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Home » EDUCATION LEGISLATION AMENDMENT (UP-FRONT PAYMENTS TUITION PROTECTION) BILL 2020 [AND] HIGHER EDUCATION (UP-FRONT PAYMENTS TUITION PROTECTION LEVY) BILL 2020

EDUCATION LEGISLATION AMENDMENT (UP-FRONT PAYMENTS TUITION PROTECTION) BILL 2020 [AND] HIGHER EDUCATION (UP-FRONT PAYMENTS TUITION PROTECTION LEVY) BILL 2020

(AGENPARL) – CANBERRA (AUSTRALIA), mer 30 settembre 2020

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Education Legislation Amendment (Up-front Payments Tuition Protection) Bill 2020 [and] Higher Education (Up-front Payments Tuition Protection Levy) Bill 2020

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ISSN 1328-8091

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BILLS DIGEST NO. 13, 2020-21 30 SEPTEMBER 2020

Education Legislation Amendment (Up-front Payments Tuition Protection) Bill 2020 [and] Higher Education (Up-front Payments Tuition Protection Levy) Bill 2020 Dr Hazel Ferguson Social Policy Section

Contents

Purpose of the Bill ………………………………………………….. 3

Background …………………………………………………………… 3

The Tuition Protection Service ……………………………… 3

The TPS Director ……………………………………………….. 4

The TPS levies …………………………………………………… 4

The Advisory Board …………………………………………… 5

Exemptions ………………………………………………………. 5

TPS Levy exemptions ……………………………………….. 5

VSL Tuition Protection Levy and HELP Tuition Protection Levy exemptions ……………………………… 6

Financial viability of the TPS ……………………………….. 6

Extending the TPS to domestic students who pay upfront fees ……………………………………………………….. 6

Committee consideration ………………………………………… 7

Senate Selection of Bills Committee ……………………… 7

Senate Standing Committee for the Scrutiny of Bills …………………………………………………………………… 7

Policy position of non-government parties/independents……………………………………………… 8

Position of major interest groups………………………………. 8

Financial implications ……………………………………………… 8

Statement of Compatibility with Human Rights……………. 8

Parliamentary Joint Committee on Human Rights ….. 9 Key issues and provisions—the Main Bill ……………………. 9

Date introduced: 26 August 2020

House: House of Representatives

Portfolio: Education, Skills and Employment

Commencement: 1 January 2021. Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page for the Education Legislation Amendment (Up-front Payments Tuition Protection) Bill 2020 and the Higher Education (Up-front Payments Tuition Protection Levy) Bill 2020, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at September 2020.

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Education Legislation Amendment (Up-front Payments Tuition Protection) Bill 2020 [and] Higher Education (Up-front Payments Tuition Protection Levy) Bill 2020 2

Schedule 1—amendment of the TEQSA Act …………… 9 The Higher Education Tuition Protection Director ……………………………………………………………. 9

The tuition protection requirements …………………. 10 Tuition protection requirements under proposed Part 5A …………………………………………… 10

Offences and penalties …………………………………….. 12

Table 1: Proposed new penalties—TEQSA Act ……. 13 Up-front Payment Guidelines …………………………… 14

Regulatory powers ………………………………………….. 14

Review of decisions …………………………………………. 16

Review of operation of tuition protection ………….. 16 Schedule 2—amendment of HESA ………………………. 17

Consolidation of higher education TPS arrangements …………………………………………………. 17

Alignment of provider responsibilities between the TEQSA Act and HESA ………………………………….. 17

Key issues and provisions—the Levy Bill …………………… 18

The administrative fee component ……………………. 19

The risk rated premium and special tuition protection components……………………………………. 19

Interactions with the HELP Tuition Protection Levy ……………………………………………………………….. 20

Exemptions …………………………………………………….. 20

The Governor-General may make Regulations ……. 20 Concluding comments …………………………………………… 20

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Education Legislation Amendment (Up-front Payments Tuition Protection) Bill 2020 [and] Higher Education (Up-front Payments Tuition Protection Levy) Bill 2020 3

Purpose of the Bill The purpose of the Education Legislation Amendment (Up-front Payments Tuition Protection) Bill 2020 (the Main Bill) and Higher Education (Up-front Payments Tuition Protection Levy) Bill 2020 (the Levy Bill) is to extend the Tuition Protection Service (TPS) to domestic higher education students who pay their course fees upfront.

The Main Bill proposes to:

• amend the Tertiary Education Quality and Standards Agency Act 2011 (TEQSA Act) to include compliance with tuition protection requirements for domestic students who pay their fees upfront as a condition of registration as a higher education provider—the proposed tuition protection requirements are in similar terms to those currently in place in relation to students covered by the TPS, but include some extensions of provider responsibilities and

• amend the Higher Education Support Act 2003 (HESA) to consolidate higher education TPS arrangements for domestic students, and provide consistency of TPS provisions between the TEQSA Act and HESA.

The Levy Bill proposes to create the Higher Education (Up-front Payments Tuition Protection Levy) Act 2020, which provides for, and details the arrangements for calculating, the Up-front Payments Tuition Protection Levy.

A number of minor consequential amendments to the Education Services for Overseas Students Act 2000 (ESOS Act), Higher Education Support (HELP Tuition Protection Levy) Act 2020, Student Identifiers Act 2014, and VET Student Loans Act 2016 (VSL Act) are also proposed in the Main Bill. These are not covered in the Bills Digest.

Background

The Tuition Protection Service The TPS is a provider-funded, Australian Government service to assist students whose education provider is unable to deliver their course as planned, ensuring that eligible students either continue their studies with a different provider, or have the unused portion of the tuition fee reimbursed or re-credited to their loan balance.1

The TPS began operating under the ESOS Act in 2012 as a service for overseas students studying in Australia on student visas.2 Participation in the TPS, and payment of the associated levy, is a condition of registration on the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS), the record of all Australian education providers approved to offer courses to people studying in Australia on student visas.3

In 2019, the TPS was extended to domestic students who pay their tuition fees using student loans, replacing a range of provider-managed tuition assurance arrangements that provided similar protections to the TPS.4 Providers are required to participate in the TPS, and pay associated levies, as a condition of continuing approval as a provider of VET Student Loans (VSL) under the

1. Education Services for Overseas Students Act 2000 (ESOS Act), Part 5. 2. Tuition Protection Service (TPS), ‘Tuition Protection Service – International’, TPS website. 3. ESOS Act, sections 50A and 53C; Department of Education, Skills and Employment (DESE), ‘Fees and charges’, DESE International Education Online website, n.d.

4. More information and background to these changes is available in H Ferguson, Education Legislation Amendment (Tuition Protection and Other Measures) Bill 2019 [and] VET Student Loans (VSL Tuition Protection Levy) Bill 2019 [and] Higher Education Support (HELP Tuition Protection Levy) Bill 2019, Bills digest, 44, 2019-20, Parliamentary Library, Canberra, 2019.

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Education Legislation Amendment (Up-front Payments Tuition Protection) Bill 2020 [and] Higher Education (Up-front Payments Tuition Protection Levy) Bill 2020 4

VSL Act, or certain Higher Education Loan Program (HELP) loans (HECS-HELP and FEE-HELP) under HESA.5 These changes did not extend to domestic students who pay their fees up front.

As a consequence of the 2019 changes, the TPS is now formally three separate services funded by levies on providers, governed by a single TPS Director and Advisory Board:

• the TPS under the ESOS Act, for overseas students

• the VSL TPS under the VSL Act, for students using VSL and

• the HELP TPS under HESA, for students using HECS-HELP and FEE-HELP.6

Table A providers (essentially public universities) and other providers specified in the VET Student Loans Rules 2016 (VSL rules) and Higher Education Provider Guidelines 2012 (HELP Guidelines) are exempt from the VSL TPS and HELP TPS requirements, except those requirements related to providing information about replacement courses and providing replacement courses.7

The TPS Director The TPS Director appointed under the ESOS Act is the head of all three services.8 The primary functions of the TPS Director are to:

• place and/or provide refunds to international students, and re-credit loans for VSL and HELP students

• report to the Minister on the operations of the TPS and the financial status of the Fund for each service (discussed below)

• manage the TPS to ensure it meets its liabilities and

• make TPS levy legislative instruments each year.9

The TPS levies TPS operations are funded by education providers through a levy for each service. Levy revenue for each of the three services is paid into a separate special account: the Overseas Students Tuition Fund, the VSL Tuition Protection Fund, and the HELP Tuition Protection Fund.10

Each levy is charged and calculated separately:

5. VSL Act, Part 5A and Part 5B; HESA, Part 5-1A and Part 5-1B of Chapter 5. The 2019 changes were given effect by the Education Legislation Amendment (Tuition Protection and Other Measures) Act 2019, VET Student Loans (VSL Tuition Protection Levy) Act 2020 and Higher Education Support (HELP Tuition Protection Levy) Act 2020.

6. VSL Act, Part 5A and Part 5B; HESA, Part 5-1A and Part 5-1B of Chapter 5. 7. VSL Act, section 66A; HESA, section 166-5. ‘Table A’ refers to bodies listed in Table A in section 16-15 of HESA. These are universities founded under or recognised by legislation—generally referred to as public universities, these institutions are eligible for all HESA funding programs. HESA also includes a number of other categories for the purposes of determining

funding eligibility. Those providers listed in Table B in section 16-20 are universities that have been independently founded in Australia; bodies listed in Table C in section 16-22 are overseas-founded universities that operate in Australia; other providers may be approved by the Minister under section 16-25. HESA does not specify requirements for an institution to be added to Tables A, B or C. 8. ESOS Act, section 54A; VSL Act, section 66M; HESA, section 167-15. 9. ESOS Act, section 54B; VSL Act, section 66N; HESA, section 167-20. 10. ESOS Act, section 52A; VSL Act, section 66J; HESA, section 167-1. Under section 80 of the Public Governance, Performance and

Accountability Act 2013 (the PGPA Act), if an Act establishes a special account and identifies the purposes of the account, then the Consolidated Revenue Fund is appropriated for expenditure for those purposes, up to the balance of the special account at the time. The Department of Finance (DoF), ‘Special appropriations: special accounts’, DoF website, provides the following definition: ‘A special account is a limited special appropriation that notionally sets aside an amount that can be expended for listed purposes. The amount of appropriation that may be drawn from the CRF [Consolidated Revenue Fund] by means of a special account is limited to the balance of each special account at any given time’. A list of special accounts is available from DoF, Chart of Special Accounts – 30 June 2020, DoF.

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• the TPS Levy for a registered CRICOS provider is the sum of four components: the administrative fee, base fee, risk rated premium and special tuition protection fee for the year11 and

• the VSL Tuition Protection Levy and HELP Tuition Protection Levy are each the sum of three components: the administrative fee, risk rated premium and a special tuition protection fee for the year.12

The administrative and (for the TPS Levy) base fee components are responsive to fluctuations in student numbers, and are set by legislative instruments by the Minister.13 The risk rated premium and special tuition protection components are calculated based on factors set each year by legislative instrument by the TPS Director, in response to provider risk factors and other relevant considerations.14

The Advisory Board An Advisory Board is responsible for advising the TPS Director on the levies—as with arrangements for appointment of the Director, the Chair and members of each Advisory Board are those appointed under the ESOS Act.15 The Advisory Board comprises a representative from each of the Department of Education, Skills and Employment (DESE), Department of Finance, Department of Home Affairs, Australian Government Actuary, Australian Prudential Regulation Authority and up to seven other members appointed by the Minister on the basis of skills and experience.16

Exemptions The Minister may exempt classes of providers from paying components of the levies.

TPS Levy exemptions For the TPS Levy, exemptions can be applied to the base fee and/or risk rated premium component of the levy.17 The Education Services for Overseas Students (TPS Levies) Act 2012 (Levy exemptions) Determination 2012 (No. 1) specifies that Table A providers, government schools, and state or territory VET institutions, are exempt from the risk rated premium component of the levy.18

The specified percentage, which determines how much special tuition protection component providers must pay, has been set at zero every year since 2012.19

11. Education Services for Overseas Students (TPS Levies) Act 2012 (TPS Levies Act), section 5. 12. VET Student Loans (VSL Tuition Protection Levy) Act 2020 (VSL Levies Act), section 7; Higher Education Support (HELP Tuition Protection Levy) Act 2020 (HELP Levies Act), section 7. 13. TPS Levies Act, section 7A; VSL Levies Act, sections 8 and 9; HELP Levies Act, sections 8 and 9. 14. TPS Levies Act, sections 9 and 10; VSL Levies Act, sections 11, 12 and 13; HELP Levies Act, sections 11, 12 and 13. 15. ESOS Act, sections 55B and 55D; VSL Act, section 66Q; HESA, section 167-30. 16. ESOS Act, section 55C. 17. TPS Levies Act, section 12. 18. Education Services for Overseas Students (TPS Levies) Act 2012 (Levy exemptions) Determination 2012 (No. 1), clause 5. 19. Education Services for Overseas Students (TPS Levies) (Risk Rated Premium and Special Tuition Protection Components)

Instrument 2019; Education Services for Overseas Students (TPS Levies) (Risk Rated Premium and Special Tuition Protection Components) Instrument 2018; Education Services for Overseas Students (TPS Levies) (Risk Rated Premium and Special Tuition Protection Components) Instrument 2017; Education Services for Overseas Students (TPS Levies) (Risk Rated Premium and Special Tuition Protection Components) Instrument 2016; Education Services for Overseas Students (TPS Levies—Risk Rated Premium and Special Tuition Protection Components) Instrument 2015; Education Services for Overseas Students (TPS Levies) (Risk Rated Premium and Special Tuition Protection Components) Determination 2014; Education Services for Overseas Students (TPS Levies) (Risk Rated Premium and Special Tuition Protection Components) Determination 2013; Education Services for Overseas Students (TPS Levies) (Risk Rated Premium and Special Tuition Protection Components) Determination 2012.

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The effect of these combined arrangements is that Australian public universities, government schools, and state or territory VET institutions are only paying the administrative fee and base fee parts of the TPS Levy each year, while other providers are paying an additional risk rated premium component.

VSL Tuition Protection Levy and HELP Tuition Protection Levy exemptions Exemptions can be applied to any or all of the components of the VSL Tuition Protection Levy and HELP Tuition Protection Levy.20

Table A providers and other providers specified in the VSL rules and HELP Guidelines are exempt from the bulk of TPS requirements, including levy liability.21 The VSL rules and HELP Guidelines extend the exemption to all providers owned by the Commonwealth, or a state or territory, or established under the various state and territory technical and further education (TAFE) Acts.22

Financial viability of the TPS The latest TPS annual report is for 2018-19, before the VSL TPS and HELP TPS commenced operations. Based on an analysis of annual reports from 2012-13 to 2018-19, over the term of its operation the TPS had responded to 62 provider closures affecting 9,215 students to June 2019, and levy revenue has consistently outstripped expenditure.23 The ability to shift levy charges in response to changing circumstances is a key component of the TPS design, and is intended to maintain the balance of the respective special accounts.24

Extending the TPS to domestic students who pay upfront fees In 2019, 9.1 per cent of domestic Commonwealth supported students (56,159 of 614,596, measured in equivalent full-time student load (EFTSL)) and 24.9 per cent of domestic full fee-paying students (23,355 of 93,694 EFTSL) paid upfront fees with no HELP assistance.25

In the vocational education and training (VET) sector, the proportion of students paying upfront fees is much higher. In 2019, measured in full-year training equivalents (FYTEs), there were approximately 548,900 domestic government-funded and 396,700 domestic fee-for-service VET enrolments.26 In the same year, 53,892 students were assisted by VSL.27 In part, this reflects a greater diversity of study options in the VET sector, with large proportions of students studying shorter and lower level courses, which are not eligible for VSL.28

20. VSL Levies Act, section 14; HELP Levies Act, section 14. 21. VSL Act, section 66A; HESA, section 166-5. 22. VET Student Loans Rules 2016 (VSL rules) section 45; Higher Education Provider Guidelines 2012 (HELP Guidelines), chapter 2.5.1.

23. TPS, Annual report 2012-13, p. 157; Annual report 2013-14, p. 339; Annual report 2014-15, p. 206; Annual report 2015-16, p. 203; Annual report 2016-17, p. 167; Annual report 2017-18, p. 145; and Annual report 2018-19, p. 133, available via TPS, ‘Annual reports’, TPS website.

24. For more information on this see H Ferguson, Education Services for Overseas Students (TPS Levies) Amendment Bill 2017 [and] Education Services for Overseas Students Amendment Bill 2017, Bills digest, 29, 2017-18, Parliamentary Library, Canberra, 2017. More detailed analysis of TPS financials is available in H Ferguson, Education Legislation Amendment (Tuition Protection and Other Measures) Bill 2019 [and] VET Student Loans (VSL Tuition Protection Levy) Bill 2019 [and] Higher Education Support (HELP Tuition Protection Levy) Bill 2019, Bills digest, op. cit.

25. DESE, ‘2019 Section 5 Liability status categories’, Higher Education Statistics, 2020, Table 1. 26. National Centre for Vocational Education Research (NCVER), Total VET students and courses 2019, NCVER, Adelaide, 2020, [p. 5]. 27. DESE, VET Student Loans : annual statistical report 2019, DESE, Canberra, 2020, p. 5. This data is not directly comparable with

the NCVER enrolment data, since the number of VET enrolments is in FYTEs and the student loan data is number of students. 28. NCVER, Total VET students and courses 2019, op. cit., [p. 5]; VET Student Loans (Courses and Loan Caps) Determination 2016.

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The omission of students who pay their fees upfront from the 2019 expansion of the TPS was considered as part of the Senate Inquiry into the Education Legislation Amendment (Tuition Protection and Other Measures) Bill 2019.29 The Inquiry heard from a number of key interest groups with concerns that these students would not be covered.30 DESE advised that students paying fees up-front were able to seek a refund through the Australian Competition and Consumer Commission (ACCC), or, if the fee was $1,500 or more, the provider was required to have other tuition protection arrangements in place for students.31 The Committee was convinced that these protections, and other regulatory protections to ensure provider quality, were sufficient.32 It did not recommend extending the TPS to cover domestic students who pay their fees upfront.33 However, the planned closure of the main independent tuition protection scheme for higher education students, the Independent Tertiary Education Council Australia (ITECA) Australian Student Tuition Scheme (ASTAS) was flagged as a concern.34

ASTAS closed at the end of 2019, and ITECA has advocated for an extension of the TPS to cover the gap left by the cessation of this service.35

Committee consideration

Senate Selection of Bills Committee The Senate Selection of Bills Committee has recommended the Bills not be referred to committee for inquiry and report.36

Senate Standing Committee for the Scrutiny of Bills The Senate Standing Committee for the Scrutiny of Bills has considered the Bills and requested additional information from the Minister in respect to the necessity of leaving significant elements of the proposed TPS expansion to delegated legislation, and why high-level guidance could not be included in the primary legislation.37 The Committee raises particular concerns about the Levy Bill, stating:

One of the most fundamental functions of the Parliament is to impose taxation (including levies). Consequently, the committee’s consistent scrutiny view is that it is for the Parliament, rather than the makers of delegated legislation, to set rates of tax. The committee therefore considers that it is more appropriate for the rate of levies and charges to be prescribed in primary legislation.

38

However, ultimately:

The committee draws its scrutiny concerns to the attention of senators, and leaves to the Senate as a whole the appropriateness of allowing the Higher Education Tuition Protection Director to determine

29. Senate Education and Employment Legislation Committee, Education Legislation Amendment (Tuition Protection and Other Measures) Bill 2019 [Provisions], VET Student Loans (VSL Tuition Protection Levy) Bill 2019 [Provisions], Higher Education Support (HELP Tuition Protection Levy) Bill 2019 [Provisions], Senate, Canberra, November 2019, pp. 25-30.

30. Ibid.

31. Ibid., pp. 28-29. 32. Ibid., pp. 35-36. 33. Ibid.

34. Ibid., p. 35. 35. Independent Tertiary Education Council Australia (ITECA), TPS extension to higher education providers, media release, 26 August 2020. 36. Senate Standing Committee for the Selection of Bills, Report, 7, 2020, The Senate, Canberra, 27 August 2020, [p. 3]. 37. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 11, 2020, 2 September 2020, pp. 9-10 and 13-15. 38. Ibid., p. 13.

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core elements of the up-front payments tuition protection levy in delegated legislation, with only limited guidance as to the amounts of levy that may be imposed. 39

In relation to the Main Bill, the Committee outlines its broader concerns in relation to the approach taken to the TPS:

The committee has consistently raised concerns about framework bills, which contain only the broad principles of a legislative scheme and rely heavily on delegated legislation to determine the scope and operation of the scheme. The committee considers that such an approach considerably limits the ability of Parliament to have appropriate oversight over new legislative schemes. Consequently, the committee’s view is that significant matters, such the details of a scheme to implement tuition protection measures, should be included in the primary legislation unless a sound justification for the use of delegated legislation is provided.

While the committee notes the explanation provided in the explanatory memorandum and acknowledges that some of the matters may be administrative and technical in nature, the committee has generally not accepted a desire for administrative flexibility to be a sufficient justification for leaving significant matters to delegated legislation. Additionally it is unclear to the committee why it would not be possible to set out at least some high-level requirements in relation to the operation of this scheme in the primary legislation.

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Policy position of non-government parties/independents At the time of writing, no non-government parties or independents have commented specifically on the Bills.

During the Senate Inquiry into the 2019 expansion of the TPS to cover HELP and VSL students, Labor Senators expressed concern that the expansion did not include students who pay fees upfront, potentially leaving these students vulnerable and with little practical protection from the ACCC.41 The Bills appear to address these concerns.

Position of major interest groups ITECA has advocated in favour of the extension of the TPS.42

Financial implications The Explanatory Memorandum to the Main Bill states that the measure is expected to generate $0.1 million over the forward estimates.43

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bills’ compatibility with the human rights and freedoms recognised

39. Ibid., p. 14. 40. Ibid., p. 10. 41. Senate Education and Employment Legislation Committee, Education Legislation Amendment (Tuition Protection and Other Measures) Bill 2019 [Provisions], VET Student Loans (VSL Tuition Protection Levy) Bill 2019 [Provisions], Higher Education

Support (HELP Tuition Protection Levy) Bill 2019 [Provisions], op. cit., pp. 38-39. 42. ITECA, TPS extension, op. cit. 43. Explanatory Memorandum, Education Legislation Amendment (Up-front Payments Tuition Protection) Bill 2020, p. 4.

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or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bills are compatible.44

Parliamentary Joint Committee on Human Rights The Parliamentary Joint Committee on Human Rights has considered the Bills and has no comment.45

Key issues and provisions—the Main Bill

Schedule 1—amendment of the TEQSA Act The TEQSA Act provides for the operation of the higher education regulator, the Tertiary Education Quality and Standards Agency (TEQSA).46 TEQSA is responsible for the registration of higher education providers, and some higher education courses, in accordance with the TEQSA Act and the Threshold Standards (currently the Higher Education Standards Framework (Threshold Standards) 2015).47 There are currently no TPS provisions in the TEQSA Act, as these are dealt with in the funding legislation, HESA, alongside the HELP provisions.

Schedule 1 of the Main Bill proposes to amend the TEQSA Act to add compliance with tuition protection requirements to the conditions of registration for higher education providers.48 The proposed requirements are in largely similar terms to current TPS arrangements for overseas, VSL and HELP students under the ESOS Act, VSL Act, and HESA, but will apply to domestic higher education students who pay their fees up-front.49 Various exemptions are included in the Bill, with the effect that the tuition protection requirements will only apply to private providers, unless a public provider is specifically included by the Minister.50

The Bill’s proposed TPS arrangements under the TEQSA Act differ from existing TPS arrangements for HELP and VSL students in one key way: under the existing TPS arrangements, a provider obligation period, during which time the provider is required to provide a student with a suitable replacement course or unit or refund, only applies under the ESOS Act.51 Schedule 1 of the Bill proposes to introduce a provider obligation period to the TEQSA Act.52 Schedule 2 then proposes to duplicate these arrangements in HESA, as part of a larger consolidation of higher education TPS provisions.53 No similar changes to duplicate these arrangements in the VSL Act are proposed in the Bill.

The Higher Education Tuition Protection Director Item 3 amends section 5 of the TESQA Act to insert a definition of Higher Education Tuition Protection Director, as the person referred to in section 167-15 of HESA—that is currently the HELP Tuition Protection Director, who is the person who holds the position of TPS Director under

44. The Statement of Compatibility with Human Rights can be found at pages 5-12 of the Explanatory Memorandum to the Main Bill and at pages 6-9 of the Explanatory Memorandum to the Levy Bill. 45. Parliamentary Joint Committee on Human Rights, Human rights scrutiny report, 11, 2020, 24 September 2020, pp. 81-82. 46. TEQSA Act, subsection 132(1) establishes TEQSA. 47. TEQSA Act, section 134. 48. TEQSA Act, proposed section 26A inserted by item 7 in Schedule 1 to the Main Bill. 49. TEQSA Act, proposed section 62A, inserted by item 8 in Schedule 1 to the Main Bill. 50. TEQSA Act, proposed subsections 62B(1) and 62B(2) inserted by item 8 in Schedule 1 to the Main Bill. 51. ESOS Act, section 46D; VSL Act Part 5A; HESA, Part 5-1A. 52. TEQSA Act, proposed section 62F inserted by item 8 in Schedule 1 to the Main Bill. 53. Part 3 of Schedule 2 to the Main Bill.

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section 54A of the ESOS Act. Schedule 2 of the Bill includes changes to repeal and replace section 167-15 of HESA, effectively renaming the HELP Tuition Protection Director as the Higher Education Tuition Protection Director, and ensuring their remit covers the TPS for both students who use HELP and those who pay fees upfront.54

For clarity, the Higher Education Tuition Protection Director is hereafter referred to as the TPS Director.

The tuition protection requirements The proposed tuition protection requirements are imposed under proposed section 26A (inserted at item 7). They include:

• an up-front payment tuition protect levy (the Levy) and, where applicable, a late payment—the Levy is to be imposed by the Higher Education (Up-front Payments Tuition Protection Levy) Act 2020 once made, as outlined later in this Bills Digest

• requirements for defaulting providers, the TPS Director and placement service, and replacement providers, which are set out in proposed Part 5A (inserted at item 8) and

• administrative arrangements set out in Up-front Payment Guidelines.55

Tuition protection requirements under proposed Part 5A Consistent with the arrangements currently in place for the HELP and VSL TPS, the tuition protection requirements set out in proposed Part 5A will not apply to Table A providers, providers owned by Commonwealth, state or territory governments, providers operating under various state and territory TAFE Acts, or those specified in the Up-front Payment Guidelines.56 However, the Minister will be able to specify by written notice that a provider is or is not exempt, subject to considerations set out in proposed subsection 62(3), such as risk of provider default, their financial status and capacity, compliance issues, advice from TEQSA or the TPS Director.57

The central concept underpinning the TPS arrangements is that a registered higher education provider’s failure to provide a unit of study to a student on the day it was scheduled to start, or cessation of a unit after this date but before completion, is considered a default, providing the student was still enrolled on the relevant day, and an upfront payment was made for the unit on or before that day, or in the case of non-payment, the student could not have deferred the cost using HELP.58

The Main Bill sets out various arrangements that will arise in response to a default.

Within 24 hours of a default, the provider must notify the TPS Director and the affected students in writing.59 Further detailed information must be provided within three business days—this

54. HESA, section 167-15, amended by item 29 of Schedule 2 to the Main Bill. 55. TEQSA Act, proposed section 26A. 56. TEQSA Act, proposed subsection 62B(1). The TAFE Acts are the Technical and Further Education Commission Act 1990 (NSW); Education and Training Reform Act 2006 (Vic.); TAFE Queensland Act 2013 (Qld); Vocational Education and Training Act 1996

(WA); TAFE SA Act 2012 (SA); Training and Workforce Development Act 2013 (Tas.); Canberra Institute of Technology Act 1987 (ACT). 57. TEQSA Act, proposed subsections 62B(2) and (3). 58. TEQSA Act, proposed section 62C. Additional circumstances that may be considered to constitute a default can also be set in the Up-front Payment Guidelines. A definition of unit of study is inserted into section 5 of the TEQSA Act at item 5 of Schedule 1 to the Main Bill. Essentially, it is a subject undertaken as part of a course, or, if the course does not comprise a series of units/courses, it is the whole course. 59. TEQSA Act, proposed subsections 62D(2) and 62E(2).

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includes information about the student, their unit(s) and course of study, their related tuition fees at the time of the default, how the provider intends to deal with the default in relation to the student, and the student’s records if requested.60

From the date of the default, a 14 day provider obligation period applies, during which time the provider is required to discharge their obligation to the student.61 This is a two-step process. First, the provider must identify whether or not there are one or more suitable replacement units or suitable replacement courses for the student.62 If there are, the provider must inform the student that they can choose to either continue their studies in one of these courses or units, or receive a refund.63

If there is no suitable replacement unit or suitable replacement course, or if the student elects to receive a refund, the provider must pay the student a refund equal to the amount of any up-front payments made for the affected unit.64 The provider must then notify the TPS Director of the outcome of their discharge of obligations within seven days of the end of the provider obligation period.65 These arrangements continue to apply to a person as if they were a registered higher education provider, even if their registration is no longer current.66

If the TPS Director determines that the provider has failed, or is likely to fail, to discharge its obligations to the student within the provider obligation period, the TPS student placement service will instead assist the student, in which case the TPS Director performs the functions described above in relation to deciding whether there are suitable replacement courses.67 In determining the availability of suitable replacement courses, or carrying out any other functions under the TEQSA Act, the TPS Director can require any registered higher education provider to provide information to assist with this assessment.68 Following the TPS Director’s determination, the student can then choose to enrol in a suitable replacement course identified by the TPS Director, or another course, or receive a refund equal to the amount the provider would have been liable to pay.69 If the TPS Director makes arrangements in place of the provider, any payments to replacement providers for replacement courses, or refunds to the student, are paid from the Higher Education Tuition Protection Fund. 70

60. TEQSA Act, proposed subsection 62D(3). 61. TEQSA Act, proposed subsections 62F(2) and (3). Requirements in relation to suitable replacement courses are set out in subsections 62F(4) to (6). Providers that have defaulted are required to assess and make a determination in relation to the availability of suitable replacement courses. In doing so, they must have regard to the resulting qualification, what credit the

student may receive for study already undertaken, the mode of delivery of the original and replacement courses, the location of delivery, any additional fee or attendance requirements the student may face in trying to access the replacement course, and any other matters prescribed in the Up-front Payment Guidelines. 62. TEQSA Act, proposed subsection 62F(4). 63. TEQSA Act, proposed subsections 62F(7). Proposed subsection 62F(10) provides that if the student has also been entitled to HECS-HELP or FEE-HELP for any units of the affected course (resulting in the application of HELP TPS provisions), their choice under proposed Part 5A of the TEQSA Act to receive a refund or replacement unit must be consistent with their choice under HESA in relation to the courses covered by HELP. 64. TEQSA Act, proposed subsection 62F(8). 65. TEQSA Act, proposed section 62H. 66. TEQSA Act, proposed section 62U. 67. TEQSA Act, proposed subsections 62J(1) and (2). 68. TEQSA Act, proposed sections 62N and 62S. 69. TEQSA Act, proposed subsections 62J(4)-(8). 70. TEQSA Act, proposed section 62K. The proposed section includes a number of exceptions to this. The Higher Education Tuition Protection Fund will not be used if: the TPS Director becomes aware that the provider has not satisfied its obligations to the student more than 12 months after being advised of the default; the student only elects to receive a refund more than 12 months after the TPS Director advises them of this option.

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If there is a difference between the cost of a replacement course and the amount the student would otherwise receive as a refund, the TPS Director is afforded some discretion to pay for a more costly replacement course, providing it is in the best interest of the student and would not jeopardise the sustainability of the Fund.71 In the case of a less costly course the TPS Director is required to pay the difference to the student.72 However, if the right to a refund under these arrangements is cancelled, revoked, terminated or varied by or under later legislation, no compensation is payable.73

If the TPS Director pays the cost of a refund or replacement course from the Fund, the student ceases to have any claim against the provider, but the provider then becomes liable to repay the amount spent to the TPS Director—the TPS Director must give the provider written notice of the amounts owning.74

Certain obligations are also imposed on providers of replacement courses. If the student accepts an offer of a place in a replacement course or unit (either organised by the defaulting provider or the TPS student placement service), the replacement provider must:

• advise the TPS Director within 14 days of the acceptance

• ensure the student is granted credit for units already completed, if the student has enrolled in a replacement course

• ensure the student is not charged tuition fees, if they have already paid through the original course

• ensure the student is enrolled in the replacement course or unit as soon as practicable and

• keep up to date records in relation to the student.75

Fee arrangements for jointly provided units or courses are also clarified. If a provider makes an agreement with another provider to provide a unit or course jointly, student fees must be either paid to the original provider or the agreement must be in writing and provide for the receipt and disbursement of any fees to other providers.76

Offences and penalties

A failure to comply with a provision of the TEQSA Act may give rise to a criminal offence or a civil penalty. Criminal offences The standard of proof for a criminal offence is ‘beyond reasonable doubt’. The penalties for a criminal offence may be a fine or a term of imprisonment, or both. The Crimes Act 1914 is relevant in that it deals with the amount of penalties, including the method of calculating the penalty for a person or body corporate.77

71. TEQSA Act, proposed subsection 62K(4). 72. TEQSA Act, proposed subsection 62K(5). 73. TEQSA Act, proposed section 62T. 74. TEQSA Act, proposed subsection 62L(2) and section 62M. 75. Proposed sections 62P and 62Q. The up to date records under proposed section 62Q must include: the student’s full name

and contact details; details of the replacement unit or course and units of study; any tuition fees paid or incurred; any payments made by the TPS Director; details of the replacement unit or units of study completed by the student; details of the credits granted to the student for the units of study of the original course successfully completed by the student. 76. TEQSA Act, proposed section 62R. 77. See sections 4AA to 4E of the Crimes Act 1914.

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Civil penalties In addition to criminal offences, Commonwealth statutes may contain civil penalties. The standard of proof for a civil penalty is ‘on the balance of probabilities’. Civil penalties provide an additional or alternative enforcement option, especially where there may be difficulty in proving the necessary fault element to establish a criminal offence.

A number of penalty provisions are included in proposed Part 5A to ensure provider compliance with the tuition protection requirements. These are summarised in Table 1 below. In each case, both a civil penalty and an offence of strict liability is proposed, with a maximum penalty of 60 penalty units (PU), being the equivalent of $13,320 at the time of writing.78

Table 1: Proposed new penalties—TEQSA Act Offence/Civil penalty provision Provision Maximum

penalty (PU)

Failure of a provider to give notice of default to the TPS Director 62D 60

Failure of a provider to give notice of default to affected students 62E 60

Failure of a provider to discharge obligations to students in case of default 62G 6079

Failure of a provider to give notice of discharge of obligations to the TPS Director 62H 60

Failure of a provider to comply with a notice to provide information about replacement courses 62N 60

Failure of a replacement provider to meet their obligations as a replacement provider, including giving notice of acceptance of a replacement course or unit to the TPS Director, and in respect to granting the student credit, not charging fees, and ensuring enrolment is completed as soon as practicable

62P 60

Failure of a replacement provider to meet their obligations as a replacement provider in respect to enrolment information

62Q 60

78. The imposition of strict liability means that a fault element does not need to be satisfied, but the offence will not criminalise honest errors and a person cannot be held liable if he, or she, had an honest and reasonable belief that they were complying with relevant obligations: section 6.1 and 9.2 of the Criminal Code Act 1995. Penalties are expressed in penalty units to facilitate adjustment across the Act from time to time. A penalty unit is currently equal to $222, with effect from 1 July 2020. See Notice of Indexation of the Penalty Unit Amount.

79. The offence provision under proposed subsection 62G(2) of the TEQSA Act is a continuing offence under section 4K of the Crimes Act 1914, which provides that where a Commonwealth law requires an act or thing to be done within a particular period or before a particular time (in this case, the requirement is for the defaulting higher education provider to discharge its obligations to an affected student within 14 days of the default) then, unless the contrary intention appears, the obligation to do the act or thing continues, notwithstanding that the period has expired or the time has passed, until the act or thing is done. Where such a failure to comply with a requirement is an offence, a person commits an offence in respect of each day during which the person refuses or fails to comply with that requirement. Proposed subsection 62G(3) of the TEQSA Act provides that the maximum penalty for each day that an offence under subsection 62G(2) continues is 10 per cent of the maximum penalty that can be imposed in respect of that offence, that is, six penalty units ($1,332) per day.

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Offence/Civil penalty provision Provision Maximum

penalty (PU)

Failure of a higher education provider to adhere to the requirements for payments between providers 62R 60

Failure of a provider to comply with a notice to provide information relevant to the TPS Director’s functions under the TEQSA Act

62S 60

Up-front Payment Guidelines In addition to arrangements proposed to be set out in the TEQSA Act, the Up-front Payment Guidelines, made by the Minister under proposed section 26B, may cover:

• the issue of notices setting out the Levy amounts owed by a provider

• when Levy payments are due

• issues related to payment extensions

• penalties for late payments

• who the Levy and any late payments are payable to

• refund, remission, or waiver arrangements

• review of decisions in relation to the collection or recovery of Levy payments

• any other matters relating to the collection or recovery of the Levy

• payments made in connection with the tuition protection requirements in relation to costs, expenses or other obligations incurred through the TPD Director’s functions, including managing the HELP Tuition Protection Fund, under paragraph 167-10(1)(b) of HESA and

• the information and documents a provider must keep and give to the Secretary, in the time period and manner specified by the Secretary, for the purposes of the tuition protection requirements—this can include, but is not limited to:

– information related to the enrolment, progression, units of study and results of the provider’s domestic students – their tuition fees and any amount received up-front – identifying information including names and contact details of the students and – any other matter related to tuition protection requirements.80

Regulatory powers Item 15 in Schedule 1 to the Main Bill inserts provisions in Part 7 of the TEQSA Act, which deals with enforcement, to apply the Regulatory Powers (Standard Provisions) Act 2014 (the Regulatory Powers Act) to provisions in proposed Part 5A. This approach is consistent with that already in place under the VSL Act and HESA.81 The Regulatory Powers Act provides for a framework of standard regulatory powers exercised by agencies across the Commonwealth. It applies to regulatory schemes which trigger its provisions through primary legislation.

Proposed sections 131A and 131B of the TEQSA Act provide that the provisions of proposed Part 5A are subject to monitoring and investigation under Parts 2 and 3 of the Regulatory Powers Act. Parts 2 and 3 create a framework for monitoring whether provisions of an Act have been or are

80. TEQSA Act, proposed subsections 26A(5) to (9). 81. HESA, Part 5-8; VSL Act, part 8.

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being complied with and for gathering material that relates to the contravention of offence and civil penalty provisions.82 Parts 2 and 3 allow entry to premises by consent or under warrant, and powers of search and inspection.83 Part 3 also allows seizure of evidential material.84

Proposed section 131C provides that each civil penalty provision in proposed Part 5A is enforceable under Part 4 of the Regulatory Powers Act, which provides for an authorised applicant (in this case the TPS Director) to apply to a court for an order that a person who is alleged to have contravened a civil penalty provision pay the Commonwealth a pecuniary penalty.85 Part 4 also provides for the interaction of civil and criminal penalties and the state of mind needed to establish a contravention of a civil penalty provision, among other things.

Proposed section 131D provides that civil penalty provisions under Proposed Part 5A may be enforced through an infringement notice under Part 5 of the Regulatory Powers Act. If an infringement officer (in this case the TPS Director) believes on reasonable grounds that a person has contravened a civil penalty provision in proposed Part 5A of the TEQSA Act, they may give the person an infringement notice.86 A person who is given an infringement notice can choose to pay an amount as an alternative to having court proceedings brought against them for the civil penalty contravention. If the person chooses not to pay the amount, proceedings can be brought against them in relation to the contravention.87 The maximum penalty that may be imposed under an infringement notice relating to a breach of a civil penalty provision in proposed Part 5A of the TEQSA Act is 12 penalty units.88

Proposed section 131E provides that the provisions of proposed Part 5A of the TEQSA Act are enforceable under Part 6 of the Regulatory Powers Act, which allows an authorised person (in this case the Secretary of DESE) to accept an undertaking (referred to as an enforceable undertaking) that the person will take, or refrain from taking, specified action in order to comply with a relevant provision.89 Such an undertaking is enforceable by a court, which may make an order directing compliance, an order requiring any financial benefit from the failure to comply to be surrendered and/or an order for damages.90

Finally, proposed section 131F provides that the provisions of proposed Part 5A of the TEQSA Act are enforceable using injunctions under Part 7 of the Regulatory Powers Act. Under Part 7 an authorised person (in this case the Secretary of DESE) may apply to a court for an injunction restraining a person from engaging in conduct that would contravene a provision of Part 5A, or requiring a person to do a thing.91

Items 16 and 17 propose to amend section 154L of the TEQSA Act in relation to delegation by the TEQSA Chief Executive Officer (CEO), to allow the CEO to delegate, in writing, any or all of their powers under the Regulatory Powers Act in relation to proposed Part 5A, to an Executive Level 2 or above employee of TEQSA. Before making such a delegation, the CEO must have regard to

82. Regulatory Powers (Standard Provisions) Act 2014, sections 7 and 37. 83. Ibid., sections 18, 19, 48 and 49. 84. Ibid., section 49. 85. Ibid., subsection 82(1) 86. Ibid., subsection 103(1). 87. Ibid., subsection 104(1). 88. Ibid., subsection 104(2) 89. Ibid., subsection 114(1). 90. Ibid., section 115. 91. Ibid., section 121.

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whether the office or position to which the power will be delegated is sufficiently senior, or whether the employee has appropriate qualifications or expertise to perform the function or duty or exercise the power.

Review of decisions Items 18 to 20 insert provisions for reviewable decisions relating to tuition protection, namely decisions about whether:

• Part 5A applies, or does not apply, to a registered higher education provider (this decision is made by the Minister)92

• there are one or more suitable replacement courses for a student (this decision is made by the TPS Director)93 and

• there is not a suitable replacement course for the student (this decision is also made by the TPS Director).94

The person whose interests are affected by any of these decisions may request that the reviewer reconsider the decision, in which case the reviewer must reconsider the decision.95 Alternatively, the reviewer may independently decide to reconsider a reviewable decision if they consider there is sufficient reason to do so.96

Proposed section 187B provides that the decision will be reviewed by the original decision maker, unless it was delegated, in which case, if it is to be reconsidered by a delegate (rather than the Minister or TPS Director) it will be reconsidered by a delegate who was not involved in making the decision and who occupies a position senior to the person involved in making the original decision.

An application may be made to the Administrative Appeals Tribunal (AAT) for the review of decisions under proposed section 62B of the TEQSA Act as to whether Part 5A applies, or does not apply, to a provider, which have been confirmed, varied or set aside after review under proposed sections 187C or 187D (that is, decisions about suitable replacement courses cannot be appealed to the AAT).97

Review of operation of tuition protection The 2019 expansion of the TPS included the requirement that the Minister commence a review of the operation of the VSL TPS, HELP TPS, and the existing TPS (to be conducted at the same time), before 1 July 2021.98 Item 23 in Schedule 1 to the Main Bill inserts proposed section 203A to add the operation of proposed Part 5A of the TEQSA Act to that planned review.

92. TEQSA Act, proposed section 187A, table items 1 and 2. 93. TEQSA Act, proposed section 187A, table item 3. 94. TEQSA Act, proposed section 187A, table item 4. 95. TEQSA Act, proposed section 187D. Conditions as to the form and timeframes of such an application apply under proposed

section 187D. 96. TEQSA Act, proposed section 187C. 97. TEQSA Act, proposed section 187E. 98. See H Ferguson, Education Legislation Amendment (Tuition Protection and Other Measures) Bill 2019 [and] VET Student Loans

(VSL Tuition Protection Levy) Bill 2019 [and] Higher Education Support (HELP Tuition Protection Levy) Bill 2019, Bills digest, op. cit., p. 4. See section 176A of the Education Services for Overseas Students Act 2000; section 238-7 of the Higher Education Support Act 2003; and section 113A of the VET Student Loans Act 2016.

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Schedule 2—amendment of HESA

Consolidation of higher education TPS arrangements Arrangements for the HELP TPS, including the HELP Tuition Protection Fund, the HELP Tuition Protection Director, and the HELP Tuition Fund Advisory Board, are currently dealt with in Part 5-1A of HESA. Like provisions are also included in the VSL Act, and the ESOS Act.

Rather than create another parallel structure under the TEQSA Act, Schedule 2 of the Main Bill proposes to amend the TPS provisions in HESA to replace the HELP TPS structures with a Higher Education Tuition Protection Fund, Higher Education Tuition Protection Director, and Higher Education Tuition Fund Advisory Board. Each of these would continue its existing functions for HELP students, and also be extended to students who pay their fees upfront as provided for under the TEQSA Act, according to the provisions in Schedule 1 of the Main Bill. A large number of minor technical amendments are included in this Schedule to update the names of the various components of the TPS. Only the substantive amendments are outlined below.

Item 29 in Schedule 2 to the Bill proposes to repeal and replace section 167-15, which establishes the position of the HELP Tuition Protection Director under HESA. Under the replacement version of that section, the position is to be known as the Higher Education Tuition Protection Director. The role remains otherwise unchanged and would still be held by the person who holds the office of TPS Director under section 54A of the ESOS Act.99

Item 38 proposes to amend section 167-20, which sets out the functions of the TPS Director under HESA, to include making the legislative instrument each year under section 13 of the Higher Education (Up-front Payments Tuition Protection Levy) Act 2020 (discussed in the section below).100 Item 41 proposes to amend the same section to require the TPS Director to consider how exercising any of their powers under the section will affect the tuition protection requirements under both HESA and the TEQSA Act.101

Item 55 proposes to repeal and replace section 167-35 of HESA, which sets out the functions of the Advisory Board, to include advising and making recommendations to the TPS Director in relation to the legislative instrument under section 13 of the Higher Education (Up-front Payments Tuition Protection Levy) Act 2020 (discussed in the section below) each year.102 Proposed subsection 167-35(2) retains the Advisory Board’s powers to make recommendations on either its own initiative or at the request of the TPS Director, which are in current section 167-35.

Alignment of provider responsibilities between the TEQSA Act and HESA As part of the consolidation of higher education TPS arrangements under a Higher Education Tuition Protection Director, the TPS provisions included in Schedule 1 that do not currently appear in HESA would be inserted in similar terms by Part 3 of Schedule 2 of the Main Bill.

As flagged in the introduction to this section, the Bill proposes to insert provisions for a provider obligation period into the TEQSA Act, which is consistent with provisions under the ESOS Act, but not the VSL Act or HESA.103 Currently, HESA provides that once a higher education provider gives

99. HESA, proposed section 167-15. 100. HESA, proposed subparagraph 167-20(1)(ea). 101. HESA, proposed subsection 167-20(3). 102. HESA, proposed section 167-35. 103. ESOS Act, section 46D.VSL Act Part 5A; HESA, Part 5-1A.

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notice of a default to the TPS Director and affected students, the student placement service (with the TPS Director as decision maker) is responsible for determining whether a course is a suitable replacement course, giving notice to the student, and arranging re-crediting of the student’s HELP balance where necessary.104

Item 90 proposes to repeal and replace section 166-25 of HESA, which deals with the student placement service. Proposed section 166-25 outlines the obligations of providers in the case of a default in similar terms to proposed section 62F of the TEQSA Act. That is, following a default, the provider would have 14 days in which to source suitable replacement units or courses, and their responsibility to the student would be discharged once the student agrees in writing to a suitable replacement, or the provider re-credits the student’s HELP balance and pays the Commonwealth an amount equal to any HECS-HELP or FEE-HELP assistance to which the person was entitled for that unit. Consistent with the proposed provisions in the TEQSA Act, providers would be required to notify the TPS Director of the outcome of their discharge of obligations within seven days of the end of the provider obligation period, and in the event that the TPS Director determines the provider has not, or is unlikely to be able to, discharge its obligations, the student placement service will step in in relation to replacement courses and re-crediting.105 Penalty provisions apply to these new requirements under HESA, and they are identical to those proposed for the TEQSA Act.106

Item 97 also inserts additional provisions to Part 5-1A of HESA to align with those proposed for the TEQSA Act, namely:

• to allow the TPS Director to require any higher education provider to provide information relevant to the TPS Director’s functions under HESA—contravention of this requirement is an offence of strict liability or subject to a civil penalty of 60 penalty units107

• to apply the provider’s obligations under Part 5-1A to a person who was previously a higher education provider, even if they are no longer registered.108

The remainder of the proposed amendments to HESA are minor technical and consequential amendments required to give effect to the above changes.

Key issues and provisions—the Levy Bill The Levy Bill proposes to create the Higher Education (Up-front Payments Tuition Protection Levy) Act 2020, which provides for, and details the arrangements for calculating, the Up-front Payments Tuition Protection Levy. Provisions are in near identical terms to the Higher Education Support (HELP Tuition Protection Levy) Act 2020.

That is, the Levy Bill proposes to formalise the extension of the existing TPS levy funding approach to include students who pay fees up front through an Up-front Payments Tuition Protection Levy, to be calculated in the same way as the existing HELP Tuition Protection Levy.

Clause 5 specifies that a leviable provider is a registered higher education provider to whom Part 5A of the TEQSA Act applies—that is, a private provider unless a public provider is specifically

104. HESA, sections 166-15, 166-20 and 166-25. 105. HESA, proposed sections 166-26A and 166-26B. 106. HESA, proposed section 166-26 and proposed subsections 166-26A(4) and (5). 107. HESA, proposed section 166-40. 108. HESA, proposed section 166-45.

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included by the Minister. If a provider is a leviable provider at any time during a year, the Levy is imposed under clause 6.

Identical to the HELP and VSL levies, under clause 7, the new Levy will consist of:

• an administrative fee component

• a risk rated premium component and

• a special tuition protection component.

The remainder of the proposed Act deals with a framework for how the Levy components are to be worked out.

The administrative fee component Clause 8 sets out how the administrative fee component is to be calculated:

• for new providers, it will be determined in a legislative instrument under clause 9 or

• for other providers, it will be an amount determined in a legislative instrument under clause 9, multiplied by the total upfront fee paying students for the provider for the previous year.

Legislative instruments under clause 9 for the purposes of clause 8 are to be made by the Minister. The Minister is required, before 1 August 2021, to determine an amount for new providers, and an amount for other providers. For later years the Minister may, but is not required to, determine new amounts for new providers and/or other providers. Amounts for later years may be indexed as set out in clause 10.

Subclause 9(3) imposes an upper limit of $325 on the fee for new providers and $31 per upfront fee paying student on the fee for existing providers.

Subclause 9(4) requires the Minister to have regard to the sustainability of the Higher Education Tuition Protection Fund in making the legislative instruments, and subclause 9(5) allows the Minister to have regard to any other matter they consider appropriate.

Clause 10 sets out the way that the indexation factor is calculated for 1 August 2022 and each subsequent year. The indexation factor is based on a number of inputs including the All Groups Consumer Price Index number from the original series (being the weighted average of the eight capital cities) published by the Australian Statistician for that quarter.

The risk rated premium and special tuition protection components Clause 11 sets out how the risk rated premium component is to be calculated.

Under subclause 11(1), new providers will not pay the risk rated premium component. For other providers, it will be calculated according to the method set out in subclause 11(2). The proposed calculation method is:

• the sum of:

– the number of upfront fee paying students for the previous year, multiplied by the amount determined in a legislative instrument under clause 13 and – the amount of upfront payments received (directly or indirectly) by the provider in the previous year for domestic students for units of study, multiplied by the percentage

determined in a legislative instrument under clause 13 (subclause 13(2) allows this percentage to be zero) • multiplied by the sum of each risk factor value worked out for the year in accordance with a legislative instrument under clause 13, plus 1—under subparagraph 13(1)(c)(i), the legislative instrument must determine one or more risk factors that reflect the risk of payments being

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made out of the Higher Education Tuition Protection Fund, and, for each risk factor, a risk factor value or method for working out the risk factor value for leviable providers or a class of leviable providers, and if a value is provided, under subclause 13(3) it must be a number between zero and 10.

Clause 12 sets out how the special tuition protection component is to be calculated.

New providers will not pay the special tuition protection component. For other providers, it will be calculated on the amount of upfront payments received (directly or indirectly) by the provider in the previous year for domestic students for units of study, multiplied by the percentage determined in an instrument under clause 13 (subclause 13(2) allows this percentage to be zero).

Legislative instruments made under clause 13 for the purposes of clause 11 or 12 are made by the TPS Director. Subclause 13(6) requires that before the Director makes this legislative instrument, the Treasurer must approve it in writing.

In making the legislative instrument, under subclauses 13(4) and 13(5) the TPS Director:

• must have regard to any advice from the Advisory Board in relation to the matters dealt with in the instrument

• must have regard to the sustainability of the Higher Education Tuition Protection Fund and

• may have regard to any other matter that the TPS Director considers appropriate.

Interactions with the HELP Tuition Protection Levy To avoid double counting students for the purposes of the TPS higher education levies, the components of the new Levy that rely on student number calculations will not include any students that fall within the definition of total HELP students for the purposes of calculating the HELP Tuition Protection Levy under the Higher Education Support (HELP Tuition Protection Levy) Act 2020.109

Exemptions Clause 14 provides for the Up-front Payment Guidelines to prescribe one or more classes of leviable providers as exempt from the requirements to pay one or more components of the Levy.

The Governor-General may make Regulations Clause 15 allows that the Governor-General to make Regulations prescribing matters:

• required or permitted by the proposed Act to be prescribed or

• necessary or convenient to be prescribed for carrying out or giving effect to the proposed Act.

Concluding comments These Bills extend the TPS to higher education students studying at private providers, who pay their fees upfront. In doing so, they address some of the concerns identified during the Parliament’s consideration of the expansion of the TPS to VSL and HELP students in 2019.

The status of VET students who pay fees upfront is not addressed in the Bill. However, given the relatively more complex range of full-fee studies undertaken in the VET sector, the case for extending the TPS to these students is less straightforward.

109. Subclauses 8(3) and 11(3).

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Education Legislation Amendment (Up-front Payments Tuition Protection) Bill 2020 [and] Higher Education (Up-front Payments Tuition Protection Levy) Bill 2020 21

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