Bills Digest No.
67, 2019–20
PDF version [516KB]
Dr Hazel Ferguson
Social Policy Section
13
December 2019
Contents
Purpose of the Bill
Background: Trade Support Loans
Committee consideration
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Key issues and provisions: TSL
overpayments
Date introduced: 28
November 2019
House: House of
Representatives
Portfolio: Employment,
Skills, Small and Family Business
Commencement: Sections
1–3 on Royal Assent; Schedule 1 the day after Royal Assent.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at December 2019.
Purpose of
the Bill
The purpose of the Trade
Support Loans Amendment (Improving Administration) Bill 2019 (the Bill) is
to amend the Trade
Support Loans Act 2014 (TSL Act) to make administrative changes
to how overpayments are dealt with in the Trade
Support Loans (TSL) program.[1]
The Bill also proposes minor changes to certain notice
periods under the TSL Act. These are not dealt with in this Bills Digest.
Background: Trade
Support Loans
TSL is an income contingent loans program which commenced
in 2015 with the aim of providing assistance to Australian Apprentices to meet
the day-to-day costs of undertaking an apprenticeship.[2]
Apprentices apply for a loan through their Australian
Apprenticeship Support Network provider.[3]
Only apprentices studying a qualification specified according to the Trade Support Loans
Priority List (the List) are eligible for a loan:
under
clause 6 of the List, eligible qualifications leading to occupations for which
skilled persons are a priority are identified in the TSL
Qualifications List.[5]
According to the Trade
Support Loans Guidelines (the Guidelines), at 1 July 2019, up to $21,078
can be provided over the course of an apprenticeship.[6]
This amount is indexed annually on 1 July.[7]
Loans are structured to provide more support during the early stages of the
apprenticeship, when costs are likely to be higher, as follows:
- first
year: $8,431
- second
year: $6,324
- third
year: $4,216 and
- fourth
year: $2,108.[8]
Payments are made in monthly instalments in arrears, and
apprentices must opt in every six months to continue receiving payments.[9]
Since 2015, when the program commenced, 108,371 apprentices
have been approved for a loan, and approximately $815 million in payments have
been made (to 30 June 2019).[10]
In 2018–19, nearly 56,000 Australian apprentices received a TSL payment.[11]
Loans are repaid through the Australian Taxation Office
(ATO) once a person’s income reaches a minimum repayment threshold, which is $45,881
with a repayment rate of one per cent for the 2019–20 financial year.[12]
The repayment rate increases according to the taxpayer’s income, to a maximum
of ten per cent on incomes of over $134,573.[13]
Committee
consideration
Senate
Selection of Bills Committee
At its meeting of 4 December 2019, the Senate Selection of
Bills Committee determined that the Bill not be referred to committee for
inquiry and report.[14]
Senate
Standing Committee for the Scrutiny of Bills
Item 6 of Schedule 1 to the Bill will allow the
rules (that is delegated legislation) to set out circumstances where the
Secretary must determine that an amount of TSL that has been paid to a person
in error may be recovered from later instalments of TSL. The Senate Standing
Committee for the Scrutiny of Bills was concerned that significant matters,
such as the circumstances in which the amounts of later TSL instalments may be
reduced, should be set out in primary, rather than delegated legislation,
unless a sound justification is provided.[15]
The Committee noted that ‘[t]he explanatory memorandum provides no explanation
as to why it is necessary to prescribe such circumstances in delegated
legislation’.[16]
The Committee sought the Minister’s advice on why it is
considered necessary and appropriate to deal with this matter in delegated
legislation and whether it would be appropriate for the Bill to be amended ‘to
set out at least high level guidance regarding the relevant circumstances on
the face of the primary legislation’.[17]
At the time of writing, the Minister’s response had not
been provided to the Committee.[18]
Policy
position of non-government parties/independents
At the time of writing, no non-government
parties/independents have commented on the measures proposed in the Bill.
Position of
major interest groups
At the time of writing, no major interest groups have
commented on the measures proposed in the Bill.
Financial
implications
The Explanatory
Memorandum to the Bill states that the changes are not expected to have any
financial impact.[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, the Parliamentary Joint Committee
on Human Rights had not considered the Bill.[21]
Key issues
and provisions: TSL overpayments
Current law
Overpayment
debts
Currently, under section 90 of the TSL Act, if a
person receives a TSL payment that they were not, for any reason, entitled to,
the amount of the payment becomes an overpayment debt which is recoverable
by the Commonwealth. In that case the TSL Act sets out a range of
options including:
- the
Secretary, on behalf of the Commonwealth, enters into an arrangement to recover
the outstanding amount[22]
or
- the
outstanding amount is recovered through the courts[23]
or
- the
Secretary, on behalf of the Commonwealth, decides to write off the outstanding
amount (subject to future recovery), if:
- the
debt is irrecoverable at law
- the
debtor has no capacity to repay
- the
debtor’s whereabouts are unknown after all reasonable efforts have been made to
locate them or
- it
is not cost effective to take action to recover the debt[24]
or
- the
Secretary, on behalf of the Commonwealth, waives the outstanding amount, if:
- the
debt is attributable to an administrative error made by the Commonwealth, an
authority of the Commonwealth, or an organisation that performs services for
the Commonwealth or
- the
debt is less than, or likely to be less than, $200 and it is not cost effective
for the Commonwealth to recover the debt.[25]
TSL debts
This is distinct from a TSL payment to which the person
was entitled, which is referred to as a TSL debt, and repaid
through the ATO as described above.[26]
The TSL Act contains a ‘special case qualification
and payability’ provision at section 11, to deal with cases where just one
additional TSL payment is made after a person is no longer entitled to the
payment. If the Secretary determines that section 11 applies to a person, then
the additional payment is taken to have been an instalment of TSL, which means
it can be recovered through the ATO as a TSL debt.
Subsection 11(2) states that the rules (currently the Trade Support Loan Rules 2014) may
prescribe circumstances in which the Secretary is to determine that this
section is, or is not, to apply to a person. Currently, section 11 of the rules
states:
Subsection 11(1) of the Act is taken to apply to a person
where:
- before
the end of the final instalment period specified in a determination made for
the person under section 16 of the Act, the person has notified the Secretary
of a change of circumstances which would affect payability of trade support
loan, but payments of trade support loan have continued to be made to the
person for that period; or
- the
person has successfully completed a qualifying apprenticeship but the Secretary
has not received notice from the designated State/Territory training authority,
or from the person, of this completion and the person has continued to receive
instalments of trade support loan.
What the
Bill does
The Bill proposes to amend section 11 of the TSL Act
to expand the circumstances under which the ‘special case qualification and
payability’ provision could apply, reducing the department’s use of the overpayment
debt provisions in favour of using ATO repayment arrangements and the
TSL program itself, to deal with TSL overpayments.
Items 1 to 5 remove references to the final
instalment period from section 11 and make consequential amendments,
with the effect that payments dealt with under section 11 would no longer be
limited to only one additional payment after an eligible payment. The role of
the Trade Support Loan Rules 2014 in setting
circumstances in which the Secretary can apply these arrangements is retained.
Item 6 adds proposed subsection 11(3), to provide
that an additional payment that the Secretary determines under subsection 11(1)
is to be treated as an instalment of TSL, can be recovered by reducing
subsequent TSL payments, if the person is paid such payments. The proposed
subsection would allow the Secretary to determine if this option is taken. Proposed
subsection 11(4) would allow the rules to prescribe circumstances in which
the Secretary is to make this determination.
According to the Guidelines, this kind of offsetting
arrangement is already in use by the department when the Secretary enters into
an arrangement to recover an overpayment debt under section 92 of
the TSL Act.[27]
Therefore, the effect of this change is to allow that if the Secretary
determines that an overpayment falls under section 11, but the person
subsequently receives additional TSL payments, the debt could still be offset
against these payments rather than having to be recovered through the ATO once
the person’s income reaches the minimum repayment threshold.
The application provision at item 11 means that
these changes will not apply to an amount paid before the commencement of the
amendments.
[1]. Department
of Employment, Skills, Small and Family Business (DESSFB), ‘Trade
Support Loans’, DESSFB website.
[2]. Ibid;
Australian Government, ‘Financial
support for Australian Apprentices’, Australian Apprenticeships website.
[3]. Australian
Government, ‘What
is the Australian Apprenticeship Support Network?’, Australian
Apprenticeships website; Department of Education (DoE), Annual
Report 2018–2019, DoE, Canberra, 2019, p. 128.
[4]. Australian
Government, About
the National Skills Needs List, DESSFB, [Canberra], n.d. The DESSFB Trade Support Loans
webpage refers prospective applicants to the Trade
Support Loans Priority List in place of the National
Skills Needs List.
[5]. DESSFB,
TSL
Qualifications List, DESSFB, [Canberra], n.d.
[6]. Australian
Government, Trade
Support Loans Program guidelines, DESSFB, [Canberra], 1 July 2019,
p. 7.
[7]. Ibid.
[8]. Ibid.,
p. 8; Trade
Support Loans Act 2014 (TSL Act), section 24.
[9]. Ibid.,
p. 8.
[10]. DoE,
Annual
report 2018–2019, op. cit., p. 128.
[11]. Ibid.
[12]. TSL
Act, section 46; Higher
Education Support Act 2003 (HESA), sections 154-1 and 154-20;
Australian Tax Office (ATO), ‘Study
and training loan repayment thresholds and rates’, ATO website, last
modified 4 June 2019.
[13]. ATO,
‘Study
and training loan repayment thresholds and rates’, op. cit.
[14]. Senate
Standing Committee for Selection of Bills, Report,
10, 2019, The Senate, Canberra, 5 December 2019.
[15]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 10, 2019, The Senate, Canberra, 5 December 2019, pp. 26–27.
[16]. Ibid.,
p. 26.
[17]. Ibid.,
p. 27.
[18]. Senate
Standing Committee for the Scrutiny of Bills, Ministerial
responses, The Senate, Canberra, accessed 12 December 2019.
[19]. Explanatory
Memorandum, Trade Support Loans Amendment (Improving Administration) Bill
2019, p. 2.
[20]. The
Statement of Compatibility with Human Rights can be found at page 3 of the Explanatory
Memorandum to the Bill.
[21]. Parliamentary
Joint Committee on Human Rights, Index
of Bills and instruments considered by the committee, as at
5 December 2019.
[22]. TSL
Act, section 92.
[23]. TSL
Act, section 93.
[24]. TSL
Act, section 94.
[25]. TSL
Act, sections 95, 96 and 97.
[26]. TSL
Act, Chapter 3.
[27]. Australian
Government, Trade
Support Loans Program guidelines, op. cit., p. 28.
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