In May this year, the Universities Legislation Amendment Bill 2016 (WA) (Bill) was introduced into the WA Parliament to amend the enabling legislation of WA universities including Curtin University of Technology (Curtin), Edith Cowan University (ECU), Murdoch University (Murdoch), The University of Western Australia (UWA) and The University of Notre Dame (Notre Dame). The Bill passed through both houses of WA Parliament and received Royal Assent on 19 October 2016. The new laws are expected to be proclaimed in December 2016 or January 2017.
The Bill makes common amendments to the legislation of each WA university as well as university specific amendments. Perhaps most significantly, the Bill expands the commercial powers of the public universities by providing a common scheme to raise money and capital, and a new mechanism for obtaining approvals for borrowings and guarantees.
Curtin, ECU and Murdoch's enabling legislation will be amended to clarify existing commercial powers and expand the ability of these universities to engage in commercial activities. In particular, the amendments allow the universities to participate in commercial arrangements to develop their land for their own benefit as well as increasing the flexibility with which universities may lease their lands.
Power to borrow and commercial powers
With respect to Curtin, ECU, Murdoch and UWA's enabling legislation, there have been common amendments made in relation the power to borrow and raise capital. While the existing legislation only permits a university to borrow money with the approval of the Governor, the Bill expands this power to allow borrowing and raising capital without Governor consent. The only limitation introduced by the Bill is that the university must give notice to the Minister for Education (Minister) outlining its intention to borrow money and notice of the outcome of the application to borrow money. Approval required is where the university seeks a guarantee on any borrowings, in which case the consent of the Minister and Treasurer will be required.
Additionally, the Bill expands powers of Curtin, ECU and Murdoch to commercially develop their land for purposes that would not otherwise be authorised under the existing legislation. Specifically, the universities will have the power to obtain income by participating in commercial arrangements that involve the leasing and development of university land. Commercial arrangements such as entering into partnerships, joint ventures or profit sharing arrangements, which lease university land and derive an income, will now be permissible. The important limitation on this power is the approval of the Minister will need to be obtained prior to entering into such arrangements.
Ministerial approval process
The Bill sets out a three-step procedure to obtain approval from the Minister prior to entry into a commercial arrangement: an in principle approval, advance determination of approval and a final approval. While the third step (a final approval) is necessary to enter into a commercial arrangement, the first two steps are not compulsory. The intention of the first two steps is to provide both the University and prospective partners with confidence during the early stages of a university's proposed development or arrangement. If an advance determination of approval is granted, the Minister is required to grant a final approval if there is no material deviation from the application for the advance determination and the application for approval.
The legislative reforms expand the universities' powers, improves efficiencies for both the State Government and the universities, and ultimately enhance the ability of WA universities to compete nationally and internationally. However, with expanded powers come additional responsibilities. It is timely for the universities to review the adequacy of their internal guidelines and policies relating to commercial activities. In addition, given the 'new territory' for the university sector, it is recommended that in-principle Ministerial approval is obtained at an early stage in any procurement process to give both the university and prospective private sector parties confidence any proposed commercial arrangement has the necessary support.