Senate

Revised Explanatory Memorandum

(Circulated by authority of the Minister for Education, the Hon Jason Clare MP)

OUTLINE

The purpose of the Higher Education Support Amendment (2022 Measures No. 1) Bill 2022 (the Bill) is to amend the Higher Education Support Act 2003 (HESA).

The Bill will amend the definition of a 'grandfathered student' to include students undertaking an honours course that is related to a course of study they commenced with a higher education provider before 1 January 2021 but that they did not complete until after 1 January 2021.

The proposed amendment to the definition of a 'grandfathered student' in HESA will clarify grandfathering arrangements under the Job-ready Graduates package of reforms to higher education. The Higher Education Support Amendment (Job-ready Graduates and Supporting Regional and Remote Students) Act 2020 amended HESA to change student and Commonwealth contribution amounts, to encourage students to enrol in courses in areas of job growth. Those amendments inserted a definition of 'grandfathered student' in Schedule 1 of HESA to treat certain existing students (on and after 1 January 2021) beneficially where the changes would otherwise result in those students being charged a higher student contribution amount.

Under the current definition, Commonwealth supported students who completed a course at the bachelor level after 1 January 2021 do not fall within the definition of 'grandfathered student' when they commence a subsequent related honours course. The current definition of a 'grandfathered student' only applies where a student completed the bachelor level course prior to 1 January 2021. Where a student commences or transfers to a new related honours course after 1 January 2021, they are also not covered by the definition.

The policy intention is that a student should be a 'grandfathered student' where they commenced a bachelor level course before 1 January 2021 and subsequently commence a related honours course, regardless of when the bachelor level course is completed.

To benefit the greatest number of students, these amendments will apply to any student who meets the new definition and undertakes a unit of study in an ongoing course or an honours course with a census date on or after 1 January 2021, whether the person enrolled in that unit before, on or after the amendments commence. This means some students will retrospectively become grandfathered students, and any student contribution amounts deferred to the Higher Education Loan Program (HELP) or paid upfront may need to be re-credited or refunded, respectively.

To ensure the seamless and beneficial transition of these amendments in relation to students affected retrospectively (defined as 'affected students'), the Bill also includes application and transitional provisions which set out the steps that a higher education provider must take in respect of an affected student for units that form part of the relevant honours course with a census date in the period from 1 January 2021 to the commencement of the relevant provisions in the Bill (the 'transition period'). The actions the higher education provider must take will depend on whether the student has made a full up-front, partial up-front or no upfront payment of the student contribution amount as well as the amount of any up-front payments made, and include a re-credit of an affected student's HELP balance and/or a refund of an excess up-front payment amount to the student. Compliance with the application and transitional provisions is taken to be a condition of a grant made to a higher education provider under Part 2-2 of HESA. Further, the Bill enables the Minister to make transitional rules relating to the amendments, or repeals, made by the Bill, with certain limits imposed. This is also intended to be a beneficial measure for affected students.

The Bill also makes a technical amendment to HESA to clarify that a student whose course of study is discontinued by their provider, and who is forced to transfer to a new course of study, will be treated as a grandfathered student. These students are already grandfathered under HESA; however, this amendment puts this beyond doubt and provides clarity and certainty for students and providers.

The Bill will also introduce new provisions to HESA to partially or completely reduce outstanding HELP debts for eligible health practitioners working in rural, remote or very remote Australia. The measure also allows for the waiver of indexation in relation to eligible health practitioners' HELP debts while they are completing eligible work in a rural, remote, or very remote area.

This measure is intended to encourage initial employment and retention of health practitioners to work in rural, remote or very remote areas of Australia, addressing issues of equity and access to healthcare in these areas.

FINANCIAL IMPACT STATEMENT

The financial implications of this Bill are expected to be moderate.

The grandfathering amendments in Schedule 1 to the Bill will result in a negligible financial impact due to the resultant reduction of HELP debt in respect of eligible study undertaken by grandfathered and transitionally grandfathered students. Grandfathered students are charged lower student contribution amounts, thus reducing the amount of funding the Government pays to providers on students' behalf through the HELP program, and reducing the associated costs of administering the program. As the changes to grandfathering arrangements are not expected to affect large numbers of students, the financial impact on higher education providers and the Commonwealth is expected to be negligible.

The grandfathering amendments will have no financial impact on Commonwealth Grant Scheme funding paid to higher education providers. Providers can only be paid a maximum basic grant amount (MBGA). As a COVID relief measure, eligible providers' MBGAs are guaranteed by the Higher Education Continuity Guarantee, for the grant years 2021 to 2023, under Part 8 of the Higher Education Support (Other Grants) Guidelines 2022. This means eligible providers will receive their full MBGA, no more and no less, irrespective of their actual enrolments.

The measure to reduce HELP debts for health practitioners is estimated to have an underlying cash impact of $27.2 million over the period 2021-22 to 2025-26.

CONSULTATION

The department has not undertaken a formal consultation process relating to the proposed change to grandfathering arrangements. However, the measure reflects the original policy intention of grandfathering arrangements in HESA under the Job-ready Graduates Package, which the sector was consulted on. Feedback received from students and other stakeholders following the initial introduction of the Job-ready Graduates Package was also taken into consideration in the development of this measure.

Following the announcement of the 2021-22 MYEFO HELP for Rural Doctors and Nurse Practitioners initiative, the Department of Health completed consultations with health sector stakeholders - through established consultation channels - to explain how the new program to reduce outstanding HELP debts would operate, and to seek their input to ensure the program would incentivise the targeted recipients.

Stakeholder feedback identified issues in relation to the eligibility requirements for health practitioners delivering primary care services, including in relation to both the setting where services are delivered and the remuneration arrangements for nurse practitioners and medical practitioners working as, or working towards attaining fellowship as, a general practitioner or a rural generalist.

These concerns have been addressed in the overall design of the program, whereby the Bill establishes the program, eligibility requirements for the target health practitioners and the nature of the work to be undertaken to achieve the benefits of the program and provides for secondary legislation - the HELP Debtor Guidelines (Health Practitioners) - to articulate the specifics of eligible participants, eligible locations, and eligible work, and other arrangements to support the administration of the program.