Bills Digest 159 1996-97 Higher Education Funding Amendment Bill (No. 1) 1997


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WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History

Higher Education Funding Amendment Bill (No. 1) 1997

Date Introduced: 28 May 1997
House: House of Representatives
Portfolio: Employment, Education, Training and Youth Affairs
Commencement: Royal Assent. However, the measures will apply from the date referred to in the Main Provisions section of this Digest.

Purpose

The major amendment in the Bill will extend the discount currently available from a student's Higher Education Contribution Scheme (HECS) debt to include situations where the student has made a contribution of $500 or more to the cost of their course. Minor amendments relate to supplementary funding to take account of cost increases and the situations when the Secretary may waive all or part of a student's HECS debt.

Background

The higher education system is funded on a calendar year basis under the provisions of the Higher Education Funding Act 1988 (the Principal Act). This Act also covers the operation of the Higher Education Contribution Scheme (HECS). According to the 1997-98 Budget Paper No.1 (p.4-36), funding is legislated for three forward years. However, the current provisions of the Principal Act (and those of this Bill) refer only to 1998 and earlier years, with no allocation for 1999 and 2000. This omission may be because the Government is awaiting the report of the Higher Education Review Committee, chaired by Mr Roderick West. The Committee is due to present its final report in December 1997. The 1996-97 Budget reduced the forward estimates for higher education operating grants by 1 per cent in 1997, a further 3 per cent in 1998 and a further 1 per cent in 1999. The same budget also stated that the Government would be prepared to consider specific proposals from institutions for financial assistance to help restructure their activities. The 1997-98 Budgetallocated $10.2m in 1997-98 for this purpose. Part 2 of Schedule 1 of this Bill contains provisions that will enable the Minister to make grants to institutions for restructuring and rationalising activities. The 1997-98 Budget also abolished the Commonwealth Industry Places Scheme (CIPS) under which the Commonwealth and students (through HECS) contributed 60 per cent of the cost of a university place while the balance was funded by industry. The abolition of the scheme will hit a number of campuses harder than others, in particular Charles Sturt University (1076 places), Deakin University (505 places) and Swinburne University of Technology (528 places). It has been suggested that the restructuring package could be used to assist these institutions cope with the loss of CIPS. The 1997-98 Budget also introduced a 25 per cent discount for partial up-front HECS payments of at least $500. Part 3 of Schedule 1 of this Bill contains provisions which will implement this decision. The Part also contains measures to facilitate the refund of payments to those students whose enrolments have been cancelled because they have not provided a valid tax file number. Part 4 of Schedule 1 of the Bill provides that part or whole of a person's HECS debt may be remitted if the person does not complete a course of study because of circumstances outside their control.

Main Provisions

Part 1 of Schedule 1 of the Bill contains provisions relating to the payment of grants to certain education institutions to compensate for price increases and other liabilities, such as superannuation obligations of the various institutions. Of particular notice is the amount of the grant for open learning organisations, which peaked at approximately $9.5 million in 1995, and which was reduced to approximately $400 000 in 1996. The amount allocated for such institutions in 1998 will be $218 000 (Item 2 of Schedule 1).

Part 2 of Schedule 1 will give the Minister power to allocate further funding to educational institutions that may assist restructuring or rationalisation of programs. Proposed section 19 does not define what will be considered to be a restructuring or restructure but does require a determination made to increase funding for such purposes to be in accordance with guidelines issued by the Minister. Under Item 7 of Schedule 1 such guidelines are to be instruments that are disallowable by Parliament.

Item 12 of Part 3 of Schedule 1 will insert a new subsection 41(1A) into the Principal Act that will provide that the 25% discount will also apply where the student has paid to the institution an amount of $500 or more which is less than the 75% contribution currently necessary for the discount, and the contribution is made prior to the census date in respect of the semester. In such cases, the student is also required to request the Commonwealth to loan the student an amount equal to the difference between the cost for the course and the amount contributed, which will insure that the institution receives the full amount of the assessed cost of the course. The amount owed to the Commonwealth by the student will then be discounted to provide the 25% reduction to the student.

Where a students enrolment has been cancelled due to the student not providing their tax file number when required to do so and the student has made a contribution to the cost of their course under proposed subsection 41(1A), proposed sections 56A and 56B, which will be inserted into the Principal Act by Item 17 of Part 3 of Schedule 1, provide for the refund of the amount contributed.

Item 18 will amend section 57 of the Principal Act, which deals with loans by the Commonwealth to students to discharge their liability to an institution for the cost of their course, to reflect the reduction in liability to the Commonwealth as a consequence of proposed subsection 41(1A).

Application: The above amendments will apply to courses beginning on or after 1 January 1997.

Section 106L of the Principal Act provides the Secretary with a discretion to remit all or part of a debt where there are special circumstances. Item 20 will amend the discretion to provide that special circumstances will exist where the Secretary is satisfied that the circumstances are beyond the person's control, they did not have their full impact on the person until after the census date for their course and the circumstances made it impracticable for the person to complete their course. The Secretary may issue guidelines regarding when the Secretary will be satisfied that these issues exist and if such guidelines are issued, a decision by the Secretary is to be in accordance with the guidelines.

Application: The above amendment will apply in respect of debts incurred on or after 1 January 1998.

Contact Officer and Copyright Details

Kim Jackson
Chris Field
27 June 1997
Bills Digest Service
Information and Research Services

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1997

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 11 July 1997


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