Explanatory Memorandum(Circulated by authority of the Minister for Employment, Skills, Small and Family Business, Senator the Hon Michaelia Cash)
Outline and financial impact statement
The Bill amends HESA to implement measures to assist the Commonwealth to resolve outstanding matters that arose under the former VFH scheme, and introduce measures that will facilitate closure of the scheme. The Bill also amends the VSL Act to improve administration of the VET Student Loans program.
Amendments to HESA relating to the VFH scheme
The VFH scheme, set out in Schedule 1A to HESA, was an income contingent loan scheme for VET students. The VET FEE- HELP scheme was replaced by the VET Student Loans program in 2017, but some students continued to access VFH under grandfathering arrangements in 2017 and 2018. Despite the scheme being no longer operational, the Commonwealth continues to manage a number of outstanding matters relating to the scheme. There are also a number of bodies that remain approved as VET providers under Schedule 1A to HESA.
The Bill implements measures to:
- phase out the Commonwealth's obligation to pay amounts of VFH assistance to VET providers in respect of old student data, and protect students by preventing providers from pursuing students for the amounts the Commonwealth does not pay;
- enable the Commonwealth to set off various amounts owed by VET providers to the Commonwealth under the VFH scheme against amounts of FEE-HELP assistance or VET student loans payable to the provider under HESA or the VSL Act;
- revoke the approval of remaining VET providers, while providing for the continuing operation of HESA and relevant legislative instruments to enable the Commonwealth to deal with and resolve outstanding matters under the VFH scheme.
Amendments to the VSL Act relating to the VET Student Loans program
The VET Student Loans program is administered in accordance with the VSL Act. The Bill includes measures to improve the efficient administration of the VET Student Loans program by:
- specifying additional circumstances where the Secretary is not required to pay a VET student loan amount for a student for a course, to align with current provisions and circumstances that allow the Secretary to re-credit a student's HELP balance. Currently, for the Secretary to re-credit a student's HELP balance, the relevant amount must have been first paid by the Secretary to the provider. Once the amount is re-credited to the student's HELP balance, the Commonwealth is entitled to recover that amount from the provider. The proposed amendments provide that the Secretary is not required to pay the provider in the first instance, in the same range of circumstances that students' HELP balances can be re-credited. This will have the same outcome for providers and students while making it clear the Secretary is not required to pay an amount to a provider prior to seeking to recover that same amount as a debt;
- automatically revoking the approval of an approved course provider if it ceases to be an RTO.
FINANCIAL IMPACT STATEMENT
The financial impact of the legislative changes is immaterial on the fiscal balance over the forward estimates.
Former students enrolled in the VFH scheme have not been consulted as it was not considered necessary, and they will not be adversely impacted by the measures in the Bill. Notably, the Bill contains measures that protect students by preventing providers from pursuing students for the amounts the Commonwealth does not pay. Students' ability to make an application to have their VFH debts remitted under the VFH Student Redress Measures remains unaffected.
Current VET student loans students have also not been consulted as it was not considered necessary, and they will not be adversely impacted by the measures in the Bill. Their ability to apply to have their debts remitted under existing provisions in the VSL Act is unaffected.
In June and July 2020, the Department consulted its stakeholder working group of VET providers about the policy issues in the Bill and their implementation. The stakeholder working group is comprised of some 15 members, including relevant representative bodies and providers that are generally representative of the approved provider group. With respect to the measures relating to the VFH scheme, the consensus was that a phase out period commencing from July 2021, giving providers a minimum of three years from a student's census date to submit data, would be adequate for outstanding issues to be resolved and student data to be submitted for payment from prior years. No critical issues were identified about the measures relating to the VET student loans program.