Submitters and witnesses to the private education inquiry broadly supported
regulation in the school, higher education and vocational education and
training (VET) sectors.
However, they argued that having the right amount of good regulation is
critical and that, at present, each sector is unnecessarily burdened by complex,
redundant or duplicative regulation and red tape.
This chapter discusses some of the issues raised in relation to:
the volume and impact of regulation;
duplication and coordination;
regulators' performance; and
differences in regulation.
Volume and impact of regulation
Submitters and witnesses commented on the volume of regulation affecting
the private education sector, as well as its effect on and cost to providers.
Volume of regulation
Submitters argued that private education providers are affected by high
levels of regulation. The Independent Schools Council of Australia (ISCA)
submitted, for example, that one state has more than 55 relevant statutes which
create a diverse range of regulatory requirements for independent schools.
The Catholic Education Commission of Victoria (CECV) stated that, to its
knowledge, 'no government agency has ever reviewed the sheer breadth of
regulations impacting Catholic schools (or the school sector more generally)
and explored [rationalisation opportunities]'.
Speaking on behalf of the higher education sector, the Council of
Private Higher Education (COPHE) described a high regulatory burden and red
tape as 'the new reality'. Although identified as an issue in 2013,
COPHE contended that the situation has deteriorated further: 'for the private
higher education sector, the burden of over‑regulation remains'.
Chief Executive Officer, Simon Finn, suggested that it would be 'valid' to
review outstanding recommendations from the Review of Higher Education
Regulation Report prepared by Professor Kwong Lee Dow AO and Professor
Valerie Braithwaite (Dow and Braithwaite review).
The Australian Council for Private Education and Training (ACPET) expressed
similar views on the volume of regulation.
Its Chairman, Bruce Callaghan, said that regulatory measures are 'crushing'
private providers in the higher education and VET sectors, and, in the latter
sector, creating 'a pressure towards the higher ed sector, the university
sector, which is less regulated'.
Open Colleges agreed that there has recently been an 'upsurge' in red
tape with consequent impacts on private VET providers. Its submission
described the amount of regulation in 2007, compared to 2018:
In 2007 the regulatory framework for Registered Training
Organisations (RTOs) was articulated in the Australian Quality Training
Framework (AQTF) via the Essential Standards for Registration. This
suite of standards encompassed three Standards, 14 Elements and supported by
nine Conditions of Registration, all packaged in a 12-page document (including
covers, definitions, introduction and an appendix). The nuts and bolts of the
regulatory obligations for registration were explained in plain English over
In comparison, the Standards for Registered Training
Organisations (RTOs) 2015 consists of 8 Standards, 59 Clauses, over 100
sub-clauses and six Schedules, packaged in a 33-page legislative instrument.
Statistics published by the Australian Skills Quality Authority (ASQA) confirm
that many ASQA RTOs struggle to maintain compliance with the current and recent
Open Colleges considered that there is scope to reduce the red tape
burden for VET providers.
While the Australian Government has a role—to ensure a nationally portable
system of VET—Open Colleges' representative, Alexis Watt, argued that the
regulation should be more risk-based:
All providers are being treated the same in the current
regulatory climate, a post-VET FEE-HELP environment. Open Colleges does
not take state or Commonwealth funding for its services yet is classified
within the same risk framework as prior examples of shockingly poor behaviour
by providers and attempts to further protect students and industry, and
taxpayers by extension, through reforms to the VET FEE-HELP and conversion to
the VET Student Loans.
COPHE, ACPET and Open Colleges all attributed over-regulation in the VET
sector to the recent VET FEE-HELP scandal. COPHE submitted, for example, that
'the unscrupulous behaviour of some in the VET sector...[has] hardened the
regulatory attitude towards all private providers where 'red-tape' is an unfortunate
consequence of this legacy'.
Department response to concerns
about regulation in the VET sector
A representative from the Department of Education and Training
(Department) did not consider the legislative response to the VET FEE-HELP scandal
an overreaction, stating 'providers that are operating with integrity will find
little impact on their operations'.
The officer said that the Department will be closely monitoring the new VET
Student Loans program to identify opportunities for red tape reductions.
The same officer affirmed the Australian Government's role in supporting
nationally portable VET qualifications, the delivery of which contributes to
Australia's reputation 'as a world-class training system'. The officer noted
the 2017–2018 Review of the National Vocational Education and
Training Regulator Act 2011 (Cth) (Braithwaite review), in which stakeholders
favourably commented on the regulator—ASQA—and its performance.
Cost of regulation and its effect on
private education providers
Submitters and witnesses expressed concerns about the cost of regulation
and its effect on private education providers in terms of human resources.
Stakeholders argued that private providers and their staff are adversely
affected by high levels of Commonwealth regulation. CECV, for example, submitted
that 'schools are caught in a massive web of regulatory requirements that
burden principals and staff with administrative tasks'.
Some submitters highlighted that this burden comes at the direct expense of educating
students, enriching students' school experience or having the capacity to
pursue improvements that better support quality outcomes.
Independent Education Union of Australia (IEUA) emphasised that its
members are 'reeling under the burden of red tape and administrative demands'. Its submission
illustrated changes in schools' administrative workloads over the past 10
ABS data (4221.0 – Schools, Australia 2017) shows that in the
ten years to 2017 school staff working in administrative and clerical positions
increased by just over 70,000 fte or close to 71% (at the same time the number
of teachers increased by only 37,600 or 15%). These figures illustrate the
recognition of the need to meet the increasing administrative burden, arguably
at the expense of increasing teacher resourcing.
Federal Secretary, Chris Watt, noted that the administrative burden is
not necessarily borne by the employment of additional staff but by greater
imposition on existing staff. With reference to a survey conducted by the IEUA,
Mr Watt noted:
When I started going through the comments and looking at what
[union members] were saying, what then struck me is that I started looking at
the column on the right-hand side, which actually had the time at which people
were filling this in, and it was 8.30 at night, 10 o'clock at night, 11 o'clock
at night, 2.30 in the morning, or 4.30 in the morning. Hopefully, those 2.30s
or 4.30s were from people with newborn babies, and that's why they were up at
that time. But it beggared belief in my head...That's when teachers felt they
had the time to be able to respond.
Several witnesses observed that smaller providers have more limited
capacity to manage regulatory compliance. For example, the majority of Catholic
schools in Victoria are primary schools where compliance is undertaken by a
principal and an administration officer.
Mr Finn from COPHE similarly said 'there is...a significant regulatory burden on
smaller providers or those providers that don't attract significant
Commonwealth subsidy or support' and who have to bear their own administrative
Submitters and witnesses stated that high levels of regulation and red
tape are impeding innovation in the higher education and VET sectors. ACPET's Mr Callaghan
said the private sector is so regulated that 'creativity and constructive
attitudes to developing the future of this Australian asset (VET) are being
repressed and pushed aside'.
ACPET's submission explained:
The prescriptive nature of much of the recent regulatory 'reforms'
means that quality providers are not empowered to look at ways to better
respond to the needs of their students, to innovate their programs.
Consultations with members indicate the need to adopt a 'small target' approach
- to stick with the approved processes and limit any innovation or reform, lest
it draw the attention of the regulators.
To illustrate the current regulatory environment, Mr Callaghan referred
to the current VET standards that he argued are not related to educational
outcomes. Mr Callaghan said that 'it's almost impossible to get a perfect
tick on all of those', as even small things are treated as having much
Mr Watt from Open Colleges provided an example:
If a training provider is audited by the regulator and if
it's found that perhaps there's a signature missing on one document in the
record of a student's assessment, the provider is classified as noncompliant
against the standards, regardless of whether the student has achieved the
outcome in the training, whether they've gone on to gain employment or whether
they've done their education through public funding or their own resources. All
of those factors are without consideration, and a finding of noncompliance is
issued for the absence of a date or a signature on a piece of paper.
Open Colleges shared concerns about the effect of regulation on innovation
and 'the increasing distance between the relevance and timeliness of nationally
recognised training and the needs of employers and the workforce in a global
Its submission explained:
Training packages are out of date before they are released.
Current arrangements take up to four years for a graduate to emerge from a new
product offering...Open Colleges is strongly of the view that the current
arrangements and trajectory of future policy for tertiary education in
Australia is clearly failing to meet the current and future needs of employers
and students. The National Training Framework is at risk of being discarded by
its core stakeholders in favour of more innovative, responsive and flexible
options offered by education providers operating outside the national
Mr Watt added:
If large national or multinational companies can build a more
compelling offering and attract people to spend their own money...that should be
a very strong call to review and reconsider the way the national training
system is designed, and the way the programs are built and brought to market. I
sit on an industry reference committee which manages two training packages.
Preliminary modelling said it was six years from industry saying we require a
new set of skills to a graduate being available holding that information—six
years. That's simply not sustainable. It just isn't. I'm not observing, in our
space, a lot of people leaving VET, but I'm certainly observing fewer people
looking to join.
Submitters and witnesses raised regulatory costs as an issue for private
providers across education sectors. In the higher education sector, for
example, Michael Wells from private consultancy firm Wells Advisory estimated
that seven to 10 per cent of a regulated entity's turnover would commonly be
spent on education‑specific regulation.
ACPET agreed that regulatory costs were part of a 'major resource imposition'
for its members,
with Open Colleges estimating its compliance costs at about $5–$7 million from 2012
to 2018 (plus associated legal expenses).
Department response to concerns
about the cost and effect of red tape
The Department shared concerns regarding the amount of time it is
currently taking to deliver new training packages (two to six years). An officer
partly attributed this timeframe to extensive consultation processes and advised
that the matter is currently being progressed through the Council of Australian
Governments. The officer did not agree that innovation has stagnated in
the VET sector, specifically describing efforts to address the impact of technology
Representatives from the private education sector unanimously described
high levels of regulation that are negatively affecting providers, students,
industry and the Australian economy. The committee is concerned that, despite
opportunities presented over the past five years, stakeholders cannot discern
any significant regulation or red tape reductions.
The committee considers that it would be beneficial for federal and
state governments to determine the volume and quality of regulation currently
affecting the private education sector, to identify opportunities for
deregulation and red tape reduction.
The committee is concerned that unless this occurs, the private
education sector will be unable to achieve its potential as a contributor to
the economy through education and that the burden will unnecessarily fall on
taxpayers via public education.
The committee recommends that the Australian Government, through the
Council of Australian Governments, initiate a review of Commonwealth and
state-based regulation affecting the private education sector, to identify
opportunities for regulation and red tape reductions.
In conjunction with Recommendation 1, the committee recommends that the
Department of Education and Training review the findings and recommendations of
the 2013 Review of Higher Education Regulation Report, to assist in
the identification of deregulation opportunities for the higher education
A recurring theme in the committee's interim inquiries has been the need
for a risk-based approach to regulation. In the private education inquiry,
submitters and witnesses reiterated calls for regulation more suited to their
sector and which targets high-risk regulated entities. The committee heard that
a broad or 'one-size-fits-all' approach contributes to inappropriate and
burdensome over-regulation, particularly to the detriment of smaller entities
which are often more innovative and responsive to market needs. Accordingly,
the committee agrees that governments should consider whether a
'one-size-fits-all' approach is effective and where necessary, explore options
for better risk-based regulation.
In conjunction with Recommendation 1, the committee recommends that Australian
governments consider the effectiveness of a 'one-size-fits-all' approach to
regulation and explore options to implement better risk‑based regulation.
The committee notes that regulatory compliance costs concern private
education providers, especially those which operate in more than one sector. The committee
understands that Regulation Impact Statements (RIS) include a cost/benefit
component which aims to quantify compliance costs for regulatory proposals
and notes that no submitters or witnesses raised these statements as a concern.
The committee nonetheless questions whether stakeholders are sufficiently engaged
and their input taken into account in the RIS process. The committee considers
that the Department and the Office of Best Practice Regulation should review
The committee recommends that the Department of Education and Training,
in conjunction with the Office of Best Practice Regulation, review its
Regulatory Impact Statement processes, to improve identification and
quantification of regulatory compliance costs in the private education sector.
Duplication and coordination
Submitters and witnesses commented on certain areas of duplication within
regulation of the private education sector. Submissions argued that there are
specific causes of this duplication: multiple regulatory regimes; broad‑ranging
regulation; and regulators whose activities are not always well-coordinated
Financial reporting and data collection were the most commonly raised concerns.
Financial reporting for the school
Section 75 of the Australian Education Act 2013 (Cth) sets out basic
funding conditions for private schools,
which are detailed further in Part 5 of the Australian Education Regulation
These schools must demonstrate that funds received from the Australian
Government have been expended appropriately and must provide financial
data to the Department (Financial Questionnaire for Non‑Government
The National Catholic Education Commission (NCEC) accepted that 'all
schools should transparently account for their use of government funding in support
of educational outcomes'. However, NCEC argued that transparency and
accountability measures should be reasonable and not create duplicative and/or
excessive compliance burdens.
At present, private providers report financially to the Department
and the Australian Charities and Not‑for-profit Commission (ACNC, Annual
Information Statement), due to schools' status as charitable or not-for-profit
NCEC supported education departments being the primary regulators for
while CECV submitted that there is no or limited justification for any ACNC role:
'existing arrangements for Catholic schools already deliver on the three
overarching objects of the ACNC...ACNC reporting and compliance requirements
provide absolutely no value'.
NCEC similarly questioned the value of the ACNC but acknowledged that
the Department of Education and Training and the ACNC have instituted
arrangements to reduce the compliance burden:
Arrangements were put in place whereby the financial
reporting to [the Department] would then be accessed by the ACNC, following a
data item mapping exercise so that the financial data could conform to the
different format required by the ACNC. Accompanying financial reports have also
been requested by [the Department] and are then provided to the ACNC.
Stakeholders from the school sector expressed different views on these
arrangements. NCEC considered them to be complex, not ideal and fraught with
ongoing IT issues, duplication and inconsistencies.
The CECV representative emphasised that the arrangements are transitional only,
with schools preparing to move toward the more burdensome (and generally costlier)
ACNC accrual reporting process.
The NCEC submitted:
It would be far better for the requirement to be that schools
report financial data in one format to [the Department] and that this also
satisfies the reporting obligation to the ACNC.
In contrast, ISCA credited the ACNC with working toward the reduction of
overlapping reporting requirements, consistent with its statutory object
'to promote the reduction of unnecessary regulatory obligations on the
Australian not-for-profit sector'.
Its representative suggested that current frustrations with financial reporting
requirements might be due to reporting processes not having been finalised.
In its submission, the ACNC stated that its financial reporting
requirements inform the online public register of charities (Charity Register)
to provide 'greater transparency and accountability to parents, donors, funders
and the wider community to give a more comprehensive financial picture of
The ACNC has dedicated significant resources to minimise
duplicate reporting for non-government schools that are required to report to
both the [Department] and the ACNC.
ACNC confirmed that the transitional arrangements will end in 2019, when
private schools will be required to adopt accrual accounting. ACNC emphasised
that the timeframes have been instituted at the request and for the benefit of
Working group members have previously advised the ACNC that
they needed until 2020 to adopt accrual accounting, and at the most recent
working group meeting in October 2018, we confirmed to all working group
members that all accounting standards (including accrual accounting) will be a
requirement from the 2020 period (as the transitional arrangements will have
Data collection for the school
As an ongoing funding condition, private schools must annually provide
the Department with information relating to students (Non-Government Schools
including students with disability (Nationally Consistent Collection of Data on
School Students with Disability, NCCD).
The NCCD is used by the Australian Government to calculate the students with disability
loading in recurrent funding for states and territories.
Some submitters commented on duplication in data collection for the Non‑Government
Schools Census and for state government purposes.
However, other submitters and witnesses focussed on the NCCD, where they primarily
identified the means of data collection as particularly burdensome.
From January 2018, teachers use their professional judgement to determine
and report which students are being provided with reasonable adjustments to
access education, as required under Commonwealth law.
CECV contended that the new approach has placed 'an enormous
administrative burden on school and system staff', with an estimated annual
cost of about $28.51 million. Its submission questioned the consistency and
accuracy of the data collection, which relies upon teachers having sufficient
professional judgement to make accurate determinations.
A CECV representative added that there are unresolved issues in relation to
auditing the dataset:
The government put the cart before the horse, because it
hasn't yet come up with an effective way to audit the dataset. It announced
that it was going to be used before it actually figured out how to audit it
properly. So at the moment the government's trying to figure out how to audit
Department response to concerns
about financial reporting and data collection
A departmental officer recognised 'the administrative cost to the
education sector', which the Department stated is balanced with the need to
ensure continued quality student outcomes. The officer described current
projects to reduce regulatory burden and compliance costs, as well as
continuous improvement measures that have been implemented in recent years—such
as the 2015 Review of Education Services for Overseas Students Act.
In response to specific concerns raised, the Department confirmed its
work with the ACNC to reduce the compliance burden associated with dual
financial reporting requirements. An officer advised that the Department will
continue to look for ways to streamline requirements and noted its six-monthly
dialogues with the private school sector.
This evidence corroborated information presented in the ACNC's submission.
The Department maintained that teachers are best placed to make student
assessments for the NCCD. An officer emphasised that the new collection process
will be closely monitored, including through post-enumeration exercises:
We monitor those counts of students at the levels of
disability year on year to see if there are marked changes. If you were to, for
instance, see a large change in one state sector from one year to the next that
would raise a concern for us. We would then ask, 'What's happening in that
With regard to compliance costs, the representative agreed that spending
as much as 15 per cent of students with disability funding on administration
costs would be 'a lot'. However, with a new scheme for data collection,
'there's always going to be that sort of start-up cost'.
Coordination of regulation
Some submitters and witnesses described a lack of legislative and
regulatory coordination, which they argued results in unnecessary duplication
and administrative burden. For instance, COPHE's representative remarked that
higher education providers operate in accordance with three Acts that enliven
the regulatory framework: 'we're seeing quite a degree of crossover between the
department's oversight of the [Higher Education Support Act 2003 (Cth)]
and the regulatory agency's oversight of the [Tertiary Education Quality and
Standards Act 2011 (Cth)]'.
COPHE's submission highlighted a lack of streamlining between the
Tertiary Education Quality and Standards Agency and ASQA in their regulatory
functions under the Education Services for Overseas Students [ESOS] Act 2000
Regulation in this area also concerned ISCA, which commented:
[There is] no mechanism or agency oversight to ensure
consistency of application of ESOS regulation across states and territories. Previous
[attempts to streamline] ESOS have yielded some small results after long
periods of consultation and effort but have generally advantaged other sectors
to a far higher degree than schools.
Again, there was some dissatisfaction expressed with regard to
regulation based on a one-size-fits-all approach.
ISCA, for instance, broadly identified international education as an area in
which that approach has inadvertently and adversely burdened schools,
discouraging them from entering or expanding into the international education
In another example, NECA commented that ACNC legislation and practice needs a
'more nuanced understanding and appreciation of the different regulatory and
reporting environments within which certain highly regulated charities are
A better methodology would ensure the ACNC takes the specific
circumstances of charities into account, differentiating between those
charities that are primarily and comprehensively regulated by, and report to,
government departments relevant to their field of operation and those of the
general charity sector whose central regulator is ACNC. This would lead to a
more coherent and coordinated approach to the regulation and reporting
framework for charities. The circumstances of already highly regulated
charities would be fully acknowledged and their reporting obligations to the
ACNC adjusted accordingly. This legislative change could also address the issue
of duplication in reporting.
The committee accepts that there is duplication in regulation of the
private education sector, with the school sector focussing on two specific
areas. In relation to:
financial reporting—there are two key regulators collecting information
each for their own purposes. The committee believes regulators should be
coordinating and expeditiously finalising arrangements whereby schools report
once only in a common format.
data collection—the committee acknowledges the compliance burden
experienced by providers and their staff. Notwithstanding the Department's
reassurances, the committee is not convinced that this burden will
automatically be ameliorated over time, that it is being appropriately
recognised, or that it will not have unintended consequences due to incentives
to classify students as disabled or more severely disabled. Accordingly, the
committee considers that the Department should schedule a two‑year
review of the NCCD, including audit options to ensure the consistency of
quality data collection.
The committee recommends that the Department of Education and Training
schedule a two-year review of the Nationally Consistent Collection of Data on
School Students with Disability, including audit options to ensure the
consistency of quality data collection.
As in its other interim inquiries, the committee heard that legislation
and regulation are not well coordinated to prevent duplication and reduce
compliance costs at the Commonwealth level, as well as the federal/state
levels. This is a continuing concern and one that the committee considers
should have been considered, or even progressed, much earlier under the
As part of the Deregulation Agenda, the Australian Government
established a Regulator Performance Framework (Framework) to:
...encourage regulators to undertake their functions with the
minimum impact necessary to achieve regulatory objectives and to effect
positive ongoing and lasting cultural change within regulators.
The Framework sets out six outcomes-based Key Performance Indicators
(KPIs), which some submitters and witnesses argued are not always being
achieved. For example, ACPET indicated that ASQA is not demonstrating
regular, ongoing consultations or engagement with stakeholders on policies and
procedures (KPI 1):
The present regulatory environment is one where independent
providers largely see they are little more than regulatory 'objects'. There has
been little, if any, real consultation with [the] sector in the development of
the raft of legislation and regulations that have been introduced in recent
In relation to higher education, COPHE raised concerns about TEQSA's
demonstrated understanding of the operating environment of the higher education
sector, the circumstances of individuals, and current and emerging issues (KPI
1). Its submission argued:
TEQSA needs to better understand the nature and role of
independent higher education providers and provide a more flexible regulatory
framework across the higher education sector. TEQSA's relationship with
providers would also benefit from regular meetings with providers, particularly
in relation to risk assessments.
COPHE voiced concerns also about TEQSA's performance in: delivering
decisions in a timely manner (KPI 2); applying a proportionate approach to
regulatory decisions (KI 3); and its openness regarding the operation of the
regulatory framework (KPI 5).
Similarly, Open Colleges questioned ASQA's performance across KPIs 1, 5
and 6 (engagement of stakeholders in the development of options to reduce
compliance costs). Open Colleges contended that removing a rectification step
in the audit process has reduced regulated entities' ability to engage early
with ASQA and minimise negative regulatory impacts (often resulting in appeals
to the Administrative Appeals Tribunal). Open Colleges
concluded that ASQA 'isn't operating within the principles of [the] Framework'.
Department response to concerns
about regulators' performance
A departmental officer noted the Braithwaite review,
in which Professor Braithwaite highlighted and promoted the benefits of
regulatory partnerships. Professor Braithwaite's first recommendation was to support
Recommendation 1: ASQA develop and implement processes to
enhance its capabilities and opportunities to proactively engage in regulatory
conversations with students, teachers, RTOs, industry and other interested
stakeholders. The desired outcomes are to improve the value of the student‑focused
regulatory approach and involve the sector in developing the regulatory culture
that drives ASQA's use of its legislative powers.
The officer advised that 'in principle the government supports [the
recommendation], and now we're looking at how we might actually implement that'.
The committee heard that there is disconnect between regulators and
private providers in the VET and higher education sectors. The committee
considers that regulators must do more to strengthen engagement with these
providers and to incorporate their knowledge, experience and expertise into the
regulatory environment. More broadly, the committee recommends that the
Framework be reviewed to identify opportunities to improve Commonwealth
regulators' performance, including across all six KPIs.
The committee recommends that the Australian Government initiate a
five-year review of the Regulator Performance Framework, to identify
opportunities to improve Commonwealth regulators' performance.
Differences in regulation
Some submitters and witnesses argued that there are regulatory differences
between the public and private education sectors which result in a greater
regulatory burden on private providers.
NCEC referred to dual financial reporting obligations;
ISCA highlighted the need for each private school to be a
registered provider under the ESOS Act, compared to education departments whose
single registration covers all public schools in their jurisdiction;
ISV submitted that independent schools are significantly affected
by town planning processes that do not apply to public schools (such as road
and infrastructure works):
A very recent example—we found this out yesterday—is of a
school on the urban fringe of Melbourne. Very tragically, someone was killed
out the front of the school a year or so ago—they were hit by a car—so finally
traffic lights are going to be installed, which is a wonderful thing, but the
school is being asked to put up $2 million to pay for it. This is on a highway
outside of Melbourne. That example is not atypical.
COPHE described higher education policy settings and regulatory
attitudes as enforcing:
...a bifurcated system that preferences publicly funded
institutions at the expense of private education. In comparison, public institutions
are heavily subsidised, lightly regulated, and free to pursue market and
product development without external approvals. By contrast, private
institutions operate without public subsidy, are extremely heavily regulated
and effectively require government approvals for new sites, new courses, new
delivery modes, permission to grow international student numbers, and change of
COPHE contended that the broader policy settings are inequitable,
with private providers ineligible for Commonwealth Subsidised Places (and
other funding opportunities) and subject to various evolving market constraints.
Its submission argued that providers' students are affected by these
...as they are excluded from Commonwealth tuition assurance
schemes and are levied a 25% loan fee on the Commonwealth funded FEE-HELP loan
scheme. This loan fee does not apply to students in publicly funded
institutions or to private universities. Students of private higher education
providers are required to loan 125% of their course costs if they access the
government funded HELP scheme.
COPHE's Chief Executive Officer stated that 'abolition of the loan fee
would create greater economic stimulus and that revenue would be recouped, if
not increased, by a decision to abolish the fee'. Mr Finn said that independent
economic analysis on the impacts of the loan fee will shortly be published and highlighted
some key points of that analysis:
What it establishes is that the loan fee raises, on a net
present value analysis, about $6 million per year in revenue to the
Commonwealth. The loan fee doesn't fund the HELP scheme. The loan fee goes
into consolidated revenue...When you look at its abolition, and if you take the
market from simply an analysis around price stimulus and you take a
conservative approach that says you reduce a price—that is, remove the fee; do
you stimulate growth?—then our analysis works on a model of stimulating about a
two per cent growth in the sector [about $100 million], which we think is a
conservative approach, but the economic stimulus of that transfers to assets,
the employment of staff, and then direct revenue back through the taxation
ACPET expressed similar concerns about the absence of a 'level playing
field', public funding for private providers, and financial support for those
Department response to concerns
about FEE-HELP loan fee
A departmental representative explained that the purpose of the FEE-HELP
loan fee is to compensate the Australian Government. An officer said:
The loan fee for both sectors is designed to compensate the
Commonwealth for the cost of lending amounts that are significantly higher than
those loaned to Commonwealth supported students and, therefore, may take
significantly longer to repay. All categories of HELP debt incur a cost to the
Commonwealth in the form of an implicit subsidy that may take the form of an
interest rate subsidy and a doubtful debt subsidy.
The committee notes there are differences in regulation of the private
and public education sectors, the reasons for which are not always clear. The
committee accepts that there is inequity in the provision of FEE‑HELP to
VET and higher education students who choose to enrol in courses offered by
The committee considers that the policy rationale underpinning the 25
per cent loan fee may not be justified. The committee has not received any statistical
information regarding the Commonwealth's lending costs to confirm that higher
costs are indeed associated with managing debts incurred by students who enrol
with private providers.
Further, the committee understands that one objective of the VET Student
Loans program is to help deliver quality and affordable training linked to
industry need. In the committee's view, private and public education both seek
to achieve these objectives and any differentiation in Commonwealth funding
should be appropriately justified.
The committee recommends that the Australian Government review the assumptions
underpinning the 25 per cent loan fee and if they are not substantiated with
statistical information, take action to abolish this fee.
Based on views expressed in this report, the committee makes a number of
recommendations that are intended to improve regulation and contribute to red
tape reductions in the private education sector.
Senator David Leyonhjelm
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