Revised Explanatory Memorandum(Circulated by authority of the Minister for Small and Family Business, Skills and Vocational Education, Senator the Honourable Michaelia Cash)
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Education and Other Legislation Amendment (VET Student Loan Debt Separation) Bill 2018
This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Bill
The principal purpose of the Education and Other Legislation Amendment (VET Student Loan Debt Separation) Bill 2018 (Bill) is to separate VET student loan debts from other forms of Higher Education Loan Program debts (HELP debts) and establish VET student loans as separate income contingent loans. The amendments in the Bill operate together with amendments in the Student Loans (Overseas Debtors Repayment Levy) Amendment Bill 2018.
The Bill also amends the VET Student Loans Act 2016 (VSL Act) to allow the courses and loan caps determination made by the Minister by legislative instrument under subsection 16(1) of the VSL Act (currently the VET Student Loans (Courses and Loan Caps) Determination 2016)), to incorporate, by reference, any matter contained in an instrument or other writing as in force from time to time.
VET student loans
Vocational education and training (VET) is central to Australia's economic growth, business opportunities and employment outcomes for students. Income contingent loans support Australians to access higher level VET qualifications.
The VSL Act, which commenced on 1 January 2017 as a part of a package of legislation, established the VET Student Loans program, a new Commonwealth program for income contingent loans for students engaged in higher level VET, to assist students with payment of their tuition fees.
Under the VSL Act, the Secretary of the responsible Department (currently the Department of Education and Training) may approve VET student loans for eligible students for approved courses, and the loans are used by the Secretary to pay tuition fees for the students.
Under the current arrangements, payments of amounts of VET student loans give rise to 'VET student loan debts' under the Higher Education Support Act 2003 (HESA). VET student loan debts are a type of HELP debt and are therefore dealt with in the same way as other HELP debts under Chapter 4 of HESA. Specifically, VET student loan debts are incorporated into, and are factored into the calculation of, a person's accumulated HELP debt, which can be repaid through voluntary repayments or compulsory repayments (based on the person's income) through the tax system.
Separating VET student loans debt from HELP debt
Currently, there is limited capacity to measure the sustainability of the VET Student Loans program because a debtor's HELP repayments are not disaggregated by loan type. Irrespective of whether the debt applies to HECS-HELP, FEE-HELP, SA-HELP, OS-HELP, VET FEE-HELP assistance or VET student loans, loan repayments are made towards a single aggregated HELP debt.
This creates difficulties in that, where a person has received loans under more than one form of HELP assistance (for example, a person has received both HECS-HELP and VET student loans), it is not possible to obtain accurate data on what proportion of which form of HELP assistance has been repaid. Similarly, where a HELP debt is not being repaid, it is not possible to identify the form of HELP assistance the debt relates to.
The Bill separates VET student loan debts from other forms of HELP debts, by moving the legislative basis for VET student loan debts from HESA into the VSL Act. In effect, this provides greater transparency of repayment rates for VET student loans and more accurate information to inform future policy decisions. The separation of VET student loan debts from other forms of HELP debts also enables more timely, transparent and accurate reporting on the fiscal sustainability of the VET Student Loans program. Further, the Bill supports greater public accountability of the VET Student Loans program.
As a result of the amendments in the Bill, VET student loan debts incurred under HESA before 1 July 2019 continue to be administered as HELP debts and are subject to the repayment provisions in HESA, while VET student loan debts incurred from 1 July 2019 will be administered under, and will be subject to, repayment provisions in the VSL Act. The repayment thresholds, repayment rates, renewable HELP balance and indexation with respect to these debts are the same as the repayment thresholds, repayment rates, renewable HELP balance and indexation for HELP debts under HESA. A person must start repaying a debt in relation to a VET student loan once they have finished repaying any HELP debts.
Consistent with existing arrangements for HELP debts, persons residing overseas and who have a VET student loan debt will be required to make repayments in respect of those debts.
The amendments relating to the separation of VET student loan debts from other forms of HELP debts are contained in Schedule 1 to the Bill.
VET Student Loans Courses and Loan Caps Determination
VET student loans are only available for courses which have been approved by the Minister through a courses and loan caps determination made by the Minister by legislative instrument under subsection 16(1) of the VSL Act (currently the VET Student Loans (Courses and Loan Caps) Determination 2016 (Determination)). The objective of the Determination is to list courses that have high national priority, align with industry needs, contribute to addressing skills shortages and lead to employment outcomes.
The Determination is updated twice yearly. Once the Determination is made, VET student loans are approved only for the courses specified on the Determination. Courses are specified by reference to their course code. If a course becomes superseded or reaccredited, VET student loans cannot be approved for the new version of the course until the next update to the Determination.
Schedule 2 to the Bill enables the resolution of this problem, by providing for the Determination to reference the National Register of VET.
The National Register, as defined in section 3 of the National Vocational Education and Training Regulator Act 2011, is a register that contains the most up to date information about VET courses and their status.
Schedule 2 to the Bill amends section 16 of the VSL Act to enable the Determination to incorporate, by reference, any matter contained in an instrument or other writing as in force from time to time. This lays the groundwork for the Determination to be amended to refer to listed courses and new courses that replace them when they become superseded or reaccredited, as specified on the National Register.
Referring to the National Register in the Determination will ensure the instrument reflects the dynamic nature of the VET system and retains its currency in relation to courses that are superseded and reaccredited. This will mean students can be approved for VET student loans for these new courses without having to wait for the Determination to be updated.
Analysis of human rights implications
Right to Education
The Bill engages the right to education contained in Article 13 of the International Convention on Economic, Social and Cultural Rights (ICESCR).
Article 13 provides that vocational education is a part of secondary education (article 13(2)(b)), and secondary education must be available and accessible to all on the basis of capacity, by every appropriate means, and in particular by the progressive introduction of free education (article 13(2)(c)). It recognises the important personal, societal, economic and intellectual benefits of education, and provides that technical and vocational education should enable students to acquire knowledge and skills which contribute to their employability and enhance their productivity. Articles 13(3) and (4) of the ICESCR state that State Parties are obliged to establish "minimum education standards" to which all education institutions established are required to conform. They must also maintain a transparent and effective system to monitor such standards.
The measures in the Bill will have a positive effect on the provision of education services to students by VET providers. This Bill promotes this right through consolidating the legislative basis for the administration of the VET Student Loans program, increasing transparency over the VET Student Loans program and ensuring its fiscal sustainability into the future.
By enabling the Determination to incorporate, by reference, matters contained in other instruments or writing, as in force from time to time (most relevantly information published on the National Register), the Determination will refer to the most up to date information on nationally recognised VET courses, so that VET student loans for students can be approved for courses listed in the Determination, and new courses that replace them, when they become superseded or reaccredited, without having to wait for updates to the Determination. This ensures the legislative framework according to which financial assistance is provided to students in the VET sector has legal efficacy and reflects the dynamic nature of the VET sector.
The Bill is compatible with and promotes the right to education.
The right to work
The Bill engages the right to work and rights in work which are set out in Articles 6, 7 and 8 of the ICESCR.
Article 6(1) specifies that State Parties are required to recognise the right to work, which includes the right of everyone to the opportunity to gain their living by work which they freely choose or accept. The labour market is to be open to everyone and there can be no discrimination in access to and maintenance of employment on the grounds enumerated in Article 2 of the ICESCR, including birth or status.
Article 6(2) recognises the steps to be taken by a State Party to achieve the full realisation of this right including providing technical and vocational guidance and training programs.
The measures in this Bill to separate VET student loan debts from other forms of HELP debts will have a positive effect on ensuring this right by increasing the transparency of the VET Student Loans program, and ensuring its fiscal viability into the future. The measures will allow greater transparency over the performance and sustainability of the VET Student Loan program, which in turn, ensures ongoing access to VET student loans by students to financially support them to enter into and undertake vocational education training that is freely chosen, meets workplace needs, and improves their employment opportunities and outcomes.
The Bill is compatible with and promotes the right to work.
The Bill is compatible with human rights.