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2016-2017-2018
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
STUDENT LOANS (OVERSEAS DEBTORS REPAYMENT LEVY)
AMENDMENT BILL 2018
EXPLANATORY MEMORANDUM
(Circulated by authority of the Assistant Minister for Vocational
Education and Skills, the Honourable Karen Andrews MP)
STUDENT LOANS (OVERSEAS DEBTORS REPAYMENT LEVY)
AMENDMENT BILL 2018
OUTLINE
The purpose of the Student Loans (Overseas Debtors Repayment Levy)
Amendment Bill 2018 (Bill) is to amend the Student Loans (Overseas Debtors
Repayment Levy) Act 2015, by providing for a levy to be imposed on a defined
group of overseas debtors in line with provisions added to the VET Student Loans
Act 2016 (VSL Act) by the Education and Other Legislation Amendment (VET
Student Loan Debt Separation) Bill 2018 (VSL Debt Separation Bill).
The specific measures in this Bill are part of the broader measures implemented by
the VSL Debt Separation Bill to separate VET student loan debts from other forms
of Higher Education Loan Program (HELP) debts.
This is consistent with existing arrangements with respect to persons who reside
overseas and owe a HELP debt.
VET Student Loans
Vocational education and training (VET) is central to Australia's economic growth,
business opportunities and employment outcomes for students. Income contingent
loans support Australians to access higher level VET qualifications.
The VSL Act, which commenced on 1 January 2017 as a part of a package of
legislation, established the VET Student Loans program, a new Commonwealth
program for income contingent loans for students engaged in higher level VET, to
assist students with payment of their tuition fees. The new VET Student Loans
program replaced the VET FEE-HELP scheme (which operated under Schedule 1A
to the Higher Education Support Act 2003 (HESA)).
Under the VSL Act, the Secretary of the responsible Department (currently the
Department of Education and Training) may approve VET student loans for eligible
students for approved courses, and the loans are used by the Secretary to pay
tuition fees for the students.
Under the current arrangements, payments of amounts of VET student loans give
rise to 'VET student loan debts' under HESA. VET student loan debts are a type of
HELP debt and are therefore dealt with in the same way as other HELP debts
under Chapter 4 of HESA. Specifically, VET student loan debts are incorporated
into, and are factored into the calculation of, a person's accumulated HELP debt,
which can be repaid through voluntary repayments or compulsory repayments
(based on the person's income) through the tax system.
In addition, VET student loan debts, currently as a type of HELP debt, are repaid by
debtors who reside overseas as a result of the Student Loan (Overseas Debtors
Repayment Levy) Act 2015.
1
Separating VET student loans debt from HELP debt
Currently, there is limited capacity to measure the sustainability of the VET Student
Loans program because a debtor's HELP repayments are not disaggregated by
loan type. Irrespective of whether the debt applies to HECS-HELP, FEE-HELP, SA-
HELP, OS-HELP, VET FEE-HELP assistance (which are other forms of HELP
assistance available under HESA) or VET student loans, loan repayments are
made towards a single, aggregated HELP debt.
This creates difficulties in that, where a person has received loans under more than
one form of HELP assistance (for example, a person has received both HECS-
HELP and VET student loans), it is not possible to obtain accurate data on what
proportion of which form of HELP assistance has been repaid. Similarly, where a
HELP debt is not being repaid, it is not possible to identify the form of HELP
assistance the debt relates to.
The Education and Other Legislation Amendment (VET Student Loan Debt
Separation) Bill 2018 separates VET student loan debts from other forms of HELP
debts by moving the legislative basis for VET student loan debts from HESA and
into the VSL Act. In effect, this provides greater transparency of repayment rates for
VET student loans and more accurate information to inform future policy decisions.
The separation of VET student loans debts from HELP debts will take effect from
1 July 2019. As a result, VET student loans debts incurred on or after 1 July 2019
will be administered under the VSL Act (rather than HESA).
The Education and Other Legislation Amendment (VET Student Loan Debt
Separation) Bill 2018 provides that the repayment thresholds, repayment rates and
indexation with respect to VET student loan debts are the same as the repayment
thresholds, repayment rates and indexation for HELP debts under HESA.
Similarly, and consistent with existing arrangements for HELP debtors residing
overseas, the measure in the Education and Other Legislation Amendment (VET
Student Loans Debt Separation) Bill 2018 and this Bill, ensure that persons residing
overseas who have a VET student loan debt are required to make repayments in
respect of those debts, the amount of which is set out in the Education and Other
Legislation Amendment (VET Student Loan Debt Separation) Bill 2018.
This is not a substantive change from the existing situation. This is because VET
student loans debtors who reside overseas are currently required to make
repayments in respect of those debts by virtue of VET student loans debts being
HELP debts.
This Bill continues this requirement by including debts incurred under the VET
Student Loans Act 2016 in the relevant definition in the Student Loan (Overseas
Debtors Repayment Levy) Act 2015.
It is necessary to include this change in a separate Bill to the Education and Other
Legislation (VET Student Loan Debt Separation) Bill 2018 as it relates to the
imposition of a levy.
2
FINANCIAL IMPACT STATEMENT
The specific measures in this Bill are part of the broader measures implemented by
the VSL Debt Separation Bill. Separating VET Student Loans debt from HELP debt
will cost $2.1 million over four years from 2017-18 for the Department of Education
and Training to support the required IT changes at the Australian Taxation Office
and Department of Education and Training.
The figures were published in December 2017 in the Mid-Year Economic Fiscal
Outlook 2017-18. A breakdown of the costs (in underlying cash) over this period is
as follows:
Expense ($m) 2017-18 2018-19 2019-20 2020-21
Australian Taxation Office 0.5 0.4 0.1 0.1
Department of Education and
- 0.1 - -
Training
Total - Expense 0.5 0.5 0.1 0.1
Related capital ($m)
0.4 0.4 - -
Australian Taxation Office
3
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011
STUDENT LOAN (OVERSEAS DEBTOR REPAYMENT LEVY)
AMENDMENT BILL 2018
The purpose of the Student Loans (Overseas Debtors Repayment Levy)
Amendment Bill 2018 (Bill) is to amend the Student Loans (Overseas Debtors
Repayment Levy) Act 2015, by providing for a levy to be imposed on a defined
group of overseas debtors in line with provisions added to the VET Student Loans
Act 2016 (VSL Act) by the Education and Other Legislation Amendment (VET
Student Loan Debt Separation) Bill 2018 (VSL Debt Separation Bill).
The specific measures in this Bill are part of the broader measures implemented by
the VSL Debt Separation Bill to separate VET student loan debts from other forms
of Higher Education Loan Program (HELP) debts.
This is consistent with existing arrangements with respect to persons who reside
overseas and owe a HELP debt.
VET Student Loans
Vocational education and training (VET) is central to Australia's economic growth,
business opportunities and employment outcomes for students. Income contingent
loans support Australians to access higher level VET qualifications.
The VSL Act, which commenced on 1 January 2017 as a part of a package of
legislation, established the VET Student Loans program, a new Commonwealth
program for income contingent loans for students engaged in higher level VET, to
assist students with payment of their tuition fees. The new VET Student Loans
program replaced the VET FEE-HELP scheme (which operated under Schedule 1A
to the Higher Education Support Act 2003 (HESA)).
Under the VSL Act, the Secretary of the responsible Department (currently the
Department of Education and Training) may approve VET student loans for eligible
students for approved courses, and the loans are used by the Secretary to pay
tuition fees for the students.
Under the current arrangements, payments of amounts of VET student loans give
rise to 'VET student loan debts' under HESA. VET student loan debts are a type of
HELP debt and are therefore dealt with in the same way as other HELP debts
under Chapter 4 of HESA. VET student loan debts can be repaid through voluntary
repayments or compulsory repayments (based on the person's income) through the
tax system.
4
In addition, VET student loan debts, currently as a type of HELP debt, are repaid by
debtors who reside overseas as a result of the Student Loan (Overseas Debtors
Repayment Levy) Act 2015.
Separating VET student loans debt from HELP debt
Currently, there is limited capacity to measure the sustainability of the VET Student
Loans program because a debtor's HELP repayments are not disaggregated by
loan type. Irrespective of whether the debt applies to HECS-HELP, FEE-HELP, SA-
HELP, OS-HELP, VET FEE-HELP assistance (which are other forms of HELP
assistance available under HESA) or VET student loans, loan repayments are
made towards a single, aggregated HELP debt.
This creates difficulties in that, where a person has received loans under more than
one form of HELP assistance (for example, a person has received both HECS-
HELP and VET student loans), it is not possible to obtain accurate data on what
proportion of which form of HELP assistance has been repaid. Similarly, where a
HELP debt is not being repaid, it is not possible to identify the form of HELP
assistance the debt relates to.
The Education and Other Legislation Amendment (VET Student Loan Debt
Separation) Bill 2018 separates VET student loan debts from other forms of HELP
debts by moving the legislative basis for VET student loan debts from HESA into
the VSL Act. In effect, this provides greater transparency of repayment rates for
VET student loans and more accurate information to inform future policy decisions.
The separation of VET student loans debts from HELP debts will take effect from
1 July 2019. As a result, VET student loans debts incurred on or after 1 July 2019
will be administered under the VSL Act (rather than HESA).
The Education and Other Legislation Amendment (VET Student Loan Debt
Separation) Bill 2018 provides that the repayment thresholds, repayment rates and
indexation with respect to VET student loan debts are the same as the repayment
thresholds, repayment rates and indexation for HELP debts under HESA.
Similarly, and consistent with existing arrangements for HELP debtors residing
overseas, the measure in the Education and Other Legislation Amendment (VET
Student Loans Debt Separation) Bill 2018 and this Bill ensure that persons residing
overseas who have a VET student loan debt are required to make repayments in
respect of those debts, the amount of which is set out in the Education and Other
Legislation Amendment (VET Student Loan Debt Separation) Bill 2018.
This is not a substantive change from the existing situation. This is because VET
student loans debtors who reside overseas are currently required to make
repayments in respect of those debts by virtue of VET student loans debts being
HELP debts.
This Bill continues this requirement by including debts incurred under the VET
Student Loans Act 2016 in the relevant definition in the Student Loan (Overseas
Debtors Repayment Levy) Act 2015.
5
Analysis of human rights implications
The Bill does not engage any of the applicable rights or freedoms.
The amendments to the Student Loans (Overseas Debtors Repayment Levy) Act
2015 are necessary as a result of the separation of VET student loans debts from
HELP debts by the Education and Other Legislation Amendment (VET Student
Loans Debt Separation) Bill 2018.
The measures in this Bill do not represent a substantive change in the requirements
that currently apply to persons residing overseas and who owe a VET student loan
debt to the Commonwealth. This is because VET student loan debts, as a type of
HELP debt, are currently captured by the levy imposed with respect to HELP debts.
Conclusion
The Bill is compatible with human rights.
6
STUDENT LOANS (OVERSEAS DEBTORS REPAYMENT LEVY)
AMENDMENT BILL 2018
NOTES ON CLAUSES
Clause 1 - Short title
Clause 1 provides for the Act to be the Student Loans (Overseas Debtors
Repayment Levy) Act 2018.
Clause 2 - Commencement
Subclause 2(1) contains a three column table setting out commencement
information for various provisions in the Bill. Each provision of the Bill specified in
column 1 of the table commences (or is taken to have commenced) in accordance
with column 2 of the table, and any other statement in column 2 has effect
according to its terms.
The table in subclause 2(1) provides that the whole of this Act will commence at the
same time as items 1 to 35 of Schedule 1 to the Education and Other Legislation
Amendment (VET Student Loan Debt Separation) Act 2018 (VSL Debt Separation
Act) commence. However, the provisions do not commence at all if those items do
not commence. This is because this Act imposes the overseas debtor's repayment
levy. However, the VSL Debt Separation Act specifies when a person is liable to
pay the overseas debtors repayment levy, and the amount of the levy they are
required to pay. Therefore, Act will only commence if the relevant provisions of VSL
Debt Separation Act commence.
The 'Note' at the end of subclause 2(1) clarifies that the table relates only to the
provisions of this Act as originally enacted and it will not be amended to deal with
any later amendments of the Act.
Subclause 2(2) provides that any information in column 3 of the table is not part of
the Act, and information may be inserted in column 3, or information in it may be
edited, in any published version of the Act.
Clause 3 - Schedules
Clause 3 provides that any legislation that is specified in a Schedule is amended or
repealed as set out in the applicable items in the Schedule concerned and that any
other item in a Schedule has effect according to its terms.
7
LIST OF ABBREVIATIONS
HESA Higher Education Support Act 2003
VSL Act VET Student Loans Act 2016
VSL Debt Separation Bill Education and Other Legislation Amendment (VET
Student Loan Debt Separation) Bill 2018
8
Schedule 1 Amendments
Summary
The purpose of the Student Loans (Overseas Debtors Repayment Levy)
Amendment Bill 2018 (Bill) is to amend the Student Loans (Overseas Debtors
Repayment Levy) Act 2015 by providing for a levy to be imposed on a defined
group of overseas debtors in line with provisions added to the VET Student Loans
Act 2016 (VSL Act) by the Education and Other Legislation Amendment (VET
Student Loan Debt Separation) Bill 2018 (VSL Debt Separation Bill).
Detailed explanation
Student Loans (Overseas Debtors Repayment Levy) Act 2015
Item 1 - Section 3 (after paragraph (a) of the definition of overseas debtors
repayment levy)
Section 3 contains definitions for defined terms used in the Act.
Item 1 amends section 3 of the Student Loans (Overseas Debtors Repayment
Levy) Act 2015 by inserting a new paragraph (aa), after paragraph (a), which
provides "section 23EC of the VET Student Loans Act 2016; or".
This amendment expands the definition of overseas debtors repayment levy to
mean a levy payable under section 23EC of the VSL Act (in addition to a levy
payable section 154-16 of HESA and section 47A of the Trade Support Loans Act
2014).
Item 2 - Section 4
Section 4 imposes the overseas debtors repayment levy.
This item amends section 4 of the Student Loans (Overseas Debtors Repayment
Levy) Act 2015 by repealing and replacing that section.
This ensures that an overseas debtors repayment levy payable under section 23EC
of the VSL Act is imposed, and that students who received financial assistance
under the VSL Act and reside overseas are required to repay their debt to the
Commonwealth via the payment of a levy. The liability of overseas debtors to repay
amounts to the Commonwealth, and the amount of the levy, is dealt with in 23EC of
the Education and Other Legislation Amendment (VET Student Loan Debt
Separation) Act 2018.
9
Item 3 - Section 5
Section 5 provides the amount of a person's overseas debtors repayment levy is
equal to the amounts payable by the person under section 154-16 of HESA or
section 47A of the Trade Support Loans Act 2014, as the case requires.
This item amends section 5 by inserting ", section 23EC of the VET Student Loans
Act 2016" after "2003".
This amendment is consequential to the insertion of section 23EC and specifies
that the amount of the overseas debtors' repayment levy imposed on VET student
loan debtors is equal to the amount payable under section 23EC.
10