Explanatory Memorandum
(Circulated by authority of the Minister for Education, Training and Youth Affairs the Hon Dr David Kemp MP)Outline and financial impact
Outline
The Higher Education Funding Act 1988 (HEFA) makes provision for grants of financial assistance to higher education institutions and other bodies for higher education purposes, establishes the Higher Education Contribution Scheme (HECS) and the Open Learning Deferred Payment Scheme (OLDPS) and makes provision for the repayment of monies lent by the Commonwealth to students under those schemes.
The Bill amends the Higher Education Funding Act 1988 to:
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- vary the maximum amount of financial assistance payable to higher education institutions in 2001 under section 17 to reflect revised estimates of planned expenditure under the Higher Education Workplace Reform Programme;
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- vary the maximum amount of financial assistance payable to higher education institutions in 2002 and 2003 under section 20 to reflect revised estimates of the Commonwealths overall superannuation liability as a result of the Beneficiary Choice Programme in Victoria;
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- create an income contingent loans scheme for fee-paying postgraduate coursework students, called the Post-graduate education loan scheme;
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- introduce a cap on the total amount of indebtedness that an individual is able to accrue in aggregate under the Higher Education Contribution Scheme, the Open Learning Deferred Payment Scheme and the proposed Post-graduate education loan scheme; and
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- allow higher education institutions to accept electronic communications, including an electronic signature, consistent with the requirements of the Electronic Transactions Act 1999, and to elect to communicate electronically with students without seeking students agreement, provided students have access to the appropriate technology and services.
Financial impact
The Bill provides for additional funding of $39.4 million for the Higher Education Workplace Reform Programme and Commonwealth superannuation contributions under the Higher Education Funding Act 1988.
Notes on clauses
Clause 1 - Short title
Provides for the Act to be cited as the Innovation and Education Legislation Amendment Act (No. 2) 2001.
Clause 2 - Commencement
Provides for the Act to commence on the day on which it receives the Royal Assent.
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.
Schedule 1 - Extra funding for higher education
Part 1 - Extra funding for operating purposes
Higher Education Funding Act 1988
Section 17 sets the maximum aggregate funding levels for operating grants that may be paid to higher education institutions under sections 15 and 16 of the Act. Item 1 amends section 17 to vary the maximum aggregate funding levels for 2001 and 2002 to reflect revised estimates of planned expenditure under the Higher Education Workplace Reform Programme.
Part 2 - Extra funding for superannuation expenses
Higher Education Funding Act 1988
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 2002 and 2003 to reflect revised estimates of the Commonwealths overall superannuation liability as a result of the Beneficiary Choice Programme in Victoria.
Schedule 2 - Post-graduate education loan scheme
Higher Education Funding Act 1988
Amends the definition of year to which this Chapter applies in section 3 to reflect the introduction of the post-graduate education loan scheme from the year 2002 by item 5.
Amends paragraph 60(1)(a) to reflect the introduction of the post-graduate education loan scheme by requiring that money paid to the Commonwealth under proposed Chapter 4A be transferred from the Consolidated Revenue Fund to the Higher Education (HECS) Reserve.
Amend paragraph 61(1)(a) to permit money in the Higher Education (HECS) Reserve to be applied for the purposes of proposed Chapter 4A.
Inserts a new Chapter 4A providing for a new post-graduate education loan scheme.
Chapter 4A - Post-graduate education loan scheme
(NOTE: proposed section is abbreviated as ps)
This proposed section inserts a definitions clause which gives particular meanings to words and expressions used in proposed Chapter 4A (unless there is a contrary intention apparent). Expressions used in proposed Chapter 4A that are defined in Chapter 4 have the same meaning in proposed Chapter 4A (unless a contrary intention is apparent). Section 37 and subsection 39(2) apply in relation to the expressions semester and standard student load in Chapter 4 as if the references in section 37 and subsection 39(2) to institution were references to institution within the meaning of Chapter 4A.
Expressions used in the Income Tax Assessment Act 1936 have the same meaning in proposed Chapter 4A as they have in that Act (unless the contrary intention appears).
Student fees paid to an institution by a person other than the student are deemed to be payment to the institution by the student.
This proposed section specifies the citizenship or residency requirements to qualify as an eligible student for the purposes of proposed Chapter 4A. The proposed section has the effect of providing that a student who is a permanent resident of Australia or a New Zealand citizen who is the holder of a permanent visa, but not also an Australian citizen or a person who has been granted Australian citizenship, is not an eligible student for the purposes of the post-graduate education loan scheme if they are resident outside Australia for the duration of their course in a semester for a reason other than a requirement of the course.
Part 4A.2 - Additional condition of grant of financial assistance
This proposed section provides that financial assistance is granted to an institution on the condition that the institution complies with the requirements of proposed Chapter 4A in addition to the conditions specified in any other part of the Act.
Part 4A.3 - Applications for and grants of PELS loans
Division 1 - Application for PELS loan
ps98D Making an application for a PELS loan
This proposed section provides that a person enrolled in or proposing to enrol in an eligible post-graduate course of study for a semester at an institution may make an application for a post-graduate education loan scheme loan in the form and manner specified in proposed section 98D. An applicant makes only one application for each course of study.
ps98E Tax file number of student
This proposed section provides that sections 41A, 41B and 42-53 apply in relation to the tax file number of a student in the manner specified in proposed section 98E.
This proposed section has the effect of providing that an institution must give each student enrolled in an eligible post-graduate course at the institution who has made an application for a loan under proposed section 98D, a written notice under proposed subsection 98F(1). Proposed subsections 98F(1)-(6) set out the timing, content and purpose of such a written notice. Proposed subsection 98F(7) provides that section 55 applies to a subsection 98F(1) notice as if references in that section to student were references to student within the meaning of Chapter 4A, references in subsections 55(1) and (4) to section 54 were references to section 98F and the reference in subsection 55(3) to the liability of the student to pay the contribution were a reference to the liability of the student to pay fees charged by the institution.
Division 2 - Discharge by Commonwealth of students liability for fees
ps98G Commonwealth to discharge students liabilities
This proposed section provides that if an eligible student has made an application under proposed section 98D before the census date for a semester for an eligible post graduate course of study for that semester, is enrolled in that course at the institution and has not paid the full amount of the fees charged by the institution for the course of study being undertaken, the Commonwealth must lend the student the amount of the fees outstanding immediately after the census date and apply the amount so lent in making a payment to the institution in discharge of the students liability for the fees outstanding. Proposed subsection 98G(3) provides that the Commonwealth may advance an institution an amount that is expected to become payable to the institution under proposed section 98G.
ps98H Commonwealth not liable where person does not have a tax file number
This proposed section provides that if an institution receives a notice from the Commissioner of Taxation under subsection 42(3) or (5) (as applied by proposed section 98E) to the effect that a person who has applied for a loan under proposed section 98D does not have, or no longer has, a tax file number and after 28 days the institution has not been notified of a number the institution is satisfied is the persons tax file number, the Commonwealth is not liable, and is taken never to have been liable, to lend an amount to the person under proposed paragraph 98G(2)(a) or to making a payment to the institution under proposed paragraph 98G(2)(b).
Proposed subsection 98H(3) provides that regulations may set out procedures for the institution to notify persons who may be affected by proposed subsection 98H(2).
ps98J Institution to provide information to Minister
This proposed section provides that an institution must give to the Minister on request such statistical and other information relating to students in relation to eligible post-graduate courses of study as the Minister reasonably requires for the purposes of proposed Part 4A.3, other than information as to the name and address of a student.
The proposed section extends the application of the secrecy provisions of section 78 to proposed Chapter 4A.
The proposed section imposes an obligation on the chief executive officer of an institution to provide an annual statement of compliance with proposed Chapter 4A requirements on or before 31 December in each year and setting out the particulars of any instances of non-compliance.
ps98M Electronic communications between students and institutions
Proposed subsection 98M(1) inserts an explanatory table and provides that proposed sections 56C, 56D and 56E apply for the purposes of Chapter 4A as if a reference in those sections to a person, thing or provision mentioned in the second column of an item in the table were a reference to a person, thing or provision mentioned in the third column of the table for that item. Proposed subsection 98M(2) clarifies that proposed section 98M is not intended to otherwise affect the application of proposed sections 56C, 56D and 56E.
Amends the heading to Chapter 5A to reflect the introduction of the post-graduate education loan scheme by item 5.
Inserts a definition of PELS semester debt in subsection 106H(1).
Amends paragraph (b) of the definition of semester debt in subsection 106H(1) to include a PELS semester debt.
Amends subsection 106H(2) to reflect the introduction of the post-graduate education loan scheme by item 5.
Amends section 106I by inserting a new paragraph (aa) so that the objects of Part 5A.1 reflect the introduction of the post-graduate education loan scheme by item 5.
Inserts a proposed new section 106JA specifying the nature of a PELS semester debt.
Amend section 106N to include debts incurred under the post-graduate education loan scheme when calculating an accumulated HEC debt.
Amends paragraph 106O(1)(b) to provide that debts incurred under the post-graduate education loan scheme are discharged by a persons subsequent accumulated HEC debt.
Inserts a new subsection 106R(4) to require an institution to give such data in its possession relating to students in relation to eligible post-graduate courses of study at the institution as the Commissioner of Taxation reasonably requires for the purposes of Chapter 5A.
Amends subparagraph 106Y(2)(e)(i) to include debts incurred under the post-graduate education loan scheme when applying payments made by a person who has not given any directions.
Amends subsections 118(1) and (2) to exclude proposed Chapter 4A (which provides for the establishment of the post-graduate education loan scheme) from appropriations under the Act, but without excluding by implication the application of any existing appropriation in relation to Chapter 4A.
A transitional provision which provides that guidelines made under paragraph 42A(1)(b) operate on and after commencement of this Schedule in relation to proposed paragraph 98H(1)(b) as if they had been made under that paragraph and paragraph 42A(1)(b). This item is not intended to prevent the amendment or repeal of the guidelines.
Schedule 3 - Limit on student debt to Commonwealth
Higher Education Funding Act 1988
Amends the definition of institution in section 3 to also exclude proposed Chapter 5B from the meaning given to the term by section 4.
Inserts a new Chapter 5B providing for a limit on total student indebtedness to the Commonwealth under the Act.
Chapter 5B - Limit on student debt to Commonwealth
(NOTE: proposed section is abbreviated as ps)
Inserts a definitions clause which gives particular meanings to words and expressions used in Chapter 5B (unless there is a contrary intention apparent). Expressions used in Chapter 5B that are defined in Chapter 4, 4A, 5 or 5A have the same meaning in Chapter 5B (unless a contrary intention is apparent).
Part 5B.2 - Additional condition of grant of financial assistance
This proposed section adds compliance with Chapter 5B to the conditions an institution referred to in section 4 must comply with to be eligible for financial assistance under the Act.
Part 5B.3 - Maximum permitted debt
ps106ZD Minister may determine maximum permitted debt
This proposed section provides that the Minister may make a determination specifying the maximum permitted debt for the purposes of Chapter 5B.
Part 5B.4 - Loan limit notices
ps106ZE Commissioner to give loan limit notice
Proposed subsection 106ZE(1) provides that the Commissioner of Taxation must give a notice, known as the loan limit notice, to a person if the persons total indebtedness under the Act exceeds the maximum permitted debt determined under proposed section 106ZD. Proposed subsections 106ZE(2) and (3) specify the form and content of a loan limit notice and that it must be given to the person to whom it relates, while proposed subsection 106ZE(4) provides that, unless the loan limit notice has been cancelled under proposed section 106ZF, the Commissioner must give a copy of the notice to each specified institution or the agency, as applicable.
Proposed subsection 106ZE(5) further provides that the Commissioner of Taxation must also give a statement in writing to the person to whom the loan limit notice relates specifying the maximum permitted debt and the persons total indebtedness under the Act at that time.
ps106ZF Cancelling loan limit notice
This proposed section provides that a person issued with a loan limit notice may ask the Commissioner of Taxation to give a notice, known as the cancellation notice, cancelling the loan limit notice. The Commissioner must give the cancellation notice to the person if their total indebtedness under the Act no longer exceeds the maximum permitted debt. Proposed subsection 106ZF(3) sets out the form and content of a cancellation notice.
ps106ZG Consequences of loan limit notice - no amounts payable by Commonwealth
HECS and PELS
Proposed subsections 106ZG(1) and (2) of this proposed section provide that if the Commissioner of Taxation has given a person a loan limit notice in accordance with proposed section 106ZE that relates to that person, the Commonwealth is not liable (and is taken never to have been liable) to lend an amount to the person in relation to a course of study for a semester under subsection 57(3), paragraph 57(3A)(e), subparagraph 57(3B)(b)(i) or proposed paragraph 98G(2)(a); or to make a payment to an institution under subsection 57(2), subsection 57(3), paragraph 57(3A)(e), paragraph 57(3A)(f), subparagraph 57(3B)(b)(ii) or proposed paragraph 98G(2)(b).
Proposed subsection 106ZG(3) specifies what constitutes a course of study for a semester for the purposes of proposed subsection 106ZG(2).
Open Learning Deferred Payment Scheme
Proposed subsections 106ZG(4) provides that, in relation to a unit of study for a study period covered by proposed subsection 106ZG(5), the Commonwealth is not liable (and is taken never to have been liable) to lend an amount to the person under paragraph 106D(1)(a) or to make a payment to the Open Learning Agency of Australia Pty Ltd under paragraph 106D(1)(b).
Proposed subsection 106ZG(5) specifies what constitutes a unit of study for a study period for the purposes of proposed subsection 106ZG(4).
Notifying affected persons
Proposed subsection 106ZG(6) provides that the regulations may set out procedures for an institution or the Open Learning Agency of Australia Pty Ltd to notify persons who may be affected by proposed subsections 106ZG(2) or (4).
Part 5B.5 - Suspension notices
ps106ZH Commissioner must give suspension notice
This proposed section has the effect of providing that the Commissioner of Taxation must give an institution a written notice (known as a suspension notice) under proposed subsection 106ZH(1) in relation to a person where a HECS debt has been reported for a student after a loan limit notice has already been issued. Such an event will only occur where a student changes institution and does not advise their new institution that they have been issued with a loan limit notice. It is not necessary to issue a suspension notice where a PELS or OLDPS debt is reported as the consequences are different.
Proposed subsection 106ZH(3) provides that the Commissioner of Taxation must give a copy of the suspension notice to the person to whom it relates.
ps106ZJ Consequences of suspension notice - HECS courses
This proposed section has the effect of providing that, where a suspension notice has been issued to a student, the institution must dis-enrol the student unless the student makes an up front payment of fees for the entire semester. The requirement to dis-enrol arises from the requirements of section 41. In the case of PELS and OLDPS, institutions and the Open Learning Agency of Australia Pty Ltd have discretion on how to treat students who have not paid their fees and were not eligible to take out a loan.
The proposed section extends the application of the secrecy provisions of section 78 to proposed Chapter 5B.
Amends paragraph 110(b) to provide that a determination under proposed section 106ZD is a disallowable instrument.
Schedule 4 - Electronic communications with students
Higher Education Funding Act 1988
Insert definitions for electronic communication and information system in section 3.
Inserts proposed new sections 56C, 56D and 56E at the end of Division 2 of Part 4.2, providing for electronic communications between institutions and students.
(NOTE: proposed section is abbreviated as ps)
ps56C Electronic communications from students to institutions
This proposed section enables a student to communicate electronically with institutions for the purposes of HECS where the student uses the information system that the institution has specified. The information system must meet the guidelines issued by the Minister and the Minister must declare that the information system meets those guidelines. The guidelines and the Ministers declaration will be disallowable instruments. These requirements are in place to ensure that institutions information systems meet security, privacy and legal requirements. Proposed subsection 56C(2) only applies at a time when section 9 of the Electronic Transactions Act 1999 does not apply because of regulations made under that Act.
ps56D Electronic signature of communications by students
This proposed section enables students to use an electronic signature in relation to an approved document for the purposes of HECS, where the student uses a method for identification and document approval that the institution has specified. The method used must meet the guidelines issued by the Minister and the Minister must declare that the method used meets those guidelines. The guidelines and the Ministers declaration will be disallowable instruments. These requirements are in place to ensure that institutions information systems meet security, privacy and legal requirements. Proposed subsection 56D(2) only applies at a time when section 10 of the Electronic Transactions Act 1999 does not apply because of regulations made under that Act.
ps56E Electronic communications from institutions to students
This proposed section allows institutions to communication electronically with students without specifically seeking student agreement. Institutions may only communicate with students in this way if the institution provides students with access to the necessary information systems. There is provision for the Minister to make guidelines setting out the conditions relating to access.
Inserts proposed new section 106CA at the end of Division 1 of Part 5.2, facilitating electronic communications between clients and the Open Learning Agency of Australia Pty Ltd in a similar way in which proposed sections 56C, 56D and 56E facilitate communications between students and institutions.
(NOTE: proposed section is abbreviated as ps)
ps106CA Electronic communications between clients and Agency
Proposed subsection 106CA(1) inserts an explanatory table and provides that proposed sections 56C, 56D and 56E apply for the purposes of Chapter 4 as if a reference in those sections to a person, thing or provision mentioned in the second column of an item in the table were a reference to a person, thing or provision mentioned in the third column of the table for that item. Proposed subsection 106CA(2) clarifies that proposed section 106CA is not intended to otherwise affect the application of proposed sections 56C, 56D and 56E.
Amends paragraph 110(c) to provide that guidelines issued under proposed subsections 56C(6) or 56D(6) are disallowable instruments.