House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Vocational Education and Skills, the Hon Luke Hartsuyker MP)

Outline

The purpose of the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 (the Bill) is to amend the Higher Education Support Act 2003 (the Act) to:

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give effect to the Government's decision to strengthen the administration of the VET FEE-HELP loan scheme;

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respond to inappropriate market practices;

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introduce complementary actions to improve the quality of outcomes for students; and

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protect students, public monies and the reputation of the broader vocational education and training (VET) sector.

The VET FEE-HELP loan scheme is an income contingent loan scheme that helps students to pay for higher level VET courses. Higher level VET qualifications are at the diploma level and above, with a limited trial extending to specified Certificate IV level qualifications until December 2016.

The VET FEE-HELP loan scheme has experienced significant growth since its inception, some of which can be attributed to the strong early growth of a demand-driven scheme implemented in an area previously unassisted by Government loan assistance. Some of the growth however, derives from the unscrupulous or opportunistic behaviour of some providers and their agents. The characteristics of this pattern of unscrupulous behaviour are aggressive marketing, inappropriate targeting of vulnerable people, and widespread use of inducements.

This Bill enacts a series of measures to strengthen the administration of the VET FEE-HELP loan scheme and improve the quality of outcomes for students while protecting students, public monies and the reputation of the broader VET sector.

The Bill introduces new requirements for VET FEE-HELP approved training providers (VET providers) to develop and apply appropriate student entry procedure requirements. These measures seek to ensure that a student is properly assessed for academic suitability, including demonstrated language, literacy and numeracy requirements, before being admitted to enrol in a VET course of study for which they are entitled to receive a VET FEE-HELP loan. The measures contained in the Bill will increase the protection of vulnerable Australians by protecting students (and intending students) who do not have the capacity to undertake the course in which they are enrolled.

The Bill enhances the protection of students under the age of 18 by requiring a parent's approval before the student can request a VET FEE-HELP loan.

The Bill further strengthens the protection of students by broadening the circumstances in which a student can seek a re-credit of their VET FEE-HELP loan debt balance and remission of a debt where it is proven that as a result of unacceptable behaviour by the provider (or their agent) the student enrolled with the provider and subsequently received a VET FEE-HELP loan.

The Bill introduces a minimum registration and trading history requirement as additional eligibility criteria for admitting new VET providers to the VET FEE-HELP loan scheme. This will enhance the integrity of the scheme by ensuring all providers are suitably experienced and have had the chance to demonstrate they are quality education and training operators.

The Bill will enhance the Commonwealth's power to deal with unscrupulous behaviours by introducing an infringement notice scheme attached to civil penalties aimed at VET providers who engage in inappropriate marketing behaviours and administrative practices and are found to be contravening civil penalty provisions in Schedule 1A to the Act. Introducing an infringement and a civil penalty regime engages Parts 2 to 5 of the Regulatory Powers (Standard Provisions) Act 2014 (Regulatory Powers Act).

The infringement and civil penalty scheme will support the enhanced compliance regime to be implemented with the assistance of additional funding for the department provided for in the 2015-16 Budget, which will go further to strengthen the administration of the programme, prohibit inappropriate market practices and protect vulnerable students, taxpayers and the reputation of the national vocational education and training sector.

As it presently stands, Schedule 1A to the Act provides for the following regulatory powers:

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the Minister may impose a condition on a body's approval as a VET provider (clause 12A);

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the Minister may require a VET provider to be audited as to its compliance with a number of VET requirements imposed under Schedule 1A (clause 26);

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compliance notices (clause 26A) may be issued if the Minister is satisfied that the provider has not complied with, or is aware of information that suggests that the provider may not comply with, the Act or Regulations, the VET Guidelines or a condition imposed on a VET provider's approval;

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suspension of approval as a VET provider (clause 36 of Schedule 1A); and

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revocation of a body's approval under Subdivisions 5-AA, 5-B or 5-D.

It is intended that an infringement and civil penalty regime with direct and immediate consequences for unacceptable behaviour will go further to stamp out abuse in the market, strengthen the integrity of the scheme and increase protections for students as well as improve educational quality. The breaches that will lead to infringements and penalties will cover the type of practices that have been of concern in the VET sector, including:

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publishing information that suggests VET FEE-HELP assistance is not a loan;

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offering inappropriate inducements;

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failing to comply with student requests to withdraw a request for VET FEE-HELP or cancel enrolment;

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charging a fee for a student to withdraw from their enrolment;

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failing to give students adequate time to consider their payment options;

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accepting requests for VET FEE-HELP assistance when the student is not entitled;

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failing to apportion fees appropriately in line with course delivery and continued student participation and progression through the course;

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failing to provide VET FEE-HELP notices to students;

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failing to publish tuition fees for the information of students; and

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failing to report data as required, which includes data subsequently transmitted to the Australian Taxation Office for timely debt recording on students' tax records.

Each civil penalty provision in Division 5A of Schedule 1A is subject to an infringement notice under Part 5 of the Regulatory Powers Act. A person who is issued with an infringement notice can choose to pay an amount as an alternative to having court proceedings brought against the person. If the person does not choose to pay the amount, proceedings can be brought against the person in relation to the contravention.

Further, the expected consequential outcomes of implementing the measures in the Bill include the protection of public monies from misuse. This ensures that the quality of the VET FEE-HELP loan scheme, vulnerable students and taxpayers are protected. These outcomes are important to the reputation of Australia's quality VET sector.

The Bill will also extend the Commonwealth and the National VET Regulator's powers with respect to monitoring and investigation. The Bill does this by making the civil penalty provisions and relevant information subject to monitoring by the department and the National VET Regulator under Part 2 (Monitoring) of the Regulatory Powers Act. Similarly, the civil penalty provisions are also made subject to investigation under Part 3 (Investigation) of the Regulatory Powers Act by the department and the National VET Regulator.

This will ensure that the National VET Regulator and the department have sufficient monitoring and investigation powers under the Act to monitor and investigate compliance and purported compliance with respect to the civil penalties in Subdivision 5A-A. The Bill also provides that each of the civil penalty provisions is enforceable by the department under Part 4 of the Regulatory Powers Act.

The Bill also provides for minor technical amendments to be made which are intended to improve the clarity of some requirements of providers.

The technical amendments will directly impact on the functioning of the VET FEE-HELP loan scheme under Schedule 1A to the Act, and will only make minor consequential and technical amendments to the Act.

The Attorney Generals Department, the Department of the Prime Minister and Cabinet, VET providers and the VET FEE-HELP Working Group (comprising of student, provider, consumer law, community college, educationalist and industry peak body representatives) have been consulted in relation to the development of the VET FEE-HELP reform policy.