Explanatory Memorandum
(Circulated by authority of the Minister for Education, Science and Training the Hon Dr Brendan Nelson 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), the Post-graduate Education Loan Scheme (PELS), the Open Learning Deferred Payment Scheme (OLDPS) and the Bridging for Overseas-trained Professionals Loan Scheme, and makes provision for the repayment of monies lent by the Commonwealth to students under those schemes.
The Australian Research Council Act 2001 establishes the Australian Research Council (ARC) as an independent body to administer the Commonwealth research programmes for which it has responsibility, make recommendations to the Minister on the allocation of funds within research programs and to provide advice to the Minister on research matters as requested by the Minister. Funding is appropriated under section 49 of the Act.
This Bill will amend the Higher Education Funding Act 1988 (HEFA) to:
- •
- Set a new maximum aggregate funding level in section 17 of HEFA for the years 2002 and 2003 to reflect actual HECS liabilities and other technical adjustments.
- •
- Set new maximum funding amounts in Part 2.2 of HEFA for the year 2003 to reflect indexation increases and other technical adjustments including:
- -
- a new maximum aggregate grant amount for superannuation benefits available to higher education institutions;
- -
- a new maximum aggregate grant amount for certain grants, including equality of opportunity; research; multi-media; innovation and quality assurance;
- -
- a new maximum aggregate grant amount for teaching hospitals; and
- -
- a new maximum aggregate funding level for Commonwealth expenditure on the international marketing and promotion of Australian education and training services.
- •
- Set a new maximum aggregate grant amount for special capital projects in section 27 of HEFA including funds for the reconstruction of the Mt Stromlo Observatory as announced in the 2003-04 Budget.
The Bill amends the Australian Research Council Act 2001 (ARCA) to:
- •
- Update the offices of members of the ARC Board to reflect the current Administrative Arrangement Orders (s.12).
- •
- Broaden Board members' disclosure of interest requirements to include any material interest, pecuniary or otherwise (s.27).
- •
- Allow the CEO of the ARC to be included on a committee if required (s.32).
- •
- Appropriate funding by financial year rather than calendar year, beginning in the 2004-05 financial year (ss.48 and 49).
- •
- Provide the Minister with greater flexibility in determining the funding split between research programs (subs.50(1)).
- •
- Permit the Minister to delegate certain additional powers contained in Division 1 of Part 7.
Financial impact
In relation to the Higher Education Funding Act 1988, the Bill:
- •
- increases the overall appropriation by $49.368 million in 2002 (note: this variation is for accounting purposes in relation to the Higher Education (HECS) Special Account);
- •
- increases the overall appropriation by $58.385 million in 2003.
In relation to the Australian Research Council Act 2001, the Bill:
- •
- increases the overall appropriation by $436.331 million for the period 1 January 2003 to 30 June 2007.
Notes on clauses
Provides for the Act to be cited as the Higher Education Legislation Amendment Act 2003.
Provides for the Act to commence on the day on which it receives the Royal Assent.
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 - Higher Education Funding Act 1988
Since the introduction of the Higher Education Contribution Scheme (HECS), funding for the operating purposes and limited operating purposes of higher education institutions has come from a combination of HECS liabilities and grants approved under sections 15 and 16 of the Act. Section 17 sets the maximum aggregate funding levels for operating grants that may be paid to institutions under sections 15 and 16 while Part 4.3 of the Act established the Higher Education (HECS) Reserve and provides for the application of money in the Account.
Each year the operating needs of institutions are estimated and funded by a combination of estimated HECS liabilities during the year and aggregate grants funded within the maximum amount provided for in section 17 for that year. Actual HECS liabilities for a year are not available until early in the subsequent year after which an adjustment is made to the section 17 funding amount for the previous year to correctly reflect the relative contribution of HECS liabilities to the funding needs of institutions.
Item 1 amends section 17 to vary the maximum aggregate funding level for 2002 and 2003 to reflect revised Higher Education Contribution Scheme (HECS) liabilities and estimated liabilities and adjustments for overenrolments. The item also amends section 17 to vary the maximum aggregate funding level for 2003 to reflect supplementation consistent with indexation arrangements and advances to the Royal Melbourne Institute of Technology and the University of New England.
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 2003 to reflect supplementation consistent with indexation arrangements.
Subsection 23C(2) of the Act limits the total funds available for grants that may be approved under sections 21, 21B, 22, 23, 23A and 23B of the Act for specified years. Item 3 amends subsection 23C(2) to vary the funding limit for 2003 to reflect a transfer of subsection 23C(2) funds from 2002 and supplementation consistent with indexation arrangements.
Section 24 of the Act provides grants in respect of teaching hospitals. Item 4 amends subsection 24(3) to increase the maximum aggregate grant amount for 2003 to reflect supplementation consistent with indexation arrangements.
Section 27A of the Act provides for grants to institutions for special capital projects. Item 5 amends subsection 27A(6) to increase the maximum aggregate grant amount for 2003 to reflect additional funding for the reconstruction of the Mt Stromlo Observatory and supplementation consistent with indexation arrangements.
Section 27D of the Act allows the Minister to determine an amount to be available for expenditure by the Commonwealth on the international marketing and promotion of Australian education and training services. Item 6 amends subsection 27D(2) to increase the maximum aggregate funding level for 2003 to reflect supplementation consistent with indexation arrangements.
Schedule 2 - Australian Research Council Act 2001
Updates the list of members of the Board of the Australian Research Council to reflect the current titles of offices.
Repeals subsection 27(1) and inserts a new subsection which has the effect of broadening the disclosure of interest obligations of Australian Research Council Board members to include any material interest (pecuniary or otherwise).
Amends subsection 27(4) to reflect the changes made by item 2. Subsection 27(4) deals with the obligations of a Board member who has made a disclosure under subsection 27(1), not to be present at or take part in deliberations by the Board on whether to make a determination under subsection 27(3) modifying the member's obligations in relation to the disclosure.
This is an application provision to the effect that the amendments to section 27 made by items 2 and 4 apply in relation to matters that the Board starts to consider after the commencement of this Schedule.
Amends subsection 29(4) to reflect the changes made by items 2 and 4 in relation to disclosure of interest obligations on representatives of Board members.
Amend paragraphs 32(3)(a) and (b) and subsection 32(3) to permit the CEO of the Australian Research Council to be a member of a committee established by the Board under section 30.
Amend the Act to appropriate funding in section 49 by financial year rather than the current calendar years, beginning in the 2004-05 financial year and make consequential amendments. One transitional consequence is the need to treat the first half of the 2004 calendar year as if that period were a year. Item 14 also provides supplementation consistent with indexation arrangements for 2003 and inserts a new funding cap for the out-year of the Budget estimates.
Items 8-11 amend paragraphs 48(a), (b) and (c), repeal paragraphs 48(d), (e) and (f) and insert new subsections 48(2) and (3) to have the effect of converting the years to which Division 1 of Part 7 applies from the calendar years 2004, 2005 and 2006 to financial years starting on 1 July 2004, 1 July 2005 and 1 July 2006, with the six month transitional period 1 January 2004 to 30 June 2004 treated as a year.
Item 12 is a transitional provision which has the effect of providing that if, before the commencement of this Schedule, the Minister had approved a proposal under subsection 51(1) as deserving financial assistance in respect of one or more of the calendar years 2004, 2005 or 2006, Division 1 of Part 7 (as in force after that commencement) has effect as if the Minister had approved the proposal in respect of each year (the new year ) to which that Division (as in force after that commencement) applies that falls partly or wholly within a calendar year (the old year ) in respect of which the Minister had approved the proposal before that commencement and the approved amount for the funding approval in respect of each of the new years for the proposal equalled the sum of 50% of the approved amount for the funding approval in respect of each old year within which part or all of the new year falls. This is to ensure that funding for such proposals is not disrupted by the transition to financial year funding.
Items 13-14 amend the annual caps on funding in section 49 to reflect the conversion of the calendar years 2004, 2005 and 2006 to financial years starting on 1 July 2004, 1 July 2005 and 1 July 2006 (including the six month transitional period 1 January 2004 to 30 June 2004 which is treated as a year by proposed subsection 48(3) inserted by Item 11).
Inserts a new subsection 50(1A) which has the effect of providing that the Minister may specify in a determination under subsection 50(1) [dealing with the division of funding caps between different categories of research programs] proportions in a specified range for each of two or more categories of research programs specified in the determination. If one of the following things is consistent with one proportion in the range specified for the relevant category, the thing is taken to be consistent with the determination for the purposes of Division 1 of Part 7:
- •
- approval of a funding proposal;
- •
- variation of a funding approval;
- •
- rules prepared under section 59.
Repeals the examples at the end of subsection 53(3).
Reflect the transition from calendar year to financial year funding in relation to audited accounts.
Item 17 repeals paragraph 58(1)(b) and inserts a new paragraph which will have the effect of requiring an organisation to give the Minister, not more than 6 months after the end of an accounting period of the organisation that includes part or all of the year, a statement by a qualified auditor in an approved form as to the amounts spent as described in paragraph 58(1)(a) in respect of so much of the year as is included in the accounting period.
Item 18 provides that an approved form means a form approved in writing by the Minister for the purposes of paragraph 58(1)(b).
Item 19 is an application provision which provides that the amendments to section 58 made by Items 17 and 18 apply in relation to periods that are years to which Division 1 of Part 7 of the Act (as amended by this Schedule) applies and which start after 31 December 2003.
Repeals subsection 66(1) and inserts a new subsection which has the effect of providing that the Minister may, in writing, delegate all or any of his powers or functions under Division 1 of Part 7 (other than his powers under sections 50 and 51 and Subdivision D) to the CEO or a member of the staff referred to in section 41.
A saving provision which has the effect of providing that a delegation or a direction to a delegate that was in force under section 66 immediately before the commencement of this Schedule has effect after commencement as if the delegation had been made immediately after that commencement under that section as amended by this Schedule. Item 21 is not intended to prevent the revocation or amendment of a delegation or direction.