Richard Colbeck (Tasmania, Liberal Party, Minister for Tourism and International Education) Share this | Hansard source

If it did, it would have needed to have one, but the fact that it had no money in the bank would have meant that the designated account would have effectively been useless. On the point made by the Greens in their discussion about some ideological process around deregulation, the point is that we want to see the appropriate regulation but we do not need to see duplication of regulation.

I paid credit in my contribution earlier to the previous government for the establishment of the Tuition Protection Service, because it is actually a good system. It is a world-leading system. The important thing to understand about where it sits now is that, as Senator Carr indicated in his speech this morning, it started with a relatively small amount of money: it started with a $5 million injection from government. I agree with Senator Carr's comment this morning when he indicated that he did not want government—we should say 'taxpayers' –to be propping up shonky operators, but in the context of the Tuition Protection Service that is not what is happening. That $5 million that was put in by government when the Tuition Protection Service was first set up is now three-quarters paid back, so that is being returned to government at an appropriate rate as the Tuition Protection Service grows, and the rest will follow. So the Tuition Protection Service is effectively industry funds paid by industry into a fund to provide protection against any failure from industry. So it is actually doing what Senator Carr wants it to do by the growth of the fund.

At this point in time, based on the latest information that I have available, the Tuition Protection Service has some $19.296 million in it—plus, to provide additional capacity should it be required, a $30 million insurance policy that sits on the back. The premium for that insurance policy is also paid out of receipts that are taken from education providers. So what we actually have and we will have once the $5 million is fully paid is a service and a system where education providers are providing the guarantee for any failures within the system. I think that is a good system. Rather than rely on the taxpayer, which I agree with Senator Carr that neither of us wants to do, we have a system where, through risk ranking of premiums or payments into the Tuition Protection Service—and I noted in my contribution earlier that private providers already pay more than public providers—there is also the capacity within that process to risk-rank providers. Where the Tuition Protection Service believes that there is a greater level of risk with one provider than another, they can be charged a higher amount for input into the service.

So I think that what we have in the TPS at this point in time is a very good system. Rather than bringing everybody in the system down to the lowest common denominator—the amendment that Senator Carr wants the chamber to agree to brings everybody down to the lowest common denominator, particularly the private providers, and, as Senator Carr indicates, there are very many good private providers—it provides the capacity for the system to provide a risk ranking against those who might present more risk to the system, charge them a higher amount and therefore reward the good behaviour of the good providers. By retaining the designated account, everybody in the system, regardless of whether they are good or bad, has to retain the additional expense of having that account. Worse, if they are a bad provider and if they are in financial stress, there may not be anything in the account, so you end up having to call on the TPS anyway. So you end up with a duplicating system, one that applies additional cost into the overall education provision service.

Senator Carr, you might think that $75-odd million is not a lot of money. In the context of $18 billion, it might not be seen as that. But this is a competitive international market. There is no question about that. It is a competitive international market, and making our businesses, our industry and our education providers, whether they be public or private, as competitive as possible in that international market does matter. It does matter. Education is now a global industry, and we are playing a very important part in that. As you indicate, Senator Carr, we have a very good reputation in that space. And the government, despite what you might like to say, want to ensure that we maintain that. But we want to maintain that with sensible regulation. We want to retain that with regulation that does not produce duplication. We want to maintain that with a regulatory framework that supports and rewards good behaviour.

We have, in the Tuition Protection Service, a system that can do that. We can raise or lower the amount of funding that we require to go into that system to ensure that there is an appropriate sum to provide the protections required. If you look at the amount of money, even with the concerns and the problems that have occurred over recent years and that have been taken out of the TPS so far, it amounted in 2012-13 to $649,941 and, under default funds before 1 July 2012 and under section 50B of the ESOS Act, $358,005, so in 2012 it was $1.07 million. In 2013-14, there was a total of $187,000; in 2014, $121,288; and, to 30 September 2015, $833.That is a total of $1.317 million.

So we have, as I said during my presentation, a balance of just over $19 million in there. There is the capacity to manage that and of course, as I indicated, a $30 million insurance scheme that sits over the top of it. So at the moment we have in the system a capacity of $50 million. That is being funded by the providers. I think that is the appropriate way to do that. They cannot escape it. They have to put their money in. There is no question about the designated account, because this is something that the TPS has control over.

I urge the crossbenchers to consider this quite carefully. This is part of a well-considered, well-consulted-on package of reforms. We think that there is the basis to go down this track because of the way that the TPS has been set up, because of the protections that it provides and because of the one example that Senator Carr gave about a business that went broke and had nothing in the bank. Had they done that as a provider of international education services there would have been nothing in the bank in the context of the designated account, so the TPS would have had to have been used in any circumstance. We do not believe that it is necessary to have both. We think that the structure and mechanisms of the TPS provide the protection that is required. As I said, I congratulate the previous government for the way they established the service.