Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2016-2017-2018
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Education and Other Legislation Amendment
(VET Student Loan Debt Separation) Bill 2018
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments to be moved on behalf of the Government
(Circulated by the authority of the Assistant Minister for Vocational
Education and Skills, the Hon Karen Andrews MP)
Education and Other Legislation (VET Student
Loan Debt Separation) Bill 2018
OUTLINE
These amendments to the Education and Other Legislation Amendment (VET
Student Loan Debt Separation) Bill 2018 (the Bill) are necessary as a result of
amendments to the Higher Education Support Act 2003 (HESA) made by the
Higher Education Support Legislation Amendment (Student Loan
Sustainability) Bill 2018 (SLS Bill). Parliamentary amendments to the SLS Bill
were agreed by Parliament following introduction of the Bill, with the SLS Bill
being passed by both Houses of Parliament on 14 August 2018.
Under HESA as amended by the SLS Bill, a person's HELP balance will
become renewable from 2020. That is, a person's HELP balance will be re-
credited with amounts of HELP debt repayments made during a financial year,
so they will be able to re-borrow those funds, up to the prescribed loan limit.
The renewable component will commence in 2020 and apply to the financial
year commencing on 1 July 2019 and each financial year thereafter. That is, a
HELP debtor's compulsory and voluntary repayments during the 2019-20
financial year (and each financial year thereafter) will offset their HELP
balance. Currently, these arrangements would also capture VET student
loans debts by virtue of them being HELP debts.
While the Bill separates VET student loan debts from other forms of HELP
debts by moving the legislative basis for VET student loans debts from HESA
into the VET Student Loans Act 2016 (VSL Act), it maintains the repayment
arrangements that apply to HELP debts under HESA. That is, the repayment
thresholds, repayments rates and indexation with respect to VET student loan
debts incurred on or after 1 July 2019 under the VSL Act (VETSL debts) are
the same as the repayment thresholds, repayment rates and indexation for
HELP debts under HESA.
Consistent with this, it is intended that a person's HELP balance will be re-
credited with amounts of VETSL debt repayments made during a financial
year, starting from the 2019-20 financial year.
These amendments also include technical amendments to existing provisions
in the Bill relating to the calculation of VETSL debts to ensure consistency
with corresponding provisions in HESA relating to the calculation of HELP
debts.
More specifically, these amendments will:
introduce a new provision in the VSL Act (new section 73A) that would
renew a person's HELP balance as a result of payments made in
discharge of VETSL debts incurred on or after 1 July 2019 under the
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VSL Act. Consistent with the corresponding provision in HESA (new
section 128-25), this provides a way for a person's HELP balance to be
re-credited by VETSL debt repayments made during a financial year.
The debtor will then be able to re-borrow those funds, up to the
prescribed loan limit. The provision will commence in 2020 and apply to
the financial year commencing on 1 July 2019 and each financial year
thereafter;
amend existing provisions in the Bill, as a consequence of the
introduction of new section 73A;
make consequential changes to existing provisions in the Bill as a
result of the passage of the SLS Bill though both Houses of Parliament;
make technical amendments to existing provisions in the Bill relating to
the calculation of accumulated VETSL debts (with respect to the
rounding of amounts) to ensure consistency with corresponding
provisions in HESA relating to the calculation of accumulated HELP
debts.
Financial Impact
The amendments to the Bill have no financial impact.
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LIST OF ABBREVIATIONS
HELP Higher Education Loan Program
HESA Higher Education Support Act 2003
SLS Act Higher Education Support Legislation Amendment
(Student Loan Sustainability) Act 2018
SLS Bill Higher Education Support Legislation Amendment
(Student Loan Sustainability) Bill 2018
VSL Act VET Student Loans Act 2016
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PROPOSED GOVERNMENT AMENDMENTS
The Government proposes the following amendments to the Bill.
Amendments (1) to (5) amend the table in clause 2 of the Bill to provide for
the commencement of new provisions to be inserted in the Bill by these
amendments and to make consequential changes to the commencement of
existing provisions.
As a result of these amendments, the table in clause 2 of the Bill provides
that:
Items 1 to 25 of Schedule 1 to the Bill commence on 1 July 2019. This
does not represent a substantive change to the commencement of
these provisions, rather it is consequential to the insertion of new table
item 2A.
New item 25A of Schedule 1A (see amendment (8) below)
commences on 1 January 2020, immediately after Schedule 3 to the
SLS Act commences. This is because item 25A is necessary following
the commencement of provisions contained in Schedule 3 to the SLS
Act.
Items 26 to 35 of Schedule 1 to the Bill commence on 1 July 2019. This
amendment is also consequential to the insertion of new table item 2A
and does not make a substantive change to the commencement of
these provisions.
Items 40 and 46 of Schedule 1 to the Bill commence on 1 July 2019,
immediately after Schedule 1 to the SLS Act commences. This change
reflects the fact that the SLS Bill has now passed both Houses of
Parliament.
Items 71A to 76 of Schedule 1 to the Bill commence on 1 January
2020, immediately after Schedule 3 to the SLS Act commences. These
items contain amendments that are necessary as a result of the
commencement of provisions contained in Schedule 3 to the SLS Act.
Amendments (6) and (7) amend new subsections 23CB(1) and 23CC(1),
respectively, of the VSL Act (see item 20 of Schedule 1 to the Bill).
New subsection 23CB(1) sets out the method for calculating a person's
former accumulated VETSL debt, while subsection 23CC(1) sets out the
method for calculating a person's accumulated VETSL debt.
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These amendments provide for the rounding of certain amounts in the
calculation of a person's former accumulated VETSL debt, specifically:
the sum of all VETSL debts referred to at step 2 of the method
statement in subsection 23CB(1); and
the total referred to in the definition of VETSL debts incurred in
subsection 23CC(1).
These changes ensure consistency with corresponding provisions in HESA
relating to the calculation of a person's former accumulated HELP debt
(subsection 140-5(1) of HESA) and accumulated HELP debt (subsection
140-25(1)-(1A) of HESA).
Amendment (8) inserts a new item 25A in Schedule 1 to the Bill to insert a
Note under subsection 137-19(4) of HESA as proposed to be amended by
item 9 of Schedule 1 to the Bill and Schedule 3 to the SLS Act. As a result of
these amendments, subsection 137-19(4) of HESA will deal with the
remission of VET student loan debts incurred before 1 July 2019 under HESA
(pre-1 July 2019 VSL debts), providing that these debts are taken to be
remitted if the person's HELP balance is re-credited under Part 6 of the VSL
Act. The new Note explains that a person's HELP balance may also be re-
credited under section 128-25 of HESA, but that in those circumstances there
is no related remission of debt under section 128-25.
Amendments (9) and (10) omit the Notes under items 40 and 46 of Schedule
1 to the Bill. The amendments in items 40 and 46 are contingent on the
commencement of amendments contained in Schedule 1 to the SLS Act. The
Notes are redundant as a result of the passage of the SLS Bill.
Similarly, amendment (12) omits the Note under item 72 of Schedule 1 to the
Bill. The amendment in item 72 is contingent on the commencement of
amendments in Schedule 3 to the SLS Act, therefore the Note is now
redundant.
Amendment (16) inserts a new Division 4 at the end of Part 6 of the VSL Act.
New Division 4 deals with re-crediting by the Secretary on discharge of
VETSL debts and comprises new section 73A.
New section 73A provides that the Secretary must re-credit a person's HELP
balance with the amount of any compulsory and voluntary repayments of the
person's VETSL debt that the person paid in the preceding financial year, as
notified to the Secretary by the Commissioner of Taxation after the end of that
financial year. The first time this will occur is in 2020, with a person's HELP
balance credited shortly after the end of the 2019-20 financial year with the
amounts of the person's repayments in that year. New section 73A operates
in a similar way to new section 128-25 of HESA, inserted in HESA by the SLS
Act.
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This amendment ensures that, following the separation of VET student loan
debts from other forms of HELP debts, a person's HELP balance is re-
credited if a person makes payments in discharge of a VETSL debt owed
under new Part 3A of the VSL Act, consistent with the arrangements for other
HELP debts under new section 128-25 of HESA.
As explained in the Note under new subsection 73A(2), a re-credit under new
section 73A does not have the same effect as a re-credit under Division 2 or 3
of Part 6 of the VSL Act. That is, a re-credit under section 73A does not result
in the remission of the debt concerned (see amendment (13) below),
because those debts would have already been discharged through
repayments.
Amendments (11) and amendments (13) to (15) are consequential to the
insertion of new Division 4 and section 73A into Part 6 of the VSL Act.
Amendment (11) inserts four new items in Schedule 1 to the Bill to amend
paragraph 22(1)(b) and the Notes under subsection 22(1) of the VSL Act.
Section 22 of the VSL Act deals with when a course provider is required to
repay amounts of VET student loans to the Commonwealth.
New item 71A amends paragraph 22(1)(b) of the VSL Act. This amendment
ensures that a provider is not required to repay the Commonwealth amounts
that are re-credited under new section 73A.
New item 71B deletes Note 1 under subsection 22(1). This Note is redundant
as a result of the changes to paragraph 22(1)(b).
New item 71C renames Note 2 as a result of the deletion of Note 1.
New item 71D amends the remaining Note (noting this is also amended by
item 19 of Schedule 1 to the Bill and Schedule 3 to the SLS Act). As
amended, the Note explains the effect of re-credits under Division 2 or 3 of
Part 6 of the VSL Act referring the reader to new section 23BA for debts
incurred on or after 1 July 2019 and to section 137-19 of HESA for debts
incurred before 1 July 2019.
Amendment (13) inserts a new item 73 in Schedule 1 to the Bill to amend
new subsection 23BA(4) of the VSL Act (see items 20 and 72 of Schedule 1
to the Bill). Subsection 23BA(4) deals with the remission of VETSL debts (that
is, debts incurred under section 23BA on or after 1 July 2019), and provides
that a person's VETSL debt, in relation to a loan amount used to pay tuition
fees for the person for a course, is taken to be remitted if the person's HELP
balance is re-credited under Part 6 of the VSL Act in relation to the loan
amount. This amendment ensures that subsection 23BA(4) does not operate
in relation to amounts re-credited under new section 73A of Part 6 of the VSL
Act. This is because those debts would have already been discharged
through repayments.
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Amendment (14) inserts a new item 74 in Schedule 1 to the Bill to amend the
Note under section 67 of the VSL Act as proposed to be amended by item 21
of Schedule 1 to the Bill. As amended, the Note under section 67 explains the
effect of amounts re-credited under Division 2 or 3 of Part 6 of the VSL Act.
Amendment (15) inserts a new item 75 in Schedule 1 to the Bill to amend the
heading of Division 3 of Part 6 of the VSL Act to reflect that Division 3 deals
with re-credits other than on discharge of debt (which is dealt with by new
Division 4 of Part 6).
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