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Wednesday, 30 August 2000
Page: 19609

Dr KEMP (Minister for Education, Training and Youth Affairs and Minister Assisting the Prime Minister for the Public Service) (NaN:00:00) —I move:

That the bill be now read a second time.

The Education Services for Overseas Students (or ESOS) Bill 2000 is being introduced with four other Bills including:

• the ESOS (Consequential and Transitional) Bill 2000

• the ESOS (Assurance Fund Contributions) Bill 2000

• the ESOS (Registration Charges) Amendment Bill 2000, and also

• the Migration Legislation Amendment (Overseas Students) Bill 2000.

We are introducing these bills to provide a more effective regulatory framework for the education and training export industry, which we know to be of great value to Australia. The new ESOS Act will protect and enhance the industry's integrity and quality, and will assist in reducing abuse of the student visa program.

The industry strengthens our relations with the region and with countries from which students come. It yields valuable revenue. It provides a cross-fertilisation of ideas and cultures, and the internationalisation of education enhances the quality of education for all students. It is enjoying a record year, with over 180,000 international students enrolled with Australian institutions: fifteen per cent up on 1999. It now earns Australia $3.7 billion a year in export dollars, comparable to wool or wheat. The continuing value of the industry depends on the service it provides to overseas students and on public confidence in its integrity and quality.

• The main ESOS Bill will replace the Education Services for Overseas Students (Registration of Providers and Financial Regulation) Act 1991(the old ESOS Act). That act was introduced to ensure:

• that international students in Australia are treated with equity and fairness;

• that there is a positive basis for promoting Australia's international reputation as a provider of reliable, high quality education and training; and

• that taxpayers' funds are not required to recompense international students who have been let down by individual education and training providers.

The old ESOS Act pursued protection of Australia's international reputation by establishing key national elements for the regulation of the industry. It has been amended and extended since its introduction, increasing industry responsibility and improving protections for students. However, as the industry has developed, new regulatory challenges have emerged, and it has become clear that a more effective framework is required. We are introducing the Education Services for Overseas Students Bill 2000,building on the strengths of the old ESOS Act, but alsoproviding new and more effective measures relating to both quality and integrity.

This bill has been developed following a review of the old ESOS Act, and a process of consultation with industry, states and territories and the Department of Immigration and Multicultural Affairs. The review considered the problems facing the industry: the uncertain financial protections for students' pre-paid course fees; the emergence of a small minority of unscrupulous providers; nationally inconsistent quality assurance; and the need to strengthen public confidence in the integrity of the student visa program.

Some successful measures to increase monitoring ofstudent visacompliance were undertaken during 1999. As a result, the cancellation rate for breaches of student visa conditions has grown significantly. It increased by 19 per cent during 1998-99 and by 36 per cent for 1999-2000. The bills will help to ensure that students admitted to Australia to study do just that, and that those students receive the education to which they are entitled.

The new ESOS Act will:

• provide overseas students with stronger protection for pre-paid fees and continuing education if their provider collapses, through an industry-based assurance fund;

• establish a legally enforceable national code providing nationally consistent standards for the registration and conduct of providers, which will deliver improved and more reliable quality assurance across the states and territories;

• create new obligations for providers to report student breaches of their visa conditions through the Electronic Confirmation of Enrolment system;

• make it an offence to be a bogus provider—that is, to fail to provide genuine courses to students and in doing so intentionally or recklessly facilitate visa breaches;

• provide powers for my department to investigate possible breaches of the act and of the national code; and

• allow greater powers to impose suspension and cancellation action and other conditions on providers that breach the provisions of the act or the national code.

Assurance fund

The ESOS Bill 2000 requires providers to belong to an assurance fund, which will be established under the Education Services for Overseas Students (Assurance Fund Contributions) Bill 2000. The ESOS assurance fund will provide greater security for overseas students' pre-paid course fees. It will replace the old ESOS Act requirement on providers to deposit pre-paid fees into a notified trust account. Those accounts were open to abuse. When an unscrupulous provider collapsed, we found that the trust account was empty; it had failed to achieve the objective of the act to protect student fees. The assurance fund will avoid that difficulty because an independent fund manager will control it.

National code

The ESOS Bill 2000 establishes a new national code, which will provide legally enforceable and nationally consistent standards for the registration and conduct of registered providers. Providers will be obliged to comply with it; the states will use it when considering initial and ongoing registration of providers; and DETYA will be able to take action where providers are not complying with the code. I expect shortly to publish an exposure draft of the code.

Electronic confirmation of enrolment (eCoE)

The ESOS Bill 2000 places reporting requirements on providers concerning their students, through a new, secure electronic confirmation of enrolment system. This system is being developed co-operatively between my department and the Department of Immigration and Multicultural Affairs. It will bear down on the fraudsters that have been found to be misusing the old paper based system that was introduced in 1995. The electronic system will also provide evidence as a basis for monitoring compliance with the new act, and allow my and Mr Ruddock's departments to cooperate in minimising the presence in the industry of providers lacking integrity, or who facilitate student breaches of their visa conditions, or collude with non-genuine students.

With that aim in view the new electronic confirmation of enrolment system will, once fully operational, enable more effective exchange of information between relevant Commonwealth and state government agencies. This bill also obliges providers to report students who are not meeting course requirements or not attending classes. Complementary measures in the Migration Legislation Amendment (Overseas Students) Bill 2000 will then trigger automatic cancellation of the student's visa in certain circumstances.

DETYA investigations

Under the ESOS Bill 2000 the states will retain first-line responsibility for the oversight of the providers whom they approve. But the bill will provide new powers for my department to investigate breaches of the act and code where states fail to act in a timely or adequate manner. These powers will be used to ensure that only education and training providers of high quality and integrity are allowed to provide services to overseas students by identifying those against whom action should be taken.

This will mean the Commonwealth taking a more proactive role in the registration and regulation of the education export industry, and will involve increased costs. The ESOS (Registration Charges) Amendment Bill 2000 will increase industry contributions in order to offset some of the additional costs that the Commonwealth will incur under the reforms. The maximum increase in registration charge per provider is $2864 a year.


The ESOS Bill 2000 provides powers for the minister for education to suspend or cancel the registration of providers, in cases of breaches of the act, the code, or of conditions of the provider's registration.

Minister for immigration's emergency power

In addition, this bill provides an emergency power for the minister for immigration to issue a certificate suspending visa grants to students enrolled with a provider of concern for a period of six months. Such an emergency power is necessary to enable the government to act quickly to safeguard the reputation of Australia's education export industry.

The circumstances in which this power would be used will be identified in detail with the international education industry, which strongly supports this measure. They will cover those circumstances where a significant number of non-complying overseas students are identified with a particular provider of concern.

The six months suspension will allow the relevant authorities to undertake investigations and give the provider time to get its house in order.

Continuing provisions

The more effective requirements of the old ESOS Act will be maintained in the new one, including the obligation for providers to be registered on CRICOS, the Commonwealth Register of Institutions and Courses for Overseas Students, to belong to a tuition assurance scheme, to refrain from misleading or deceptive recruitment of students and to refund student money in cases of default.

The ESOS (Consequential and Transitional) Bill ensures that the transitional conditions relating to the new ESOS Act are unambiguously stated, and that the requirements for education and training providers are clearly stipulated, including:

• notification requirements for the starting day of obligations for registered providers

• carryover requirements for accepted international students and registered providers as the new ESOS Act is introduced;

• national code compliance conditions;

• amendments to the Migration Act 1958 to allow for the disclosure of information to relevant agencies and the making of necessary regulations under that act. It is intended that, where such regulations involve the disclosure of personal information, they would be drafted in consultation with the Attorney-General.

Review arrangements

The bills are intended to address problems in the industry. They will be reviewed in 2005 in terms of their effectiveness in addressing these problems and any new problems that might emerge over the intervening period. The review will be comprehensive, covering both their effectiveness and efficiency and the ongoing needs of the industry for regulation.


The five bills provide a new approach to regulating this industry. They protect students by replacing the notified trust account with the requirement to belong to an assurance fund. They establish a national code for the registration and conduct of providers and enable the Commonwealth to investigate and impose sanctions on providers who breach the act or the national code. They strengthen the operation of the student visa program by requiring the electronic confirmation of enrolments. The migration amendments will improve monitoring and compliance in the overseas student industry and streamline the process for student visa cancellation.

The financial impact of the bill will be minimal.

I present the explanatory memorandum to this bill.

Debate (on motion by Mr Lee) adjourned.