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Wednesday, 4 May 1994
Page: 181


Senator BELL (12.48 p.m.) —Those who are observant may be aware of a number of questions on notice concerning overseas students that I have addressed to the minister responsible for the Department of Employment, Education and Training. Certainly the department and the minister have become aware of these questions and some sections of the media are beginning to realise that Australia has a pretty shabby record in this area. It began in the mid-1980s, when Mr Dawkins was Minister for Employment, Education and Training. The government at that stage discovered a new, lucrative source of income in the form of thousands of Asian students needing to learn English and to undertake other studies by coming to Australia and paying for the courses in private colleges.

  With government promotion, demand steadily increased. In 1986, the government streamlined overseas student entry provisions and introduced a student visa system which entitled students who had been accepted into an accredited course, after paying full fees, to a visa entry to Australia on the presentation of an official acceptance advice form. That policy was successful. A dramatic increase in the number of fee-paying students resulted, with student arrivals increasing by 800 per cent between 1986 and 1989 in the ELICOS sector alone. Servicing this increase led to an explosion in the number of private education institutions.

  It should be emphasised that until January 1990 the Department of Employment, Education and Training accredited private institutions to provide English and business courses to overseas students. The criteria by which institutions were accredited included management, course content, premises, qualifications of staff, welfare services to students and financial viability. I specifically emphasise that last criterion.

  After 1987, an inspection by an independent panel of experts was needed for the initial and provisional accreditation, which was to be followed by a further inspection. According to the minister, a further inspection by an independent panel of experts was required to confirm that institutions could demonstrate that they offered high standards of English instruction and business practice and that they continued to meet the above criteria. If an institution successfully demonstrated that it met these requirements, full accreditation was granted on an indefinite basis, subject to review every three years.

  I am emphasising these points to illustrate the degree of accreditation, examination and supervision of these expanding institutions. On the basis of this accreditation, encouraged by the minister and his department, institutions actively sought overseas students. However, while the initiative worked in the sense of increasing the numbers and in terms of fees being paid, other concerns were being expressed.

  It was suggested that the new, relaxed visa arrangements were being exploited by some students and some institutions, and it was said that the regulations allowed what were called `non-genuine' students, primarily interested in working in Australia, to enter Australia too easily. For example, one report from 1990 that I have seen quotes a departmental adviser at a seminar telling his audience that ELICOS had become, in his words, `a non-compliance nightmare', and that it had `contributed to the overstay problem'. I quote from a letter to me from Minister Crean of 3 March this year, which refers to `serious concern about the large number of overseas students, particularly from China, breaking Australian migration law either by remaining in Australia after completion of their studies or using the educational programs, particularly ELICOS, as a means of back door migration'.

  In response to these so-called concerns, some relatively minor modifications were made to the visa system in 1987 and 1988. In August 1989 the government introduced new, tighter entry conditions to visa applicants in a move which, according to Minister Crean, was to deal with the perceived overstay problem. New checks on bona fides were instituted, a minimum educational level was required, an age limit of 35 was introduced, and dependants were not permitted to accompany students. In addition, institutions were told not to issue advice acceptance forms to new students from the People's Republic of China. The minister claims that this was done with the cooperation of private colleges, and with the expectation that refunds would have to be made by the educational institutions which had taken fees from prospective students.

  A report in the Canberra Times in September 1989 refers to 25,000 students being involved. This is no matter of small concern, this is a matter of great national importance: 25,000 students were involved in 1989. That is, 25,000 potential students had paid fees which were reportedly up to $5,000 each, and had been accepted into colleges; but suddenly, in order to gain a student visa they had to meet changed conditions—conditions which were different from those they had originally been informed about.

  Of course, in the expectation of ongoing student numbers, the colleges had made financial commitments for their courses. They had arranged extra accommodation, they had paid for printing, extra staff had been engaged, et cetera. You can imagine the amount of money involved in that, Mr Acting Deputy President. An estimate at the time was an expected loss to private accredited colleges of at least $25 million.

  Around October 1989 an agreement was reached between the government and the industry that refunds, with an additional payment of $100 each, would be issued by the colleges to each of the students who were to be denied entry under these new, arbitrarily applied conditions. The government would investigate the case for financial assistance to institutions which suffered cash flow problems as a result of the cutback in students. It is claimed that the government reneged on this arrangement. The arrangement had been with private colleges, and the government reneged by imposing such harsh conditions for eligibility for government loans that not one loan application was granted for the full amount of the application.

  We know the story from then on. Many colleges collapsed and went out of business as the number of students dried up. For example, whereas in 1989 and 1990 there were more than 20,000 visas issued by the Beijing embassy, in 1990-91 following the crackdown there were 1,579—from anything up to a possible 40,000 applications.

  The federal budget of June 1990 provided $50 million for loans to colleges to enable the department to provide direct refunds to students who had been denied an entry visa. The plan was to later recover the money from the institution with which the student had been enrolled. According to the minister, as at January 1994, a total of $66.076 million has been paid to students and $3.978 million has been recovered. Of the institutions involved, some 60 per cent have closed, with many in liquidation.

  The minister has provided a breakdown of the $62.098 million which has not yet been recovered. The amount owed if pending court cases or liquidations are successful is $33.926 million; the amount to be paid under negotiated or court sanctioned agreements is $1.091 million; and the amount to be written off is $6.746 million. The remainder of that, $20.335 million, is obviously not calculated in that breakdown. We can only presume that that also needs to be written off. I venture to suggest that the $33.9 million that is supposed to be forthcoming, if pending court cases and liquidations are successful, is an ambitious expectation.

  The recovery program is implemented by what is known as the China task force. Since 1990 this force has cost us, the taxpayer, $4.3 million to administer. The whole project has cost us $70 million. All we know is that about $3.9 million has been recovered to this point. Where the rest is coming from is a matter of some considerable conjecture. None of this takes account of the cost of compliance measures that have to be put in place by the colleges. Various observations suggest that that cost may be an additional $20 million.

  In recent answers to questions the minister attempted to praise the results of the government's overseas education initiatives. He praised the growth in the university sector. It recorded an income from educational exports in 1993 of $710 million compared with only $115 million in 1988. That praise is indeed properly given. However, the figures the minister quoted showed an increase in the private sector of only $190 million, including a substantial reduction in the English language sector from $200 million in 1988 to $120 million in 1993. Why? Is it true, as some in the industry have suggested, that the department's real goal is to eliminate the private colleges from the field? Is this government policy? If it is not policy, it would seem that the department has certainly got it wrong. It has obviously failed to implement whatever the government policy is.

  By any analysis of proper management, the initiation, encouragement, establishment of goals and purpose, and the monitoring and evaluation of overseas exports of education by the Department of Employment, Education and Training, and the government, have been an unmitigated disaster. Scores of businesses have collapsed, individuals have been financially crippled, millions of dollars of taxpayer's money has been squandered and Australia's reputation has been perhaps irrevocably damaged. Even though an inquiry by the Industry Commission resulted in some changes to the act, I would suggest that it was after the horse had bolted. No-one has been asked to take responsibility or even been required to explain the many inconsistencies.

  The government and the minister are attempting to explain it all away in terms of past mistakes now rectified. But it is simply not good enough; too many fundamental questions remain about the way the department is managed, about the way it evaluates and monitors its performance and about the way it sets its goals. Why were colleges required to refund any fees when they had already acted on a policy initiative of the government to expand education exports that had been accredited by the department, as I have explained, after `appropriate' checks and after they had followed government and departmental directives?

  If increasing rates of `overstay' were causing concern, why did not the department's investigation of reports from colleges enable offenders to be identified and deported? Why was not the problem, so-called, properly examined and rectified in a manner other than a unilateral crackdown on providing visas to innocent students who had paid fees?

  Is it true that only private colleges were forced by the department to keep meticulous records of attendances of overseas students, but not universities and government colleges? Again, why were these private college records not adequately monitored and acted upon? If private educational institutions were `cashing in' on a desire for a backdoor immigration path, why did the accreditation monitoring not identify such colleges? We had the accreditation in place. Surely the monitoring was taking place and surely it was possible to identify such colleges. If so, it is not clear that anything was done about it.

  Why is it that the exciting, brave new world of millions of dollars from exports of education, initially seen to be available to the private sector, has taken a back seat to providing a source of income for universities? There is nothing particularly wrong with universities making a profit out of it, but that has been pursued to the disadvantage of the other sectors. One has to ask: what effect will this have on the tertiary education system of the future? There are many fundamental questions still to be answered. The evasion so far does not provide any reason to be confident that the Department of Employment, Education and Training is properly set up or structured to meet its responsibilities.