Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

You can't keep these good socialists down!

Brett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | Link to this | Hansard source

Thank you to Senator Conroy. I always enjoy his interjections as well as his contributions in this place. I rise to speak on the Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Bill 2011 and related bills. Madam Acting Deputy President Moore, you would be aware the international education sector in our country has been through a lot lately: the global economic crisis affecting demand, increasing foreign competition, an uncompetitively high Australian dollar, well-publicised provider collapses, and, indeed, violence against overseas students. These have all been subjected to very sharp media scrutiny. Last but not least, the sector has had to adjust to a series of reforms, of which the most recent raft is contained in the three bills before the Senate today.

It is very important that we get it right. Today's—and previous—education services for overseas students bills might sound right. They might sound rather technical and, indeed, they are at one level, but these changes belie their importance to the sector. International education is Australia's fourth-largest export industry and Australia's largest personal service industry, contributing over $16 billion to our national economy—not counting many less direct and less easy to quantify benefits.

I know I quote these statistics very often to the Senate and I will continue to quote them because I believe they are telling and need to gain more currency, both in the parliament and in the community. All too often still, post-secondary education, particularly but not just restricted to university education, is seen as something rather ethereal or boutique and far removed from the realities of everyday life—something of just niche interest. Yet it benefits the Australian economy nearly as much as gold and a few billion dollars more than tourism.

It is not our beaches, the Great Barrier Reef or the Outback that bring in most visitors to Australia. It is our lecture halls. The most common answer to the famous tourism ad slogan, 'Where the bloody hell are you?' is: 'At university, studying.' That is why it is imperative that we continue to nurture and grow this industry. International education deserves as much of our attention and appreciation as mining, tourism and manufacturing.

The proposed legislative changes before us today arise out of the Stronger, simpler, smarter ESOS: supportinginternational students report conducted by the former distinguished member of the New South Wales Legislative Assembly and former member for the House of Representatives, Hon. Bruce Baird. Several reforms recommended by Mr Baird have already been implemented, including changes to registration fees and the establishment of an overseas student ombudsman. These bills being debated today are in response to Mr Baird's recommendations, primarily recom­mendation 16 of his report. These bills will establish a single tuition protection service for all higher education providers listed on the Commonwealth Register of Institutions and Courses for Overseas Students—CRICOS.

The Tuition Protection Service can be accessed by students to gain a refund on that part of their course which is not delivered in the event their higher education provider does not meet its refund obligations under the ESOS act. Students will only be eligible for a refund of the unused part of prepaid tuition fees. In other words, tuition for which the student has paid but which has not yet been delivered by the provider, rather than a full refund as was previously the case, in recognition that students may obtain credit for part of the study already completed.

The new scheme limits the collection of fees to no more than one study period in advance and requires providers who do not receive recurrent government funding to place all students' pre-paid course fees for their first study period into a designated account which can only be drawn down when the student begins study. In addition, these bills establish an online information service to allow students to select from suitable placement options in circumstances where their higher education provider does fold, and will establish national registration for providers operating in more than one jurisdiction.

These bills were referred to both the House of Representatives and the Senate committees on education and employment. All stakeholders had an opportunity to comment and some common threads have emerged. The Australian Council of Private Education Providers, ACPEP—the peak body for private higher education providers—Universities Australia as well as the Group of Eight universities are all concerned about the rushed implementation of these forecast changes. They think the time frames are unrealistically short. But beyond the time frame for the changes, there are also specific concerns relating to cash flow issues, quantum of fees and the approach to risk.

The coalition shares some of these concerns so let me briefly touch upon them in greater detail. The time frames proposed by the government for implementing this significant suite of legislation does indeed seem very short. The coalition would have preferred to have a longer lead time to allow some providers more time to change their business model, which the new fee regime will necessitate. We are not talking about a minor or cosmetic change here. The quantum of fees that institutions will be able to collect upfront makes a huge difference to cashflow. If the quantum is reduced, as it is under the proposed legislation, institutions have to restructure the way they operate and do business. Clearly, this is not something that can be done overnight. The ESOS Act, as it currently stands, requires providers to give notification of default within 14 days. While the coalition acknowledges some of the problems the Department of Education, Employment and Workplace Relations outlined in evidence to the Senate committee with the current 14-day time frame, the opposition is not convinced that the proposed new 24-hour deadline is adequate—though I have just been looking through the recently released proposed government amendments and I do notice that amendment (1) changes the government's proposal from 24 hours and substitutes that for three business days. Looking at that amendment here and now, it would seem that that amendment is far more preferable. So I think the government is on the right track. I should also remind the Senate that both the House and the Senate committees that looked at the legislation recommended that the notification period be 72 hours or three business days respectively. So I do think the government is on the right track.

The coalition acknowledges the diverse nature of the providers who will be affected by the changes envisaged in these bills and has some concern about the one-size-fits-all nature of the way in which student tuition fees may be dealt with. The legislative changes proposed allow operators to collect, in most circumstances, only a proportion of upfront course costs and for those fees to be placed into a designated account. Many providers argue that this scheme may result in a destabilisation of their existing business model. On the other hand, the department believes allowing providers to collect pre-paid fees 'encourages poor business practices'. We acknowledge that for some operators the department's view is probably the correct one but we believe the department has underestimated the great diversity of the international education sector. For that reason the coalition would have preferred a legislative scheme in which riskier operators are subjected to more regulation than less risky operators in order to reflect this great diversity.

The coalition will support this legislation, but we will, as we often do—and as you have often heard me say in this place—monitor its implementation to ensure it achieves its policy objectives. We owe the international education sector nothing less.

Lee Rhiannon (NSW, Australian Greens) Share this | Link to this | Hansard source

International students are significant for our education sector in terms of what they bring to our education communities and the commercial strength of our tertiary sector. We benefit from the rich social capital, knowledge, skills and diversity international students bring not only to our classrooms and campuses but also to our communities. Those students who stay after studying here keep directly contributing to our prosperity and wellbeing. Those students who return home provide links with the regions around us and assist to connect us to the rest of the world.

International students are an important conduit for the flow of ideas, of personal and national relationships and obviously with investment and trade. Economically, overseas students studying in Australia poured some $16.3 billion into our economy last financial year. Education services are still our largest services export industry and Australia's third-largest export industry after iron ore and coal. International students generate demand for nearly 181,000 full-time equivalent employees and, with the short-sighted historic decline in public funding for higher education, now represent a substantial investment in our universities from which all Australian students profit.

I just mentioned the huge amounts of money international students bring in, and I think it is relevant to this debate that we note that this has decreased. Last year we saw a significant drop of 12.5 per cent in the international student income. That is actually a hefty $2.3 billion plunge from the 2010 high of $18.6 billion. So how we manage this sector is obviously vitally important.

These bills before us, the Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Bill 2011, the Education Services for Overseas Students (Registration Charges) Amendment (Tuition Protection Service) Bill 2011 and the Education Services for Overseas Students (TPS Levies) Bill 2011, represent the latest in a line of legislation, beginning with the ESOS Act itself, seeking to strengthen protection of international students' interests. It is clear that there is a range of different approaches from the different parties represented in this parliament, but overall there is a commitment that protection needs to be in place. And the Greens certainly argue that the improvements are badly needed.

It is relevant to this debate to remember the terrible assaults experienced by Indian students in 2009 and also the default of a number of private providers, which has brought real disgrace on the sector in many areas. I understand that 49 private providers defaulted in 2009 and this affected about 11,000 students—and we know that it did severely damage Australia's reputation as a safe and welcoming country for overseas students. These problems have been compounded by some education agents and providers who in fact have misled students about courses, work opportunities and migration outcomes. This unethical behaviour has made it much more difficult, I believe, for Australia to present its best fact in an increasing sharp international competition. This competition is more and more attracting overseas students away from Australia. Again, it further underlines the need for this legislation.

Australia Education International has provided some very informative information for what we are considering here. Its September report showed that the perception of quality education as the most important factor for prospective students when choosing an international education destination. The same report showed Australia as ranking third out of five English-speaking competitor countries in perceived quality education. I would argue that that supports the Greens position for substantially more investment in our education systems.

These bills are the second in the tranche of responses to the Baird review, tightening regulation around the industry and protecting students' interests, and so working to rebuild and safeguard Australia's reputation and own interests in this incredibly important sector.

I would like to go on to some of the details of the bills. I mentioned the defaulting of private providers during 2009 and 2010. Out of the total of 54 college closures in the last five years only 11 have provided any refunds at all to their overseas students. Overseas students have been paying substantial amounts of money upfront for their education. In 2010 the cost of default refunds and student replacement services was $11.5 million. That was up by $2.2 million from 2009.

As of December 2010 there were 32 claims that were not finalised, and the government has been forced to subsidise the ESOS fund twice to cover unfunded student refunds. The centrepiece of these bills seeks to remove the risk of this happening again. Obviously, these are issues that are important for the reputation of the sector and there is also the issue of the financial burden that is put back on the public of Australia.

A new universal tuition protection service, or TPS, will be the centrepiece here. When providers default on commencing or completing a course at a particular location for which students have paid, TPS will organise alternative course placements or student tuition fee refunds. The Greens are pleased to see that low-risk publicly funded institutions will be exempt from two of the levy components: the base fee and the risk rated components. I note that low-risk private providers may also apply for exemption from the same components.

However, there is a major anomaly in calculating the TPS levy. The administrative fees are set at $100, plus $2 per enrolment for the previous year. The base fees are set at $200 plus $5 per enrolment for the previous year. I give emphasis to 'the previous year', but that is what this is all based on. Yet new providers seeking registration—and one could argue that they pose a higher risk of default—are in effect exempted from the $2 and $5 per student components because they do not have a prior history of enrolments. This is where we have an extraordinary anomaly.

I argue that this is an absurd contradiction in risk assessment terms. New providers must already provide projected domestic and overseas student numbers with their application for CRICOS registration. I will move an amendment to the Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Billto ensure that new providers are also charged per student, using their projected likely total enrolments to complete the calculation. This could actually also provide a check against overinflated claims of student numbers that new providers might be tempted to provide.

The overseas student tuition fund will also pay for placement services and the costs of TPS staff, its director and the board—which is intended to represent the different sectors of international education providers. Some in the sector have expressed concerns that there is no requirement in the bill to ensure that representation, so we are inserting an amendment that requires the seven non-department board members to represent providers from across the international education and training sector, including providers of ELICOS courses, which provide major pathways into further Australian studies for overseas students.

The amount of initial prepaid tuition fees a provider can collect from each student before the course starts will be limited to one study period of 24 weeks, and may not be more than 50 per cent of the total tuition fees for the course unless the total length of the course is less than 24 weeks. Thereafter, providers may not receive overseas tuition fees more than two weeks before study commences. This is to minimise the amount of refunds a defaulting provider may need to repay to students.

I fully appreciate that this is a logistical challenge for providers. However, we need to remember that last year calls on the ESOS Assurance Fund were an unsustainable 523 per cent higher than the year before, with some $11.5 million being drawn from that fund, which had to be topped up by the government twice. Clearly, it is not sustainable and something has to give. Let us not forget that last financial year the sector lost $3.2 billion in income compared with the previous year, and it is suffering for it. We have to take the hard steps to ensure that our international students' money—and let us always remember that it is their money—is protected and available to give back to the students when providers do not deliver what the students have paid handsomely for. Surely, that is something that we could all agree on.

To that end, any initial prepaid—that is, pre course commencement—tuition fees should be kept in a designated prepaid fees account, which may only be drawn to a minimum balance of the unused fees as the course progresses. In the case of default, the unused portion of those fees can be transferred to an alternative course provider if the student accepts another placement, or the unused balance can be refunded to the student. State education providers and publicly funded universities are exempt from this requirement as low-risk providers, being effectively underwritten by the government, unlike private providers. However, regulations may exempt other such providers if they are determined to be similarly low risk. Moving on to the issue of accommodation, these provisions provide protection to overseas students by ensuring their unexpended tuition fees are available for refund should their education provider default on course provision. Clearly, this is incredibly important. However, there is nothing in these bills to protect students when they pay what are often substantial upfront accommodation fees to providers, and these can disappear with shonky providers and have done so. Some measure of protection surely belongs in this legislation. I am concerned that it was not in there from the very beginning. We will be amending these bills to afford prepaid accommodation fees the same protection as tuition fees, except in item 11, where providers will be able to draw down below the protected amount in order to make advance payments to accommodation suppliers, and may do so before a course commences.

We have also given attention to the issue of record keeping. Record-keeping require­ments, which obligate the confirmation and updating of written student contact details, academic progress and attendance records every six months, streamline student replacement or refunds in the case of default. It will provide another way of ensuring overseas students do not slip by unnoticed in the system, which is also the justification for the requirement to report any provider or student default within 24 hours.

There has been some argument around the tightness of this reporting deadline, and I understand it has caused some logistical challenges for providers. The department has committed that the reporting system will be online and easy to reverse. However, there have been significant delays in cases where overseas students have gone missing, some in very serious circumstances, with overseas governments expressing grave concern. The duty of care for the welfare and safety of students remains paramount. Clearly, their friends and family need to feel confident that they are safe at all times and that, if there are problems, they will hear about them quickly. In many cases, foreign governments are also playing a role here and want to be confident. Again, it goes to the perception of how international students fare in our country with regard to the key issue of safety.

Providers must notify students if that provider defaults on the provision or completion of a course the student has paid for and must either organise for students to be placed in another similar course, if the student so chooses, or provide a refund of unexpended fees. The provider must then advise within seven days of how they have met those obligations. Conversely, in the case of student default, providers must have a written agreement with each overseas student or intending student setting out refund conditions in the case of student default. They must pay any refund due to the student under the agreement within four weeks of the student's claim unless the student did not pay outstanding payments, had their visa refused because they did not start the course on the agreed date or withdrew from the course at that location.

There is a need for the national code to be updated, and for benchmarks and minimum standards for refund policies of providers to be instated, to ensure all students are entitled to consistent refund policies. That first requires consultation outside this legislative process. This is another small protection which does not yet exist but which these bills should afford a student. I look forward to the debate in the committee stage, because there is clearly room for improvement on these bills.

Matt Thistlethwaite (NSW, Australian Labor Party) Share this | Link to this | Hansard source

The Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Bill 2011, the Education Services for Overseas Students (Registration Charges) Amendment (Tuition Protection Service) Bill 2011 and the Education Services for Overseas Students (TPS Levies) Bill 2011 build on the significant and progressive reforms that the Gillard government has made in Australia's education sector. A commitment to a long-term, high-quality international education sector is at the forefront of the Gillard government's priorities.

It would come as no surprise to anyone in the broader community that this government is delivering a significant number of reforms to our education sector. These reforms are aimed at ensuring not only that all Australians get the best education but also that Australia's reputation as a provider of high-quality, first-class educational services in the international community is fulfilled. In last year's budget, Labor outlined $3 billion of additional investment in training to address skill shortages across the industry. This government is putting back into a number of industries that matter most to our nation, and through these vocational education and training reforms we will see, in the longer term, productivity growth in our economy.

International education is one of Australia's most important industries. It is our third-largest export industry and annually provides revenue of more than $16.3 billion to the Australian government. Income generated in my home state of New South Wales by overseas education services amounted to $5.8 billion, or 37 per cent of export income from all onshore students, in 2010-11. In Victoria and Queensland, there was $4.8 billion and $2.5 billion respectively, while in other states the income from overseas students amounted to $2.6 billion. Of the total export income generated by education services, $15.8 billion was from spending on fees and goods and services by onshore students, and a further $595 million was earned through offshore and other educational activities. The international education sector in this country cannot be taken for granted. In recent times we have seen the effects that the high Australian dollar has had on the demand for placements of international students in Australia. And not only are the economic effects important; reputation is crucial to our nation's ability to attract international students and grow this important export market. That is why in 2009 the Prime Minister, in her then role as Minister for Education, asked Bruce Baird to conduct a review of the Education Services for Overseas Students Act and associated legislation. While the review was conducted the government moved to have the ESOS Act amended to require reregistration of all overseas student education providers to ensure ongoing integrity in this important industry. When the Baird report was released the government committed to a staged response to that review. April last year saw the enactment of the first stage of the government's response to the Baird review. Legislation soon followed in June to adjust the annual registration charge for cost recovery. This bill represents the government's fourth piece of legislation to strengthen the regulation of international education in Australia.

The government has already taken other significant steps towards creating a long-term future for international students in the higher education sector, including the establishment of a national regulator for the vocational education and training and higher education sectors and significant reforms to the student visa program. This bill will strengthen Australia's reputation as a high-quality education provider within the region and throughout the world. It does this by establishing a strong but fair regulatory regime for the provision of international education and training services. This ensures that the interests of overseas students are protected by establishing minimum standards and providing tuition and financial assurance for those overseas students. Also, the bill is designed to strengthen Australia's migration laws by ensuring providers collect and report information that is relevant to the administration of the law relating to student visas.

As I said earlier, the education sector is of huge significance to the Australian economy. It is one of our largest export industries, generating about $16.3 billion a year for our economy. The sector is also very important when it comes to employment. It is responsible for about 125,000 jobs throughout the economy. The international education sector in Australia has also grown considerably in a relatively short period of time—from about 50,000 students at the beginning of the 1990s to more than 600,000 students now. Obviously this growth has led to an increased number of international students at our universities. Macquarie University, in the north of Sydney, has around 12,000 international places, Monash University has around 13,000 places and my old stomping ground the University of New South Wales also has around 13,000 places.

On top of this we have also had a huge rise in the number of education providers for international students, particularly in the private sector. Significantly, there are now more than 1,200 providers in this sector. These huge numbers, and the relatively large increase in recent times, have caused pressures on the regulatory framework that underpins our international education sector. The Baird review focused on several major aspects of those pressures in the international education space. When the report was released in 2010 some of the key recommendations included strengthening the registration process; effective monitoring and enforcement provisions; empowering students with information about complaint handling; ethical recruitment; and stronger consumer protections for students.

In early 2011 the government acted to bring in a wide range of reforms designed to give effective enforcement, to restrict processes around the registration of education providers and to give access to the ombudsman to allow students who attend private schools and private education providers to access a fair and balanced complaints facility. These changes were necessary at the time and they have created a framework for this second round of reforms. These bills will address many of those remaining recommendations contained in the Baird report.

Key to those reforms is the strengthening of tuition protections, and education providers who close their doors will no longer be able to take their students' money with them without some recourse. The reforms contained in these bills are also the government's response to a series of closures within the sector that have cost students a great deal of time, money and heartache to get refunds but have also done damage to Australia's reputation in the international community as a market for overseas students.

Closures affect not only the students but also our reputation throughout the world as a stable provider of services. The current system requires all non-exempt providers to belong to a tuition assurance scheme and pay into the ESOS Assurance Fund. This process involves separate applications and fees as a condition of CRICOS registration. Often the process means that the costs of placing affected students are not distributed throughout the industry in an equitable way.

The introduction of the Tuition Protection Service allows for a single point of placement for students and, in the worst cases, a refund for students. The TPS will allow for all possible placement options for students, placement incentives for providers and greater student choice. A single TPS means greater flexibility in service, a single entry point for students, a single set of fees for providers and, of course, greater accountability to government. The TPS will also mean providers who take on displaced students will receive the equivalent of an unexpended prepaid fee. This means the education providers and, importantly, the students are not out of pocket when these circumstances occur. If students do not meet the entry requirements of an education provider there is no obligation to admit the student; and for providers who are unable to pay any difference in fees that may be payable to take on a student there are no compulsory placements. The TPS will include student refunds for unspent portions of upfront fees paid to education providers. Under the current system, if an education provider closes in the final weeks of a student's study, the student is entitled to a full refund even if they obtain credit for completed units of study from another provider. These changes are about ensuring that we strengthen the framework of our approach to providing education services. The changes will provide greater integrity and greater security which will only bolster Australia's reputation as a provider of first-class international student services.

In the past, growth was seen as the only objective; no thought was given to Australia's reputation as a global education supplier. Neither was any thought given to the welfare of students receiving the education nor, worst of all, to ensuring that their education was of a good standard. Growth in the overseas student education sector is fantastic for the Australian economy, and the creation of jobs servicing overseas students is of great importance to all of us. This bill is designed to ensure that growth in the industry continues and that we strengthen the reputations of the industries which are providing the services.

Let us take the example of a potential student from China, from where more than $4.1 billion of student related income comes into the Australian economy each year. That potential student will now be able to choose an Australian education provider and have confidence that their investment in the future will be secure. Another example is that of a potential student from India, from where more than $2 billion of student related income makes its way into the Australian economy each year. There are also potential students from Korea, Vietnam, Malaysia, Thailand, Indonesia, Nepal, Hong Kong and Saudi Arabia. The combined economic benefit to the Australian economy of the education of students from these countries is more than $4.8 billion. These students expect to come to Australia and receive an education of the highest calibre; this government has an obligation to protect those students and to ensure that the Australian education sector has the reputation it deserves—and that is what these reforms will do.

Whether for Australian students or for international students, the Gillard government is delivering better education services in our economy which will provide the platform for better delivery of services as well as greater growth and greater strength in our economy. These are things that must be supported by the Senate.

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

I too rise to comment on the Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Bill 2011 and associated bills. For the record, I acknowledge the many overseas students whose presence in our regional universities, TAFEs and colleges offers benefits to all Australian students as well as to our regional communities more generally. Only last week I participated quite vigorously—though probably less vigorously than I had in the late 80s—in the O-week celebration at Latrobe University in Bendigo. There I was able to see firsthand the social and cultural value of international students studying at our institutions as domestic and international students got to know each other through a range of social activities prior to commencing their university studies.

Australians are known to value the wealth of cultural diversity and social sophistication brought by international students to campuses and their associated communities. The internationalisation of Australian education provides people in all areas of Australia with the opportunity to learn about other cultures and languages. In addition, it provides Australia with a ready-made supply of future advocates in the best laboratories and the brightest boardrooms in countries right across the world. All overseas students need our recognition and our support.

According to the ABS, during the last 20 years there has been strong growth in transnational education. There are more than 3 million tertiary students worldwide who are enrolled outside their country of residence. That is an increase of more than 200 per cent since 1985, when just under 1 million students travelled overseas to study. Since the 1980s Australia has become a major player in the international student market by offering globally recognised courses and qualifications. Australia's international students are currently our second largest group of temporary entrants. In 1990 Australia welcomed 47,000 international students to our shores; by 2004, Australia attracted six per cent of all tertiary students enrolled outside their country of residence and was the fifth most popular destination for overseas students. Already by the year 2000 the number of international students had grown to 153,000. In 2005, overseas students represented approximately 18 per cent of all higher education students. In 2010, we welcomed more than 619,000 international students to universities, TAFE colleges and schools throughout Australia.

So the provision of education services to full-fee-paying overseas students is an important industry for the Australian economy, and many of the senators who have been commenting on this bill have made reference to that fact. Education services provided in Australia to international students were valued at over $9 billion in export earnings in the financial year 2004-05. At the time, it was the fourth-highest-earning export industry for Australia: in total, it generated more revenue than either wool, wheat or beef. Today, according to the Commonwealth government's Department of Education, Employment and Workplace Relations, education services are Australia's third-largest export industry behind coal and iron ore—that is saying something—and the largest service export industry, ahead of personal travel services.

Full-fee-paying overseas students are therefore an important revenue source for Australian universities. In 2005, revenue from full-fee-paying overseas students represented 15 per cent of all revenue within the higher education sector, which is a significant proportion. As universities work towards delivering quality educational infrastructure right around our nation, it is important that they are well funded. By 2008, the Australian overseas student industry contributed $15 billion in export income to the Australian economy from spending on fees and goods. The latest comparable ABS estimate, which is for the year 2008-09, is $16.6 billion. Universities Australia, the peak body representing Australian universities, states that education exports are the clear No. 1 service export ahead of tourism. As well as being an important revenue source, overseas enrolments can help educational institutions reach the critical mass needed to diversify the range of educational programs on offer to all students. The international student population growth has led to significant expansion in the number of education providers offering services, particularly in the private vocational education and training space. There are now more than 1,200 providers ranging from large universities and TAFEs and public and private schools to small private colleges and English language providers, many in regional centres throughout Australia. Together this has resulted in pressures on the underpinning regulatory frameworks, exacerbated by external factors such as global economies and the increasing value of the Australian dollar.

The background to the more current problems facing international education in Australia is by now well known. Reputational damage associated with provider closures has affected all providers in the international education sector, and this has needed to be addressed. In my own home state of Victoria this was particularly the case. I have first-hand experience of this and it is great to see both institutions and jurisdictions working hard to repair the damage.

One of the issues highlighted through the recent provider closures was the ability to gain a national picture of education providers to determine how many students were going to be affected. Current figures indicate that approximately 230 providers operate across sectors and jurisdictions, contributing to a disjointed system for these providers in that they experience different processes and charges in each jurisdiction, and different initial and annual registration charges at the Commonwealth level. There may also be a duplication in registration assessments which are more global to the organisation rather than local to the course being delivered at a particular campus. Only 11 of the 54 providers that closed between 2008 and the end of March 2011 met or partially met their refund obligation to students. That would significantly play into the reputation of our Australian providers in this area, the issue obviously being that the international students—all 11,000 of them—are the ones left holding the can.

The Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Bill is part of a package of three bills to establish a tuition protection service for all our overseas students. The bill amends the Education Services for Overseas Students Act 2000 and places obligations on registered international education providers when a provider fails to start or finish providing a course or when the overseas student fails to start or finish a course. It also provides for a national regime of national registration of providers. It limits the amount of initial prepaid fees that may be collected by a registered provider and it provides that students are only eligible for a refund of the unused portion of prepaid tuition fees and specifies what details must be kept on student records.

In summary, the implementation of a new universal single-layer TPS framework will place students more effectively into the Australian tertiary education sector. It will limit refunds, remove unnecessary administrative layers and fees, and draw from a greater pool of available places in the education sector, with incentives for providers to place students. It will enable greater student choice and responsibility as well as direct contact with potential new education providers. It will also provide for transparent decision making and fee setting that better targets provider risks and ensures sufficient funds are collected from the sector to meet fluctuating requirements related to the risk of future provider default. We obviously appreciate greater transparency in this area. The changes will also complement Australia's migration laws by ensuring providers collect and report information relevant to the administration of the law relating to student visas.

As I examine the detail, I want to comment on one of the issues raised—that of prepaid fees. Providers will be limited to the amount of prepaid fees they can collect at any one time to no more than 50 per cent of the total tuition fees before the student has begun the course. The current ESOS provisions have no restrictions on prepaid fees, with students possibly paying 100 per cent of tuition fees, sometimes before a student visa is approved. While many providers take no more than one study period fees at a time, this amendment is designed to help reduce the liability to businesses by limiting the size of refunds owed to students and reduce any potential refunds.

The changes also propose to restrict a provider from collecting student tuition fees not more than two weeks before the commencement of a course. Stakeholders have regarded this restriction as impractical. The Council of Private Higher Education suggests the period should be extended to four weeks while the public university sector wants no time frame when a university can accept prepaid fees. All but the low-risk providers will also have to keep initial prepaid fees in a designated account until the student commences their first study period. Whilst the requirements do not apply to low-risk providers such as universities who receive Commonwealth funding and providers administered by the state education authority, they will apply to many smaller private universities, colleges and schools who are similarly low-risk providers and have quite strong reputations in the sector.

The Department of Employment, Education and Workplace Relations argues that the proposed changes will ensure providers are able to meet their refund requirements should the provider default or the student visa application be refused and will assist and encourage sustainable business practices. However, one-size policy solutions rarely result in a seamless implementation across a sector or an industry, so there is a bit of wait-and-see on this one. The change is designed to stop providers from using prepaid fees for operating expenses before the student commences, despite the fact that a lot of operating expenses in order to start teaching a student actually occur before they have to rock up on day one of classes and encourage more sustainable business models. Penalties have been recommended for non-compliance and for the misuse of prepaid fees. It is reasonable that if a provider defaults and fails to provide a course at an agreed location or a course does not start on an agreed date, then the student should be reimbursed. However, there needs to be some recognition of those providers with strong reputations such as the Holmes Institute, which has been operating for many years in this sector and offering a range of programs to international students, and similar low-risk providers who will be caught in these hasty policy implementations. Whilst it will protect Australia's reputation for delivering quality education services, it will mean that all providers are able to meet their student refund obligations in a timely way. This will obviously impact on the financial operations of the business and many institutions. I have reservations concerning the impact of this legislation on regional universities, TAFE colleges and boarding schools—all smaller institutions than the likes of Melbourne, Sydney or Monash universities. Invariably the most expensive two months of any year occur when the curriculum is being prepared, the teachers are gearing up and the equipment is being purchased—the charge will prove a challenging cashflow issue.

I recognise that the focus is on better managing risk upfront and throughout a provider's registration and that these need a legislative framework to provide security and support for all our overseas students. At the same time we must also ensure that the financial operations of all our educational providers is protected and a variety of educational providers is available in all areas of Australia. While international students provide welcome financial input into our tertiary sector and are a rich addition to the cultural and social experience for Australian students studying alongside them, it is incumbent on legislators and regulators to ensure that our higher education sector remains world-class. We have a responsibility to all students studying in Australia to ensure that they have a high quality educational standard. We also need to guard our reputation abroad as a destination of choice for the world's brightest. Financially, educationally and socially the experience of our international students needs to be positive, transparent and rewarding. There are challenges on these fronts, which universities, governments and communities are addressing. This legislation, based on the Baird review recommendations, goes towards addressing these concerns.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

I rise also to contribute to the debate on the Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Bill 2011 and cognate bills, and to affirm the comments of my colleagues—that is, the critical importance of overseas student education to this country, particularly in the Asian region. I am very pleased to acknowledge visitors in the public gallery who come from the very regions where we are hosting and, in some cases, receiving higher education.

People must not overlook or dismiss the importance of overseas student education to the Australian economy, to our foreign affairs and to the long-term wellbeing of our relationships in the region. We are pleased to have a circumstance in which the export income to this country from the overseas higher education sector is now the third highest in the nation and it is the highest service based export income earner for Australia. This is undervalued by most Australians. It is not understood by most Australians, and it needs to be far more deeply seated into the psyche of our community.

The benefit for us is not just when the students are here; there is also the long-term benefit that comes from them having studied in this country. In 2009 I had the pleasure of giving the occasional address at Edith Cowan University in Perth, where I was informed that one-third of the graduands in front of me that day were from overseas. I think back too to the occasion in 2004 when the company that I then ran opened an office in Manila in the Philippines. There was a Filipino businessman who could not have been more helpful to us in opening doors and in introducing us to people in government and in the business sector. At a function at the ambassador's home, I asked him: 'Why are you giving us so much assistance? Why are you so keen to see our company here?' He said: 'Because I got my opportunity during the Colombo Plan back in the 1950s. I studied at the University of Western Australia. It was an opportunity that would otherwise have been denied me and I have never forgotten it. I have never ever wasted an opportunity to be able to join with Australian companies and government in trying to advance their interests.'

I urge my colleagues and the wider community to understand and realise that as we move more into the Asian region, politically, diplomatically, militarily and economically, we have an enormous resource in the graduates and alumni of our Australian institutions—those who have come from overseas to study here and those who go back to their countries and who, hopefully, think well of their Australian experience. We should be building on that: we should be maintaining contact with the alumni and we should be using them as they move into senior positions in business, commerce and government. We should be using those links all the more into the future. That is why this legislation is so important.

It has been mentioned by others that the income to this country from overseas students is now in the order of some $16.3 billion. It has been as high as $25 billion annually, and I want to explore for a few moments the reasons for its decline. Referring back to an earlier age, when I was engaged in business activities in India in the early part of the last decade, I remember reading and then discussing with our Australian consul in Mumbai the widely-publicised fact that Australia had passed the United Kingdom and was second only to America as a location popular with Indian students wanting to study overseas and gain overseas qualifications. I was very proud as an Australian and as one who had been on the faculty of the Curtin University in Western Australia, another university that has long had an association with overseas students and relies heavily on the income from full-fee-paying overseas students. I ask: why is it that we have gone down on the list? We would be no closer now than probably fourth or fifth. Yes, currency fluctuations and the high Australian dollar are points. Others have obviously alluded to the unfortunate publicity that occurred as service providers failed, as overseas students were left here helpless and, regrettably, as some students from overseas countries, particularly in this case India, seem to have been the subject of attacks, particularly in Melbourne. I made it my business to inquire about the background and the basis of that and I am absolutely satisfied that there was no deliberate attempt to target Indian students as such. What came home to me is the fact that those who arrive on our shores need some form of orientation—to be aware that you do not get on a train late at night with a laptop computer and the sorts of objects that others might want to steal from you, or they might cause physical damage to you. I am sure that we have seen that overcome.

Unfortunately, also evident to us when we undertook the hearings on this particular matter under the chairmanship of Senator Marshall in the Senate Education, Employ­ment and Workplace Relations Legislation Committee was the lack of consultation prior to decisions being taken. I learnt that recently from vice-chancellors; we have certainly learnt it from other registered training providers. If there is one lesson that we all want to get out of this process it is that we must engage—government must engage and departmental senior officers must engage with all of the players before we make precipitous decisions. We had a circum­stance in which overseas students were coming to this country and enrolling in spurious courses—hairdressing and cooking type courses—with the expectation, often driven by agents in their home countries, that this was an easy path to Australian residency, ongoing to Australian citizenship. Those are the sorts of issues we should have foreseen and we should have put measures in place to prevent them happening.

We all know very well that overseas agents and, in some cases, Australian providers are only too willing to see the short-term benefit and ignore the long-term loss and the long-term damage that they cause by building up expectations that can never be realised. From this side of the chamber to the government side of the chamber, if we can work constructively to put those sorts of activities behind us we will be all the better for it.

The figures are interesting. A previous speaker mentioned that 125,000 full-time equivalent positions were generated here in Australia for service providers to provide educational services for overseas students—a very impressive figure. When we saw the downturn, unfortunately the dramatic loss of those positions was also reported to us. What is equally interesting to me is that, of the 380,000 students who had student visas, the average number of family member visits per student was 1.8 last year. If my calculations are correct, somewhere approaching 700,000 visitors come to this country who would not have come had their relative not been studying here. Again, that is something which we should surely be encouraging. I would be very interested to learn from tourism authorities and others about what the yield might have been. How high spending were those overseas visitors who came directly as a result of their student relative being here?

Of course, that 380,000 student figure is low because it only includes those on student visas. When you add in short-term, English-as-a-second-language students who come here on tourist visas, we would see that number of students, with the multiplier effect, dramatically increased. Those of us who have had sons or daughters overseas on Rotary exchange or similar types of programs always seem to find an opportunity to visit them when we otherwise would not have gone there. We all know the attraction and the power that accompanies these sorts of visits, and we would often see a multiplier effect with the visitors going back to their home country, speaking well of Australia, speaking well of their relative's experience here and generating others to come.

It is interesting to listen to the evidence, particularly from those who were providing short-term training, especially in the English language. For example, English Australia advised us that the number of students under the umbrella that they represented had decreased from 219,000 in 2008 to 122,000 in 2011. The number had almost halved in that three-year period. That has a dramatic effect on employment, service provision and the jobs of those who would have been providing the service. It is also interesting that there was a 30 per cent decline in the number coming from China for short-term courses in the English language, a 40 per cent decline in those coming from Thailand and a 50 per cent decline in those coming from Vietnam—some of the very markets that we want to promote to. I go back to tourism. Naturally enough, in terms of yield, in terms of dollars left and dollars invested—not in terms of numbers yet—we know that China has become the highest contributor to offshore tourism to this country. We should not overlook those opportunities.

Recommendations were put forward to the department and onwards to the government, especially when it came to questions about prepayment fees. I thought very good suggestions were put forward by those organisations. They said that we are now in stiff competition with service providers from other countries and that we do not want to put into place legislation that would make it so unnecessarily onerous for those wanting to come to Australia that they look to other countries. We would simply be denying ourselves the opportunity.

It was put to us that representatives support the intent of the legislation—and I am quoting here from correspondence to me—'to ensure that fees are utilised for the study period for which they are collected' and that 'the proposed legislation proposes two broad mechanisms to achieve it: firstly, depositing funds into a nominated account and drawing it down; and—not or; and—secondly, putting a limit on collection of no more than six months or 50 per cent of the fees themselves'. These people made the point eloquently that the objectives would be served by either one of those two but that the administrative burden of having to comply with the two of them was certainly unnecessary. They said it would be expensive and it would be confusing for the overseas students. So I still ask that the government give consideration to what have been very reasonable submissions from them.

If nominating an account and drawing it down was not enough, they would strongly recommend that legislation to limit fee collection to no more than two weeks prior to the course commencing be abolished entirely or extended to a minimum of six weeks. The point they were making is that, in a very short course, the confusion associated with having to break the payment into two, the administration associated with collecting the funds a second time and the inconvenience to those who are supporting overseas students in having to make two payments rather than one is simply unnecessary.

If ever there was an instance in which a risk management approach should be taken to this whole question, then the funding for and protection of overseas students as part of their education is a prime example. I am interested in knowing the sort of risk analysis that was done on those service providers who failed. I am interested in knowing, for example, the status and structure of those which failed. Were they the university sector? Were they the publicly owned TAFE sector? Were they long-established Australian companies? Were they long-established Australian private providers? Were they substantially overseas companies or organisations that had come into Australia to take advantage of this burgeoning demand?

Until we know the background of those who failed—of those who failed their students, of those who took money and ran with it—I do not believe we can introduce legislation that is a catch-all for all purposes. For example, do we think for one minute that any one of the 28 or 29 universities in this country are going to close up shop and run away with overseas student money? The answer is patently no. Do we think that would happen with state owned, run and managed TAFEs or their equivalent? The answer is no. Therefore, it is critically important that we apply legislation on the basis of risk, and where there is no risk or low risk then the legislation should reflect that. We have many analogies. We have the capacity to put funds into escrow. We have the capacity to place a bond on a new provider if we perceive there is a risk associated with their capacity or willingness to deliver on what they are charging and claiming. I do not yet see that we have this approach.

I see we have a sledgehammer to kill a nut. I see we have a one-size-fits-all approach. I do not think this is the way to go. I do not believe we get the best when we penalise those for whom there is no risk associated with the activity, function or legislation under which they will be caught. I made this point to the department, I made it in the hearing itself: we must be much more forensic, if that is the term, in identifying where the risk lies and in applying treatments to that risk to ensure that we minimise or negate it. If it does not exist, do not impose the penalty or imposition in the first place. Witnesses before us and submissions placed before us from the various service providers made that point.

On the point of competition, Australia has a great track record of 'aid, trade and fade'. If time permitted I could go through industry after industry where we have provided aid throughout regions of interest to us, that has led to trade and, for various reasons, we have faded. I make the plea that we do not fade. But, in so doing, I also make the point that it is such a lucrative opportunity that it is not just this country that has that opportunity, it is countries throughout Asia—the Philippines, for instance. Our universities have campuses in Singapore, Malaysia and other countries, and increasingly now in the Middle East, in the United Arab Emirates et cetera. So let us not think for a minute—arrogantly—that we are the only country capable of providing these educational services.

There are two things I do not want to see happening: firstly, our own service providers shifting offshore because they cannot—or do not want to and do not believe they need to—comply with restrictive legislation here and move offshore to locations where they do not have these levels of governance and insistence but can still equally and safely provide the education; and, secondly, our being disadvantaged as a result of overseas service providers setting up and taking the very market that we are building a reputation for and in which we have enormous capacity for growth.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I will first reflect on some of the comments made by Senator Back in his comprehensive contribution on this package of education services for overseas students legislation, not so much on points of difference but on matters that need to be sorted out in the committee stage. There is no doubt there is unanimity in this place about the importance of the overseas student sector. It is a significant part of Australia's economy. In my home state of South Australia it is one of the biggest export earners. South Australia is better as an economy and as a community because of the overseas student sector. It would be fair during the committee stage to explore the concerns around risk raised by Senator Back and others in the coalition. My understanding, as I read the bill, is that all but the lowest risk providers will have to keep prepaid fees in a designated account for the first study period. There is an element in the report of the Senate Standing Committee on Education, Employment and Workplace Relations that relates to risk that ought to be explored. The committee inquiry was very ably chaired by Senator Gavin Marshall and the deputy chair, Senator Back.

We not only need to strike a balance between ensuring that we do not have so much red tape that it becomes an onerous burden on educational institutions but also need to have some security, some sense of guarantee, for those overseas students who sign up for these courses that they will be able to pay those fees with the security that if anything does go wrong with an education provider they will not be out of pocket. That is the very important policy balance that needs to be obtained.

Let us put this in perspective. This is a major sector which is very important to Australia's economy and very important to my home state of South Australia. I have spoken in the past about my concerns for the overseas student sector in Australia and how we slipped back for a whole range of reasons. One of the big challenges we now have is a very strong Australian dollar, which is making us less competitive in the overseas student sector. The government needs to be congratulated for the action it has taken so far. The Baird review was a positive review that looked at a whole range of issues to comprehensively deal with these problems. The fact that Mr Bruce Baird AM was a former senior coalition politician indicates that the government has tackled this issue in a bipartisan fashion, and that is a good thing.

In my home state of South Australia, overseas students make up nearly 10 per cent of the state's total exports compared to between seven and eight per cent nationally. That is why I have a vested interest, if you like, on behalf of my constituents to make sure we get this right. Unfortunately, some unscrupulous education providers have taken advantage of the strong growth in this sector to make a quick buck. In 2009 and 2010 we heard story after story of students who had come to Australia only to find the course was not what they paid for and, in some cases, the course and the provider no longer existed. There were also distressing stories of students forced to undertake long hours of physical labour in exchange for minimal education. This, coupled with disturbing accounts of isolated attacks against overseas students, even though they were universally condemned, began to reduce confidence in the sector. The overhaul of provider standards and regulations along with the establishment of an overseas students ombudsman have finally begun to pay off with improved standards and increased confidence for providers and students alike.

I note the work the government has done in implementing the Baird review, and this package of legislation is a part of that. The Australian overseas student education sector is much stronger as a result of these changes, and I support the government's intentions in these bills. I also support the government's amendments to these bills, which are in line with the recommendations made by the committee.

I will be moving again—I hope it is a case of third time lucky—amendments to the Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Bill 2011 and I will discuss these in more detail during the committee stage. In brief, my amendment simply gives the minister the discretionary power to make payments to overseas students to cover incidental costs such as travel or accommodation where a provider has failed to deliver the services as promised. It is a discretion for the minister that I think can be exercised in a way and in a manner that could enhance confidence in the sector. These payments could only be made after consultation with the Director of the Tuition Protection Service and if they do not put the TPS in financial difficulty. I am trying to get that blend of ensuring that it strengthens the sector and also ties it back to fiscal responsibility. These measures are sensible and straightforward and have appropriate safeguards in place to ensure that they do not place an excessive burden on the scheme.

I support these bills. I think it is fair, though, that some of the concerns raised by Senator Back and other coalition senators in their additional comments to the committee report be addressed. As I see it, we need to strengthen support and confidence in the sector. That will involve some costs, but the benefits of that will be to have more overseas students coming to Australia knowing with greater confidence that they will be protected from unscrupulous operators, the very small minority that taint the sector. The measures in this bill are a positive step.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I thank all senators who have contributed to this debate and appreciate the positive manner and constructive way in which they have approached these issues. I will not delay the chamber too long in summing up other than to say that this is the final response to the Baird review, which I think has been a very good process designed to address some of the issues which were exposed in terms of the management and support for overseas students studying in Australia. I congratulate Mr Bruce Baird on the role he has played.

I also thank all those who contributed to the debate around these bills. We have listened to the sector and their concerns, but there is one overriding objective in all of this, which I continue to stress: this is a competitive international industry. Brand Australia is really important in this debate. For every closure of a college or every student who is treated poorly, the impact is felt around the world in terms of Australia's reputation. It does not matter whether it is the small cooking college in Melbourne or the Australian National University; a poor experience for someone in the small cooking college in Melbourne impacts on the ANU and every other university and college that is out there marketing its services as part of Australian international education.

So it is very important that we get this right. It is very important that we provide as much protection and support for those international students and the sector as possible. That is done by making sure we have a very rigorous regulatory environment which supports the sector, supports its capacity, supports its responsiveness to the needs of students and ensures that we continue to support a really strong international reputation for our international education sector.

I have heard the concerns of stakeholders about some of the business aspects of these changes and the good work that came out of the Senate committee inquiry, so the government will be moving some amendments to give providers more time to notify the TPS Director of provider and student defaults. We think these suggestions, made and picked up by the Senate committee inquiry, are good ones and so we will be moving amendments to support the approach that was recommended in that report.

I do not think we have enough evidence to support some of the amendments that have been moved by the Greens and Senator Xenophon. I am not sure whether he is still moving amendments; I heard he was moving amendments but I will have to double check.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

You heard right.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Okay. I heard right. You looked quizzical, Senator, so I thought maybe I had heard wrong.

Senator Xenophon interjecting—

We will come to that in time, but I do appreciate the constructive manner in which senators have engaged in this. I remind people that the passage of these bills is essential if we are going to get the 1 July 2012 date, but I will deal with the amendments as we move through the committee stages.

Question agreed to.

Bill read a second time.