House of Representatives

Explanatory Memorandum

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

OUTLINE

The Education and Other Legislation Amendment Bill (No. 1) 2017 consists of two schedules. The first schedule amends the Ombudsman Act 1976 ( Ombudsman Act ) to insert a new Part IIE establishing the office of the VET Student Loans Ombudsman. It also makes consequential amendments to the Ombudsman Act and the VET Student Loans Act 2016 ( VET Student Loans Act ). The second schedule amends the Australian Research Council Act 2001 ( ARC Act ) to update indexation against appropriation funding caps for existing legislated amounts and includes an additional forward estimate amount.

VET Student Loans Ombudsman

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.

The Australian Government introduced the VET Student Loans Bill 2016 and associated Bills in the 2016 Spring sittings. The VET Student Loans Act and associated Acts received Royal Assent on 7 December 2016.

The VET Student Loans Act established the VET Student Loans program, a new program for income contingent loans from the Government to students engaged in higher level VET, to assist students with payment of their tuition fees. The new VET student loans program replaced the VET FEE-HELP assistance scheme (which operated under Schedule 1A to the Higher Education Support Act 2003 (the HESA )), from the start of 2017.

In her second reading speech introducing the VET Student Loans Bills, the Assistant Minister for Vocational Education and Training stated that the Government would establish a VET Student Loans Ombudsman.

In its report of the inquiry into the VET Student Loans Bill, the Senate Standing Committee on Education and Employment recommended that "the Government establish a VET Ombudsman and work with key stakeholders to ensure that the Ombudsman operates in a way that is fit for purpose".

The Government subsequently introduced amendments to the VET Student Loans Bill which:

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enabled the Minister to approve, by legislative instrument, an external dispute resolution scheme providing for the investigation and resolution of disputes relating to VET student loans and VET FEE-HELP assistance, and compliance by course providers with the VET Student Loans Act and the HESA (Division 4A of Part 4 of the VET Student Loans Act);

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required approved course providers under the VET Student Loans Act to be members of an approved external dispute resolution scheme (paragraph 25(2)(h)), to comply with the requirements of the scheme (section 42C), and to cooperate with the operator of the scheme (paragraph 46(e)); and

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enable information collected under the VET Student Loans Act to be collected, used and disclosed for the purposes of an approved external dispute resolution scheme (paragraphs 92(1)(d) and 93(2)(e)).

Schedule 1 of this Bill amends the Ombudsman Act to extend the jurisdiction of the Commonwealth Ombudsman by establishing a VET Student Loans Ombudsman.

The VET Student Loans Ombudsman will:

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conduct investigations and make recommendations and make other reports, in relation to: VET loan assistance; and compliance by VET student loan scheme providers with the VET Student Loans Act, the HESA and any legislative instruments made under either of those Acts;

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give VET student loan scheme providers advice and training about the best practice for the handling of complaints made by VET students in relation to VET loan assistance;

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develop and promote, and review from time to time, a code of practice relating to: the provision of services by VET student loan scheme providers in relation to VET loan assistance; and the handling of complaints made by VET students;

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perform any other function conferred on the VET Student Loans Ombudsman by the Ombudsman Act or another Act;

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provide reports to VET loan scheme providers (and the Minister and Secretary of the Department administering the VET Student Loans Act) about the outcome of investigations, as appropriate;

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provide annual and other reports to the Minister administering the Ombudsman Act about the operations of the VET Student Loans Ombudsman.

Schedule 1 also introduces other consequential amendments to the Ombudsman Act and the VET Student Loans Act.

Australian Research Council Act 2001

Schedule 2 amends the ARC Act to update indexation against appropriation funding caps for existing legislated amounts and includes an additional forward estimate amount for the financial year starting on 1 July 2019. The amendments are essential as the ARC Act is the legislative basis that supports the financial operations of ARC grants programs through special appropriation mechanisms which must occur each financial year. These programs fund the high-quality research needed to address current challenges, support improved quality of life, and to support Australian businesses to become more innovative and remain competitive in the global knowledge economy.

FINANCIAL IMPACT STATEMENT

Schedule 1 - VET Student Loans Ombudsman

The measure to establish the VET Student Loans Ombudsman will cost $7.8 million over four years for the Office of the Commonwealth Ombudsman to support the implementation and delivery of the VET Student Loans program. The figures were published in December 2016 in the Mid-Year Economic and Fiscal Outlook 2016-17. A breakdown of the costs (in underlying cash) over this period is as follows:

Schedule 2 - Research funding

The amendments in Schedule 2 of the Bill will allow for additional spending of up to $752.4 million from 2016-17 to 2019-20.