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Education Legislation Amendment (Governance) Bill 2012

Introduction Print

EXPLANATORY MEMORANDUM

General

The Education Legislation Amendment (Governance) Bill 2012 amends the Education and Training Reform Act 2006 (the Principal Act).

The Bill also proposes governance arrangements for the eight Acts that establish Victorian universities, namely—

the Deakin University Act 2009; and

the La Trobe University Act 2009; and

the University of Melbourne Act 2009; and

the Monash University Act 2009; and

the Royal Melbourne Institute of Technology Act 2010; and

the Swinburne University of Technology Act 2010; and

the University of Ballarat Act 2010; and

the Victoria University Act 2010.

The amendments proposed by the Bill fall into several groups. These are:

Governance reforms for TAFE institutes and adult education institutions, especially—

new statements of objectives for TAFE institutes and adult education institutions, which emphasise their role in contributing to the State's economy and community wellbeing, and the need for them to act in accordance with prudent commercial practice and as efficiently as possible; and

571260 BILL LA INTRODUCTION 24/10/20121

the establishment of new governing boards with chairpersons appointed by the Governor in Council and all other directors appointed by the Minister. Selection will be on the basis of skills and experience that are relevant to the governance and oversight of major public authorities with substantial public assets responsibilities; and

the establishment of the institutions as incorporated entities (instead of their governing boards, as at present).

Deferral of new commercial powers for TAFE institutes pending the implementation of these governance changes.

Abolition of the Victorian Skills Commission (VSC), the transfer of its remaining functions, and the removal of provisions relating to its former advisory bodies known as "industry training boards" (ITBs).

Transfer to the Secretary of the Department of Education and Early Childhood Development (DEECD) the function (currently with the VSC) of administering and allocating State training funds.

Authorise the Secretary to enter into VET funding contracts with education providers that deliver government-subsidised training places to the community. The provisions relating to VET funding contracts also enable them to contain certain terms that will be effective despite certain rules and principles of common law and equity, so as to improve student rights, contract management and public accountability.

Authorise the Victorian Registration and Qualifications Authority (VRQA) to take into account an education provider's history of compliance with government training contracts in Victoria or elsewhere when deciding whether to register training organisations under State law.

Authorise the VRQA and DEECD to exchange information with each other and with Commonwealth education agencies and regulators about providers' history of compliance with government training contracts.

Amend the Education and Training Reform Amendment (Skills) Act 2010 to defer new TAFE institute commercial powers until after the introduction of the new governance arrangements outlined above. These powers would otherwise commence on 1 January 2013.

Machinery and technical amendments.

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Clause Notes

PART 1—PRELIMINARY

Clause 1 sets out the main purposes of the Bill.

Clause 2 provides for the commencement of the Act.

Most of the Act comes into operation on days to be fixed by proclamation, but no later than 1 January 2013.

The exceptions are Part 1 of the Bill, which deals with preliminary matters, and Part 7 of the Act, which makes miscellaneous amendments to the Principal Act and the Education and Training Reform Amendment (Skills) Act 2010. These provisions will commence on the day after Royal Assent.

Note that clause 108(1), which is one of the provisions that will come into operation on the day after Royal Assent, will extend the default commencement date of the Education and Training Reform Amendment (Skills) Act 2010 from 1 January 2013 to 1 January 2014.

The reason is to enable section 55(3) of that Act to be brought into operation once TAFE institute governance has been reformed in accordance with this Bill, with new boards of directors established along corporate lines. Section 55(3) of the 2010 Act will amend the Principal Act to confer broader commercial powers on TAFE institutes. See the notes on clause 17, new section 3.1.11, and clause 108 for further explanation.

PART 2—ABOLITION OF THE VICTORIAN SKILLS COMMISSION AND REMOVAL OF INDUSTRY TRAINING

BOARD PROVISIONS

Overview of Part 2

The main purposes of Part 2 are to abolish the Victorian Skills Commission (VSC), to transfer its remaining functions, and to repeal the provisions of the Principal Act dealing with its former advisory bodies known as "industry training boards".

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The body now known as the Victorian Skills Commission was established by the Vocational Education and Training Act 1990 (the 1990 Act). At that time it was known as the "State Training Board", and it subsumed the functions of both the former TAFE Board and Industrial Training Commission. The name was changed in 2001 to "Victorian Learning and Employment Skills Commission" and changed again in 2007 to "Victorian Skills Commission", its current name.

At the time of its creation, the Commission had many functions. It was the regulator of vocational education and training providers, apprenticeships and traineeships and accredited training courses. It allocated State training funds and oversaw the establishment and operations of TAFE institutes, including determining which courses they could provide.

In recent years, the VSC's regulatory functions have all moved to the Victorian Registration and Qualifications Authority (VRQA) or elsewhere. With the introduction of demand driven funding, the VSC no longer allocates training funds in practice—DEECD now administers funding under a VSC delegation. The VSC's remaining role is advisory, but new advisory and consultative structures have been established.

The Bill therefore proposes to abolish the VSC from 1 January 2013.

Industry training boards (ITBs) also date from the 1990 Act. They were established by industry itself as companies or incorporated associations, and then declared to be ITBs for the purposes of the legislation by Orders in Council. Their main statutory function was to provide advice to the VSC and State and Commonwealth Governments on training needs in their respective sectors.

This advisory and consultative role is now performed by other means. All ITB declarations were revoked on 1 July 2012 and there are no longer any ITBs recognised under the Principal Act. The Bill therefore repeals provisions relating to the establishment or declaration of ITBs from 1 January 2013.

Clauses

Clause 3 amends section 1.1.3(1) of the Principal Act to repeal the definitions of Commission (that is the VSC) and industry training board. These definitions will be redundant with the abolition of the VSC and the removal of provisions for ITBs.

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Clause 4 repeals Division 1 of Part 3.1 of the Principal Act. That Division currently establishes the Victorian Skills Commission and underpins its operations. Thus, the repeal effectively abolishes the VSC.

Note that a new Division 1 of Part 3.1 is to be inserted by clause 10 to establish new arrangements for State funding of vocational education and training.

Clause 5 repeals Division 3 of Part 3.1 of the Principal Act. That Division currently enables the establishment or declaration, by Orders in Council, of industry training boards and sets out their functions. Thus, the repeal abolishes the statutory framework for industry training boards.

Note that there are currently no industry training boards declared under the Principal Act. All declarations were revoked from 1 July 2012—see Government Gazette No. S 216, 28 June 2012.

Clause 6 repeals section 3.3.3(2) of the Principal Act. That provision presently requires the Adult, Community and Further Education Board to cooperate with the Victorian Skills Commission. With the abolition of the VSC, the provision is redundant.

The clause also amends section 5.2.1 of the Principal Act, which deals with the Minister's general powers. The amendment repeals subsection (2)(d)(iii), which omits a power for the Minister to establish, name, modify, merge or abolish industry training boards. This power is no longer needed because of the removal of all provisions relating to industry training boards.

Clause 7 inserts a new section 5.2.9A into the Principal Act. The new section enables the Minister to delegate the Minister's powers or functions under Division 2 of Part 5.4 of the Principal Act. The powers may be delegated to the directors of the board of a TAFE institute or to the members of the council of a University with a TAFE Division. Further, the Minister may authorise delegates to subdelegate the powers to any person who holds office or who is employed under the Principal Act, or who is involved in the administration of the Principal Act.

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Division 2 of Part 5.4 deals with practical placements of vocational education and training students. The powers of the Minister under that Division that will be delegable are—

making determinations, under section 5.4.15 of the Principal Act, about the placement of post-secondary students with employers for work experience or training; and

suspending, under section 5.4.17 of the Principal Act, the operation of Division 2 of Part 5.4 of that Act for any student of class of students.

Currently, these powers are conferred on the VSC by sections 5.4.15 and 5.4.17 of the Principal Act. Consequent on the VSC's abolition, clause 8 of this Bill will transfer the powers to the Minister by amending those sections.

Currently, the VSC may delegate these powers under section 3.1.9 of the Principal Act to certain bodies. Further, it may authorise those delegates to subdelegate the powers. These powers are in fact currently delegated by the VSC to TAFE institutes. Further, the TAFE institutes are currently authorised by the VSC to subdelegate the powers.

Consequent on the abolition of the VSC, the VSC's power to delegate will be repealed by clause 4 of this Bill, along with the rest of Division 1 of Part 3.1 of the Principal Act. This will have the effect of nullifying the existing delegations to TAFE institutes in relation to practical placements. The repeal will also nullify the subdelegation authorisations.

Clause 7 therefore proposes to insert a new section 5.2.9A into the Principal Act. This will confer on the Minister the ability to delegate (to the board of a TAFE institute or council of a University with a TAFE division) the powers under sections 5.4.15 and 5.4.17 relating to practical placements. It will also enable the Minister to authorise the board or council to subdelegate the powers to any person holding office or employed under the Principal Act, or involved in the administration of that Act.

In effect, then, clause 7 (new section 5.2.9A) will enable the Minister to remake existing VSC practical placement delegations to TAFE institutions and authorised subdelegations. Without such a power, the existing delegations with TAFE

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institutions relating to the administration of practical placements would lapse when the VSC is abolished and could not be reinstated.

Clause 8 amends various provisions of the Principal Act to remove or replace references to the VSC that are made redundant by its abolition.

Subclause (1) omits from section 5.3.2 the responsibility of the Secretary DEECD to implement VSC decisions.

Subclauses (2) to (4) transfer from the VSC to the Minister various powers under Division 2 of Part 5.4 in relation to practical placements for vocational education and training.

Subclause (5) amends section 5.8.8(4) of the Principal Act. That section deals with the issuing of evidentiary certificates, for the purposes of legal proceedings, about determinations, resolutions or decisions of the VSC. The amendment keeps that power in place, so that the Secretary DEECD can in future issue such certificates in relation to VSC actions prior to its abolition. This also applies to actions of the VSC under its former names.

Subclause (6) repeals paragraph (f) of the definition of authority in clause 1 of Schedule 2 to the Principal Act. The effect is that the governance provisions of Schedule 2 will no longer apply to the VSC.

Subclause (7) omits a redundant reference to the VSC in clause 4(2) of Schedule 2 to the Principal Act. That clause deals with the appointment of acting members of authorities.

PART 3—VET FUNDING

Overview of Part 3

Part 3 deals with the administration of funding by the State of vocational education and training (VET). Part 3 of the Bill inserts a new Division 1 of Part 3.1 of the Principal Act, which will provide a legal framework governing Victoria's $1.2 billion annual funding for vocational education and training.

Note that the new Division 1 of Part 3.1 (titled "VET Funding") of the Principal Act to be inserted by Part 3 of this Bill will take the place of the existing Division 1 of Part 3.1 (titled "Co-ordination of State training system"), which is to be repealed by clause 4 of this Bill.

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The key elements of Part 3 are:

The Secretary DEECD will have the function of allocating State training funds to education providers.

Funds can be provided under VET funding contracts. These will be legally enforceable contracts made between the Secretary and a contractor for the provision of Government-subsidised training places.

Funds can also be provided by way of grants, subsidies or loans to public and private providers and community groups.

VET funding contracts are intended to be legally enforceable.

In addition, a new Division 1 of Part 3.1 of the Principal Act will provide that certain terms of VET funding contracts will be enforceable despite certain rules and principles of common law and equity. This is so the contracts can better deal with the provision of government-subsidised training to the community—see below.

The VRQA will be authorised to take into account a provider's history of compliance with government training contracts anywhere in Australia (not just Victorian VET funding contracts) in determining whether that provider is suitable to be registered as a registered training organisation (RTO) under the Principal Act.

The VRQA and DEECD will be authorised to exchange information with each other and with Commonwealth agencies and education regulators about providers' histories of compliance with government training contracts.

As mentioned, a new Division 1 of Part 3.1 will provide that certain terms of VET funding contracts may be enforced despite certain rules and principles of common law and equity. This is to avoid or reduce some of the well-known difficulties that can arise in enforcing and monitoring contracts for the delivery of government services to the public.

Some of the difficulties the new Division 1 will address are:

When a contract for the delivery of government services to the public is breached, the remedy of monetary damages is generally not available to the State. This is because the State, as a legal entity, would generally not incur a direct, quantifiable loss that can be compensated by damages. This may leave few ways to enforce a contract effectively.

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When contracts for the delivery of government services are breached, it is more likely that losses would be suffered by those individuals and groups meant to benefit from the government funded services. But these individuals generally have no remedy, not being parties to the contract.

Specific performance (that is, a court order for a contractor to fulfil the contract) is generally not a remedy available in relation to government contracts to provide services to the public. This is because, under principles of common law and equity, monetary damages is a more preferred remedy than specific performance, especially if the contract involves the provision of personal services.

There are sometimes doubts whether government funding arrangements are really legally enforceable contracts, or are just grants with conditions that are legally unenforceable.

It can be difficult to enforce contractual obligations that exist for the purposes of accountability for use of public funds and contract management, such as obligations to provide information, allow access to premises and monitor performance. This is because the only remedy against a contractor who dishonours such an obligation may be to seek monetary damages, and even then only if an actual monetary loss can be proved.

More information on these and other issues in enforcing contracts for government services can be obtained from several books, reports and articles, including:

Government Contracts – Federal, State and Local, by Dr Nicholas Seddon (4th edition, The Federation Press, Sydney, 2009)—see especially Chapter 1 on "The Uses of Contract by Governments";

Report to the Attorney-General, The Contracting Out of Government Services, Report No. 42 (August 1998), Administrative Review Council, Attorney-General's Department, Commonwealth of Australia, Canberra. A copy of this Report can be accessed at the ARC's website at: www.arc.ag.gov.au/Publications/Reports/Pages/ Reportfiles/ReportNo42.aspx

Article in the Australian Journal of Administrative Law, "ARC report on the contracting out of government services: its context and recommendations" by LM Zamprogno, Vol. 6, February 1999, pp. 75–84.

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The proposed Division 1 of Part 3.1 would provide that certain terms of VET funding contracts take effect despite certain rules and principles of common law and equity. These are:

A VET funding contract may specify monetary damages to be paid by a contractor for breaching or not complying with the contract, despite the common law rule against contractual "penalties". Without this, a breach by a contractor that causes harm to students and the community may incur no sanction unless the State can prove it directly incurred a loss.

The State may seek to enforce a VET funding contract by "specific performance", if the contract so provides. This would enable the State to ask a court to order a contractor to fulfil its obligations by, say, completing delivery of a course or awarding qualifications. Without this, it is likely that monetary damages rather than specific performance would be awarded, even though the failure to fulfil the contract may cause significant disruption and loss to students and groups of students.

A VET funding contract may, if the parties so agree, provide for specified terms to operate for the benefit of students in government-subsidised training places. This means a student who undertakes government-subsidised training may be able to obtain compensation from a contractor for losses caused by the contractor's failure to deliver training, award a qualification, etc. in accordance with the VET funding contract. This will be so even though the student is not a party to that contract. Without this, a student may be prevented by the common law rule of "privity of contract" from recovering his or her losses. A student's losses could be considerable if, for example, a course has to be repeated or the contractor fails to provide a statement of attainment.

An officer authorised by the Secretary may enter and inspect a contractor's premises if so agreed under the VET funding contract. Without this, a refusal by a contractor to provide access in accordance with the contract may prevent appropriate inspections and monitoring, thus frustrating proper accountability for the use of public funds.

The provisions outlined are enabling in nature. They enable VET funding contracts to include terms of the kinds outlined above. If included, the provisions would enable such contract terms to be enforced despite legal or equitable rules that may otherwise prevent or limit enforcement of terms of those kinds.

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The provisions would not apply to all education providers, but would make enforceable only those terms of VET funding contracts that are freely entered into by contractors providing government-subsidised training to the public.

The funding of vocational education and training is a matter left to State legislation by section 9(2)(e) of the National Vocational Education and Training Regulator Act 2011 (NVR Act). It is intended that VET funding contracts—

will deal with the funding of training and contractual and other matters related to that funding; and

will not deal with regulatory matters that are the responsibility of the Commonwealth regulator (ASQA) under the NVR Act, or of the State regulator, the VRQA, under the Principal Act, as the case may be.

Part 3 will commence operation on a day to be fixed by proclamation but no later than 1 January 2013—see clause 2(2) and (3) of this Bill. This means that the function of administering training funding will transfer to the Secretary DEECD no later than 1 January 2013.

Clauses

Clause 9 inserts a definition of VET funding contract into section 1.1.3(1) of the Principal Act, which is the general definition section for that Act. A VET funding contract is defined as a contract that is entered into under the new Division 1 of Part 3.1, which is to be inserted by clause 10 of this Bill.

Clause 10 inserts a new Division 1 of Part 3.1 of the Principal Act. Note that the existing Division 1 of Part 3.1 (dealing with the establishment of the Victorian Skills Commission) is to be repealed by clause 4.

The new Division 1 will set out the legislative framework for Government funded vocational education and training. The new Division will consist of new sections 3.1.1 to 3.1.7, which are explained below.

New section 3.1.1 deals with the application of the new Division.

It provides that, for the purposes of new Division 1, a contractor means an education provider that has entered into a VET funding contract with the Secretary to the Department of Education and Early Childhood Development (DEECD) to deliver government-subsidised training.

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An education provider will not be eligible to enter into a VET funding contract unless it is registered and regulated by one of the regulators of RTOs operating in Victoria:

The Australian Skills Quality Authority (ASQA), under the National Vocational Education and Training Regulator Act 2011 of the Commonwealth; or

The Victorian Registration and Qualifications Authority (VRQA), under the Education and Training Reform Act 2006.

New section 3.1.2 authorises the Secretary to DEECD to make payments of vocational education and training funds. In particular the Secretary may—

make payments to RTOs on terms and conditions the Secretary thinks fit;

enter into VET funding contracts with an RTO (a contractor) for it to provide State-funded (whether wholly or partially) vocational education and training;

make payments to a local learning and employment network under a performance management agreement with its committee of management;

make payments by way of grants, subsidies and loans for vocational education and training to any public or private institution or other person or organisation (such as community groups) on terms and conditions the Secretary thinks fit; and

use funds to meet related administrative costs.

The power to make VET funding contracts is essentially a power to purchase or subsidise training places—by way of a legally enforceable contract—from RTOs, whether they are public institutions (such as TAFE institutes) or private organisations in the business of providing training.

In contrast, the power to make grants, subsidies or loans is essentially a power to make grants of public funds to assist community based organisations and the like that provide training.

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New section 3.1.3 sets out what a VET funding contract may contain, namely—

the terms and conditions on which the State will fund training under the contract;

that the contractor agrees to deliver vocational education and training programs, services and facilities as part of the government vocational education and training system;

the terms and conditions under which the contractor will do this;

the specifications relating to the training programs, services and facilities that the contractor will provide;

performance requirements for the contract, and how performance is to be measured;

the terms and conditions under which government training funding will be paid to the contractor;

the manner in which the contractor may earn other revenue for training that is government-subsidised, such as the fees that may be charged to students in government-subsidised programs;

the fees that can be charged to students undertaking government-subsidised programs;

those matters in the contract for which the State could seek "specific performance", that is, a court order requiring the contractor to carry out specific obligations under the contract—see new section 3.1.5 for more detail;

those matters in the contract that the State and contractor agree should operate for the benefit of the student, such that the student may have a direct claim against the contractor if the requirements are not complied with—see the notes on new section 3.1.6 for more detail;

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monetary penalties that the contractor agrees to pay to the State if it breaches or does not comply with specified terms of the contract, and the recovery of such penalties—see the notes on new section 3.1.4 for more detail;

the process for varying, transferring, assigning, sub-contracting or terminating the contract, and matters consequential on termination;

pre-agreed rights of access for persons authorised by the Secretary to monitor compliance with the contract—see the notes on new section 3.1.7 for more detail;

anything else the Principal Act or the regulations require to be specified in a VET funding contract—for example, regulations could require that a contract specify a manager who is responsible for contract communications; or

anything else that the Secretary considers should be contained in the contract in the public interest.

New section 3.1.4 provides that a VET funding contract may expressly provide for payment of monetary penalties, to be fixed or calculated in accordance with the contract, if the contractor breaches or fails to comply with it, or if the contract is terminated.

As a general rule, contract law will allow a party to recover actual damages incurred as a result of a breach of contract. But if a contract term provides for payments that exceed losses actually incurred, a court may see the term as a "penalty clause" and not enforce it.

This rule can make it difficult to enforce government contracts that deal with the provision of government services to the public by contractors. This is because, if the contract is breached or not complied with, it is likely to be the public that would incur the loss rather than the State as an entity.

Consequently, even if a contract is clearly breached, and even if members of the public who depended on the contractor for the provision of the service incur loss as a result, the State may not be able to sue successfully under common law.

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Some existing legislation enables breach of government contracts to lead to penalties—see for example section 27(3) of the Bus Services Act 1995. In the absence of such provisions, there may be few effective sanctions for non-compliance with a contract to provide government services to the public.

For these reasons, new section 3.1.4(1) (and 3.1.3(k)) will enable a VET funding contract to provide that a contractor must pay monetary penalties if they breach or do not comply with the contract, or if the contract is terminated. Under subsection (2), such a term would be enforceable despite the normal rules and principles of the common law of contract relating to liquidated damages and penalties outlined above.

It should be noted that this is an enabling power only. There will be no requirement that penalty clauses must be included in all VET funding contracts. But it will be an option, and such a clause could be included if negotiated and agreed between the Secretary and a contractor that undertakes to deliver government-subsidised training to the public.

New section 3.1.5 (and 3.1.3(i)) will enable a VET funding contract to provide that an order for specific performance may be sought by the Secretary against a contractor that breaches or does not comply with a VET funding contract.

This new section addresses another aspect of the problems in enforcing government contracts described in the notes on new section 3.1.4 above.

An order for specific performance is basically a court order that requires a party to fulfil its obligations under a contract. While a party can seek such an order, a court may not award it even if the court is satisfied that the contract has been or is being breached. For instance, if a court is satisfied that adequate monetary damages can be awarded, the court may award those damages in preference to ordering specific performance of the contractual obligation. Further, a court may decline to award specific performance where it would require personal services to be provided.

Certain rules and principles of common law and equity can prevent or impede effective enforcement of government contracts for the provision of services to the public. In some cases, awarding monetary damages to the State may not be an adequate remedy to protect the interests of members of the

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public affected by the breach. It may be better to require a contractor to fulfil its contract, thus avoiding the disruption and cost to members of the public that would result from the breach.

For instance, say a contractor has agreed to provide an educational program to the public under a government contract, and then breaches that contract by ceasing to provide the course shortly before it is due to end. If students are unable to complete the course, they may be forced to repeat or abandon the course. The students' educational and professional careers may be set back, and money spent on accommodation and other expenses during the course may be wasted. In such a situation, an order for specific performance requiring the contractor to complete the course for the students' benefit may be a more appropriate remedy for the State to seek than monetary damages.

For these reasons, new section 3.1.5 and 3.1.3(i) provide that a VET funding contract may expressly provide that particular terms may be enforced by specific performance. If the contract contains such a term, then—despite rules and principles of common law and equity—a court may award specific performance in relation to that matter even though adequate monetary damages may be available and even though it may require personal services to be provided.

The new section would enable the State to seek an order that a contractor actually deliver contracted services to the public, rather than just paying damages (even "adequate" damages) for a failure to deliver.

It is important to note that the new section is an enabling provision. It will only apply to contracts, or terms of contracts, if the Secretary and the contractor expressly agree, at the time the contract is executed, that specific performance may be required of certain obligations.

New section 3.1.6 (and 3.1.3(j)) will enable a VET funding contract to provide that certain provisions of the contract are to operate for the benefit of students. If the contract says this, then a student who incurs a loss arising from the breach of such a term may be able to recover damages directly from the contractor.

New section 3.1.6 addresses another aspect of the problems in enforcing government contracts described above.

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As explained in the notes on new section 3.1.5, if a contractor breaches or does not comply with a VET funding contract for the provision of a government-subsidised educational program, students may incur substantial losses directly or indirectly. For instance, a student's educational and professional career may be set back, causing money already spent to have been wasted, causing additional expenses, or loss or delay of earning potential.

However, under general principles of contract law, contracts are usually enforceable only by the parties to them. This principle of contract law is known as "privity of contract". Thus, if a student in a government-subsidised course incurs a loss because a contractor does not comply with their contractual obligations to the State in delivering that course, the student may have no recourse against the contractor.

For these reasons, new section 3.1.6(1) (and 3.1.3(j)) will enable a VET funding contract to provide (if the Secretary and contractor agree) that a student may be able to recover damages directly from the contractor if all of the following conditions are met, namely—

the contract expressly states that it extends to a category of students; and

the contract expressly states that a "performance requirement" (as defined) in the contract confers a benefit directly on a student; and

the student incurs a loss arising from a breach, or failure to comply with, that performance requirement; and

the student's loss is a direct and foreseeable consequence of that breach or failure to comply.

If these conditions are met then, under subsection (2), the student may sue the contractor for that loss even though the student is not a party to the contract. This will be a statutory exception to the principle of "privity".

Subclause (3) provides that a contractor has all the same legal defences that it would have had if the student had actually been a party to the contract.

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Subclause (4) defines performance requirement for the purposes of the new section 3.1.6. It means a term of a VET funding contract that specifies a performance requirement that is to operate for the benefit of a student in a government-subsidised course.

It is important to note that this new section will only apply, and rights of action will only be conferred on students, if the contractor and the Secretary expressly agree in the VET funding contract to this effect.

New section 3.1.7 gives effect to terms of VET a funding contract that provides for the Secretary's officers to be able to enter a contractor's premises to monitor compliance with the contract. The new section provides that an officer authorised by the Secretary may enter the contractor's premises as agreed, but only during times agreed in the contract.

The new section gives statutory backing to agreed access arrangements, which might otherwise be practically unenforceable. However, the new section will only give effect to terms that are pre-agreed between the Secretary and contractor.

Clause 11 substitutes section 3.1.15 (1)(a) of the Principal Act. That section deals with the accountability of TAFE institute boards.

The effect of the amendment is that a TAFE institute board must perform its functions and exercise its powers subject to any VET funding contract between the Secretary and the TAFE institute. This will replace an existing requirement to act in accordance with a performance agreement.

Clause 12 amends section 3.1.19(1)(b) and (d)(ii) of the Principal Act. That section sets out the reserve powers of the Minister with respect to the board of a TAFE institute that has not complied with certain obligations under the Act.

The effect of the amendment is that an institute's failure to comply with a VET funding contract will be grounds for the exercise of the reserve powers, and the Minister's options include directing the institute to comply with the contract. This amends existing provisions that already confer such powers in relation to compliance with performance agreements.

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Clause 13 inserts a new definition of government training contract into section 4.1.1(1) of the Principal Act. This is the definition section for Chapter 4 of the Principal Act, which deals with the Victorian Registration and Qualifications Authority (VRQA) and its regulatory functions.

Government training contracts will include not only VET funding contracts, but also any contract or arrangement involving the provision of vocational education and training with Victorian government funds, and similar contracts and arrangements in other States and Territories, past and present.

The new definition will be relevant for the purposes of the amendments proposed by clauses 14 and 15, which will enable the VRQA to consider a provider's history of compliance with a government training contract in determining whether it is suitable to be a registered training organisation (RTO) under Victorian law. The definition will also be relevant to the amendments proposed by clause 16, which enables exchanges of information about providers' compliance with government training contracts.

Clause 14 amends section 4.3.16(2A) of the Principal Act by inserting a new paragraph (e). That section sets out matters that the VRQA may take into account when considering whether an applicant is suitable to be registered under Victoria law as an RTO.

The effect of the new paragraph (e) is that the VRQA may consider whether the applicant, or a high managerial agent of the applicant, has ever breached a "government training contract", whether in Victoria or elsewhere in Australia. A history of non-compliance with such contracts is a significant risk indicator. See the notes on clause 13 for an explanation of the term "government training contract".

Clause 15 amends section 4.3.21(3) of the Principal Act by inserting a new paragraph (g). That section sets out matters that the VRQA may take into account when considering whether the registration of an RTO should be amended, suspended or cancelled. Similar to the amendment proposed by clause 14, the amendment to be made by clause 15 will enable the VRQA to take into account the RTO's history of compliance with government training contracts.

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Clause 16 amends section 4.9.4 of the Principal Act. That section authorises certain kinds of information to be exchanged between education regulators and other agencies.

The effect of the amendment is that information about a provider's compliance with a government training contract may be disclosed—

by the VRQA to the Secretary DEECD, Commonwealth Departments and education regulators of other jurisdictions (such as ASQA); and

by the Secretary DEECD to the VRQA, Commonwealth Departments and education regulators of other jurisdictions.

In addition, the VRQA will be authorised to pass to DEECD information of the kind it is already authorised to provide to the Commonwealth department and to other education regulators.

Providers sometimes move between jurisdictions, or are registered simultaneously by more than one regulator in respect of different areas of activity. It is important that relevant information held by Victorian agencies can be shared with each other and their counterparts in other jurisdictions so that they can all better able to carry out their responsibilities. The corresponding Commonwealth legislation already enables Commonwealth regulators to pass such information to the Victorian agencies.

See the notes on clause 13 for an explanation of the term "government training contract".

PART 4—GOVERNANCE OF TAFE INSTITUTES AND ADULT EDUCATION INSTITUTIONS

Overview of Part 4

Part 4 of the Bill amends Chapter 3 of the Principal Act in relation to the governance of TAFE institutes and adult education institutions. Victoria has two adult education institutions, the Centre for Adult Education and the Adult Multicultural Education Services, which are operate on broadly similar lines to TAFE institutes.

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In overview, the key changes are:

New statements of objectives for TAFE institutes and adult education institutions will be put into the Principal Act. These objectives will emphasise operating efficiently and collaboratively to promote the economy and community wellbeing through provision of educational services.

TAFE institutes and adult education institutions will become incorporated entities like other large public authorities. Currently, it is their governing boards that are the incorporated entities.

The boards of TAFE institutes and adult education institutions are to be reconstituted, with all directors appointed by the Government on the basis of skills and experience to oversee the management of major public corporations. This reflects the fact that these institutions are major corporations, manage substantial public assets, are responsible for important public services, and operate in a complex and competitive education and training market. There will no longer be directors appointed or elected as representatives of particular stakeholders, or co-opted by the boards themselves.

A review process is to be conducted, leading to the making of new Orders in Council to reconstitute the boards of TAFE institutes and adult education institutions along these lines. To this end, a Model Constitution for TAFE institutes and Adult Education Institutions will be published setting out, for consultation purposes, proposals for implementing the proposed new governance arrangements.

It will be possible to merge the governance of an adult education institution with that of a TAFE institute. This new power is to be first used to establish one governing board for the Box Hill Institute of TAFE and the Centre for Adult Education. They will remain separate educational institutions with their own programs and staff but under the one governance structure.

Part 4 of the Bill will commence operation on a day to be fixed by proclamation but no later than 1 January 2013—see clause 2(2) and (3) of this Bill.

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Division 1—TAFE Institutes

Overview of Division 1

Division 1 of Part 4 of the Bill establishes new governance structures and accountabilities for Victoria's TAFE institutes. To this end, it makes substantial amendments to Division 2 of Part 3.1 of the Principal Act, which deals with the establishment and governance of TAFE institutes.

What are the current TAFE institute governance arrangements?

Under present governance arrangements, TAFE institutes are unincorporated bodies established by Order in Council under existing section 3.1.11 of the Principal Act. They are governed by incorporated boards, which are established by Orders in Council under existing section 3.1.12. Those boards are at present partly appointed by government, partly self-selected through a process of co-option, and include the institute's chief executive officer and elected directors. The existing section 3.1.13 sets out boards' functions, which mix together the educational and other functions of the institute with the governance functions of the board.

What TAFE governance arrangements are proposed?

Under the proposed amendments, governance arrangements for TAFE institutes will be more like those for comparable public statutory authorities with large scale operational responsibilities.

Each institute will become a statutory corporation. The employees and assets of the existing boards will become employees and assets of the newly incorporated institutes. The institutes will have broad power to carry out their educational and related roles.

Institutes' governing boards will be accountable for running them economically, efficiently and in a commercially prudent way. The boards will be reconstituted along corporate lines, with all directors appointed by government, some after receiving advice from the boards themselves. Selection will be based solely on having the skills, experience and qualifications to undertake the important and onerous responsibilities of being a director of such a board. Chief executive officers of institutes will no longer be board directors. This is because they are employees of, and accountable to, the boards.

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Instead of the one functions statement for boards, there will be—

A statement of objectives for institutes, articulating TAFE institutes' major goals, individually and collectively;

A statement of institutes' functions, listing their main tasks, such as the delivery of vocational education and training and other educational and related programs; and

A statement of boards' institutional governance functions, including oversight of management, strategic and operational planning, giving direction to management, ensuring that the institute operates efficiently and in a commercially prudent manner, and being accountable (through the Minister) for the proper performance of the institute's functions.

A related amendment will defer the introduction of broad new commercial powers for TAFE institutes until the new boards are established. In this regard, see the notes on clause 108.

The Bill also requires that all the existing Orders in Council be reviewed and remade, so as to implement the new governance arrangements outlined above. These Orders would reconstitute the boards as required by the Bill. Pending the making of new Orders, the existing boards would remain in place.

The new Orders would also make detailed governance provision for each institute individually, tailored to local circumstances and reflecting the needs of the communities and industries that the institute serves. The Orders may also make further provision with respect to the objectives, functions, powers, governance and accountability of institutes.

The new Orders will be developed in consultation with the TAFE institutes and with other stakeholders. To this end, it is proposed to publish a Model Constitution for TAFE Institutes and Adult Education Institutions with an accompanying discussion paper as a basis for this consultation process.

Note that this consultation process will also cover the governance of the two adult education institutions, which will be reformed along similar lines under Division 2 of Part 4 of the Bill.

Division 1 will also facilitate the merger of an adult education institution's and a TAFE institute's governance arrangements. This is intended to be first used to merge governance of the Box Hill Institute of TAFE and the Centre for Adult Education.

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Clauses

Clause 17 inserts new sections 3.1.11, 3.1.12, 3.1.12A, 3.1.12B and 3.1.2C into the Principal Act.

New section 3.1.11(1) enables the Governor in Council, by Order, to create, abolish, amalgamate or change the name of a TAFE institute. TAFE institutes can also be amalgamated with a University with a TAFE Division, if the Council of that University approves. University with a TAFE division is already defined in section 3.1.1(1) of the Principal Act to mean the Swinburne University of Technology, Victoria University, the University of Ballarat and the Royal Melbourne Institute of Technology.

Subsection (2) then enables Orders in Council under section 3.1.1 to make provision with respect to the governance of a TAFE institute. In particular, an Order in Council may, under the following paragraphs of subsection (2)—

(a) establish a board to oversee and govern an institute;

(b) amalgamate boards of TAFE institutes, so that the one board may be responsible for the governance of more than one TAFE institute;

(c) under additional powers to be conferred by new section 3.1.26AA, which will complement the powers conferred by section 3.1.11, an Order in Council may provide that the board of a TAFE institute will oversee and govern both a TAFE institute and an adult education institution—see the notes on clause 23 of the Bill;

(d) abolish the board of a TAFE institute;

(e) change a board's name;

(f) make provision or further provision in respect of the governance, constitution, management structure, membership, objectives, powers, duties or functions of an institute or of its board, including the manner of appointment and the terms and conditions of appointment of board directors;

(g) enable the board to make institute rules;

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(h) authorise the board to delegate its powers and functions to an employee of the institute or a board committee established by the Order in Council;

(i) amend any previous Order in Council or Ministerial Order relating to an institute or its board; or

(j) make consequential, savings or transitional provision.

Note that, under existing section 5.10.3(2) of the Principal Act, such Orders in Council must be published in the Government Gazette as soon as practicable after they are made.

Under subsection (3), any of the things that can be done by Order in Council under paragraphs (f) to (j) of subsection (2) can be done by a Ministerial Order as well or instead. For instance, a Ministerial Order could make provision (in addition to or instead of in an Order in Council) in relation to institutional governance and the process for selection of board directors. However, a Ministerial Order cannot do the things set out in paragraphs (a) to (e), such as create, abolish or amalgamate a TAFE institute.

Note that, under existing section 5.10.4(4) of the Principal Act, Ministerial Orders must be published as soon as practicable after they are made.

In relation to paragraph (e) of subsection (1), note that the power for an Order in Council or Ministerial Order to specify the objectives, powers, duties or functions of an institute or its board may complement or provide additional detail in relation to—

the statement of objectives of TAFE institutes to be set out in new section 3.1.12A;

the statement of functions of TAFE institutes to be set out in new section 3.1.2B;

the powers of TAFE institutes to be set out in new section 3.1.12C; and

the functions of TAFE institute boards to be set out in new section 3.1.13.

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In relation to paragraph (f) of subsection (1), note that the power for an Order in Council or Ministerial Order to specify the composition of a board of directors must comply with the parameters to be set by new section 3.1.16 in relation to the composition of boards. In this regard, see the notes on clause 20.

In relation to paragraph (h), note that clause 23 of the Bill will make a consequential amendment to clause 11 of Schedule 2 to the Principal Act, which deals with delegations by authorities established by the Principal Act including boards of TAFE institutes and adult education institutions.

There is a related transitional provision in new sections 6.1.32(5) and 6.1.33(5). This will require the Minister to arrange for all existing Orders in Council that establish the boards of TAFE institutes and adult education institutions to be reviewed and remade within 12 months. See the notes on clause 33 of the Bill.

Subsection (4) sets out the process for making an Order in Council or Ministerial Order. Basically, an Order may only be made if there has been a request for the Order from the board of any affected TAFE institutes or adult education institutions.

Subsection (5) clarifies that, despite a change of name of a board of a TAFE institute, it continues in existence as the same entity. Any reference to the board in any document by its former name must then be construed as a reference to it by its new name.

Subsection (6) provides that the change of the name of a TAFE institute does not in any way affect legal rights or obligations. Legal rights or actions involving the institute continue unaffected by the name change. Any reference to the TAFE institute in any document by its former name must be construed as a reference to it by its new name.

Subsection (7) provides that legal rights or actions involving either of the amalgamated institutes may continue unaffected against the new single institute.

Subsection (8) requires that a copy of every Order in Council or Ministerial Order made under section 3.1.11 be laid before each House of Parliament as soon as practicable after it is made.

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New section 3.1.12 provides that a TAFE institute is a body corporate. That is, the institute will be a legal person that can own property, make contracts, employ staff and sue or be sued in its corporate name.

At present, TAFE institutes, are unincorporated bodies with boards of directors that are incorporated by the existing section 3.1.12 of the Principal Act. Clause 17 of this Bill repeals that section, taking away the provision that incorporates the boards.

The new arrangement is more conventional and is consistent with the general situation with respect to other corporations with significant operations, such as trading companies and large statutory authorities. It is also brings the legal situation more in accord with general expectations. Employees and people and organisations having dealings with a TAFE institute think of themselves as being employed by, or having a contract with, an Institute of TAFE, rather than a board.

New section 6.1.32, which is to be inserted by clause 33 of the Bill, is a related transitional provision. By operation of that new section, all existing TAFE institutes will become incorporated bodies, their boards will cease to be incorporated, and all the existing assets, liabilities, rights and obligations of the boards as corporations will transfer to the institutes. For instance, staff will become the legal employees of the institute rather than the institute board as at present.

New section 3.1.12A sets out a statement of objectives for TAFE institutes. This will be a high level set of goals and aims for institutes individually and collectively. The objectives reflect the changing environment in which TAFE institutes operate, as large public corporations with substantial businesses and operating in a competitive environment.

The objectives of a TAFE institute are—

(a) to perform its functions for the public benefit by—

operating its businesses, delivering educational services and utilising the assets it manages on the State's behalf as efficiently as possible, and

ensuring that it is sustainable in the medium to long term, and

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ensuring that its procedures, policies and practices are consistent with prudent commercial practice, and

endeavouring to maximise its contribution to the economy and wellbeing of the communities and industries served by the institute and the State as a whole; and

(b) to facilitate student learning, knowledge acquisition, skills for employment and vocational education and training through excellent teaching, innovation and educational leadership that delivers quality outcomes; and

(c) to collaborate as part of a strong public provider network that is mutually and commercially beneficial to enable the institute to offer or provide educational services that meet the needs of industry partners and communities, including persons and groups that have particular education needs; and

(d) any other objectives set out in an Order in Council or Ministerial Order under section 3.1.11.

In relation to paragraph (d) above, this means that the objectives set out in new section 3.1.12A can be supplemented for individual institutes by the Orders in Council or Ministerial Orders to be made under new section 3.1.11(2)(f) or (3)—see above. As explained in the overview at the beginning of the notes on Part 4, it is intended to publish a Model Constitution for TAFE Institutes and Adult Education Institutions with an accompanying discussion paper to serve for consultation with institutes and other stakeholders.

Note that, under new section 3.1.12C, TAFE institutes will have power to do all things that are necessary or convenient to be done to meet their objectives—see below.

There is more explanation in the overview of Part 4 of the Bill about the way in which the objectives, functions and powers of TAFE institutes and their boards will be set out in the new governance framework to be established under this Bill.

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New section 3.1.12B sets out the detailed statement of functions of TAFE institutes. This lists the ongoing tasks and activities of a TAFE institute. These include—

to provide the communities and industries served by the institute with—

efficient and effective technical and further education services;

efficient and effective adult, community and further education programs and services which are responsive to the needs of the community and to consult Regional Councils of Adult, Community and Further Education in this;

to provide vocational education and training—but note that providers of vocational education and training must be registered as an registered training organisation (RTO) under either the National Vocational Education and Training Regulator Act 2011 of the Commonwealth or the Principal Act, depending on the scope of their activities;

to offer and conduct courses of study leading to the conferral of higher education awards and to confer such awards—but note that the Tertiary Education Quality Standards Agency Act 2011 of the Commonwealth requires providers of higher education to be registered under that Act; and

to conduct other consistent activities, as detailed in new section 3.1.12B, including providing facilities for use by the community.

Subsection (2) authorises TAFE institutes to perform their functions outside Victoria.

Note that additional functions of a commercial nature will be conferred on TAFE institutes by amendments that will be made to section 3.1.12B by section 55(3) of the Education and Training Reform Amendment (Skills) Act 2010 when it comes into operation. See the notes on clause 108.

New section 3.1.12C sets out the powers of TAFE institutes. They will have power to do all things that are necessary or

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convenient to be done to meet their objectives or performing their functions.

Under subsection (2), an institute will have power, for the purpose of meeting its objectives and performing its functions, to be a member of or participate in the formation of a company, association, trust or partnership and to enter into joint ventures. In this regard, see also the notes on clause 18.

New section 3.1.13 sets out the functions of TAFE institute boards, which focus on the governance of the institute.

The boards' existing functions statement is in effect split, with operational matters assigned to the institute under new section 3.1.12C, and governance to the board under new section 3.1.13.

The boards' key governance functions are—

to oversee and govern the institute efficiently and effectively; and

to develop and implement strategic plans and statements of corporate intent in accordance with the requirements of the Principal Act (see existing sections 3.1.18A to 3.1.18C) and operational business plans for the institute; and

to ensure that the institute operates in accordance with its strategic plan and statement of corporate intent; and

to provide for the proper, efficient and effective performance of the institute;

to develop and issue directions for the administration and management of the institute that must be complied with by the chief executive officer and staff of the institute;

to give proper direction to, and exercise proper control over, the chief executive officer and other staff employed by the institute and monitor that they are carrying out their functions in a fit and proper manner;

to advise and report on the activities of the institute to the Minister; and

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to perform any other functions that are conferred on the board by an Order in Council or Ministerial Order under new section 3.1.11.

Under new subsection (2), a board may perform its functions outside Victoria and Australia.

Note that, under existing section 3.1.15(2) of the Principal Act, a board is accountable to the Minister for the proper performance of its statutory functions and that the Minister has reserve powers under section 3.1.19 if a board is inefficiently or incompetently governing an institute.

Clause 18 repeals section 3.1.14(2) of the Principal Act. That section currently confers power on TAFE institute boards to participate in companies, partnerships, trusts, joint ventures and the like. The section is made redundant by the transfer of incorporated status from the board to the institute itself. The institutes will have corresponding powers under the new section 3.1.12C(2)—see notes above.

Clause 19 amends section 3.1.15 of the Principal Act, which deals with the accountability of TAFE institute boards. Subclause (1) makes a consequential change to a section cross-reference.

Subclause (2) makes a substantive amendment. Under section 5.2.1 of the Principal Act, the Minister has power to issue directions to education institutions, including TAFE institutes. Subclause (2) inserts a new subsection (2A) into section 3.1.15 of the Principal Act. This will authorise a TAFE institute board to publish in its annual report any written direction given to it.

Clause 20 substitutes section 3.1.16 of the Principal Act, which deals with the appointment of directors of TAFE institute boards.

New section 3.1.16 sets certain parameters for any Order in Council or Ministerial Order under new section 3.1.11 that provides for the composition of a board of directors.

An Order must provide that—

the board chairperson is to be appointed by the Governor in Council; and

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half of the other directors (or one more than half if there is an odd number) are to be appointed by the Minister alone; and

the remainder are to be appointed by the Minister after considering the advice of the chairperson and the directors appointed by the Minister alone.

Note that an Order under new section 3.1.11 could set out a process for providing board advice to Minister, such as the advertisement of director positions, the assessment of candidates against selection criteria and the matters to be addressed in the advice to the Minister. It is proposed that a Model Constitution for TAFE Institutes and Adult Education Institutions will be published for consultation with institutions and stakeholders and could deal with such matters.

Note that, pending the making of the new Orders under section 3.1.11 and the formation of new boards under those Orders, the existing boards will remain in place under their current Orders (or "constitutions") under the transitional provisions to be set out in new section 6.1.32—see the notes on clause 33.

New subsection (2) sets out the matters that must be taken into account by the Minister (and by directors when advising the Minister) on the appointment of directors to an institute board. It requires that the Minister and the directors must endeavour to ensure that the board has directors with knowledge of or experience in the following areas—

management;

finance;

commerce or business;

law;

corporate governance;

vocational education and training;

adult, community and further education;

any industry in which training is provided at the institute;

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higher education (if the TAFE institute provides higher education); and

if the board is also responsible for overseeing and governing an adult education institution, the community or any industry served by that adult education institution—in this regard, see the notes on clause 23, new section 3.1.26AA.

Subclause (3) maintains an existing provision making members of Parliament ineligible to be a director of a board. In addition, the chief executive officer of a board will be ineligible to be appointed a director. This is because the chief executive officer is an employee of, and accountable to, the board.

As can be seen, the boards will be reformed along corporate lines, with full responsibility and accountability for corporate governance. Directors will be chosen on the basis of their qualifications and experience to carry out the responsibilities of such a board, rather than partly representational considerations.

Note that there will no longer be directors selected and appointed by the boards themselves through co-option. Further, there will no longer be guaranteed student and staff positions on boards. It should be noted, however, that qualified individuals who are staff or students will not be ineligible for appointment as directors, other than the chief executive officer.

Clause 21 substitutes section 3.1.18 of the Principal Act, which deals with the power to remove individual directors. This amendment is consequential on the fact that all directors will now be government appointed.

The new section will enable the Governor in Council to remove the chairperson or a director from office at any time. This is the existing position under section 3.1.18 in relation to government appointed directors.

While section 3.1.18 currently provides a process for removal for cause for other categories of directors, those provisions become redundant because those categories will no longer exist.

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Clause 22 makes a number of amendments to Part 3.1 that are consequential on the substantive amendments described above.

Subsection (1) substitutes section 3.1.19(1)(f) of the Principal Act, which deals the power of the Governor in Council to remove all directors of a board under reserve powers. The current section provides that the Governor in Council would appoint new directors in this situation. Under the new provision, appointments will be made in the usual way for filling vacancies.

The other amendments are consequential on the transfer of incorporated status from the boards to the institutes themselves, or on changes to the composition of the boards.

Clause 23 inserts a new section 3.1.26AA into the Principal Act.

New section 3.1.26AA will enable an Order in Council under section 3.1.11 which establishes the board of a TAFE institute to provide that, in addition, the board will oversee and govern an adult education institution. This new provision works in conjunction with new section 3.1.11(2)(c), to be inserted by clause 17 of this Bill.

It is intended to use this power, in the first instance, to make the board of the Box Hill Institute of TAFE responsible for overseeing and governing the Centre for Adult Education. These will continue as separate educational institutions, and will be separate corporate entities, with their own assets and staff.

However, they will have a common governing board and chief executive officer, which will be the board and CEO of the TAFE institute.

The governance and management of the TAFE institute will come under the provisions of the Principal Act that relate to the governance of the TAFE institute. Similarly, the provisions relating to adult education institutions will continue to apply in relation to the CAE, except that its board will be constituted as a TAFE board. But note that, in this situation, the board may include directors with qualifications relevant to the adult education institution—see the notes on clause 20, new section 3.1.16 (2) above.

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In particular, when acting in relation to the TAFE institute, a combined board would be subject to the provisions of the Principal Act dealing with the objectives, powers, duties and functions of the board of a TAFE institute. However, when acting in its capacity as the governing board of the adult education institution, it would be subject to the corresponding provisions of the Act relating to those institutions.

Further, where the board of a TAFE institute has also been made responsible for the oversight and governance of an adult education institution, then new section 3.1.26AA will authorise an Order in Council under section 3.1.11 that relates to the board of that institute also to make further provision in relation to the adult education institution. In particular, an Order in Council under section 3.1.11 could—

make provision or further provision for or with respect to the objectives, powers, duties or functions of the adult education institution for which the board is responsible; or

make provision for the board to delegate its powers or functions that relate to the adult education institution to the staff of that institution or to the chief executive officer.

Subclause (2) provides that the establishment of a common board to oversee and govern both a TAFE institute and an adult education institution would not affect the continuity or the name of either the TAFE institute or the adult education institution. That is, they would continue as separate educational institutions and separate corporations. Nor would the establishment of a common board affect the separate and distinct objectives, functions, powers or duties of—

the TAFE institute, or

the adult education institution, or

the board when it is acting in its capacity in relation to the TAFE institute, or

the board when it is acting in its capacity in relation to the adult education institution.

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The new section is written in such a way that similar arrangements could be implemented for other TAFE institutes and adult education institutions in the future if appropriate.

Clause 24 amends Schedule 2 to the Principal Act, which makes provision with respect to the functioning of the various authorities established under the Principal Act.

The effect of subclauses (1) to (3) is that, in future, the remuneration and allowances of directors of boards of TAFE institutes and adult education institutions will be determined by the Minister, rather than by the boards themselves (with the Minister's consent). This is because of the re-composition of the boards along corporate lines, with full responsibility and accountability for corporate governance, and directors appointed solely on the basis of qualifications to fulfil these duties.

Subclause (4) enables the board of a TAFE institute to delegate its functions, other than the power of delegation itself.

Subclauses (5) and (6) deal with the management of funds of TAFE institutes and adult education institutions. Currently, these requirements are set out in clause 13 of Schedule 2, Essentially, the amendments replicate the existing requirements in a new clause 13A of Schedule 2, with changes consequential on the transfer of incorporated status from the board to the institutes.

Clause 25 amends Schedule 3 to the Principal Act, which deals with the employment of staff of TAFE institutes. The changes are consequential on the fact that, with the transfer of incorporated status from the boards to the institutes, the staff will in future be employees of their institute rather than its board. Note also that clause 33, new section 6.1.32, will make transitional arrangements in relation to the transfer of employment from the boards to the institutes.

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Division 2—Adult education institutions

Overview of Division 2

Victoria has two adult education institutions, the Centre for Adult Education (CAE) and the Adult Multicultural Education Services (AMES).

The CAE was originally established under section 65 of the Education Act 1958. In 1981, it was continued and reconstituted under a separate Act, the Council of Adult Education Act 1981. On 1 March 2001, that Act was repealed, and the CAE continued as the Centre for Adult Education by section 45 of the Adult, Community and Further Education Act 1991. Since 1 July 2007, the CAE has been continued in existence under section 3.3.27 of the Education and Training Reform Act 2006.

The AMES was originally a Division of the former Department of Education, Employment and Training known as the Adult Migrant Education Services. It was established as a separate educational institution (called the Adult Multicultural Education Services) on 1 March 2001 by section 44 of the Adult, Community and Further Education Act 1991. Since 1 July 2007, the AMES has been continued in existence under section 3.3.26 of the Education and Training Reform Act 2006.

The provisions of the Principal Act dealing with the establishment and governance of adult education institutions have always been broadly similar to the equivalent provisions in relation to TAFE institutes. A recent report of the State Services Authority recommended that governance arrangements for governance of for TAFE institutes and adult education institution should be kept consistent.

The amendments being made to adult education institution governance arrangements by Division 2 are therefore very similar to those made in relation to TAFE institute governance by Division 1. Throughout the notes on Division 2, readers are referred to the notes on the equivalent provisions of Division 1.

Clauses

Clause 26 inserts replaces existing sections 3.3.28, 3.3.29 and 3.3.30 of the Principal Act with the new sections described below. The sections being substituted currently deal with the governance of adult education institutions.

New section 3.3.28 deals with the establishment and governance of adult education institutions and their governing boards by Orders in Council. This new section corresponds very closely

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to the new section 3.1.11 being inserted by clause 17 in relation to TAFE institutes. See those notes for a full explanation.

A difference between section 3.1.11 and section 3.3.28 is that there is no power in the latter to make Ministerial Orders in relation to these governance matters. They may only be dealt with by Orders in Council.

Orders under new section 3.3.28 must be gazetted and tabled in Parliament in a similar manner to Orders under section 3.1.11.

New section 3.3.29 provides that an adult education institution will be a body corporate. This new section corresponds very closely to the new section 3.1.12 being inserted by clause 17 in relation to TAFE institutes. See those notes for a full explanation.

New section 6.1.33 (to be inserted by clause 33) is a transitional provision dealing with the transfer of incorporated status from the governing boards to the adult education institutions themselves.

New section 3.3.29A sets out a high level statement of objectives for adult education institutions.

This new section corresponds very closely to the new section 3.1.12A being inserted by clause 17 in relation to TAFE institutes. See those notes for a full explanation. However, there are several points of difference—

the adult education institutions' objectives statement reflects their different and special educational focus in providing adult, community and further education, employment and other associated programs and services that are responsive to the needs of the communities they serve.

adult education institutions have as an objective facilitating adult, community and further education, knowledge acquisition and skills for employment;

the governing board of the AMES will have as an objective to monitor the structure, reach and accessibility of AMES services to maximise their availability to new and emerging communities and client groups; and

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adult education institutions other than the AMES (currently, this is only the CAE) will have as an objective to make adequate arrangements for persons and groups which have not had or do not have adequate access to the institution's programs or services; and

any other objectives to be set out in an Order in Council relating to the institution —

under section 3.3.28 (which is the section under which Orders relating to adult education institutions are usually made); or

(if the institution is overseen and governed by the board of a TAFE institute) under section 3.1.11 (see the notes on clause 23).

New section 3.3.29B sets out the functions of adult education institutions. This new section corresponds to the new section 3.1.12B being inserted by clause 17 in relation to TAFE institutes. See those notes for a fuller explanation. However, there are some differences reflecting the different focus of adult education institutions. For instance, section 3.3.29B (1)(a) makes it a function of adult education institutions to undertake generally the development and provision of adult, community and further education.

Note that additional functions can be conferred on an adult education institution by an Order in Council—

under section 3.3.28 of the Principal Act (which is the section under which Orders relating to adult education institutions are usually made); or


New section 3.3.29C sets out the powers of the governing boards of adult education institutions. This new section corresponds to the new section 3.1.12C being inserted by clause 17 in relation to TAFE institutes. See the notes on that clause for explanation.

New section 3.3.30 sets out the functions of the governing boards of adult education institutions. This new section corresponds to the new section 3.1.13 being inserted by

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clause 17 in relation to TAFE institutes. See the notes on that clause for explanation.

Note that additional functions can be conferred on the governing board of an adult education institution by an Order in Council—

under section 3.3.28 of the Principal Act (which is the section under which Orders relating to adult education institutions are usually made); or


Clause 27 repeals section 3.3.31(2) of the Principal Act, which deals with the powers of the governing boards of adult education institutions. This section is made redundant by the transfer of incorporation from governing boards to the institutions. See the notes on clause 18, which is the corresponding clause relating to TAFE institutes, for further explanation.

Clause 28 inserts a new section 3.3.24(4) into the Principal Act, which would enable the governing board of an adult education institution to publish a written Ministerial direction in its annual report. This corresponds very closely to the amendment to be made by clause 19(2) in relation to TAFE institute boards—see the notes on that clause for further explanation.

Clause 29 substitutes section 3.3.33 of the Principal Act, which deals with the membership of the governing board of an adult education institution.

This new provision corresponds very closely to the section 3.1.16 to be substituted by clause 20 in relation to the composition of TAFE institute boards—see the notes on that clause for further explanation.

Clause 30 amends section 3.3.34 of the Principal Act in relation to the removal from office of members of governing boards of adult education institutions. This corresponds very closely to clause 21 (substituted section 3.1.18) in relation to TAFE institute boards—see the notes on that clause for further explanation.

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Clause 31 makes amendments to the Principal Act that are consequential on the governance changes in relation to adult education institutions. These amendments correspond very closely to the amendments proposed by clause 22 in relation to TAFE institutes. See the notes on that clause for explanation.

PART 5—TRANSITIONAL AND SAVINGS PROVISIONS

Overview of Part 5

Part 5 makes a number of amendments of a transitional and savings nature relating to Parts 2 and 4 of the Bill. That is, the amendments relate to the abolition of the Victorian Skills Commission (VSC) and the governance changes in relation to TAFE institutes and adult education institutions.

This Part will commence operation on a day to be fixed by proclamation but no later than 1 January 2013—see clause 2(2) and (3) of this Bill.

Clauses

Clause 32 repeals sections 6.1.19(4) and (5) and 6.1.28 of the Principal Act.

Sections 6.1.19(4) and (5) required the Orders in Council under which TAFE institute boards are currently established to be reviewed and remade in accordance with governance provisions inserted into the Principal Act by the Education and Training Reform Amendment (Skills) Act 2010. Those provisions would now be superseded by the governance amendments proposed by this Bill. This makes sections 6.1.19(4) and (5) redundant. Instead clause 33, new section 6.1.32, will require the Orders to be reviewed and remade in accordance with the requirements of this Bill—see below.

Similarly, existing section 6.1.28 requires Orders in Council dealing with the establishment of the governing boards of adult education institutions and related matters to be reviewed and remade in accordance with governance amendments that were made by the Education Legislation Amendment (VET Sector, Universities and Other Matters) Act 2012. Again, this review requirement is superseded by the further governance amendments proposed in this Bill. A new review and remaking process in respect of adult education institutions will be required by clause 33, new section 6.1.33—see below.

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Clause 33 inserts new sections 6.1.31, 6.1.32 and 6.1.33 dealing with transitional and savings matters.

New section 6.1.31 deals with matters related to the abolition of the Victorian Skills Commission (VSC). In particular—

all accounts and records of the VSC will transfer to the Secretary to the Department of Education and Early Childhood Development (DEECD) on the VSC's abolition.

on the commencement day (which will be no later than 1 January 2013), the VSC is abolished and its members go out of office.

on the commencement day, all assets, liabilities and obligations of the VSC are transferred to the State, in practice to be administered by DEECD.

the Secretary to DEECD may finalise any VSC business that is outstanding as at the commencement day, including reporting on any VSC operations in respect of any period not covered by the VSC's annual reports to date; and

any determinations made by the VSC in relation to the conduct of practical placements under Part 5.4 of the Principal Act will continue in operation as if they were determinations of the Minister.

New section 6.1.32 deals with matters related to the governance changes to be made in relation to the governance of TAFE institutes by Division 1 of Part 4 of the Bill.

In particular, from the commencement day (which will be no later than 1 January 2013):

an existing TAFE institute will be taken to be a body corporate and will have objectives, functions and powers as if it were established under the new governance arrangements proposed by this Bill;

existing boards of TAFE institutes will cease to be incorporated bodies;

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all assets, rights, liabilities and obligations of the formerly incorporated board will transfer to the newly incorporated institutions;

the institute will be substituted as a party to any legal proceedings to which the board was a party;

the institute may complete any matter that involved the board as a corporate body;

employees of the board will become employees of the institute, with transfer of entitlements;

a reference in any legislation or document to the board as a corporate body is to be construed as a reference to the TAFE institute, except in relation to matters that occurred before the commencement day.

Despite the governance amendments to be made by this Bill, new subsection (4) will keep the existing TAFE institute boards in place as an interim measure pending the review and remaking of the Orders that establish the boards. Under subsection (5), the Minister must arrange for the existing Orders to be reviewed and remade within 12 months of the commencement day. There will be a power to extend the review period, either generally or in relation to a particular TAFE institute.

To this end, it is intended to publish a Model Constitution for TAFE Institutes and Adult Education Institutions with an accompanying Discussion Paper as the basis for consultation with TAFE institutes (and adult education institutions) and other stakeholders in these governance reviews.

New section 6.1.33 deals with matters related to the governance changes to be made in relation to the governance of adult education institutions by Division 2 of Part 4 of the Bill. These provisions correspond very closely to the provisions of new section 6.1.32 in relation to TAFE institutes described above.

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PART 6—AMENDMENT OF UNIVERSITY ACTS

Overview of Part 6

Part 7 amends the eight Acts that establish Victorian universities. The amendments to all eight Acts are in identical terms. They deal with University governance and, in particular, with the composition of the Universities' Councils.

This Part will commence operation on a day to be fixed by proclamation but no later than 1 January 2013— see clause 2(2) and (3) of this Bill.

What are the current University governance arrangements?

Victoria has eight Universities established by State Acts, which were all re-enacted on the same pattern in 2009 and 2010. The eight Universities are—

Deakin University,

La Trobe University,

Monash University,

The Royal Melbourne Institute of Technology,

Swinburne University of Technology,

University of Ballarat,

University of Melbourne, and

Victoria University.

The Councils of the Universities are all constituted in the same way. They each have 14 to 21 members, made up as follows—

Three "official members", namely, the Chancellor, Vice-Chancellor and President of the Academic Board;

At least 4 Government-appointed members;

At least 4 Council-appointed members (i.e. co-opted members);

The number of Government-appointed and Council-appointed members must be exactly the same;

2 or 3 elected staff members; and

1 or 2 elected student members

What are the proposed new arrangements?

The proposed changes are in two parts.

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First, certain changes will be made to all University Councils from 1 January 2013.

Secondly, the Bill will insert provisions into each University Act that would enable a University Council (by a 2/3 majority) to request additional changes to its size and composition, subject to approval of the Governor in Council and disallowance by Parliament.

This is to enable greater flexibility in the size and composition of University Councils, appropriate to that University's particular needs and circumstances.

In several respects, the proposals in this Bill to introduce flexibility in University Councils' composition and structure are similar to changes introduced in New South Wales in October 2011—see the Universities Governing Bodies Act 2011 (NSW Act No 51/2011).

Which changes will apply to all universities on 1 January 2013?

First, the requirement that Government-appointed and Council-appointed members must be exactly the same number will be removed. Instead, the rule will be that the Council-appointed members may not outnumber Government-appointed members. The two categories may be the same in number, or there could be more Government appointed members.

Secondly, appointments must be made on the basis of skills and experience appropriate to a board with full responsibility and accountability for the governance of major public bodies that control substantial public resources and deliver important public services. From 1 January 2013, there would no longer be elected staff and student positions on University Councils. However, staff and students would be eligible for appointment as Council members if they have the appropriate skills and experience.

From 1 January 2013, the make-up of a University Council that has not requested a variation would be 11 to 21 members, made up as follows—

Three "official members", namely, the Chancellor, Vice-Chancellor and President of the Academic Board; and

At least 4 Government-appointed members of whom—

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at least 2 must be persons with financial expertise with relevant qualifications or experience in financial management; and

one must be a person with commercial expertise at a senior level; and

At least 4 Council-appointed members.

Thus, the main change on the commencement day will be that the elected positions will cease. Existing Government and Council appointed members will remain in office. As the number of members in these two categories is currently the same, the changed rule about relative size of the two categories will not immediately affect the current Council members in these categories.

Thirdly, the Bill will change the quorum required for a valid meeting of a Council from 8 members to a majority of members in office for the time being, not including members on extended leave of absence.

How can a University Council's composition be varied under the proposals?

The Bill proposes to amend each University Act to enable the composition of its Council to be varied by the following process—

A University Council may, by a resolution passed by 2/3 of its members, request an Order in Council to be made to fix the number of Government-appointed members and Council-appointed members.

If the request is approved, an Order in Council may be made that fixes the number of Government appointed members and Council appointed members in accordance with the resolution.

As at present, there must be at least three "official members", namely, the Chancellor, Vice-Chancellor and President of the Academic Board

As at present, there must be at least 4 Government-appointed members of whom—

at least 2 must be persons with financial expertise with relevant qualifications or experience in financial management; and

one must be a person with commercial expertise at a senior level; and

There must be at least one Council appointed member.

The Order in Council must be published in the Government Gazette and would take effect on gazettal or a later specified day.

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The Order in Council must be laid before each House of Parliament and could be disallowed.

This means that the fewest members a Council could have would be 8, namely the 3 official members with at least 4 Government appointed members and at least one Council appointed members.

No maximum number of Council members is prescribed by the Bill. The number of members would be fixed by Order in Council, but only in accordance with the Council's resolution (if approved), and subject to parliamentary disallowance.

Thus, it would be open to a Council, by its resolution, to request that a number of members be fixed that is sufficient to enable it to appoint as many or as few members of Council as it thinks appropriate, with differing backgrounds and experience, subject only to the rules that the members must be appropriately qualified and that Council appointed members cannot outnumber Government appointed members. As mentioned above, staff and students would be eligible for appointment, if appropriately qualified.

Given the variable size of Councils, the Bill alters quorum requirements for Council meetings to a majority of members in office at the time, other than those on extended formal leave of absence. The Bill also enables an Order in Council that varies a Council's composition to alter the normal membership rotation provisions of the University Acts.

Clauses

The amendments to all the University Acts are in identical terms.

Division 1—Amendment of Deakin University Act 2009

Clause 34 repeals the definitions of appointed member and elected member in section 3 of the Deakin University Act 2009.

The definition of appointed member is replaced by a definition of government appointed member, which has the same meaning. The change is proposed to make it clearer to readers of the Act how these members are appointed.

Clause 35 substitutes section 11 of the Deakin University Act 2009. That section deals with the membership of the University's Council.

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New section 11 provides that the University's Council consists of a fixed number of members being—

the three official members (Chancellor, Vice-Chancellor and President of the Academic Board); and

a fixed number of at least 4 government appointed members of whom—

at least 2 must have financial expertise with relevant qualifications or experience in financial management;

one must have commercial expertise at a senior level; and

a minimum of one or a greater fixed number of Council appointed members.

The number of government appointed members must be equal to or greater than the number of Council appointed members.

A reference to a fixed number of members is a reference to the number fixed by an Order in Council under section 63.

However, unless and until an Order in Council is made under section 63, the composition of the Council will be determined in accordance with new section 76 of the Deakin University Act 2009, which is to be inserted by clause 37 of the Bill.

Clause 36 inserts a new section 63 into the Deakin University Act 2009.

New section 63 enables Orders in Council to be made in relation to the composition of the University's Council. In particular, an Order in Council may—

fix the total number of Council members or fix the number of a category of members for the purposes of new section 11, which will be inserted by clause 35.

determine the method by which the terms of government appointed and Council appointed members will be calculated so that their terms of office do not fall vacant in the same year—such an Order would override the existing rotation rules set out in clause 1(2) of Schedule 1 to the Act.

make transitional and savings provisions in relation to the Council's membership arising from any change in

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membership made by the Order. For instance, the Order could make provision for which members go out of office or are appointed so as to implement the new membership arrangements.

Orders in Council under section 63 may only be made on the recommendation of the Minister after receiving a request from Council. Such a request can only be made by a resolution passed by a two thirds majority of the current members of the Council.

An Order in Council must be published in the Government Gazette and will take effect on the day specified by it or, if it does not specify a day, on the day it is published in the Government Gazette.

A copy of every Order in Council must be laid before each House of Parliament on or before the 6th sitting day after the publication of the Order in the Government Gazette. An Order may be disallowed in accordance with Part 5A of the Subordinate Legislation Act 1994 as if it were a legislative instrument within the meaning of that Act laid before each House of the Parliament under section 16B of that Act.

Clause 37 substitutes Division 3 of Part 8 of the Deakin University Act 2009.

The existing Division 3 repealed Division 1 of Part 3 on 1 January 2012. It is therefore a spent provision and can be repealed.

The new Division 3 of Part 8 (consisting of new sections 74 to 78) makes further transitional provisions for the purposes of implementing the new arrangements proposed in this Bill.

New section 74 defines commencement day as the day on which this Bill comes into operation. Under clause 2(3) of this Bill, that day will be no later than 1 January 2013.

New section 75 provides that the new Division 3 of Part 8 of the Deakin University Act 2009 does not affect or take away from the Interpretation of Legislation Act 1984.

New section 76 makes provision for the composition of the University's Council unless and until an Order in Council is made under new section 63 (to be inserted by clause 36 of this Bill) to fix the number of members of the Council. In other

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words, new section 76 establishes a "default" composition for the University Council, which will apply unless and until an Order in Council is made under new section 63.

Under the "default" rules, the Council's composition will be very similar to the rules that apply under the Deakin University Act 2009 at present, with two exceptions—

the number of government appointed members must be equal to or greater than the number of Council appointed members; and

there will be no requirement for staff or student elected member positions.

This means in practice that, until an Order in Council is made under new section 63, the existing Council will continue largely unchanged.

In particular, if new section 76 applies, the University Council will consist of between 11 and 21 persons, as follows, being—

the three official members (namely, the Chancellor, Vice-Chancellor and President of the Academic Board);

a fixed number of at least 4 government appointed members of whom—

at least 2 must have financial expertise with relevant qualifications or experience in financial management;

one must have commercial expertise at a senior level; and

at least 4 Council appointed members.

Of the government appointed members, at least 3 must be persons appointed by the Governor in Council and at least one by the Minister.

New section 77 is a savings provision. On the commencement day of this Bill, the University Council continues in existence and is taken to be the same legal person despite changes in its constitution caused on that day by this Bill. Similar provision is made when the Council's constitution is changed by an Order in Council under new section 63.

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New section 78 is a transitional provision relating to the members of Council in office as at the commencement day. The existing members of the Council (other than the elected members) will continue in office as members appointed under new section 76. The elected members of office will go out of office on 1 January 2013 or earlier if that is when their term expires. However, it should be noted that staff and students will be eligible to be appointed to the Council if qualified.

Clause 38 makes various consequential amendments to the Deakin University Act 2009 to reflect the change in terminology from appointed member to government appointed member. It also reflects the fact that, if an Order in Council is made under section 63, there may be more than one government appointed member who is appointed by the Minister.

Clause 39 amends clause 1 of Schedule 1 to Deakin University Act 2009. That clause currently provides for the rotation of a certain number of government appointed and Council appointed members each year, so that positions do not all vacant at the same time. If the number of Council members is increased or decreased by an Order in Council under section 63, it will be necessary to provide more flexibility in these arrangements. To this end, clause 39 of the Bill amends so that the Order in Council may specify rotation arrangements that will prevail over those prescribed in clause 1 of Schedule 1 to the Deakin University Act 2009.

Clause 40 makes amendments to Schedule 1 to the Deakin University Act 2009 that are consequential on the omission of the staff and student elected member positions.

Clause 41 substitutes clause 12(1) of Schedule 1 to the Deakin University Act 2009. The effect of the amendment is to change the quorum requirement for meetings of the University Council from at least 8 members (as at present) to at least a majority of members holing office for the time being, not counting members who have been formally granted a leave of absence under clause 4A of Schedule 1.

Clause 42 omits references to the election of Council members in clause 16 of Schedule 1 to the Deakin University Act 2009, which is a

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provision that validates decisions or actions of the University Council despite defects or disqualifications in the appointment or election of its members. The omissions are consequential on the removal of the elected member positions.

Division 2—Amendment of La Trobe University Act 2009

Clauses 43 to 51 amend the La Trobe University Act 2009 in relation to the composition and appointment of the University's Council and related matters.

These amendments to be made by these clauses correspond to the amendments to be made to the Deakin University Act 2009 by clauses 34 to 42 of this Bill. Refer to the notes on the corresponding clauses for explanation.

Division 3—Amendment of University of Melbourne Act 2009

Clauses 52 to 60 amend the University of Melbourne Act 2009 in relation to the composition and appointment of the University's Council and related matters.


Division 4—Amendment of Monash University Act 2009

Clauses 61 to 69 amend the Monash University Act 2009 in relation to the composition and appointment of the University's Council and related matters.


Division 5—Amendment of Royal Melbourne Institute of Technology Act 2010

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Clauses 70 to 78 amend the Royal Melbourne Institute of Technology Act 2010 in relation to the composition and appointment of the University's Council and related matters.


Division 6—Amendment of Swinburne University of Technology Act 2010

Clauses 79 to 87 amend the Swinburne University of Technology Act 2010 in relation to the composition and appointment of the University's Council and related matters.


Division 7—Amendment of University of Ballarat Act 2010

Clauses 88 to 96 amend the University of Ballarat Act 2010 in relation to the composition and appointment of the University's Council and related matters.


Division 8—Amendment of Victoria University Act 2010

Clauses 97 to 105 amend the Victoria University Act 2010 in relation to the composition and appointment of the University's Council and related matters.


PART 7—OTHER AMENDMENTS

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Overview of Part 7

Part 7 makes miscellaneous amendments to the Education and Training Reform Act 2006 and the Education and Training Reform Amendment (Skills) Act 2010.

Part 7 will commence operation on the day following Royal Assent—see clause 2(1) of this Bill.

Clauses

Clause 106 amends section 5.3A.9(1)(d) of the Education and Training Reform Act 2006 to omit obsolete references to the Department of Innovation, Industry and Regional Development (DIIRD) and the Department of Planning and Community Development (DPCD). Section 5.3A.9 authorises certain agencies and staff to use information from the Victorian Student Number system. Since this provision was enacted, responsibility has transferred to the Department of Education and Early Childhood Development—

from DIIRD in relation to vocational education and training; and

from DPCD in relation to adult, community and further education.

Consequently, the references to DIIRD and DPCD in section 5.3A.9 are now redundant and can be omitted.

Clause 107 amends section 5.8.6(4) of the Principal Act. That section currently enables the Minister to authorise proceedings for offences against a provision of the Principal Act other than Part 2.6 or 5.5 or Chapter 4 to be taken by a person authorised by the Minister generally or in any particular case.

The effect of the amendment is to enable the Minister, in a similar manner, to authorise proceedings for offences against a provision of regulations made under the Principal Act. A number of the regulation making powers in the Principal Act enable the regulations to create offences. It is necessary that there be a mechanism for bringing proceedings in relation to offences against the regulations.

Clause 108 amends the Education and Training Reform Amendment (Skills) Act 2010 (the 2010 Act). Most of that Act is already in operation.

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Subclause (1) amends section 2(2) of the 2010 Act to extend that Act's default commencement date from 1 January 2013 to 1 January 2014.

New commercial powers are to be conferred on TAFE institutes by section 55(3) of the 2010 Act. The deferral of the forced commencement date will enable section 55(3) to be brought into operation, and these new powers to be conferred, once the TAFE institute governance reforms proposed by this Bill have been implemented. See the overview of Part 4 (especially Division 1 of Part 4) and the notes on clause 17 for further explanation of these proposed governance reforms.

Clause 109 makes several amendments of a Statute Law Revision nature to the Principal Act. Most of these are of a grammatical nature.

Subclause (2) corrects a reference in section 4.9.4 (1A) of the Principal Act to the Australian Skills Quality Authority (ASQA). ASQA is the regulatory authority established by the National Vocational Education and Training Regulator Act 2011 of the Commonwealth.

PART 8—REPEAL OF AMENDING ACT

Clause 110 provides for the automatic repeal of this Bill (if passed) on 1 January 2014. That repeal will not affect in any way the continuing operation of amendments by this Bill—see section 15(1) of the Interpretation of Legislation Act 1984.

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