Chapter 1Introduction
Purpose of the bill
1.1The Higher Education Support Amendment (Response to the Australian Universities Accord Interim Report) Bill 2023 (bill) seeks to implement two of five priority actions recommended by the Australian Universities Accord Interim Report (interim report). The two priority actions are:
ending the 50 per cent pass rule, given its poor equity impacts, and requiring increased reporting on student progress; and
ensuring that all First Nations students are eligible for a funded place at university, by extending demand driven funding to metropolitan First Nations students.
1.2In his second reading speech, the Minister for Education, the Hon Jason Clare MP (Minister Clare) highlighted the contribution these measures would make to improving equity for underrepresented groups and addressing Australia's skills challenges.
Current policy settings
50 per cent pass rule requirements
1.3At present, students must maintain a pass rate of at least 50 per cent of the units of study in their course to remain eligible for a Commonwealth supported place and FEE-HELP assistance. Students who fail to do so must pay the cost of their course upfront, transfer to another course, or withdraw from study.
1.4This arrangement has been in place for independent higher education providers and independent universities since 1 January 2018. It was extended to students commencing at public universities from 1 January 2022 as part of the Job-ready Graduates (JRG) package. The aim of the requirement was to prevent students from accruing large HELP debts if they were not succeeding in their studies.
Eligibility of First Nations' students for Commonwealth supported places
1.5A demand driven funding system operated in Australia between 2012 and 2017. Under this system, the Australian Government (Government) funded every domestic bachelor degree student admitted to a public university, with no restrictions on student numbers or the type of course undertaken (other than courses in medicine). In 2017, the Government returned to a supply driven system.
1.6In 2019, the National Regional, Rural and Remote Tertiary Education Strategy Final Report recommended introducing demand driven funding to boost higher education participation by First Nations students in regional and remote areas.
1.7This was implemented in 2021 with the introduction of demand driven funding for First Nations students from regional and remote areas in bachelor courses of study (excluding medicine) at Table A universities. Since then, participation of First Nations students in higher education has increased across Australia.
The Australian Universities Accord process
Establishment of the Australian Universities Accord
1.8As part of the October 2022–2023 Budget, the Government allocated $2.7 million over two years to develop the Australian Universities Accord (Universities Accord), informed by a 12-month review of Australia's higher education system by the Universities Accord Panel (Panel).
1.9The objective of the Universities Accord is to develop 'recommendations and performance targets' to enhance the 'quality, accessibility, affordability and sustainability of higher education' for the 'long term security and prosperity for the sector and the nation'.
1.10The Panel's review is the first broad review of higher education since 2008. It is being led by Professor Mary O'Kane AC, former Vice-Chancellor of the University of Adelaide, the first Chief Scientist and Engineer of New South Wales, and the first woman to be appointed Dean of Engineering at an Australian University.
1.11The terms of reference for the Universities Accord process set out seven key areas for review:
Meeting Australia's knowledge and skills needs, now and in the future—recognising that almost all new jobs will require post-school qualifications, with half of all new jobs expected to require a bachelor's degree or higher.
Access and opportunity—supporting greater access and participation for students from underrepresented backgrounds (including First Nations students, those from low socio-economic backgrounds, students with disability, and regional and rural students).
Investment and affordability—exploring funding arrangements that deliver equity, access, quality and longer-term investments to meet priorities in teaching, research, workforce and infrastructure, including a review of the JRG package.
Governance, accountability and community—enhancing regulatory settings to help universities to meet their obligations to staff and students, and exploring the contribution of higher education to the Australian community, national security, and sovereign capability.
The connection between the vocational education and training and higher education systems—exploring opportunities for better engagement and alignment between vocational education and training (VET) and higher education.
Quality and sustainability—examining challenges faced by domestic and international students and staff due to the COVID-19 pandemic, and supporting a competitive and resilient international education sector.
Delivering new knowledge, innovation and capability—securing the future of the Australian research pipeline, from basic and translational research to commercialisation.
1.12The Panel's interim report was released on 19 July 2023, with the final report to be delivered by December2023.
The Universities Accord consultation process
1.13Since late 2022, the Panel has engaged with a range of stakeholders, including students, staff, researchers, industry, businesses, professions and governments. This has occurred via targeted meetings, direct engagement, roundtables, a survey and submissions processes. An overview of the Panel's key submissions processes is provided below.
1.14Between 24 November 2022 and 19 December 2022, stakeholders were invited to complete a survey and make an initial submission outlining priorities for the Universities Accord (in line with the terms of reference). Over 180 submissions and 1900 survey responses were received.
1.15In February 2023, the Australian Universities Accord Discussion Paper was released, with submissions invited between 22 February 2023 and 11 April 2023. Over 300 submissions were received from a broad range of stakeholders.
1.16Most recently, between 19 July 2023 and 1 September 2023, stakeholders were invited to make submissions in response to the Panel's interim report. The interim report states that its final conclusions will 'follow further consultations, submissions, studies and testing'.
The Universities Accord interim report—five priority actions
1.17The Universities Accord terms of reference required the Panel to deliver an interim report on priority actions. The interim report identified the following 'immediate issues [that] stand out for urgent action':
the need for greater certainty around university funding;
the need to address inequality in higher education, including narrowing the Closing the Gap target for First Nations tertiary attainment; and
the need to address the public's concerns about student safety and staff underpayment.
1.18In line with the above, the interim report 'offers five modest, sensible priority actions to address these immediate issues'. The five priority actions are to:
Priority Action 1 – extend visible, local access to tertiary education by creating further Regional University Centres (RUCs) and establish a similar concept for suburban/metropolitan locations;
Priority Action 2 – cease the 50 per cent pass rule, given its poor equity impacts, and require increased reporting on student progress;
Priority Action 3 – ensure that all First Nations students are eligible for a funded place at university, by extending demand driven funding to metropolitan First Nations students;
Priority Action 4 – provide funding certainty, by extending the Higher Education Continuity Guarantee into 2024 and 2025, to minimise the risk of unnecessary structural adjustment to the sector (with funding arrangements to prioritise delivery of supports for equity students to accelerate reform towards a high equity, high participation system); and
Priority Action 5 – through National Cabinet, immediately engage with state and territory governments and universities to improve university governance, with a particular focus on:
universities being good employers
student and staff safety
membership of governing bodies, including ensuring additional involvement of people with expertise in the business of universities.
1.19In addition to the five priority actions, the interim report also outlined the Panel's early views on a number of wider issues that will be addressed in its final report in December 2023.
1.20According to the interim report, implementation of the priority actions would 'start to grow student numbers and the higher education system through increased participation and engagement from equity cohorts'. This would respond to immediate problems and build momentum for further change, 'while larger-scale and system-wide governance and funding issues are being resolved'.
The Universities Accord Process—support for Priority Actions 2 and 3
1.21Priority Action 2 was supported by Universities Australia and the Innovative Research Universities. It was also supported by individual universities including the University of Adelaide, Monash University, the University of Technology Sydney, the University of the Sunshine Coast, University of New England, the Queensland University of Technology and Western Sydney University.
1.22Priority Action 3 was supported by Universities Australia, the Equity Practitioners in Higher Education Australasia and the National Aboriginal and Torres Strait Islander Higher Education Consortium. It was also supported by universities such as the Australian National University, University of Queensland, Western Sydney University Macquarie University, James Cook University, University of Southern Queensland, University of Melbourne, University of Adelaide, Queensland University of Technology and the University of Technology Sydney.
1.23According to the Explanatory Memorandum, the National Indigenous Australians Agency was also consulted in relation to Priority Action 3 and is supportive of the change.
The Universities Accord interim report—Government response
1.24In his second reading speech, Minister Clare indicated that the Government has committed to implementing all five priority actions.
1.25In response to Priority Action 1, the Government will double the existing number of university study hubs. Of the new hubs, 20 will be established in regional Australia. Fourteen will be established in outer suburban areas of major cities where the percentage of university-qualified people is low.
1.26In response to Priority Action 4, the Government will extend the Higher Education Continuity Guarantee into 2024 and 2025, with a requirement for universities to use remaining grant funding on support for students 'from poor backgrounds, from the regions and from other underrepresented groups'
1.27In response to Priority Action 5, the Government is convening a working group with states and territories to advise on immediate actions to improve university governance. The working group will focus on:
ensuring that universities are good employers providing supportive workplaces where staff can be confident they will not be underpaid;
making sure governing bodies have the right expertise, including in the business of running universities; and
making sure universities are safe for both students and staff.
1.28The current bill responds to Priority Actions 2 and 3, which both require legislative change.
Ongoing consultation on Priority Action 2
1.29On 16 August 2023, Minister Clare announced a consultation process in relation to the support-for-students policy requirements, with a Consultation Paper published on the Australian Government Department of Education (Department of Education) website. The consultation process will be finalised, and draft amendments to the Higher Education Provider Guidelines (Guidelines) prepared for release, prior to the bill being debated in the Senate.
1.30The consultation process sought feedback on what should be included in the Guidelines to ensure they are practical and support students to succeed. Stakeholders were invited to identify any practical issues associated with implementation of the proposed approach, with submissions closing on 22 September 2023.
1.31In addition, Minister Clare has asked the Higher Education Standards Panel to consider the effectiveness of the current Higher Education Standards Framework (Threshold Standards) 2021 in supporting students and provide advice on matters such as:
whether current thresholds are sufficiently detailed to cover issues like student retention, completion and success;
ensuring universities are appropriately implementing the Threshold Standards; and
ensuring students know what protections and supports are already available to them—such as the ability to obtain refunds in certain circumstances, or where a student has had to discontinue a course for reasons beyond their control; and
what can be done to improve the standards currently in place.
Key provisions of the bill
1.32In line with the two priority actions outlined above, the bill would amend the Higher Education Support Act 2003 (HESA) to:
make all First Nations students, regardless of location, eligible for Commonwealth supported places in demand-driven higher education courses; and
remove the requirement for students to pass 50 per cent of the units they study to remain eligible for a Commonwealth supported place and FEE‑HELP assistance; and
insert a new requirement that higher education providers must implement and comply with a policy to identify and support students who are at risk of not successfully completing their studies.
First Nations students
1.33The National Agreement on Closing the Gap aims to increase the proportion of First Nations people aged 25–34 years who have completed a tertiary qualification to 70 per cent. According to the Closing the Gap Information Repository, in 2021, only 47 per cent of First Nations people aged 25–34 years had completed non-school qualifications of Certificate III or above. While this target shows improvement, it is not on track to be met.
1.34The bill would amend the HESA to remove the cap on Commonwealth supported places for First Nations students—in demand driven bachelor and honours level courses from Table A providers—by extending eligibility to First Nations students in metropolitan areas. Currently, only First Nations students in regional and remote areas are eligible for Commonwealth supported places.
1.35To support this change, the bill would also repeal a number of definitions within the Act that are no longer necessary. The definitions 'eligible Indigenous person', 'regional area' and 'remote area' will be repealed as the bill seeks to expand eligibility to include all First Nations people in demand driven courses irrespective of where they live.
1.36The removal of the cap on demand driven funding for First Nations students is expected to have a positive effect on the level of participation and over time should increase the number of First Nations students with a tertiary qualification. The Australian Government Department of Education has estimated that this measure could double the number of First Nations students at university within ten years.
Supporting students to succeed
Removing the 50 per cent pass rule
1.37The bill would remove the requirement that students must maintain a pass rate above 50 per cent of the units they undertake in a bachelor's degree or higher. Currently, students who fail to meet this requirement become ineligible for Commonwealth assistance and must either pay their course fees upfront, transfer to a new course, or withdraw from their studies.
1.38The 50 per cent pass rule was implemented as part of the JRG package and was intended to prevent the accrual of large Higher Education Loan Program (HELP) debts by dissuading students from remaining in courses in which they were not succeeding. Universities Australia described this measure as 'punitive' and 'unnecessarily harsh', with most of the students affected by this rule being from low socio-economic backgrounds. The bill would remove this measure all together.
Implementing a support-for-students policy
1.39As well as removing the 50 per cent pass rule, the bill would require universities and other higher education providers to implement and comply with a support-for-students policy to support students who are identified as at-risk of not successfully completing their studies. The bill would require such policies to include information on:
a provider's processes for identifying students at risk of not successfully completing their units of study; and
the supports available from, or on behalf of, the provider to help students successfully complete the units of study in which they are enrolled.
1.40A provider's support-for-students policy would also need to be compliant with any requirements specified in the Guidelines.
1.41As well as implementing a support-for-students policy, the bill requires higher education providers to be compliant with their policies and report on compliance to the minister. The compliance report provided to the minister must:
include the information required by the Guidelines; and
be given within the period, or at the intervals, specified in the Guidelines.
1.42As an additional measure to ensure compliance, the bill would enforce financial penalties for providers that do not meet their obligations. The bill provides for a civil penalty of up to 60 penalty units for non-compliance.
1.43This is consistent with similar provisions in the HESA, which provide that failure of a provider to give the Minister information in the form approved by the Minister and in accordance with other requirements that a Minister makes, will attract a civil penalty of 60 penalty units.
1.44In addition, the bill would allow the Department of Education or the Tertiary Education Quality and Standards Agency to take action, such as issuing an infringement notice under Part 5 of the Regulatory Powers (Standards Provisions) Act 2014, to providers who are non-compliant.
Financial implications
1.45The cost of expanding demand driven places will be 'up to $34.1 million in underlying cash terms' over four years from 2023–24 to 2026–27.
1.46The cost of removing the 50 per cent pass rate requirement and introducing the new requirements for higher education providers in relation to student support policies 'is expected to have an underlying cash impact of $1.1 million' over four years from 2023–24 to 2026–27.
Consideration by other parliamentary committees
1.47When examining a bill, the committee considers any relevant comments published by the Senate Standing Committee for the Scrutiny of Bills and the Parliamentary Joint Committee on Human Rights. At the time of writing, neither committee had reported on the Higher Education Support Amendment (Response to the Australian Universities Accord Interim Report) Bill 2023.
1.48The committee notes the EM's statement on compatibility with human rights, which concludes that the bill 'is compatible with human rights because it supports the right to education'.
Conduct of the inquiry
1.49On 10 August 2023, the Senate referred the provisions of the Higher Education Support Amendment (Response to the Australian Universities Accord Interim Report) Bill 2023 to the committee for inquiry and report by 13 September 2023.
1.50On 11 September 2023, the Senate agreed to extend the committee's reporting date to 27 September 2023. On 27 September 2023, the committee presented a progress report which requested a further extension to report until 11October 2023 to allow the committee time to conclude its deliberations.
1.51The committee advertised the inquiry on its website and invited submissions by 25 August 2023. The committee received 23 submissions, listed at Appendix 1.
1.52The committee also held two public hearings in Sydney on 1 September 2023 and 8 September 2023. A list of witnesses who gave evidence at that hearing is included at Appendix 2.
Acknowledgement
1.53The committee thanks those organisations and individuals who contributed to this inquiry by preparing written submissions and giving evidence at the public hearings.