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What does the NVETR Bill mean for you and your RTO? An explanation from a legal mind.  

February 9, 2024 by Milo

On 7 February 2024, National Vocational Education and Training Regulator (NVETR) legislative amendments were introduced into Parliament. This is part of the government’s ongoing effort to clean up the VET industry and reduce integrity risks posed by non-genuine or unscrupulous RTOs.  

The Bill is the National Vocational Education and Training Regulator Amendment (Strengthening Quality and Integrity in Vocational Education and Training No.1) Bill 2024 which we will now refer to as ‘the Bill’. 

Understanding the Legislative Process for VET Sector Changes

The news and social media are abuzz with commentary about what this may mean for the VET sector, so we asked our Principal Consultant, Alison Lovell, who is a qualified legal practitioner, to unpack this all for us so that we can interpret the legal speak and understand what this may mean for us and our clients. She told us that first, it is important to understand the legal process. So, here’s a rundown of the nitty gritty: 

  • The Bill is a proposal to change the existing law and the bill will be read three times (noting the first and second reading did occur on 7 February 2024).  
  • The debate has been adjourned to allow members time to study the Bill and its effects before speaking and voting on it, and to provide the opportunity for public discussion and reaction.  
  • In addition, the Bill will be examined by the legislative scrutiny committee. If the committee decides the Bill needs further investigation, it will be recommended to the senate that it be referred to a senate committee and then the senate committee will open it up for public comment. 
  • Following this, the second reading debate will occur, and amendment may be moved at this stage and then at the end of the debate, the House will vote on the motion moved by the Minister. If it’s agreed to in principle, they will consider any proposed changes (however this stage can be bypassed). 
  • There will then be a third reading which may result in debate again but it’s usually rare. At the end of the third reading, it signifies that the Bill has passed the House and then it becomes legislation.  
  • So, at the moment, the Bill is a proposal and not a done deal and the timing at this point is also unknown.   

Now that we’ve looked at the process, it’s time to unpack the Bill. Alison unpacked the key aspects of the Bill for us: 

Automatic lapse of RTO registrations 

The Bill enables the automatic lapsing of an RTO’s registration where it has not delivered training and/or assessment for a period of 12 months, as recommended by the Braithwaite review. The rub here is that the measurement period starting date seems to be backdated to on or after 1 January 2023 (40A of the amendment Bill). There’s reason to question whether this is a typographical error, as section 40B appears to allow for an extension of the measurement period, contingent upon applying at least 90 days before the period’s conclusion.

This would mean that an RTO that did not have any delivery from 1 January 2023 to 1 January 2024 would have been required to submit the application by 1 October 2023, which is impossible. The Explanatory Memorandum refers to “limited circumstances” for allowing but not in the legislation, so we think this would need to be included and limited circumstances extended as it only talks about natural disasters such as fire, flood, or pandemic events. We think this may be too limited in its definition.  

It is noted that a decision regarding an application to extend a measurement period is reviewable internally through ASQA and/or through an external merits review in the Administrative Appeals Tribunal.

Adding training products to the scope  

The Bill will prevent an RTO from adding new training products to its scope of registration in the first two years of registration to manage quality risks to students, addressing a Braithwaite review recommendation. It says that this will ensure newly registered RTOs are required to focus on delivering quality training and/or assessment in the segment of the market for which they were originally approved and it will also provide ASQA with the opportunity to assess a new RTO’s operations over a reasonable period, to ensure a new RTO has a sound understanding of the educational integrity and commitment required to operate in the sector, prior to expanding its course offerings. 

While this may not present a problem for most RTO market entrants who are often very clear about what they want to do in the first two years, it is however, quite limiting as it doesn’t allow for RTOs to reposition their business to meet new skills shortages or to seize new opportunities for partnership or expansion that may arise.  

Further, the proposed amendment to section 32 of the Act appears to put new providers in a difficult situation if the training products on their scope are superseded and the new release is not equivalent. This scenario does not appear to be contemplated by the amendments. In reality, a provider could end up with no training products on scope, be unable to undertake delivery and have to apply to extend the “measurement period” in order to stop their RTO registration from automatically lapsing! 

Expansion of 90-day review period to 120 days 

The Bill also seeks to expand the period within which the regulator can conduct an internal review of decisions from 90 days to 120 days.  

It is interesting to note that providers are usually only given 30 days to apply for an internal review and are often not granted an extension of time if requested. This proposed change sees the regulator seeking to allow itself a period four times longer than an applicant to process reviews on their end.  

If implemented, we would hope that ASQA takes into account the operational impact of the 120-day processing period when evaluating RTOs’ stay applications. 

Greater discretionary powers for ASQA 

The Bill gives ASQA greater discretion in terms of how it prioritises, considers, and makes decisions in relation to applications for initial registration of an RTO. In the second reading speech, the Minister for Skills and Training stated that this proposed measure is aimed to ensure registration applications can be prioritised, for example, where “reputable” applicants propose to deliver courses in areas of skills shortage areas or where there is a community need for this to happen.

It will say that this will enable ASQA to decide “simple” applications quickly and efficiently while applying appropriate scrutiny to more complex or so-called high-risk applications. 

Essentially, we see that ASQA already does this as there are wildly varied processing times for initial applications, however we note that currently these processing variations are without any apparent rhyme or reason. The proposed changes seem to indicate that ASQA will prioritise some applications to meet their own Service Standards (effective from 1 July 2023).

Although this area won’t bring too many changes, there are value judgements here about who is considered “reputable” and what is considered a “priority”, and this could be open to rorting internally.  We would ask the question, is there ever really such a thing as a “simple” application? 

Power to halt RTO registration applications  

The Bill seeks to empower the Minister responsible for VET to determine a specified period where the regulator is not required to, or must not, process or accept initial applications for RTO registration. It states that this determination must be made in consultation with ASQA and with the agreement of State and Territory Skills Ministers. 

This discretionary power could be exercised by the minister where ASQA identifies a trend in applications by non-genuine or unscrupulous providers seeking to enter the VET sector, for reasons other than a genuine commitment to delivering quality training. It seems the determination could also be used where ASQA has received a considerable influx of applications, and the number of applications means that granting them would have a harmful effect on the integrity, health and quality of the VET sector.  

The determination may apply to one or more classes of applications, and this will permit ASQA to target specific cohorts of RTO applicants that pose a risk to the sector, without disrupting the acceptance and processing of other applications for registration. Further, a determination under this section can apply to initial applications for registration made before or after the commencement of the determination. 

Examining the Potential Impact of Ministerial Powers on RTO Applications

Unpacking the above, it’s important to note that this is a power that the Minister will be given but may or may not be used. It will apply to certain “classes” of applications. For example, the hundreds of RTOs set up with only Diploma of Business on scope some time ago comes to mind when thinking about “a class of RTOs” as this was clearly an attempt to register with reasons other than a genuine commitment to delivering quality training.   

Anyone with a genuine intention to deliver high quality training and assessment should not be overly concerned about this; however, change is worrying when definitions are unclear.  

It’s also important to note that we don’t know how classes of applications will be defined.  

ITECA has noted,  

…the amendments introduce a degree of market intervention that we’ve not seen before, not only in the skills training system but elsewhere in the economy. It would be concerning if the legislation to be introduced into the Parliament today did not clearly articulate why and for how long the government may act to stop the creation of new RTOs, nor spell out in what circumstances it would stop existing RTOs from seeking to offer new accredited courses.” https://www.iteca.edu.au/news/skills/2024-Qtr1/nvetra.amendments.need.safeguards.aspx  

ITECA is on point. This level of intervention could lead to small business owners being in an unending period of limbo whilst suffering significant financial losses, an impact that does not appear to have been considered by the Bill.  

Expanding civil penalties for false and misleading marketing 

The Bill aims to improve student protection by expanding offence and civil penalty provisions to cover a broader range of false or misleading representations by RTOs about their operations. It expressly prohibits the publication of false testimonials as if they were from current or past students. It’s stated that these provisions will remove impediments to ASQA taking decisive action in response to RTOs that intend to mislead students with false representations and false advertising. 

We think this is a welcome addition. It will be interesting to see and to what extent the regulator intends to enforce these offence provisions. 

If you’re worried about what these changes may mean for your RTO, get in touch with a compliance consulting by emailing hello@rtoworks.com.au as we’re here to help.

We partner with our clients to help them navigate the ever-changing regulatory landscape and have a team of RTO consultants ready to support you and your RTO.