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Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests |
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Purpose
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This bill seeks to amend the VET Student Loans Act 2016 and the
Higher Education Support Act 2003 to implement a new tuition protection
model for students participating in the VET Student Loans program or accessing
FEE-HELP or
HECS-HELP assistance
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Portfolio
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Employment, Skills, Small and Family Business
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Introduced
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House of Representatives on 18 September 2019
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Bill status
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Before the Senate
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2.81 In Scrutiny Digest 7 of 2019, in relation to the power in proposed paragraphs 66A(1)(b) and 166-5(1)(b), the committee requested the minister's advice as to the appropriateness of amending the bill to provide at least high-level guidance as to the circumstances in which rules and guidelines may exempt higher education providers from the operation of the tuition protection scheme.[28]
Minister's response[29]
2.82 The minister advised:
The committee expresses valid concerns about whether the Education Amendment (Tuition Protection and Other Measures) Bill 2019 ('the TP Bill') should include high-level guidance as to the circumstances in which Rules and Guidelines may exempt higher education providers from the operation of the tuition protection scheme. In this instance however, it is not desirable or necessary to include such explicit guidance.
The purpose of the TP Bill is to provide a sustainable framework for the provision of tuition protection for students accessing VET Student Loans, FEE-HELP or HECS-HELP at a private education provider or TAFE. In part, this will be achieved by ensuring that there are adequate funds in the VET Student Loans Tuition Protection Fund and the HELP Tuition Protection Fund. It is therefore implicit from the overarching purpose of the new tuition protection scheme that generally it is those providers that are of minimal risk of default and/or have the capability to protect students in the event of a default, who are likely to be exempt from the schemes. Table A providers (i.e. public universities) have been expressly excluded from this regime given they are considered very low risk, and in the unlikely event of a default, should have the capacity and capability to place students without the assistance of a Director.
Further, it is desirable to allow the delegated legislation maximum flexibility to exempt classes of providers. This is because the circumstances and classes of providers for which it may be appropriate to exempt are not certain and cannot necessarily be foreseen. Specifying this detail in the delegated legislation may avoid the need to amend the primary legislation in order to exempt a class of provider not currently contemplated for an exemption.
The reliance on the Guidelines and the Rules for the purposes of proposed subsections 49A(2) and 19-66A(3) is appropriate because it will allow administrative and technical details of the schemes to be adjusted relatively quickly (compared to the provisions of the primary legislation), in the event that changes in policy give rise to the need for changes in the administration of the schemes. The use of delegated legislation allows the Minister, with appropriate parliamentary scrutiny, to work out the application of the law as it applies to the administrative details of the schemes. For instance, it is desirable that Rules be able to be made relating to the refund, remission and waiver of tuition protection levies, in order to provide greater flexibility in responding to circumstances where this may be appropriate.
Committee comment
2.83 The committee thanks the minister for this response. In relation to proposed paragraphs 66A(1)(b) and 166-5(1)(b), the committee notes the minister's advice that it is desirable to allow the delegated legislation maximum flexibility to exempt classes of providers because the circumstances and classes of providers for which it may be appropriate to exempt are not certain and cannot necessarily be foreseen. In relation to proposed subsections 49A(2) and 19-66A(3), the committee notes the minister's advice that the use of delegated legislation allows for greater flexibility and for administrative and technical details of the scheme to be adjusted quickly.
2.84 While noting this advice, the committee reiterates its scrutiny concerns that significant matters, such as the core elements of a tuition protection scheme and the entities to which the scheme is to apply, should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. From a scrutiny perspective, the committee does not generally consider flexibility, on its own, to be sufficient justification for including significant matters (including broad exemptions) in delegation legislation.
2.85 The committee draws its scrutiny concerns to the attention of senators and leaves to the Senate as a whole the appropriateness of including significant matters, such as the core elements of a tuition protection scheme and the entities to which the scheme is to apply, in delegated legislation.
2.86 The committee also draws this matter to the attention of the Senate Standing Committee on Regulations and Ordinances for information.
2.87 In Scrutiny Digest 7 of 2019 the committee requested the minister's advice as to why it considered necessary and appropriate to permit the minister to determine, by non-legislative instrument, individual providers to which the tuition protection scheme in proposed Part 5-1A of the Higher Education Support Act 2003 applies.
2.88 The committee also requested the minister's advice as to the appropriateness of amending the bill to:
• provide that determinations made under proposed subsection 166-5(2) are legislative instruments; and
• provide at least high-level guidance as to how the minister's power to make such determinations is to be exercised.[31]
Minister's response
2.89 The minister advised:
The power for the Minister to determine, by non-legislative instrument, individual providers to which the tuition protection scheme in the proposed Part 5-1A of the Higher Education Support Act 2003 (proposed Part 5-1A) applies, enables the Minister to react to changes in a dynamic sector, while retaining the discretion to consider the relevant and unique circumstances of individual providers.
Provider funding and governance structures, historical arrangements, existing and emerging compliance risks, and other characteristics vary widely across the sector, and continue to evolve. In recognition of this, the Minister can make a determination that proposed Part 5-1A does not apply to a provider based on the individual circumstances of that provider. Anticipating through legislation the factors the Minister must consider before making a determination risks restricting the Minister's ability to consider individual provider circumstances.
As a non-legislative instrument, a determination under proposed subsection 166-5(2) enables rapid response to provider and sector changes. This is critical as conditions or time limitations specific to individual providers made under subsections 166-5(3)(a) and (b) can be introduced, amended or revoked without delay. Non-legislative instruments give certainty to providers that the Minister's decision is final and not capable of disallowance. This ensures that providers have certainty about whether the tuition assurance obligations apply to them, which assists with financial and compliance planning. This level of certainty is particularly important for providers given that the Minister's determination has the additional consequence that the provider is not a 'leviable provider' for the purposes of the Higher Education Support (HELP Tuition Protection Levy) Bill 2019 ('HELP Levy Bill').
On the question of the appropriateness of amending the TP Bill to provide that determinations made under proposed subsection 166-5(2) are legislative instruments, the overarching purpose of the Bill is to ensure that students are adequately protected in the event of provider failure. It is essential that changes in provider circumstances can be responded to rapidly and with certainty for students, as well as for the HELP Tuition Protection Director. This purpose can be achieved by retaining the current proposed subsection 166-5(4).
On the question of the appropriateness of amending the Bill to provide guidance on how the Minister is to make determinations under proposed subsection 166-5(2), it is impractical and restrictive to anticipate the factors that the Minister may take into account when considering whether to make a determination, and therefore, it is not appropriate to amend the Bill.
Committee comment
2.90 The committee thanks the minister for this response. The committee notes the minister's advice that amending the bill to provide that determinations made under proposed subsection 166-5(2) are legislative instruments would undermine flexibility and certainty for students and that it would be impractical to amend the bill to provide guidance as to how the minister's powers to make determinations are to be exercised.
2.91 While the committee notes this advice, the committee reiterates its scrutiny concern that proposed subsection 166-5(2) would permit the minister to determine whether and how the tuition protection requirements in Part 5-1A of the Higher Education Support Act 2003 apply to specific providers, with little or no guidance on the face of the bill as to how this power is to be exercised. The committee further reiterates its concern that the use of non-legislative instruments would limit parliamentary oversight of the relevant determinations.
2.92 The committee draws its scrutiny concerns to the attention of senators and leaves to the Senate as a whole the appropriateness of amending the bill to:
• provide that determinations made under proposed subsection 166-5(2) are legislative instruments; and
• provide at least high-level guidance as to how the minister's power to make such determinations is to be exercised.
2.93 In Scrutiny Digest 7 of 2019 the committee requested the minister's advice as to why it is considered necessary and appropriate to permit the VSL Tuition Protection Director and the HELP Tuition Protection Director to delegate their powers and functions to officers at the APS 6 level. The committee noted that its consideration of these matters would be assisted if the minister's response addressed the following matters:
• the anticipated nature and volume of matters to be determined by the VSL Tuition Protection Direction and HELP Tuition Protection Director; and
• whether the relevant work could be performed by officers below the Senior Executive Service (SES) level, with an SES officer giving final authorisation.
2.94 The committee also requested the minister's advice as to the appropriateness of amending the bill to restrict delegations to members of the SES or, at a minimum, to require that delegates possess expertise appropriate to the delegated power or function.[33]
Minister's response
2.95 The minister advised:
The committee expresses valid concerns about the delegation of administrative powers to a relatively large class of persons without specification as to the delegates' qualifications, attributes or expertise. In this instance, however, I consider it necessary and appropriate to permit the VSL Tuition Protection Director and the HELP Tuition Protection Director to be able to delegate their powers and functions to officers at the APS 6 level for the reasons articulated below. I have explained this rationale in relation to the VSL Tuition Protection Director specifically but the same rationale, albeit different provisions, applies to the HELP Tuition Protection Director.
Firstly, a key role of each Director is to provide support to students when their provider defaults. While reforms have been implemented, especially in the vocational and education sector, to minimise the risk of provider failure, it is inevitable that defaults will occur from time to time. Such defaults cause significant disruption and stress to students for whom support needs to be provided as soon as practicable. It is difficult to anticipate with precision the nature and volume of matters to be determined by the Directors, but suffice to say the office of the Director needs to be able to respond in a timely fashion at times of crisis and for this, needs to have within his or her powers, the ability to delegate to a broad class of persons. For example, the catastrophic failure of Careers Australia impacted over 16,000 students. The Director, under proposed section 66E of the VSL Act will be required to assess for each individual student whether there is a suitable replacement course. This will most likely require a broad level of delegation if the students are to be given the appropriate support. In circumstances such as these, I do not consider a delegation to only a senior executive level will ensure the necessary student support is delivered in a timely manner.
Secondly, the same person is undertaking the role of TPS Director, VSL Tuition Protection Director and HELP Tuition Protection Director. It is often the case that providers enrol students in all three sectors, and so it is reasonable to assume that in the event of a default, the volume of the resultant workload will be significant.
Thirdly, whilst the VSL Tuition Protection Director has a range of powers and functions, most of these are more administrative and process driven rather than being decisions of significant consequence. Notably, the critical function of the Director- having to make the legislative instrument under the VSL Student Loans (VSL Tuition Protection Levy) Bill ('the VSL Levy Bill') has not been delegated. For example:
(a) a key function of the Director is to assess under proposed section 66E whether there is a suitable replacement course for a student, having regard to the matters listed in section 66E(2). While such a decision has important implications for an individual student, this decision is reviewable (proposed section 74), and cannot be reviewed by the same delegate, and must be reviewed by a person who occupies a position at a level not lower than that of the delegate who made the decision (proposed section 78A);
(b) powers of the Director in proposed sections 66C and 66F to require providers to give to the Director certain information to assist with the tuition protection process;
(c) the requirement for the Director (proposed section 66H) to notify the Secretary of the default and notify the provider of the re-credit amount and invite submissions. Critically, it is the Secretary that determines the actual re-credit amount - the role of the Director is to give the provider procedural fairness.
Fourthly, proposed subsection 114(4) ensures that any delegate when exercising powers or performing functions under the Act is required to comply with any directions of the VSL Tuition Protection Director - ensuring that the Director maintains overarching oversight of any exercise of his or her powers.
I also consider it unnecessary to specify that the delegates possess expertise particular to the delegated power or function. The powers and functions to be exercised by the Directors are general in nature and I consider it sufficient that the delegates, as officials under the Public Governance, Performance and Accountability Act 2013 ('the PGPA Act'), will understand the nature and scope of the powers being delegated. Officials under the PGPA Act are required pursuant to sections 25 to 29 to exercise their powers with due care and diligence, honestly, in good faith and for proper purpose. The TPS Director is similarly an official for the purposes of the PGPA Act (per section 54N of the Education Services for Overseas Students Act 2000 ('the ESOS Act')).
Importantly, under proposed subsection 89(1A), the powers and functions of the VSL Tuition Protection Director under the Regulatory Powers Act 2014 (as an authorised applicant, infringement officer or relevant chief executive) are only able to be delegated to an SES employee or acting SES employee. The committee queries how this aligns with the Director's ability, in subsection 114(3), to delegate any or all of the Director's powers or functions under 'this Act' (with the exclusion of paragraph 66N(l)(e)) to APS Level 6 employees or above-this is in light of section 66N, which sets out the functions of the VSL Tuition Protection Director and include 'any other function conferred by this Act or any other law of the Commonwealth' (for example, the Regulatory Powers Act 2014).
As the VSL Tuition Protection Director is conferred functions and powers by different Acts (relevantly, the VET Students Loans Act 2016 and the Regulatory Powers Act 2014), subsections 114(3) and 89(1A) separately provide for the Director's ability to delegate powers or functions conferred on him/her under those Acts.
To the extent that there might be any ambiguity as to whether subsection 114(3) might extend to the delegation of functions or powers conferred on the Director by the Regulatory Powers Act 2014 (because of section 66N). This is resolved by the operation of subsection 89(1A) itself as it relates specifically to the delegation of such powers or functions.
Committee comment
2.96 The committee thanks the minister for this response. The committee notes the minister's advice that the volume of matters to be determined by the VSL Tuition Protection Direction and HELP Tuition Protection Director is likely to be significant. The committee also notes the advice that the powers that would be delegated by the Directors are general and largely administrative, rather than legislative.
2.97 The committee further notes the minister's advice that it is not considered necessary for delegates to possess expertise particular to the delegated power or function because the delegates are officials under the PGPA Act and, as such, have sufficient knowledge of the nature and scope of the relevant powers. The committee also notes the advice that the VSL Tuition Protection Director maintains oversight of any exercise of their power by a delegate by ensuring that delegate must comply with any direction given.
2.98 While noting the minister's advice, from a scrutiny perspective, the committee remains concerned that the bill would permit the delegation of significant powers to APS 6 officers, without requiring any specific qualifications, attributes or expertise. Generally, the committee prefers to see a limit set either on the scope of the powers that may be delegated, or on the categories of people to whom delegations are permitted. The committee's general preference is that delegates be confined to holders of nominated officers, and/or to members of the SES.
2.99 The committee draws its scrutiny concerns to the attention of senators, and leaves to the Senate as a whole the appropriateness of allowing the VSL Tuition Protection Director and the HELP Tuition Protection Director to delegate their powers and functions to officers at the APS 6 level, without legislatively requiring delegates to possess expertise appropriate to the delegated power or function.
[27] Schedule 1, proposed subsection 49A(2) and paragraph 66A(1)(b); Schedule 2, proposed subsection 19-66A(3) and paragraph 166-5(1)(b). The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(iv).
[28] Senate Scrutiny of Bills Committee, Scrutiny Digest 7 of 2019, pp. 21-23.
[29] The minister responded to the committee's comments in a letter dated 29 October 2019. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 8 of 2019 available at: www.aph.gov.au/senate_scrutiny_digest
[30] Schedule 2, proposed subsections 166-5(2) and (4). The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(ii).
[31] Senate Scrutiny of Bills Committee, Scrutiny Digest 7 of 2019, pp. 23-24.
[32] Schedule 1, item 41, proposed subsection 114(3); Schedule 2, item 27, proposed section
238-6. The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(ii).
[33] Senate Scrutiny of Bills Committee, Scrutiny Digest 7 of 2019, pp. 24-27.
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