Introductory Info
Date introduced: 4 July 2019
House: House of Representatives
Portfolio: Education
Commencement: 1 January 2020, except Part 2 of Schedule 1 of the Higher Education Support Amendment (Cost Recovery) Bill 2019, which commences at the same time as the Higher Education Support (Charges) Act 2019 (the Charges Act), but does not commence at all if the Charges Act does not commence.History of
the Bills
The Higher
Education Support (Charges) Bill 2018 (the first Charges Bill) and the Higher
Education Support Amendment (Cost Recovery) Bill 2018 (the first Cost
Recovery Bill) (collectively the 2018 Bills) were introduced into the House of
Representatives on 19 September 2018. The 2018 Bills were debated in
the House on 4 December 2018 but did not progress, and lapsed when
the Parliament was prorogued on 11 April 2019.[1]
The Higher
Education Support (Charges) Bill 2019 (the Charges Bill) and the Higher
Education Support Amendment (Cost Recovery) Bill 2019 (the Cost Recovery
Bill) (collectively the Bills), which were introduced into the House on 4 July 2019,
are in near-equivalent terms to the 2018 Bills. The only difference is the
commencement date, which is proposed to be 1 January 2020, in
recognition that the 1 January 2019 commencement proposed in the 2018 Bills has
now passed. The 2019–20 Budget delayed the introduction of the charges by 12
months, to January 2020.[2]
A Bills Digest was prepared for the 2018 Bills.[3]
Much of the material in this Bills Digest has been sourced from that earlier
one.
Purpose of the Bills
Together, the Charges Bill and the Cost Recovery Bill
propose to give effect to a 2018–19 Budget measure to introduce partial cost
recovery arrangements for higher education providers whose students access the
Higher Education Loan Program (HELP).[4]
These arrangements comprise two new charges:
- an
annual higher education provider charge to partially recover the cost of
administering HECS‑HELP and FEE-HELP and
- an
application fee to be paid by registered higher education providers seeking to
become FEE‑HELP providers, to recover the cost of administering the
FEE-HELP application process.[5]
The Higher Education Support (Charges) Act 2019 (when
enacted) will introduce the annual higher education provider charge, the amount
of which will be specified in, or worked out in accordance with, Regulations to
be made by the Governor-General.
The Cost Recovery Bill proposes to amend the Higher Education
Support Act 2003 (HESA) to enable the relevant Minister
(currently the Minister for Education) to require payment of the application
fee, and enable the Department of Education (DoE) to administer the annual
provider charge under the Higher Education
Provider Guidelines 2012 (the Guidelines), which are made by the Minister
under section 238–10 of HESA.
The Bills do not specify the amounts to be charged, or
methods for working out the charges—this will be in the respective Regulations.
Background
The Australian Government
Charging Framework
Regulatory cost recovery is dealt with under the Australian
Government Cost Recovery Guidelines (the CRGs), which form part of
the Australian Government Charging Framework (the Charging Framework). The
Charging Framework aims to improve consistency of charging, including when it
is appropriate for the Government to charge for its activities.[6]
According to the CRGs:
The Australian Government’s overarching cost recovery policy
is that, where appropriate, non-government recipients of specific government
activities should be charged some or all of the costs of those activities.[7]
Under the CRGs, the appropriateness of cost recovery from
a given activity is assessed based on the nature of the activity, who is to be
charged, the impact of cost recovery on competition, innovation or
financial viability, the efficiency of administering the cost recovery, and any
effect on the policy outcomes of the activity, as well as obligations under
treaties, policies and legislation.[8]
The CRGs recommend full cost recovery but acknowledge
partial cost recovery, while less common, may be appropriate when:
- charges are being ‘phased in’
-
full cost recovery would be inconsistent with community service
obligations endorsed by the Australian Government
-
the Australian Government has made an explicit policy decision to
charge for part of the costs of an activity.[9]
Under the CRGs, ‘charges imposed when a good, service or
regulation is provided to a group of individuals or organisations (for example,
an industry sector) rather than to a specific individual or organisation’ are a
‘cost recovery levy’.[10]
A cost recovery levy is a tax and is imposed via a separate
taxation Act. It differs from general taxation as it is ‘earmarked’ to fund
activities provided to the group that pays the levy.[11]
A cost recovery implementation statement (CRIS) is
required before charges commence.[12]
The Explanatory Memorandum to the Cost Recovery Bill states that this will be
completed before the Regulations are introduced.[13]
On 31 October 2018, the then Department of Education and Training
(DET) released a draft Cost
Recovery Implementation Statement: cost recovery activities for the HECS-HELP
and FEE-HELP programs financial year 2018–19 (the draft CRIS) for
comment. The draft CRIS details the regulatory costs associated with DET’s (now
DoE’s) management of FEE-HELP provider applications and ongoing regulatory
activities related to higher education providers under HESA, as well as
a proposed fee structure.[14]
Commonwealth higher education
funding under the Higher Education Support Act 2003
HESA provides the legislative framework for Commonwealth
funding for higher education institutions. Although institutions have access to
other sources of funding, the major higher education funding programs are under
HESA, including HELP loans to students, the Commonwealth
Grant Scheme (CGS), which subsidises tuition costs for ‘Commonwealth
supported places’ (CSPs), research grants under the Other Grants
Guidelines (Research) 2017, and ‘Other Grants’, as set out in the Other Grants
Guidelines (Education) 2012, such as funding for equity programs under the
Higher Education Participation and Partnership Program.
Providers must meet financial viability, policy standards
and probity of key staff requirements to maintain their status as an approved
higher education provider under HESA, and DoE monitors compliance with
these requirements.[15]
Access to funding is controlled according to provider type
in HESA:
- Australian
public universities, listed in Table A in section 16–15, have access to all
Australian Government grants under HESA, and their eligible students can
access all HELP loans
- universities
listed in Table B in section 16–20 can access some Australian Government grants
as outlined in section 41–10, and their eligible students can access FEE-HELP,
and in some cases HECS-HELP[16]
- universities
listed in Table C in section 16–22 and other approved non-university higher
education providers (NUHEPs) are not eligible for Australian Government grants
under HESA, but their students can access FEE-HELP.
Thus, the only program that is broadly available to all
approved higher education providers under HESA is FEE-HELP. Consistent
with this, for NUHEPs, approval under HESA is dealt with by DoE as a
FEE-HELP Provider Application.[17]
This means that applying cost recovery to FEE-HELP providers captures all
higher education providers with access to Commonwealth funding.
The Higher Education Loan
Program
HELP is currently made up of four student loan schemes
which allow eligible students to defer the cost of approved tertiary education
courses at approved providers, with loans repaid through the Australian
Taxation Office (ATO) when a debtor’s income is more than the minimum repayment
threshold.[18]
The loan schemes are:
- HECS-HELP,
available for Commonwealth supported higher education students (usually domestic
undergraduate students studying at Australian public universities) to pay their
student contribution amounts (the part of the course fee not paid by the
Commonwealth)
- FEE-HELP,
available for domestic full fee-paying higher education students to pay course
fees, up to a lifetime borrowing limit
- OS-HELP,
which is available for eligible Commonwealth-supported higher education students
undertaking part of their course overseas and
- SA-HELP
is available to students wishing to defer payment of the student services and
amenities fee, which higher education providers charge for non-academic student
services and amenities.[19]
A similar scheme, VET Student Loans, is also available to
Vocational Education and Training (VET) students studying an approved course at
an approved training provider.[20]
VET Student Loans was introduced as a HELP sub‑scheme to replace VET
FEE-HELP from 2017. However, the Education and
Other Legislation Amendment (VET Student Loan Debt Separation) Act 2018
separated VET Student Loans from HELP as of 1 July 2019. As outlined
below, cost recovery arrangements are already in place for VET Student Loans.
The role of the Higher
Education Loan Program in provider operations
HELP constitutes a significant source of revenue for
higher education providers. In 2017 (the latest year for which statistics have
been published), university and non-university higher education providers’
students collectively deferred over 90 per cent of their eligible fees through
HECS-HELP and FEE-HELP. This amounted to just under $6.0 billion revenue to
providers (see Table 1 below), or 15.8 per cent of $37.9 billion total sector
revenue.[21]
Table 1: Fee amounts charged
and amounts deferred through HECS-HELP and FEE-HELP, all higher education
providers, 2017
|
Total charges |
HELP debt |
HELP debt as percentage
of amount charged |
Commonwealth supported domestic students
(HECS-HELP eligible) |
$4,995,126,811 |
$4,467,327,781 |
89.4% |
Fee-paying domestic students
(FEE-HELP eligible) |
$1,540,667,896 |
$1,506,160,144 |
97.8% |
| Total |
$6,535,794,707 |
$5,973,487,925 |
91.4% |
Source: Parliamentary Library calculations based on DoE, ‘2017
Section 5 Liability status categories: Table 5.8: Amounts Charged, Paid Up-front, and Debt amount(a) by Higher Education Institution and Loan type,
Full Year 2017, $’, Higher
education liability status categories tables for the 2017 full year,
DoE website, 14 September 2018.
In order to provide their students with access to HELP,
higher education providers must undertake a range of functions to administer
the program. Generally, this involves providing information to students,
appropriate officers of the provider handling requests for Commonwealth
assistance (essentially the application for a HELP loan), and providing
estimates of student loan amounts and then actual student numbers to DoE in
order to facilitate the processing of payments. In cases where the student
applies to have their HELP debt cancelled for a unit, an officer of the
provider will act as the delegate of the Secretary in handling the initial
application:
Where a student seeks remission of their HELP debt, they must
apply to their provider in the first instance, who as a delegate of the
Secretary, decides on the application. If the student disputes the provider’s
decision, they can apply for an internal review of the decision and this can be
conducted and decided by the provider.[22]
Current cost recovery
arrangements in the Higher Education Loan Program
Cost recovery arrangements were introduced to HELP in the VET
Student Loans in 2017, prior to the separation of VET Student Loans from HELP.
Charges include an application fee, enabled by section 31 of the VET Student Loans
Act 2016, and a provider charge levied on approved providers as
a tax under the VET
Student Loans (Charges) Act 2016. Like the arrangements proposed in the
Charges Bill and the Cost Recovery Bill, the charges are set in regulations.
Currently:
No cost recovery charges for HELP currently apply to
higher education providers. The only administrative charge currently in place
in the higher education HELP schemes is the 25 per cent loan fee paid by
some undergraduates accessing FEE-HELP—because FEE-HELP is for students who are
not in CSPs, which are generally offered to undergraduate students enrolling at
public universities, these undergraduates are almost always at NUHEPs.[24]
Although this loan fee is intended to recover some of the costs of providing
FEE-HELP loans to students at favourable terms, with, for example, the 2008 Review
of Australian Higher Education chaired by Professor Bradley stating that the
fee is ‘intended to recover some of the costs to the Commonwealth associated
with the repayment subsidies’, this is to be distinguished from regulatory cost
recovery as per the CRGs.[25]
The purpose of the Higher
Education Loan Program
The expansion of cost recovery into HECS-HELP and FEE-HELP
raises questions about the purpose of the program—specifically, which ‘group of
individuals or organisations’ the ‘good, service or regulation’ is being
provided to, as per the CRGs.[26]
Since the introduction of the precursor to HELP, the
Higher Education Contribution Scheme (HECS) in 1988, governments have described
the purpose of higher education student loans variously as a way to reduce cost
to government, and ensure access for students. That is, the role of HELP for providers
has not been foregrounded.[27]
For example, at the introduction of the legislation to
create HECS in 1988, the Higher Education
Funding Act 1988, then Minister for Employment, Education, and
Training, John Dawkins, stated in his second reading speech:
To help finance the substantial expansion in the funding of
higher education that was announced in the Budget, the Bill makes provision for
the establishment of the higher education contribution scheme (HECS). HECS will
apply to study in award courses undertaken in higher education institutions
from 1 January 1989. People who benefit from participation in higher education
will be required to make a small contribution towards the cost of their study.
...The higher education contribution scheme is an essential
part of the Government's plans for expansion and development of the higher
education system. In financial terms it will raise more than one-third of the
additional funding for the 1989-91 triennium allocated to higher education in
this Budget. The size of this contribution will grow in future years. Just as
important, the scheme will increase the fairness of funding arrangements for
higher education, ensuring that the total burden of funding does not fall
entirely on the taxpayer.[28]
In 2003, when the passage of HESA increased access
to higher education student loans through the creation of HELP, Dr Brendan
Nelson, then Minister for
Education, Science and Training, stated:
One of the most important changes in these reforms is the
recognition that, as the world and the needs of Australian universities are
changing, Australians should be no less free to take up, if they are
academically qualified, a full fee paying place in an Australian university
than a citizen from another country. The government will allow the
universities, once they have filled all of their HECS places and if they choose
to, to then offer a full fee paying place to an Australian citizen who is
academically qualified and considered to be so by the university. For the first
time, the Commonwealth government will lend those students money on the same
income contingent arrangements as HECS.[29]
More recently, in 2014, in his second reading speech
introducing the Higher Education and Research Reform Amendment Bill 2014, Christopher Pyne, then Minister for
Education, argued:
Most people would agree that HELP is the
best loan you would get in your life—for the best investment that most people
will ever make in themselves.
It is a good deal. It is the best deal an
Australian will ever get. Australian university graduates on average earn up to
75 per cent more than those who do not go on to higher education after
secondary school. Over their lifetime graduates may earn around $1 million more
than if they had not studied at university. It is only fair that they pay a
reasonable share of what it costs the taxpayer.[30]
Research into the benefits of higher education funding has
tended to follow this logic, with analysis of returns on education investment
typically comparing individual benefits with those to the economy as a whole
(public versus private benefit), rather than considering the benefit the
provider may gain from students being able to access the loan.[31]
Committee consideration
Senate Education and Employment
Legislation Committee
The Senate Selection of Bills Committee has recommended
that the Charges Bill and Cost Recovery Bill not be referred to committee.[32]
The 2018 Bills were referred to the Senate Education and
Employment Legislation Committee for report by 23 November 2018. Details of the
inquiry are available from the inquiry
homepage.
The Committee recommended that the Senate pass the 2018
Bills, but encouraged ‘the department to continue consulting with key
stakeholders to ensure the final implementation is fair and equitable.’[33]
Senate Standing Committee for
the Scrutiny of Bills
At the time of writing, the Senate Standing Committee for
the Scrutiny of Bills had not considered the Bills.
The Committee considered the 2018 Bills and, in relation
to the first Charges Bill, sought advice from the Minister about why limits on
the annual provider charge are not specified in primary legislation and whether
the method of calculation of a maximum charge could be included in the Bill.[34]
The Scrutiny Digest states:
One of the most fundamental functions of the Parliament is to
impose taxation (including duties of customs and excise). The committee's
consistent scrutiny view is that it is for the Parliament, rather than makers
of delegated legislation, to set a rate of tax.
... Where charges are to be prescribed by regulation the
committee considers that, at a minimum, some guidance in relation to the method
of calculation of a maximum charge should be provided on the face of the
primary legislation, to enable greater parliamentary scrutiny.[35]
The Minister’s response, provided 16 November 2018,
states:
[T]he purpose of setting the amount of the charge for a year
via a legislative instrument is to ensure that the charge can be reviewed and
updated annually, which will assist providers by giving them certainty on the
annual charge amounts for each calendar year.
In addition, there is existing legislation (VET Student
Loans (Charges) Act 2016) for similar annual charge on VET Student Loans
approved course providers that does not provide a limit on the charge, and the
amounts for the charge are set out in legislative instrument. This sets a
precedent, which was used to guide the development of the Charges Bill.[36]
In relation to the first Cost Recovery Bill, the Committee
sought advice from the Minister about why it is necessary and appropriate for
the rate of the late penalty, and review of decisions made about the collection
and recovery of the annual provider charge, to be set out in delegated
legislation, and why the Bill does not require that the Guidelines make review
rights available.[37]
The Scrutiny Digest states:
The committee's view is that significant matters, such as the
amount of a penalty or the review of decisions relating to the collection and
recovery of the higher education provider charge, should be included in primary
legislation unless a sound justification for the use of delegated legislation
is provided.[38]
In response, the Minister reiterated the points cited
above about the need for the flexibility provided by subordinate legislation,
as compared with pursuing amendments through primary legislation, and again
pointed to the VET Student Loans (Charges) Act 2016 as precedent.[39]
However, the Minster’s response did undertake to ensure
that review rights are included in the Guidelines.[40]
Policy position of non-government parties/independents
At the time of writing, no non-government parties or
independents have comments on the Bills.
In respect to the 2018 Bills, Labor Senators' additional comments
in the report of the Senate Education and Employment Legislation Committee
stated:
Labor won’t oppose these bills because of the very small
impact they will have on the sector, especially in the context of our policies
to properly fund the sector.
Labor has concerns about how the charges and other aspects of
the bill will operate over the long term.
Labor will seek assurances that the new scheme must ensure
there is not a negative impact on students—it is simply not fair for any of
these small additional charges to flow through to students or undermine equity
in Australia’s university system.[41]
Australian Greens Senators' dissenting report in the
Senate Education and Employment Legislation Committee’s report on the 2018
Bills recommended the Bills not proceed, citing insufficient consultation and
‘a worrying continuation in this Government’s larger pattern of defunding the
higher education sector and shifting the costs of providing higher education
away from the Commonwealth.’[42]
Position of major interest
groups
Most key stakeholders issued statements in response to the
2018 Bills, and made submissions to the Senate Standing Committee for the
Scrutiny of Bills inquiry into these, but have not separately addressed the
current Bills.
Universities
Australia (UA), the national representative body for Australian
universities, stated that the Bills do not provide sufficient detail about how
the new charging arrangements would operate, stating:
The legislation seeks very broad Ministerial powers to tax
higher education providers ... This would be a significant change from current
legislative funding arrangements. It would place such decisions in the hands of
the Minister rather than the Parliament.[43]
The Group of Eight (Go8)
research intensive universities, said in a submission to the Senate Standing
Committee on Education and Employment inquiry into the 2018 Bills:
In total this is a demonstrably pernicious policy; it is a
tax on public institutions dressed up as recouping administrative costs. The
Go8 therefore registers its strong objections to the Government’s unacceptable
policy proposal.[44]
The Innovative Research
Universities (IRU) grouping urged the Senate to oppose the annual provider
charge, arguing:
Charging providers for students’ use of HECS-HELP and
FEE-HELP is to avoid recovering costs from those who actually use the schemes –
the students. This shows the fundamental error underlying the charge as created
in the Bills. The Government - rightly - will not charge students directly for
access to HELP. Yet it will, instead, penalise students by further reducing the
resources universities and other higher education providers have to deliver
students a good education.
The IRU members would not deny their students access to HELP
nor does the IRU propose that students should pay to access HELP. Rather, as a
Government program that reduces Government direct expenditures on higher
education the Government should bear the cost.
In effect the Statement acknowledges that the Government’s
schemes to assist students rely heavily on universities and other providers to
operate. The Government ought to pay universities and other providers for the
cost of this service, which would be true cost recovery. Instead, it wishes to
charge universities and other providers for the benefit of assisting the
Government implement its programs for students.[45]
The Council
of Australian Postgraduate Associations (CAPA), which aims to protect and
further the interests of postgraduate students, is not supportive of the
proposed fees. In response to the 2018 Bills, CAPA indicated that it considers
the proposed fees minor in comparison to the overall budget position of
universities:
The amounts levied are minimal compared to overall university
budgets, and so, while these levies are unwelcome, they are not a cause of
major upset to universities. Of more concern to universities and students is
the impact of successive cuts, which over time erodes the quality of university
education.[46]
CAPA issued a further media release in response to the
Bills on 4 July 2019, stating:
This tax will end up being passed to students, either through
an increase in fees for postgraduate and international students, or through a
reduction in services available to students.[47]
The Independent
Tertiary Education Council Australia (ITECA), previously the Australian
Council for Private Education and Training (ACPET), which represents private
providers of tertiary education and training, stated in its budget media
release:
Without addressing the funding demise, moving the regulators
to full cost recovery will see more college closures and disruption for
students. For higher education providers they have already been locked out of
access to government funded places and their students are required to pay a 25%
fee University students don’t have to pay, so increased fees will shift more
costs to students.[48]
Independent Higher
Education Australia (IHEA), previously the Council of Private Higher
Education (COPHE), which represents private higher education providers, said in
a submission to the Senate Standing Committee on Education and Employment
inquiry into the 2018 Bills that it was unable to support the Bills, on the
basis of a lack of consultation and information, and concerns about adding to
cost burdens on students, particularly FEE-HELP students already paying the 25
per cent loan fee.[49]
The Grattan Institute’s submission to the Senate Standing
Committee on Education and Employment inquiry into the 2018 Bills observed:
Conceptually, it is not clear that HELP’s cost recovery
should be from higher education providers. HELP is a government program that
aims to assist students, and they are its main beneficiaries. The providers
assists with HELP’s implementation, rather than HELP being a service provided
to them.[50]
Given that HELP is assistance to students, the submission
states:
... it might be argued that... it is the providers who are
providing a service to the Department in managing a substantial part of the
process of students applying for HELP... If HELP cost recovery is to be pursued
as a policy objective, a student charge added to their HELP loan may more
closely match the cost recovery policy.[51]
Financial implications
The Explanatory Memorandum to the Cost Recovery Bill
states:
The annual charge which is based on partial cost recovery is
expected to deliver savings of $11.4 million in fiscal balance terms over the
forward estimates (2019-20 to 2022-23).The application fee which is based on
full cost recovery is expected to deliver saving of $0.3 million over 2019-20
to 2022-23. Thereby the HELP cost recovery measures provide an estimated
combined saving of $11.7 million over 2019-20 to 2022-23.[52]
This represents a slightly lower expected saving than
presented in conjunction with the first Cost Recovery Bill, which cited
expected savings of $14.1 million over 2018–19 to 2021–22, including $13.8
million from 2019–20 to 2021–22 from the annual charge, and $0.3 million over
2018–19 to 2021–22 from the application fee.[53]
The Explanatory Memorandum to the Charges Bill repeats the
partial cost recovery savings figures for the annual higher education provider
charge:
The annual charge, which is based on partial cost recovery,
is expected to deliver a saving of $11.4 million in fiscal balance terms over
the forward estimates (2019-20 to 2022-23).[54]
The 2019–20 Budget attributed a drop in revenue to the 12
month delay in the introduction of this measure.[55]
Statement of Compatibility with
Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed
the Bills’ compatibility with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of that Act. The
Government considers that the Bills are compatible.[56]
Parliamentary Joint Committee
on Human Rights
At the time of writing, the Parliamentary Joint Committee
on Human Rights had not examined the Bills, but had reported that the 2018
Bills did not raise human rights concerns.[57]
Key issues and provisions
Higher Education Support
(Charges) Bill 2019
The higher education provider
charge
The Charges Bill sets out a framework to enable the
Minister to impose the higher education provider charge under the proposed Higher
Education Support (Charges) Act 2019 (the Charges Act).
Clause 4 specifies that the Act does not impose a
tax on property of any kind belonging to a state.
Clause 5 is the dictionary. Most importantly, it
specifies that the term higher education provider is to have the
same meaning as in HESA. This definition is the part of the Charges Bill
that limits the application of the higher education provider charge
to providers that are approved to receive Commonwealth funding under HESA,
including universities and NUHEPs. There are approximately 23 higher education
providers registered to provide higher education under the Tertiary Education
Quality and Standards Agency Act 2011 (the TEQSA Act), that have
not taken the step of applying to become an approved higher education provider
under section 16 of HESA to access Commonwealth funding, and thus will
be exempt from the charge.[58]
The dictionary also defines the terms higher
education provider charge as a charge imposed by clause 6, property
of any kind belonging to a State according to subclause 4(2),
which refers to the meaning in section 114 of the Constitution,
and year as calendar year.
Clause 6 of the Charges Bill imposes the charge on
a body that is a higher education provider at any time during the (calendar)
year.
Subclause 7(1) specifies that the amount of the
charge is to be set out in Regulations, either by prescribing the amount or the
method of calculation.
The Explanatory Memorandum to the Charges Bill states:
The amount of the annual charge will be specified in
regulations. It is anticipated the amount of the charge will differ depending
on the size of the provider (determined by the number of enrolments per year),
recognising the impost of such a charge on smaller providers. Prior to the
introduction of the regulations, a fees schedule will be determined that is
consistent with the Australian Government Cost Recovery Guidelines and
documented in a cost recovery implementation statement (CRIS).[59]
Subclause 7(2) of the Charges Bill specifies that before
the regulations are made, the Minister must be satisfied that the cost
recovered by the higher education provider charge will be no more
than the Commonwealth’s likely costs in connection with the administration of HESA.
It is notable that this does not strictly limit cost recovery to the
Commonwealth’s costs in connection with the administration of the HELP program.
Instead, it appears to cover the administration of HESA as a whole. Subclause
7(3) allows that the Regulations may provide for indexation of amounts
specified in the Regulations.
Clause 8 allows the Regulations to provide for
exemptions from the higher education provider charge. The Explanatory
Memorandum does not provide any additional detail about the circumstances or
classes of providers that might be covered by such an exemption.[60]
Clause 9 of the Charges Bill deals with making
Regulations under the Act. It specifies that the Governor-General may make
Regulations prescribing matters required or permitted by the Act, or necessary or
convenient to give effect to the Act.
The draft CRIS indicates ‘[t]he Government has currently
determined the costs of administering payments, general administration and
compliance will not be recovered from providers.’[61]
The draft CRIS proposes to recover, through the annual
provider charge, costs associated with:
- stakeholder
engagement and responses to enquiries and complaints—based on the process costs
per activity outlined in the draft CRIS, these activities are driven by student
numbers and
- provider
management, as well as monitoring and assessment of compliance and financial
viability—based on the process costs per activity outlined in the draft CRIS,
these activities are driven by provider type, with DoE undertaking more
monitoring and assessment tasks for NUHEPs and Table C universities.[62]
The proposed annual provider fee structure presented in
the draft CRIS is outlined in Table 2 below, however the Bills do not specify
the amounts to be charged, or methods for working out the charges—this will be
in the respective Regulations. The draft CRIS indicates the annual charge could
change in future as the complexity of DoE’s regulatory activities is reduced
through improved provider compliance.[63]
Table 2: Proposed fee structure for the annual charge for
approved higher education providers (2019)
| Activity Group |
Activity driver |
Annual Charge Estimate |
| Stakeholder engagement and Enquiries (via telephone,
email, webform and through Ministerial correspondence) |
Number of students registered with a provider |
$1.82 per registered student for the provider |
Provider management and compliance
(NUHEPs and Table C universities) |
Number of students registered with a NUHEP/Table C provider |
$13.18 per registered student at the NUHEP/Table C
provider |
Provider financial viability
(NUHEPs and Table C universities) |
Risk assessment and risk management, based on assessment
of a NUHEP or Table C provider as:
- high risk (or not assessed yet)
-
medium risk or
-
low risk.
|
Based on risk assessment:
- Low: $544
- Medium: $1,631
-
High (or not assessed yet): $2,719
|
Provider management, compliance and financial viability
(Table A and B universities) |
Delivered equally across all universities |
$26,207 per university |
Source: Adapted from DET, Cost
Recovery Implementation Statement: cost recovery activities for the HECS-HELP
and FEE-HELP programs financial year 2018–19, draft for consultation,
31 October 2018, p. 14.
The draft CRIS does not indicate
that the per-student components of this charge would be calculated based only
on HECS-HELP and FEE-HELP students. Parliamentary Library calculations, based
on 2017 all student numbers, suggest charges under this proposed fee structure,
if implemented, would range from approximately $30,000 to $250,000 per calendar
year for universities, and from under $1,000 to just over $100,000 for NUHEPs.[64]
It should be noted that, under
the current provisions of HESA, higher education providers would not be
able to recover the cost of the annual higher education provider charge through
increases to the fees paid by students using HECS-HELP, since these fees are
capped under section 169–15, which requires a Commonwealth supported student to
pay the student contribution amount for a unit, and section 93–10 of HESA,
which sets out the maximum student contribution amounts and allows for their
indexation under Part 5-6 of Chapter 5 of HESA.[65]
Under subsection 36–30(1) a domestic undergraduate studying at a Table A university
must be enrolled as a Commonwealth supported student, and as such would
normally be eligible for HECS-HELP.
Administration requirements for the higher education
provider charge under HESA are addressed in the Cost Recovery
Bill, as outlined below.
Higher Education Support
Amendment (Cost Recovery) Bill 2019
The higher education provider
application fee
Section 16–25 of HESA sets out how bodies are
approved as higher education providers by the Minister following an
application. Section 16–40 specifies that an application must be in writing,
cannot be made within six months of an unsuccessful application, must be in the
form approved by the Minister, and accompanied by the information requested by
the Minister.
Part 1 of the Cost Recovery Bill proposes to amend
section 16–40 to enable the Minister to charge an application fee as part of
these arrangements.
Item 1 inserts proposed paragraph 16–40(2)(c)
so that an application ‘must be accompanied by the fee (if any) prescribed by,
or worked out in accordance with the method prescribed by, the Higher Education
Provider Guidelines’. Including the fee at application stage means providers
that make an unsuccessful application will still be liable to pay the fee, and
the fee could be charged again for any subsequent applications.
The Explanatory Memorandum to the Cost Recovery Bill
states that the fee will be ‘a flat fee on prospective FEE-HELP providers’.[66]
However, the note to proposed paragraph 16–40(2)(c) clarifies that the
Guidelines ‘may prescribe different fees, or methods, for applications made by
different kinds of applicant’.
Item 2 inserts proposed subsection 16–40(3) into
HESA which specifies that the provider application fee is not to be
levied in such a way as to amount to taxation.
The draft CRIS proposes a FEE-HELP provider application
fee (for providers not currently approved under HESA) of $12,926.00
(rounded), to fully recover the cost for DoE to:
- receive
and register an application
- check
for completeness
- assess
the application, which involves:
- a
financial performance check
- fit
and proper person checks
- assessment
and moderation
- assessment
oversight
- decisions
and notifications.[67]
Arrangements for administering
the higher education provider charge
Part 2 of the Cost Recovery Bill deals with those
elements of the higher education provider charge not addressed in the Charges
Bill.
Subdivision 19-E of HESA sets out the compliance
requirements for higher education providers under the Act.
Item 3 inserts a new section into Subdivision 19-E
to set out the compliance requirements for the higher education provider
charge. Proposed subsection 19–66(1) provides that a higher
education provider must pay the higher education provider charge and any late
payment penalty imposed by the Higher Education Support (Charges) Act 2018
(when enacted) when it is due and payable. Proposed subsection 19–66(2)
would add to the range of matters the Higher Education Provider Guidelines can
make provision for:
- notices
setting out the higher education provider charge amount payable, and to whom
the charge is payable
- the
higher education provider charge due date, and extensions of this date
- late
payment penalties
- refund,
remission, or waiver of the higher education provider charge or late payment
penalties
- review
of decisions in relation to the collection or recovery of the higher education
provider charge
- any
other matters relating to the collection or recovery of the higher education
provider charge.
Item 4 proposes to add the definition of higher
education provider charge to the dictionary at Schedule 1 of HESA
meaning a ‘charge imposed by the Higher Education Support (Charges) Act 2018’.
Concluding comments
These Bills propose to give effect to a 2018–19 Budget
commitment to introduce partial cost recovery arrangements to HECS-HELP and
FEE-HELP, bringing arrangements for higher education providers into line with
those already in place for approved VET Student Loans providers.
As with the introduction of cost recovery charges to VET
Student Loans, the lack of legislative control on the approach to setting the
charges and the maximum amount of the charges has raised concern among some
stakeholders. While the Charging Framework does impose some limitations, in
particular specifying that the charges should represent the efficient cost of
the regulatory activity, implementation arrangements are still undergoing
consultation.[68]
Additionally, despite the revenue providers attract from
HELP, with the exception of cost recovery in the VET Student Loans from 2017,
there appears to be little precedent to draw on to evaluate the proposition
that ongoing administration of HELP is a regulatory activity for higher
education providers. Instead, some institutions have argued that they act as intermediaries
between the government and students, to whom the service is being provided. To
the extent that government deals directly with students to administer the
program, it is not clear that higher education providers should be liable for
this cost.