Chapter 1Introduction
Purpose of the bill
1.1The Education Legislation Amendment (Startup Year and Other Measures) Bill 2023 (bill) chiefly seeks to amend the Higher Education Support Act 2003 (HESA) to establish STARTUP-HELP as a new type of Higher Education Loan Program (HELP) assistance. This is underpinned by the broader goal of building individuals' 'skills, capabilities and connections so that they can build and participate in startup businesses'.
1.2The introduction of STARTUP-HELP would fulfil an election commitment made by the Australian Government to provide HELP loans for tertiary students and recent graduates to participate in accredited accelerator programs.
1.3The bill would also amend the Social Security Act 1991, Social Security (Administration) Act 1999 and the Student Assistance Act 1973 to enable students undertaking accelerator program courses to potentially qualify for certain student payments, including Youth Allowance and Austudy.
1.4In addition, the bill amends the Australian Research Council Act 2001 (ARC Act) to increase annual research funding caps to reflect indexation, and to add a research funding cap for the financial year 2025–26. This amendment would allow for financial assistance to continue to be provided for approved research programs, thus supporting research for the benefit of the Australian community.
1.5The bill also seeks to amend the HESA to list Avondale University as a Table B provider, thereby making Avondale University eligible for various education and research-related grants. This amendment recognises Avondale University's recent registration as an 'Australian University' under the Tertiary Education Quality and Standards Agency Act 2011, and would improve access to education for Avondale University students as they would be able to benefit from a wider range of grants.
Context of the bill
Consultation on the design of the Startup Year program
1.6The Startup Year program aims to ‘enable students to participate in university accelerator programs, with the view of commercialising good ideas and injecting new business dynamism into our economy’. Through the program, the Government hopes to build the entrepreneurial skills of the Australian workforce, promote innovation, and support the emergence of startups by students from diverse backgrounds.
1.7In September 2022, the Department of Education and the Department of Industry, Science and Resources (departments) jointly released a consultation paper seeking stakeholder input on key Startup Year program design features such as the registration process and selection criteria for accelerator program providers, and student eligibility requirements. Submissions were open for six weeks. Thirty-eight submissions were received from a range of stakeholders across industry, the higher education sector and the startup community.
1.8The departments also conducted a survey as part of the consultation process, which gathered approximately 530 survey responses from current undergraduate and postgraduate students and recent graduates. The survey sought student input about their desired supports and what skills and capabilities they would want to learn as part of an accelerator program, amongst other things.
1.9The departments further conducted six roundtables with universities, accelerators and industry and three workshops with current and former accelerator participants.
Entrepreneurship and innovation in Australia
1.10The departments' consultation paper stated that promoting entrepreneurship and innovation through startups is particularly important in light of Australia's fall in the Global Innovation Index rankings and the World Economic Forum's Global Competitiveness Index 4.0.
1.11According to a 2019 analysis of Australian Bureau of Statistics data, the rate of entry for entrepreneurs in Australia declined significantly from 2005 to 2015, leading to a drop in productivity growth, job creation, competition and innovation.
1.12This study also highlighted the importance of entrepreneurship for job creation, finding that of the 2.5 million full-time jobs created in Australia between 2004 and 2014, 2 million (80 per cent) originated from small young firms, thus leading the researcher to identify 'entrepreneurship as the most important engine of jobs growth in Australia'.
1.13Other research has found that universities are important providers of entrepreneurship education, as evidenced by the significant increase in accelerator programs, entrepreneurs in residence and heads of entrepreneurship at universities in recent years. According to this research, the universities that have most successfully embedded entrepreneurship education into their offerings not only display 'progressive and strategic entrepreneurship transformation' but 'also enhance local entrepreneurship ecosystems'.
Australia’s Higher Education Loan Program (HELP)
1.14The Higher Education Contribution Scheme (HECS) was introduced in 1989, and was gradually amended and expanded over a number of years. Subsequently, major reforms to higher education, including significant changes to HECS, were legislated by the HESA and came into effect in 2005. The HELP scheme incorporated HECS and introduced other types of payments.
1.15The HELP scheme ‘allows students to defer the costs of tuition until their taxable income reaches a certain level at which repayments commence’.
1.16The HELP scheme gradually expanded to encompass four types of loans:
(a)HECS-HELP, which assists students enrolled in a Commonwealth supported place (CSP) to pay the student contribution amount;
(b)FEE-HELP, which assists students in fee-playing places to pay their fees;
(c)OS-HELP, which assists students enrolled in a CSP to study overseas; and
(d)SA-HELP, which assists students to pay student services and amenities fees.
Key provisions of the bill
1.17The bill is divided into three schedules, with each schedule covering a distinct set of amendments.
1.18Schedule 1 is the main schedule and is split into two parts – the first part would establish STARTUP-HELP while the second part would amend social security legislation to enable students undertaking accelerator program courses to potentially qualify for student payments.
1.19Schedule 2 would amend the ARC Act to lift research funding caps to account for indexation and create a new funding cap for the financial year 2025–26.
1.20Schedule 3 would amend the HESA to grant Avondale University the status of a Table B provider, thus making it eligible for certain grants.
Schedule 1
1.21The bulk of Schedule 1 deals with the insertion of a new Part 3–7 in the HESA which would set out rules about entitlement to STARTUP-HELP, the selection of STARTUP-HELP recipients, the amount of STARTUP-HELP that students can receive, and how payments are made, amongst other things.
Entitlement to STARTUP-HELP
1.22The Startup Year program will be available for up to 2000 final year undergraduate students, current post-graduate students andrecent graduates per annum enrolled at a participating Australian higher education provider, to ‘support their participation in higher education‑based accelerator programs to develop their innovative startup ideas’.
1.23The bill defines an accelerator program course as a 'structured and integrated program of education and mentoring that is designed to develop a person's skills, capabilities and connections for the purposes of startup businesses'. The accelerator program course would need to lead to the award of a qualification accredited by the higher education provider; be valued between 0.5 and 1Equivalent Full-Time Student Load (EFTSL); and meet any other requirements set out in the STARTUP-HELP Guidelines.
1.24The bill outlines several requirements a student would need to meet to be entitled to STARTUP-HELP, including:
enrolment in an accelerator program course;
assessment by the relevant higher education provider as being academically suited to undertake the accelerator program course;
citizenship or residency requirements;
the requirement to be in a certain stage of study or post-study; and
the requirement to not have received more than one amount of STARTUP-HELP assistance previously.
1.25The bill provides that the Higher Education Provider Guidelines could require higher education providers to comply with certain rules when assessing students' academic suitability to undertake an accelerator program course.
1.26The citizenship or residency requirements for STARTUP-HELP would be the same as those for HECS-HELP – the individual must either be an Australian citizen, a permanent humanitarian visa holder who will be a resident in Australia for the duration of the accelerator program course, or an eligible former permanent humanitarian visa holder who will be a resident in Australia for the duration of the accelerator program course.
1.27STARTUP-HELP would be available to students who are in their final year of undergraduate study; are enrolled in a postgraduate course of study; or were awarded at least a Bachelor Degree level qualification no more than three years before starting the accelerator program course.
1.28The bill outlines several instances in which a student would not be entitled to STARTUP-HELP assistance, for example where they have been determined to be 'not a genuine student in relation to the course'; where they are undertaking an 'unreasonable study load'; or where they are or will be taking the course at an overseas campus.
Selection of STARTUP-HELP recipients
1.29The bill would provide for STARTUP-HELP Guidelines to set out the principles and procedures that higher education providers would need to follow in selecting recipients of STARTUP-HELP assistance. The Guidelines would be made by the Minister, and may make rules about the number of students who may be selected or how that number is to be determined, amongst other things.
1.30These Guidelines will specify further details of STARTUP-HELP, including:
a registration process of eligible accelerator program courses for which STARTUP-HELP assistance will be payable;
a limit on the number of STARTUP-HELP places, and the mechanism through which STARTUP-HELP places will be assigned to higher education providers, including considerations for equitable access for disadvantaged and underrepresented groups; and
a set of expected core capabilities that Startup Year accelerator program courses will be required to equip students with to ensure a consistent student experience across accelerator program courses.
1.31In addition, the bill would require higher education providers to have 'open, fair and transparent procedures that, in the provider's reasonable view, are based on merit' for selecting students to receive STARTUP-HELP assistance. This requirement would not prevent providers from taking into consideration a student's educational disadvantages.
Amount of STARTUP-HELP
1.32The amount of STARTUP-HELP assistance to which a student would be entitled would be calculated by deducting any upfront course payments a student makes from the total accelerator program course fee.
1.33Higher education providers would determine the accelerator program course fee, though the bill would cap the maximum course fee. For accelerator program courses with an EFTSL value of 1, fees must not exceed the maximum student contribution amount for a place in a unit of study in Medicine, Dentistry or Veterinary Science for a non-grandfathered student. In 2023, this amount is $11,800. Therefore, based on current contribution amounts, those students entitled to the maximum of two amounts of STARTUP-HELP assistance could receive financial assistance of up to $23,600.
Payments of STARTUP-HELP
1.34In line with the provisions of the bill, if a student is entitled to STARTUP-HELP assistance, the Commonwealth would be required to lend the student the relevant amount of STARTUP-HELP assistance and pay the higher education provider that amount to discharge the student's liability to pay the course fee.
1.35However, the bill also outlines instances in which STARTUP-HELP assistance would be reversed, including where:
it is determined that the individual was not entitled to receive STARTUP-HELP assistance for the course with the relevant provider;
the individual had not been assessed by the relevant provider as academically suited to undertake the course; or
the individual had not completed the course requirements and there were special circumstances beyond their control that made it impracticable for them to complete the course requirements.
1.36Reversal of STARTUP-HELP assistance would require the relevant higher education provider to repay the amount received from the Commonwealth for the course as well as any amounts that the relevant individual paid in relation to the course fee. If an amount of STARTUP-HELP assistance was reversed, the relevant individual's STARTUP-HELP debt would be remitted and they would be discharged from all liability to pay, or account for, that amount of the course fee.
Reviewable decisions
1.37The bill would provide for several reviewable decisions in relation to STARTUP-HELP, including a decision that a student is not a genuine student in relation to an accelerator program course and a decision that undertaking an accelerator program course would impose an unreasonable study load on the student.
Eligibility for social security payments
1.38Part 2 of Schedule 1 to the bill would amend social security legislation to enable students who are entitled to STARTUP-HELP assistance to potentially qualify for student payments.
1.39The bill would amend the Social Security Act 1991 to allow students entitled to STARTUP-HELP who are undertaking an accelerator program course or a combined course that includes an accelerator program course to potentially qualify for Youth Allowance, Austudy payment, Relocation Scholarship payment, and a Pensioner Education Supplement.
1.40The bill would also amend the Student Assistance Act 1973 to clarify that a course of study or instruction includes an accelerator program course, thereby allowing the Minister to make a written determination that an accelerator program course is a tertiary course that qualifies for various student payments, including Youth Allowance, Austudy payment and a Pensioner Education Supplement.
Schedule 2
1.41Schedule 2 to the bill would amend the ARC Act to lift the annual research funding caps for the financial years 2022–23, 2023–24 and 2024–25 to reflect indexation. The bill also adds a research funding cap for the financial year 2025–26.
1.42This amendment would allow for financial assistance to continue to be provided for approved research programs, thus supporting ongoing research for the benefit of the Australian community.
Schedule 3
1.43Schedule 3 to the bill amends HESA to insert Avondale University as a Table B provider. This would make Avondale University eligible for certain grants, including Indigenous student assistance grants and grants to support the training of research students.
1.44This amendment recognises Avondale University's recent registration as an 'Australian University' under the Tertiary Education Quality and Standards Agency Act 2011, and its teaching and research performance.
1.45The bill’s Statement of Compatibility with Human Rights states that Avondale University's eligibility for grants would improve access to education for students at the university as they would be able to benefit from a wider range of grants, reducing barriers to their study.
Financial implications
1.46The measures in Schedule 1 to the bill establishing STARTUP-HELP would lead to a net expense of $15.4 million over four years from 2022–23. Following this initial period, STARTUP-HELP would cost the government $2.8 million per year on an ongoing basis.
1.47The measures in Schedule 2 to the bill, which would update the special appropriation funding caps administered by the ARC, would result in an additional appropriation of $1,009 million for the financial years 2022–23 to 2025–26 inclusive. This includes alterations to the three existing financial year funding figures to apply current indexation rates, as well as the extension of the forward estimate period to include the 2025–26 financial year. See Figure 1.1 below for a comparison of the current and proposed research funding caps.
Figure 1.1Proposed, current and difference in ARC Act funding amounts to 2025-26
Source: Education Legislation Amendment (Startup Year and Other Measures) Bill 2023, Revised Explanatory Memorandum, p. 3
1.48The measures in Schedule 3 to the bill, listing Avondale University as a Table B provider under the HESA, would have no financial impact because the financial benefits that would become available to Avondale University are covered by existing program allocations.
Consideration by other parliamentary committees
1.49When examining a bill, the committee considers any relevant comments published by the Senate Standing Committee for the Scrutiny of Bills (Scrutiny Committee) and the Parliamentary Joint Committee on Human Rights (Human Rights Committee).
Consideration by the Senate Standing Committee for the Scrutiny of Bills
1.50The Scrutiny Committee raised concerns about the lack of availability of independent merits review in relation to:
a higher education provider’s expectation that a student will not undertake in Australia any of the accelerator program course; and
a decision by the Secretary of the Department of Education that a person who has received an amount of STARTUP-HELP assistance for an accelerator program course with a higher education provider was not entitled to receive that assistance.
1.51The Scrutiny Committee considered that ‘generally, administrative decisions that will, or are likely to, affect the interests of a person should be subject to independent merits review unless a sound justification is provided’. The Scrutiny Committee pointed to the absence of any relevant justification in the bill’s explanatory memorandum.
1.52Accordingly, the Scrutiny Committee requested the Minister provide advice as to why it was considered necessary and appropriate not to provide for independent merits review in relation to decisions made under proposed subsection 128B-30(6) and proposed section 128E-30 of the bill.
1.53At the time of writing, the minister's response had been received but not published by the Scrutiny Committee.
Consideration by the Parliamentary Joint Committee on Human Rights
1.54The Human Rights Committee did not comment on the bill. However, the bill’s statement of compatibility with human rights concluded that the bill is compatible with human rights because it:
… promotes and supports the right to work, the right to social security and the right to education. To the extent a human rights obligation is engaged or limited, the impact is for a legitimate objective and is reasonable, necessary and proportionate.
Conduct of the inquiry
1.55On 23 March 2023, the Senate referred the provisions of the bill to the committee for inquiry and report by 28 April 2023.
1.56The committee advertised the inquiry on its website, issued a media release and invited submissions by 24 March 2023. The committee received 12 submissions, listed at Appendix 1 of this report.
1.57The committee held a public hearing in Canberra on 17 April 2023. A list of witnesses who gave evidence at the hearing is included at Appendix 2.
1.58The committee thanks those individuals and organisations who contributed to this inquiry by preparing written submissions and giving evidence at the public hearing.