Purpose of the Bill
The purpose of the Education Legislation Amendment (Startup Year and Other Measures) Bill 2023 (the Bill) is to:
- amend the Higher Education Support Act 2003 (HESA) to create a new loan, SY-HELP, which is designed to support students participating in accelerator program courses, as part of the Higher Education Loan Program (HELP)
- amend the Social Security Act 1991 (the SS Act), the Social Security (Administration) Act 1999 (the SS Admin Act) and the Student Assistance Act 1973 (the SA Act) to allow students participating in accelerator program courses who are entitled to SY-HELP assistance to potentially qualify for student social security payments
- amend the Australian Research Council Act 2001 (the ARC Act) to update funding caps for approved research programs, applying indexation to existing amounts and adding a new funding cap for the financial year beginning in July 2025
- amend HESA to include Avondale University as a Table B provider.
Structure of the Bill
The Bill has 3 Schedules:
- Schedule 1 creates SY-HELP and amends social security legislation to include participation in accelerator courses for eligibility for student payments
- Schedule 2 updates the funding caps in the ARC Act
- Schedule 3 adds Avondale University as a provider under HESA.
The Australian Government provides income contingent loans to students studying approved higher education courses under its Higher Education Loan Program (HELP). There are currently 4 types of HELP loans, with eligibility for each depending on what the loan is to be used for, and students’ residency and citizenship status. The 4 types of loans are:
This Bill introduces a fifth type of loan, Startup Year or SY-HELP, to support eligible students to participate in accelerator programs run by higher education providers.
As part of its 2022 election policy on education, the Australian Labor Party (Labor) committed to introduce a Startup Year program. The program would potentially create up to 2,000 new firms through providing income contingent loans to 2,000 final year students and recent graduates to support their participation in accelerator programs (p. 3). The Bill seeks to implement that program.
On 29 September 2022, Minister for Education Jason Clare and Minister for Industry and Science Ed Husic announced a consultation process to develop the proposed program. A consultation paper was released as part of this process, with submissions in response to the paper closing on 15 November 2022 (p. 1). The Department of Education also conducted a student survey to seek the views of current students and recent graduates on the proposed design.
Neither the outcomes of the survey nor submissions to the consultation have been published on the relevant departmental websites, although several groups have published their submissions on their own websites—see under ‘Position of major interest groups’ below.
According to the consultation paper, the intention of the program is to ‘enable students to participate in university accelerator programs, with a view of commercialising good ideas and injecting new business dynamism into our economy’ (p. 1). The expectation is that this initiative will increase the pool of entrepreneurs and help drive innovation through increased links between universities and the startup community (p. 1). The consultation paper, citing Universities Australia, states that there are already more than 100 startup hubs in Australian universities (p. 3).
Under the proposal, a new category of HELP loan is to be created, which is ‘tailored to participation in university accelerators and incubators’ (p. 1). Loans would be available up to the maximum student contribution for Funding cluster 4 (Medicine, Dentistry or Veterinary Science), which is $11,800 for 2023.
Several of the responses to the consultation paper expressed concerns about the proposed program as outlined below (see under ‘Position of major interest groups’). These included the lack of detail about:
- the criteria for the inclusion of eligible programs
- how students would be selected
- how the allocation of 2,000 places would be distributed
- what the funding could be spent on.
Most identified submissions therefore supported the option in the consultation paper to have an initial pilot program (p. 10) to test some of these aspects, prior to full implementation. It appears that the Government has not taken that approach.
In the joint media release announcing the introduction of the Bill, Ministers Clare and Husic stated that the program will also support under-represented groups, such as female entrepreneurs, Indigenous Australians, people with disability, and community-based startups working on regional and rural issues. However, most of the details highlighted in consultation responses and in relation to access and equity are not included in the proposed legislation but are to be included in proposed ‘SY-HELP Guidelines’.
Concerns have also been raised about the program further increasing HELP debts, and whether a separate HELP scheme is needed.
At the time of writing this Bills Digest, the Bill had not been referred by the Senate Standing Committee for the Selection of Bills to Committee for inquiry and report.
Similarly, the Senate Standing Committee for the Scrutiny of Bills has not reported on the contents of the Bill.
Position of major interest groups
The Universities Australia submission to the consultation paper supported the policy intent of the Startup Year program, but raised a number of concerns about the proposed scheme. In particular, it noted a lack of clarity around the purpose and the outcomes of the program and argued that there needed to be an appropriate ‘value proposition’ for students to be prepared to take on additional HELP debt, particularly given the high proportion of startups that fail. It stated that:
A program where a business failure is expected but where the lessons learnt through failing builds a student’s experience for the next startup they launch, is a valuable addition to the education landscape (p. 2).
The submission also stated that the funding would not be sufficient to cover the costs of delivering an accelerator program. Universities Australia suggested that an expert group be established to further develop the program and clarify its aims and value to students.
Similarly, in its submission to the consultation paper, the Group of Eight stated that it was ‘highly supportive of the aims’ of the initiative. However, it suggested that given the complexity of the initiative and lack of clarity concerning key elements of the design, that it should initially proceed as a pilot (Recommendation 3).
The Australian Technology Network (ATN) group of universities suggested, among other recommendations, that funding should be given directly to students, not to universities, to enable them ‘direct access to their own capital and ability to direct their own expenditure’ (p. 3). Noting the Government’s focus on supporting students from diverse backgrounds, the ATN also highlighted the need to ensure that student debt was not an actual or perceived barrier to participation (p. 3).
The Regional Universities Network also expressed concern about the ‘value proposition’ for both students and regional institutions (p. 8). It supported the option to commence with a pilot, but asked that more than one regionally-based accelerator be included (p. 15).
There has been limited response from industry groups. Cooperative Research Australia supported the program in principle, but, in relation to a first-year pilot phase, cautioned that building entrepreneurial skills takes time and it would be important to adjust expected results to the limited timeframe (p. 10). The Australian Information Industry Association expressed its support in June 2021 when the policy was first announced.
The Explanatory Memorandum notes that the establishment of SY-HELP is expected to result in a net expense of $15.4 million over 4 years from 2022–23 (p. 2). This funding was included in the October 2022–23 Budget, which also noted that it is expected to cost $2.8 million ongoing (p. 95).
The amendments to the ARC Act update the special appropriation funding cap for financial years 2022–23 to 2024–25 to include indexation adjustments and add a further year of funding for financial year 2025–26. According to the Explanatory Memorandum, this results in an additional appropriation of $1.0 billion for the financial years 2022–23 to 2025–26 (p. 2). Details are provided in Table 1 below.
Table 1: Proposed, current and difference in ARC Act funding amounts to 2025-26
Source: Explanatory Memorandum, Education Legislation Amendment (Startup Year and Other Measures) Bill 2023, 3.
The Explanatory Memorandum states that the addition of Avondale University as a provider under HESA does not have any financial implications as it will be ‘accommodated within existing program allocations’ (p. 3).
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.
Parliamentary Joint Committee on Human Rights
At the time of writing this Bills Digest, the Parliamentary Joint Committee on Human Rights has not commented on the Bill.
Key issues and provisions
Schedule 1 of the Bill establishes SY-HELP as new type of HELP loan for students undertaking accelerator programs at Australian universities and university colleges. This section primarily focusses on the provisions in the Bill introduced under item 25, which sets out the operation of SY‑HELP assistance. A number of the Bill’s provisions are consequential amendments to incorporate the new loan into HESA and are not discussed here.
Establishing SY-HELP assistance
Chapter 3 of HESA provides for 4 kinds of assistance to students: HECS-HELP, FEE-HELP, OS-HELP and SA-HELP, and sets out provisions for their operation. Item 25 of the Bill inserts proposed Part 3-7—SY-HELP assistance at the end of Chapter 3, to provide for SY-HELP as a fifth kind of assistance. New Part 3-7 sets out the operation of SY-HELP, and includes provisions for establishing SY-HELP assistance, SY-HELP Guidelines, eligibility requirements for SY-HELP assistance, how SY-HELP assistance amounts are worked out, how SY-HELP debts are incurred and paid, and conditions for the reversal of SY-HELP assistance.
As noted above, a number of the details for the Startup Year program are to be included in guidelines. Existing section 238-10 of the HESA empowers the Minister to make Guidelines by legislative instrument for matters set out in table form in that section. Item 65 of Schedule 1 to the Bill amends the table to include a reference to SY-HELP guidelines.
Proposed section 128A-5 states that the provisions in Part 3-7 may indicate when a particular matter will be dealt with by the SY-HELP Guidelines. As outlined in the Explanatory Memorandum, and consistent with other types of HELP assistance, matters to be further specified in the SY-HELP Guidelines will include:
- how students are to be selected
- a registration process for eligible accelerator program courses
- limits for SY-HELP places and mechanisms for how places will be allocated
- core capabilities the courses are expected to provide (pp. 1–2).
Entitlement to SY-HELP assistance
Under proposed section 128B-1, a student is entitled to SY-HELP assistance for an accelerator program course in which they are enrolled if they meet citizenship or residency requirements under proposed section 128B-30, and if they:
- are in the final year of undergraduate study: proposed subparagraph 128B-1(1)(b)(i)
- are enrolled in a postgraduate course of study: proposed subparagraph 128B-1(1)(b)(ii) or
- were awarded a qualification at Bachelor Degree level or above (level 7, 8, 9, or 10 in the Australian Qualifications Framework), no more than 3 years before starting the course: proposed subparagraph 128B-1(1)(b)(iii).
Proposed paragraph 128B-1(1)(c) limits students to 2 amounts of SY-HELP assistance in total (disregarding any amounts of assistance reversed under proposed Division 128E).
The citizenship and residency requirements for SY-HELP are the same as those for HECS-HELP and other loans—for instance, proposed section 128B-30 is in near equivalent terms to existing section 90-5 which sets out the citizenship and residency requirements under Part 3-2 of HESA in relation to HECS-HELP assistance.
Other administrative aspects of eligibility are specified under proposed section 128B-1(1). However, entitlement to SY-HELP is subject to certain rules about when there will be limited entitlement or no entitlement.
Proposed section 128B-5 of HESA provides that if a student is undertaking two or more accelerator program courses at the same time, the student is limited to SY-HELP for only one of those courses. Proposed subsection 128B-5(2) allows the student to elect, in writing, the course for which SY-HELP would apply. Where the student enrolled in the courses at different times, SY‑HELP applies to the course in which the student first enrolled.
Proposed sections 128B-10, 128B-15, and 128B-20 of HESA provide that a student has no entitlement to SY-HELP for an accelerator program course if they are determined to be ‘not a genuine student’, if they are undertaking an unreasonable study load, or for an accelerator course undertaken at an overseas campus respectively.
What is an accelerator program course?
One of the concerns raised by stakeholders in their consultation responses was a lack of clarity around the aims of the Startup Year program, with a number of submissions arguing for the need for the program to have an educational focus, rather than aiming to create new startup firms (see for example, Universities Australia’s submission, p. 6).
The educational and skills development aspect of accelerator program courses, as well as other features and requirements, are set out in proposed section 128B-25. Under proposed subsection 128B-25(1) an accelerator program course is ‘a structured and integrated program of education and mentoring’, designed to develop a person’s ‘skills, capabilities and connections for the purposes of startup businesses’.
Such courses are required to lead to the award of a qualification accredited by the higher education provider, have an EFTSL value of at least 0.5 EFTSL and not more than one EFTSL, and meet other requirements as set out in the SY-HELP Guidelines: proposed subsection 128C-25(2).
Selecting students to receive SY-HELP assistance
Media releases announcing the Startup Year program stated that it would provide up to 2,000 SY‑HELP loans each year, and would support under-represented cohorts. Proposed section 128B‑35 of HESA provides for the SY-HELP Guidelines to set out the principles and procedures that higher education providers must follow in selecting people to receive SY-HELP assistance and requires decisions made by higher education providers to be made in accordance with the SY-HELP Guidelines. Proposed subsection 128B-35(3) enables SY-HELP Guidelines to allocate the number of students higher education providers may select for SY-HELP assistance, and how such allocations are determined. At the time of writing this Bills Digest draft SY-HELP Guidelines were not available for scrutiny. That being the case, there is a lack of detail about how higher education providers will select the relevant students. However, item 4 of Schedule 1 to the Bill repeals and replaces subsection 19-35(5) of HESA to require a higher education provider that receives a payment on account of amounts of SY-HELP to have open, fair and transparent procedures that, in the provider’s reasonable view, are based on merit for making decisions about:
- the selection of persons to enrol in an accelerator program course
- the selection of students for receipt of SY-HELP assistance in relation to that course and
- the treatment of students undertaking that accelerator program course.
Proposed subsection 19-35(6) replaces the repealed subsection 19-35(5) and clarifies that higher education providers’ merit-based decision making processes do not prevent them from taking into account educational disadvantages a student has experienced.
Amount of SY-HELP assistance
The amount of SY-HELP assistance which a student is entitled to is the difference between the course fee and the sum of any upfront payments a student makes for the course: proposed section 128C-1. Students can pay their contribution upfront rather than taking out a loan (see also section 93-15 of HESA in relation to HECS-HELP). An upfront payment is the full or partial payment of the accelerator program course fee (other than the payment of SY-HELP assistance under proposed Part 3-7) made on or before the census date for the course: proposed section 128C-5.
Proposed section 128C-10 of HESA provides for the maximum accelerator program course fee. For a course with an EFTSL value of 1, fees must not exceed the maximum student contribution amount specified in section 93-10 of HESA for a place in a unit of study in Medicine, Dentistry or Veterinary Science for a non-grandfathered student (item 4 in the table). The Study Assist website lists the 2023 funding clusters and their maximum student contribution amounts. In 2023, the maximum student contribution amount per EFTSL for Medicine, Dentistry or Veterinary Science (funding cluster 4) is $11,800. As such, with students eligible for 2 amounts of SY-HELP assistance in total, based on current rates, students could incur a SY-HELP debt of up to $23,600.
The Explanatory Memorandum states that SY-HELP loans will not be included in HELP loan limit (p. 1). The HELP loan limit is specified in existing section 128-20 of HESA. It imposes a cap on the amount a student can borrow towards tuition fees. For 2023, the HELP loan limit for most students is $113,028. There is a higher limit of $162,336 in 2023 for students studying medicine, dentistry and veterinary science courses leading to initial registration, or eligible aviation courses.
Payment arrangements for SY-HELP are the same as for other HELP loans (except OS-HELP) in that assistance amounts are paid to the provider on behalf of the student: proposed section 128D-1.
Reversal of SY-HELP assistance
Proposed Division 128E in Part 3-7 of HESA provides for the reversal of loans in some circumstances. Circumstances include:
- unanticipated personal circumstances causing the student to withdraw from the course: proposed section 128E-5
- where a tax file number has not been provided: proposed section 128E-20 and
- where no assessment has been made as to whether the person is academically suited: proposed section 128E-35.
These essentially mirror the conditions for HECS-HELP recrediting under Division 97 in Part 3-2 of HESA.
Division 206 of HESA deals with decisions that are subject to review. Reviewable decisions relating to SY-HELP are inserted into the table in existing section 206-1 by item 63. Reviewable decisions include those relating to the student not being a genuine student (proposed table item 2AAA) and that undertaking the accelerator program will impose an unreasonable study load (proposed table item 2AAB).
Part 2 of Schedule 1 to the Bill adds SY-HELP and accelerator program courses into social security legislation—the SS Act, SS Admin Act and the SA Act—to enable students participating in accelerator program courses who are entitled to SY-HELP assistance to potentially qualify for student payments.
Part 2.11 of Chapter 2 of the SS Act sets out the qualifications for Youth Allowance. The general rule, stated in section 540, is that a person is qualified for a youth allowance in respect of a period if, amongst other things, throughout the period the person is undertaking full-time study of a type specified in section 541B.
Item 78 inserts proposed paragraph 541B(1)(ca) into the SS Act so that a person who is undertaking an accelerator program course or a combined course including an accelerator course, for which the person is entitled to SY-HELP assistance is undertaking full time study for the purposes of deciding whether the person qualifies for youth allowance. The Explanatory Memorandum states that the intention of this provision is that a student may only qualify for youth allowance while undertaking an accelerator course if they are entitled to SY-HELP under HESA (p. 25). It further notes that:
If a student has received youth allowance on the basis of being entitled to SY‑HELP assistance for an accelerator program course, and then it is later determined under HESA that the student was not so entitled, this may result in the student losing qualification for youth allowance, and a debt may arise (p. 25).
Australian Research Council
One of the objects of the ARC Act is to provide for the funding of research programs. Schedule 2 to the Bill amends Division 1 of Part 7 of the ARC Act to specify the annual funding caps for approved research programs. Section 48 of the ARC Act lists years to which the Division applies. Item 1 in Schedule 2 to the Bill inserts proposed paragraph 48(2)(v) to add the financial year starting on 1 July 2025 to the list. Items 2–4 amend the funding amounts in paragraphs 49(w), (x) and (y), lifting the annual caps on funding to reflect indexation for financial years starting on 1 July of 2022, 2023 and 2024 respectively. Item 5 inserts proposed paragraph 49(z) to provide the funding cap for the financial year starting on 1 July 2025—being $893,036,000.
Schedule 3 to the Bill adds Avondale University to the list of Table B providers in existing section 16-20 of HESA. Item 2 specifies that the amendment has effect from 1 January 2024 in relation to the making of grants.
According to the Bills Digest prepared for the Higher Education Support Amendment (2021 Measures No. 1) Bill 2021 in which this measure was previously contained:
Listing in Table B does not extend Avondale’s access to all higher education funding programs— that is limited to Table A providers. However, certain key funding, especially certain Other Grants such as Research Block Grants would become available to Avondale as a consequence of this change (p. 4).