Explanatory Memorandum
(Circulated by authority of the Minister for Education, Training and Youth Affairs the Hon Dr David Kemp MP)Outline and financial impact
Outline
The Higher Education Funding Act 1988 (HEFA) makes provision for grants of financial assistance to higher education institutions and other bodies for higher education purposes, establishes the Higher Education Contribution Scheme (HECS), the Postgraduate Education Loans Scheme (PELS) and the Open Learning Deferred Payment Scheme (OLDPS) and makes provision for the repayment of monies lent by the Commonwealth to students under those schemes.
The Australian Research Council Act 2001 establishes the Australian Research Council (ARC) as a body which provides advice to the Minister on Commonwealth support for research, administers the Commonwealth research programmes for which it has responsibility and makes recommendations to the Minister on the allocation of funds within research programs. This funding is appropriated under section 49 of the Act.
The Australian National University Act 1991 establishes the Australian National University and provides for its governance arrangements.
The Higher Education Funding Amendment Bill 2001 will amend the HEFA to:
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- vary the maximum funding levels in section 17 for the 2002 and 2003 funding years to provide for an additional 670 new student places to be allocated to regional universities and campuses, a 2001-02 Budget measure;
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- vary the maximum funding levels in section 23C for the 2002 and 2003 funding years to include provision for additional support for people with disabilities, a 2001-02 Budget measure;
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- legislate the maximum funding levels in section 17, subsections 20(3), 22A(5), 23C(2), 24(3), and 27A(6) and section 27D for the 2003 funding year, including additional funding provided in the Backing Australias Ability policy and the 2001-2002 Budget measures noted above;
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- vary the maximum funding levels in section 17, subsections 20(3), 22A(5), 23C(2), 24(3) and 27A(6) for the 2002 funding year to reflect supplementation for price movements;
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- vary the maximum funding levels in Part 2.2 to reflect revised estimates of Higher Education Contribution Scheme (HECS) receipts for the 2000, 2001 and 2002 funding years and the Commonwealths superannuation liability for the 2001 and 2002 funding years;
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- vary the maximum funding level in section 17 for the 2002 funding year to reflect a transfer of funds to the Australian Research Council Act 2001 to enable the Institute of Advanced Studies of the Australian National University to access ARC competitive grant programmes;
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- vary the maximum funding levels in subsection 23C(2) for the funding year 2001 to reflect a transfer of innovation programme funds from 2000 to 2001;
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- remove an ambiguity concerning the operation of the Higher Education Contribution Scheme (HECS) in relation to the Bankruptcy Act 1966;
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- broaden the Minister's guideline-making power in relation to HECS and work experience in industry to assist higher education institutions in interpreting the current provisions of the Act;
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- enable the Commissioner of Taxation to apply any refunds of HECS repayment credits of less than $50 to existing outstanding taxation debts;
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- remove references to the now repealed Overseas Students Charge Act 1979.
The Bill amends the Australian Research Council Act 2001 (ARCA) to:
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- legislate the maximum funding level in section 49 of ARCA for the funding year 2003, including additional funding provided in the Backing Australias Ability policy;
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- vary the maximum funding level in section 49 of ARCA for the funding year 2002 to reflect supplementation for price movements;
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- vary the maximum funding level in section 49 of ARCA for the funding year 2002 to reflect a transfer of funds from section 17 of HEFA to enable the Institute of Advanced Studies of the Australian National University to access ARC competitive grant programmes.
The Bill amends the Australian National University Act 1991 to enable the University to establish a new advisory/committee structure.
Financial impact
In relation to the Higher Education Funding Act 1988, the Bill:
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- provides base funding of $4,044.832 million in 2003;
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- increases funding by $138.254 million in 2002;
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- reduces funding by $0.041 million in 2001.
The aggregate adjustments for each funding year include:
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- additional funding for regional university places of $4.192 million in 2002 and $8.464 million in 2003;
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- additional funding for disability support of $1.836 million in 2002 and $2.961 million in 2003;
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- a transfer $2.22 million in 2002 from section 17 of HEFA to section 49 of ARCA;
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- a transfer $1 million of innovation programme funds from 2000 to 2001 (section 23C of HEFA);
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- technical adjustments on the basis of revised estimates of HECS receipts and superannuation liabilities.
In relation to the Australian Research Council Act 2001, the Bill provides:
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- base funding of $339.183 million in 2003;
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- increases funding by $7.963 million in 2002.
The aggregate adjustment for 2002 includes a transfer of $2.22 million to section 49 of the ARCA from section 17 of HEFA.
Notes on clauses
Clause 1 - Short title
Provides for the Act to be cited as the Higher Education Funding Amendment Act 2001.
Clause 2 - Commencement
Provides for this Act (other than item 11 of Schedule 1) to commence on the day on which it receives the Royal Assent.
Item 11 of Schedule 1 will commence or will be deemed to have commenced immediately after the commencement of the Innovation and Education Legislation Amendment Act 2001.
Clause 3 - Schedule(s)
Provides that each Act that is specified in a Schedule is amended or repealed as set out in the applicable items in the Schedule and that any other item in a Schedule has effect according to its terms.
Schedule 1 - Extra funding for research, higher education and other purposes
Australian Research Council Act 2001
Amend paragraphs 48(b) and 49(b) to provide financial assistance for approved research programs for the year 2003 under Division 1 of Part 7 of the Act.
Higher Education Funding Act 1988
Since the introduction of the Higher Education Contribution Scheme (HECS), funding for the operating purposes and limited operating purposes of higher education institutions has come from a combination of HECS liabilities and grants approved under sections 15 and 16 of the Act. Section 17 sets the maximum aggregate funding levels for operating grants that may be paid to institutions under sections 15 and 16 while Part 4.3 of the Act established the Higher Education (HECS) Reserve[F1] and provides for the application of money in the Account.
Each year the operating needs of institutions are estimated and funded by a combination of estimated HECS liabilities during the year and aggregate grants funded within the maximum amount provided for in section 17 for that year. Actual HECS liabilities for a year are not available until early in the subsequent year after which an adjustment is made to the section 17 funding amount for the previous year to correctly reflect the relative contribution of HECS liabilities to the funding needs of institutions.
Item 4 amends section 17 to vary the maximum aggregate funding level for 2000, 2001 and 2002 to reflect revised Higher Education Contribution Scheme (HECS) liabilities and estimated liabilities, to vary the maximum aggregate funding level for 2002 to provide for new student places to be allocated to regional universities and campuses, to reflect supplementation for price movements and a transfer of funds to the Australian Research Council Act 2001 to enable the Institute of Advanced Studies of the Australian National University to access Australian Research Council competitive grant programmes. Item 4 also inserts the maximum aggregate funding level for the year 2003 (including funding for new student places to be allocated to regional universities and campuses).
Section 20 provides for grants to higher education institutions for superannuation expenses for staff whose salaries are funded from grants provided under the Act. Item 5 amends subsection 20(3) to vary the maximum aggregate grant amount for 2001 and 2002 to reflect revised estimates of the Commonwealths superannuation liability, to vary the maximum aggregate grant amount for 2002 to reflect supplementation for price movements and to insert the maximum aggregate grant amount for the year 2003.
Subsection 22A(5) provides for the total amounts which may be approved as expenditure by way of grants to open learning organisations. Item 6 amends subsection 22A(5) to increase the maximum aggregate grant amount for the year 2002 to reflect price movements and to set the maximum aggregate grant amount for the year 2003.
Subsection 23C(2) of the Act limits the total funds available for grants that may be approved under sections 21, 21B, 22, 23, 23A and 23B of the Act for specified years. Item 7 amend subsection 23C(2) to vary the funding limit for 2001 to reflect a transfer of innovation programme funds from 2000 to 2001, to increase the funding limit for 2002 to reflect supplementation for price movements and additional support for people with disabilities, and to insert the funding limit for the year 2003 (including additional support for people with disabilities).
Section 24 of the Act provides grants in respect of teaching hospitals. Item 8 amends subsection 24(3) to increase the maximum aggregate grant amount for the year 2002 to reflect supplementation for price movements and to insert the maximum aggregate grant amount for the year 2003.
Section 27A of the Act provides for grants to institutions for special capital projects. Item 9 amends subsection 27A(6) to increase the maximum aggregate grant amount for the year 2002 to reflect supplementation for price movements and to insert the maximum aggregate grant amount for the year 2003.
Section 27D of the Act allows the Minister to determine an amount to be available for expenditure by the Commonwealth on the international marketing and promotion of Australian education and training services. Item 10 amends subsection 27D(2) to increase the maximum aggregate funding level for the year 2002 to reflect supplementation for price movements and to insert the maximum aggregate funding level for the year 2003.
Innovation and Education Legislation Amendment Act 2001
Repeals Schedule 1 of the Innovation and Education Legislation Amendment Act 2001 to correct a drafting error.
Schedule 2 - Amendments relating to bankruptcy
Bankruptcy Act 1966
Add a note to subsections 82(1) and 153(1) to the effect that the operation of each section in relation to accumulated HEC debts and semester debts under the Higher Education Funding Act 1988 is affected by section 106YA of that Act.
Higher Education Funding Act 1988
Inserts a proposed new section 106YA to provide for the effects of bankruptcy on accumulated HEC debts and semester debts under the Act.
(NOTE: proposed section is abbreviated as ps)
Proposed subsection 106YA - Effect of bankruptcy
Proposed subsection106YA(1) specifies when the proposed section applies in relation to a bankruptcy.
Proposed subsection106YA(2) has the effect of providing that debts relating to the pre-bankruptcy period are provable debts for the purposes of the Bankruptcy Act 1966. This includes the pre-bankruptcy part of the bankrupts accumulated HEC debt and the unpaid part of the semester debt, or of each of the semester debts.
Proposed subsection106YA(3) has the effect of providing that debts relating to the post-bankruptcy period are not provable debts for the purposes of the Bankruptcy Act 1966. This includes the bankrupts accumulated HEC debt (apart from the pre-bankruptcy part of that debt) and any semester debt incurred by the bankrupt on or after the bankruptcy date.
Proposed subsection106YA(4) has the effect of providing that a dividend paid to the Commonwealth under the Bankruptcy Act 1966 in respect of the pre-bankruptcy part of the bankrupts accumulated HEC debt or a semester debt mentioned in subsection 106YA(1), is taken to be money that the bankrupt has directed to be applied in payment of that debt.
Proposed subsection106YA(5) provides that section 153 of the Bankruptcy Act 1966 does not operate to release the bankrupt from all or any part of the accumulated HEC debt or a semester debt mentioned in subsection 106YA(1).
Proposed subsection106YA(6) has the effect of providing that, if subsections 106YA(2) to (5) apply to an accumulated HEC debt (the old HEC debt) of the bankrupt (including because of a previous application of subsections 106YA(6) or (7)) and the old HEC debt is discharged under section 106O because the bankrupt incurred another accumulated HEC debt (the replacement HEC debt) under section 106N, those subsections apply (subject to any later application of subsection 106YA(6)) to the replacement HEC debt instead of the old HEC debt. A proof of debt under the Bankruptcy Act 1966 in relation to the pre-bankruptcy part of the old HEC debt (including because of a previous application of subsections 106YA(6) or (7)) is taken to relate to the pre-bankruptcy part of the replacement HEC debt to the extent of that proof. In addition, if at the time the old HEC debt is discharged under section 106O, a semester debt of the bankrupt is also discharged under that section, a proof of debt under the Bankruptcy Act 1966 in relation to the semester debt is taken to relate to the pre-bankruptcy part of the replacement HEC debt to the extent of that proof.
Proposed subsection106YA(7) has the effect of providing that, if immediately before the bankrupts bankruptcy date the bankrupt had one or more undischarged semester debts (an old semester debt), no undischarged accumulated HEC debt and on or after the bankruptcy date the unpaid part of an old semester debt is discharged under section 106O because the bankrupt incurred an accumulated HEC debt (the new HEC debt) under section 106N, then after the new HEC debt is incurred subsections 106YA(2) to (5) apply (subject to any later application of subsection 106YA(6)) to the new HEC debt instead of the old semester debt. In addition, a proof of debt under the Bankruptcy Act 1966 in relation to the old semester debt is taken to relate to the pre-bankruptcy part of the new HEC debt.
Proposed subsection106YA(8) has the effect of providing that, subject to subsection 106YA(9), the pre-bankruptcy part of a bankrupts accumulated HEC debt is the amount that would be the bankrupts relevant debt calculated in accordance with subsections 106Q(2) and (3) if that amount was calculated immediately before the bankrupts bankruptcy date and the reference in paragraph 106Q(2)(a) to the persons accumulated HEC debt referred to in paragraph 106Q(1)(b) were a reference to the persons accumulated HEC debt on the 1 June immediately preceding the bankruptcy date.
Proposed subsection106YA(9) has the effect of providing that, if immediately before the bankrupts bankruptcy date the bankrupt had one or more undischarged semester debts and at a time (the discharge time) on or after the bankruptcy date, the unpaid part of those debts (the discharged amount) was discharged because of the operation of section 106O, then if the bankrupt did not have an accumulated HEC debt immediately before the discharge time the pre-bankruptcy part of the bankrupt's accumulated HECS debt is equal to the discharged amount.. Otherwise the pre-bankruptcy part of the bankrupts accumulated HEC debt is taken to be increased at the discharge time by an amount equal to the discharged amount.
Proposed subsection106YA(10) defines certain terms used in the proposed section.
Has the effect of providing that that the amendments made by this Schedule apply to bankruptcies for which the date of the bankruptcy is on or after the day this Bill was introduced in the House of Representatives (the introduction day).
However, the amendments made by this Schedule do not apply to a bankruptcy where a declaration was presented by the debtor under section 54A and accepted under section 54C of the Bankruptcy Act 1966 on or before the introduction day and the date of the bankruptcy is after the introduction day but within 6 days after the day on which the declaration was accepted.
The amendments made by this Schedule are expressed not to affect the interpretation of the Bankruptcy Act 1966 or the Higher Education Funding Act 1988 where the date of the bankruptcy is before the introduction day.
Schedule 3 - ANU governance arrangements
Australian National University Act 1991
Amend section 3 to insert new definitions of Chair of the Education Committee and Chair of the Research Committee and to amend the definition of ex officio member.
Amends subsection 10(1) to remove the Chairperson of the Board of the Institute and the Chairperson of the Board of the Faculties as members of the Council of the University and makes provision for the Chair of the Education Committee and the Chair of the Research Committee to take their place as members of the Council, provided that the University makes a Statute under Part 4 of the Act creating an Academic Board, subcommittees of which are known as the Education Committee and the Research Committee.
Amends subsection 15(2) to replace references to the Chairperson of the Board of the Institute and the Chairperson of the Board of the Faculties with references to the Chair of the Education Committee and the Chair of the Research Committee.
Replace subsections 20(2) and 25(2) with new subsections reflecting the proposed new University governance arrangements in respect of the Board of the Institute and the Board of the Faculties.
Schedule 4 - Miscellaneous
Higher Education Funding Act 1988
Remove references to the Overseas Students Charge Act 1979, which was repealed by Schedule 1 to the Statute Stocktake Act 1999. Item 1 does this by repealing paragraph 18(1)(e) while Item 2 repeals the definition of overseas student charge in subsection 36(3).
Broadens the Ministers discretion to issue guidelines setting out criteria that an institution must apply in deciding whether the requirements in paragraphs 36(1) (a), (b) (c) and (d) in relation to the exclusion of work experience in industry from a student load, apply to a particular student. Currently the Minister may only issue guidelines to institutions in relation to deciding work done by a student outside an institution is done for the purposes of obtaining work experience in industry. In other words the Ministers guideline making powers under subsection 36(3) currently extend only to the discretion to make guidelines in relation to paragraph 36(1)(d).
Inserts a new paragraph 61(1)(ba) to permit money in the Higher Education (HECS) Reserve[F2] which would otherwise be payable under paragraph 61(1)(b) to be credited against primary tax debts within the meaning of Part IIB of the Taxation Administration Act 1953, for amounts that are less than $50.