House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Education, the Honourable Dan Tehan MP)

OUTLINE

The Higher Education Support Amendment (Cost Recovery) Bill 2019 ( Bill ) is a Bill to amend Divisions 16 and 19 of the Higher Education Support Act 2003 ( HESA ) to:

•

implement an application fee for applications for approval as higher education providers whose students are entitled to FEE-HELP assistance under HESA; and

•

provide for the administration of the annual charge on higher education providers under the Higher Education Support (Charges) Bill 2019 ( Charges Bill ).

Under the Charges Bill, the amount of the annual charge will be an amount prescribed by the regulations or as worked out in accordance with the manner prescribed by the regulations. It is anticipated the amount of the charge will differ depending on the size of the provider (determined by the number of enrolments per year), recognising the impost of such a charge on smaller providers. Prior to the introduction of the regulations, a fees schedule will be determined that is consistent with the Australian Government Cost Recovery Guidelines (available from www.finance.gov.au ) and documented in a cost recovery implementation statement (CRIS).

This Bill will require higher education providers to pay the annual charge as an ongoing requirement of their approval under HESA, and will facilitate the collection and recovery of the annual charge by the Department of Education.

The Bill also implements an application fee on prospective FEE-HELP providers to fund the FEE-HELP provider application process, including the costs of administration and assessment of the applications from prospective providers seeking approval as a higher education provider under HESA. The amount of the application fee will be a flat fee on prospective FEE-HELP providers (payable upon submission of an application for assessment) that will be calculated in accordance with the manner prescribed by the Higher Education Provider Guidelines.

FINANCIAL IMPACT STATEMENT

This Bill implements the annual charge, and the application fee, which are HELP cost recovery measures announced on 8 May 2018 as part of the 2018-19 Federal Budget. The annual charge which is based on partial cost recovery is expected to deliver savings of $11.4 million in fiscal balance terms over the forward estimates (2019-20 to 2022-23).The application fee which is based on full cost recovery is expected to deliver saving of $0.3 million over 2019-20 to 2022-23. Thereby the HELP cost recovery measures provide an estimated combined saving of $11.7 million over 2019-20 to 2022-23.

LIST OF ABBREVIATIONS

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Higher Education Support Amendment (Cost Recovery) Bill 2019

The Higher Education Support Amendment (Cost Recovery) Bill 2019 ( 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 Higher Education Support Amendment (Cost Recovery) Bill 2019 is a Bill to amend Divisions 16 and 19 of the Higher Education Support Act 2003 ( HESA ) to:

•

implement an application fee for applications for approval as higher education providers whose students are entitled to FEE-HELP assistance under HESA; and

•

provide for the administration of the annual charge on higher education providers under the Higher Education Support (Charges) Bill 2019 ( Charges Bill ).

Under the Charges Bill, the amount of the annual charge will be an amount prescribed by the regulations or as worked out in accordance with the manner prescribed by the regulations. It is anticipated the amount of the charge will differ depending on the size of the provider (determined by the number of enrolments per year), recognising the impost of such a charge on smaller providers. Prior to the introduction of the regulations, a fees schedule will be determined that is consistent with the Australian Government Cost Recovery Guidelines (available from www.finance.gov.au ) and documented in a cost recovery implementation statement (CRIS).

This Bill will require higher education providers to pay the annual charge as an ongoing requirement of their approval under HESA, and will facilitate the collection and recovery of the annual charge by the Department of Education.

The Bill also implements an application fee on prospective FEE-HELP providers to fund the FEE-HELP provider application process, including the costs of administering and assessing the applications from prospective providers seeking approval as a higher education provider under HESA. The amount of the application fee will be a flat fee on prospective FEE-HELP providers (payable upon submission of an application for assessment) that will be calculated in accordance with the manner prescribed by the Higher Education Provider Guidelines.

Summary of analysis

The Bill does not engage any of the applicable rights or freedoms of individuals, and therefore the Bill is compatible with human rights.

Analysis of human rights implications

The Bill does not engage any of the applicable rights or freedoms of individuals. It amends HESA to implement an application fee for an application for approval as a higher education provider whose students are entitled to FEE-HELP assistance under HESA, and to reflect the introduction of an annual charge on higher education providers under the Charges Bill.

Conclusion

The Bill is compatible with human rights because it does not raise any human rights issues.

Notes on Clauses

Clause 1 - Short title

Clause 1 provides for the Act to be the Higher Education Support Amendment (Cost Recovery) Act 2019.

Clause 2 - Commencement

The table in this clause specifies that parts of the Bill commence at the following times:

•

sections 1 to 3 and any matters not otherwise covered by the commencement table commence on the day the Bill, once enacted, receives the Royal Assent;

•

Part 1 of Schedule 1 commences on the 1 January 2020;

•

Part 2 of Schedule 1 commences at the same time as the Charges Bill commences. However, the provisions do not commence if the Charges Bill does not commence.

Clause 3 - Schedule(s)

Clause 3 provides that any legislation that is specified in a schedule to the Bill is amended or repealed as set out in the applicable items in the schedule concerned and any other item in a schedule has effect according to its terms.

Schedule 1 Amendments

Summary

Schedule 1 to the Bill implements an application fee on prospective FEE-HELP providers submitting an application for approval as a higher education provider under HESA. This will assist to fund the FEE-HELP provider application process including the costs of administering and assessing the applications from prospective providers seeking approval as a higher education provider under HESA.

Schedule 1 to the Bill also amends Division 19 of HESA to provide for the administration of the annual charge on higher education providers imposed under the Higher Education Support (Charges) Bill 2019.

Detailed explanation

Part 1 - Higher education provider application fee

Higher Education Support Act 2003

Item 1 - At the end of subsection 16-40(2)

Item 2 - At the end of subsection 16-40

Subsection 16-40(2) of HESA requires the application for approval as a higher education provider under HESA to be in a form approved by the Minister, and accompanied by information as the Minister requests.

Item 1 adds a new paragraph (c), to require that the application for approval as a higher education provider under HESA be accompanied by the fee which will be prescribed by, or worked out in accordance with the method prescribed by, the Higher Education Provider Guidelines. Item 2 inserts a new subsection 16-40(3) that provides that the application fee must not be such as to amount to taxation.

The purpose of this amendment is implement the application fee on registered higher education providers that apply for approval as a higher education provider to offer FEE-HELP.

Part 2 - Higher education provider charge

Higher Education Support Act 2003

Item 3 - After section 19-65

This item enables the Department of Education to administer the higher education provider charge imposed by the Charges Bill.

Item 3 inserts a new section 19-66 under Subdivision 19-E of HESA, which outlines the compliance requirements for higher education providers.

Proposed subsection 19-66(1) will require higher education providers to pay the higher education provider charge, and any penalty for late payment of the higher education provider charge, when it is due and payable. A failure by a higher education provider to pay the charge (or late payment penalty) will constitute a breach by the provider of the quality and accountability requirements of HESA, for which the Minister can take action under Division 22 of the Act.

Proposed subsection 19-66(2) provides the Higher Education Provider Guidelines may provide for all or any of the following matters:

•

the issuing of notices setting out the amount of higher education provider charge payable by a provider;

•

when higher education provider charge is due and payable;

•

the issuing of notices extending the time for payment of higher education provider charge;

•

penalties for late payment of higher education provider charge;

•

to whom higher education provider charge and any penalties for late payment are payable;

•

the refund, remittal or waiver of higher education provider charge or late payment penalty;

•

the review of decisions made under the Higher Education Provider Guidelines in relation to the collection or recovery of higher education provider charge;

•

any other matters relating to the collection and recovery of higher education provider charge.

Including these matters in the Higher Education Provider Guidelines provides greater flexibility in addressing changes to matters under proposed subsection 19-66(2), instead of pursuing amendments through primary legislation. In addition, administrative issues related to the higher education provider charge and application fee (i.e. the setting of the rate of a penalty for late payment, and right of review of decisions made in relation to the collection and recovery of the annual charge and application fee) are best addressed outside the Bill. This facilitates a more timely and efficient response to administrative changes for the cost recovery charges.

In addition, there is existing subordinate legislation (VET Student Loans Rules 2016) for the collection and recovery of the approved VET Student Loans course provider charge that provides for late payment penalty. This sets a precedent, which was used to guide the development of the Bill.

Therefore, delegated legislation is the appropriate mechanism for setting out matters referred to in the proposed subsection 19-66(2).

Although the Bill does not require the Higher Education Provider Guidelines to include review rights, they will be included in the Guidelines.

The higher education provider charge will commence from the 2020 calendar year and will be collected from providers yearly 'in arrears' with providers invoiced 'in arrears' for the charge after providers' student enrolments data for the calendar year has been verified (often occurs around mid-May the following year). Higher education providers will have 30 days from the date of the issued invoice to pay the higher education provider charge, and penalties may apply for late payments. For the 2020 calendar year, providers will receive the invoice for the charge in 2021.

Item 4 - Subclause 1(1) of Schedule 1

This item inserts the definition for higher education provider charge in the Dictionary under subclause 1(1) of Schedule 1 in HESA.