Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

We were hoping there'd be one more constituency statement then, because we had the third Wilson in and we could have had a hat-trick of Wilsons, but, nevertheless—another day.

Honourable Member:

An honourable member interjecting—

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

I know; it was a very good point—a substantive point! I'm really rocking this Federation Chamber stuff!

An honourable member interjecting—

Thank you! I'm pleased to express support for the Education Services for Overseas Students (TPS Levies) Amendment Bill 2017. They are, overall, sensible changes to the Tuition Protection Service. The Tuition Protection Service was introduced by the Labor government in 2012, under then Minister Chris Evans. It was an important part of the response to problems. 'Problems' is an understatement; indeed, it was a crisis that had emerged across Australian international education in 2009. The crisis took many forms, as was well reported in the media—dodgy private providers, first and foremost. I think we all may remember the reports, particularly in Melbourne, of the cooking schools with no kitchens. So we had hundreds or thousands of international students enrolled to learn cooking in schools which were then revealed by the media to not even have kitchens.

An honourable member: Toasters!

Yes, indeed—probably toasters! There were also the international reports of violence—terribly unfortunate incidents—against students. Some of those reports, as was later seen, were somewhat confected or exaggerated by the media, or indeed, in one famous case, it was actual fraud by the purported victim. But, overall, the crisis at that time hurt students. Providers went broke, leaving students stranded and, particularly, out-of-pocket with lost fees, and with problems with their visas and so on.

Importantly, the crisis damaged Australia's hard-won reputation for quality and hurt public confidence in international education and also in our migration program. This is no small matter. It sounds like ancient history, but international education was and is enormously important to the Australian economy. Indeed, last year the economic value reached record heights, in the order of $24 billion. That is comprised of direct economic value of $23½ billion and a bit over half a billion dollars worth of indirect value—fees, jobs, retail housing and the direct expenditure. It's now officially our third-biggest export sector and has achieved record growth, in the order of 18 per cent in the last year.

This is directly relevant to the bill and not just an ad for the sector because, whilst overall growth is good and the number is good—I think we reached, in June 2017, 583,243 students studying in Australia; the highest ever number, which shows strong recovery from the 2009-13 slump—ultimately we have to be aiming for sustainable growth. Growth that is too fast is risky. It poses risk to our quality of delivery, which is incredibly dangerous for Australia's sector because our position in the global market is as a quality provider.

It also poses risk for the student experience. Our student experience is also important for future sustainability of growth because, overwhelmingly, this is an industry which is driven by word-of-mouth marketing. All the work we do to position ourselves as a destination of choice is important. But in this market all the research says very clearly that student experience is important—telling their friends and telling their family. Indeed, we have generations of people whose parents may have studied in Australia and the children, nieces and nephews return. Risks of too fast a growth where quality or student experience is impeded threatens our future growth.

The growth is reasonably balanced across sectors although there are worrying signs starting to emerge of imbalance between states in particular. The last year or two have shown significant growth in the eastern seaboard states—the sort of elephants in the market of Victoria, New South Wales and Queensland—but, quite concerningly, a slowing growth or lesser growth in the smaller states. Those smaller states need to focus particularly on their niche strengths and student experience to compete. Most concerningly, I saw the WA English language enrolments were particularly low with a sharp drop well over 15 per cent. By itself that's not of huge economic import but English language enrolments are the canary in the coalmine for future enrolments because they tend to be the lead indicator of what's going to happen in the next year or two with the much more economically valuable and important higher education enrolment. So there are some matters of concern. We do need to monitor these levels of growth very carefully for any negative signs of an unsustainable growth bubble.

There are also many other benefits which I won't go into now. Suffice to say, we have a lot to lose if we get this wrong—the current value as well as future growth potential. In that context, the Tuition Protection Service is a key plank of the consumer guarantee to protect the student experience and our international reputation. In essence, it's a contingent fund to provide assistance for international students, including with fees where necessary but also re-enrolment in other providers that steps in where there is a market failure.

The broad structure of Labor's scheme from 2012 has stood the test of time and has been highly successful. It sees international education providers levied according to risk. The levy is paid into a fund which is then available for the Tuition Protection Service to draw upon if a provider goes broke to reimburse students or is shut down. I think most of the cases where students have had to seek assistance have been because of regulatory action by our regulatory agencies which have shut down dodgy providers for quality. In some cases, they haven't been able to reimburse the fees and the TPS steps in.

There is a risk-rating system and the universities make a bit of noise and don't really like paying because they say they are paying for the less reputable end of the market. But there's a risk-rating system and providers are levied according to the assessment of risk. That approach has stood the test of time and was subsequently drawn on for the Department of Immigration and Border Protection as they started to try and adjust the student visa processing. It's also had that additional benefit.

The issue now though is because of that extensive growth, which I touched upon, over the last few years, we've seen the fund reserves increase sharply. Advice from the Australian Government Actuary and the TPS Advisory Board is that we can lower the collection rate but still preserve the $30 to $50 million in the fund which the government actuary has said is necessary. The proposed mechanism, which Labor supports, is to adjust the administration while preserving the intent of the scheme to give the minister the power to set administrative fees through a legislative instrument. We anticipate that this year, this will lead to a one-off reduction, which if not changed, would then be indexed modestly, but again, provides the ability more flexibly without resort to legislation to keep an eye on the balance of the fund and adjust as needed.

In endorsing the scheme, I also want to note the benefits of stability in administration. The Tuition Protection Service has been a model of stability and I think that we have seen, since its inception, one legislative appointed director sitting over that scheme which gives enormous benefits. I would contrast that with the crisis, chaos and instability that we have seen in the Department of Education and Training of late. In talking to stakeholders about this bill, I've heard a number of reports of growing frustration across the international education sector both from peak bodies and also providers about the musical chair, the revolving door—that is—the general manager position of international education in the Department of Education and Training. This is incredible but there have been six or seven acting or permanent general managers in the last two years alone. In one sense, it is quite impressive that any legislation made it here with that level of chaos, but it's actually quite a serious matter too and the minister needs to sort this out.

Broadly speaking, the commitment to the international education sector in Australia is bipartisan in spirit. I saw that in Victoria when, for some years under a Liberal government and then under a Labor government, I was the executive director of international education in the Public Service. It was a wonderful role—I learnt so much about the education sector and also Australia's international positioning, student experience and so on. I had staff across the globe working on a marketing study in Melbourne, policy advocacy, student experience and so on. I worked closely with the then Commonwealth bureaucrats who were all in their jobs for more than five minutes! We saw in Victoria the benefits of a bipartisan, consistent, stable approach to policy and administration. The Bracks and Brumby government did an enormous amount of good in responding to that student crisis by weeding out the dodgy providers, resetting the student experience and advocating for the establishment of responses like the Tuition Protection Scheme. That was carried forward and built upon by the Napthine and Baillieu governments and then built upon again by the Andrews government. In Victoria, this has been an area of great bipartisanship. We have had a couple of strategies, our market percentage has improved and so on.

At the national level, despite the stated commitment and broad sense of bipartisanship, the effort in the last couple of years can be described as sluggish at best. We have a national strategy, but it is not exciting or ambitious. It is too general. It should be more comprehensive. It should be more targeted and specific in what it is trying to achieve. And there is a clear case for more resources. The $12 million is a pathetic amount that was put behind the administration—and the strategy was reprioritised from somewhere else in any event. I am happy to be corrected on that; that would be a wonderful thing to be corrected upon. Aside from that, in thinking about the context of the Tuition Protection Scheme, I had a look at the first pages of the document. It is still there on the internet. It is a tragicomic reminder of the instability and scattered lack of focus which unfortunately has characterised this government's stewardship of international education. And there was a foreword in the strategy, signed by Richard Colbeck. 'Who is Richard Colbeck?' you might ask.

An opposition member: A collector's item.

That's right. For five minutes, under the previous government, he was the world's first international education minister. But he achieved an unfortunate triple whammy: he was not just the world's first international education minister at a national level, he was done over by the current Prime Minister; when the Prime Minister did over the previous Prime Minister, he was dumped from his ministry. But then in an amazing coincidence the Prime Minister's nemesis, Eric the Dark Lord of Tassie in the other place, did him over on the Senate ticket because he voted for the Prime Minister in the leadership ballot, who then dumped him. So it is amazing—

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

Order! The member for Bruce will resume his seat. The assistant minister.

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

I rise on a point of order in relation to relevance. I would ask the Deputy Speaker to bring the member back to the particular topic. He is harming what was in fact a good speech by digressing.

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

The assistant minister will resume her seat. The member for Bruce will be relevant to the bill. I would also ask the member for Bruce to ensure that he refers to members by their correct title.

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

I was referring to Senator Eric Abetz, not the well-known drag queen Erica Betz. In closing—and this is important in terms of the coordinating mechanisms that oversight initiatives such as the Tuition Protection Scheme, along with the complementary mechanisms—the National Coordinating Council, which this government put in place, is a great initiative and I applaud it. It comprises ministers from across the government—including immigration, education, vocational training and so on—as well as sector experts. Of course, it is only as good as its attendance—I don't think ministers have been taking this seriously; I really hope to see improvement on that front—and there has been stakeholder and expert frustration in terms of the support and performance of the Department of Education and Training and its revolving set of GMs.

I support this bill as sensible. I call on the minister to take a break from cutting school funding, cutting university funding and jacking up university fees and sort out his department and step up the thinking and support for this critical sector.

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

Prior to summing up in respect of this legislation, I would like to make a couple of remarks with regard to international education. I listened with interest to what the member said and I would actually like to make a couple of observations. Firstly, I have taken responsibility for international education in the vocational education space in the last couple of months. I recently returned from a visit to Sri Lanka; in fact I was in Sri Lanka on Friday. I also spent the first part of last week in India. I had a couple of days in India, then Singapore, then Sri Lanka. The focus of that was education, clearly—primarily, from my point of view, vocational education but also some higher education in India as part of Australia Business Week in India. I can assure all members, of the House in particular, that international vocational education is extremely important to this government. My focus was to look at building opportunities for growth for our providers from Australia to provide support particularly to our nearest neighbours.

India is a significant market for us and we have to be conscious of the support that we can provide there, given that the statistics say that over the next decade India is wishing to train 400 million people in the vocational education space. The opportunities for our providers clearly are in the 'train the trainer' space. Singapore is clearly a hub. We already have providers working in that space in vocational education and in higher education. This government will be working to increase our presence in Singapore and the support that we can provide in that nation.

Sri Lanka is a significant opportunity for Australia. I hope my visit last week is going to be the start of some fairly strong engagement with that nation. They have some clear areas of need in the hospitality and tourism sector. We spoke to them about opportunities where Australia could support their growth. I believe that we now have in place some clear steps that we can take with our high commission in Sri Lanka, and also with our Indian high commission, to make sure we are developing opportunities for our providers. It is clear that Australia has a very high quality vocational education system, and that is what is so highly regarded by our nearest neighbours.

I turn specifically to the Education Services for Overseas Students (TPS Levies) Amendment Bill 2017. Measures in this bill underline the government's commitment to support the international education sector. These measures will reduce the financial burden on education providers while ensuring that strong student protections are maintained. The Tuition Protection Service, the TPS, is a key contributor to Australia's reputation as a preferred study destination. The TPS is funded by an annual levy on all Commonwealth-registered international education providers. It consists of an administrative and base component and a risk-rated premium paid into the Overseas Student Tuition Fund. The fund exists to protect students' investment in their tuition by providing refunds or placing students in alternative courses where a provider closes or is unable to deliver a student's course.

The success and strong growth of the sector, reflected by the recent growth in student enrolments, has resulted in an increased collection of the administrative and base fee components of the TPS levy. The fund is at risk of accumulating excessive reserves, which has potential to undermine industry commitment. The Australian Government Actuary and the TPS advisory board have recommended the fund remains within the target range of $30 million to $50 million. As at 30 June 2017, the balance of the fund was $34.8 million, including the $9.7 million collected from the TPS levy in 2017. Of this, $4.1 million was collected from providers in the form of administrative and base fees. A reduction of the administrative and base fees will ensure the fund remains within the target range.

This bill provides additional flexibility the government needs to manage the fund in response to changes in market conditions. It will give the minister authority to set the administrative and base fees through a legislative instrument. If the bill is passed, the minister intends to immediately make a legislative instrument to lower the administrative and base fee amounts to reduce the burden on providers. This will ensure an effective price signal is maintained for high-risk providers while low-risk providers are appropriately recognised for managing risk effectively. The government is taking a proactive approach to support the strong growth of international education in Australia. The measures will ensure that Australia maintains strong student protections and contributes to the sustainable growth of the international education sector. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.