This Bills Digest replaces the preliminary Bills Digest published on 12 February 2024.

Purpose of the Bill

The purpose of the National Vocational Education and Training Regulator Amendment (Strengthening Quality and Integrity in Vocational Education and Training No. 1) Bill 2024 (the Bill) is to amend the National Vocational Education and Training Regulator Act 2011 (the NVETR Act) and the National Vocational Education and Training Regulator (Transitional Provisions) Act 2011 to improve regulation of the vocational education and training (VET) sector.

Structure of the Bill

The Bill comprises 9 Parts as set out below.

• Part 1—Enables the automatic lapsing of a Registered Training Organisation’s (RTO’s) NVETR registration where the RTO has not delivered training and/or assessments for 12 consecutive months from 1 January 2023.
• Part 2—Prevents RTOs from changing the courses they are registered to deliver to students in the first 2 years of registration.
• Part 3—Extends the period ASQA can conduct internal reviews of decisions when a review application is made by an RTO—from 90 to 120 days.
• Part 4—Provides greater flexibility to ASQA in terms of how it prioritises initial applications for registration.
• Part 5—Provides the Minister for Skills and Training with the power to determine, via a legislative instrument, a specified period where ASQA is not required to or must not accept or process initial applications for RTO registration.
• Part 6—Expands the offence and civil penalty provisions regarding false and misleading representations made by RTOs.
• Part 7—Increases the penalty units specified under certain provisions of the NVETR Act.
• Part 8—Makes amendments to improve the efficiency and effectiveness of VET regulation including: clarifying how personal information can be used in audit reports, aligning registration requirements with those under the Education Services for Overseas Students Act 2000; and clarifying review processes to align with the processes in the Tertiary Education Quality and Standards Agency Act 2011.
• Part 9—Sets out transitional arrangements.

Background

The Vocational Education and Training Sector

Australia’s Vocational Education and Training (VET) system provides training for jobs from entry level positions through to highly technical occupations. It also provides non-employment related training.

The National Centre for Vocational Education Research states that VET:

… encompasses training delivered by registered training organisations (RTOs) and other providers that can lead to both nationally recognised qualifications under the Australian Qualifications Framework (AQF) and skill sets, as well as certifications or skills from training programs that are not nationally accredited but respond to local industry and community needs.

There are some 4,000 RTOs in Australia. Providers must be registered in order to deliver nationally recognised courses and AQF-accredited VET qualifications, or to receive government funding for the provision of VET courses.

Accredited VET programs cover a wide range of activities, including part-day employer-specific training, general use courses such as first aid training, year-long employment-related certificates, multi-year apprenticeships, and postgraduate diplomas. Apprenticeships and traineeships provide training for specific occupations.

In 2022, there were around 4.5 million VET students (p. 1). Around 3.4 million were enrolled with private training providers and around 720,000 were enrolled in Technical and Further Education (TAFE) institutes (p. 11). Around 490,000 were enrolled with community education providers and others were enrolled at schools, universities, and enterprise providers (p. 11). Students can be enrolled with multiple provider types.

Australian Skills Quality Authority

The Council of Australian Governments (COAG) agreed to the creation of a National VET Regulator in December 2009 (p. 1), and ASQA was established in 2011 under the NVETR Act. All states except Victoria and Western Australia have referred powers for VET regulation to the Commonwealth.[1]

As the National Vet Regulator (NVR), ASQA:

• registers training providers
• registers VET and English language course providers that wish to offer courses to overseas students studying in Australia (via the Commonwealth Register of Institutions and Courses for Overseas Students, CRICOS)
• accredits VET accredited courses.

Providers who only offer courses in Victoria or Western Australia, and who do not offer online courses or courses for interstate and overseas students, register with their relevant state regulator instead (the Victorian Registration and Qualifications Authority or the Western Australian Training Accreditation Council).

At the time of writing this Bills Digest there were 3,686 training organisations registered with ASQA, representing the vast majority of the 4,018 RTOs with current registration.[2]

Reviews of ASQA

When ASQA was established, its role brought the Commonwealth into greater contact with thousands of RTOs.[3] ASQA has received considerable scrutiny, including about the nature of its engagement with RTOs, its leadership structures, and quality issues, particularly linked to the misuse of the former VET FEE-HELP scheme (replaced by VET Student Loans in 2017) by unscrupulous providers.[4] Several reviews of the Australian VET system have sought to address these issues.

2018 Braithwaite Review of the NVETR Act

In 2017, the Government commissioned a comprehensive review of the NVETR Act, as well as the broader VET legislative environment. All eyes on quality: review of the National Vocational Education and Training Regulator Act 2011 report (Braithwaite Review) reported in January 2018.

The Braithwaite Review acknowledged the challenging role ASQA faced in ‘maintaining and improving quality in the VET sector’, given the size of the sector and the range in size, quality and behaviours among organisations (p. 7). It found that while ASQA had ‘a wide range of regulatory powers at its disposal’ and had performed well in evolving its regulatory practice towards greater sophistication, the VET sector could benefit from ‘a stronger ability to manage entrance to the market.’ (p. 7)

The Braithwaite Review also uncovered VET student experiences that ‘could be classed as disappointing if not demoralising’ (p. 9), and considered that ASQA had helped to address some of the abuses and exploitation of students by providers:

The review accepts that the establishment of ASQA under the NVETR Act has, on balance, been a helpful start to establishing a VET regulatory framework to clean up such abuses. It has reduced overlap and duplication across the country, and the reforms to ASQA’s audit model augur well for the future. It is also acknowledged that ASQA performs its essential role in a complex and challenging environment. Few regulators in Australian history have cancelled registrations for such a large number of businesses in a relatively short period of time; yet few have faced such major challenges of profound importance to Australia’s future. (p. 9)[5]

The Braithwaite Review contained 23 recommendations, addressing ASQA’s engagement with the sector, registration requirements, teaching quality, collection and sharing of data, and protecting and informing students.[6] Professor Braithwaite stated that the review’s recommendations were intended to improve the likelihood of positive VET student experiences (p. 5). The Australian Government response supported 9 of the recommendations, and 11 in principle. It noted 3 recommendations.

Recommendation 6 was supported by the Australian Government at the time, and Recommendation 17 was noted (pp. 7–8, 13).

The amendments in Parts 1 and 2 of the Bill implement Recommendation 6 from the Braithwaite Review:

Recommendation 6: The Australian Government amends the legislative framework to ensure greater scrutiny of new providers to:

provide that where an RTO without reasonable justification does not commence providing training within 12 months of being registered, or during its registration ceases to provide training for a 12-month period, its registration automatically lapses, meaning that it would no longer be registered.

prevent RTOs changing the scope of the courses they deliver where an RTO has been operating for less than 12 months. (p. 66)

The amendments in Part 6 relate to Recommendation 17 of the Braithwaite Review:

Recommendation 17: The legislative framework be amended to strengthen ASQA’s ability to take action under a general prohibition against misleading or deceptive conduct which reflects Australian Consumer Law requirements. (p. 85)

2019 Joyce Review of the VET system

Commissioned in November 2018, the Joyce Review of the VET sector as a whole was delivered in March 2019 as Strengthening skills: expert review of Australia’s vocational education and training system. It drew on the Braithwaite Review and its own consultations and analysis, and was more critical of ASQA:

While there was general acceptance of the need for a robust national regulator, particularly after the damage caused to the reputation of the vocational education sector during the VET FEE-HELP scheme, there was a strong sense that the approach the regulator is taking to its role is causing its own problems. Most concerningly, industries and RTOs in a number of jurisdictions, particularly smaller ones with thin training markets, cited examples of good long-term smaller providers leaving the sector because of the perceived risks and compliance costs associated with the way the ASQA regulatory regime is currently being implemented. (p. 36)

Among its wide-ranging recommendations, the Joyce Review called for ASQA to ‘urgently be given the new powers’ recommended by the Braithwaite Review ‘to better control the registration’ of RTOs, including Recommendation 6 (p. 42).

The Government included several response measures to the Joyce Review in the 2019–20 Budget (pp. 69–70) and the Mid-Year Economic and Fiscal Outlook (MYEFO) 2019–20 (p. 214). Further, in 2019 COAG leaders agreed to a new ‘Vision’ for VET and the COAG Skills Council tasked officials with developing a roadmap, agreeing on three priorities for VET system improvements:

• relevance―actions in this area will ensure that VET is relevant and responsive to the job market, employers, industry and learners
• quality―actions in this area will support public confidence in the quality and value of VET for students throughout their lives and move it to parity with the higher education system
• accessibility―actions in this area will ensure all prospective students and employers can access suitable information and training when and where it is required, and include a specific focus on supporting access for disadvantaged Australians. (p. 1)

At the same meeting, the Skills Council:

[agreed that ASQA] should improve its engagement with the VET sector and expand its educative role…

…[and] called for immediate work to be done to reform ASQA’s regulatory approach, improve confidence in the regulator and support continuous improvement in training provision across the VET sector. (p. 1)

Following the meeting, the Australian Government confirmed its commitment to regulatory reforms in response to the Braithwaite Review and the Joyce Review.

2023 Nixon Review of exploitation of Australia’s visa system

In January 2023, the Government commissioned a Rapid Review into the Exploitation of Australia’s Visa System, that was completed by the end of March. Its third finding was that the ‘regulation of education agents must be considered, and the regulation of education providers strengthened to stop exploitation of the system’ (p. 15).

According to the Explanatory Memorandum, the Bill ‘responds more broadly to the findings of the Nixon Review’ in relation to RTOs ‘that do not have the genuine purpose of delivering quality training and instead undermine integrity in the VET sector and exploit vulnerable students’ (p. 1).

2023 Joint Committee on Foreign Affairs, Defence and Trade report on international education

In his second reading speech, the Minister for Skills and Training, Brendan O’Connor, stated the Bill had been informed by the 2023 interim report of the Joint Standing Committee on Foreign Affairs, Defence and Trade: 'Quality and integrity—the quest for sustainable growth': interim report into international education.

Recommendation 14 of this report was for the Government to ‘take firm action to address persistent and deep-seated integrity issues in the private Vocational Education and Training (VET) sector’ (p. xxii). The Committee suggested that legislative changes could include:

a pause for at least 12 months by Australian Skills Quality Authority (ASQA) in processing new provider applications for Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) registered VET providers, with limited exceptions for legitimate applications such as industry linked entities, high economic value proposals or those endorsed by state and territory governments. (p. xxii)

The amendments in Part 5 of the Bill would allow for such a pause to be put in place through a ministerial determination.

The Committee also suggested that changes to improve integrity could include: ‘cancellation of a provider’s CRICOS registration if no training is delivered for a period of 12 months or more’ (p. xxiii). The proposed amendments in Part 1 of the Bill would provide for the automatic lapsing of a RTO’s ASQA registration where the RTO has not delivered training and/or assessments for 12 consecutive months.

2022 Regulator Performance Omnibus Bill

• The amendments in Part 8 were previously included in Schedule 3 to the Regulator Performance Omnibus Bill2022, introduced by the Morrison Government in the 46th Parliament. This Bill lapsed at the dissolution of the Parliament on 11 April 2022.

Committee consideration

Senate Standing Committee for the Selection of Bills

At its meeting of 8 February 2024, the Selection of Bills Committee deferred its consideration of whether the Bill should be referred for inquiry and report.

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 Bill.

Policy position of non-government parties/independents

During the debate in the House of Representatives, the Deputy Leader of the Opposition, Sussan Ley, stated that after seeking ‘the views of the training sector and business groups’ there was ‘broad alignment on the intent of the Bill.’ However, there was also feedback about a lack of consultation and transparency, as well as ‘a high level of caution around this bill, particularly the Minister's new power to pause the establishment of new training organisations.’

A similar concern was voiced by Sam Birrell, Deputy Nationals Whip, who focused on a need for more transparency around the ministerial powers in the Bill.

Independent Dai Le also scrutinised the ministerial powers in the Bill and called for constructive consultations with the sector to ensure legislation works to all parties’ best interest.

Position of major interest groups

Several major interest groups publicly backed the Bill, namely the Australian Education Union, the Australian Council of Trade Unions and the Australian Industry Group, seeing the measures for acting against unscrupulous providers as necessary.

The Independent Tertiary Education Council Australia (ITECA), the peak body of independent providers in the higher education and VET sectors, stated that its members had raised concerns with the Bill:

The amendments to the National Vocational Education Training Regulator Act 2011 (Cth) appear to create a power that would allow the government to effectively ban the establishment of new independent Registered Training Organisations (RTOs). It would also place a ban on some RTOs expanding the support provided to students by offering new nationally accredited courses.

ITECA has noted that the amendments introduce a degree of market intervention that we’ve not seen before, not only in the skills training system but elsewhere in the economy. It would be concerning if the legislation to be introduced into the Parliament today did not clearly articulate why and for how long the government may act to stop the creation of new RTOs, nor spell out in what circumstances it would stop existing RTOs from seeking to offer new accredited courses.

ITECA Chief Executive Troy Williams stated that the council wanted amendments:

ITECA wants to see amendments that strengthen the legislation by putting in place safeguards. These include placing a limit on the amount of time that a ban on new RTOs would be in place. It’s also sensible that the government publish the underpinning reason for making such decisions.

Financial implications

According to the Explanatory Memorandum, the Bill would have a positive financial impact of around $2.0 million over the 4 years from 2024–25, and $0.9 million ongoing from 2028–29 (p. 6). This is primarily due to the proposed increase in penalties. The Explanatory Memorandum notes:

There is necessarily some uncertainty in these projections relating to the fact that courts have the discretion to determine the appropriate penalty amount, up to the maximum set under the law. (p. 6)

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.[7]

Parliamentary Joint Committee on Human Rights

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

Key issues and provisions

Provider registration

Lapse of registration

There is currently no provision for automatic lapsing of registration with ASQA within the normal term of a provider’s registration if they meet all the conditions in Subdivision B-Conditions of Registration in Division 1 of Part 2 of the NVETR Act. The maximum length of registration, before a renewal application, is set at 7 years.[8]

Item 2 inserts proposed Subdivision C – Lapse of registration into Division 3 of Part 2 of the NVETR Act, in which proposed section 40A contains the circumstances that give rise to a lapse of registration and the actions to be taken. It stipulates that a registration lapses if the organisation does not provide assessments or training necessary to ‘satisfy a requirement of a VET qualification or a unit of competency or module in relation to a VET statement of attainment’ over a period of 12 consecutive months beginning on or after 1 January 2023 (called the measurement period). In that case, the National VET Regulator must give the organisation a written notice to that effect: proposed subsection 40A(3) and the organisation must return its certificate of registration: proposed subsection 40A(4).

Proposed section 40B allows organisations to seek an extension of the measurement period. The organisation must make an application for an extension at least 90 days before the end of the 12-month period during which the relevant activities have not occurred. This provision allows for the National VET Regulator to give an extension of up to 12 months.

If an organisation is given notice that its registration lapsed and it does not return its certification of registration within 10 days, it is liable to a maximum civil penalty of 600 penalty units (equivalent to $187,800), under proposed subsection 112(3), inserted by item 3.[9]

The Explanatory Memorandum states the following:

It is intended that extensions will only be granted where the reason for which the NVR RTO has not provided training or assessments is demonstrably outside the control of the NVR RTO. Such limited circumstances could include, for example, natural disasters such as fire, flood, or pandemic events. Provided an NVR RTO begins delivering training and/or assessment within the period specified in the extension and it demonstrates that it is otherwise capable and committed, the NVR RTO’s registration will not lapse after the extension period concludes (p. 8).

A decision to extend or not extend the period before a registration lapses is a reviewable decision, under the NVETR Act.[10] Such a decision is reviewable at first instance by the National VET Regulator[11] and then by the Administrative Appeals Tribunal if the Regulator has affirmed or varied the original decision.[12]

Scope of registration

ASQA defines the scope of registration as the VET ‘training package qualifications, accredited courses and units of competency that [a] Registered Training Organisation (RTO) is approved to deliver.’ RTOs must apply to ASQA to add or remove training package qualifications, accredited courses and unites of competency.

RTOs have their scope of registration listed on the national register.

Item 12 of the Bill inserts proposed subsection 32(3) into the NVETR Act to prevent organisations from applying to change the scope of their registration until they have been registered for at least 24 months at the time of applying.

Whilst items 1–12 of the Bill are intended to implement Recommendation 6 of the Braithwaite Review (p. 66), the amendment to section 32 goes further than the recommendation which was to prevent a change of scope for RTOs that have been operating for less than 12 months.

New ministerial powers

Suspension of initial applications for registration

Currently section 16 of the NVETR Act allows for either a person, or a body of a state or territory to apply for registration with the National VET Regulator (NVR), as an NVR registered training organisation. The relevant application for registration must be ‘in a form approved by the National VET regulator’ and accompanied by documents required by the Regulator. An application fee determined by the Minister by legislative instrument is payable at the time the application is made.[13]

Item 22 of the Bill inserts proposed Division 3C—Suspension of initial applications for registration into Part 12 of the NVETR Act. The new Division consists of proposed sections 231C to 231F.

Proposed subsections 231C(1) and (2) provide that the Minister may determine that the NVR is not required to process initial applications for registration as an RTO until after a day specified in a legislative instrument. The pause in processing initial applications extends from the day the instrument commences until after a day specified in the instrument.

In addition, proposed subsections 231C(3) and (4) provide that the Minister may determine that the NVR must not deal with initial applications for registration as an RTO until after a day specified in a legislative instrument. The suspension of processing of initial applications extends from the day the instrument commences until after a day specified in the instrument.

Proposed subsection 231C(5) provides that these legislative instruments may apply to all initial applications, or one or more classes of initial applications and may apply to initial applications made before and/or after the commencement of the instrument.

Importantly, proposed subsection 231C(6) provides that the relevant legislative instruments are not subject to disallowance. This reflects subsection 44(1) of the Legislation Act 2003, which provides that a legislative instrument made under an Act that:

facilitates the establishment or operation of an intergovernmental body or scheme involving the Commonwealth and one or more States or Territories; and

authorises the instrument to be made by the body or for the purposes of the body or scheme

is not subject to disallowance unless otherwise provided.

As set out in the Explanatory Memorandum:

This process [of obtaining Ministerial Council approval of determinations proposed to be made by the Minister, discussed below] is the product of the Act’s initial drafting which followed the then Council of Australian Governments’ decision to establish a new approach to national regulation of VET. The Act was enacted consistent with the Intergovernmental Agreement for Regulatory Reform in VET, thereby facilitating the establishment and operation of an intergovernmental scheme involving the Commonwealth and referring States for the purposes of VET regulation (p. 39).

Proposed subsection 231D(1) allows the Minister to determine that no initial applications for registration can be made. The pause in accepting initial applications extends from the day the instrument commences until after a day specified in the instrument. The relevant legislative instrument can apply to all initial applications or to specific classes of application: proposed subsection 231D(3).[14] The legislation instrument is not subject to disallowance: proposed subsection 231D(4). The Government explains that this is for the same reasons as outlined above, namely that it is an instrument made under an Act that facilitates the establishment and operation of an intergovernmental scheme involving the Commonwealth and referring states for the purposes of VET regulation (pp. 40-41).

Proposed section 231E and section 231F stipulate that in making the determinations above, the Minister must first consult with the NVR and gain the agreement of the Ministerial Council. The Ministerial Council, defined in the Act as ‘a body established by the Council of Australian Governments to deal with training and skills’, is the Skills and Workforce Ministerial Council. Requiring the consent of the Ministerial Council prior to the implementation of the legislative instruments means that it must consider the views of the states and territories, as well as ASQA.

Expanded and increased penalties

False or misleading representations

Item 23 of the Bill inserts criminal offences and civil penalties for ‘making false or misleading representation’ in advertisements or relating to VET courses, qualifications or operations.

Similar provisions exist under Subdivision C – Other prohibited conduct in Division 1 of Part 6 of the NVETR Act. Those provisions relate to ‘a person’ committing an offence or contravening a civil penalty provision. The provisions of this Bill relate to an RTO. In 2020, an ASQA investigation led to the conviction and fine of Qualify Me! Pty Ltd under section 123A, for advertising a course as a non-RTO without making clear who the actual issuer of the qualification was.

Proposed sections 100A to 100D are to be inserted into Subdivision A—Conduct by NVR registered training organisations in Division 1 of Part 6. The Explanatory Memorandum states that these additions broaden the ‘existing provisions to clarify that prohibited conduct includes making false and misleading representations in relation to the NVR RTO’s operations’ (p. 3).

Proposed provisions cover false or misleading representation connected to advertisements and an organisation’s operations, in relation to VET courses and qualifications. Prohibited conduct includes false or misleading claims in advertising, publishing false or misleading descriptions and images of an RTO’s facilities or location, fabricating testimonials, falsely claiming associations or endorsements and misleading potential student about student services offered by the RTO (p. 3).

The offences and civil penalty provisions are in equivalent terms—but carry a different standard of proof and different monetary penalties. The maximum penalty for an offence is 300 penalty units (equivalent to $93,900) whilst the maximum civil penalty is 600 penalty units (equivalent to $187,800).

In addition, item 24 of the Bill amends the table in section 133A of the NVETR Act so that an executive officer of a registered training organisation commits an offence if the organisation commits an offence; the officer knew that the offence would be committed; the officer was in a position to influence the conduct of the organisation in relation to the commission of the offence; and the officer failed to take all reasonable steps to prevent the commission of the offence (subsection 133(1)).

Penalty Increases

The table below compares current and updated penalty amounts which are set out in items 25–65 of the Bill.

Table 1 Proposed increases in penalty units

Sources: National Vocational Education and Training Regulator Amendment (Strengthening Quality and Integrity in Vocational Education and Training No. 1) Bill 2024 and the National Vocational Education and Training Regulator Act 2011.