University Funding and Fee Deregulation: Bill Outline and Committee Recommendations

Thursday 30 October 2014 @ 1.09 p.m. | Legal Research

The Federal Government’s proposed changes to university funding and fee deregulation (the Higher Education and Research Reform Amendment Bill 2014) are currently being debated in the Senate.  It is still not clear whether the bill will pass, as Labor, the Greens and Clive Palmer of the Palmer United Party have all expressed their opposition to the bill as it currently stands.

A Senate inquiry into the changes led by Nationals Senator Bridget McKenzie released its report on Tuesday (28 October 2014).  While the Senate committee did recommend that the bill be passed, it also made some further recommendations.  Labor and the Greens put forward separate dissenting reports as part of the inquiry.

Key Provisions

The Explanatory Memorandum says:

“[t]he main purpose of this Bill is to enable reforms to expand opportunity and choice in higher education in Australia, and ensure that Australia is not left behind at a time of rising performance by universities around the world.”

The proposed amendments are divided into 10 schedules dealing with different areas of reform.

Schedule 1

  • Removes provisions in the Higher Education Support Act 2013 (Cth) that allow the government to set the maximum student contribution that a higher education provider can charge students, resulting in fee deregulation
  • Extends demand driven funding system to diploma, advanced diploma and associated degree courses, as well as to accredited courses at private university and non-university higher education providers.
  • Merges the FEE-HELP (for fee paying students) and HECS-HELP (for Commonwealth-supported students) schemes into one scheme to be called HECS-HELP and “streamlines” eligibility requirements.

Schedule 2

  • Requires providers with 500 or more equivalent full time Commonwealth supported students to support disadvantaged students’ access to higher education via a Commonwealth Scholarship Scheme.
  • Requires providers to direct “up to 20 per cent of additional revenue that they receive from the deregulation of student contributions to the scheme”.

Schedule 3

  • Changes the indexation rate of HELP debts to the Treasury 10 year bond rate, up to a maximum of 6% per annum.  This would apply to both existing and new loans.

Schedule 4

  • Establishes a new minimum repayment threshold for HELP debts of two per cent when a person’s income reaches $50,638 in 2016-17. 

Schedule 5

  • Increases funding of $139.5 million over four years for research under the Future Fellowship scheme.
  • Enables universities to charge Research Training Scheme students a capped student contribution fee in either “high cost” or “low cost” courses.

Schedule 6

  • Removes the current lifetime limits on VET FEE-HELP loans and the VET FEE-HELP loan fee.

Schedule 7

  • Discontinues the HECS-HELP benefit from 1 July 2015.

Schedule 8

  • Changes how grants and regulated student contribution amounts are indexed, replacing the Higher Education Grants Index with the Consumer Price Index from 1 January 2016.

Schedule 9

  • Changes the name of the University of Ballarat to “Federation University Australia”

Schedule 10

  • Makes certain New Zealand citizens eligible for HELP assistance from 1 January 2015.

Committee Recommendations

The Senate Committee made the following recommendations:

  • Guidelines for the Commonwealth Scholarship Scheme should seek to address some of the financial barriers faced by students from low SES backgrounds and regional communities in accessing higher education;
  • The government should explore the provision of a structural adjustment package to assist certain sections of the higher education sector transition to a fully deregulated system;
  • The government should examine HELP indexation measures in light of evidence presented to the committee, recognising unforseen impacts of the proposed reforms on students;
  • The government should explore avenues to recover HELP debts of Australians residing overseas; and
  • That the bill be passed.

What Next?

Some provisions of the Bill are relatively uncontroversial – for example, the changes in Schedules 9 and 10.  Labor senators have called for the bill to be split so that these can be passed.  However, universities who support deregulation are concerned that funding will be cut but that deregulation will not pass.  Ian Young, the chair of the Group of Eight, says that this would be “truly disastrous” and would place universities in a “crisis situation”.  The Greens think the bill should be rejected by the Senate.  The fate of the bill currently lies with the cross-bench.

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