House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

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. It also provides for the funding of certain institutions of higher education and associated bodies, and for related purposes.

The Bill amends HEFA to:

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set the maximum grant amount for operating purposes for higher education institutions for the funding years 1999, 2000 and 2001;

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vary the maximum total financial assistance payable to higher education institutions for superannuation expenditure for the funding year 2000 and set the maximum total amount of financial assistance for the funding year 2001;

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vary the maximum aggregate amount of financial assistance which may be granted to open learning organisations for the funding year 2000 and set the maximum aggregate amount of financial assistance for the funding year 2001;

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vary the limit on total funds available for higher education institutions for certain grants under the Act in respect of the funding years 1999 and 2000 and set the limit on total funds for the funding year 2001;

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vary the maximum aggregate amount of financial assistance which may be granted to higher education institutions in respect of their teaching hospitals for the 2000 funding year and set the maximum aggregate amount of financial assistance for the 2001 funding year;

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vary the maximum aggregate amount which may be granted to higher education institutions for approved special capital projects for the 2000 funding year and set the maximum aggregate amount for the 2001 funding year;

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set the maximum funding level for expenditure on the international marketing and promotion of Australian education and training services by Australian Education International for the 2001 funding year.

The Bill also amends HEFA to make provision for the funding of 60 medical places at James Cook University for the 2001 funding year and for an additional $4.9 million in the 2000 funding year and $9.8 million in the 2001 funding year for Science Lectureships. Higher education research infrastructure funding is also increased by $36.8 million in each of the 2000 and 2001 funding years.

The Bill reflects reductions to the Higher Education Innovation Program for projects of national priority in each of the 2000 and 2001 funding years and savings of $7.8 million in the 2000 funding year and $10.4 million in the 2001 funding year resulting from the phasing out of the Merit Equity Scholarships.

FINANCIAL IMPACT

The Bill provides a total net increase of $183.8 million to Part 2A HEFA funding limits for 1999, representing adjustments to section 17 funding to reflect revised HECS estimates and an increase of $11.3 million in the 1999 funding limit for section 23C offset by an equivalent under expenditure by institutions in 1998.

The Bill provides a total net increase of $255.5 million to Part 2A HEFA funding limits for the year 2000 representing adjustments to section 17 funding to reflect revised HECS estimates, supplementation for price movements and additional section 23C funding for research infrastructure and science lectureships.

The Bill also inserts new Part 2A funding limits for the year 2001 totalling a net $3.9 billion representing base funding for all grants plus additional section 17 funding for medical places at James Cook University and additional section 23C funding for research infrastructure and science lectureships.

The sections 17 and 23C funding levels set by the Bill for the years 2000 and 2001 also reflect savings from phasing out Equity Merit Scholarships (section 17) and reduced funding for projects of national priority (section 23C).

NOTES ON CLAUSES

Clause 1 - Short Title

Clause 1 provides for this Act to be cited as the Higher Education Funding Amendment Act 1999.

Clause 2 - Commencement

Clause 2 provides for this Act to commence on the day on which it receives the Royal Assent.

Clause 3 - Schedule(s)

Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in the applicable Schedule.

SCHEDULE 1

AMENDMENT OF HIGHER EDUCATION FUNDING ACT 1988

Item 1

Section 17 sets the maximum aggregate funding levels for operating grants which may be paid to higher education institutions under sections 15 and 16 of the Act. Item 1 amends section 17 to increase the maximum aggregate funding level for the years 1999 and 2000 to reflect revised Higher Education Contribution Scheme (HECS) estimates, to increase the maximum aggregate funding level for the year 2000 to reflect supplementation for price movements and to insert the maximum aggregate funding levels for the year 2001 (including provision for medical places at James Cook University). The maximum aggregate funding levels for the years 2000 and 2001 reflect savings from the phasing out of Equity Merit Scholarships.

Item 2

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 increase the maximum aggregate grant amount for the year 2000 to reflect price movements and to set the maximum aggregate grant amount for the year 2001.

Item 3

Subsection 22A(5) provides for the total amounts which may be approved as expenditure by way of grants to open learning organisations. Item 3 amends subsection 22A(5) to increase the maximum aggregate grant amount for the year 2000 to reflect price movements and to set the maximum aggregate grant amount for the year 2001.

Item 4

Subsection 23C(2) of the Act provides for a limit on total funds available for grants which may be approved under sections 21, 21B, 22, 23, 23A and 23B of the Act for specified years. Item 4 amends subsection 23C(2) to vary the funding limit for 1999 to reflect the transfer of unspent funds from 1998 to 1999; to increase the funding limit for the year 2000 to reflect supplementation for price movements, additional funding for Research Infrastructure projects and Science Lectureships; and to insert the funding limit for the year 2001. The funding limits for the years 2000 and 2001 reflect savings from reduced funding for projects of national significance approved under s.21 of the Act.

Item 5

Section 24 of the Act provides grants in respect of teaching hospitals. Item 5 amends subsection 24(3) to vary the maximum aggregate grant amount for the year 2000 to reflect supplementation for price movements and to insert the maximum aggregate grant amount for the year 2001.

Item 6

Section 27A of the Act provides for grants to institutions for special capital projects. Item 6 amends subsection 27A(6) to vary the maximum aggregate grant amount for the year 2000 to reflect supplementation for price movements and to insert the maximum aggregate grant amount for the year 2001.

Item 7

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 7 amends subsection 27D(2) to insert the maximum aggregate funding level for the year 2001.