Karen Andrews (McPherson, Liberal Party, Assistant Minister for Vocational Education and Skills) Share this | Hansard source

I move:

That this bill be now read a second time.

Today I am introducing the Education Services for Overseas Students (TPS Levies) Amendment Bill 2017 which amends the Education Services for Overseas Students (TPS Levies) Act 2012. This bill reflects the government's commitment to support the international education sector by reducing the financial burden on education providers while maintaining our strong student protections.

International education is a cornerstone of our economy and Australia's largest service export. It contributed $22.4 billion and 130,000 jobs to our economy last year. The strong growth in the sector shows the government's policy settings are working to drive success and create job opportunities for Australians.

This is only possible because of our reputation in providing high-quality education and offering unique, strong student protections.

The Tuition Protection Service (TPS) is an initiative of the Australian government to assist international students whose education providers are unable to fully deliver their course of study. It is a key mechanism to protect students, and is funded by an annual levy on all international education providers which is credited into the Overseas Students Tuition Fund, or the fund. The levy comprises an administrative fee and base fee components which are based on a provider's enrolment numbers, a risk rated premium and a special tuition protection component.

Since 2012, the TPS has provided assistance to 1,228 students who have been affected by provider closures, by placing them in alternative courses or refunding their unspent tuition fees.

The success and strong growth of the sector, reflected by an increased number of international student enrolments and a comparatively low number of provider closures, has resulted in the fund reserves increasing sharply.

The balance of the fund has already passed the original target amount recommended by the Australian Government Actuary and the TPS Advisory Board in 2013. The balance is forecast to exceed the upper target unless changes are made to current TPS levy settings. It is important to retain industry commitment to the TPS and to appropriately recognise international education providers that are managing risk effectively and contributing to stable growth in the sector.

The TPS director has taken action to address this issue by reducing the risk rated premium component of the TPS levy to slow the growth of the fund. However, the risk rated premium is calculated based on the risk profile of each provider. Further reducing this component would result in the loss of an effective price signal to higher risk providers, and would not benefit low risk providers who are exempt from this component of the levy.

Low risk providers pay proportionately more of the administrative and base fees, as the higher number of enrolments in these education providers has a significant multiplier effect on the fees collected. Further reductions to the risk rated premium would also give little incentive to providers to reduce their overall level of risk.

A reduction to the current administrative and base fees will ensure the fund remains within the target range of $30 million to $50 million, as recommended by the Australian Government Actuary and endorsed by the TPS Advisory Board.

If we are to continue to be one of the most sought after study destinations in the world, we must continue to improve the effectiveness of our consumer protection mechanisms.

This bill will enable the Minister for Education and Training to proactively manage the fund in response to changing market conditions, by setting the administrative and base fees through a legislative instrument.

This will ensure that international education providers are appropriately recognised for managing risk effectively, while ensuring sufficient reserves are maintained in the fund to meet future claims. The minister will still be able to increase the fees to an 'upper limit' set at the current legislated levels to ensure adequate tuition protection, if required.

I turn now to the specific measures which will reduce the burden on the sector while maintaining our world class student protections.

The bill contains new measures to require the minister to set the administrative and base fee amounts for the 2018 calendar year through a legislative instrument. The minister must do this by 31 December 2017 for the new fee amounts to take effect for the 2018 levy collection.

The new amounts will help reduce the levy collections in a way that appropriately recognises international education providers managing risk effectively, while ensuring the fund remains viable to meet any future claims.

A further amendment to the TPS levies act gives the minister discretion to make a new legislative instrument for the administrative and base fee amounts in following calendar years, that is, for 1 January 2019 onwards. It is anticipated that this will be a one-off reduction to the fund and the fee settings will not be updated every year. If the minister chooses not to make a legislative instrument in later years, the current instrument will be indexed annually until a new one is made. This will give providers some stability, as these amounts will not have to change each year.

The minister must have regard to the sustainability of the fund and any other matters in setting the administrative and base fee components through a legislative instrument.

To give certainty to providers, the bill will impose an 'upper limit' which the minister cannot surpass in setting the administrative and base fee amounts. The limit is set at the current indexed legislated levels. This amendment provides transparency and assurance to the sector by limiting the minister's power to determine dollar amounts for the administrative and base fee components of the TPS levy through a legislative instrument.

The minister must cause the administrative and base fee components to be published in any manner he or she considers appropriate.

This measure will ensure that the administrative and base fee amounts for each year are publicly available to providers to assist in planning their finances.

In today's fast growing international sector, Australia's third-largest export, the government must play a proactive role in maintaining a healthy fund balance to protect overseas students' investment in their education.

This bill will ensure that Australia maintains strong student protection mechanisms, appropriately recognise low risk providers and contributes to the stable growth of the international education sector. This will strengthen the industry's confidence in the TPS, and will ultimately result in better outcomes for students.

This bill delivers on the objectives of the National Strategy for International Education 2025for developing Australia's role as a global leader in education, training and research through strengthening a fundamental student protection mechanism. I commend the bill.

Debate adjourned.

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