Senate

Revised Explanatory Memorandum

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

OUTLINE

The Universities Accord (Student Support and Other Measures) Bill 2024 (the Bill) amends the Higher Education Support Act 2003 (HESA) primarily to respond to the recommendations of the Australian Universities Accord (the Accord).

The Accord was the biggest and broadest review of the higher education sector in 15 years. It sets out a blueprint for higher education reform for the next decade and beyond.

The Bill gives effect to the Accord's recommendations and the Australian Government's commitment to build a better and fairer tertiary education system which includes:

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Making the HELP system fairer by improving the way HELP indexation is calculated, which will impact more than 3 million Australians, by capping the HELP indexation rate to be the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI) and providing an indexation credit to people's HELP accounts to ensure the new HELP indexation cap has effect from 1 June 2023. This will ensure that outstanding loans never grow faster than average wages.

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Providing cost of living relief for students through the facilitation of a weekly Commonwealth Prac Payment to support around 68,000 teaching, nursing (including midwifery) and social work students a year to complete their university placements.

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Providing greater opportunities for more people, especially those from under-represented backgrounds, to participate in tertiary education by delivering FEE-FREE Uni Ready courses. These free courses will create enabling pathways which will help more students to gain the skills they need to get into university and to succeed.

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Recognising the value in student-led organisations having a say in how services are delivered to them by requiring higher education providers to ensure that 40 per cent of the Student Services and Amenities Fees (SSAF) revenue they collect from students is provided to student-led organisations. This recognises that SSAF revenue is student money over which students should have a say in the services that are delivered to them by their higher education providers.

The Bill makes amendments to HESA to:

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in Part 1 of Schedule 1 to the Bill, provide that the calculation of a person's accumulated HELP debt will take into account changes in CPI and WPI, instead of just CPI;

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in Part 2 of Schedule 1 to the Bill, provide that, from 1 June 2025, the HELP debt indexation factor will be determined by reference to CPI index numbers or WPI index numbers for the four quarters ending on 31 December, instead of the four quarters ending on 31 March;

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in Schedule 2 to the Bill, require higher education providers to allocate a minimum of 40 per cent of their SSAF revenue to student-led organisations and also provide for transition arrangements to be agreed by the Secretary of the Department of Education (or their delegate) for up to three years for Table A providers and up to five years for non-Table A providers;

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in Schedule 3 to the Bill, rename enabling courses 'FEE-FREE Uni Ready Courses' for students in Commonwealth supported places and establish a new Commonwealth Grant Scheme (CGS) funding cluster for these courses;

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in Schedule 4 to the Bill, insert a new item in the table in subsection 41-10(1) of HESA, to specify a new purpose for which grants under Part 2-3 of HESA could be paid, to facilitate the establishment of a grant to higher education providers (the Commonwealth Prac Payment (CPP) grant) for eligible domestic students undertaking mandatory placements in identified priority areas, such as teaching, nursing and midwifery, and social work as part of their course of study to meet entry-to-practice professional accreditation requirements; and

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in Schedule 5 to the Bill, add Adelaide University to the list of Table A providers in HESA and remove the University of South Australia and University of Adelaide, and provide for appropriate transition arrangements.

Parts 3 and 4 of Schedule 1 to the Bill also make consequential amendments to the Australian Apprenticeship Support Loans Act 2014, the Social Security Act 1991, the Student Assistance Act 1973 and the VET Student Loans Act 2016 to provide that the calculation of a person's study or training income contingent loan will take into account changes to CPI and WPI, instead of just CPI. This is intended to mirror the changes made in relation to the calculation of a person's accumulated HELP debt in HESA in Parts 1 and 2 of Schedule 1, including the commencement from 1 June 2023 and associated indexation credit.

Schedule 6 of the Bill also provides a power for the Minister to make transitional rules. This transitional rule making power is necessary in order to address any transitional issues that need to be managed as a result of unforeseen consequences to the changes made in the Bill.

FINANCIAL IMPACT STATEMENT

The Bill is expected to have a medium financial impact. The amendments in relation to how a person's accumulated HELP debt and income contingent loan are to be calculated in Schedule 1 of the Bill are estimated to have a cost of $134.6 million, and the changes to establish a new funding cluster for FEE-FREE Uni Ready courses measure in Schedule 3 of the Bill are estimated to have a cost of $320 million over the forward estimates. The CPP measure in Schedule 4 of the Bill is estimated to have a cost of $369.19 million over the forward estimates.

The other measures in the Bill are expected to have minimal cost.

CONSULTATION

The Bill amends HESA primarily to respond to the recommendations of the Universities Accord. The Accord Panel engaged extensively across the tertiary sector, with students, staff, researchers, industry, businesses, professions and governments to examine a range of issues. Understanding the voices of all people and organisations affected by, and interested in, the development of the Accord and the future of Australian higher education was a priority for the Panel. The Panel engaged with a broad range of stakeholders through targeted meetings, direct and one-on-one engagements, roundtables, a survey and three submissions processes.

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Schedule 1 - HELP indexation and indexation of other income contingent loans: following comprehensive consultation as part of the Accord review process where the views and feedback of an extensive range of stakeholders, including students, were obtained and considered, the measures were developed in consultation with the Australian Taxation Office (ATO), the Department of Social Services (DSS), Services Australia, the Department of Employment and Workplace Relations (DEWR), and the Treasury. Key issues raised by stakeholders included the need to reduce the burden of HELP loans and introduce a fairer and simpler indexation and repayment arrangement system. Increased CPI inflation in recent years has led to historically large increases in indexation rates of 7.1 per cent on 1 June 2023 and 4.7 per cent on 1 June 2024, meaning the value of HELP debts and other income contingent loans is growing faster than historical rates of indexation and leading to adverse student outcomes potentially discouraging future studies in tertiary education, especially from students from disadvantaged backgrounds. The changes in Schedule 1 address this feedback by changing the way HELP loans and other income contingent loans are indexed, reducing the cost of education for students, and reducing barriers for future students to tertiary education, by ensuring that tertiary education is more affordable as their debts will only be indexed by the lower of WPI or CPI.

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Schedule 2 - SSAF changes: these measures were developed in response to Recommendation 19 of the Accord. Consultation with stakeholders, including higher education providers, peak sectoral bodies, and student groups, identified that some higher education providers would need time to adjust to and implement the new requirements. In order to address these concerns, transition arrangements are facilitated through the changes to HESA to support providers to implement the measure.

The Bill provides that the Secretary of the Department must not agree to transitional arrangements to allow for higher education providers to adjust to and implement the new requirement, unless the relevant provider has a Transition Plan. Transition Plans for a Table A provider will be for a period of up to three consecutive years, and all other higher education providers will have up to five consecutive years.

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Schedule 3 - FEE-FREE Uni Ready courses: during the Accord Panel's consultations, stakeholders expressed the need to increase enrolments in Commonwealth supported places, particularly from under-represented groups, through enabling or 'preparatory' courses (now called 'FEE-FREE Uni Ready courses'), to support greater equity and access to higher education, and prepare those with interrupted educational journeys to qualify for higher education entry without having to return to school. It also replaces the current mixed funding system for Commonwealth supported students in these courses, by providing consistent and sufficient funding through a new CGS funding cluster (at the equivalent amount of the CGS funding cluster 1, currently $18,278) to deliver high quality FEE-FREE Uni Ready courses.

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Schedule 4 - CPP: The measure was developed following extensive consultations conducted in the context of developing the Government's 2023 Employment White Paper, and by the Accord Panel as part of its review. Stakeholders including students, unions, education providers and peak bodies highlighted the concerns about placement poverty and cost-of-living pressures for students. While they form an important part of learning, placements come at a financial cost to students over-and-above standard costs of living. In some cases, these pressures are causing students to defer or withdraw from study which is impacting the pipeline of graduates entering the workforce in critical sectors. Placement poverty disproportionately affects key equity groups as they are more likely to choose to study in care and teaching fields of education which have mandatory placement requirements. The financial pressures experienced by students are exacerbated for women, mature-aged students and First Nations students, who are often juggling full-time or part-time study with paid work as well as caring and parental responsibilities. The amendments made by Schedule 4 to the Bill were made to provide for a new grant to be paid to higher education providers to provide payments to students undertaking mandatory practicums, in order to help address these concerns raised by the relevant stakeholders.

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Schedule 5 - Adelaide University: the amendments in Schedule 5 to the Bill were developed in close consultation with the University of Adelaide, the University of South Australia and the Adelaide University Merger Team to ensure that all legislated requirements are being met and no issues arise for students, staff, or the wider community with the merger of the two universities. The Bill is consistent with the South Australian Adelaide University Act 2023 (SA) which establishes the new Adelaide University.