Higher Education Support (HELP Tuition Protection Levy) Bill 2019; VET Student Loans (VSL Tuition Protection Levy) Bill 2019 - Commentary on Ministerial Responses [2019] AUSStaCSBSD 146 (13 November 2019)

• VET Student Loans (VSL Tuition Protection Levy) Bill 2019
• Charges in delegated legislation 39

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Higher Education Support (HELP Tuition Protection Levy) Bill 2019

VET Student Loans (VSL Tuition Protection Levy)
Bill 2019

Purpose	The Higher Education Support (HELP Tuition Protection Levy) Bill 2019 seeks to impose the HELP tuition protection levy, specify the amounts that are payable by providers and prescribe the levy components and the manner in which, and by whom, they will be determined each year The VET Student Loans (VSL Tuition Protection Levy) Bill 2019 seeks to impose the VSL tuition protection levy, specify the amounts that are payable by various classes of providers and prescribe the levy components and the manner in which, and by whom, they will be determined each year
Portfolio	Employment, Skills, Small and Family Business
Introduced	House of Representatives on 18 September 2019
Bill status	Before the Senate

Charges in delegated legislation ^[39]

2.112 In Scrutiny Digest 7 of 2019, the committee drew its scrutiny concerns to the attention of senators, and left to the Senate as a whole the appropriateness of allowing the HELP Tuition Protection Director and the VSL Tuition Protection Director to determine core elements of the tuition protection levy by delegated legislation, with only limited guidance as to the amounts of levy that may be imposed.

Minister's response^[40]

2.113 The minister advised:

I consider there are sufficient checks and balances and guidance provided within the respective levy Bills to ensure the core elements of the levy are appropriately determined. I explain this below for each of the three components to the tuition protection levy: administrative fee, risk rated premium component and the special tuition protection component. Again, I have explained this rationale in relation to the VSL Levy Bill but the same rationale, albeit different provisions, applies to the HELP Levy Bill.
The VSL Levy Bill provides for the administrative fee to be calculated having regard to the amounts determined in a legislative instrument made by the Minister. However, the Bill specifically provides for an upper limit beyond which the administrative fee cannot exceed. This upper limit was determined in consultation with the Australian Government Actuary.
The risk rated premium component of the levy is calculated according to a detailed methodology provided for in the Bill (see proposed section 11 of the VSL Levy Bill), which was developed by the Australian Government Actuary. This methodology takes into consideration the provider's level of exposure under the relevant loan scheme in terms of total student numbers and loan amounts as well as the provider's risk of default based on certain risk factors such as volatility in student numbers, course completion rates, length of operation, by way of example.
The VSL Tuition Protection Director is responsible for determining in a legislative instrument certain amounts necessary to calculate a provider's risk rated premium. In making this instrument, the Director is required to have regard to the advice of the VSL Tuition Protection Fund Advisory Board as well as the sustainability of the VSL Tuition Protection Fund. Notably, members of the Advisory Board are required to include, amongst others, representatives from the Department of Finance, the Australian Prudential Regulatory Authority and the Australian Government Actuary (see section 55C ESOS Act). The Treasurer is also required to approve the legislative instrument before the Director makes the instrument, providing an extra measure of scrutiny to the legislative instrument.
The VSL Tuition Protection Director is similarly responsible for determining in the same legislative instrument (and so with the same checks and guidance) the percentage to multiple the providers' total loan amounts by in order to calculate the special tuition protection component. This component of the levy is intended to be imposed on providers to enable the VSL Tuition Protection Fund to grow.
Similar levy components apply under the Education Services for Overseas Students (TPS Levy) Act 2012 with both the Minister and the TPS Director making the relevant legislative instruments. This approach towards the handling of the levy in respect to providers with international students has been operating successfully since 2012.
Consistent with other delegated legislation, the Minister and the Director will consult with the sector as part of the annual levy setting process and similarly both instruments will be subject to Parliamentary scrutiny through the disallowance process after tabling in both Houses of Parliament.

Committee comment

2.114 The committee thanks the minister for this response. The committee notes the minister's advice that the bill specifically provides for an upper limit beyond which the administrative fee cannot exceed and that this upper limit was determined in consultation with the Australian Government Actuary.

2.115 The committee also notes the minister's advice that the relevant methodology takes into consideration the provider's level of exposure under the relevant loan scheme in terms of total student numbers and loan amounts, as well as the provider's risk of default based on certain risk factors such as, for example, volatility in student numbers, course completion rates and length of operation.

2.116 The committee further notes the minister's advice that the minister and director will consult with the sector as part of the annual levy setting process and both instruments will be subject to parliamentary scrutiny through the disallowance process after tabling in both Houses of the Parliament.

2.117 The committee requests that the key information provided by the minister be included in the explanatory memorandum, noting the importance of this document as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).

2.118 In light of the information provided, the committee makes no further comment on this matter.

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[39] Clause 13. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(iv).

[40] 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