Purpose of the Bill

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

• extend the Job-ready Graduates Package grandfathering arrangements to honours students who commenced, but did not complete, their related undergraduate degree prior to 1 January 2021 and
• introduce new provisions to reduce HELP debts partially or completely for eligible health practitioners working in rural, remote, or very remote areas. This measure also provides for HELP debt indexation to be waived for the period approved health practitioners are undertaking eligible work in rural, remote, or very remote areas.

Background

Higher education funding

HESA is the Act under which Australian Government support for higher education teaching, and some research, is funded, via:

• the Commonwealth Grant Scheme (CGS), which provides a Commonwealth contribution to course fees to reduce the cost to eligible students, predominantly domestic undergraduates
• the Higher Education Loan Program (HELP), which through various sub-schemes allows eligible students to defer their course costs until their earnings reach a minimum threshold
• the Indigenous Student Success Program, which provides supplementary funding to universities to support Indigenous students through scholarships, tutorial assistance, mentoring, safe cultural spaces and other personal support services and
• various Other Grants made to providers to support specified priorities, such as the Disability Support Program, which provides funding to support students with disabilities, and the Higher Education Superannuation Program, which provides support for certain superannuation expenses.[1]

Provider approval to access to higher education funding

Access to funding under HESA is only available to approved providers, which can be either:

• Table A providers, listed in section 16–15, which are eligible to access all funding programs
• Table B providers, listed in section 16–20, which are eligible to access a limited range of funding programs
• Table C providers, listed in section 16–22, which are explicitly excluded from most funding, but can offer some HELP loans or
• providers approved by the Minister under section 16–25—these are not listed in HESA, but can offer some HELP loans, and are sometimes eligible for other funding programs, subject to Ministerial approval.[2]

Higher Education Loan Program (HELP)

HELP provides loans to higher education students through four sub-schemes:

• HECS-HELP enables students in CSPs (predominantly undergraduate university students) to defer the cost of their student contribution amounts
• FEE-HELP enables full fee-paying students (predominantly postgraduate university students and students studying at non-university higher education providers) to defer their fees
• SA-HELP enables students to defer the cost of the student services and amenities fee (SSAF), which covers certain student services and amenities of a non-academic nature
• OS-HELP enables students in CSPs to defer the cost of certain overseas study expenses.[3]

Generally, these loans are only available to Australian citizens, New Zealand Special Category Visa holders who reside in Australia for the duration of their studies, and permanent humanitarian visa holders who meet residency requirements.[4]

Eligible students can borrow up to the HELP loan limit, which in 2022 is $156,847 for Medicine, Dentistry and Veterinary Science courses leading to initial registration, or eligible Aviation courses, and $109,206 for all other courses.

Once a person’s repayment income reaches a minimum threshold, they are required to make repayments through the Australian Taxation Office.[5] In 2022–23, the minimum repayment threshold is $48,361, and repayment rates range from 1.0% (at $48,361 to $ 55,836) to 10% at $141,848 and above.[6]

Each year on 1 June, any debt that has been outstanding for at least 11 months is indexed using the HELP debt indexation factor, which uses changes in the consumer price index (CPI) to calculate HELP debt increases.[7]

Although students can pay for courses up front rather than using HELP, very few do—in 2020, 90.7% of students liable to pay a student contribution used HECS-HELP, and 73.4% liable to pay a course fee used FEE-HELP (measured in equivalent full-time students).[8] Uptake of each sub-scheme is provided in Table 1 below.

Table 1: HELP uptake by sub-scheme, 2020

Source: ‘2020 Section 5 Liability status categories’, DESE, 14 February 2022, Table 7.

Note: Student numbers in this table should not be summed. Students often use more than one sub-scheme in a year.

Committee consideration

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills has not yet considered the Bill. It did examine the Higher Education Support Amendment (2021 Measures No. 1) Bill 2021, where the grandfathering arrangements were first proposed, however, the Committee made no comment on that Bill.[9]

The Committee also examined the Education Legislation Amendment (2022 Measures No. 1) Bill 2022. Here it expressed concerns about certain criteria for health practitioners wishing to have their HELP debt and indexation reduced being dealt with in Guidelines, rather than being addressed in the Bill.[10] This use of Guidelines to set parameters for eligibility is the same in this Bill.[11] At the time, the Committee sought more detailed advice from the Minister as to:

• why it is considered necessary and appropriate for key details of who will be a location-preferred HELP debtor to be included in delegated legislation and
• whether at least high-level guidance can be included regarding these matters on the face of the primary legislation.[12]  

A response from the Minister was not published by the Committee before the dissolution of the 46th Parliament.

Policy position of non-government parties/independents

At the time of writing, no comments on the Bill from non-government parties/independents were located, however, as this Bill contains measures first introduced by the previous Government, any commentary by the Coalition is likely to be favourable.

Position of major interest groups

Comments about the Bill and its previous incarnations have been mostly positive. However, some major interest groups have identified that health workforce issues are likely to persist despite the measure in Schedule 2 to the Bill.

The President of the Australian College of Nurse Practitioners (ACNP) Leanne Boase has released a statement saying:

The Australian College of Nurse Practitioners (ACNP) is delighted to learn on the 10 November, legislation was passed [sic] by the Federal Government that will ensure Nurse Practitioners or Doctors who live and work in the most remote parts of Australia will have their HELP debt wiped. For Nurse Practitioners this means, ‘the legislation will go towards covering a master’s degree in Commonwealth supported study, a full fee-paying place, or a combination of both.’[13]

In a statement on the lapsed Bill containing the same measure, peak nursing organisations, including the ACNP said:

Despite the recognised incentive that funding for education would create, there are numerous barriers to practice for Nurse Practitioners in all areas of Australia. However, in rural and remote Australia, these are significantly exacerbated. Whilst we fully support the plan to address university debt, without removing the existing government-constructed barriers to practice, it will still not be possible to attract more Nurse Practitioners in any significant numbers. These barriers and their solutions were already identified addressed [sic] as part of the MBS review by the Nurse Practitioner Reference Group and supported by the KPMG report commissioned as part of the process. However, none of these recommendations were accepted or implemented by government, and it seems there is still no intention to do so.[14]

Also commenting on the lapsed Bill, the Australian Medical Association welcomed the program but cautioned the initiative must be coupled with a ‘strong rural training pathway’ and employment model.[15]

At the time of the introduction of the earlier Bill, Peta Rutherford, CEO of the Rural Doctors Association of Australia, was reported as saying the initiative will make regional, rural and remote areas more attractive places to work for junior doctors, but:

It really is about ensuring that the government's strategies recognise the full scope of practice of rural GPs and rural generalists and ensuring that they get a fair remuneration package … But also looking at some of the social elements that go with working in a rural community as a doctor. Often that has impacts in relation to children's education or partner employment.[16]

Megan Belot, president of the same association, was also reported as saying one strength of the program is that doctors with exposure to non-metropolitan locations often choose to stay longer than they initially intended, once exposed to the work. However, she cautioned that the program also has the potential to create unintended incentives for doctors to leave remote locations in favour of rural towns.[17]

Universities Australia has come out in support of the current Bill, welcoming the provision of greater financial support to university students. Universities Australia’s Chief Executive Catriona Jackson said:

Universities back the government’s focus on helping more people to get a world-class university education. Skill shortages are biting hard right across the country and the economy, which is why we must do more to get as many university graduates into the workforce as we can. Rural and remote parts of Australia are particularly susceptible to these shortages, so any move to get more doctors and nurses out to these areas to keep locals healthy is a good thing. We also support the certainty this legislation provides for honours students who have been unfairly subjected to fee increases since the Job-ready Graduates package took effect.

Financial implications

The financial implications of the Bill are cited by the Government as being ‘moderate’.[18]

The grandfathering amendments in Schedule 1 will result in a negligible cost as the vast majority of students were covered under HESA, and costed for, already.

The measure in Schedule 2 to reduced HELP debts for medical practitioners is estimated to have an underlying cash impact of $27.2 million over the period 2021–22 to 2025–26.[19]

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 Bill’s 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 Bill is compatible.[20]

Parliamentary Joint Committee on Human Rights

At the time of writing this Digest, the Parliamentary Joint Committee on Human Rights has not considered the Bill.

Key issues and provisions

Schedule 1 – Grandfathered students

The Job-ready Graduates Package (JRG) was a large package of interacting changes to higher education funding, legislated in late 2020.[21] As part of JRG, new Commonwealth and student contribution amounts for a range of study areas commenced on 1 January 2021—while students’ costs for studying in priority fields such as teaching and nursing were reduced, student contributions for other fields such as society and culture were increased.[22]

Grandfathering arrangements were included in the package in an effort to ensure continuing students were not disadvantaged by the changes. These arrangements hinge on a definition of grandfathered student which was inserted into the dictionary at Schedule 1 of HESA. The definition specifies a range of circumstances where grandfathering applies.

The extension of eligibility to receive discounted course fees to honours students who commenced, but did not complete, their related undergraduate degree prior to 1 January 2021 ensures that those students intended to be covered by the measure introduced under the Higher Education Support Amendment (Job-ready Graduates and Supporting Regional and Remote Students) Act 2020 are covered.

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.[23]

Item 1 inserts subparagraph (ia) to the definition of grandfathered student, which would extend the definition to include such students in grandfathering arrangements.

Item 5 specifies that the amendment is to apply from 1 January 2021. As such, any student who has paid a higher student contribution because of being excluded from the grandfathering arrangements will become retrospectively eligible to pay the lower amount. Arrangements for the refund of resulting overpayments by the Commonwealth or students are dealt with in Items 7 to 9. Item 10 provides that the Secretary may act in place of the higher education provider to re-credit an affected student’s HELP balance, if the provider is unable to do so. (Note that it appears that the references to subitems 6(4) and 7(3) within Item 10 are in error. It appears that the relevant subitems are 8(4) and 9(3).)

Item 12 provides that the Minister may, by legislative instrument, make rules prescribing matters of a transitional nature in relation to any of the amendments made by the Bill. Subitem 12(2) is a ‘Henry VIII clause’, under which delegated legislation is able to modify the operation of a primary Act.[24]

Schedule 2 – HELP debt arrangements for certain rural, remote or very remote health practitioners

Access to health practitioners

Unequal access to health practitioners in non-metropolitan areas is a long-running issue in Australia. Analysis of health workforce data by the Australian Institute of Health and Welfare shows consistent disparities in the number of full-time equivalent practitioners per 100,000 people in regional and remote areas, versus major cities.[25] In 2020 (the latest year covered by this analysis), for every 100,000 people living in an inner regional area, the equivalent of 303 full-time medical practitioners, and 1,061 full-time nurses and midwives were practicing, compared with 403 full-time medical practitioners, and 1,069 full-time nurses and midwives in major cities.[26]

The Medical Deans Australia and New Zealand survey finds that of final year students wishing for a future career working in Australia, just under 35% preferred work outside of capital cities.[27] Similarly, around 30% of nurse practitioners work in rural or remote locations.[28]

HELP debt forgiveness

HELP debt forgiveness for doctors and nurse practitioners who practice in rural, remote or very remote areas was announced as part of a package of rural health workforce measures in December 2021.[29] The initiative builds on the Stronger Rural Health Strategy, which included a number of other measures to increase supply of rural health practitioners, including the Murray-Darling Medical Schools Network and the Bonded Medical Program.[30]

The program reflects the regime currently in place for teachers in very remote areas, which was introduced in 2019.[31] While it is too early to assess the success of the program for teachers, historically, similar initiatives do not appear to have significantly shifted workers’ preferences. Instead, such programs have resulted in a windfall gain for individuals whose circumstances and preferences already align with policy goals.[32]

Health practitioner course costs and HELP repayments

Under current arrangements, HELP forgiveness could equate to a benefit of approximately $45,604 to $68,406 for students who studied medicine, and $7,970 for the nurse practitioners, based on 2022 student contribution amounts for CSPs.[33] Students who study on a full fee-paying basis usually pay higher fees.

In 2018–19, those who had studied medicine were estimated to take an average of 10.5 years to repay their HELP debt (the longest repayment time of any field), while those who had studied nursing repaid in an average of 7.7 years (the shortest repayment time).[34]

Broadly, these repayment times correspond with the size of the debts, with medical students incurring the largest amount per year of any field, and nursing students the smallest.[35] However, those who study courses with a clear vocational outcome, such as medicine or nursing, also have the best repayment track records, with 82.5% of people who studied medicine and 67.8% of people who studied nursing having fully or partly repaid their HELP debt in 2018–19.[36] This contrasts with 40.0% of those who studied creative arts, who have the lowest likelihood of repayment.[37]

Proposed legislative amendments

The proposed legislative amendments create a new Division 144 in HESA which allows for the partial or complete reduction of accumulated HELP debt, or the waiver of indexation of that debt, to eligible health practitioners working in rural, remote or very remote areas.

Proposed section 144-1 in Division 144 provides that a person is a location-preferred HELP debtor (health practitioner) if they satisfy all the below conditions:

• they have completed a course of study in medicine, or a course of study allowing registration as a nurse practitioner, as specified by the HELP Debtor Guidelines (Health Practitioners), or another course of study specified in the Guidelines[38] 
• they incurred a HECS-HELP or FEE-HELP debt in relation to the course[39]
• they are registered or accredited and carry out work as provided in the Guidelines[40]
• the work they carry out is in an area specified by the Guidelines by reference to the ABS Remoteness Structure, as rural, remote, or very remote[41]
• the number of hours carried out is at least as much as specified in the Guidelines[42] and
• they satisfy any other conditions specified in the Guidelines.[43]

The Guidelines are anticipated to cover the scope of work, geographical location, and time periods relevant to the program.[44] They are to be made by the Minister, following consultation with the Treasurer.[45] As discussed earlier in this Digest, in relation to the earlier introduction of these amendments in the Education Legislation Amendment (2022 Measures No. 1) Bill 2022, the Scrutiny of Bills Committee raised concerns about these significant issues being dealt with in the Guidelines, and asked if it would be possible to include high-level guidance on these matters in HESA.[46] In this context, it is also notable that item 36 amends section 238-10 to allow the Guidelines to may make provision in relation to a matter by applying, adopting or incorporating, with or without modification, any matter contained in any other instrument or other writing as in force or existing from time to time. The Scrutiny of Bills Committee has previously raised general concerns about incorporation provisions, citing, for example, the potential for changes being made without Parliamentary scrutiny, uncertainty in the law, and limited access to incorporated documents.[47]

The Secretary is to be the decision-maker for applications to the program.[48]

If a person makes an application and meets the requirements above for periods totalling at least the minimum time specified in the Guidelines, the Secretary will be required to determine that their accumulated HELP debt be reduced.[49] The reduction is to be for the relevant course of study only, up to an amount for the course type to be specified in the Guidelines.[50] It will be possible for the debt to be reduced to less than zero, in which case the extra amount must be refunded.[51]

The Secretary will also be required to determine that the indexation of a person’s HELP debt is reduced if the person:

• is a location-preferred HELP debtor (health practitioner) at any time in the calendar year
• has an outstanding HELP debt at 1 June (this is the date indexation is applied each year) and
• has met any other requirements specified in the Guidelines.[52]

The reduction (if any) will be in proportion to the number of days in the calendar year that the person was a location-preferred HELP debtor (health practitioner), as determined by the Secretary.[53]

An application form will be specified for both HELP reduction and indexation, and applications may not be considered if they do not meet the specified requirements.[54] An applicant is entitled to a written response outlining the decision within 60 days, or up to six months if determined by the Secretary in writing, but the application is taken to be rejected if the person is not notified of an outcome within the required timeframe.[55]

Additional program information

The Department of Health has provided additional information about the program, which includes some of the details likely to be specified in the Guidelines. According to this information, health practitioners will be able to apply for:

• a pause on all HELP indexation for the duration of the time they are working in an eligible location and
• forgiveness of 50% to 100% of eligible outstanding HELP debt, based on a combination of remoteness and time worked.[56] 

Eligibility commenced from 1 January 2022, with applicants required to work at least 24 hours per week.[57] In order to have 100% of the relevant HELP debt forgiven, those in a Modified Monash Model 6 to 7 location (remote and very remote communities) are required to work for half the length of course, and those in a 3 to 5 location (small, medium, and large rural towns) are required to work for the full length of the course.[58]

Concluding comments

The Job Ready Graduates Package measures covered off by this Bill will no doubt be welcomed by students and graduates. Unfortunately, though there remain questions as to their efficacy. Financially incentivising course selection has not necessarily played out as expected.[59] For example, since its introduction demand for humanities courses remains high despite large fee increases.[60] The other issue facing this measure is that producing more graduates will not necessarily solve skills shortage issues. In health, for example, the problem is arguably more about distribution than it is about true shortages i.e., most graduates want to work in cities rather than out bush, and as outlined above, those who go on to work out bush would likely have done so without the incentives.

The Jobs and Skills Summit Employment White Paper process will provide some further clarity on the new Government’s approach to higher education post-JRG including the ways in which it proposes to address correlations between university degrees and market forces. This clarity is to be thrashed out under the Universities Accord process, where the Government will reveal its hand and the influence of the sector will be measured in the quality of this new accord.