Bills Digest No. 5, 2017–18
PDF version [683KB]
Dr Hazel Ferguson
Social Policy Section
7
August 2017
Contents
Purpose of the Bill
Structure of the Bill
Background
The experience of VET FEE-HELP
Entry of VET providers into higher
education
Higher education providers
Current regulatory arrangements
Unscrupulous practices in the higher
education sector
Committee consideration
Senate Standing Committee for the
Scrutiny of Bills
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions
Provider viability
Fit and proper person test in the ESOS
Act
Notification of certain events
Retrospective application of
amendments in Schedule 1
Fit and proper person test in the TEQSA
Act
Consideration of a providers history,
financial status and capacity of providers by TEQSA
Retrospective application of
amendments in Schedule 2
Consideration of a providers history,
financial status and capacity of providers under the HESA
Safeguarding FEE-HELP
Prohibition of certain marketing
practices
Preventing inappropriate enrolments
Re-crediting students where provider
breaches conditions
Criticisms of new risk management
approach
Retrospective application of
amendments in Schedule 3
Information sharing
Increased regulatory powers
Concluding comments
Appendix A: proposed new civil
penalties—Higher Education Support Act 2003
Date introduced: 1
June 2017
House: House of
Representatives
Portfolio: Education
and Training
Commencement: The
day after this Act receives the Royal Assent. Various provisions have
retrospective application.
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 August 2017.
Purpose of
the Bill
The purpose of the Education Legislation Amendment
(Provider Integrity and Other Measures) Bill 2017 (the Bill) is to amend the Education
Services for Overseas Students Act 2000 (the ESOS Act), the Tertiary
Education Quality and Standards Agency Act 2011 (the TEQSA Act), and
the Higher Education Support Act 2003 (HESA) to strengthen the regulatory
capabilities of government to address possible unscrupulous providers entering
into the higher education system.[1]
Structure
of the Bill
The Bill consists of three Schedules, each in two parts, Part
1 covering the substantive amendments to the relevant Act and Part 2 the
application provisions.
Schedule 1
amends the ESOS Act to strengthen fit and proper person and financial
viability requirements, and extend reporting requirements and information
sharing provisions.
Schedule 2
amends the TEQSA Act to introduce additional considerations into the assurance
activities of the Tertiary Education Quality and Standards Agency (TEQSA), including
fit and proper person requirements and strengthened financial viability
requirements.
Schedule 3
amends the HESA to detail monitoring and regulatory powers including civil
penalties in cases of non‑compliance, and apply additional regulations to
non-university higher education providers.
Background
The
experience of VET FEE-HELP
The Bill is broadly consistent with recent reforms to Vocational
Education and Training (VET) loans arrangements, which responded to mounting
concerns over the administration and fiscal sustainability of the VET FEE-HELP
scheme resulting from the entry of unscrupulous providers into the system.[2]
The Bill’s Explanatory Memorandum states:
The Government’s actions to address unscrupulous practices in
the VET sector have resulted in a surge of VET providers, including some which
had their VET FEE-HELP approval revoked, seeking to transition their operations
into the higher education and international education sectors. It is clear that
amendments to the higher education and international education legislative
settings are necessary, when viewed against reforms to enhance regulatory tools
and protections in VET Student Loans (VSL).[3]
The full impact of unscrupulous VET providers is still
unfolding, but in 2016 the Australian National Audit Office (ANAO) reported a
total of $2.2 billion had been lost through the VET FEE-HELP system:
As at 30 June 2016, the Australian Government Actuary
estimated that $1.2 billion in loans issued inappropriately by VFH providers in
2014 and 2015 would not be recovered. The Actuary also estimated that a further
$1.0 billion in VFH loans would not be repaid, largely relating to loan
recipients not expected to meet the income repayment threshold for new debts
raised in 2015–16.[4]
Costs to students and Australia’s reputation as a provider
of international education may also be substantial. In 2015, in its submission
to the Senate Standing Committee on Education and Employment’s enquiry into the
operation, regulation and funding of private VET providers in Australia, TAFE
Director’s Australia stated that both direct and broader reputational effects
were being felt:
Firstly the reality of poor quality in VET provision in the
case of a few providers and secondly the much greater problem of widespread
perception of questionable practice that is doing significant damage to the
reputation of VET nationally.[5]
Entry of
VET providers into higher education
Significant overlap already exists between the VET and
higher education sectors in Australia:
Since there is a continuum of knowledge and skills rather
than sharp dividing lines between the AQF [Australian Qualification Framework] levels,
the distinctions between vocational and higher education are partly a matter of
convention ... Vocational and higher education providers also overlap. The
public-sector vocational education providers, the TAFEs, are adding degrees to
their course programs; eleven had done so as of mid-2016. Especially in
Victoria, some universities are ‘dual sector’, with substantial TAFE
operations. Other universities offer a smaller range of vocational education
courses. In the private sector, many institutions offer both higher education
and vocational education courses. All up, at least 86 organisations provide
both higher and vocational education courses.[6]
As at June 2017, 4,587 registered training providers (RTO)
have active registration to operate in Australia.[7]
According to the most recent report of higher education provider applications
(drawn from data at 31 March 2017) the number of these providers
moving into higher education is growing:
There continue to be more new prospective providers
indicating intent to submit an application to be registered as a HEP [Higher Education
Provider]. However, the number decreased from 10 in Q2 2016/17 to 7 in Q3
2016/17. The percentage of these new prospective providers that are a
registered training organisation (RTO) remains consistent with 80% in Q2
2016/17 identifying as RTOs versus 71% (5 out of 7) in Q3 in 2016/17.[8]
Higher
education providers
In comparison to the VET sector, the number of existing higher
education providers in Australia is relatively small. As at June 2017, in
addition to the 43 universities (including 40 Australian universities, one
Australian university of specialisation and two overseas universities) there
are 123 other higher education providers registered with TEQSA.[9]
Most ‘non-university’ higher education providers (NUHEP) are
private providers specialising in teaching in a particular field. However, large
public institutions such as TAFEs and smaller specialist public institutions (such
as the Australian Institute of Police Management) also make up that number.
Although students at these institutions do not have access
to the same Commonwealth tuition fee support as those attending public
universities, undergraduate and postgraduate domestic students can choose to
defer their tuition fees through FEE‑HELP, which, like the former VET
FEE-HELP, is part of the Higher Education Loan Program (HELP).[10]
More often than not, new entrants to the higher education
sector are NUHEPs. A 1999 survey listed 81 registered non-university providers,
compared to the 123 operating today (not all of the 81 providers operating in
1999 are still current today).[11]
As a consequence, this group of providers, when taken as a whole, appears both
more diverse and less stable than the universities.[12]
The diversity of NUHEPs was enabled in part by the
extension of HELP loans through FEE‑HELP as part of the introduction of HESA
in 2003, and peak bodies representing these providers, the Council of Private
Higher Education (COPHE) and Australian Council for Private Education and
Training (ACPET), have long emphasised their role in providing students with
greater diversity of choice.[13]
They also contend that the lack of availability of Commonwealth Supported
Places (where government pays a portion of the tuition fee) and the application
of a 25 per cent FEE-HELP loan fee disadvantages their students and undermines
equity across the sector.[14]
These characteristics make it difficult to generalise
about higher education providers, and this is borne out by recent analysis,
which paints a mixed picture of outcomes for students attending NUHEPS. For
example, analysis by TEQSA suggested that students attending a NUHEP may be
more likely to withdraw from study. However, the study also highlighted that
attrition varies considerably across all institutions, with NUHEPs at both the
extreme high and extreme low end of the spectrum of outcomes.[15]
In contrast to this, analysis of outcomes from those NUHEPs participating in
Quality Indicators for Learning and Teaching suggests that students attending
these institutions may be more satisfied than those at universities.[16]
Current regulatory
arrangements
At the federal level, higher education regulation sits
largely with the quality assurance agency TEQSA, which:
... registers and evaluates the performance of higher education
providers against the Higher Education Standards Framework. All providers must
meet the Threshold
Standards in order to enter and remain within Australia’s higher education
system.[17]
TEQSA’s risk-based approach to regulation focuses its
assurance activities on those providers it considers most at risk of non‑compliance.[18]
Providers can apply to become self-accrediting
authorities, in which case they accredit some or all of their courses
according to the Standards. Other providers must have courses accredited directly
with TEQSA. It is relatively rare for NUHEPs to be self-accrediting, with only
11 holding this status at the time of writing.[19]ESOS
agencies, responsible for regulating delivery of education to overseas students
studying in Australia on a student visa, include TEQSA, along with the VET
regulator Australian Skills Quality Authority (ASQA), and the Secretary of the
Department of Education and Training (Education).[20]
Funding programs under HESA, including HELP and the
CGS, are administered by Education. Education assesses and oversees providers’ compliance
with HESA and relevant Guidelines and undertakes financial viability
assessments of HELP providers as part of their application to access HELP and
annually thereafter and also facilitates the collection of data from HELP providers.[21]
The experience of VET FEE-HELP suggests that risk of inadequate
oversight can occur at the intersection of responsibilities between Education
and portfolio regulatory agencies, in particular if there is insufficient
information sharing to facilitate risk monitoring and management:
There was poor engagement by Education with the Australian
Skills Quality Authority and the Australian Competition and Consumer Commission
to exchange information and intelligence about low quality or unscrupulous VFH
providers. Within Education, until 2016 there was little analysis or internal
management reporting of the VFH scheme to identify emerging problems.[22]
Unscrupulous practices in the higher education
sector
Although cases of unscrupulous practices in higher
education have not approached the scale seen in VET, recent cases of provider
de-registration do raise concerns about whether there are appropriate
protections in place, especially in relation to access to FEE-HELP.
In the most recent case, Careers Australia, operating
through the Australian School of Management (ASM) withheld information about
plans for rapid expansion in offerings to FEE-HELP students from TEQSA. In
April 2017 the Administrative Appeals Tribunal heard that the planned increase,
from 104 students in March 2015 when Careers Australia acquired ASM, to more
than 8700, could have cost $87 million to the FEE‑HELP scheme.[23]
ASM’s registration was cancelled by TEQSA in June 2017 for failure to meet the
Threshold Standards in relation to information provided to students and
financial viability and sustainability. TEQSA further considered that ASM had
failed to meet the conditions of its registration when it did not cooperate
with TEQSA in performing its functions and failed to inform TEQSA of an event
that would affect its ability to meet the Threshold Standards.[24]
As part of a series of actions against key VET providers,
the Australian Competition and Consumer Commission (ACCC) recently took action
against Careers Australia. On 16 May 2016, the ACCC accepted an undertaking
from Careers Australia to cancel enrolments and repay to the Commonwealth amounts
totalling at least $44.3 million. Careers Australia admitted that in violation
of Australian Consumer Law, during the period from 1 August 2013 to 31 March
2015, through its door-to-door marketing and telemarketing, it:
- misrepresenting
that courses were free
- misrepresenting
that the courses would allow consumers to find employment or would increase
their chances of finding employment and
- offered
inducements such as iPads and laptops and claiming they were provided for free
if the consumer signed up to the courses.[25]
TEQSA has taken action in two other cases of providers
failing to meet the Threshold Standards in recent years, cancelling the Australian
Institute of Professional Education’s registration in 2016, and not renewing
the Phoenix Institute’s registration in 2015.[26]
Committee consideration
Senate
Standing Committee for the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills has
sought information from the Minister on:
- why
flexibility is necessary in relation to setting the criteria as to whether
providers are fit and proper persons, and examples as to why 'market
developments' mean that it is difficult to detail the relevant matters and
circumstances in primary legislation
- why
it is more appropriate that the matters to be considered in determining whether
a person is a fit and proper person are to be determined by TEQSA in a
legislative instrument, rather than set out in primary legislation
- why
it is necessary to confer investigatory powers on any 'other person' to assist
an authorised person and whether it would be appropriate to amend the bill to
require that any person assisting an authorised person have specified skills,
training or experience.[27]
At the time of writing no information was available as to
the Minister’s response to the Committee.[28]
Policy
position of non-government parties/independents
At the time of writing no non-government parties or
independents have commented specifically on the Bill.
Position of
major interest groups
Responses to the Bill have so far been cautiously
supportive on the grounds that it will secure Australia’s higher education
system against unscrupulous providers.
Rod Camm, Chief Executive Officer of the Australian
Council for Private Education and Training (ACPET) stated:
I for one do support measures to help ensure integrity sits
at the heart of our system. We can’t ever go through this again. I do though
urge some restraint in the language and rhetoric around the changes. The new
nomenclature of negativity does not accurately represent the majority of people
that I know in the sector, nor does it position us to grown [sic] international
exports.[29]
Phil Honeywood, Chief Executive of the International
Education Association of Australia (IEAA) stated:
The changes will strengthen our national regulators’ ability
to veto providers from receiving and/or maintaining their CRICOS [Commonwealth
Register of Institutions and Courses for Overseas Students] registration by
assessing an applicant’s previous education activities and the characters of
its officers. Reporting on agent performance, and publishing data as
appropriate, will promote greater transparency and accountability in
educator-agent relationships and the wider sector.[30]
Financial
implications
The Explanatory Memorandum notes that the Bill will have
no financial implications.[31]
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.[32]
Parliamentary
Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights has
indicated that the Bill does not raise any human rights concerns.[33]
Key issues
and provisions
Provider
viability
As discussed above, financial viability assessments are
currently undertaken by Education as part of a provider’s application to access
FEE-HELP. Currently the HESA and the ESOS Act both contain
provisions to ensure providers are fit and proper persons.[34]
Consistent with the Threshold Standards, TEQSA also includes fit and proper
person requirements in its assessments. The Bill seeks to strengthen these arrangements
and ensure in particular that past actions of all key decision‑makers are
considered, in light of concerns over unscrupulous providers from VET moving
into higher education.
While these changes are not controversial, focusing on consistency
across the main Acts applying to higher education providers rather than
introducing substantially new considerations in relation to provider viability,
they are alert to the potential risks posed by new entrants to the sector.
Importantly, allowing greater attention to the history of a provider’s key decision-makers
establishes a risk‑management approach that is more in line with the
contemporary character of the tertiary education sector which (as discussed
above) shows increasing overlaps and movement between VET and higher education.
Fit and
proper person test in the ESOS Act
Schedule 1 amends the ESOS Act to strengthen
the fit and proper person provisions applied to providers of international
education and add to the range of events a registered provider must report to
their ESOS agency.
Currently, the ESOS agency, in determining whether
a provider or registered provider is fit and proper to be registered, must consider
if the provider and related persons:
- have
been convicted of an offence
- had
registration cancelled under the ESOS Act (including the previous ESOS
Act)
- been
issued with an Immigration Minister’s suspension certificate
- had
a condition imposed on their registration
- had
significant financial problems (as defined in the ESOS Act)
- been
disqualified from managing corporations under the Corporations Act
2001 or
- have
been involved in the provision of courses by another provider where any of
these issues arose and resulted in a conviction or other action.
Items 4, 5 and 6 broaden these considerations to
add any convictions for Commonwealth or State offences within the last five
years (if these were punishable by imprisonment for two years or longer or a
fine of 120 penalty units or more), cancellation of approval, or disciplinary,
remedial or other compliance action arising from being a Commonwealth or State
program or service provider.
Notification
of certain events
Currently, registered providers must notify their ESOS
agency of any offences relating to the ESOS Act. Proposed section
17A of the ESOS Act provides that registered providers must also notify
their ESOS agency of an event that would significantly affect the provider’s ability
to comply with the ESOS Act, and any prospective changes to the
ownership or related persons of the registered provider. Such notifications
must be provided within:
- ten
days if the change cannot be determined until it takes effect or
- for
other changes, as soon as practicable before the change takes effect.[35]
In relation to changes to the ownership or related persons
of the registered provider, proposed subsection 17A(4) requires that the
notice include information about the new owner or related person to enable a
decision as to whether the provider is fit and proper to be registered. Hence
notification of changes to the ownership or related persons of the registered
provider trigger the application of the new ‘fit and proper’ person test
(discussed above).
Retrospective
application of amendments in Schedule 1
Item 16 provides that the amendments made by
Schedule 1 apply not only after the commencement of the provisions, but also
(in some circumstances) before the commencement of the provisions, meaning the
amendments will have a retrospective application on providers and applications
made (but not yet decided) before the commencement of the provisions.
Fit and
proper person test in the TEQSA Act
Schedule 2 amends the TEQSA Act to provide
for a definition of ‘fit and proper person’ (item 1), increase financial
viability and transparency requirements (item 2), apply fit and proper
person provisions to TEQSA’s consideration of new higher education provider
applications (items 4, 9, 10 and 11) and enable TEQSA to take into
account the history of persons related to the entity in its regulatory
activities (item 7).
Currently, although TEQSA assesses if members of a
provider’s governing body are ‘fit and proper persons’ as required by the Threshold Standards
2015, standard 6.1.2, the TEQSA Act does not contain any
definition on which to base this assessment, nor do the Standards. Item 1
and item 4 therefore specify that TEQSA may, by legislative instrument, specify
matters for consideration in determining if a provider is a fit and proper
person. Items 9, 10 and 11 then specify that the status as a fit and
proper person should be considered in granting an application for registration,
and be a condition of maintaining that registration. The Explanatory Memorandum
states that these will collectively ensure:
- the
process for provider approval will now include a requirement that an applicant
not only satisfies the relevant Threshold Standards, but also that the
applicant and each person involved in the decision-making processes for the
conduct of its affairs (for example, each person of a provider’s corporate
governing body) is a fit and proper person[36]
- all
providers applying for renewal of registration, as well as those persons who
make, or participate in making, decisions that affect the whole, or a
substantial part, of the body’s affairs (including higher education affairs)
are required to be fit and proper persons.[37]
The above amendments in relation to registration
applications and renewals is reinforced by proposed section 25A
which has the effect of requiring that at all times a registered higher
education provider and all persons who make or participate in the provider’s
decisions that affect the whole, or a substantial part, of the provider’s
affairs, must be fit and proper persons.[38]
Consideration
of a providers history, financial status and capacity of providers by TEQSA
Currently, TEQSA considers the entity’s financial status
and capacity and quality assurance mechanisms as well as its history of
scholarship, student experience, financial status, compliance with Threshold
Standards and laws regulating higher education in its risk assessments.
Item 2 replaces the TEQSA Act’s definition
of an auditor with the requirement that an auditor be a registered company
auditor within the meaning of the Corporations Act
2001. This will ensure a higher degree of probity than is currently the
case, because auditors of a higher education provider’s financial statements
must meet the new, higher standards imposed on company auditors imposed by the Corporations
Act (or otherwise be approved by TEQSA).[39]
The Explanatory Memorandum notes that in relation to this new requirement:
Providers will be given adequate notice and time to prepare
for this amendment as it is not being required for any financial reporting
until the reporting period commencing on or after 1 July 2018.[40]
Item 7 adds the history of persons related to the
entity to the considerations examined by TEQSA when considering an entity’s
financial status and capacity and quality assurance mechanisms. This change
will allow TEQSA to consider if key decision-makers have a history of poor
practices before joining the provider. In addition, item 8 amends
section 15 of the TEQSA Act to expand the definition of a related person
to include a person who:
- is
able to control, or to materially influence, the entity’s activities or
internal affairs
- is
able to determine, or to materially influence, the entity’s financial or
operating policies
- is
financially interested in the entity’s success or failure or apparent success
or failure
- is
a holding company of the entity
- is
a subsidiary of the entity or
- is
a subsidiary of a holding company of the entity.[41]
This will have the effect of ensuring that the definition
of ‘related person’ captures not only related entities (as applicable in the
context of bodies corporate or relational terminology under the Corporations
Act) but also more broadly to all regulated entities, including individuals
and bodies politic. In turn this will enable the risk reflection principles to
capture a wider range of instances where a person or entity exercises control
or material influence over a regulated entity’s affairs, including in relation
to its financial governance or operating policies and interests in its solvency
or liquidity (or any companies which form part of the same corporate group as
the regulated entity).[42]
Retrospective
application of amendments in Schedule 2
Item 13 provides that the amendments made by
Schedule 1 apply not only after the commencement of the provisions, but also
(in some circumstances) before the commencement of the provisions, meaning the
amendments will have a retrospective application on providers, and applications
for renewal made (but not yet decided) before the commencement of the
provisions.
Consideration
of a providers history, financial status and capacity of providers under the
HESA
Currently, section 16–25 of
the HESA sets out how bodies are approved as higher education providers.
Schedule 3 will add a provider’s history and
experience (and that of its key decision-makers) in higher education, including
the scope of courses and level of qualifications, to the range of factors
considered in approving a body as a higher education provider under the HESA.
Proposed paragraph 16-25(fb) of the HESA will require that the
Minister must be satisfied that the body has sufficient experience in the
provision of higher education to approve that body as a provider.
In reaching such a conclusion, proposed subsection 16-25(2A)
provides that the Minister may consider the following:
- whether
the body has been a registered higher education provider for three or more
years
- the
history of the body, and each person who makes or participates in making
decisions that affect the whole, or a substantial part, of the body’s affairs,
in delivering higher education
- the
scope of courses and level of qualifications the body, and each person who
makes or participates in making decisions that affect the whole, or a
substantial part, of the body’s affairs, has experience in providing.
The use of the word ‘may’ means the above list is
non-exhaustive, and would provide scope to, for example, consider if a provider
seeking to move into higher education has key decision‑makers and
academic staff in place with backgrounds in higher education suitable to its
plans, both in terms of governance and scope of courses. This consideration
will be straightforward for those that have already been registered higher
education providers for three or more years, while new entrants to the sector
may need to hire staff with backgrounds in higher education.
Safeguarding
FEE-HELP
Currently, Section 104–10 of
the HESA allows the Minister to determine, by legislative instrument,
that a specific course or all courses at a provider are ineligible for
FEE-HELP. As a disallowable instrument, this determination is subject to
Parliamentary scrutiny. Schedule 3 proposes a number of measures
intended to raise the bar for NUHEPs to access FEE‑HELP, in an effort to prevent
a repeat of the losses attributable to unscrupulous providers in VET FEE-HELP.
Schedule 3, item 6 adds conditions to section 16–60 of the HESA to allow limits to be set on:
- the
number of students entitled to FEE-HELP at a provider
- the
total amount of FEE-HELP payable to a provider or
- the
units or modes of study for which FEE-HELP is payable.
This will allow the Minister to choose to limit FEE‑HELP
access for providers seeking to rapidly grow their operations through FEE-HELP
enrolments. When viewed as a whole, the above changes along with that made by item
27[43]
will allow the Minister to make a determination to limit FEE-HELP access at
provider level without the requirement to table the decision in Parliament.
However, the Minister must still have regard to the effect of the determination
on students undertaking the course or courses under subsection 104-10(3).[44]
Proposed subsection 104-1(3) add additional conditions
to Section 104–1 of the HESA to restrict FEE-HELP
to students in a variety of situations, including where the relevant provider’s
FEE-HELP limit (be it on the total number of students or total amount payable
to the provider). In addition, proposed subsection 104(4) provides that
a student is not entitled to FEE-HELP for a unit of study where the provider
completes any part of the request for Commonwealth that the student is
required to complete.
Proposed section 104-1A adds further restrictions
on the availability of FEE-HELP entitlements. Proposed subsection
104-1A(1) provides that a student is not entitled to FEE-HELP if they fail
a substantial number of units within a course of study (except where the
provider has granted a special circumstances exemption).
Prohibition
of certain marketing practices
Item 10 draws on experience with VET providers to
disallow various marketing practices which became common in that system,
including:
- representing
that HELP is not a loan or does not need to be paid back
- offering
inducements to take up Commonwealth assistance
- mentioning
the availability of FEE-HELP if engaged in cold‑calling or using third
party contact lists and
- completing
the request for Commonwealth assistance form on behalf of students.
Each of these practices is defined as a civil offence with
an associated penalty.[45]
(A full list of new civil penalties proposed in the Bill is provided at
Appendix A.)
Civil penalty provisions were only recently added to the HESA
through the Higher
Education Support Amendment VET FEE-HELP Reform Act 2015, which sought
to address the issues in VET which this Bill responds to. While enforcement of the
HESA has previously relied on practices built up over long histories and
the deterrent effect of providers’ needing to maintain their approval (which in
theory the Minister could revoke), the introduction of these civil penalties recognise
that with a more diverse sector there is a need to establish a deterrent and/or
punishment below the level of de‑registration.
Preventing
inappropriate enrolments
Currently, providers typically set entry requirements for
a course of study, and use of prerequisites to limit entry into units which assume
specific prior knowledge, in order to safeguard academic standards; however,
these specific checks have not been a requirement under the HESA.
Items 12 and 23 seek to protect vulnerable
prospective students from being inappropriately enrolled, either without their
knowledge or in units inappropriate to their academic ability as happened to
many under VET FEE‑HELP. As such, these items establish a
responsibility for providers to ensure debts are only incurred by ‘genuine students’
(item 23) who are academically suited to the units of study they enrol
in (item 12).
In the context of the overall purpose of the Bill, the
intent of adding these requirements into the HESA is to ensure these
checks are occurring across all providers, in response to incidences of VET
providers enrolling students whose academic capabilities were far below those
required for their courses. However, it is not clear exactly how this would
function and concerns have been raised that applying these requirements at unit
(rather than course) level will pose ‘considerable practical difficulty’ for
providers.[46]
Re-crediting
students where provider breaches conditions
Arguably, under the HESA it is already possible for
students to have any FEE-HELP balance re-credited where the conditions for a
student accessing HELP are not met (because the loan should not be made and is
not a valid debt).[47]
Item 29 specifies that in cases where provider
conditions are not met, any FEE-HELP balance incurred to the student must
be re-credited by the provider. If the provider is not able to do so, proposed
subsection 104-43(2) provides that the Secretary is able to re-credit the
balance.
This amendment introduces more directive arrangements
which resolve apparent uncertainty around whether the Department of Education
can (or should) re‑credit FEE-HELP balances in the event of providers
failing to act in accordance with the HESA in relation to HELP debts.
Criticisms
of new risk management approach
Part 2 of schedule 3, which sets out the
application provisions of this part, has the effect that these key amendments
to the HESA only apply to providers approved under section 16–25 (NUHEPs). Unlike the more nuanced approach to risk
management taken by TEQSA, this approach captures institutions such as many TAFEs
that are likely to be low-risk.
Warburton has raised concerns about this approach:
Do we really want a tertiary education sector bifurcated into
‘trustworthy’ education providers whose students can access government
assistance and marginal providers where domestic, as well as international
students, are required to pay full fee-fees upfront for their courses and do so
in an environment in which there is inadequate enforcement of regulatory
protections?[48]
While it is unclear why restrictions such as those on
unscrupulous marketing practices would not also be applied to universities,
this blunter approach to risk management is consistent with activities intended
to sit with Education under the HESA through the administration of
FEE-HELP.
Retrospective
application of amendments in Schedule 3
Item 44 provides that the amendments made by
Schedule 3 apply not only after the commencement of the provisions, but also (in
some circumstances) before the commencement of the provisions, meaning the
amendments will have a retrospective application on providers and applications
made (but not yet decided) before the commencement of the provisions.
Information
sharing
At present, sections 189, 190 and 194 of the TEQSA Act
allow TEQSA to disclose information to a Commonwealth authority. Section 180–15 of HESA also allows the Department of Education and
Training to disclose information to TEQSA for the performance of duties or
functions of the HESA. TEQSA and Education also have in place a
Memorandum of Understanding (MOU) to allow Education to make information
available to TEQSA for the purposes of its risk assessment activities.[49]
The Careers Australia case discussed above was discovered as a consequence of
information sharing from Education to TEQSA, indicating that the sector is
likely already be in a better position than VET was during the height of losses
through VET FEE-HELP.[50]
Currently, section 175 of the ESOS Act allows ESOS
agencies to share information about providers with relevant bodies for the
purposes of administering the ESOS Act. Proposed subsection 175(1A)
of the ESOS Act will compliment existing arrangements allowing the
Secretary or ESOS agency to provide information to an ‘enforcement body’.[51]
This will allow the Secretary or ESOS agency to provide information to a
provider about the activities of its agents and to publish information about
agents, for example, the number of student visas granted to students recruited
or otherwise dealt with by an agent that have been cancelled or have ceased to
be in effect.[52]
Increased
regulatory powers
To ensure that the proposed amendments are able to be
appropriately enforced, item 37 of Schedule 3 amends the HESA
to insert a proposed Part 5-8 providing various regulatory powers to
relevant agencies. The effect of the proposed amendments is to make the HESA
(other than schedule 1A) enforceable under the Regulatory Powers
(Standard Provisions) Act 2014.[53]
These changes reflect recent amendments to Schedule 1A,
through the Higher
Education Support Amendment VET FEE-HELP Reform Act 2015. These were
essentially a stop-gap to address the issues in the VET sector until more
substantial reforms could be legislated through the VET Student Loans
Act 2016.[54]
The features of the increased regulatory powers introduced here take their cue
from the VET changes under these Acts.
Under the proposed arrangements, monitoring and
investigation powers would allow regulators to demonstrate violation of the new
civil penalty regime discussed above, with HESA and TEQSA investigators
appointed to carry out these activities. New enforcement arrangements would allow
TEQSA and Education staff with responsibilities under the Proposed Part 5-8
to issue infringement notices in accordance with allowable civil penalty
provisions (set out in Appendix A).
Much of the impact of the proposed changes will be
determined by the regulatory capacity of TEQSA and Education, although the Bill
does largely limit enforcement activity to NUHEPs through the application
provisions contained in part 2 rather than requiring coverage of the
entire sector.[55]
Concluding comments
The Bill reflects key recent reforms to VET loans arrangements
by increasing protection for students and the remaining HELP schemes from potentially
unscrupulous providers entering into the higher education sector. While schedules
1 and 2 propose uncontroversial amendments to the ESOS Act and TEQSA
Act to provide more consistent coverage in relation to fit and proper
person and financial viability requirements, reporting requirements and
information sharing provisions, schedule 3 proposes more substantial changes to
the HESA, including a civil penalty and compliance regime, with
additional regulations largely applied to NUHEPs.
The restrictions around FEE-HELP coupled with the detailed
civil penalties and regulatory powers set out in the Bill appear to
substantially increase the regulatory focus of the Department of Education and
Training as the program manager of HELP, as well as adding to TEQSA’s existing
responsibilities. Thus, one of the most significant questions raised by the
Bill is whether increasing the regulatory powers of government will have the
desired protective effect. The lessons of VET FEE-HELP are arguably as much
about a lack of enforcement as a lack of appropriate powers. For example, the
introduction in 2015 of new VET Guidelines prohibiting inducements was followed
by media reports of providers continuing to offer inducements such as laptops.[56]
It has been suggested that this in part reflects a lack of regulatory
capacity within the Department of Education and Training:
Attaching civil penalties to existing provisions is not a
solution for the absence of enforcement activity. Whatever is done to the
provisions, someone has to enforce them or they will be ineffective. The
‘someone’ responsible for enforcing the Quality and Accountability requirements
in HESA is the Minister and his department, with the Minister being ultimately
responsible to the parliament for the job being done satisfactorily.[57]
The Explanatory Memorandum indicates that the Bill has no
financial implications, however the information provided with the Bill does not
include any discussion of the adequacy of the resources currently available to support
enforcement activity, which needs to encompass monitoring compliance, utilising
the proposed new categories of information, detecting and investigating
breaches, and conducting legal enforcement action.
On the other hand, more proactive information sharing and
regulatory arrangements already in place between TEQSA and Education, discussed
above, appear likely to provide a better foundation for these changes than was
the case for earlier efforts to reform VET FEE-HELP.
Appendix A:
proposed new civil penalties—Higher
Education Support Act 2003
Offence |
Provision |
Amount (PU) |
Misrepresenting assistance (that HELP is not a loan or
does not need to be repaid) |
19‑36 |
240 |
Offering certain inducements likely to cause a person to
make a request for Commonwealth assistance |
19‑36A(1) |
120 |
Mentioning the possible availability of FEE‑HELP
assistance if engaged in cold‑calling |
19‑36B(2) |
60 |
Mentioning the possible availability of FEE‑HELP
assistance if using third-party contact lists |
19‑36C(2) |
60 |
Contravention of other marketing requirements as may be
set out in the Higher Education Provider Guidelines |
19‑36D(2) |
60 |
Completing any part of a request for Commonwealth
assistance that a student is required to complete |
19‑36E |
120 |
Failing to assess the student as academically suited to
undertake the unit concerned |
19‑42(1) |
120 |
Failure to comply with the provider’s own student
grievance and review procedures* |
19‑45(5) |
60 |
Failure to comply with HESA requirements relating
to provision of statistical and other information to the Minister* |
19-70(4) |
60 |
Failure to co-operate with, or hindrance of, HESA or
TEQSA investigators performing functions or exercising powers under the Act |
19‑71(2) |
60 |
Failure to keep records in accordance with the Higher
Education Provider Guidelines |
19‑72(2) |
60 |
Failure to publish information in accordance with the
Higher Education Provider Guidelines |
19‑73(2) |
60 |
Failure to inform the Minister in writing of any event
affecting the provider’s capacity to meet the conditions of Commonwealth assistance* |
19-75 |
60 |
Failure to inform the Minister in writing of any event
affecting the provider’s accreditation* |
19-77 |
60 |
Failure to inform the Minister in writing of any event
affecting the provider’s registration (unless the Minister has been advised
of the same in relation to accreditation)* |
19‑78(1) |
60 |
Failure to cooperate with the auditing body during the
course of an audit |
19‑80(3) |
60 |
Failure to comply with compliance notice* |
19-82(4) |
60 |
Failure to provide the Minister with a student
contribution amount and tuition fee schedule according to the requirements
set out in HESA* |
19‑95(2) |
60 |
Failure to inform the Minister of any variation in student
contribution or tuition fee amounts* |
19‑95(3) |
60 |
Failure to comply with requirements relating to withdrawal
from units of study |
169‑17(3) |
120 |
Failure to publish census dates and EFTSL values according
to the requirements set out in HESA* |
169‑25(3) |
60 |
Variation of the census dates or EFTSL values without
written approval of the Minister* |
169‑25(4) |
60 |
Failure to adhere to Administration Guidelines in relation
to electronic communications* |
174‑5(1A) |
60 |
Giving false or misleading information |
238-1A |
60 |
*Offences marked with an asterisk are currently in HESA (with
no civil penalties attached).
[1]. Education Services
for Overseas Students Act 2000 (Cth); Tertiary Education
Quality and Standards Agency Act 2011 (Cth); Higher Education
Support Act 2003 (Cth); Explanatory
Memorandum, Education Legislation Amendment (Provider Integrity and
Other Measures) Bill 2017, Australian Parliament website, p. 1.
[2]. These
changes and the details of the VET FEE-HELP controversy are discussed in detail
in J Griffiths, VET
Student Loans Bill 2016 [and] VET Student Loans (Charges) Bill 2016 [and] VET
Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016,
Bills digest, 41, 2016–17, Parliamentary
Library, Canberra, 2016.
[3]. Explanatory
Memorandum, op. cit., p. 1.
[4]. Australian
National Audit Office (ANAO), Administration
of the VET FEE-HELP scheme: Department of Education and Training; Australian
Skills Quality Authority; Australian Competition and Consumer Commission,
Audit report, 31, 2016–17, ANAO, Canberra, 2016, p. 7.
[5]. TAFE
Directors Australia (TDA), Submission
to the Senate Education and Employment References Committee, Inquiry into
the operation, regulation and funding of private vocational education and
training (VET) providers in Australia, 12 February 2015, p. 1.
[6]. A
Norton, Mapping
Australian higher education 2016, Grattan Institute, Melbourne, August
2016, pp. 11–12.
[7]. Australian
Government, ‘Report
list: RTO list with CEO contacts report’, Training.gov.au website.
[8]. Tertiary
Education Quality and Standards Agency (TEQSA), Prospective
higher education providers update: for January to March 2017, TEQSA, Melbourne,
May 2017, p. 1.
[9]. TEQSA,
‘National register of
higher education providers’, TEQSA website, May 2017; Higher Education
Support Act 2003 (Cth).
[10]. Except
for allocated places in priority areas, Commonwealth Supported places under the
Commonwealth Grant Scheme (CGS), where the government pays a proportion of the
tuition fee, are only available at public universities. For the 2016–17 financial year, FEE-HELP loans are available up to $126,101
for medicine, dentistry and veterinary science and $100,879 for other courses.
For more information on FEE-HELP see Australian Government, ‘FEE-HELP’,
StudyAssist website. More information on HELP is available in C Ey, Higher
Education Loan Program (HELP) and other student loans: a quick guide,
Research paper series, 2016–17, Parliamentary Library,
Canberra,
2017.
[11]. L
Watson, Survey
of private providers in Australian higher education 1999, Department of
Education, Training and Youth Affairs, Canberra, June 2000.
[12]. Norton,
Mapping
Australian higher education 2016, op. cit.
[13]. For
example, TAFE Directors Australia, Concern
over lack of genuine student choice in higher education reform plan, media
release, 3 May 2017; J Ross, ‘Budget
package undermines its own ideals: private colleges’, The
Australian, 10 May 2017; COPHE and Australian
Council for Private Education and Training (ACPET), Federal government’s higher education reforms lack equity,
joint media release, May 2017.
[14]. Ibid.
[15]. TEQSA,
Characteristics
of Australian higher education providers and their relation to first-year
student attrition, TEQSA, Melbourne, 6 June 2017.
[16]. A
Norton, ‘Non-uni
higher education provider students more satisfied than uni students’, AndrewNorton.net.au,
blog, 25 March 2015; see also Social Research Centre, Quality indicators
for learning and teaching, QILT website, accessed 22 June 2017.
[17]. TEQSA,
‘About TEQSA’, TEQSA website.
[18]. TEQSA,
TEQSA’s
risk assessment framework, version 2.1, TEQSA website.
[19]. TEQSA,
‘National register of
higher education providers’,
op. cit.
[20]. Department
of Education and Training (DET), ‘ESOS
agencies’, DET International Education website.
[21]. DET,
‘Applying
to become a higher education provider’, DET website.
[22]. ANAO,
Administration
of the VET FEE-HELP scheme, op. cit., p. 30; The Australian Government
has commissioned Professor Valerie Braithwaite, Professor of Regulatory Studies
in the School of Regulation and Global Governance at the Australian National
University, to lead a review of the National Vocational Education and
Training Regulator Act 2011 (NVETR Act). The review is due to report
by the end of 2017. DET, ‘Review of the National
Vocational Education and Training Regulator Act 2011’, DET website, 7 July
2017.
[23]. B
Butler, ‘Careers
Australia plans “misleading”’, The Australian, 22 June 2017.
[24]. TEQSA
‘Australian
School of Management’s registration cancelled’, TEQSA website, 16
June 2017.
[25]. Australian
Competition and Consumer Commission (ACCC), ‘The
ACCC: public registers: Careers Australia Group Limited (Careers Australia)
undertaking’, ACCC website.
[26]. TEQSA, ‘National
register of higher education providers’,
op. cit.
[27]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 6, 2017, Parliament of Australia, Canberra, 14 June 2017, pp. 22–24.
[28]. Parliament
of Australia, ‘Senate
Standing Committee for the Scrutiny of Bills: ministerial responses’,
Parliament of Australia website.
[29]. ACPET,
‘But
wait there is more’, ACPET website, 5 June 2017.
[30]. International
Education Association of Australia, ‘Government moves to prevent
unscrupulous VET providers entering higher education’,
Medianet website, 1 June 2017.
[31]. Explanatory
Memorandum, op. cit., p. 4.
[32]. The
Statement of Compatibility with Human Rights can be found at page 6 of the Explanatory
Memorandum to the Bill.
[33]. Parliamentary
Joint Committee on Human Rights, Scrutiny
report, 5, 2017, Parliament of Australia, Canberra, 14 June 2017, p. 49.
[34]. Education Services
for Overseas Students Act 2000, section 7A; Higher Education
Support Act 2003, subsection 16–25(4), section 22–17.
[35]. Proposed
paragraph 17A(3)(b).
[36]. Explanatory
Memorandum, op. cit., pp. 38–39.
[37]. Ibid.,
p. 39.
[38]. Ibid.
[39]. Ibid.,
p. 35.
[40]. Ibid.
[41]. Tertiary Education
Quality and Standards Agency Act 2011, proposed subsection 15(2).
[42]. Explanatory
Memorandum, op. cit., p. 38.
[43]. Item
27 repeals subsection 104-10(4) that requires the Minister to make a
determination on funding under subsection 104-10(2) not later than 6 months
before the commencement of the specified course.
[44]. Explanatory
Memorandum, op. cit., p. 56.
[45]. Penalties
are expressed in penalty units to facilitate adjustment across the Act from
time to time. A penalty unit is currently equal to $210.00, according to the Commonwealth
Crimes Act, section 4AA.
[46]. M
Warburton, Avoiding
regulatory responsibility and its impact on student loan programs: how to
really understand the Education Legislation Amendment (Provider Integrity and
Other Measures) Bill 2017, LH Martin Institute, Melbourne, June 2017,
p. 6.
[47]. M
Warburton, The
VET FEE-HELP debacle: helping its victims and lessons for administration,
LH Martin Institute, Melbourne, December 2016.
[48]. Warburton,
Avoiding
regulatory responsibility and its impact on student loan programs, op.
cit., p. 8.
[49]. TEQSA
and DET, Memorandum
of understanding: for the sharing of higher education data and information,
TEQSA website, October 2016.
[50]. Butler,
‘Careers
Australia plans “misleading”’, op. cit.; ANAO, Administration
of the VET FEE-HELP scheme, op. cit.
[51]. The
definition of enforcement body is according to the Privacy Act 1988.
[52]. Explanatory
Memorandum, op. cit., p. 32
[53]. For
information about the Regulatory Powers (Standard
Provisions) Act 2014, see: J Murphy, Regulatory
Powers (Standard Provisions) Bill 2014, Bills digest, 73, 2013–14,
Parliamentary Library, Canberra, 2014.
[54]. From
1 January 2017, VET FEE-HELP was replaced by VET Student Loans under a new Act,
the VET Student
Loans Act 2016, with the VET FEE‑HELP regulatory powers described
under Schedule 1A continuing under grandfathering
arrangements available to students until the end of 2017 (and in some cases
longer).
[55]. Regulatory
powers set out in the proposed Part 5–8
are confined to monitoring and enforcement of the new civil penalty provisions,
which the application provisions contained in Part 2 limit to NUHEPs
(those institutions approved as higher education providers under HESA 16–25).
However, the proposed Part 5–8,
section 238–1A applies a civil penalty to
giving false or misleading information. As this is outside the limitations
imposed in Part 2, at least some of the new enforcement arrangements are
likely to apply to universities.
[56]. For
discussion of this issue, see Griffiths, VET
Student Loans Bill 2016 [and] VET Student Loans (Charges) Bill 2016 [and] VET
Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016,
op. cit., p. 23–24.
[57]. Warburton,
Avoiding
regulatory responsibility and its impact on student loan programs, op.
cit., p. 6.
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