The implications of ASQA being moving to a full cost recovery agency

ASQA and TEQSA are required by the Australian Government to transition from partial cost recovery to full cost recovery by 2020-21 making charging activities more consistent with the other areas of Government and Australian Government Charging Framework.

Currently, neither regulator recovers the full cost of their regulatory operation or the full cost of legislative activities. The regulators recover only the costs of regulatory activity for outputs that are initiated/requested by the providers and not costs associated with compliance, monitoring, enforcement, and investigations. Under these updated provisions that will change.

Background:

In December 2009, the Council of Australian Governments (COAG) agreed to ASQA’s establishment as a cost recovery agency, and announced that ASQA would over a period of years move from partial to full cost recovery. On 1 July 2011 ASQA was established by the enactment of the NVR Act and supplementary legislation. In the 2014–15 Portfolio Additional Estimates Statements, the Australian Government confirmed ASQA’s continued operation as a partial cost recovery entity.

The Australian Government Budget 2018–19 announced that ASQA will transition from partial cost recovery to full cost recovery by 2020–21.

During the transition to full cost recovery by 2020–21, ASQA will engage in public consultation with all VET sector stakeholders before any changes are made to ASQA’S fees and charges. ASQA will detail any proposed changes, the rationale and anticipated cost-recovery outcomes of the proposal, and provide all stakeholders with the opportunity to provide input and feedback. ASQA will allow adequate time not only for this consultation to take place, but also for reconsideration and revision of the proposal based on stakeholder input received during the consultation.

Public consultation on ASQA’s fees and charges for 2018–19 took place from 1 August to 3 September 2017. For more information on this consultation process, see section 5—Stakeholder engagement.

ASQA recovers costs by imposing fees and charges on providers for various tasks ASQA performs as part of regulating the VET sector. ASQA receives budget appropriations from the Australian Government, and cost recovery revenue is returned to the Australian Government’s Consolidated Revenue Fund to offset budget funding

ASQA’s collection of fees and charges

ASQA’s authority to impose fees is provided in section 232 of the NVR Act.

ASQA’s authority to impose charges is provided in sections 7–12 of the National Vocational Education and Training Regulator (Charges) Act 2012 (the Charges Act).

ASQA mainly imposes and collects fees and charges on three key groups:

Registered Training Organisations (RTOs)
Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) providers—including those that deliver English Language Intensive Courses for Overseas Students (ELICOS)
VET accredited course owners.

ASQA’s business activities

ASQA is required to support all its business activities and operations under the full recovery model. The business activities and operations include:

ASQA’s partial cost recovery model

ASQA currently receives an annual budget appropriation for operating and capital activities from the Australian Government and returns cost recovery revenue to the Consolidated Revenue Fund to offset their budget funding. The cost of some of ASQA’s regulatory activity is partially recovered through fees and charges. Some of ASQA’s regulatory activity is funded by ASQA’s annual budget appropriation.

Implications:

Let’s now look into how the proposed changes are going to affect your training organisation or its operations.

A revised fees and charges model came into effect from 6 July 2018:

reduce many fees and charges from the current rates, reflecting efficiencies realised through ASQA’s upgraded business systems and improved processes
provide cost reductions for providers that demonstrate high levels of compliance with their regulatory obligations , including the requirements of the VET Quality Framework
only impose assessment fees in certain cases (for example, when a registered training organisation seeks to renew its registration, charges for the additional cost of assessment will only be imposed on those providers that require an audit)
align with ASQA’s risk-based approach to regulation, so that providers that require a greater level of regulatory attention and oversight are more likely to pay higher costs for their regulation.

Changes to fees and charges for RTOs include:

decreases in initial, renewal and change-of-scope application lodgement fees
a shift from assessments of all applications (with costs shared across all providers) to an approach where costs are charged at the point of audit (meaning that for renewal and change- of-scope applications, charges for the additional cost of assessment will only be imposed on those providers that require an audit).

CRICOS changes include:

decreases in initial and renewal application lodgement fees
a decrease in the change-of-scope application fee. Course accreditation changes include:
replacing the single application fee with a lodgement fee and an assessment fee (so that ASQA’s initial costs are recovered, and applicants whose applications are of insufficient quality to proceed to the assessment stage are only charged for the cost of lodgement)
replacing the single amendment fee with different fees for ‘minor’ and ‘major’ amendments, which results in a lower cost to providers who make minor amendments.

Annual registration changes include:

replacing the annual fee with an annual registration charge to ensure consistency with the Australian Government Charging Framework (noting the amount and structure is unchanged, and that there will be no financial impact on providers, course owners or ASQA due to this change).

Averaging the application lodgement fee for initial, assessment, renewal and change-of-scope provides simplicity, consistency and efficiency.

Does this mean all providers will pay more?

ASQA‘s answer to this question is “not necessarily”. The proposed fees and charges represent a full review of associated costs, taking into account the impact of streamlining of some processes and all relevant data.

Calculation of fees and charges takes into account the principle that the cost of dealing with non-compliance should not be borne by compliant providers.

ASQA fees and charges are designed to limit financial impact on providers and course owners while ensuring the quality of providers entering and operating in the industry.

ASQA’s fees and charges for 2018–19 are designed to support ASQA’s risk-based regulatory approach, incentivise provider compliance, and minimise the administrative and financial burden on providers that provide quality outcomes to students.

The fees and charges apply to all ASQA-regulated providers and course owners.

What is most important for you to understand

Stay compliant. The cost of non-compliance is a lot more than you spending time and energy to stay compliant with the operations of your organisation. Organise an independent audit from experienced compliance consultants to look into your operations, processes and practices. Improve where you can, fill gaps and make sure you are following all regulatory guidelines and legislative instruments at all times.

There is always help available for your RTO.

If you unsure or not confident with your understanding of the regulatory processes, ask for help! Having professional advice can be an invaluable resource to your RTO. Utilising the experiences of a seasoned professional who is dealing with the regulatory bodies can give you access to a wealth of information for your RTO. Having the right professional help can actually save you money, time and stress. Contact us at www.caqa.com.au to see how we can help your RTO.

What could be other implications?

How will compliant and non-compliant RTOs be identified in the current unclear and completely ambiguous regulatory environment and system?
How will transparency be maintained through the Cost-Recovery Implementation Statements (CRIS)?

Most importantly,

How will the Government and regulatory bodies ensure that compliant RTOs are not penalised for the actions of non-compliant RTOs?
Will there be higher course fees than the already expensive course fees to Australian and International students?

Reference:

Fees and charges | Australian Skills Quality Authority. (2019). Retrieved 28 September 2019, from https://www.asqa.gov.au/about/fees-and-charges