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Wednesday, 2 November 2011
Page: 12548


Mr PYNE (SturtManager of Opposition Business) (17:58): I rise to speak on the Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Bill 2011, the Education Services for Overseas Students (TPS Levies) Bill 2011 and the Education Services for Overseas Students (Registration Charges) Amendment (Tuition Protection Service) Bill 2011. These proposed legislative changes stem from the Stronger, simpler, smarter ESOS: supporting international students report conducted by a former member of this House, the Hon. Bruce Baird, who is also a very good personal friend of mine. As members of this House will be aware, in August 2009, the then Minister for Education, the Hon. Julia Gillard, commissioned the review of the Education Services for Overseas Students (ESOS) Act 2000. Issues in the international education sector came to a head in 2009 with media reports of unethical behaviour within the sector and a when series of colleges collapsed over financial viability issues. The sector was also damaged by protests and sensationalist media coverage in overseas markets concerning a spate of assaults which were portrayed as having been racially motivated. It has also been a very difficult time for many education providers, who have been impacted by other pressures such as competition from other countries, the value of the Australian dollar and the government's visa rule changes. Unfortunately, the combination of these factors led to falling enrolments in the sector, which is a deeply concerning matter both to the sector and to the coalition.

Bruce Baird was asked to report back to the government with recommendations designed to ensure that Australia could continue to offer quality international education to students studying in Australia. The review considered the need for enhancements to the ESOS legal framework in a number of key areas and was reported to government in February 2011. The report emphasised the need for a new and strengthened regulatory approach to protect Australia's reputation as a provider of quality education. In particular, the recommendations focused on: more support for international students; improved information; stronger consumer protection measures to ensure students are protected from unscrupulous operators; improved regulation of Australia's international education sector; and improved support for those who study and live in Australia, including their having somewhere to go when problems arise.

The coalition has supported in principle the recommendations to amend the ESOS Act in order to improve and strengthen our international education industry. Reform to the ESOS Act has been undertaken in a number of stages. The coalition supported the reforms requiring the re-registration of all institutions already on the Commonwealth Register of Institutions and Courses for Overseas Students, CRICOS, by 31 December 2010. We also supported the introduction of two new registration requirements to strengthen the education credentials of education providers. These require providers to list the names of their agents and to comply with any regulations relating to them.

These new requirements were implemented following the passage of the Education Services for Overseas Students Legislation Amendment Bill 2010. Education providers are now required to demonstrate more rigorously that they have a sustainable business model. They also need to demonstrate that they have access to financial resources and have appropriate capability, governance and management structures in place.

There will now be a more consistent requirement for assessing risk to be applied by all state authorities. Further reforms have been implemented, including changes to registration fees and the implementation of an Overseas Students Ombudsman, in response to Baird recommendations 16 and 17. Changes to registration fees were considered in the Education Services for Overseas Students (Registration Charges) Amendment Bill 2011 and the Education Services for Overseas Students Amendment (Registration Charges Consequentials) Bill 2011, which received royal assent on 26 September 2011.

The coalition supported the passage of those bills, which amended the ESOS Act to create a new fee structure replacing the previous charging structure for the compulsory annual registration charge payable by all registered providers of courses to students on student visas. Those bills also provided for an entry-to-market charge payable for the first three years of registration.

Now the parliament is considering a further stage of reforms to the ESOS Act. The bills that are being considered today seek to do the following. Firstly, strengthen tuition protection to ensure students receive the tuition they have paid for or, as a last resort, a refund. Secondly, introduce national registration for providers operating in multiple jurisdictions. Thirdly, make technical amendments, including clarification of the definitions of tuition fees to include only the costs directly associated with the course as well as to include former accepted students in the definition to make reporting requirements and complaints-handling processes applicable even if a student has ceased with a provider.

The Tuition Protection Service are to be accessed by students who seek to gain a refund on those parts of their courses which were not delivered in the event that higher education providers do not meet refund obligations under the ESOS Act. Students will only be eligible for a refund of the unused portion of prepaid tuition fees—that is, 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 they may obtain credit for part 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. The bills will establish national registration for providers operating in more than one jurisdiction.

These bills also establish the framework for the administration of the scheme. I note that the explanatory memorandum to one of the bills states that the implementation of the Tuition Protection Service comprises $5 million of seed money for the Overseas Student Transition Fund in 2012-13. Also provided for is $800,000 to remunerate the Tuition Protection Service directors across the forward estimates. It is understood that these costs will be offset by funding sourced from government financial assistance provided to the Assurance Fund in 2010. As a consequence, the government expect that the establishment of Tuition Protection Service will be budget-neutral. I note the government has indicated that, based on modelling, possible revenue for 2012-13 is estimated at $6.1 million.

While the coalition support the measures contained within these bills, we are aware of a number of education stakeholders who are concerned that such rapid changes could result in some quality providers having to change their entire business structures in a relatively short period. 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.

Some stakeholders, for example, while supporting the changes, are concerned that the time frame in which the government requires providers to change their business structure is far too short, given what I have just described. Some private higher education providers are particularly worried about the associated cash-flow issues and are worried that rushing the implementation of this scheme may increase the chance of higher education providers closing. They are concerned about the quantum of fees payable, which have not yet been set. Universities also share these concerns, and some seek assurances that the payment of fees to the scheme will be clearly differentiated on the basis of risk. Based on these concerns and suggestions from the industry, the coalition suggests a very straightforward amendment: full implementation of the scheme by 1 January 2013 rather than 1 July 2012, as currently provided for. Therefore, we intend to begin the scheme six months later than is currently provided for under the act. Specifically, the amendment I will seek to move at consideration in detail stage is as follows:

(1) Clause 2, page 2 to page 4 (table), omit "The first 1 July that occurs on or after the day this Act receives the Royal Assent" (wherever occurring), substitute "1 January 2013".

I have written to the crossbenchers seeking their support for this amendment, which I hope they will consider supporting, and I hope the government might consider supporting it too. I place on the record that the coalition support the series of bills which have passed the parliament and led to the implementation of the Baird review's recommendations to strengthen the risk management of education services to overseas students. Action was needed to protect the reputation of Australia's international education export industry, which is estimated to be worth $19 billion annually.

The latest measures being considered today are the most recent of the many amendments to the ESOS framework. Many amendments were made by the former coalition government from 1997, particularly over the period of 2006-07, which sought to protect the industry. I hope that the government is willing to consider the extension of time that I intend to propose in the consideration in detail stage, and I commend the other aspects of the bill to the House.