Explanatory Memorandum
(Circulated by authority of the Minister for Education, Science and Training the Hon Dr Brendan Nelson MP)1 - Outline and financial impact
Outline
The Bill deals with transitional and consequential matters arising from the enactment of the Higher Education Support Act 2003 and a number of other matters concerning higher education.
The Bill ensures that students who commenced their studies before 2005 and received assistance under the Higher Education Contribution Scheme will be able to continue their studies as Commonwealth supported students under the proposed Higher Education Support Act 2003 until the end of 2008. Until this time, they will have student contribution amounts under the new arrangements that are no greater than the contributions they are required to pay under the current Higher Education Contribution Scheme. They will also have access to HECS-HELP so that they can defer payment of those student contribution amounts.
The Bill ensures that students who commenced their studies before 2005 and received assistance under the Post-graduate Education Loan Scheme will have access, under special conditions, to the new FEE-HELP scheme until the end of 2008. The indexation of the debts that they incur under this arrangement will be limited to changes in the Consumer Price Index and they will continue to receive a bonus for the voluntary repayment of these debts.
The Bill provides for accumulated HEC debts to be converted into accumulated HECS-HELP debts on 1 June 2006. It ensures that the calculation of accumulated HECS-HELP debts takes account of any voluntary repayments, HEC assessment debts or amendments of HEC assessment debts that occur after 1 June 2005.
The Bill provides that the University of Notre Dame and Avondale College may receive funding for student places under the new Commonwealth Grant Scheme until the end of 2008. This will ensure that the Commonwealth makes its contribution to the cost of student places for those students who commence their studies before 2005, as students liable to pay a contribution under the Higher Education Contribution Scheme.
The Bill includes a number of other minor transitional provisions related to the commencement of the proposed Higher Education Support Act 2003. These include matters such as the rollover of grants, merit based equity scholarships and marginally funded places.
The Bill makes changes to the Higher Education Funding Act 1988 as a consequence of the proposed Higher Education Support Act 2003. It increases the expenditure limits for a number of grants and provides for transitional assistance in respect of 2005 to be paid to institutions which received grants in respect of 2004 under the Higher Education Funding Act 1988. It also ends the application of various provisions of that Act to take account of the commencement of the proposed Higher Education Support Act 2003.
The Bill amends the Australian National University Act 1991 and the Maritime College Act 1978. The amendments to these Acts improve the governance structures of the Australian National University and the Australian Maritime College by altering the composition of their Councils and the method of appointment of members to those Councils. It inserts clauses detailing the duties of Council members, clarifies their responsibilities and makes other minor and consequential amendments to these Acts.
The Bill removes Marcus Oldham College from the Higher Education Funding Act 1988 and provides for the Minister to determine an amount of payment to be made to the College in respect of 2004.
The Bill makes a number of other minor amendments as a consequence of the proposed Higher Education Support Act 2003.
Financial impact
Total funding levels for the higher education sector in the 2004 and 2005 calendar years under the Bill are estimated to be around $4.3 billion (2004 prices).
Notes on clauses
Clause 1 - Short title
Provides for the Act to be cited as the Higher Education Support (Transitional Provisions and Consequential Amendments) Act 2003.
Clause 2 - Commencement
Subclause 2(1) inserts a three column table setting out commencement information for various provisions in the Act. Each provision of the Act specified in column 1 of the table commences (or is taken to have commenced) in accordance with column 2 of the table and any other statement in column 2 has effect according to its terms.
The table provides for sections 1-3 of the Act to commence on the day on which it receives the Royal Assent and for other provisions to commence on the days set out in column 2 of the table.
Subclause 2(2) provides that column 3 of the table is for additional information which may be added to or edited in any published version of the Act but that information in this column is not part of the Act.
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.
4 Meanings of expressions defined in the Higher Education Support Act 2003
Provides that expressions used in this Act that are defined in the Higher Education Support Act 2003 have the same meanings as in that Act, unless the contrary intention appears.
Schedule 2 - Amendments
Part 1 - Appropriations
Higher Education Funding Act 1988
Part 1 amends the maximum funding amounts in Part 2.2 of the Higher Education Funding Act 1988 for the year 2004 to reflect indexation increases and other funding adjustments to accommodate the new Higher Education Support Act 2003.
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 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 1 amends section 17 to vary the maximum aggregate funding level for 2004 to reflect supplementation consistent with indexation arrangements, new funding to support higher education in regional areas, increased funding for nursing education and additional nursing places.
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 2 amends subsection 20(3) to vary the maximum aggregate grant amount for 2004 to reflect supplementation consistent with indexation arrangements.
Subsection 22A(5) provides for the total amounts which may be approved as expenditure by way of grants to open learning organisations. Item 3 amends subsection 22A(5) to vary the maximum aggregate grant amount for 2004 to reflect supplementation consistent with indexation arrangements.
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 4 amends subsection 23C(2) to vary the funding limit for 2004 to reflect supplementation consistent with indexation arrangements, new funding to support the General Sir John Monash Awards and the transfer of research scholarship funding which is now to be paid as Commonwealth Scholarships under Part 2-4 of Chapter 2 of the Higher Education Support Act 2003.
Section 24 of the Act provides grants in respect of teaching hospitals. Item 5 amends subsection 24(3) to increase the maximum aggregate grant amount for 2004 to reflect supplementation consistent with indexation arrangements.
Section 27A of the Act provides for grants to institutions for special capital projects. Item 6 amends subsection 27A(6) to increase the maximum aggregate grant amount for 2004 to reflect supplementation consistent with indexation arrangements.
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 7 amends subsection 27D(2) to increase the maximum aggregate funding level for 2004 to reflect supplementation consistent with indexation arrangements.
Part 2 - Transitional financial assistance
Higher Education Funding Act 1988
Inserts a new section 110A in Chapter 6 of the Act providing for transitional financial assistance. The new section provides that there is payable to an institution to which financial assistance was payable under Chapter 2 in respect of the year 2004 such amount as the Minister determines in respect of the year 2005, 2006 and 2007. The total of the amounts that are payable under new section 110A must not exceed $21,536,000 (2005), $9,411,000 (2006) and $7,393,000 (2007).
Part 3 - Discontinuance of provisions of the Higher Education Funding Act 1988
Higher Education Funding Act 1988
Repeal section 2B and Chapter 5C of the Act to reflect that provisions for regulating higher education in the external territories will be provided for in Chapter 6 of the Higher Education Support Act 2003.
Amend paragraphs (a) to (b) of the definition of year to which this Chapter applies in section 3 of the Act and sections 98L, 98ZE and 106FA of the Act and insert new sections 98NA, 98ZAA and 106KA to reflect that no financial assistance will be payable under the Act after 31 December 2004 (or the funding year 2004) as a consequence of the new Higher Education Support Act 2003.
Inserts a new section 106KA which provides that despite sections 106J to 106K, a person does not incur a semester debt if the census date, in respect of the course of study or study period in respect of which the debt would (apart from section 106KA) arise, occurs on or after 1 January 2005. This section is inserted as a consequence of the new Higher Education Support Act 2003.
Item 18 After subsection 106N(2)
Inserts a new subsection 106N(2A) in Part 5A.2 of Chapter 5A of the Act to provide that a person cannot incur an accumulated HEC debt on 1 June 2006 or on 1 June in any later year. A person's accumulated HECS-HELP debt, worked out under section 140-25 of the Higher Education Support Act 2003, for the financial year starting on 1 July 2005 can include an amount for the person's accumulated HEC debt incurred on 1 June 2005 (see Part 3 of Schedule 1 to this Act).
Part 6 - Marcus Oldham College
Higher Education Funding Act 1988
Item 90 Subsection 4(1) (Table B)
Omits "Marcus Oldham College" from the list of institutions in Table B of subsection 4(1). This means the College will no longer be eligible for grants for expenditure for limited operating purposes under section 16 in respect of the 2004 funding year [also see item 91]. However, item 92 inserts a new section to provide for the Minister to determine a special purpose grant payment for the College for 2004.
Repeals paragraph 18(2)(a) to remove The University of Notre Dame Australia (a Table A institution), Marcus Oldham College and Avondale College (Table B institutions) from exemption from the condition of grant in paragraph 18(1)(d) in relation to operating grants and limited operating grants under sections 15 and 16. This reflects both changes made under this Part and the new arrangements for Commonwealth funding of higher education institutions under the Higher Education Support Act 2003.
Proposed section 20B Grant to Marcus Oldham College
Inserts a new section 20B to give the Minister the power to determine a 'special purpose grant' to Marcus Oldham College for 2004 which must not exceed $2,095,000.
Amends subsection 34(4) to remove reference to Marcus Oldham College from the definition of institution for the purposes of Chapter 4 (dealing with the Higher Education Contribution Scheme) to reflect the amendments made by Part 6 of Schedule 2.
Item 94 Subsection 98A(1) (paragraph (b) of the definition of appropriate officer)
Amends paragraph (b) of the definition of appropriate officer in subsection 98A(1) to remove reference to Marcus Oldham College for the purpose of Chapter 4A (dealing with the Post-graduate education loan scheme) to reflect the amendments made by Part 6 of Schedule 2.
Part 7 - Other amendments
Make consequential amendments to A New Tax System (Family Assistance) (Administration) Act 1999, Disability Services Act 1986, Equal Opportunity for Women in the Workplace Act 1999, Fringe Benefits Tax Assessment Act 1986, Income Tax Assessment Act 1936, Income Tax Assessment Act 1997, Social Security Act 1991, Taxation Administration Act 1953, and Taxation (Interest on Overpayments and Early Payments) Act 1983 to reflect the repeal of the Higher Education Funding Act 1988 and its replacement and supplementation by the new Higher Education Support Act 2003.
Items 96-97 After subsection 82(3AA)
Item 96 repeals the note to subsection 82(1) of the Bankruptcy Act 1966 [the note referred to the Higher Education Funding Act 1988] and item 97 amends section 82 by inserting a new subsection (3AB) which provides that a debt incurred under Part 4-1 of the Higher Education Support Act 2003 is not provable in bankruptcy.
Specifically, this means that a HELP debt, an accumulated HECS-HELP debt or an accumulated FEE-HELP/OS-HELP debt would not be a provable debt within the meaning of the Bankruptcy Act 1966.
Higher Education Funding Act 1988
Amends subsection 106L(1) to have the effect of providing the Secretary with the power to remit a PELS semester debt.
Amends subsection 106L(2) to have the effect of providing Secretary with the power to remit the whole or part of a person's BOTP study period debt.
Items 106-108 Paragraphs 106L(2)(a) and (c) and subsection 106L(3B)
Technical amendments to the wording of paragraphs 106L(2)(a), 106L(2)(c) and subsection 106L(3B) as a result of amendment made under Item 105.
Item 109 Subparagraphs 106L(3B)(a)(i) and (b)(i)
Amends subparagraphs 106L(3B)(a)(i) and (b)(i) to replace the reference to "an HEC semester debt" with "a semester debt" to reflect the provisions in the Higher Education Support Act 2003.
Item 110 After paragraph 106L(3B)(b)
Inserts new paragraphs 106L(3B)(ba) and (bb). Paragraph 106L(3B)(ba) provides that for the purpose of BOTP study period debt, if a person withdraws his/her enrolment, has incurred a BOTP semester debt for the BOTP course and withdraws his/her enrolment for the course for the study period and the institution at which the person was enrolled gives notice to the person that the withdrawal has taken effect the "withdrawal day" takes effect on the day specified in the notice.
Paragraph 106L(3B)(bb) provides that if a person has incurred an BOTP semester debt and paragraph (ba) does not apply and the person does not complete the BOTP course for which he/she was enrolled for the study period, the "withdrawal day" is the last day of the study period.
Amends paragraph 106M(1)(a) and replaces the reference to "an HEC semester debt or OL study period debt" with "semester debt" to reflect the provisions in the Higher Education Support Act 2003.
Item 112 Actions by appropriate officers of institutions
Transitional provision that has the effect of providing that any action by an officer of an institution before the commencement of item 112 that could have been done by the Secretary under section 106L or 106M has effect after commencement as if it has been done by the Secretary having the power to do so and had so delegated those powers.
Items 113 and 114 Subsection 106PA(2)
Subsection 106PA(2) as amended by items 113 and 114 will provide that if the amount of a debt is less than $500 but not less than $455, the debtor is taken to pay off the total debt if he/she pays $454 in respect of the debt.
Item 115 Subsection 106PA(3) (formula)
Repeals the formula in subsection 106PA(3) and replaces it with:
This has the effect of reducing the up-front payment discount for debts over $500 under Chapter 5A from 15% to 10%.
Item 116 Subsection 106PA(4) (formula)
Replaces the formula in subsection 106PA(4) with:
[Amount of debt outstanding] / 1.1
This has the effect of reducing from 15% to 10% the up-front payment discount for payments of $500 or more in part settlement of debts under Chapter 5A.
Items 117-119 Subsection 106PA(4) (example)
Amend the example to subsection 106PA(4) to reflect the changes made by item 116.
Amends paragraph 106Q(1)(b) to omit "the person had an accumulated HEC debt" and substitutes:
- "the person:
- (i)
- had an accumulated HEC debt; or
- (ii)
- if the 1 June occurs in the year 2006 or a later year-had an accumulated HECS-HELP debt (within the meaning of the Higher Education Support Act 2003) or an accumulated FEE-HELP/OS-HELP debt (within the meaning of that Act), or both;"
This is one of the conditions (subject to subsection 106Q(7) which will make a person liable to pay to the Commonwealth in reduction of his/her relevant debt an amount equal to so much of that relevant debt as does not exceed the percentage of the person's HEC repayment income that is applicable in accordance with a table in the subsection. This amendment is made as a consequence of the Higher Education Support Act 2003.
Items 121-122 Subsection 106Y(2)
Make provision for the addition of new paragraphs 106Y(2)(f) and (g) providing for the order of application of any money paid by a person to meet the person's debts to the Commonwealth under Chapter 5A if the person has not given any directions.
These amendments are made as a consequence of the Higher Education Support Act 2003.
Item 123 At the end of section 106Y
Inserts a new subsection 106Y(3) which provides that in section 106Y, HECS-HELP debt, FEE-HELP debt and OS-HELP debt have the same meanings as in the Higher Education Support Act 2003. These definitions are necessary for the amendments made by item 122.
Item 124 At the end of section 112
Amends section 112 by adding new subsections 112(3) to (5) which provide for the delegation of the Secretary's powers under sections 106L and 106M to a review officer of an institution. Proposed subsection 112(4) provides that, in exercising powers under a delegation made under subsection 112(3), the delegate must comply with any directions of the Secretary and proposed subsection 112(5) defines the term review officer.