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Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests |
2.1 This chapter considers the responses of ministers to matters previously raised by the committee.
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Purpose
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This bill seeks to amend the Australian Education Act 2013 (the Act)
to:
• implement a new funding arrangements for schools;
• make a number of consequential and technical amendments to the Act;
and
• amend the Australian Education Regulation 2013
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Portfolio
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Education and Training
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Introduced
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House of Representatives on 11 May 2017
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Bill status
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Received the Royal Assent on 27 June 2017
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Scrutiny principles
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Standing Order 24(1)(a)(ii), (iv) and (v)
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2.2 The committee dealt with this bill in Scrutiny Digest No. 6 of 2017. The Minister responded to the committee's comments in a letter dated 10 August 2017. Set out below are extracts from the committee's initial scrutiny of the bill and the Minister's response followed by the committee's comments on the response. A copy of the letter is available on the committee's website.[1]
Initial scrutiny – extract
2.3 Proposed section 35A sets out the Commonwealth share of funding for government and non-government schools. However, it states that this share of funding may be amended by the regulations. This could therefore mean that the default funding share which is set out in the bill could be amended by delegated legislation. However, the share of funding payable by the Commonwealth appears to be central to the policy changes proposed to be made by this bill.
2.4 The committee's view is that significant matters should generally be included in primary legislation unless a sound justification for the use of delegated legislation is provided. In this case, the explanatory memorandum justifies this delegation of legislative power by explaining that the 'regulation-making power is designed to ensure that sufficient flexibility is built into the Act for future government decisions on schools funding, while maintaining appropriate and sufficient Parliamentary oversight'.[3]
2.5 The modification of the share of funding payable by the Commonwealth to government and non-government schools could, depending on the size of the change to the Commonwealth share, be a major change to the policy intent of the bill. While any regulations would be subject to disallowance, the committee's preference from a scrutiny perspective would be that a limit be set on the adjustments to the funding share that could be made via regulations.
2.6 The committee therefore suggests that it may be appropriate for the bill to be amended to set a limit on the extent to which the share of Commonwealth funding for government and non-government schools can be modified by the regulations, and seeks the Minister's response in relation to this matter.
2.7 The Minister advised:
The Committee notes the Bill inserts a new section 35A into the Australian Education Act 2013 (the Act) that sets the 'Commonwealth share' for government (20 per cent) and non-government schools (80 per cent), but that this can also be set by regulation. The Committee suggests a limit on the extent Commonwealth share can be set by regulation.
Although the Act provides for transition to the Commonwealth share over a six or 10 year period, the Act is intended to cover Commonwealth funding for schools into the future. The Act will be subject to ongoing reviews (see, for example, section 128), ensuring the Act continues to operate as intended, aligns with Government policy and reflects both national and bilateral agreements with states and territories on school funding. The ability to set Commonwealth share by regulation allows more efficient response to any circumstances that may arise requiring a modified share percentage.
It is not possible at this time to predict the nature of any limits that could appropriately be imposed on setting Commonwealth share by regulation.
As noted in the Explanatory Memorandum to the Bill and by the Committee, regulations setting Commonwealth share will be subject to parliamentary scrutiny and disallowance. This process will allow the Senate to vigorously debate any change, and a variety of stakeholders to contribute to any discussion and have their interests represented.
I consider this process represents sufficient practical and political oversight of the power to set Commonwealth share by regulation.
Committee comment
2.8 The committee thanks the Minister for this response. The committee notes the Minister's advice that the ability to set the Commonwealth share of funding for government and non-government schools by regulation allows more efficient responses to any circumstances that may arise requiring a modified share percentage. The committee also notes the Minister's advice that it is not possible at this time to predict the nature of any limits that could appropriately be imposed on setting Commonwealth share by regulation (partly due to the fact that school funding arrangements will reflect both national and bilateral agreements with the States and Territories).
2.9 While the committee notes this advice, it remains unclear to the committee why it would not be possible to formulate even broad limits on this power to set the Commonwealth share by regulation (noting that if circumstances changed significantly it would be appropriate to bring forward an amending bill to ensure appropriate parliamentary scrutiny of the response to significantly changed circumstances).
2.10 However, noting that any regulations will be subject to parliamentary scrutiny and disallowance, and the fact that the bill has already passed both Houses of Parliament, the committee makes no further comment on this matter, other than to draw this issue to the attention of the Senate Standing Committee on Regulations and Ordinances for information.
Initial scrutiny – extract
2.11 Proposed section 69B provides for the establishment of transition adjustment funding for transition schools. Proposed subsection 69B(1) will enable the Minister to determine an amount of transition adjustment funding for a transition school for a transition year if the Minister is satisfied prescribed circumstances apply in relation to the school for that year.
2.12 In relation to parliamentary oversight of transition adjustment funding, the explanatory memorandum states that funding will be appropriated under annual appropriation Acts, and regulations (made under section 130 of the Australian Education Act 2013) can include:
• the eligibility criteria or preconditions for transition adjustment funding (the 'prescribed circumstances' for subclause 69B(1));
• matters that the Minister may or must take into account in making a funding determination under subclause 69B(1);
• the amount of funding that may be paid for a transition school for a transition year (whether a fixed amount, a capped amount, or an amount worked out by formula) (see subclauses 69B(2) and (3)); and
• the total amount of transition adjustment funding available for a transition year (which could be a fixed amount, a capped amount, or an amount worked out by formula (see subclause 69B(4)).[5]
2.13 Subclause 69B(5) provides that a funding determination under subclause 69B(1) is not a legislative instrument and therefore these transition adjustment funding determinations will not be subject to parliamentary disallowance. The explanatory memorandum states subclause 69B(5) is included to assist readers, as any determination under subclause 69B(1) is not a legislative instrument within the meaning of section 8 of the Legislation Act 2003.
2.14 In order to ensure that legislative power is delegated to the executive appropriately, the committee's scrutiny view is that significant matters, such as provisions relating to transition funding for schools, should be included in primary legislation unless a sound justification for the use of delegated legislation is provided.
2.15 Given that transition adjustment funding determinations will not be subject to parliamentary disallowance, the committee requests the Minister's advice as to:
• why all of the details of the new transitional adjustment funding scheme are left to be worked out in delegated rather than primary legislation;
• whether at least some high-level eligibility criteria or preconditions for transition adjustment funding can be set out on the face of the bill (rather than the eligibility criteria and preconditions being left entirely to regulations);
• whether circumstances (i.e. eligibility criteria or preconditions for transition adjustment funding) must be prescribed in the regulations in order for the Minister to be able to validly exercise his or her power to make a transition adjustment funding determination under proposed subclause 69B(1) (i.e. if no circumstances are prescribed is the Minister able to exercise an unfettered power to make a non-disallowable transition adjustment funding determination); and
• the appropriateness of amending proposed subsection 69B(2) of the bill to:
- provide that the regulations must (rather than may) prescribe a method for working out transitional adjustment funding amounts; and/or
- provide that the regulations must (rather than may) prescribe a maximum amount that is payable for a school for a year under a transition adjustment funding determination or prescribe a method for working out that maximum amount.
Minister's response
2.16 The Minister advised:
The Committee notes the Bill inserts a new section 69B into the Act, empowering the Minister to determine an amount of transition adjustment funding for a transitioning school for a transition year. The Committee asks for my advice on a number of issues regarding transition adjustment funding.
The Explanatory Memorandum sets out the purpose of the new section 69B at pages 18-19: to assist schools under financial hardship due to transitioning to the Commonwealth share and its approved authority is unable to distribute recurrent funding to rectify any hardship. Pages 23-24 also highlight how parliamentary oversight is achieved.
The terms of new section 69B replicate the existing section 69A 'Funding in prescribed circumstances'. However, section 69B is more limited in scope as it only applies to transitioning schools for transition years. The practice for drafting regulations for section 69B will also be the same as section 69A.
Currently, the Australian Education Regulation 2013 (the Regulation) sets out prescribed circumstances under which determinations of funding under section 69A can be made. This includes formulas for calculating maximum amounts payable, limits on amounts for schools or limits on total amounts in given years. Regulations made under section 69B will also include relevant financial limits.
The Explanatory Memorandum outlines the high level eligibility for section 69B funding (as above). It is important that legislative framework does not unduly limit the capacity of the Australian Government to respond effectively to potential hardship that may arise for schools. I also note that criteria for transition adjustment funding were subject to considerable discussion between the Government and stakeholders during the Bill's passage, and remain subject to ongoing discussions.
It will not be possible for the Minister to make determinations of financial assistance under section 69B without prescribed circumstances in regulations, and this determination cannot be contrary to such regulations. In this way, prescribed circumstances for funding under s 69B will be subject to parliamentary scrutiny and disallowance. Further, as the Explanatory Memorandum notes, section 69B funding is appropriated under annual appropriation Acts, subject to parliamentary oversight.
Committee comment
2.17 The committee thanks the Minister for this response. The committee notes the Minister's advice that it will not be possible for the Minister to make determinations of financial assistance under section 69B without prescribed circumstances in regulations (and that these prescribed circumstances will be subject to parliamentary scrutiny and disallowance). The committee also notes the Minister's advice that the terms of new section 69B replicate the existing section 69A 'Funding in prescribed circumstances'; that it is important that the legislative framework does not unduly limit the capacity of the government to respond effectively to potential hardship that may arise for schools; and that the criteria for transition adjustment funding were subject to considerable discussion between the government and stakeholders during the bill's passage, and remain subject to ongoing discussions.
2.18 The committee notes that the fact that a provision replicates existing provisions or that the relevant criteria is still subject to ongoing discussions with stakeholders will not generally address the committee's scrutiny concerns in relation to leaving significant matters to delegated legislation. However, the fact that it will not be possible for the Minister to make determinations of financial assistance under section 69B without prescribed circumstances in regulations, go some way to addressing the committee's scrutiny concerns.
2.19 The committee draws this matter to the attention of the Senate Standing Committee on Regulations and Ordinances for information.
2.20 In light of the fact that this bill has already passed both Houses of Parliament the committee makes no further comment on this matter.
Initial scrutiny – extract
2.21 Proposed sections 22 and 22A seek to impose new policy and funding requirements on States and Territories, as conditions of financial assistance provided to them under the Australian Education Act 2013. Specifically, these provisions provide that a payment of financial assistance will be subject to the following conditions:
• that the State or Territory implements national policy initiatives for school education agreed by the Ministerial Council from time to time;[7]
• that the State or Territory implements national policy initiatives for school education prescribed by regulations;[8]
• that the State or Territory is party to a national agreement relating to school education reform;[9]
• that the State or Territory is party to an agreement with the Commonwealth relating to implementation by the State or Territory of school education reform;[10]
• that the State or Territory complies with the two agreements mentioned above;[11] and
• that the State or Territory maintains funding levels for school education in accordance with the regulations.[12]
2.22 The committee makes no comment in relation the conditions of financial assistance prescribed by the regulations, as this will ensure that those conditions are subject to some level of parliamentary scrutiny and disallowance.
2.23 However, in relation to the conditions of financial assistance set out in agreements between the Commonwealth and State executive governments, the committee notes that the power to make grants to the States and to determine terms and conditions attaching to them is conferred on the Parliament by section 96 of the Constitution. If these provisions are agreed to and the Parliament is therefore delegating this power to the Executive in this instance, the committee considers that it is appropriate that the exercise of this power be subject to at least some level of parliamentary scrutiny, particularly noting the terms of section 96 of the Constitution and the role of Senators in representing the people of their State or Territory.
2.24 Noting this, and the fact that the conditions of financial assistance will be of significance to setting the policy framework of the bill, the committee suggests it may be appropriate for the bill to be amended to include at least some high-level policy initiatives and school education reform priorities which States and Territories will be required to implement in order to receive payments of financial assistance. The committee seeks the Minister's response in relation to this matter.
2.25 The committee also suggests that it may be appropriate for the bill to be amended to include a legislative requirement that any relevant agreements with the States and Territories about these grants of financial assistance are (a) tabled in the Parliament within 15 sitting days after being made, and (b) published on the internet within 30 days after being made. The committee also requests the Minister's response in relation to this matter.
Minister's response
2.26 The Minister advised:
Sections 22 and 22A of the amended Act impose requirements on states and territories as conditions of financial assistance payable by the Commonwealth under the Act. The Committee seeks my advice on if section 22 of the Bill could be amended to include high level policy initiatives and school education reform priorities. The Committee also requests my advice on its suggestion to table in parliament and publish on the internet the national and bilateral agreements mentioned in amended section 22.
I note current section 22 of the Act only requires states and territories to 'implement national policy initiatives for school education in accordance with the regulations'. The Regulation specifies these policy initiatives at its section 10. By contrast, the amended paragraph 22(1)(a) requires states and territories to implement national policy initiatives ' agreed by the Ministerial Council from time to time'. The policy initiatives, reform program and projects agreed by the Ministerial Council are published on the Council's website at www.educationcouncil.edu.au. Further, referencing Ministerial Council agreements allows the legislation to remain current as new initiatives are endorsed, responding to the priorities of the Council.
I note the Minister must consult the Ministerial Council prior to making regulations prescribing additional national policy initiatives for amended Act paragraph 22(1)(b), and have regard to any relevant Council decisions (see amended Act subsection 130(5)). These regulations will be subject to parliamentary scrutiny and disallowance.
In accordance with usual practice, agreements between the Commonwealth and states and territories for school education reform will be published on the Council on Federal Finance Relations website at www.federalfinancialrelations.gov.au. The Regulation will prescribe those agreements and I expect will note the website where they can be found. The agreements will therefore be publicly available.
I note that the Bill was amended before passing regarding states and territories maintaining funding levels. The amended Act section 22A now describes requirements around state-territory contributions, rather than simply in accordance with the regulations.
Committee comment
2.27 The committee thanks the Minister for this response. The committee notes the Minister's advice that States and Territories will be required to implement national policy initiatives 'agreed by the Ministerial Council from time to time' and that these policy initiatives, reform program and projects agreed by the Ministerial Council are published on the Council's website. The Minister also advised that referencing Ministerial Council agreements allows the legislation to remain current as new initiatives are endorsed, responding to the priorities of the Council. The committee also notes the Minister's advice that consultation must be undertaken with the Ministerial Council prior to making regulations prescribing additional national policy initiatives. Finally, the committee notes the Minister's advice in relation to amendments made to the bill which prescribe conditions around State and Territory contributions on the face of the bill, rather than leaving these requirements to be set out in the regulations.
2.28 In relation to the tabling and publishing of agreements, the committee notes the Minister's advice that agreements between the Commonwealth and States and Territories for school education reform will be published on the Council on Federal Finance Relations website. In addition, the Minister advised that the regulations will prescribe those agreements and it is expected that they will also note the website where they can be found.
2.29 While the committee welcomes this approach, which should ensure that the agreements are publicly available, the committee notes that there is no legislative requirement for this to occur. Furthermore, the process of tabling documents in Parliament alerts Senators to their existence and provides opportunities for debate that are not available where documents are only published online.
2.30 The committee draws this matter to the attention of the Senate Standing Committee on Regulations and Ordinances for information.
2.31 In light of the fact that this bill has already passed both Houses of Parliament the committee makes no further comment on this matter.
Initial scrutiny – extract
2.32 Item 173 proposes to amend subsection 129(3) of the Australian Education Act 2013 to provide the Secretary with the power to delegate his or her powers under the Act to 'any APS employee'. Currently, the Secretary is restricted to delegating his or her powers to SES employees in the Department.
2.33 The committee has consistently drawn attention to legislation that allows the delegation of administrative powers to a relatively large class of persons, with little or no specificity as to their qualifications or attributes. Generally, the committee prefers to see a limit set either on the scope of powers that might be delegated, or on the categories of people to whom those powers might be delegated. The committee's preference is that delegates be confined to the holders of nominated officers or to members of the Senior Executive Service. Where broad delegations are provided for, the committee considers that an explanation of why these are considered necessary should be included in the explanatory memorandum.
2.34 The explanatory memorandum justifies this change by reference to two matters. First, the Minister's powers may be delegated to any APS employee, while the Secretary can only delegate to SES employees. Secondly, it is said that there are a number of powers held by the Secretary which are of a routine administrative nature and it is appropriate they be exercisable by officers below the level of SES employees. For these reasons it is concluded that the 'capacity of the Secretary to delegate his or her powers under the Act and Regulation is being aligned with the capacity of the Minister to delegate his or her powers'.[14]
2.35 The committee has generally not accepted a desire for administrative flexibility as a sufficient justification for allowing a broad delegation of administrative powers to officials at any level. The consistency of approach between the Minister's powers of delegation and the Secretary's powers does not appear to be a sufficient justification for broadening the Secretary's powers to delegate.
2.36 The committee requests the Minister's further advice as to why it is considered necessary to allow for the delegation of any or all of the Secretary's functions or powers in these provisions and the appropriateness of amending the bill to provide some legislative guidance as to the scope of powers that might be delegated, or the categories of people to whom those powers might be delegated (for example, providing that only powers of a routine administrative nature may be delegated to non-SES employees).
Minister's response
2.37 The Minister advised:
The Committee notes that the Bill amends subsection 129(3) of the Act to enable the Secretary of the Department of Education and Training to delegate their powers under the Act to 'any APS employee'. The current Act only allows Secretary delegation to SES employees in the department.
The Secretary has a number of powers under the Act and Regulation that are of a routine administrative nature.
For example, and to provide additional context, the Secretary may allow a period longer than 30 days for lodgement of an application for internal review (subparagraph 120(2)(c)(ii) of the Act); allow a period longer than seven days after a census day for lodgement of a census return (paragraph 46(5)(b) of the Regulation); determine the form and manner of census returns (paragraph 46(3)(b) of the Regulation); arrange the use of computer programs to assist with decision-making under the Act (section 124 of the Act); and specify categories of information for the purposes of census returns (paragraph 50(1)(b) of the Regulation).
I consider that it is appropriate that these kinds of powers be exercisable by officers of the department below the level of SES employee. This further ensures that the Secretary will be able to delegate their powers to be exercisable by the same level of employee as the Minister currently can.
I note also that the delegation powers of both the Minister and the Secretary under the Act are limited to APS employees of the department.
Committee comment
2.38 The committee thanks the Minister for this response. The committee notes the Minister's advice that the Secretary has a number of powers that are of a routine administrative nature and therefore it is considered appropriate that these kinds of powers be exercisable by officers of the department below the level of SES employee.
2.39 The committee takes this opportunity to reiterate that it has generally not accepted a desire for administrative flexibility as a sufficient justification for allowing a broad delegation of administrative powers to officials at any level.
2.40 The committee notes that it would be possible to provide legislative guidance as to the scope of powers that might be delegated, or the categories of people to whom those powers might be delegated (for example, by providing that only powers of a routine administrative nature may be delegated to non-SES employees).
2.41 In light of the fact that this bill has already passed both Houses of Parliament the committee makes no further comment on this matter.
[1] See correspondence relating to Scrutiny Digest No. 9 of 2017 available at: www.aph.gov.au/senate_scrutiny_digest.
[2] Schedule 1, item 16, proposed section 35A. The committee draws Senators' attention to this provision pursuant to principle 1(a)(iv) of the committee's terms of reference
[3] Explanatory memorandum, p. 19.
[4] Schedule 1, item 40, proposed section 69B. The committee draws Senators' attention to this provision pursuant to principle 1(a)(iv) of the committee's terms of reference.
[5] Explanatory memorandum, p. 23.
[6] Schedule 1, items 59 and 60, proposed section 22 and 22A. The committee draws Senators' attention to these provisions pursuant to principle 1(a)(v) of the committee's terms of reference.
[7] Proposed paragraph 22(1)(a).
[8] Proposed paragraph 22(1)(b).
[9] Proposed paragraph 22(2)(a).
[10] Proposed paragraph 22(2)(b).
[11] Proposed paragraph 22(2)(c).
[12] Proposed section 22A.
[13] Schedule 1, item 173, proposed subsection 129(3).The committee draws Senators' attention to this provision pursuant to principle 1(a)(ii) of the committee's terms of reference.
[14] Explanatory memorandum, p. 35.
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