VET Student Loans Amendment Rules (No 2) 2017 [F2017L01121]-Response required [2017] AUSStaCSDLM 363 (18 October 2017)

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Instrument	VET Student Loans Amendment Rules (No. 2) 2017 [F2017L01121]
Purpose	Amends the Vet Student Loans Rules 2016 to provide rules for the collection and recovery of an annual approved course provider charge imposed by the VET Student Loans (Charges) Act 2016
Authorising legislation	VET Student Loans Act 2016
Portfolio	Education and Training
Disallowance	15 sitting days after tabling (tabled Senate 6 September 2017) Notice of motion to disallow currently must be given by 28 November 2017
Scrutiny principle	Standing Order 23(3)(d)

Matters more appropriate for parliamentary enactment

Scrutiny principle 23(3)(d) of the committee's terms of reference requires the committee to consider whether an instrument contains matters more appropriate for parliamentary enactment (that is, matters that should be enacted via principal rather than delegated legislation).

The making of the principal Rules, and these amendments to them, is authorised by section 116 of the VET Student Loans Act 2016, which relevantly provides that:

(1) The Minister may, by legislative instrument, make rules providing for matters:
(a) required or permitted by this Act to be provided; or
(b) necessary or convenient to be provided in order to carry out or give effect to this Act.
...
(6) The rules may provide for the collection and recovery of approved course provider charge (within the meaning of the VET Student Loans (Charges) Act 2016).
...
(8) Subsections (2) to (7) do not limit subsection (1).

In addition to setting out processes for the collection and recovery of the approved course provider charge established by the VET Student Loans Charges Act 2016 (and quantified by regulations made under that Act), the present instrument imposes a 'late payment penalty' payable by an approved course provider if the charge remains unpaid after the day on which it is due and payable. It sets out a formula for determining the quantity of the penalty with reference to a percentage of the charge and the number of days it is overdue. The instrument further provides that the Secretary may recover both the charge and any late payment penalty from the provider as debts due to the Commonwealth.

The committee notes that, although it is described as a penalty, the late payment penalty is not drafted in the manner of a civil penalty, nor with reference to a fixed number of dollars or penalty units, but appears to be more in the nature of an additional fee or charge.

The committee's longstanding view is that fees should be limited to cost recovery, so that they could not properly be regarded as taxes and their establishment by an instrument would not be regarded as an inappropriate delegation of legislative power. Where an instrument carries financial implications via the imposition of or change to a charge, fee, levy, scale or rate of costs or payment, the committee expects that the relevant ES will make clear the specific basis on which an individual imposition or change has been calculated.

If, on the other hand, fees and charges are levied on more than a cost recovery basis, such charges may be considered to be general taxation. The committee notes in this case that the VET Student Loans (Charges) Act 2016 explicitly imposes the approved course provider charge as a tax.

The committee's views in this regard accord with the approach of the Senate Standing Committee for the Scrutiny of Bills, which has consistently stated that it is for the Parliament, rather than the makers of delegated legislation, to set a rate of tax.^[1] The committee considers that if the late payment penalty in this instrument is considered to be a fee or charge comprising part of or supplementary to the approved course provider charge, then it should be levied by, or under the authority of, the VET Student Loans (Charges) Act 2016.

Noting the above concerns regarding the imposition of penalties or levies in delegated legislation, the committee requests the minister's advice as to:

• the specific legislative authority under which the late payment penalty is imposed;

• the specific basis on which the amount of the penalty has been calculated; and

• why it would not be more appropriate to impose the penalty—either as a civil penalty, a cost-recovery levy or taxation—through principal legislation.

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[1] See Senate Standing Committee for the Scrutiny of Bills, Annual Report 2016, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Scrutiny_of_Bills/Annual_Reports/Annual_Report_2016, p. 34. The committee goes on to state that if there is a compelling case for setting a rate of levy by subordinate legislation, the enabling Act should set limits on it: '[t]he vice to be avoided is delegating an unfettered power to impose fees'.