Senate

Explanatory Memorandum

(Circulated by authority of the Minister for Employment, Skills, Small and Family Business, Senator the Hon Michaelia Cash)

Notes on clauses

Clause 1: Short title

1. This is a formal provision specifying the short title of the Act to be the VET Student Payment Arrangements (Miscellaneous Amendments) Act 2020.

Clause 2: Commencement

2. The table in this clause sets out the commencement date for the provisions in the Bill, when enacted. Specifically:

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Clauses 1 to 3 and anything in the Act not elsewhere covered by the table, commence on the day the Act receives the Royal Assent;

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Part 1 of Schedule 1 commences on the day after the Act receives the Royal Assent;

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Part 2 of Schedule 1 commences on 1 July 2021. The reason for this commencement date is that Part 2 of Schedule 1 includes a measure that will revoke the approval of all remaining VET providers with effect from 1 July 2021.

Clause 3: Schedules

3. This clause gives effect to the provisions in the Schedule to the Bill, when enacted.

Schedule 1-Amendments

Part 1-Amendments commencing day after Royal Assent

4. Part 1 of Schedule 1 to the Bill contains amendments to Schedule 1A to HESA and the VSL Act that commence the day after the Act receives Royal Assent.

5. The amendments relating to the HESA will assist the Commonwealth with the resolution of various outstanding matters under the VFH scheme. The VFH scheme, set out in Schedule 1A to HESA, was an income contingent loan scheme for VET students. Students were entitled to VFH assistance if they met certain requirements set out in Schedule 1A. While the scheme closed to new students at the end of 2016, some students continued to access VFH through grandfathering arrangements in 2017 and 2018. No students are entitled to VFH assistance in relation to units of study with census dates after 31 December 2018.

6. The amendments relating to the VSL Act will improve the administration of the VET student loans program.

Higher Education Support Act 2003

Item 1: Clause 55 of Schedule 1A

7. Item 1 is consequential to the amendment in item 2 and amends the numbering in clause 55 of Schedule 1A.

Item 2: At the end of clause 55 of Schedule 1A

8. Item 2 adds four new subclauses to clause 55 of Schedule 1A.

9. Under clause 55, if a student is entitled to an amount of VFH assistance for a VET unit of study with a VET provider, the Commonwealth is required:

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as a benefit to the student, to lend to the student the amount of VFH assistance; and

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pay the amount lent to the provider in discharge of the student's liability to pay his or her tuition fees for the unit.

10. In practice, VET providers report student data to the Department, and after the Department verifies that data, the Department pays providers amounts under clause 55 of Schedule 1A. Currently, there is no time limit on the Commonwealth's obligation to pay VET providers under clause 55 and providers are able to submit new student data, or revise their data, at any time, including data relating to study undertaken as far back as 2009. At times, this causes VFH debts to appear on student records now in relation to training they undertook many years ago.

11. New subclause 55(2) has the effect of limiting the Commonwealth's obligation to pay providers under paragraph 55(1)(b) where providers have not given the Minister certain information by the relevant reporting deadline (see discussion of new subclause 55(5) below). Providers will have sufficient time to submit any outstanding student data, before the Commonwealth ceases to be liable to make further payments to providers under the scheme.

12. Specifically, under new subclause 55(2), the Commonwealth must not pay an amount to a provider under paragraph 55(1)(b) in respect of a VET unit of study unless the provider has given the Minister notice of the student's liability to pay his or her VET tuition fee for the unit, including the amount of the liability, before the reporting deadline for a unit. New subclause 55(5) sets out the reporting deadlines for units of study by reference to their census dates:

(a)

for units with a census dates before 1 January 2018, the reporting deadline is before 1 July 2021;

(b)

for any other units (effectively units with census dates on or after 1 January 2018), the reporting deadline is before 1 January 2022.

13. New subclause 55(3) provides that the amount paid to a provider for a unit of study under paragraph 55(1)(b) must not exceed the amount notified for the purposes of subclause 55(2) before the reporting deadline for the unit. This ensures that, where a provider first reports the amount of a student's liability to pay tuition fees for a unit before the reporting deadline for that unit and then revises that data to increase the amount of the student's liability after the reporting deadline, the Commonwealth will only be required to pay the provider the amount reported before the reporting deadline. This measure brings certainty and finality to both providers and students. It also acts as an integrity measure, ensuring that previously submitted data is not improperly adjusted at a later time.

14. New subclause 55(4) provides that if the Commonwealth does not pay an amount to a VET provider because of the operation of subclause 55(2), the student is discharged from all liability to pay or account for so much of the student's VET tuition fees for the VET unit of study as is equal to that amount. This subclause prevents a VET provider from seeking payment from students for any unpaid amounts.

Item 3: After paragraph 61(2)(a) of Schedule 1A

Item 4: After paragraph 61(3)(a) of Schedule 1A

15. Items 3 and 4 amend clause 61 of Schedule 1A. Clause 61 deals with the payment of advances to VET providers and provides limited powers to set off amounts owed by VET providers against amounts payable, or to be paid, under Schedule 1A.

16. Item 3 inserts a new paragraph 61(2)(aa) after paragraph 61(2)(a) so that, if an advance paid to a VET provider exceeds the amount that becomes payable under Schedule 1A, the Commonwealth may deduct the excess amount from any amount of FEE-HELP assistance or VET student loans that is payable, or to be paid, to the provider under section 110-1 of the HESA or section 19 of the VSL Act, respectively.

17. Similarly, new paragraph 61(3)(aa) as inserted by item 4, provides that if a VET provider uses an advance for a purpose other than that for which it was given, the Commonwealth may deduct an amount equal to the advance from any amount of FEE-HELP assistance or VET student loans that is payable, or to be paid, to the provider under the relevant provisions of HESA or the VSL Act.

18. These amendments will enhance the Commonwealth's ability to resolve VFH matters where VET providers owe outstanding amounts to the Commonwealth, noting some VET providers are also higher education providers receiving amounts of FEE-HELP assistance under HESA, or approved course providers receiving amounts of VET student loans under the VSL Act. These amendments will mean that the Commonwealth will not need to make payments to a provider under HESA or the VSL Act, where that provider owes a debt to the Commonwealth under the VFH scheme.

Item 5: After clause 61 of Schedule 1A

19. Item 5 inserts a new clause 61A in Schedule 1A to enable the Commonwealth to set off, in whole or in part, amounts a VET provider owes to the Commonwealth under Schedule 1A against amounts of FEE-HELP assistance or VET student loans payable, or to be paid, to the provider under section 110-1 of the HESA or section 19 of the VSL Act, respectively (paragraph 61A(a)). For example, as set out in the note under new clause 61A, if a VET provider is an approved course provider under the VSL Act, amounts payable by the provider to the Commonwealth under clause 56 of Schedule 1A may be set off against VET student loan amounts payable to the provider under the VSL Act.

20. New clause 61A also makes it clear that an amount owed by a VET provider to the Commonwealth under Schedule 1A may be recovered as a debt due to the Commonwealth (paragraph 61A(b)).

VET Student Loans Act 2016

Item 6: After paragraph 20(g)

21. Under the VSL Act, if the Secretary approves a VET student loan for a course, the Secretary must use the loan to pay tuition fees for the student for the course (section 19 of the VSL Act). However, the Secretary is not required to pay a loan amount in certain circumstances, specified in section 20 of the VSL Act.

22. The VSL Act also contains provisions enabling the Secretary to re-credit a student's HELP balance in a range of circumstances (Divisions 2 and 3 of Part 6 of the VSL Act). However, these provisions require relevant amounts to have first been paid to the provider. Once an amount is re-credited to the student, the Commonwealth is entitled to recover the amount back from the provider, as a debt (section 22 of the VSL Act).

23. Currently, the circumstances in which the Secretary is not required to pay a loan amount reflect some, but not all, of the circumstances under which the Secretary may decide to re-credit a student's HELP balance. This means that, in those circumstances, arguably the Secretary is required to pay a loan amount and then make a decision under the re-crediting provisions in order to re-credit the student's HELP balance and recover the relevant amount from the provider. This process is inefficient and represents a risk to debt recovery.

24. Item 6 inserts three new paragraphs at the end of section 20 of the VSL Act. New paragraphs (h)-(j) provide additional circumstances where the Secretary is not required to pay a loan amount for a student for a course. These circumstances are where:

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the Secretary is satisfied that special circumstances prevented, or will prevent, the student from completing the requirements for the course, or part of the course;

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the Secretary is satisfied that the course provider, or a person acting on the provider's behalf, engaged in unacceptable conduct in relation to the student's application for the VET student loan; and

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the student has not completed the requirements for the course, or the part of the course, because the provider defaulted in relation to the student and the VSL Tuition Protection Director decides under paragraph 66E(1)(b), that the Director is not satisfied that there is a suitable replacement course for the student.

25. New paragraphs 20(h)-(j) reflect existing grounds on which a student's HELP balance can be re-credited under Division 2 and 3 of Part 6 of the VSL Act (specifically sections 68, 71 and 72A of the VSL Act). They permit the Secretary to refuse payment to a provider in the first place. This will lead to the same outcome for providers and students, but makes clear that the Secretary is not first required to pay an amount to a provider and then seek to recover that same amount as a debt from the provider after a student's HELP balance is re-credited.

26. Section 81 of the VSL Act enables decisions under section 20 to be reconsidered by a decision maker. Therefore, where a provider wishes to submit further information following decisions that are made under section 20, the Secretary may reconsider the decision and confirm or vary the initial decision, or set the initial decision aside and substitute a new decision.

Item 7: After section 35

27. Item 7 inserts a new section 35A in the VSL Act which provides for the automatic revocation of an approved course provider's approval where it ceases to be an RTO. This amendment will allow the Commonwealth to more efficiently administer the VSL program.

28. An approved course provider's approval can presently be revoked under the VSL Act if it ceases to be an RTO. However, before this occurs the Secretary must give the provider the opportunity to make submissions about the proposed decision, and after considering any submissions made, the Secretary must give the provider a written notice of the decision and the reasons for it.

29. As an approved course provider must continue to be an RTO to comply with the VSL Act, and a body must be an RTO to deliver VET, it is appropriate that when a body ceases to be listed as an RTO on the National Register, its approval as an approved course provider under the VSL Act is automatically revoked. Before an RTO ceases to be listed on the National Register as a result of a decision by the relevant VET Regulator it is provided with procedural fairness and rights of review in relation to that decision.

30. New subsection 35A(1) provides that the approval of a body as an approved course provider is revoked if the body ceases to be listed as an RTO on the National Register within the meaning of the NVETR Act. In circumstances where this occurs as a result of the relevant VET Regulator making a decision covered by subclause 35A(2):

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that decision must not have been set aside or quashed;

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any applicable time limits for applying for a review (however described) or lodging an appeal (however described) of, or in relation to, the review must have expired; and

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if there is such a review or appeal of, or in relation to, the decision - the review or appeal (and any later review or appeals) must have been finally disposed of.

31. New subsection 35A(2) sets out the relevant decisions for the purposes of subsection 35A(1). These are:

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a decision under section 17 of the NVETR Act to refuse an application to renew the body's registration as an NVR RTO within the meaning of the NVETR Act;

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a decision under section 39 of the NVETR Act to cancel the body's registration; or

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a decision under a law of a State that has a similar effect to a decision under section 17 or 39 of the NVETR Act.

32. New subsection 35A(3) provides that the revocation of the body's approval takes effect at the start of the day after the first day on which subsection (1) applies to the body. The revocation of a provider's approval under new clause 35A will also be reflected in information published on the Department's website, noting the Department publishes and regularly updates on its website information about current and no longer approved course providers. As at November 2020 the lists of current and no longer approved course providers can be found at
https://docs.employment.gov.au/documents/2017-vet-student-loans-approved-course-providers and
https://docs.employment.gov.au/documents/providers-no-longer-approved-offer-vet-student-loans respectively. Additionally, the myskills website (
https://www.myskills.gov.au/ ) indicates whether a provider is currently an approved course provider.

33. New subclause 35A(4) requires the Secretary to notify the body in writing of the revocation.

Item 8: Division 1 of Part 6

34. Item 8 repeals and replaces Division 1. The new Division 1 describes the circumstances where a student's HELP balance can be re-credited under Part 6.

35. The existing section 67 provides that Part 6 only applies if an amount of a VET student loan has been used to pay tuition fees for a student. This means that technically a student could not apply for a re-credit in the circumstances prescribed in Part 6 unless their tuition fees had already been paid by the Commonwealth. New clause 67 provides that a student's HELP balance may be re-credited under Part 6 only if an amount of a VET student loan has been used to pay tuition fees for the student for a course, or a part of a course. This is a subtle distinction, but the amendment now ensures students can apply for a re-credit prior to an amount of a VET student loan being used to pay tuition fees for a student for a course. This is relevant for the purposes of the amendments to section 20 of the VSL Act because if a student makes an application for a re-credit prior to a payment being made, the Secretary can consider whether any of the circumstances specified in section 20 apply, such that the Secretary would not be required to make payment.

36. Note 1 to clause 67 provides that if the student's HELP balance cannot be re-credited because of this provision, the Secretary may decide not to pay the loan amount for the student for the course under section 20.

37. Note 2 provides that if a student's HELP balance is re-credited under Division 2 or 3 of this Part, the student's VETSL debt is taken to be remitted to the extent to which the debt relates to the loan amount concerned. A VETSL debt is the debt a person incurs, in accordance with section 23BA of the VSL Act, when the Secretary: approves a VET student loan for the person; and uses a loan amount covered by the VET student loan to pay tuition fees for the person for a course. This note is the same as the note currently included under existing section 67 of the VSL Act.

Part 2-Amendments commencing 1 July 2021

38. Part 2 of Schedule 1 to the Bill contains amendments to Schedule 1A to the HESA that will commence on 1 July 2021. The amendments provide for the revocation of the approval of remaining VET providers and makes a number of consequential amendments to Schedule 1A to the HESA. These measures will further facilitate the closure of the VFH scheme, which is no longer operational.

Higher Education Support Act 2003

Item 9: Clause 2 of Schedule 1A

39. Item 9 amends the outline for Part 1 of Schedule 1A. This change is consequential to the amendments in item 14 of the Bill, which repeals and substitutes a new Division 5 in Part 1 of Schedule 1A. The amended outline explains that, as part of the phasing out of VFH assistance, new clause 29 revokes all remaining VET provider approvals in force before 1 July 2021, but notes provisions of the Act, the VET Guidelines and conditions on approvals may continue to apply to revoked providers.

Item 10: At the end of clause 5 of Schedule 1A

40. Item 10 inserts a note at the end of clause 5, which deals with when a body becomes or ceases to be a VET provider. This change is consequential to the amendments in item 14 of the Bill. Similar to the change to the outline in clause 2, the new note explains the operation of new clause 29.

Item 11: Paragraph 25(2)(aa) of Schedule 1A

Item 12: Paragraph 25(2)(b) of Schedule 1A

41. Item 12 repeals paragraph 25(2)(b) of Schedule 1A, which requires a VET provider to inform the Minister if there is or may be grounds for revoking the approval of a VET provider under Subdivision 5-B of Division 5 of Part 1 of Schedule 1A. This is consequential to the amendments in item 14 of the Bill.

42. As a result of item 12, item 11 makes a minor technical change to paragraph 25(2)(aa).

Item 13: Subclause 26A(7) of Schedule 1A

43. Item 13 repeals subclause 26A(7) of Schedule 1A, which provides the Minister need not give a compliance notice before suspending or revoking a VET provider's approval in accordance with Division 5 of Part 1 of Schedule 1A. This change is consequential to the amendments in item 14 of the Bill.

Item 14: Division 5 of Part 1 of Schedule 1A

44. Item 14 repeals and replaces Division 5 of Part 1 of Schedule 1A, which deals with when a VET provider ceases to be a VET provider. The new Division 5, comprised of new clause 29, has the effect of revoking the approval of all remaining VET providers (see new subclause 29(1)). This will assist the Commonwealth to finalise its administration of the VFH scheme.

45. The remainder of new clause 29 deals with the continuing application of HESA and relevant legislative instruments following the revocation of VET providers' approvals under subclause 29(1) and the interaction of clause 29 with the AIA:

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subclause 29(2) provides that, despite the revocation of a body's approval as a VET provider under subclause 29(1), the Act (ie. HESA) and the VET Guidelines made under clause 99 of Schedule 1A continue to apply in relation to the body on or after 1 July 2021 as if the body were still a VET provider. Similarly, any conditions imposed on the body's approval and in effect immediately before 1 July 2021 continue to apply to the body on or after 1 July 2021 as if the body were still a VET provider;

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subclause 29(3) explains that subclause 29(2) applies for the purposes of dealing with or resolving any matter that arose under HESA during, or that relates to, the period when the body was approved as a VET provider. For example, and as set out in subclause 29(4) for the avoidance of doubt, a revoked provider's powers or obligations under, or for the purposes of, the re-crediting provisions in Subdivision 7-B of Division 7 of Part 2 of Schedule 1A continue to apply on or after 1 July 2021 as if the body were still a VET provider;

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subclause 29(5) makes it clear that clause 29 does not limit the effect of section 7 of the AIA, which deals with the effect of repeal or amendment of an Act.

46. The continuing application of HESA and relevant legislative instruments is necessary because the Commonwealth continues to manage a number of outstanding matters relating to the VVFH scheme. This includes dealing with VET providers which owe debts to the Commonwealth for overpaid amounts of VFH assistance and circumstances where the Commonwealth continues to remit VFH debts incurred by students as a result of the inappropriate conduct of VET providers or their agents.

Item 15: Paragraph 39GD(c) of Schedule 1A

47. Item 15 repeals paragraph 39GD(c), which refers to action that may be taken under Division 5A of Part 1 of Schedule 1A. This is consequential to the amendments in item 14.

Item 16: Clause 91 of Schedule 1A (table items 1C and 1D)

48. Item 16 repeals items 1C and 1D in the table at clause 91 of Schedule 1A, which sets out the reviewable VET decisions under Schedule 1A. Items 1C and 1D relate to provisions in Division 5 that are repealed under item 14 and, therefore, are no longer necessary.

Item 17: Saving of requirements on earlier revocations

49. Item 17 saves certain requirements that applied to earlier revocations of VET providers' approvals and that would otherwise be impliedly repealed through the repeal of Division 5 of Part 1 of Schedule 1A by item 14 of the Bill. That is, if before 1 July 2021 (i.e. the commencement date for item 17) a body had its approval as a VET provider revoked and the revocation was subject to conditions under clause 39 of Schedule 1A, then, despite its repeal under the Bill, clause 39 of Schedule 1A continues to apply in relation to the body as if the repeal had not happened.

50. This will ensure that any conditions imposed on the revocation of a body's approval as a VET provider under subclause 39(2A) continue to apply following the revocation of clause 39.