This chapter initially outlines the context of the reforms to higher education funding contained in the Higher Education Support Amendment (Job-Ready Graduates and Supporting Regional and Remote Students) Bill 2020 (the bill) before exploring the measures to be enacted by each schedule of the bill. The financial impact, consideration by the Senate Standing Committee for the Scrutiny of Bills and the compatibility with human rights are also examined.
Context of the higher education funding reforms
Tertiary education is a key driver of employment and income. Nearly all the gains in employment over the last 40 years have been made by people with tertiary qualifications. Further, graduates enjoy an income premium of around 60 per cent over those without tertiary qualifications.
The level of educational attainment among the nation's population is a key driver of the economic productivity that is vital to quality of life and for enabling the services and infrastructure that support it. Higher education will be an important part of arresting the decline in labour force productivity growth that Australia has experienced in recent years.
However, increasing university graduate numbers alone will not be sufficient. Improving industry-university collaboration in teaching and research is equally critical to ensuring graduates have the skills and experience needed to succeed in the workforce.
There is also significant disparity in educational participation and attainment for people from regional and remote areas and Indigenous Australians. Halving the gap in attainment rates between regional and remote students and metropolitan students will not only benefit individuals, it will drive productivity for the regions and the Australian economy.
Within the higher education funding system, there are opportunities to restore growth, better align funding with the average cost of delivery, offer greater flexibility and provide incentives to produce graduates in disciplines that support the national interest, such as teaching, nursing and STEM fields.
As the Australian economy emerges from the COVID-19 pandemic, existing disparities in education participation and attainment need to be addressed to ensure that all Australians have the job-ready skills and experience to support them in a challenging labour market.
Overview of the bill
The bill seeks to introduce reforms to higher education funding in Australia, and to strengthen and extend provider integrity measures, primarily through amendments to the Higher Education Support Act 2003 (HESA). HESA is the main piece of legislation that provides funding for higher education in Australia through both Government subsidies and tuition support for students.
The bill contains measures that will encourage higher education providers to produce job-ready graduates, create more opportunities for regional and remote students—including Aboriginal and Torres Strait Islander Australians—and direct growth in the higher education sector towards Australia's regions and national priorities.
As a result, it is expected that these higher education reforms will grow the number of university places for domestic students by 39 000 in 2023 and 100 000 in ten years.
The reforms would also make it cheaper for students to study in areas of expected future job demand—teaching, nursing, clinical psychology, English and languages, agriculture, maths, science, health, architecture, environmental science, information technology and engineering.
The bill also includes measures to extend and strengthen student protections and provider integrity in HESA, and ensure higher education providers are more accountable for the outcomes they deliver for students, industry and the wider community.
As summarised by the Minister in the second reading speech:
The amendments in this Bill demonstrate the Government's commitment to ensuring university graduates have the job-ready skills and experience to be competitive in a challenging labour market, as well as the Government's commitment to supporting and driving economic growth into Australia's regions.
Schedule 1—Commonwealth Grant Scheme
Schedule 1 would amend HESA to redesign the Commonwealth Grant Scheme (CGS) funding clusters and the Commonwealth contribution amounts (CCAs) to better align CGS funding to the cost of delivering higher education and ensure this funding is directed to areas of national priority and employment growth.
This Schedule also includes measures to ensure that higher education providers would continue to receive the same amount of CGS funding for ‘grandfathered students’ enrolled in a Commonwealth supported place (CSP), where the current maximum student contribution amounts (SCAs) would apply for units those students enrol in after 1 January 2021 (see Schedule 2). ‘Grandfathered students’ include students who are currently Commonwealth supported and:
are enrolled in a course of study prior to 1 January 2021 who have not completed that course immediately before that day;
completed a course of study before 1 January 2021 and go on to study a related honours course after that day;
are undertaking an enabling course in 2020 and go on to study another course of study leading to a higher education award on or after
1 January 2021;
are undertaking an undergraduate certificate in 2020 and go on to study a related course of study leading to a bachelor degree on or after
1 January 2021.
Schedule 1 would also amend HESA to change the way grants are paid to higher education providers in relation to CSPs. The changes mean a Table A provider’s funding agreement may specify a maximum basic grant amount for any of the following:
‘designated higher education courses’—a course of study in medicine or a course of study determined by the Minister; and
‘demand driven higher education courses’—a course of study leading to either a bachelor degree or bachelor honours degree (other than a designated higher education course, currently a course of study in medicine) undertaken at a Table A university by an Indigenous person from a regional area or a remote area.
These amendments, and others made in Schedule 1, would allow Table A providers to be allocated a funding envelope for all CSPs in ‘higher education courses'. This change would provide Table A providers with more flexibility in how they use the bulk of their CGS funding to meet the demands of students, industry and their local communities.
Table A providers would also receive funding for Indigenous students from regional and remote Australia on a demand-driven basis. This means that all Indigenous students from regional and remote Australia would have a bachelor-level Commonwealth supported place.
A 'Transition Fund' would be introduced into HESA to ensure Table A providers maintain their revenue over the grant years 2021 to 2023 while the Job-Ready Graduates Package is implemented. However, the detail of the 'Transition Fund loading' will be included in the disallowable CGS Guidelines and amounts reflected in provider funding agreements.
A maximum basic grant 'floor' for 'higher education courses' would be introduced to increase funding transparency for Table A providers. This would establish that a provider's maximum basic grant amount for 'higher education courses' for grant years 2021 to 2024 must not be less than the amount specified in the CGS Guidelines, and, for 2025 and later grant years, must not be less than the provider's maximum basic grant amount for those courses for the preceding grant year.
HESA would also be amended to remove the broad exclusion of ‘work experience in industry’ (WEI) units of study from CGS funding. Instead, WEI units would be only excluded from CGS funding where the student does not pay a SCA for that unit of study; that is, where there is essentially no engagement between the provider and the student for that unit of study. This amendment would remove barriers to the availability of this type of learning in higher education and encourage students to gain more work experience in what they learn and as they learn.
Schedule 2—Maximum student contribution amounts for places
Schedule 2 would amend HESA to change the maximum SCAs for a place in a unit of study to reflect the changes to funding clusters and CCAs that are proposed in Schedule 1. When combined, the SCA and the CCA would provide the base funding for a Commonwealth supported place that reflects the cost of teaching a student at university.
This Schedule would also ensure that ‘grandfathered students’ do not have to pay the higher maximum SCA for a unit of study they enrol in after
1 January 2021 where the SCA for that unit would otherwise increase as a result of the amendments being made by the bill.
Schedule 3—Other grants
Schedule 3 would amend HESA to provide legislative authority for the National Priorities and Industry Linkage Fund (NPILF), and to allow for the transition arrangements required to implement the Indigenous, Regional and Low Socio-Economic Status Attainment Fund (IRLSAF).
The NPILF is a $900 million fund aimed at encouraging universities to collaborate with industry to design courses that equip students with job-ready skills and experience.
The IRLSAF is aimed at ensuring more regional, rural, Indigenous and low-SES students are supported to access and complete university studies.
Schedule 4—Student protection
Schedule 4 would amend the Education Legislation Amendment (Provider Integrity and Other Measures) Act 2017 to extend various quality and accountability requirements contained in HESA to all higher education providers (including Table A, B and C universities), and would also introduce new student protection measures in HESA (that would apply to all providers). These amendments would support work being done in the higher education sector around best practice approaches to student enrolment and progression, and re-signal the quality of Australia’s higher education sector both domestically and internationally.
Specifically, the measures contained in Schedule 4 of the bill would:
prohibit all providers from engaging in unscrupulous marketing practices and from submitting requests for Commonwealth assistance on behalf of students;
require a person to be a ‘genuine student’ in order to receive Commonwealth assistance;
require providers to assess a person’s academic suitability to undertake a unit of study prior to that person receiving Commonwealth assistance for that unit;
prevent providers from pursuing ineligible students for SCAs or tuition amounts where the provider is at fault;
require a provider to re-credit a person’s HELP balance in a range of circumstances including where the provider completes any part of the person’s request for Commonwealth assistance for the relevant unit of study, or where the person was not entitled to HECS-HELP assistance in the first place;
allow the Minister to audit all higher education providers for matters of compliance with HESA;
enhance financial reporting requirements for, and improve assessment of the financial viability of providers;
apply civil penalties to existing obligations on providers under Division 19 of HESA;
preclude providers from imposing financial or administrative barriers to a student withdrawing from study;
require all higher education providers to co-operate with HESA and Tertiary Education Quality and Standards Agency (TEQSA) investigators;
require all higher education providers to keep records of a kind, in the manner and for the period required by the Higher Education Provider Guidelines, and publish information as required by those guidelines;
require a student to maintain an overall pass rate of 50 per cent to remain eligible for Commonwealth assistance; and
require providers to assess a student’s capability to enrol in a concurrent study load above 2.0 Equivalent Full Time Study Load (EFTSL).
Schedule 5—Other amendments
Schedule 5 includes several miscellaneous amendments to HESA, including:
an amendment to define a ‘school’ as including a ‘centre-based day care service’—this change would better align the legislation with the policy intention relating to very remote HELP debtors;
an amendment to remove the University College London (UCL) as a Table C provider, as UCL is no longer an approved higher education provider under HESA;
amendments to remove references to the Tuition Fee Guidelines and the Reduction and Repayment Guidelines, as these guidelines have never been made; and
amendments to the names of certain Table A and Table B providers to better reflect the names of these providers that are included on the TEQSA National Register for Providers and Courses.
Schedule 5 would also amend HESA to reduce, for units of study with a census date on or after 1 January 2021, the loan fee for students obtaining a FEE-HELP loan for an undergraduate course of study at a non-Table B provider from
25 per cent to 20 per cent.
The FEE-HELP loan fee recognises the cost to the taxpayer of the Commonwealth providing HELP loans to cover fee paying undergraduate places. The reduction of the loan fee would allow the HELP scheme to remain sustainable, while also reducing the financial burden on students and the total time taken to repay a HELP debt. This change would also bring consistency to the tertiary sector by aligning the FEE-HELP loan fee with the 20 per cent VET student loan fee that is applied to VET student loans accessed by full fee paying VET students.
The Social Security Act 1991 would also be amended to reduce the number of months, from six to three, a student living away from home must be receiving eligible student support payments (Youth Allowance, Austudy Payment and the Pensioner Education Supplement) before being eligible to receive Fares Allowance for a return journey home during the study year.
Financial impact statement
The measures contained in Schedules 1, 2, 3, and items 17 and 18 of Schedule 5 announced as part of the original Job-Ready Graduates Package were budget neutral over the forward estimates. Subsequent amendments to Schedule 1 to create professional pathways psychology and social work produce a net saving of approximately $125 million over the forward estimates. This net saving would be redirected towards additional places, such as short courses or Commonwealth supported places in 2021–22.
The measures in Schedule 4 produce savings of $0.5 million in fiscal balance terms and a cost of $0.4 million in underlying cash over the period 2020–21
The remaining measures of the bill do not have financial implications.
Compatibility with human rights
The bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in Section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Consideration by the Senate Standing Committee for the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills considered the bill in the Scrutiny Digest 11 of 2020 and made no comment.