Bills Digest No. 128   1997-98 Higher Education Legislation Amendment Bill 1997


Numerical Index | Alphabetical Index

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
Purpose
Background
Main Provisions
Contact Officer and Copyright Details

Passage History

Higher Education Legislation Amendment Bill 1997

Date Introduced: 26 November 1997
House: House of Representatives
Portfolio: Employment, Education, Training and Youth Affairs
Commencement: Royal Assent

Purpose

  • To make amendments to the Higher Education Funding Act 1988 to vary the maximum amounts of grant that can be made to higher education institutions under a range of grant categories. Principally, the Bill seeks to set the maximum grant amount for operating purposes for higher education institutions for the funding years 1999 and 2000.
  • To make minor amendments to the Maritime College Act 1978 for the sake of consistency with the student fee regime prevailing at other higher education institutions.

Background

The higher education system is funded on a calendar year basis under the provisions of the Higher Education Funding Act 1988. This Act also covers the operation of the Higher Education Contribution Scheme (HECS).

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 each of 1999 and 2000. 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 Budget allocated $10.2m in 1997-98 for this purpose. The Higher Education Funding Amendment Act (No.1)1997 contained provisions that enabled the Minister to make grants to institutions for restructuring and rationalising activities. However, that legislation did not contain grant levels for 1999 and 2000, although the 1997-98 Budget Paper No.1 (pp. 4-36) had stated that funding would be legislated for three forward years. This Bill will rectify this situation by inserting grant levels for 1999 and 2000, while also supplementing 1998 grants for cost increases.

A detailed description of the Government's policies for the current triennium can be found in the Higher Education Funding Report for the 1998-2000 Triennium (December 1997). That report forecast that the total revenue available to higher education institutions from all sources would increase from an estimated $8.4 billion in 1997 to around $8.6 billion in 2000. The report states that this estimated increase in total resources will be primarily due to projected increases in revenue from fee-paying students, both local and overseas. These forecasts may have to be revisited, given the likely impact of the Asian economic downturn on overseas student numbers. In 1997 around 86 per cent of the 62974 overseas students in higher education came from Asia. The largest source countries were Malaysia (13028 students), Singapore (11339), Hong Kong (9052), Indonesia (5968), China (2575), India (2400) and Thailand (2226). Indonesia and Korea (1403 students in 1997) have been amongst the fastest growing markets in recent years. The Funding Report itself notes that the projections should be treated with caution because of the economic uncertainty in the region, although it also indicates that the currency devaluations in a number of Asian countries could strengthen Australia's position in the education export market.

In 1998 universities will be able to offer places to fee-paying Australian undergraduate students for the first time. Only eight institutions have so far indicated that they will take advantage of this opportunity, with 1300 places on offer in 1998 rising to 3500 in the year 2000. The Funding Report considers that these projections substantially understate the potential number of Australian students willing to pay undergraduate fees. The level of fees will vary according to course and institution, but it would seem that most will be in the following ranges:

Arts, Commerce $9000 - $11000 p.a.

Law $10000 - $15000 p.a.

Science, Engineering $13000 - $15000 p.a.

Dentistry, Veterinary Science $20000 - $24000 p.a.

Recent media reports have indicated that institutions may have difficulty in attracting fee-paying local students. The Sydney Morning Herald of 23 January 1998 reported that applications for full-fee places for local students at the University of Sydney and the University of New South Wales - the two most prestigious universities in NSW - were equivalent to less than half the number of such places available. There were even vacancies in high demand areas such arts/law, optometry and pharmacy, despite the fact that fee-paying students are allowed to enrol with a tertiary entrance rank (TER) five points below that for publicly subsidised places (ie. HECS places).

The funding figures contained in the Bill do not give an accurate reflection of the total funds available to institutions as a result of Commonwealth policy. The following table compares such funding for the current triennium with selected past years.

Table 1: DEETYA Total Grants Available to Higher Education Institutions
per Planned EFTSU, Selected Years (a)

 

1983
($m)

1988
($m)

1996
($m)

1997
($m)

1998
($m)

1999
($m)

2000
($m)

Commonwealth Resources              
Total Grants

3,253.7

3,672.5

5,433.4

5,463.1

5,414.9

5,382.9

5,289.9

Funding per planned EFTSU              
Planned EFTSU ('000)

260.0

304.0

417.4

419.7

413.0

413.3

411.5

$ per planned EFTSU

12,514

12,081

13,017

13,016

13,112

13,024

12,856

% Change from 1983  

-3.5%

4.0%

4.0%

4.8%

4.1%

2.7%

% Change from 1988    

7.8%

7.7%

8.5%

7.8%

6.4%

% Change from 1996      

0.0%

0.7%

0.1%

-1.2%

Notes: (a) Amounts are expressed in constant end 1997 price levels. EFTSU are equivalent full-time student units. Planned EFTSU represent the student levels upon which the Commonwealth bases its funding decisions. [Source: Australian Vice-Chancellors' Committee website: http://www.avcc.edu.au. Detailed notes are available at this location.]

These figures do not readily correlate with those contained in the Bill because they include funds made available through HECS. For example, the grants for operating purposes given in the Bill for 1999 (Schedule 1, part 1) represent a reduction of 17.4 per cent on 1998 operating grants, rather than the one per cent reduction indicated by policy. This is because they reflect the savings made through the 1996-97 Budget decisions on HECS. The estimated reductions to outlays resulting from these measures was as follows:

Table 2: Estimated Reductions to Outlays Resulting from 1996-97 Budget HECS measures

Measure

1997-98

$m

1998-99

$m

1999-2000

$m

Higher HECS rates

66.1

101.1

123.5

Lower HECS repayment thresholds

229.9

269.7

317.8

HECS payments to institutions are made under the provisions of Part 4.3 of the Higher Education Funding Act 1988, which establishes the Higher Education Trust Fund to receive and make payments in relation to the HECS.

The Trust Fund receives the following:

  • voluntary payments of HEC debt (students who have opted to have the Commonwealth pay their HEC and to repay this through the tax system can still elect to repay all or part of their debt at any time);
  • amounts equal to those collected as compulsory repayments through the tax system (because these amounts are collected by the Commissioner of Taxation as if they were income tax and are paid into the Consolidated Revenue Fund (CRF), the Act authorises their appropriation from the CRF to the Trust Fund);
  • monies that are necessary to make payments to higher education institutions (these are also appropriated out of the CRF);
  • interest from the investment of money in the fund.

Payments are made out of the Trust Fund as follows:

  • where a student opts to pay the HEC up-front and receive a discount, the Commonwealth pays an amount equivalent to the discount to the institution;
  • where a student elects to repay the HEC through the tax system, the Commonwealth pays the institution the HEC out of the Trust Fund;
  • repayments of amounts that are refundable;
  • payments to a State in those cases where the Commonwealth collects contributions in respect of courses funded by the State.

Main Provisions

The Bill contains two schedules. Schedule 1 proposes amendments to the Higher Education Funding Act 1988, and Schedule 2 proposes amendments to the Maritime College Act 1978.

Amendment of Higher Education Funding Act 1988

Item 1 of Schedule 1 of the Bill proposes amendments to section 17 of the Higher Education Funding Act, which sets the maximum level of funding grants payable to higher education institutions for operational purposes in a given year. The amendment inserts new limits for the calendar years 1999 and 2000.

Item 2 of Schedule 1 proposes an amendment to section 20 of the Act, which provides for grants to institutions for superannuation expenses. The amendment increases the maximum amount payable for the year 1998 in order to account for inflation. It inserts an identical figure for the years 1999 and 2000.

Item 3 of Schedule 1 proposes an amendment to section 22A of the Act, which provides for grants to open learning organisations, and ceilings on those grants. The amendment does not alter the existing 1998 funding ceiling. It only proposes to insert new figures, adjusted for the effects of price inflation, for the years 1999 and 2000.

Item 4 of Schedule 1 proposes an amendment to section 23C of the Act, which operates to limit the amount payable for an aggregated group of grants. The section caps the total cost of grants made under the following categories: national priority, innovation, equality of opportunity promotion, special research assistance, and grants for advanced engineering centres and cooperative multimedia centres.

Item 5 of Schedule 1 proposes an amendment to section 20 of the Act, which provides for grants payable to teaching hospitals attached to higher education institutions. The amendment increases the maximum amount payable for the year 1998 in order to account for inflation. It inserts an identical figure for the years 1999 and 2000.

Item 6 of Schedule 1 proposes an amendment to section 27A of the Act, which provides for grants for special capital projects. The amendment increases the maximum amount payable for the year 1998 in order to account for inflation. It inserts an identical figure for the years 1999 and 2000.

Item 7 of Schedule 1 proposes the insertion of a new section (s.106LA) into the Act. The intention is to alter procedures relating to notification of Secretary's decisions upon application for remission of HECS debts in special circumstances. These are debts payable by tertiary students to the Commonwealth under the Higher Education Contribution Scheme. At present the Act requires that the Secretary must 'as soon as practicable' consider an application for remission and to notify the applicant. Proposed section 106LA provides that notice is to be given in writing. It provides that notice can be given by delivering it personally or by post. The new provision would deem that a notice has been received if it was posted.

Amendment of Maritime College Act 1978

The Bill proposes amendments to the Act establishing the Australian Maritime College, in order to correct anomalies relating to the charging of fees for higher education provided by the college, when compared with the rules presently applying to other tertiary institutions.

The intention of the proposed amendments is to alter the capacity of the Maritime College to levy fees, in order to meet the requirements of sections 13 and 18 of the Higher Education Funding Act 1988.

Part 1 of Schedule 2 proposes the repeal of section 32 of the Maritime College Act 1978, which relates to the payment of student fees. The present section states that fees are not payable except in certain circumstances. The decision making structure relating to fee charging decisions in the present Act differs from that applicable to other institutions. The proposed new section 32 will permit the charging of post-graduate fees by institutions where authorised by section 13 of the Higher Education Funding Act 1988

Part 2 of Schedule 2 is a savings and transitional provision.

Contact Officer and Copyright Details

James Prest
Kim Jackson
30 January 1998
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

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.



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