House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Education, Science and Training, the Honourable Julie Bishop MP)

Higher Education Legislation Amendment (2006 Budget and Other Measures) Bill 2006

OUTLINE

The Bill will amend the Higher Education Support Act 2003 (HESA) to revise the maximum funding amounts in:

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section 30-5 to deliver the commitments made by the Prime Minister as part of the Council of Australian Governments' (COAG) Health Workforce and Mental Health packages, including:

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new medical places;

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new general nursing places;

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increasing the contribution to clinical training of nurses;

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new mental health nursing places; and

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new clinical psychology places; and

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section 33-10 under the Commonwealth Grant Scheme to provide for an increase in the Commonwealth contribution amount for nursing units of study to $10,189 in 2007 to assist in meeting the costs associated with nurse clinical training; and

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section 41-45 for Other Grants to provide for an increase in Capital Development Pool (CDP) funding from 2007; to provide funding for the Commercialisation Training Scheme (CTS); and to provide funding for the Federation of Australian Scientific and Technological Societies and the Council for the Humanities, Arts and Social Sciences

to deliver on Government commitments.

The Bill will also amend the HESA to revise the maximum funding amounts in:

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section 30-5 under the Commonwealth Grant Scheme;

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section 41-45 for Other Grants; and

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section 46-40 for Commonwealth Scholarships

to reflect indexation increases for the years 2007 to 2009 and to add a new funding year 2010.

The Bill will also amend the HESA to revise the FEE-HELP limit in:

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section 104-20 to provide for the general FEE-HELP limit to be $80,000 from 1 January 2007 and be indexed on an annual basis from 2008 under existing arrangements and provide for a FEE-HELP limit of $100,000, indexed on an annual basis from 2008 under existing arrangements, for students enrolled on or after 1 January 2007 in:

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a course of study in medicine; or

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a course of study in dentistry; or

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a course of study in veterinary science.

These changes to the FEE-HELP limit require subsequent technical amendments to HESA to allow the current arrangements for re-crediting of a person's FEE-HELP balance to continue.

The Bill will extend the summer schools provisions to winter schools and improve higher education providers' flexibility in the delivery of courses.

The Bill will also replace the student cohort provisions to allow higher education providers further flexibility in setting student contributions and tuition fees.

The Bill will also make amendments to HESA to provide for the rounding in the calculation of accumulated HELP debts and former accumulated HELP debts. This has a retrospective date of effect of 1 January 2005. This is required to give effect to the current administrative arrangements which have rounded down HELP debts incurred since 1 January 2005. The measure will reduce a person's repayable HELP debt by any rounded down amount.

The Bill will also make amendments to HESA to provide for the operation of HESA and its guidelines without the need for an exemption under the Electronic Transactions Act 1999 by revising:

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Part 5-3 to provide for the Administration Guidelines to set out additional requirements for the electronic communication of notices.

The Bill will also amend Division 225 of the HESA to:

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allow the Commonwealth to make guidelines to regulate higher education in the external territories; and

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to allow the Commonwealth to prescribe fees in the guidelines for applications from those intending to provide higher education in the external territories.

The Bill amends the maximum funding amounts under section 110A of the Higher Education Funding Act 1988 (HEFA) to reflect indexation increases for transition funding for the year 2007.

The Bill will also repeal subsection 34(1) (definition of Account ) and Part 4.3 of HEFA to remove the HECS account.

The Bill amends section 49 of the Australian Research Council Act 2001 to reflect updated annual caps on funding.

FINANCIAL IMPACT

In relation to the Higher Education Support Act 2003 , the Bill:

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Increases the overall appropriation by $6,230.381 million for the period 1 July 2006 to 31 December 2010 to: vary the maximum grants under the Commonwealth Grants Scheme under Part 2-2 of the Act by $4,055.801 million; vary the maximum payments for Other Grants under Part 2-3 of the Act by $1,941.573 million; and vary the maximum payments for Commonwealth Scholarships under Part 2-4 of the Act by $233.007 million.

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The estimated financial impact of increasing the FEE-HELP limit over the forward estimates period (2006-07 to 2009-2010) is $18.293 million on the fiscal balance, expenses amount to $20.759 million and headline cash is -$78.458 million.

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The estimated financial impact of introducing a winter schools provision under HESA over the forward estimates period (2006-07 to 2009-10) is $0.294 million on the fiscal balance, expenses amount to $0.340 million and headline cash is -$1.290 million.

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The estimated financial impact of introducing a rounding in the calculation of HELP debts over the forward estimates period (2006-07 to 2009-10) is -$0.001 million on the fiscal balance, expenses amount to $0.001 million.

In relation to the Higher Education Funding Act 1988 , the Bill:

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Increases the overall appropriation by $0.154 million for the period 1 January 2007 to 31 December 2007.

In relation to the Australian Research Council Act 2001 , the Bill:

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Increases the overall appropriation by $29.239 million for the period 1 July 2006 to 30 June 2009.