the heading of section 133 by adding explicit reference to the personal liability of executive officers in section 133. [ Schedule 4, Item 1 ]
5.12 The Bill amends section 133 to insert section 133A to limit the offences where directors can be personally liable for the breaches of the corporation to those offences listed in the table contained within the new section 133A. [ Schedule 4, Items 2 and 3 ].
5.13 The Bill also amends the relevant sections of the NVETRA that will continue to impose liability on executive officers as a result of the amended section 133 and 133A to make this liability clear on the reading of the relevant sections [ Schedule 4, Items 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21 and 22 ]
Application and transitional provisions
5.14 These amendments apply from the day after Royal Assent. [ Section 2 ]
5.15 The amendments apply only in relation to acts or omissions occurring on or after the day the Bill commences. [ Schedule 7, Item 1 ]