This Bills Digest replaces an earlier preliminary Bills Digest dated 7 August 2023.

Purpose of the Bill

The purpose of the Higher Education Support Amendment (Response to the Australian Universities Accord Interim Report) Bill 2023 (the Bill) is to amend the Higher Education Support Act 2003 (HESA) to:

• uncap the number of Indigenous students who can enrol in a Commonwealth supported place (CSP) by extending eligibility of demand-driven funding to all Indigenous students, rather than only Indigenous students living in regional and remote areas
• remove the ‘unnecessarily harsh’ requirement—introduced as part of the Job-ready Graduates Package—that after 8 units of a bachelor degree, students need to maintain a pass rate of at least 50% to continue as a Commonwealth supported student and to be eligible for FEE-HELP assistance
• motivate higher education providers to provide appropriate support for students by requiring providers to have and comply with a ‘support for students’ policy to assist in identifying students at risk of falling behind and to support them to complete their study.

The Bill implements 2 priority actions recommended in the Australian Universities Accord Interim Report that require legislation.

Background—the Australian Universities Accord

The Australian Government is developing an Australian Universities Accord via a 12-month review of Australia’s higher education system. While in opposition, Shadow Minister for Education, Tanya Plibersek, outlined the ALP’s plan for establishing an Australian Universities Accord in August 2021:

The accord would be a partnership between universities and staff, unions and business, students and parents, and, ideally, Labor and Liberal – that lays out what we expect from our universities.

Following the election, Minister for Education, Jason Clare, flagged the Accord would be ‘an opportunity to build a long-term plan for our universities’. It would have a wide scope:

Looking at everything from funding and access, to affordability, transparency, regulation, employment conditions and also how universities and TAFEs and other higher education and vocational education providers and training institutions work together.

The review has been described by the Government as ‘the first broad review of the higher education system since the Bradley Review’ in 2008.

Minister Clare announced the Accord’s Expert Panel, to be chaired by Professor Mary O’Kane, and the Terms of Reference in November 2022.

The Terms of Reference identify 7 priority areas for review:

1. Meeting Australia’s knowledge and skills needs, now and in the future

2. Access and opportunity
3. Investment and affordability
4. Governance, accountability and community
5. The connection between the vocational education and training and higher education systems
6. Quality and sustainability
7. Delivering new knowledge, innovation and capability.

The Expert Panel’s Interim Report was released in July 2023, with the final report due to Government in December 2023.

Consultation for the Australian Universities Accord

The Accord’s Expert Panel was tasked with engaging across all sectors and groups impacted by higher education policy. Consultation has been undertaken at multiple stages of the Accord process and continues in response to the Interim Report. A summary of consultation undertaken to date is set out below.

Terms of Reference

Stakeholders were invited to make initial submissions and complete a survey in the context of the Terms of Reference between 24 November and 19 December 2022. The consultation received 185 submissions and more than 1,900 survey responses (p. 6). The Department of Education commissioned Nous Group to undertake thematic analysis of the submissions.

Nous Group’s consultation report identified common priorities from submissions, including:

• Improving access to the higher education system, particularly for underrepresented cohorts and identifying programs to improve student outcomes
• Reviewing the current higher education funding model to ensure it supports the long-term success of teaching, learning and research, in line with national priorities
• Investigating the regulatory arrangements which govern the higher education system
• Reviewing how the institutions within the higher education sector interact with each other, the Vocational Education and Training (VET) sector and industry to deliver the skills needs of the future (p. 5).

Discussion paper

In February 2023, the Government released the Australian Universities Accord Discussion Paper and called for submissions by 11 April 2023. The Discussion Paper considered and posed questions around the role of higher education in Australia’s future, and challenges and opportunities for Australia and the higher education system. More than 300 written submissions on the Discussion Paper were received and considered by the panel. Nous Group was again engaged to thematically analyse the submissions and produce a consultation report.

Submissions responded to key themes from the Discussion Paper and included recommendations for reforms. Submissions also suggested important enablers for the future of the higher education sector:

• coherence and integration between the VET and higher education systems
• secure, affordable funding arrangements and incentives
• strong governance and accountability
• investment in capability and recognition of the higher education workforce (p. 51).

Interim Report

On 19 July 2023, Minister Clare announced the release of the Australian Universities Accord Interim Report (Interim Report). The Interim Report comprised 2 parts: priority actions to address immediate problems; and the Expert Panel’s initial views and preliminary findings about larger scale issues for further policy consideration to be discussed in the final report.

Stakeholders are invited to submit written responses to the Interim Report to inform the Expert Panel’s final report to the Minister. Submissions are open from 19 July 2023 to 1 September 2023.

Australian Universities Accord Interim Report

The Interim Report identified 5 priority areas for immediate action:

• Priority Action 1: Extend visible, local access to tertiary education by creating further Regional University Centres (RUCs) and establish a similar concept for suburban/metropolitan locations.
• Priority Action 2: Cease the 50% pass rule, given its poor equity impacts, and require increased reporting on student progress.
• Priority Action 3: Ensure that all First Nations students are eligible for a funded place at university, by extending demand driven funding to metropolitan First Nations students.
• Priority Action 4: Provide funding certainty, through the extension of the Higher Education Continuity Guarantee into 2024 and 2025, to minimise the risk of unnecessary structural adjustment to the sector. Interim funding arrangements must prioritise the delivery of supports for equity students to accelerate reform towards a high equity, high participation system.[1]
• Priority Action 5: Through National Cabinet, immediately engage with state and territory governments and universities to improve university governance, particularly focusing on:

• universities being good employers
• student and staff safety
• membership of governing bodies, including ensuring additional involvement of people with expertise in the business of universities (pp. 6–7).

Government response to the Interim Report

In releasing the Interim Report, Minister Clare outlined actions to be implemented in response to the 5 priority areas. The Government committed to:

1. Establish up to 20 additional Regional University Study Hubs (formerly Regional University Centres), building on the 34 existing Regional University Study Hubs currently operating across the country, and establish up to 14 Suburban University Study Hubs.

2. Abolish the 50 percent pass rule, introduced as part of the Job-ready Graduates Scheme, which has had a disproportionately negative impact on students from poor backgrounds and from the regions, and require increased reporting on student progress.
3. Extend demand driven funding to all First Nations students who are eligible for the course they apply for. Currently this only applies to First Nations students in regional and remote Australia.
4. Extend the Higher Education Continuity Guarantee for a further two years to provide funding certainty to universities as the Accord process rolls out, and as part of this, require universities to invest any remaining funding from their grant each year on additional academic and learning support for students from poor backgrounds, from the regions and from other under-represented groups.
5. Work with state and territory governments to improve university governance. This includes university governing bodies having more people with expertise in the business of universities, and a focus on student and staff safety and making sure universities are good employers.

The Bill implements priority actions 2 and 3, which require legislation.

Since the introduction of the Bill, Minister Clare further announced in response to the Interim Report the appointment of Patty Kinnersly, chief executive officer of Our Watch, to a working group to advise on how universities can improve campus safety for students and strengthen university governance.

Committee consideration

Education and Employment Legislation Committee

The provisions of the Bill have been referred to the Senate Education and Employment Legislation Committee for inquiry and report by 13 September 2023.[2]

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills had no comment on the Bill (p. 36).

Policy position of non-government parties/independents

The Coalition Government introduced demand-driven funding for Indigenous students in regional and remote areas and the 50% pass rule as part of the Job-ready Graduates Package (JRG Package). In relation to the measures addressed in the Bill, the Coalition has expressed concerns about the reversal of the 50% pass rule and called on the Government to hold universities to account for poor student outcomes. It urged the Government to ensure that the expansion of the uncapped university places for Indigenous students did not set students up to fail.

Independents, including Dr Helen Haines, Kate Chaney, Dr Sophie Scamps and Senator David Pocock, have welcomed the expansion of demand-driven funding for Indigenous students and the removal of the 50% pass rule.

Position of major interest groups

As outlined above, there has been significant consultation at each stage of the review process to date and consultation is further invited in response to the Interim Report.

Universities Australia welcomed the introduction of the Bill and congratulated the Government for quickly implementing priority actions from the Interim Report. Universities Australia Chief Executive Catriona Jackson stated:

The 50 per cent pass rule under the Job-ready Graduates package is hurting students from disadvantaged backgrounds. Its removal is long overdue, so this is a very welcome step.

Universities have long called for uncapped places for all Indigenous students regardless of their postcode, and we’re pleased the legislation introduced today brings us closer to realising this outcome.

The Independent Tertiary Education Council Australia (ITECA) welcomed the removal of the 50% pass rule but expressed concerns that the details of requirements for providers in relation to student support measures, including penalty provisions, were not yet clear. Details of the student support measures are to be set out in the Higher Education Provider Guidelines. ITECA expressed concern that there had not been consultation on the legislation prior to its introduction and stated that it would meet with the Government ‘to review the details of the Bill and to consider the scope of penalties and the modalities of assessing contraventions’. Since the introduction of the Bill, Minister Clare has released a consultation paper on support for students policy requirements and changes to the Higher Education Provider Guidelines (discussed further below).

Financial implications

According to the Explanatory Memorandum, the cost of expanding demand driven places is estimated at up to $34.1 million over the period of 2023–24 to 2026–27 (p. 2).

Removing the 50% pass rate requirement and the new requirement for providers to have and comply with a student support policy is expected to cost $1.1 million over the same period (p. 2).

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.[3]

Parliamentary Joint Committee on Human Rights

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

Key issues and provisions

Expanding demand driven places

Demand driven places for Indigenous students living in regional and remote areas were introduced from 2021 as part of the Coalition Government’s JRG Package.[4] The measure was aimed at increasing participation and attainment rates by guaranteeing a CSP for regional and remote Indigenous people in bachelor or bachelor honours degrees at public universities (Table A providers which are listed in section 16-15 of the HESA).

Section 33-5 of HESA provides for total basic grant amounts payable for Table A providers. In addition to amounts for ‘demand driven higher education courses’—paragraph 33-5(1)(c),Table A providers receive a specific allocation for CSPs in ‘designated courses’ (currently only Medicine), and may enrol students in any combination of ‘higher education courses’ (all non-designated and non-demand-driven courses) up to a maximum basic grant amount.[5]

Currently, the definitions set out under Clause 1 of Schedule 1 of HESA state:

demand driven higher education course means a *course of study that:

(a)  is undertaken by an *eligible Indigenous person for the course of study with a *Table A provider; and

(b)  is leading to a *higher education award that is a bachelor degree or bachelor honours degree; and

(c)  is not a *designated higher education course.

and

eligible Indigenous person: an Indigenous person is an eligible Indigenous person for a *course of study with a *Table A provider if, at the time the person first enrols in a course of study with that provider, the person’s permanent residential address is in a *regional area or a *remote area.

This guarantees an Indigenous person living in a regional or remote area who is admitted to university a funded place in a bachelor-level program (other than in medicine).

Part 1 of Schedule 1 of the Bill expands access to demand driven places to all Indigenous students by changing the definitions of demand driven higher education course and eligible Indigenous person.

Item 1 of the Bill replaces paragraph (a) of the definition of demand driven higher education course to remove eligible Indigenous person, replacing it with an Indigenous person.

Items 2–4 then repeal the definition of eligible Indigenous person, and the definitions for regional area and remote area, as these are no longer needed.

Item 5 sets out the timing of the application of the amendments, with the expansion of demand driven places to apply for the 2024 calendar year onwards.

Under the JRG Package, demand-driven funding for Indigenous students living in regional and rural areas come into effect from 2021. The Department of Education estimated that 160 more Aboriginal and Torres Strait Islander students would benefit from the measure in 2021, rising to 1,700 students by 2024.

The Department of Education’s most recent Higher Education Statistics (2021) includes information on students from equity groups, including students who identify as Indigenous. Table 1 below shows that the number and proportion of Indigenous commencing undergraduate students has mainly been increasing over time.

Table 1 Commencing and all domestic undergraduate studentsa by equity group—Indigenous, 2006 to 2021

	Commencing Domestic Undergraduate Students			All Domestic Undergraduate Students
Equity group	Indigenous	All Commencing Domestic Undergraduate Students	%	Indigenous	All Domestic Undergraduate Students	%
2006	2,499	178,559	1.4%	6,604	534,719	1.2%
2007	2,647	184,807	1.4%	6,975	552,581	1.3%
2008	2,786	187,372	1.5%	7,038	561,886	1.3%
2009	3,006	202,229	1.5%	7,551	588,016	1.3%
2010	3,337	218,379	1.5%	8,243	619,625	1.3%
2011	3,621	225,033	1.6%	8,857	643,066	1.4%
2012	3,866	246,569	1.6%	9,441	679,595	1.4%
2013	4,228	261,254	1.6%	10,314	717,683	1.4%
2014	4,514	270,362	1.7%	11,286	745,733	1.5%
2015	5,025	274,674	1.8%	12,240	768,649	1.6%
2016	5,466	279,704	2.0%	13,320	784,524	1.7%
2017	5,867	286,412	2.0%	14,429	801,080	1.8%
2018	5,801	281,238	2.1%	14,871	804,614	1.8%
2019	6,109	274,196	2.2%	15,483	803,035	1.9%
2020	6,511	287,383	2.3%	16,559	818,364	2.0%
2021	6,748	289,659	2.3%	17,403	835,311	2.1%

Source: Drawn from Department of Education, 2021 Section 11 Equity groups, Table 11.2; Parliamentary Library calculations of percentages.
Notes: ^a Data excludes students where permanent home address is overseas.

While stakeholders have generally supported the measure to expand demand-driven funding to all Indigenous students, it is unclear how much of an impact it will have on increasing the number of Indigenous students enrolling at university. Professor Andrew Norton of the Australian National University has questioned whether capped funding for undergraduate degrees greatly constrains Indigenous enrolments, arguing (links in original):

Improving but still very high Indigenous attrition rates suggest that universities are, in their admissions practices, already operating at the edge of what is legal and ethical, given that many Indigenous students will end up with a HELP debt but not a degree. They do this to maximise higher education opportunities for Indigenous people.

Professor Norton highlighted that a flaw in Indigenous demand driven funding is that it only applies to bachelor degree enrolments, whereas Indigenous students are more likely to use an enabling course or diploma pathway course.

The Coalition has argued for the need for greater accountability in the higher education sector to ensure students complete degrees, citing poorer completion rates for Indigenous students:

Improving our higher education sector is about much more than providing more university places. It must also be about ensuring that these students actually complete their degrees.

Only 41 per cent of undergraduate students complete their degrees within the first four years. This number is far worse for Indigenous students with a completion rate of only 26 per cent.

Removing the 50% pass rule

Part 2 of Schedule 1 of the Bill amends HESA to reverse the ‘50% pass rule’, a minimum completion rate that the Coalition Government introduced under the JRG Package. The Higher Education Support Amendment (Job-Ready Graduates and Supporting Regional and Remote Students) Act 2020 introduced the 50% pass rule as a condition for students accessing Commonwealth assistance. Students who fail to successfully complete at least half of their units of study after they have attempted 8 or more units towards a bachelor degree or higher, or 4 or more units for a course lower than a bachelor degree, are no longer eligible to remain a Commonwealth supported student (section 36-13) or eligible to receive FEE-HELP (section 104-1A).

HESA includes provisions to allow for exemptions to the 50% pass rule for special circumstances that may impact on a student’s ability to complete the requirements of a unit, for example, a student’s medical condition changing or worsening, or the death or serious illness in the student’s family—subsection 36-13(5) and section 104-30.

Item 10 of the Bill repeals section 36-13 and item 12 repeals section 104-1A. The Bill also includes consequential amendments to remove references to repealed sections.

The rationale for introducing the 50% pass rule was to prevent students from accruing large HELP debts from studies they receive limited or no benefit from (p. 57).

There was considerable discussion about the rule when the JRG Bill was introduced.[6] The Parliamentary Joint Committee on Human Rights discussed the potential for the 50% pass rule to effectively make higher education unaffordable for a large number of students as well as the potential for the measure to disproportionately impact students who may face additional challenges undertaking higher education, such as rural students moving away from home to study, Indigenous students, students from low socio-economic backgrounds, students with disability, students who are the first in their family to attend university, students with caring responsibilities, and students from language backgrounds other than English (pp. 56–7). The Committee sought additional advice from the then Minister of Education, Dan Tehan, to assess the compatibility of the measure with the right to education and the right to equality and non-discrimination (p. 59). The Committee further considered the measure and Minister Tehan’s advice in its thirteenth report (pp. 99–109).

The Interim Report by the Accord’s Expert Panel identified removing the 50% pass rule as a priority action. It stated:

Introduced as part of the JRG package, the 50% pass rule disproportionately disadvantages students from equity backgrounds. Enhanced reporting on student progress will increase the focus on improving the success rates of at-risk students. While the Review believes other aspects of the JRG package need reform, this change should proceed at the first possible opportunity (p. 6).

The Interim Report argued that the rule was causing ‘undue stress for many students’ and that it disproportionately affected underrepresented groups, ‘including First Nations students, who are around twice as likely to be affected as other students’ (p. 16).

As the 50% pass rule took effect from 1 January 2022, there is limited publicly available data about the impact of the rule. The Interim Report cited advice provided to the Expert Panel by Universities Australia, with unpublished data that suggested more than 8,000 students had been or were at risk of being affected by the rule (p. 62). Furthermore,

Students from underrepresented groups at university make up the majority of those affected and First Nations students are around twice as likely to be affected as their non-First Nations counterparts (p. 62).

In its submission to the Universities Accord Discussion Paper, Universities Australia recommended replacing the JRG Package with a new funding model. It singled out the 50% pass rule as an ineffective measure to drive completion, stating: ‘This punitive measure is widely regarded as being unnecessarily harsh’ (p. 12).

In the second reading debate for the Bill, Mr Tehan reiterated the rationale of the rule was to hold universities to account for students failing units, arguing it was put in place to stop universities ‘churning students through units and courses they were failing:

We were saying clearly to universities, 'You will not be able to continue to charge HECS to these students because they're failing.' What they need to do is bring these students in and say, 'Is this course appropriate for you?' Or, 'We are going to provide the services for you to make sure you do pass.' That wasn't happening. What you're doing by taking this rule out is you're going to make sure you see that happening again. This was about holding universities to account. It wasn't about the students.

Alongside recommending the removal of the 50% pass rule, the Interim Report stated that:

Any changes to these arrangements need to be accompanied by stronger accountability and reporting processes to better track students’ learning and engagement, as part of their progress at key milestones in their units. This holds institutions to account for identifying at-need students as early as possible to implement tailored strategies. This is also to ensure students do not unnecessarily accrue debt without gaining a qualification (p. 62).

Part 2 of Schedule 1 of the Bill, ‘Supporting students to succeed’, addresses such issues of accountability by requiring providers to have a ‘support for students’ policy.

Support for students policy

The Bill aims to ensure higher education providers have adequate processes to identify and support students at risk of failing their units. Item 6 inserts proposed section 19-43 which sets out provisions requiring higher education providers to have and comply with a ‘support for students’ policy.

The policy must provide information on:

• the provider’s processes for identifying students at risk of not successfully completing their units of study—proposed subparagraph 19-43(2)(a)(i)
• the supports available from or on behalf of the provider to assist students to successfully complete the unit of study they are enrolled in—proposed subparagraph 19-43(2)(a)(ii).

The support for students policy must comply with any requirements specified in the Higher Education Provider Guidelines—proposed paragraph 19-43(2)(b). The Higher Education Provider Guidelines are a legislative instrument made by the Minister under section 238-10. The current guidelines are the Higher Education Provider Guidelines 2023.

Providers are required to comply with and report on their compliance with their support for students policy—proposed subsections 19-43(4)—(6). Proposed subsection 19-43(7) imposes a civil penalty of 60 penalty units ($18,780) for providers contravening the requirements set out in proposed section 19-43.[7]

Proposed section 19-43 will apply to higher education providers approved under section 16-25 of HESA on and after the commencement of item 18.

Consultation is currently underway on the changes that will need to be made to the Higher Education Guidelines in relation to the support for students policy. Minister Clare released a consultation paper on 16 August 2023, with submissions sought until 15 September 2023.

There are numerous reasons that students fail units, ranging from academic factors which universities can address, such as teaching, academic literacy and study skills, to matters outside universities’ control, such as those relating to health, work, family and relationships, housing, and finances. In the consultation paper, the Department of Education proposes information (not exhaustive) to be included in the support for students policy, such as:

• how the higher education provider will assess academic and non-academic suitability for continuing study
• processes that identify students at risk of not successfully completing units of study
• processes to ensure students are connected to support
• arrangements to provide non-academic supports for students, such as financial assistance, housing information and mental health supports
• how the higher education provider will provide access to targeted individual literacy, numeracy and other academic supports as required
• a list of circumstances resulting in proactive offers of ‘special consideration’ and academic adjustment arrangements for students affected by a significant life event
• targeted in-course support from academic staff
• appropriate crisis and critical harm response arrangements for students (pp. 8–9).

In submissions to the inquiry into the Bill’s provisions , universities have highlighted the support processes universities already have in place, which they largely expect will meet new requirements. For example, the University of Canberra stated that its ‘range of support is targeted and proactive across academic and non-academic aspects of a student’s university experience’ (p. 3). However, universities have also expressed some concerns with the details of the new support policy requirements to be included in the guidelines. For example, Innovative Research Universities (IRU) stated:

there is a risk that the Guidelines could extend beyond what is practical and implementable. This is particularly the case for non-academic supports, such as financial assistance and crisis response (p. 2).

Concluding comments

The Accord Interim Report identified 5 priority actions to address urgent concerns which could be implemented while larger-scale reforms to the higher education system are considered by the Expert Panel. The Bill proposes amendments to HESA to implement the 2 priority actions requiring legislation.

As such, these amendments are initial steps as part of broader reforms. The Expert Panel will be consulting further and building on the preliminary findings presented in the Interim Report before delivering its final report and recommendations in December 2023.

It is also important to note that the Universities Accord process is taking place in the context of other reviews into different stages of the education system currently underway:

• the Productivity Commission’s early childhood education and care inquiry, led by Professor Deborah Brennan
• the Review to Inform a Better and Fairer Education System, to inform the next national school reform agreement, led by Dr Lisa O’Brien.

Minister Clare noted in his speech to the National Press Club when the Interim Report was released:

Each report will be individually important.

But it’s how they knit together that has the potential to change the lives of people who aren’t even born yet.

Achieving reforms in the higher education sector as flagged in the Interim Report, particularly those relating to increasing participation for underrepresented cohorts, will rely on reducing disparities in outcomes across the education system more broadly.