Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

While I was finishing my first stint on this bill I believe I was speaking about the Labor Party's opposition to one element of the bill. The bill does a number of things. There are five schedules to the bill. There are a number of component parts to the fifth schedule. The first four schedules simply streamline the regulatory arrangements that cover tertiary education institutions providing services to overseas students. They do so in a way that is consistent with the additional regulation and oversight that has been put in place for institutions providing services to domestic students. The first four schedules to the bill are seemingly non-controversial, and certainly in the Senate committee government and opposition senators agreed with those four elements. The Greens opposed all, and I commented on the Greens' contribution in my earlier remarks.

There are four component parts to the fifth schedule. The fifth schedule is all about saving money for our higher education sector. We estimate that ultimately it will deliver savings of around $76 million a year if this red tape is reduced, including reducing reporting time frames for student default and allowing overseas students to pay more than 50 per cent of their fees up-front—not requiring them to do so. We have to be careful and keep in mind that that cap will still be in place and that an institution can only require 50 per cent of the fees to be paid up-front, but it will give students the choice. Finally, it will remove some of the arbitrary restrictions on the study period for overseas students. Those elements are agreed to, or seemingly broadly agreed to.

The only matter of contention between the government and the opposition at the moment relates to an issue around what is called the designated account. I will quote from the Labor senators' report on this bill, which defines a designated account. It says:

The designated account requirement was one of a range of measures introduced by the former Labor Government following the Baird Review of 2009. Together these measures have been successful in stemming reputational damage that had the potential to severely undermine Australia’s international education sector.

The designated account requires institutions to put aside or to hold a certain amount of the funding or fees provided to them by overseas students in case there are allegations of fraud or underperformance. It is held almost in trust, if you like, and provides overseas students with that protection.

What the Labor senators' report fails to take into account—in what is only a few paragraphs of analysis, it must be said—is that since 2009 there has been a whole series of regulations and protections put in place, particularly in the domestic student sector. I did wax lyrical earlier about the Australian Skills Quality Authority and the Tertiary Education Quality and Standards Agency. These new bodies have put in place greater restrictions, greater oversight and greater regulation to cover the standards in place for domestic students. This legislation expands those protections and regulations to overseas students. Therefore, after lengthy consultation and review—a review established by the former Labor government before the 2013 election—the government has concluded that these designated accounts are not needed if we were to apply this whole new regulatory structure to our overseas students market.

Again, it is about protection and reducing red tape. Protections will be in place as a result of this legislation, including the expansion of powers for the Tuition Protection Service director, which provides protection for overseas students specifically. We feel that those protections are sufficient and that the existing arrangements introduce an uneven playing field between private and public operators. It is only private institutions providing services to overseas students that must put aside these designated accounts. That of course increases their costs, because they have the cost of keeping working capital aside that could otherwise be deployed in their business. That holding cost increases their cost of running their business and makes them less competitive relative to public institutions that do not need to hold these designated accounts.

These designated accounts do not specifically provide any protection or oversight to overseas students; they are simply a safety net in case something goes wrong. I am firmly of the view that we should absolutely make sure that institutions that are not providing quality services are penalised and are held to account and, indeed, have to make rectification and restitution in the case of students not getting a good deal. But these current arrangements are imperfect because they are imposed on the entire education sector, including those institutions that do the right thing and offer high-quality services. Surely, we would not maintain that a majority of Australian education institutions are doing the wrong thing. But that seems to be some of the insinuation from the other side—that they are all suspect and we must have this overbearing and over-burdensome imposition on these institutions. I do not hold that view. I think we have a very high-quality education sector.

The whole purpose and objective of this legislation is to make sure that the sector maintains its competitive and high-quality services, particularly for the growing Asian region. I do not believe that we should tar the entire sector with a brush saying, 'We must impose these onerous obligations on all of you because we suspect that you might be doing the wrong thing.' I think most of them are doing the right thing. Sure we are always going to have bad apples that we need to root out, but this particular approach and this particular regulation is not the way to do that. The way to do that is to have in place proper accountability mechanisms and proper dispute resolution mechanisms—which this bill strengthens as well. We need to focus on bringing costs down and increasing the competitiveness of our sector, so that we can continue to provide a high-quality education sector and expand the exports that our education sector provides.

As I said, while we have a very competitive and very attractive higher education sector right now, we must be alive to the challenges, because there are institutions in other countries becoming better and lifting their standards—and, indeed, possibly doing that from an easier perspective, because they are not at the frontier like our institutions are. So we must always strive in that environment to stay one of the best places for overseas students to get a higher education degree.

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

Firstly, I thank all honourable senators for their contributions to this debate and recognise the common perspective across the chamber on this legislation, regardless of political persuasion, is to ensure that there is a high-quality education system in this country that, as Senator Canavan has quite rightly said, is held to high-quality standards and to ensure that protection for students is maintained as part of that process. That is where this piece of legislation goes to.

As honourable members would be aware, and as a number of senators have acknowledged during this debate, international education is Australia's largest services export. It outstrips personal travel. It is by far our largest non-resources export, directly and indirectly employing over 130,000 people both in our cities and in our regional areas. The latest figures from the Australian Bureau of Statistics show export income from international education at a record high of $18.8 billion in 2014-15. To support future growth we need to have in place a long-term strategy to build Australia as the world's pre-eminent destination for international students. That means getting the fundamentals right and that is what the government argues these bills do.

The amendments to the ESOS Act through these bills remove unnecessary, and importantly duplicative, regulation to provide significant savings for education institutions, estimated at $75.9 million a year. This will allow education institutions to invest in innovation so they become even more competitive globally. By reducing the complexity in a number of areas, the changes in the bills will free up education institutions to focus on their core business of providing quality teaching and learning, ensuring the future sustainability of this important sector.

The bills have been developed in close collaboration with international education stakeholders over a considerable period of two years, including education institutions and peak bodies across all sectors—international students, national quality assurance agencies, state and territory agencies, the Department of Immigration and Border Protection and the Overseas Students Ombudsman.

Through our consultations on these reforms, stakeholders strongly endorsed a robust ESOS framework. They know that our reputation for quality is critical to the continued success of Australia's international education system. But they also believe some of the regulation we have in place imposes unnecessary costs without effectively addressing risk or benefiting students. This government is committed to upholding world-class standards in international education. We need to target regulation effectively and appropriately so that our quality assurance agencies—the Tertiary Education Quality and Standards Agency, TEQSA, and the Australian Skills Quality Authority, ASQA, can focus on the highest risk practices, and stamp out any poor practices, in the international education sector.

The first key streamlining measure in the bill makes minor amendments to the current restriction on education institutions receiving, or any student from paying, more than 50 per cent of their tuition fees before the course starts. Currently the only exemption from this restriction is for a short course of less than 24 weeks duration. The amendments will provide increased flexibility for students, or the person responsible for paying on their behalf, to manage their fee payments. It will enable them to take advantage of favourable exchange rates and have the convenience of paying only once if they choose. Importantly, students cannot be compelled by these amendments to pay more than 50 per cent of their tuition before their course starts if they do not wish to. The short-course exemption on collecting prepaid tuition fees will be increased slightly to 25 weeks to better reflect enrolment periods and to respond to feedback from education stakeholders. However, the government will retain the 50 per cent restriction on the collection of fees in all other cases so the original important protections remain in place.

The second streamlining measure removes the requirement for certain education institutions to hold all tuition fees paid by students before they start their course in a designated account. Under the current provisions this requirement only applies to private institutions. It is a costly and unfair impost on more than half our international education sector, simply because their main source of funding is not from the government. It limits their competitiveness and their ability to invest in innovation and focus on their core business of providing education. It does nothing to reward those private institutions who do the right thing and who add so much to Australia's reputation for quality.

By removing the requirement on these providers to hold tuition fees in a designated account, education institutions will have greater operating flexibility. However, they will have the same obligations to protect students and pay the relevant levies through the Tuition Protection Service. The Tuition Protection Service will continue its important role in placing students on alternative courses and provide refunds where a provider ceases to operate, just as it does now. Where the regulators have concern about a provider's financial viability, conditions still may be imposed on the provider's registration at any time.

The third streamlining measure reduces reporting requirements on education institutions relating to information about students who default on their course—commonly referred to as a 'student default'. During consultations, stakeholders told the government these requirements were unnecessarily burdensome, disproportionate to risk and did not allow enough time for students and institutions to resolve issues and confirm that a default had actually taken place. This has the unintended consequence of students being at risk of inadvertently breaching the conditions of their student visa. Consequently, the streamlining regulation in the bill removes the requirement to report a student default and instead relies on other legislative provisions that require reporting of changes to a student's enrolment. However, the amendments retain the shorter reporting time frame of 14 days for certain information relating to students under the age of 18. This is to ensure the safety and wellbeing of this more vulnerable age group.

The fourth streamlining measure removes the concept of a short course as being less than 24 weeks. Again, during consultations stakeholders told the government this requirement was extremely burdensome. Many education institutions were forced to change their course structures and administrative arrangements to accommodate this requirement.

Other elements of the legislative framework already require a study period of up to six months and require providers to have a written agreement with each international student. The written agreement must set out the student's course details, tuition fees and conditions of refunds. These requirements protect students by preventing any unilateral changes by institutions to a student's study periods.

These reforms do not water down protections for international students or compromise our quality assurance settings; they improve quality by ensuring regulation is clear, importantly that it is targeted and is appropriate. This is central to ensuring the global competitiveness of Australia's educational institutions.

Today the Senate Education and Employment Legislation Committee handed down its report into the ESOS bills and the majority committee confirmed the government's position. The amendments do not water down regulation; they target it more effectively. I note the Greens' recommendation that the Senate reject these bills and claims that they unwind many of the protections of the Tuition Protection Service. I want to say quite clearly that this is not the case. I believe that has been reflected in my presentation today. These bills have the support of stakeholders and, most importantly, they have the support of international students.

I welcome the Labor senator's recommendation in support of streamlining reporting and regulatory requirements, which ease the red tape burden on educational institutions and assist the regulators to target any poor practices. In noting the Labor senator's recommendation not to support the removal of the designated account, I reiterate that this proposal does nothing to weaken protections for international students. Students will continue to be protected by the Tuition Protection Service, arguably the world's best student protections in international education, and I pay credit to the opposition who established the process when they were in government in 2011-12.

Private providers already pay a higher premium under the tuition protection service. All providers' financial viability is assessed by the regulators ASQA and TESQA. The regulators can impose conditions on a provider at any time when they have concerns about financial viability. In the Senate committee majority report 'International Students and Stakeholders', the majority all support this amendment to ensure regulation is effective and well targeted.

The measures in these bills align the ESOS Act with the domestic quality assurance frameworks. Most significantly, they remove the previous reliance on government delegations for regulation which stems from the time when states and territories performed the quality assurance roles now largely performed by our national regulators. The ESOS Act will now ensures that ESOS agencies, TESQA and ASQA, and the Department of Education and Training have direct and clear responsibilities. The bills also ensure the states and territories retain their important role of assessing and recommending schools for registration by the Commonwealth under the ESOS Act. The result will be less administrative complexity and more emphasis on getting the regulation right as ESOS agencies TESQA and ASQA will have more time to focus on targeting poor practices in international education and take action against high-risk education institutions.

Institutions will benefit from streamlined administrative processes, saving them time and money. To ensure the appropriate oversight of TESQA and ASQA responsibility as ESOS agencies, the bills will now allow the minister to direct an ESOS agency in the performance of its functions under the ESOS Act. Stakeholder consultations on the bills identified the need to align the ability of ASQA and TESQA to take equivalent action under the ESOS Act. Consequently, where an institution's registration or course accreditation under domestic framework ceases, the ESOS agency will now be able to cancel, suspend or otherwise impose a condition on that institution's registration under the ESOS Act. This will ensure that regulatory action is robust and consistent between the ESOS and the domestic frameworks and improved transparency and equity for the institution against which the action is being taken.

Other measures will strengthen the operation of the Tuition Protection Service by enhancing the powers of its director and ensuring it has a more direct role in supporting the quality and integrity of international education. Powers will be vested directly in the Tuition Protection Service director to allow him or her to issue production notices to obtain information about education institutions suspected of being unable to meet their obligations to international students. The TPS director will also be able to make a recommendation to an ESOS agency about enforcement action that should be taken against an educational institution and this must be considered by the ESOS agency. These changes are all about supporting quality unambiguously to allow regulators to take action quickly against poor practices in international education.

The changes to the ESOS Act significantly reduce complexity and cut red tape without compromising Australia's strong student protections or our reputation as a world-class destination for international students.

Extensive consultation on these reforms, as I indicated earlier, over a period of two years has reiterated the strong support they have from the international education sector and the benefits that will flow to providers and students. I thank the international education sector for their genuine and constructive commitment to improving the ESOS framework and for supporting quality. I also thank members who have spoken in the debate and support the government's ambition for Australia to lead the world in international education. I commend the bills to the Senate.

Bills read a second time.