Kirsten Livermore (Capricornia, Australian Labor Party, Shadow Parliamentary Secretary for Education) Share this | Hansard source

I am pleased to have this opportunity to speak in the cognate debate of the Education Services for Overseas Students Legislation Amendment (2006 Measures No. 1) Bill 2006 and the Education Services for Overseas Students Legislation Amendment (2006 Measures No. 2) Bill 2006. International education is Australia’s fourth largest export industry and is estimated to contribute $7.5 billion to our economy each year. Now more than ever we need to take the education services industry seriously in this country. Figures released today show a decline in commencements of international undergraduate students at Australian universities. It is only a small drop but it is a signal that we can no longer take for granted the enormous growth in international students coming to Australia that we have seen over the past decade.

Central to the industry’s success in that time has been the reputation of Australia’s education providers. The ESOS regime is designed to safeguard that good reputation by ensuring that providers meet certain standards of quality and overseas students are covered by adequate consumer protection measures. The focus of the original ESOS Act was on the regulation of providers of education services to overseas students. The act ensured that the providers of education services to overseas students had to: register with the Commonwealth Register of Institutions and Courses for Overseas Students, known as CRICOS; refrain from misleading or deceptive recruitment practices; in the case of closure, refund student fees; become a member of a tuition assurance scheme, which ensured access to alternative tuition in the event of provider closure; and be penalised through suspension or cancellation from CRICOS for any breaches.

The current regulatory regime for international education consists of the ESOS Act and complementary acts, the ESOS regulations and the National Code of Practice for Registration Authorities and Providers of Education and Training to Overseas Students, known as the national code. There is much in the government’s policies on education generally to disagree with. However, in this case, the added protections for overseas students and other measures to provide clarity for providers, provided for within these bills, are a positive step for an important industry and we support them. These bills amend the ESOS Act to: extend the requirements on provider registration, clarify provider obligations in certain circumstances, extend the consumer protection elements of the act, insert a sunset clause for claims against the assurance fund, extend the fit and proper test provisions, and other elements as well. Most of the amendments have resulted from the evaluation of the ESOS Act conducted in 2003.

The ESOS Act 2000 carried a requirement that an evaluation of the act be conducted within three years of commencement. The evaluation was conducted in 2004 and invited submissions from industry and other stakeholders. The key areas that the evaluation looked into included quality assurance, consumer protection, migration policy and administration. The evaluation comprehensively addressed the limitations of the current ESOS legislation and raised a number of valid points with regard to the administration of the act. It also acknowledged the massive growth in the international education industry and the manner in which the industry has evolved in such a short time frame.

The evaluation report contained 41 recommendations aimed at improving the ESOS legislation, and it is some of these recommendations that have been picked up within these two bills. I will start with the changes to registration. In order to offer education and training services to international students, providers must be registered with the Commonwealth Register of Institutions and Courses for Overseas Students. In order to register, providers have to show that they can satisfy state and territory legislation as well as the ESOS Act and demonstrate that they are fit and proper. The ESOS Act requires all providers of education and training to overseas students that are registered on CRICOS to pay a registration fee each year. This fee is based on the total enrolments of overseas students for the previous year.

Current provisions within the act enable enforcement action to be taken against any provider that fails to pay the registration fee. These bills amend the act to stipulate that failure to pay the annual charge will result in the automatic suspension of the provider’s registration. Previously DEST had complained that enforcement of the annual registration fee payment took up too much administrative effort. This particular amendment has troubled the Australian Vice-Chancellors Committee. These concerns were raised in a letter received from the AVCC which states that:

Timely payment by universities or any other provider is contingent upon early receipt of notification from Department of Education, Science and Training ... regarding the rules and calculations of the ARC (Annual Registration Charge) for the period, which should include time to discuss any discrepancies between DEST and provider calculations.

The AVCC’s concern is that, as the annual registration charge is reliant upon an agreement between the provider and DEST on total enrolments from the previous year, the resolution of discrepancies can affect the amount to be paid. The amount charged by DEST may therefore be inaccurate, and this amendment does not allow enough time for the charge to be questioned. The AVCC believes that automatic suspension for nonpayment by the end of February when DEST is under no obligation to detail the extent of liability could be seen as unfair.

We on this side agree with the AVCC on this point and, subsequently, will be moving an amendment to the bill seeking to give providers 28 days notice of the specific amount they are required to pay as the annual registration charge under the act. Specifically the amendment that we will be moving is to repeal section 23 and substitute it with a new section 23 as follows:

(1)

The Secretary must give to each provider who is liable to pay an annual registration charge for a year a written notice stating the amount of the charge.

(2)

A notice under this section must be given to a provider by the last business day of January of the year.

(3)

Subject to subsection (4), a registered provider must pay the annual registration charge for which the provider is liable by the last business day of February of the year.

(4)

If the notice has not been given to a provider by the last business day of January, the annual registration charge for which the provider is liable must be paid within 28 days of the day on which the notice was given to the provider.

I submit that this is an entirely appropriate amendment and I would ask that the government support it. The Australian Vice-Chancellors Committee is the peak representational body of Australia’s 38 universities and deserves to be heard on matters in which it has considerable expertise. This amendment is simply commonsense as it is impossible for a provider to pay the annual charge when they are unsure as to what the amount is or there is uncertainty about the figures used to calculate the charge.

I turn now to the changes to the fit and proper test in this bill. The ESOS Act contains provisions relating to a fit and proper person test. This is designed to ensure that past behaviours which impact upon a provider or their associates’ suitability to be registered is identified. The independent evaluation identified disquiet amongst stakeholders at the fact that the test was only applied once, presently at the point of initial registration. These bills allow for that test to be applied at any stage in a provider’s registration and will allow for greater regulation over who the test applies to through an extension of the power. These bills extend the fit and proper test provision to include high managerial agents of the provider as a new category, along with providers and associates of providers.

Concerns have been raised at the amendment’s definition of ‘high managerial agent’ to include teachers, consultants and principals. This has raised several issues with regard to the onerous responsibility that this places on larger institutions with numerous staff. It has also been pointed out that this particular amendment could unfairly expose an individual’s private information. Other concerns include the potential impediment to service delivery due to the extended application of the test. Some providers are worried that the extra workload burden that they may shoulder under this amendment will divert resources away from the core business of providers: to deliver quality education. As the Minister for Education, Science and Training noted in her second reading speech for the Education Services for Overseas Students Legislation Amendment (2006 Measures No. 1) Bill 2006:

In introducing these amendments, my department has been mindful of the need to avoid unnecessary regulation, given the cost both to the industry and the Australian government. These amendments will have a minimal regulatory impact on providers and will streamline processes for the Australian government.

This would, however, appear to be at odds with the proposed requirements to do background checks on large numbers of employees, which clearly has the potential to become a regulatory burden on a number of providers. It should be pointed out though that similar tests do apply to people in the financial services sector whereby individuals are assessed prior to and continuously throughout their appointment by APRA. These tests have become commonplace in a number of sectors as consumer protection measures and will no doubt expand into a number of other areas. While we do share some concerns about this amendment we also believe that, on balance, the extension of the test is warranted.

In recent years we have seen a handful of educational facilities undertaking questionable actions with regard to their international students. Unfortunately there are always going to be unscrupulous people and organisations out there seeking to take advantage of others for a financial gain; the international education sector is no exception to this. Of course, the vast majority of organisations are above board and offer quality education and training to their students. However, there is always the danger that there will be that rogue element and the government’s intention should be to minimise the potential for that as much as possible. These bills therefore correctly attempt to strengthen the consumer protection elements of the ESOS Act.

Under the act, private providers are required to be members of a tuition assurance scheme which protects a student in the event that a provider is unable to meet its obligations. Amendments made within the bills before the House today clarify that providers must be a member of a tuition assurance scheme that covers each particular course on offer. Previously, providers could be members of any tuition assurance scheme even if it did not cover the specific courses offered. One event that has led to this change was the collapse of the Strathfield Regional Community College 12 months ago. When the college went under, students who were enrolled in its horticulture course were transferred into hospitality by the tuition assurance fund. As one media report noted at the time, the only similarity between horticulture and hospitality is that they both start with the letter H.

Obviously this was an unfortunate and clearly unacceptable situation but one which illustrates the importance of the protection measures of the act and the need for these provisions to be sound. Another amendment to the act will insert a sunset clause limiting the time frame in which a potential claim can be made on the ESOS assurance fund. The purpose of the ESOS assurance fund is to protect the interests of students by ensuring that students are provided with suitable alternative courses or have their fees refunded if the provider cannot provide the course that the student paid for. The sunset clause on the fund will be 12 months. Stakeholders had stated that the lack of a sunset clause exposed the fund to potential claims for an indefinite period. The inclusion of a sunset clause gives fund managers greater surety and enables better management of the fund.

I turn now to the important area of student visa conditions. These bills make changes so that provider obligations under the ESOS Act which support visa integrity are brought into line with current educational practice. Currently, students who breach visa conditions relating to attendance or satisfactory academic performance must be reported to DIMA. The reference in the act to the precise visa conditions for which this occurs will be removed from the act under these amendments and moved to the regulations made under the ESOS Act. These regulations will be mirrored by the migration regulations and will reflect the student visa conditions outlined in the national code.

The reporting requirements of providers were the subject of many submissions to the ESOS evaluation. Providers were obliged by the act to report students to DIMA when the students did not meet certain standards of attendance or academic performance; generally, these were triggers for the automatic cancellation of a student visa. The ESOS evaluation stated that the all-or-nothing nature of present requirements for providers to report students for breach of their visa conditions bring the full weight of DIMA’s compliance process into play too early in the educational processes that should be the responsibility of the provider. It is for these reasons that the evaluation recommended that the national code be amended to ensure that reporting conditions are clarified to better reflect current educational practices across the sector and that providers devise appropriate policies and procedures to monitor student progress and attendance. The national code will set out the appropriate educational practices to be followed by providers in assessing a student’s performance and then DIMA will amend the migration regulations and student visa conditions accordingly.

I understand that the question of how providers are expected to measure a student’s performance has become something of a sticking point in negotiations over the national code. The Australian Vice-Chancellors Committee has been successful, I understand, in negotiating for higher education providers to measure and report academic progress as opposed to attendance. Providers in the vocational education and training sector, however, are still concerned that they will be required to report on both attendance and academic progress. I trust that DEST will continue its consultation with this important sector to resolve those outstanding matters. DEST needs to consider the suggestions made by VET providers for sector-specific measures rather than insist on a one-size-fits-all approach.

These bills also tighten up and clarify the requirements for student refunds within the act. Previously, there was a perception that refunds were only provided for when a student actively withdrew from a course, either before or after the starting date. Consequently, the legislation expands the concept of student default. The new amendments clarify that a student default can occur when a student withdraws from a course and where a provider terminates the student’s enrolment due to their failure to pay course fees, breaches of visa conditions or student misbehaviour. It is now clear that students can access the consumer protection measures of the ESOS Act in those circumstances. However, the bills also make concessions for providers by inserting that a student’s refund amount can be reduced if it can be demonstrated that, upon enrolment with a new provider, a student has received academic credit or recognition of prior learning for completed study with the original provider.

A small number of providers have used the written agreement between the provider and the student regarding refunds to retain a significant proportion of the student’s prepaid course fees when a student is unable to commence a course due to a visa being refused. A new section inserted in the act will ensure that such written refund agreements cannot penalise a student for being unable to obtain a visa, although providers will be permitted to retain a small administrative fee in these circumstances.

The tightening and clarifying of refund provisions within the act is clearly something which we support wholeheartedly. The provisions clarify the obligations on providers and extend the protection for students and, as such, help to protect the integrity of our international education sector.

I want to speak now about the national code, which is another very important element of the ESOS regime. While the bills do make some technical amendments in relation to the code, they do not address its content. While these bills are important in safeguarding the reputation of Australia’s international education sector, it is the finalisation of the national code that is the most pressing issue for stakeholders in the sector.

In May this year, DEST issued a draft national code for industry consultation. Initially, the draft code was met with widespread criticism from stakeholders, especially relating to the proposed implementation date of 1 January 2007. This date was seen as being untenable to most providers as it did not provide adequate time to ensure that compliance measures under the new amendments were in place. Other issues that raised the ire of providers included the draft code’s impact on increasing compliance costs and administrative burdens, the cost of implementing the revised code and the fact that many of the proposed changes within the draft code had not been based upon quantifiable data.

Thankfully, it seems that the department listened to the majority of suggestions and these issues are now mostly resolved. However, it does point to an attitude of consultation avoidance within the department. It would seem to me that, had the providers been listened to earlier on in the process, a lot of time and angst would have been saved.

Another issue that the industry has with the revised code is the lack of inclusion of any evaluation or reporting time frames. Many within the industry fear that the code will be subject to continuous ad hoc amendments. For providers, every change means extra work, more cost and possible confusion. Providers want to meet their compliance obligations but they also have businesses to run and students to educate. To do that successfully, providers need certainty. We call on the minister to listen to the sector and work with providers to avoid non-stop changes that add to the compliance burden without necessarily adding to the quality of the education.

That brings me to the question of whether DEST itself is doing everything it can to enforce compliance with the ESOS regime. There have been numerous bills brought before this House to amend the ESOS Act, each one imposing stricter compliance regimes on providers. However, none stops to consider whether DEST itself is being proactive in identifying and preventing possible breaches of the scheme.

In June 2005, the Auditor-General presented a report to parliament on the International Education Group of the Department of Education, Science and Training. According to the ANAO report, the International Education Group undertakes a range of compliance and enforcement activities in relation to international education providers. But that audit report went on to note serious deficiencies in the way in which the International Education Group monitored performance and reporting. The report makes reference to the risk matrix model used by the IEG to assist in its compliance and enforcement role. The model assesses the risk of providers committing breaches of ESOS legislation and related policies and practices. The report notes:

This matrix is useful in directing IEG compliance and enforcement resources towards providers that are relatively likely not to comply with ESOS legislation and related policies and practices. However, the matrix does not contain standard risk management approaches ... nor does it feed into a clearly defined framework for controlling risks, determining residual risks, and monitoring and evaluating risk treatments. Further, the ANAO found that few risk assessments have been undertaken, and IEG Branch plans contain little reference to compliance and enforcement.

As I mentioned earlier, several submissions to the ESOS evaluation commented on this apparent unwillingness by government to use their monitoring and enforcement powers. This view was reiterated in submissions regarding the draft national code. A joint peak body response on the draft code made by a group consisting of the AVCC, the Australian Council for Private Education and Training, TAFE Directors Australia and English Australia states:

... DEST is not using the authority available to it in dealing with unscrupulous providers, but rather has imposed more regulation on all providers in an attempt to resolve an area of substandard performance. That is, to date, the government has not used the existing consumer protection measures available to it to protect the interests of international education.

That is a pretty strong statement from a peak body grouping with enormous experience in the provision of international education. It should be noted that those comments were made just a few short months ago, in late May. These are companies and institutions that have invested heavily in the area of international education. There is a lot at stake here for providers, so they need to know that the government is doing everything it can to monitor and enforce compliance with the ESOS regime so that rogue operators do not put the rest of the sector at risk.

The industry is calling for DEST to uphold its end of the bargain. The government keeps imposing more regulation on the sector, but there is little evidence, as highlighted by the Audit Office report, that DEST is using its enforcement powers proactively to protect students and the international education industry from unscrupulous operators. The government needs to take this industry seriously and DEST needs to show providers that the compliance burden that they have accepted for the good of the industry is matched by good administration of the regime within the department.

It is sad to say that, in the past, some institutions have treated international students as cash cows and have not provided them with the education or facilities that they have paid for. The purpose of the ESOS Act is to ensure that this does not occur. The aim is to ensure the integrity of the international education sector, thus protecting Australia’s reputation as a provider of quality education to international students. It is Australia’s reputation that attracts the majority of international students to study here. All it takes to ruin or permanently damage that reputation is a few rogue elements. It is the objective of the ESOS Act to prevent this from happening.

At the same time, though, there is one factor that is undermining Australia’s international education sector, and that is the voluntary student unionism bill that was rammed through parliament late last year. The AVCC have noted with respect to VSU:

... the economies of scale provided by universal service provision will be lost, reducing the breadth of services available to international students. This loss is becoming known internationally leading to questions from potential students and their families. One spin off from removing the requirements for Australian students to support services for themselves will be losses to the international income earned from international students. There is also considerable difficulty in justifying a charge that would apply only to one group of students.

Clearly, one of the big selling points for Australian universities to overseas students was the promotion of the types of services that were supplied by student organisations. This loss, combined with the federal government’s funding cuts, constitutes a clear threat to our place as a competitive option for potential international students. As we saw late last year, the government introduced legislation that allowed providers to charge a service fee to international students while they were negotiating with their own party about bringing the VSU legislation before the House. This blatant show of double standards attracted widespread criticism from numerous sources, not the least of whom were international students and members on this side of the House.

We now have a situation where it is compulsory for universities to charge a fee to provide services for international students but, at the same time, it is absolutely out of the question for the same universities to charge fees to provide the same services to domestic students. This does not sit well on campuses where the two student types are supposed to be sharing experiences, cultures and friendships. The last thing that international students want is to be singled out or seen as a distinct group on campus. This differentiation between students, created by the government’s ideological obsession with VSU, runs the risk of turning potential international students away from Australia as their education destination. With Australia recently posting its 52nd consecutive trade deficit, I would have thought it prudent for the government to be enhancing our successful export industries rather than trying to take away their shine.

As I mentioned previously, education services are Australia’s fourth largest export industry, behind coal, tourism and iron ore. The paramount objective of any government in relation to this industry is its protection. We must ensure the continued viability of international education through the regulation of providers. However, we must also be fair and flexible in our approach. The government also needs to acknowledge that the greatest risk to the education services industry in this country is the government’s failure to properly invest in education at all levels: universities, the VET sector and schools. The stock in trade for international education providers trying to attract overseas students is the quality of an Australian education and the status of an Australian qualification. In an increasingly competitive global market for education services, Australia needs to be branded as a quality destination. That is getting harder and harder as our universities, who are the standard-bearers in the market, are starved of funding and forced by government policies to compromise quality just to survive. This is not a risk that we would take with any other valuable export industry.

It is Labor’s intention, as I said at the outset, to support the passage of these bills along with the minor yet important amendment I referred to earlier, which I will table and move at the appropriate time. We support the bills as great believers in the aims and objectives of ESOS and through our desire to ensure that this important industry thrives.

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