Bills Digest no. 32 2009–10
Higher Education Support Amendment (VET FEE-HELP and Tertiary Admission
Centres) Bill 2009
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 & copyright details
Passage history
Higher Education Support Amendment
(VET FEE-HELP and Tertiary Admission Centres) Bill 2009
Date introduced: 9 September 2009
House: House of Representatives
Portfolio: Education
Commencement: The day after Royal Assent
Links: The relevant
links to the Bill, Explanatory Memorandum and second reading speech
can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills
have been passed they can be found at ComLaw, which is at http://www.comlaw.gov.au/.
The Bill amends the Higher Education Support Act
2003 (the Act) to:
- broaden the application of the Higher Education Loan Program (HELP)
category for Vocational Education and Training students called VET FEE-HELP,
and
- provide that officers of Tertiary Admission Centres (TACs) have the
same status and duty of care as those of higher education providers
in relation to processing student information.
The amendments provided for in this Bill were previously part of the
Higher Education Legislation Amendment (Student Services and Amenities,
and Other Measures) Bill 2009 (the original Bill) that was first introduced
into Parliament in February 2009. That Bill was finally rejected by the
Senate in August 2009, primarily due to the controversial nature of the
provisions relating to student services and amenities. Those provisions
are now in a separate Bill, the Higher Education Legislation Amendment
(Student Services and Amenities) Bill 2009.
Income contingent loans (ICLs) for students
such as those that have been available in the higher education sector
for some time, were extended to the vocational education and training
(VET) sector in 2007 under the Higher Education Support Amendment (Extending
Fee-Help for VET Diploma, Advanced Diploma, Graduate Diploma and Graduate
Certificate Courses) Act 2007. The VET FEE-HELP loans, as they are
known, were introduced by the Coalition Government as part of its agenda
to increase productivity, and address skills shortages. They were introduced
to assist students fund their own study as part of a strategy to meet
the increasing skills and training needs of a growing economy. At a time
when growth in government VET budgets has been constrained, encouraging
higher levels of private investment has gained greater acceptance as a
strategy for achieving this.
The introduction of VET FEE-HELP was justified
on equity grounds. VET students were disadvantaged by having to pay up-front
fees and should have parity with their higher education counterparts who
did have access to ICLs; VET providers could not compete with their higher
education counterparts—were some of the equity arguments. Access to VET
FEE-HELP was therefore made available for, and is still limited to those
courses that are provided by both the university and the VET sectors—Diploma,
Advanced Diploma, Graduate Diploma, and Graduate Certificate courses.
Modelled as an extension to the Higher Education Loan Program (HELP) that
exists for full-fee paying higher education students, VET FEE-HELP was,
on introduction, also limited to full-fee VET courses. Other conditions
on accessing these loans included that the provider had to be a corporate
body and that arrangements needed to be put in place between the approved
VET provider and a higher education provider to credit the qualification
towards a higher education award.[1] The credit transfer arrangements reinforced this policy’s connection
with higher education qualifications. Not only did it treat the courses
common to both sectors alike, but the credit transfer arrangements also
facilitated pathways to the higher level qualifications that are believed
to be in demand in the Australian labour force.
The amendments provided for in this Bill enable access to VET FEE-HELP
to be broadened, essentially by reducing the level of legislative prescription
on eligibility and allowing more flexibility through the use of the VET
FEE-HELP Guidelines. Specifically the amendments would relegate the details
of matters relating to the value of the loan debt, credit transfer arrangements
and the eligibility of courses and students to the VET FEE-HELP Guidelines.
As legislative instruments, the VET FEE-HELP Guidelines do not command
the same level of Parliamentary scrutiny as legislation, and can therefore
be more flexibly adapted to cater for changing policy parameters.[2]
Since the introduction of the original Bill the proposed scope of access
to VET FEE-HELP has become clearer with the release of amendments to the
VET FEE-HELP Guidelines. The amended VET
FEE-HELP Guidelines extend access to government–subsidised students,
but only for Diploma and Advanced Diploma courses. Access is also limited
to those courses provided by a ‘VET Reform State or Territory’ (as defined
in the newly amended VET Provider Guidelines).[3]
With these amendments the Commonwealth is therefore able to meet its
commitment to Victoria to provide ICLs to ‘eligible students, studying
Government-subsidised diploma and advanced diploma courses’ in support
of that state’s package of VET reforms which commenced on 1 July 2009.[4] While the Commonwealth has offered similar support to any other
state/territory that pursues such market related VET reforms, the financial
impact statement in the Explanatory Memorandum is based only on
the estimated costs for Victoria. At this stage the estimated fiscal impact
is approximately $5 million in each of the first two years. [5]
Through changes to the VET FEE-HELP Guidelines the Government is expanding
access to ICLs to government–subsidised VET students, but only to those
doing Diploma and Advanced Diploma courses (it is not clear why Graduate
Diploma and Graduate Certificate courses have not been included), and
only to those courses provided by a ‘VET Reform State or Territory’. At
this stage only Victorian government–subsidised students will be eligible,
as Victoria is the only state/territory that would currently meet the
definition of a ‘VET Reform State or Territory’.
Competition in Victoria’s VET market is also likely to be enhanced by
the amendments that will enable more flexibility around the credit transfer
arrangements that were a requirement of the original VET FEE-HELP policy.
For example, subject to the VET FEE-HELP Guidelines, access could be provided
to smaller private providers who may not have credit transfer arrangements
in place, or who may provide niche courses for which ‘there is no obvious
tertiary equivalent as the course has traditionally been covered by VET’.[6] While this relaxation of the credit transfer
requirements is likely to facilitate competition between small and large,
and public and private providers, it could also have the effect of weakening
the VET FEE-HELP policy’s connection to higher education courses and pathways.
[7]
Critics of the introduction of income contingent loans into the VET sector
expressed their concerns that access to such loans would lead to substantial
fee increases in the VET sector, thereby increasing the burden on individual
VET students. They were particularly concerned about students from disadvantaged
sectors of society who as government–subsidised students currently pay
relatively low fees.[8]
They therefore argued that rather than expanding participation in VET,
ICLs may act as a barrier to further training and much needed skills development.[9] The expansion of ICLs to government–subsidised
students in the context of Victoria’s market based VET reforms, that as
anticipated have involved an increase in TAFE fees, has reinforced these
concerns.[10]
Given that the Commonwealth Government does not currently have a role
in determining VET fees, the question of VET fee levels may also have
occupied the Commonwealth Government in costing and planning for the reach
of its VET FEE-HELP policy. A paper published by the Treasury that was
influential in the introduction of ICLs for VET had warned of possible
risks to the Commonwealth Government associated with fee increases by
state and territory authorities made possible by the introduction of ICLs:
The Commonwealth government has traditionally not
been directly involved in TAFE and it would need to be satisfied that
the risks associated with, for example, the level of fees being raised,
have been fully thought through.[11]
Supporters of income contingent loans for VET such as the co-authors
of the Treasury publication, viewed their introduction into the VET sector
as a matter of equity. They argued that VET students, unlike their higher
education counterparts, were disadvantaged by having to pay up-front fees—government–subsidised
and full-fee students alike.[12]
Although VET FEE-HELP was originally limited to full-fee students, these
advocates would have welcomed its introduction and would presumably also
welcome its current expansion. However, concerns about equity of access
are likely to persist given that access to government–subsidised students
is being extended selectively, only to Victoria—currently the only ‘VET
Reform State or Territory’. Furthermore, while full-fee Graduate Diploma,
and Graduate Certificate students can have access to VET FEE-HELP, government–subsidised
students doing such courses have not been included in the revised VET
FEE-HELP Guidelines. Any change in policy to include them could readily
be addressed by amending the VET FEE-HELP Guidelines. The total fiscal
impact of doing this would of course be increased.
Despite changes to the VET FEE-HELP policy parameters that have to a degree
relaxed its original association with higher education pathways in ‘VET
Reform States or Territories’, there is no indication that the Government
has any plans to expand access to other qualifications. The possibility
that there may be an interest in doing this in the future can not be ruled
out as the authors of the Treasury paper noted that the economic basis
for ICLs, that is the extent of private rates of return to investment
in VET, applies to Certificate level III/IV courses as well.[13] However, if the policy parameters were to be
expanded to include access for courses other than at the Diploma, Advanced
Diploma, Graduate Diploma, and Graduate Certificate levels, the legislation
would need to be amended to effect such a change.
Schedule 1 amends the Act and deals with the broadening of access to
VET FEE-HELP.
Item 1 would allow
for the VET FEE-HELP Guidelines to specify the conditions under which
a less than 120 per cent debt is incurred by a VET FEE-HELP loan. Currently
the loan debt is 120 per cent, of which 20 per cent is a loan fee. Item
2 allows for this amendment to be applied to units of study with a
census date on or after 1 July 2009. Owing to the delay in the passing
of the earlier Bill it now provides for the loan debt measure to be applied
retrospectively to debts incurred before, on or after the commencement
of the amendment.[14]
Items 3-7 in the Bill
would effectively relax the credit transfer provisions. Item 3
removes the credit transfer conditions from the Minister’s requirements
to approve a body corporate as a VET provider. These requirements will
then be dealt with through the VET FEE-HELP Guidelines.
The credit transfer arrangements
for courses are also being relaxed. Currently under paragraph 45(1)(a)
the course requirements for VET FEE‑HELP assistance for a VET
unit of study include that the unit ‘is being undertaken as part of a
VET course of study that meets any requirements set out in the VET FEE‑HELP
Guidelines relating to VET credit transfer arrangements’. Item 5
removes the reference to credit transfer in paragraph 45(1)(a). Item
6 then inserts a new section 45(1A) which would allow with respect
to the arrangements for courses provided under the amended paragraph 45(1)(a),
which are no longer limited by credit transfer arrangements, that the
VET FEE-HELP guidelines can set out different requirements for different
students and requirements that may relate only to some students taking
a particular unit of study.
Schedule 3 amends the Act and deals with Tertiary Admission Centres (TACs)
Schedule 3 provides that officers of Tertiary Admission Centres
(TACs) have the same status and duty of care as those of higher education
providers in relation to processing students’ personal information. According
to the Department of Education, Employment and Workplace Relations this
‘will ensure that student information may be shared between the Department,
higher education providers, VET providers, and TACs as appropriate and
be governed by the appropriate privacy safeguards.’[15]
[11]. B Chapman, M Rodrigues and C Ryan, ‘HECS for TAFE: the case
for extending income contingent loans to the vocational education and
training sector’, Treasury working paper, 2007-2, Treasury, 2007,
p. 41, viewed 20 February 2009, http://www.treasury.gov.au/contentitem.asp?NavId=&ContentID=1252
Carol Kempner
15 September 2009
Bills Digest Service
Parliamentary Library
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