House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Education and Training, Senator the Hon Simon Birmingham)

Statement of Compatibility with Human Rights

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

VET STUDENT LOANS BILL 2016

This 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

Vocational education and training (VET) is central to Australia's economic growth, business opportunities and employment outcomes for students. Income contingent loans support Australians to access higher level VET qualifications.

Although there are many benefits to income contingent loans, it is clear the VET FEE-HELP loan scheme needs urgent reform. Following the expansion of the scheme in 2012, the scheme has experienced unsustainable growth, unscrupulous provider behaviour and poor student outcomes. It has left many students with large debts and in some cases, little to no training outcome. Left unchanged, these policy settings and behaviours will continue to damage the reputation of Australia's quality VET sector.

The purpose of the VET Student Loans Bill 2016 (the Bill) is to replace the VET FEE-HELP loan scheme from 1 January 2017 and introduce a vastly improved student loan program for vocational education and training. The Bill forms part of a package of legislation. The other Bills in the package are the VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016 (Consequential and Transitional Bill) and the VET Student Loans (Charges) Bill 2016 (Charges Bill).

The Bill will introduce a new student loans program that will include a range of measures to protect students and taxpayers and the reputation of vocational education and training in Australia. It will improve affordability, maximise employment outcomes for students, prioritise loans to skills needs and ensure fiscal sustainability for the Commonwealth. It does this by:

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linking loans to courses that meet industry needs and skills shortages and improving the quality of the course delivery by only enabling providers to subcontract training to other approved course providers or higher education providers;

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introducing loan caps for eligible courses with the initial loan caps to be $5000, $10,000 and $15,000 with the ability of the Minister to exempt courses with high delivery costs;

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strengthening compliance, governance and payment arrangements including by triggering relevant regulatory powers from the Regulatory Powers (Standard Provisions) Act 2014. The Bill will enable the Commonwealth to immediately suspend a provider in urgent circumstances and also withhold loan amount payments to providers if it is suspected on reasonable grounds the provider is not complying with the Bill;

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expanding on the existing student protections by banning brokers or agents from engaging or recruiting students in relation to loans, prohibiting contact with students regarding the availability of loans unless the student has expressly consented to contact by the particular provider and broadening the circumstances for which student loans may be re-credited;

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raising the bar for entry by providers to the program to ensure providers have robust governance and management arrangements and maintain acceptable student outcomes and industry links (by way of example);

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introducing an application fee for bodies to apply to become approved course providers and, through the accompanying Charges Bill, imposing an annual levy on providers;

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requiring all existing VET FEE-HELP providers to have to apply to be approved under the new program. The Consequential and Transitional Bill will provide for some existing approved VET FEE-HELP providers (such as TAFEs) to be exempt from this re-application process, however all providers, including public providers, will need to meet the higher quality benchmarks to remain in the scheme.

Human Rights Implications

The Bill engages the following human rights:

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the right to work - Article 6 of the International Covenant on Economic, Social and Cultural Rights (ICESCR)

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the right to education - Article 13 of the ICESCR

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the right to privacy - Article 17 of the International Covenant on Civil and Political Rights (ICCPR)

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the right to a fair and public hearing - Article 14 of the ICCPR

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the right to be presumed innocent - Article 14 of the ICCPR

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the rights of the child - Article 3 of the Convention of the Rights of the Child (CRC)

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the rights of people with disabilities - Article 10 of the Declaration on the Rights of Disabled Persons.

As the Bill also triggers Parts 2 to 7 of the Regulatory Powers (Standard Provisions) Act 2014 (Regulatory Powers Act), this Statement of Compatibility with Human Rights also considers the human rights impact of the Regulatory Powers Act in conjunction with the Bill.

Right to Work

This Bill engages the right to work which is set out in Article 6 of the ICESCR.

Under Article 6(1) State Parties are required to recognise the right to work, which includes the right of everyone to the opportunity to gain their living by work which they freely choose or accept. Article 6(2) provides that the steps to be taken by a State Party to achieve the full realisation of this right include providing technical and vocational guidance and training programs.

This right is engaged by virtue of an objective of the Bill, which is to ensure loans to students are provided for vocational education and training that meets workplace needs and improves employment outcomes. The measures introduced by the Bill are reasonable and proportionate to systemic problems encountered in the VET FEE-HELP scheme.

This right is limited in that the Bill introduces some measures which may make it more difficult for some prospective students to access the VET student loan program. Such measures include requiring students to be genuine students, strengthening the academic suitability provisions and lifting the bar for providers to be approved in the new program. However, these measures represent a reasonable and proportionate limitation on the right, as they protect vulnerable people from being enrolled in VET courses and being imposed with a FEE-HELP debt where they are not in a position to undertake and complete the VET course.

By enabling the Minister to make a loans and caps determination, this Bill also establishes a new framework to limit course eligibility for VET student loans to those courses approved by the Minister and introduces maximum loan amounts for eligible courses. While this measure may limit the right by limiting the scope of VET courses students might otherwise undertake and the amount of loans available, reform is justified as it ensures that the focus of the VET student loans program will be to provide support for students in respect to courses that have a high national priority, align with industry needs, contribute to addressing skills shortages and lead to employment outcomes.

This Bill is compatible with the right to work.

Right to Education

The Bill engages the right to education which is set out in Article 13 of the ICESCR. Article 13 recognises the important personal, societal, economic and intellectual benefits of education.

Article 13 provides that secondary education in its different forms, including technical and vocational secondary education, shall be made generally available and accessible to all by every appropriate means. The intent of the Bill is to make technical and vocational secondary education more accessible to students who may not otherwise have had access and to undertake systemic improvements to the quality of the training by ensuring greater regulatory oversight and accountability of approved course providers within the marketplace. These measures engage and promote the right to education as they are designed to improve affordability of vocational education and training, maximise educational outcomes and prioritise student loans to accord with skills need and ensure overall fiscal sustainability for the Commonwealth to effectively regulate the sector.

The Bill retains the measure introduced in the Higher Education Support (VET FEE-HELP) Amendment Act 2015 (Reform Act) to require providers to develop and apply appropriate student entry procedure requirements to ensure that a student is properly assessed as being academically suitable for a course, before being admitted to enrol. Whilst this measure may potentially limit a student's ability to access education in an approved course, the limitation is a reasonable and proportionate response directed to protecting vulnerable students who do not have the academic ability to undertake a course from being burdened with a significant debt with limited or no educational or training outcome.

The Bill also retains a number of measures introduced in the Reform Act to enhance the integrity of the program and strengthen the protection of students as they seek out educational opportunities within Australia. For instance, the Bill retains an infringement notice scheme attached to civil penalties. It also continues to prohibit providers from offering inappropriate benefits to induce a student to apply for a student loan for a course or cold-calling students about the availability of student loans. It introduces a ban on the use of brokers by providers to recruit students who use a VET student loan to pay for their tuition. These measures will further protect students from unscrupulous behaviour and make education and training providers more accountable for their recruitment and enrolment practices.

The Bill also contains measures which broaden the circumstances in which a student can seek re-credit of their FEE-HELP loan debt balances and remission of a debt. The circumstances include if the student is not an eligible or genuine student, the student does not have a tax file number or student identifier, or if the provider has failed to comply with the Bill and the failure has adversely affected the student. Re-crediting will continue to be available in special circumstances and if there has been unacceptable behaviour by a VET provider at the time of the student's application for a loan. These measures increase protections available to students, which is consistent with and promotes the right to education.

The Bill also introduces new measures around the outsourcing of training to third party providers. It limits third party delivery to providers that are either approved course providers or accredited by TEQSA, the national regulator of the higher education sector. This ensures students have access to quality training delivered by training providers that are comparable (in quality) to their primary course provider. This ensures a high level of quality assurance and regulatory oversight of training for students.

To the extent that the new courses and loan caps determination may limit students access to particular courses and confine course choice, this is justifiable to ensure fiscal accountability and quality output from providers. Although this measure limits the loan amount available to the student, the intent of the measure is to put downward pressure on rising tuition fees to make education more affordable to students. The limit on courses eligible for loan access will ensure students are undertaking courses that are more likely to result in an employment outcome. These limitations are necessary and proportionate to the policy objective as the measures are designed to protect students by enhancing educational and employment outcomes, ensuring they are receiving value for money, and that there is a high level of quality assurance and transparency in the training courses by ensuring all providers are suitably experienced and have met statutory suitability requirements in order to operate as approved course providers.

In addition, more robust registration and performance requirements will be introduced in respect of providers seeking approval under the VET student loans program. This is intended to enhance the integrity of the program by ensuring that providers are properly scrutinised to ensure they have experience in providing VET, satisfy financial requirements, meet governance and management standards and that students obtain value and quality outcomes for their investment in education and training. The Bill will also further enhance the Commonwealth's power to redress unscrupulous behaviours on the part of course providers by expanding regulatory powers and making it easier to freeze payments to providers who would do the wrong thing. These measures are intended to better protect students whilst they are undertaking educational opportunities.

This Bill is compatible with and promotes the right to education.

Right to Privacy

The Bill engages the right to privacy which is set out in Article 17 of the ICCPR. Article 17 provides that no one shall be subjected to arbitrary or unlawful interference with their privacy, family, home or correspondence, nor to unlawful attacks on their honour and reputation.

The Bill includes measures to allow for the use and disclosure of VET information (which may include personal information). Many of these provisions replicate existing provisions in the Higher Education Support Act 2003 (HESA). This Bill extends these measures by:

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enabling the sharing of VET information by tuition assurance scheme operators with other VET officers if the officers reasonably believe the disclosure is reasonably necessary for the purposes of exercising powers, or performing functions or duties in relation to this Bill;

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including the Australian Competition and Consumer Commission (ACCC) as an agency that the Secretary may disclose VET information to if the Secretary reasonably believes the information will enable or assist the ACCC to exercise its powers, or perform its functions or duties;

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enabling the Secretary to disclose VET information to an enforcement body (as defined in the Privacy Act 1988) or to a Department, agency or authority of the Commonwealth, a State or Territory, if the Secretary believes on reasonable grounds that the disclosure of the information is necessary for an enforcement related activity (as defined in the Privacy Act 1988).

These disclosure rights are important to ensure the integrity of the VET student loans program, including ensuring eligibility requirements of students are met. This is particularly important where students are accessing income support and to check citizenship status. The disclosures will allow the Commonwealth to check the veracity of student enrolments and consequently the expenditure of Commonwealth monies.

The disclosures are also important to enable tuition assurance scheme operators to have access to up to date and accurate information so that they can support students in the event a provider ceases to provide a course and so ensure the integrity of the tuition assurance arrangement.

The power to disclosure VET information to enforcement agencies is also critically important to assist with ensuring an approved course provider's compliance with the program and the subsequent protection of students. Compliance action taken against less scrupulous providers assists with protecting a student's rights and may enable the re-crediting of a student's FEE-HELP debt in certain circumstances.

The right to privacy under Article 17 can be permissibly limited in order to achieve a legitimate objective and where the limitations are lawful and not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. In this case, the legitimate end is the protection of students, the efficacy of educational outcomes and the accountability of providers.

Disclosure will not be arbitrary and will in each case be reasonable, necessary and proportionate to the objective of providing loan support to those eligible and engaged in training. As such, the limitation is proportionate because the measures are precisely directed to the legitimate aim being pursued.

For example, to the extent that the measures in the Bill limit a person's right to privacy with regard to sharing information with Commonwealth agencies for the purposes of their programs and in respect to the collection of the unique student identifier (USI) (unless exempt), this is a reasonable and proportionate limitation because sharing this information is ultimately for the purposes of ensuring the veracity of the student's enrolment and protecting the student from potential accumulation of debt without their knowledge. The collection of USI information also improves program performance assessment and future policy development as it will allow for the analysis of performance and student outcomes for approved course providers or VET courses of study, allowing for reforms where necessary or redirection of Commonwealth funding into, or away from, areas which are not working (as the case may be). This disclosure is intended to prevent the misuse of Commonwealth monies and protect the broader reputation of the VET sector in Australia.

It is notable that the Bill provides that approved course providers must comply with the Australian Privacy Principles (APPs), as set out in Schedule 1 of the Privacy Act 1988, in relation to personal information obtained for the purposes of the Bill.

The Bill also contains measures which provide Departmental investigators and National Vocational Education and Training Regulator investigators with monitoring and investigation powers. The Bill only enables investigators with requisite knowledge or experience to be appointed. The investigative and monitoring powers are reasonable, necessary and proportionate to achieve the legitimate objective of ensuring provider compliance, maintaining the integrity, and ensuring the fiscal accountability, of the Australian VET marketplace.

The Bill protects against arbitrary abuses of these powers by invoking the provisions of the Regulatory Powers Act. This Act contains information gathering powers which are conditional upon provisions of that Act being met, such as, in certain circumstances, the requirement to obtain a warrant or to obtain the consent of an occupier prior to entry of premises. It also provides for a narrow scope of who is an authorised person and what is a relevant court. Adequate safeguards and limitations on the use of regulatory powers ensure that such lawful interferences are not arbitrary or at risk of abuse.

The Bill provides corresponding protection to students' right to privacy by ensuring providers are no longer able to liaise directly with the Commissioner of Taxation regarding a student's tax file number. Verification of numbers may only occur between the Commissioner and the Secretary.

The Bill is compatible with the right to privacy. To the extent the right is limited, the limitation is reasonable and proportionate.

Right to a Fair and Public Hearing

Article 14 of the ICCPR ensures that everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law.

The Bill engages the right to a fair and public hearing including through incorporation of an infringement notice scheme. An infringement notice can be issued by an infringement officer for contraventions of an offence provision or a civil penalty provision of the Bill. The Bill triggers Part 5 of the Regulatory Powers Act, which creates a framework for using infringement notices in relation to provisions in the Bill and attendant safeguards.

Moreover, the right of a person to a fair and public hearing by a competent, independent and impartial tribunal is preserved by the Bill as its provisions invoke the powers in the Regulatory Powers Act which allow a person to elect to have the matter heard by a court rather than pay the amount specified in the notice.

The provisions of the Regulatory Powers Act which are invoked also specify requirements for what must be included in an infringement notice, ensuring that a person issued with an infringement notice is aware of the person's right to have the matter heard by a court. Other invoked Regulatory Powers Act provisions regarding limiting the operation of questioning powers include protections which guarantee the fair trial rights protected in Articles 14(3)(d) and (g) of the ICCPR.

The Bill also invokes the provisions of Part 4 of the Regulatory Powers Act for the enforcement of civil penalty provisions. The civil penalties allow for the punishment of course provider misconduct without the need to impose criminal liability. The magnitude of the civil penalties imposed is such that they are sufficient to act as a deterrent, although not carrying the stigma of a criminal conviction.

The Bill replicates offences provisions in HESA in relation to the misuse of or inappropriate disclosure of VET information which attracts a penalty of 2 years imprisonment. This is justified by the serious nature of such a contravention and the impact on persons through having their personal information misused or inappropriately disclosed. The offence provisions contain appropriate exceptions to allow for lawful use and disclosure so that persons lawfully using and disclosing the information will not be penalised unfairly under the provisions.

The Bill also introduces new strict liability offences in relation to the obligation to giving and retaining certain information under the Bill (such as providing information to students, retaining information and documents, complying with ongoing information requirements and requests for information by the Secretary). Information under the relevant provisions is necessary to ensure the integrity of the program and to support monitoring and compliance activities. Having these offences as strict liability is consistent with the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers.

The Bill is compatible with the right to a fair and public hearing.

Right to be Presumed Innocent

Article 14 of the ICCPR requires that in the determination of any criminal charge, everyone shall be entitled to a set of minimum guarantees and that anyone convicted will have the right to review and compensation if the conviction is not upheld. Article 14 of the ICCPR also requires that anyone charged with a criminal offence shall have the right to be presumed innocent until proved guilty according to the law.

The Bill triggers the regulatory powers contained in the Regulatory Powers Act. This approach allows for a streamlined and consistent approach with other Commonwealth legislation in respect to regulatory powers. Further, in triggering the Regulatory Powers Act, the intention is to also establish consistency from a human rights perspective with a whole of Government approach to civil enforcement mechanisms.

Parts 2 (monitoring powers), 3 (investigation powers), 4 (civil penalties) and 5 (infringement notices) of the Regulatory Powers Act were previously triggered in relation to the VET FEE-HELP scheme under the Reform Act. This Bill retains these measures and further triggers Part 6 (enforceable undertakings) and Part 7 (injunctions). The monitoring powers in the Bill are extended to apply to all provisions in the Bill and not just the civil penalty provisions. These powers are part of a multi-pronged approach to ensure the integrity of the VET student loan program and protect the program and students against inappropriate conduct by providers.

Each of the regulatory powers triggered by the Bill are limited appropriately, by ensuring a narrow scope of who is an authorised person, who is an authorised applicant, who may be appointed as an investigator and what is a relevant court, ensuring that the powers will only be used in appropriate circumstances.

Triggering of the civil penalty and infringement provisions in the Regulatory Powers Act is compatible with the right to liberty and security of the person and freedom from subjection to arbitrary arrest or detention, as set out in Article 9 of the ICCPR.

Moreover, the serious nature of some of the civil penalty and offence provisions justifies the existence of these powers and their exercise from time to time. The monitoring and investigation powers are also intended to be subject to the implied privilege against self-incrimination at common law.

There are also strict liability offences that apply to factual scenarios, including in relation to giving information to students, retaining information and documents and complying with ongoing information requirements and requests for information from the Secretary. These offences are proportionate to the value of maintaining adequate safeguards in relation to the large sums of public money involved in administering the VET student loan program. It is considered reasonable in these cases to impose strict liability offences to ensure the integrity of the scheme and to allow for access for appropriate information to undertake monitoring and compliance activities. Each of these offences is subject to the infringement notice scheme. Having these offences as strict liability is consistent with the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers.

The Bill also provides for personal liability of the executive officers of providers where the provider commits an offence or contravenes a civil penalty provision. However, this liability will only arise if the officer knew the offence or contravention would be committed or occur, the officer was in a position to influence the conduct of the provider and failed to take all reasonable steps to prevent the commission of the offence or the contravention.

Establishing a strong civil enforcement regime also protects the integrity of the program to ensure providers provide quality education and training, and that students obtain value and quality outcomes for their investment in education and training.

Rights of the Child

The Bill engages and promotes the rights of the child which are provided for in Article 3 of the CRC. Article 3 provides that in all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration.

The Bill will retain a measure from the Reform Act that where there is a responsible parent of a person who is under 18, that person is required to be an additional signatory on an application for a loan. The additional signature is not required where the person has been separately assessed as independent and capable of managing their own affairs - the Bill provides that where a person is receiving, or has received, youth allowance (within the meaning of the Social Security Act 1991) on the basis that the person is independent (within the meaning of Part 2.11 of that Act), the additional signatory is not required. Retaining this measure does not exclude a person from the loan program; it simply puts in place protections to ensure minors are not exploited by unscrupulous providers for economic gain.

The Bill further protects vulnerable students by requiring students to be assessed by a course provider as academically suitable to undertake the course concerned. This measure seeks to protect vulnerable students to ensure that students are only signed up where they are academically suited to the course.

The Bill also contains strengthened measures in relation to marketing of VET courses and student loans to address unscrupulous behaviour of course providers. Without adequate understanding of what they are signing up to, or through pressure sales tactics, a loan can represent a significant financial liability to the student.

This Bill is compatible with the rights of the child.

Rights of Disabled Persons

Article 10 of the Declaration on the Rights of Disabled Persons ensures that disabled persons shall be protected against all exploitation, all regulations and all treatment of a discriminatory, abusive or degrading nature.

The Commonwealth is aware that the VET FEE-HELP scheme has been plagued by some unethical provider or agent practices that take advantage of vulnerable persons, including disabled persons.

In addition to retaining some of the protective measures provided for in the Reform Act (for example, prohibiting the offering of inducements), the Bill introduces several new measures to protect vulnerable persons.

The Bill provides the Secretary with the discretion not to pay a loan amount to a provider if the student is not genuine (which may arise, for example, if a provider has enrolled a person who had no real interest in engaging in a course). It also enables the re-crediting of a student's FEE-HELP balance in the event the student is not genuine, special circumstances arise (for example, the student is sick and not able to complete the course), if there has been unacceptable conduct by the provider at the time of the student's application for a loan, or if the provider failed to comply with the Bill and the failure adversely affected the student.

The Bill is compatible with the rights of disabled persons.

Conclusion

This Bill is compatible with human rights because, to the extent that it may limit human rights, the limitations are reasonable, necessary and proportionate.