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National Vocational Education and Training Regulator Amendment Bill 2019 - Commentary on Ministerial Responses [2020] AUSStaCSBSD 42 (26 February 2020)

National Vocational Education and Training Regulator Amendment Bill 2019

Significant matters in delegated legislation

2.38 In Scrutiny Digest 1 of 2020 the committee requested the minister's advice as to why it is necessary and appropriate to leave significant matters to delegated legislation, and the appropriateness of amending the bill to include at least high-level guidance regarding the content and publication of audit reports on the face of the primary legislation.^[7]

Minister's response^[8]

2.39 The minister advised:

Under new  section 17A , where an audit is conducted under section 17 of the National Vocational Education and Training Regulator Act 2011 (NVETR Act), the National VET Regulator will be required to prepare an audit report. The report will need to be in a form (if any) approved by the Minister and must also comply with the audit report rules (if any are made – see item 81, Schedule 1). A similar provision is made in new subsection 35(1B) in relation to the preparation of a compliance audit.
The legislation does circumscribe and provide high-level guidance on the possible content of the audit reports.
First, the audit report will be about audits authorised under section 17 or section 35 of the NVETR Act. Under section 17, the National VET Regulator may conduct an audit of any matter relating to an application for registration under the NVETR Act. Under section 35, the National VET Regulator may conduct an audit to assess whether an NVR registered training organisation's (NVR RTO) operations continue to comply with the NVETR Act or the VET Quality Framework. Audits, and therefore audit reports, are not able to go beyond the parameters of those two sections.
Second, the Bill makes clear that an audit report must not contain personal information unless it is the name of the applicant for registration or the NVR RTO to which the report relates (for example where the organisation is a sole trader).
The Bill does not provide any more detail about the content of the audit reports as the Government intends to consult, in coming months, with the National VET Regulator, and other stakeholders on what content would be of greatest assistance to stakeholders and vocational education and training (VET) students. The Government also intends to avoid publication of reports which are unfair to NVR RTOs and which might damage their businesses. Consultations with stakeholders (including NVR RTOs) will provide guidance on this. Including any more detail on the content of the audit reports in the Bill may unnecessarily constrain this consultation process and its outcomes.
It is vital that the content of the audit reports be capable of rapid change in the event that the published audit reports are not meeting their objectives. Best practice requires that the Government respond quickly to the evolving needs of industry and of the VET sector generally. Including content requirements in the audit report rules allows the Government to make changes to the content of audit reports in a timely fashion.
In relation to publication requirements, it is proposed that they be included in the audit report rules to allow for necessary flexibility. The date that the National VET Regulator will be required to start publishing audit reports will be a key publication requirement that will be set out in the audit report rules. It is proposed to include this requirement in the audit report rules rather than in the Bill so that the start date for this requirement is flexible and can be aligned to other key VET sector governance reforms currently being developed by Government. Aligning these different measures will ensure that officers within the National VET Regulator who are responsible for writing the audit reports will have time to receive adequate training in drafting audit reports for publication.

Committee comment

2.40 The committee thanks the minister for this response. With regard to the content of the audit reports, the committee notes the minister's advice that there is already high-level guidance as the content of the audit reports is limited by the parameters of sections 17 and 35 of the National Vocational Education and Training Regulator Act 2011. The committee also notes the minister's advice that the bill does not provide any further information as to the scope of the audit reports as the government intends to consult with the National VET Regulator and other stakeholders and affected individuals in the coming months to establish the content, and that providing any more detail on the content on the face of the bill may inhibit this process. In this regard, the committee notes the minister's advice that the use of delegated legislation provides for greater flexibility to adjust the content of the audit reports rapidly to meet the needs of industry.

2.41 With regard to the publication of the audit reports, the committee notes the minister's advice that establishing the publication requirements of the audit reports in delegated legislation also provides for greater flexibility. The committee notes the advice that the date that the National VET Regulator will be required to start publishing audit reports will be a key publication requirement that must remain flexible so it can be aligned to other key VET sector governance reforms currently being developed. The committee further notes the advice that aligning these measures will ensure that there is time to provide adequate training for National VET Regulator officials.

2.42 While noting this advice, the committee reiterates its scrutiny concerns that significant matters, such as the content and publication requirements for audit reports, 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 in delegated legislation.

2.43 The committee draws this matter to the attention of the Senate Standing Committee for the Scrutiny of Delegated Legislation for information.

2.44 In light of the fact that the bill has already passed both Houses of the Parliament, the committee makes no further comment on this matter.

Reversal of the evidential burden of proof

2.45 In Scrutiny Digest 1 of 2020the committee requested the minister's advice as to why it is proposed to use offence-specific defences (which reverse the evidential burden of proof) in this instance.

Minister's response

2.46 The minister advised:

The NVETR Act currently provides, under subsections 116(1) and 116(2) that it is an offence to provide or offer to provide all or part of a VET course unless a person is an NVR RTO. Under section 3 of the NVETR Act, an NVR RTO is a training organisation that is registered by the National VET Regulator under the Act. The onus is on the prosecution to prove the elements in subsections 116(1) and 116(2).
New subsection 116(1A) and (3) of the NVETR Act establish a defence against action under subsections 116(1) and (2) for a person who is not an NVR RTO who provides or offers to provide all or part of a VET course. If that person has a written agreement in place with an NVR RTO which permits them to provide or offer to provide a VET course on behalf of the NVR RTO, they will not be in breach of subsections 116(1) or (2).
As noted, the defendant (that is the unregistered person) has the evidentiary burden in relation to new subsections 116(1A) and 116(3) of the NVETR Act. However, the evidentiary burden is merely to produce a copy of the written agreement with the NVR RTO for the provision of all or part of a VET course. It is reasonable to expect that an unregistered person that enters into an arrangement with an NVR RTO to provide or offer to provide a VET course will retain a copy of that agreement in their business records. It should neither be difficult nor costly for the unregistered person to locate a copy of this written agreement for the purposes of meeting the evidentiary burden, particularly in comparison to the difficulty the prosecution would face in proving that such a written agreement does not exist.

Committee comment

2.47 The committee thanks the minister for this response. The committee notes the minister's advice that it is reasonable to expect that an unregistered person that enters into an arrangement with an NVR RTO to provide or offer to provide a VET course will retain a copy of that agreement in their business records and that therefore it should not be difficult or costly for the unregistered person to locate a copy of this written agreement for the purposes of meeting the evidentiary burden, particularly in comparison to the difficulty the prosecution would face in proving that such a written agreement does not exist.

2.48 While the committee acknowledges that it may be more difficult for the prosecution to establish that such a written agreement does not exist, the committee emphasises that the Guide to Framing Commonwealth Offences states that it is only appropriate to include a matter in an offence-specific defence when:

• it is peculiarly within the knowledge of the defendant; and

• it would be significantly more difficult and costly for the prosecution to disprove than for the defendant to establish the matter.

2.49 In this instance, it is unclear how a written agreement between an unregistered person and an NVR registered training organisation could be peculiarly within the knowledge of the defendant when two parties have entered into the agreement. As the minister's response does not explain how the matters in the offence-specific defence are peculiarly within the knowledge of the defendant, from a scrutiny perspective, the committee remains of the view that it does not appear to be appropriate to reverse the evidential burden of proof.

2.50 In light of the fact that the bill has already passed both Houses of the Parliament, the committee makes no further comment on this matter.

Exemption from disallowance

2.51 In Scrutiny Digest 1 of 2020 the committee requested the minister's advice as to why it is necessary and appropriate to continue exempting ministerial directions made under subsection 160(1) from disallowance in circumstances where it appears the scope of directions that may be given to the National VET Regulator is being expanded, and the appropriateness of amending the bill to provide that the directions be subject to disallowance to ensure appropriate parliamentary oversight.

Minister's response

2.52 The minister advised:

The Minister's power to issue a direction to the Australian Skills Quality Authority (ASQA) under section 160 of the NVETR Act is amended to remove the uncertainty and lack of clarity surrounding the existing requirement that the Minister may issue a direction if 'the Minister considers that the direction is necessary to protect the integrity of the VET sector'.
Under the proposed amendments, the Minister may issue a direction to ASQA in regard to the performance of its functions and the exercise of its powers. This power will align with similar powers of the responsible Minister under the Tertiary Education Quality and Standards Agency Act 2011. ASQA's independence will be maintained, as subsection 160(2) of the NVETR Act prevents the Minister directing ASQA with regard to a regulatory decision in respect of individual cases, specifically the registration of a person or body as an NVR RTO, the accreditation of a particular course as a VET accredited course, a particular NVR RTO, or a person in respect of whom a particular VET accredited course is accredited.
Directions by a Minister fall under exemptions found under section 9 of Legislation (Exceptions and Other Matters) Regulation 2015 - Classes of legislative instruments that are not subject to disallowance. Item 2 of section 9 states that a legislative instrument that is a direction by a Minister to any person of body is not subject to disallowance.
I also draw the Committee's attention to section 44(1) of the Legislation Act 2003 which states that a legislative instrument is not subject to disallowance if the enabling legislation for the instrument facilitates the establishment or operation of an intergovernmental body or scheme involving the Commonwealth and one or more states or territories. ASQA was established pursuant to the Intergovernmental Agreement for Regulatory Reform in Vocational Education and Training. It is not therefore appropriate for the Bill to be amended.

Committee comment

2.53 The committee thanks the minister for this response. The committee notes the minister's advice that the ministerial directions to a person of body are exempt from disallowance under section 9 of the Legislation (Exemptions and Other Matters) Regulations 2015. The committee further notes the minister's advice that subsection 44(1) of the Legislation Act 2003 provides that a legislative instrument is not subject to disallowance if the enabling legislation for the instrument facilitates the establishment or operation of an intergovernmental body or scheme involving the Commonwealth and one or more states or territories.

2.54 At a general level, the committee does not consider the fact than an instrument falls within a class of legislative instruments that is exempt from disallowance under section 9 of the Legislation (Exemptions and Other Matters) Regulations 2015 (the Exemption Regulations) is, of itself, a sufficient justification for excluding parliamentary disallowance. The committee expects that the explanatory memorandum to a bill that authorises the making of a legislative instrument that is exempt from disallowance under the provisions of the Exemption Regulations should still specify why the exemption is appropriate in the particular circumstances.

2.55 In relation to subsection 44(1) of the Legislation Act 2003, the committee notes that this provision provides that an instrument is not subject to disallowance, only if the enabling legislation for the instrument:

• facilitates the establishment or operation of an intergovernmental body or scheme involving the Commonwealth and one or more States or Territories; and

• authorises the instrument to be made by the body or for the purposes of the body or scheme.

2.56 In this instance, the committee notes that the relevant instruments are to be made by the minister, rather than the Australian Skills Quality Authority.

2.57 In light of the fact that the bill has already passed both Houses of the Parliament, the committee makes no further comment on this matter.

[7] Senate Scrutiny of Bills Committee, Scrutiny Digest 1 of 2020, pp. 22-25.

[8] The minister responded to the committee's comments in a letter dated 11 February 2020. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 3 of 2020 available at: www.aph.gov.au/senate_scrutiny_digest