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Thursday, 30 November 2000
Page: 20344

Senator CROSSIN (9:07 PM) —The package of bills before us relating to the education services for overseas students goes to our international reputation in the education export industry. The education export industry is Australia's fifth most valuable export industry, netting over $4 billion per annum in foreign exchange. The success of this industry, like most products that we export overseas, relies on our good name in order for those products to be marketable overseas and is highly dependent on our reputation for quality. While the industry has grown quickly from a small base in the mid-1980s, the regulatory and legislative framework that guarantees that quality, guarantees our name, guarantees our high reputation with international and overseas students and ensures that this reputation remains high has been seriously lacking at the federal level.

Earlier this year when I spoke on these issues I spoke of the problems associated with this sector in the education industry and the reluctance of this government to act on the many problems that were exposed by the Labor Party until, finally, the government issued a framework for regulation in this area. In the Canberra Times on 13 March this year there was an article headed `Who polices the tertiary trade?' The author of this article actually cites the government's failure under the act to have a look at what is happening—to have spot checks, if you like—in the international education market to ensure that everything is above board. It has been evident for some time that the current regulatory framework is not adequate to ensure a guarantee of educational quality in courses available to overseas students nor to ensure that the tuition fees prepaid by students are protected in the event of a financial collapse of a college or institution. The framework is not steering enough to prevent abuses such as the rorting of student visa provisions we have heard about over the years and employment scams involving overseas students, or to stop questionable providers from making money out of visa fraud.

Over the last two years this opposition has drawn attention to this situation. But, despite the obvious and overwhelming evidence of the crisis in this industry, the government constantly ignored the problems until the introduction of these five bills making up the ESOS reform package. During these last couple of years, the Labor Party has identified dishonest providers in the industry, the lack of financial probity and ethical integrity in certain sections of the industry, a lack of protection for students when providers collapse, the lack of adequate measures at both the state and federal levels to ensure educational quality and inadequate powers either through the current ESOS Act or the Immigration Act to deal with systemic student fraud and abuses. Even the Australian Council for Private Education and Training has attempted repeatedly to draw the government's attention to this impending disaster. At the end of March this year the Minister for Education, Training and Youth Affairs released a position paper called `Strengthening the regulatory framework for the education and training export industry'. In that paper the minister actually admitted that `the review had to consider the problems facing the industry'. So there was admission at last, finally, by this federal minister in his own paper that there were, in fact, problems in the industry.

The central bill under consideration this evening, the Education Services for Overseas Students Bill 2000, establishes a new tighter regime that deals with many of the problems that were identified by Labor. Labor senators support the move to improve regulation of education services for overseas students. This regulation is essential to protect the reputation of our education export industry. Even a few instances of bad practice by disreputable providers can seriously damage our international reputation in providing courses for students either overseas or for overseas students here in Australia. But while we generally support the bill in some areas, as Senator Carr has said, we believe it does not go far enough in others and should be strengthened.

The issue of quality regulation with post-compulsory courses lies with the states and territories in Australia. However, providers must also obtain CRICOS listing in order to offer courses to overseas students, which is, in effect, another layer of accreditation. The chief significance of CRICOS registration is that the Commonwealth can unilaterally suspend or cancel registration for breaches of the act of the national code. However, the initial approval is effectively delegated to the states, although the bill does allow the Com-monwealth to refuse CRICOS registration in spite of the state accreditation in some circum-stances. But this scheme does not adequately deal with the problems of quality as-sur-ance in the industry. States and territories, as well as DETYA, have inadequate resources for assessing the credentials of would-be providers and monitoring their activity once accredited. As we saw during the Senate inquiry into the quality of VET, those standards are inconsistent between the states.

I want to take you to some of the Hansard of the hearing the education committee held on this bill. I asked a question of representatives from TAFE Directors Australia about evidence we had heard of the loophole that was perceived in the bill in relation to registered businesses and private providers that are actually operating overseas. TAFE colleges supply a provision and sometimes have a base overseas even though they have been registered here in Australia as providers. Evidence put to the committee was that there is no way this bill can actually regulate what is happening under the name of Australian education in not only other countries but also other states. Mr Endean, from TAFE Directors Australia, said:

I think that is correct. Certainly the provisions of this bill address the matter of students studying in Australia; they do not address the matter of students of Australian institutes offshore. That is absolutely correct.

So the providers at the centre of problems experienced in the industry are vocational education providers that are accredited by the Commonwealth as registered training organisations, or RTOs as they are known.

Recently the Commonwealth and the states sought legal advice on the status of the national system known as the Australian Recognition Framework and intended to ensure that national consistency in standards and qualifications in the VET system remained as a whole. This advice, which we have heard in the last couple of weeks, provided by the legal firm Minter Ellison, concluded that the legal underpinnings of this national system were essentially non-existent. This problem extends to RTOs operating in the international education industry. We have yet to hear from this government what they intend to do about this advice and they are yet to convince the opposition that this advice is being given serious consideration. These bills propose a new national code of practice which will replace the voluntary MCEETYA code of practice in international education. This national code will set out the standards and requirements for both providers and state accrediting authorities and will have legislative force. However, most of its requirements are addressed to providers. It has some provisions dealing with the actions of the approving authorities but it is a far from complete scheme of nationally consistent quality assurance.

During the Senate hearings, there were also a number of concerns expressed to the committee regarding the level of executive power granted under this bill. This power allows the minister for education to establish the national code of practice without requiring agreement from the industry, state or territory governments or the federal parliament. The minister may amend the code at any time, provided the states are consulted. Consultation is not defined in this bill and ag-reement is not required with the states for the minister when he takes that action. There are significant weaknesses in the scheme of the bill and the national code concerning quality assurance. The quality assurance rules in the code need to be enhanced in relation to both the standards for education providers and the approval and monitoring actions of the authorities. The code needs to make clear which authorities, the Commonwealth or state, are responsible for which matters.

The bill provides that applicants for CRICOS registration must disclose previous CRICOS suspensions, cancellation or conditional registration. They must also disclose previous offences, but this requirement is limited to offences against the ESOS Act alone. In recent months, the Senate has taken evidence about the actions of certain providers in this industry—and Senator Carr has alluded to some of those in his contribution this evening—which would lead me to the conclusion that offences under the ESOS Act alone are insufficient. Problems that have become evident have been characterised not only by financial failure and collapse but fraud or tax avoidance, visa schemes and scams and offences against the Corporations Law. In addition, some colleges have provided educational services of extremely low quality and standard. The national code makes no reference to the more general credentials of providers and contains no provisions requiring accrediting authorities to check, for example, applicants' business credentials, their general honesty or their financial viability. When we are trying to protect and regulate an export industry that relies on our international reputation, then such assurances are important and essential.

The aim of the ESOS Act should not only be to protect students from the providers' business failure, but also, if possible, to pre-empt any failures. We heard evidence during the inquiry that there should be a broader `fit and proper person' test for applicants for CRICOS registration, going to the credentials of the principals and managers of provider companies and also to those of the actual operators of the education providers. For example, the Australian Vice-Chancellors Committee recommended that the national code should provide for accrediting authorities to investigate the business credentials of new providers, including the principals and directors.

In our minority report, we argue that two measures, at least, are necessary. Firstly, the national code should make it clear that all its rules and requirements apply to the registered provider, even when another actual provider is involved. At present this is explicitly in only two sections—the marketing and student information section and the student recruitment and placement section. This might be taken, by implication, to exclude other sections of the code. Secondly, we say that the `fit and proper person' test referred to in the previous section should be applied to actual providers as well as to the principals of the CRICOS registered companies or individuals. Sanctions should be applicable to actual providers.

I believe that in dealing with this legislation there is a need to look at the offshore activities of providers in this industry. The offshore activities of CRICOS registered providers are significant and include the offerings of courses in overseas countries, marketing and promotion and recruitment. In May 1999, Australian universities offered 581 offshore programs, mostly in Singapore, Malaysia and Hong Kong. These activities are of course just as important to the reputation of Australia's education export industry as onshore activities. In the case of Australian universities, these arrangements most commonly involve contractual arrangements with companies or education providers based in foreign countries. These are commonly known in the industry as `twinning arrangements'. In some instances, however, the Australian provider establishes its own autonomous campus and operations offshore. The committee was told about the damage done in 1999 when the Business Institute of Victoria, registered in Melbourne and operating in Vanuatu, collapsed, stranding about 200 students as well as staff. In fact, one witness, who was appearing before the committee in a private capacity, had been a staff member of that institute at the time and had suffered immeasurable stress from what happened to her in Vanuatu. She said:

The government has acknowledged that it does not have any jurisdiction over companies that provide these courses outside Australia. But if the fees are coming into Australia and the businesses are registered with CRICOS and so on, it seems a very difficult situation to be in. I think it is a loophole and that all the legislation in the world is not going to do anything.

Government senators interjecting

Senator CROSSIN —From across the chamber I heard the comment that it is very difficult—and it is a difficult situation. But while there are people like that witness, who was stranded in Vanuatu, and students who are affected by a business college operating under a registration in Australia while operating overseas, we should be concerned and take some action. Bills such as this should at least begin to look at solving the problem and address some of those issues. Mr Schroder, from ACPET, told the inquiry:

I, and a number of professional bodies, have some grave reservations about offshore activities of a so-called twinning nature—whether they are up to quality standards.

This bill does nothing to control these activities, and this is a serious omission. Providers advertising and benefiting from CRICOS registration should be subject to regulation, wherever they are. There are precedents for offshore application of Australian laws. Some key witnesses to the inquiry agreed that regulation of offshore activities would be desirable and this bill would be considerably strengthened by the inclusion of provisions designed to regulate offshore activities of education providers.

This package of bills also proposes the establishment of the tuition assistance scheme. This is to ensure that overseas students who have paid for a course have access to suitable courses or a refund in the event that a provider is unable to provide the course. A contentious issue among parties before the inquiry is the requirement for providers to be members of the proposed assurance fund. The Labor Party believes that, while there would be provision for exemption from fund membership, this should be limited only to universities that are listed on schedule A of the Higher Education Funding Act or publicly funded institutes or colleges of technical and further education that are members of state and territory systems. Private education providers, including non-government schools and the private corporate arms of universities, should not be exempted from the provisions relating to the assurance fund.

Finally, I want to raise the issue of cancelling student visas. Student representatives and others appearing before the committee inquiry expressed the opinion that the provisions in the bill for automatic cancellation of a student visa were too harsh and did not allow a sufficient time frame for students to respond to notices requiring them to present themselves at a DIMA office to explain their circumstances. While the Labor Party is generally supportive of the migration provisions associated with this package of bills, we believe that consideration should be given to extending the time line attached to this provision.

In summary, as our minority report on these bills states, we believe that this bill needs to be amended in a range of areas. There are three main areas: the inclusion of a provision for a mandatory fit and proper person test for providers and the principals of provider companies, covering registered providers and also the actual providers of educational services; the inclusion of a clause with the effect of applying procedures similar to those currently applicable under the Corporations Law to the service of documents on providers giving notice of suspension of registration; and a longer time period to allow students to respond to notices from the Department of Immigration and Multicultural Affairs regarding pending automatic cancellation of their visas.

The draft national code should be strengthened to improve the existing provisions that go to the issue of quality assurance at both the state and federal levels. The national code should also state explicitly that its provisions relating to providers apply also to the actual deliverer of the services. A further matter of serious concern is the lack of provisions in the bill that relate to the activities of providers overseas. This is a complex issue, and means of regulating offshore activities and educational provisions should be carefully examined with a view to amending the new act at the earliest possible time once these provisions have been taken into account.

In conclusion, in my dealings with matters relating to education services for overseas students, this bill has been a long time in coming. We have had a discussion paper and consultations, and we have now had a Senate inquiry into the effect of these bills. While there are many provisions in the majority report that we agree with and welcome, there are still a number of areas in which we believe this bill needs to be strengthened. It needs to be strengthened in order to make sure that this industry is regulated and maintains a high quality of courses and a high quality of teaching activities so that our international reputation in this very important and valuable export industry is not only maintained but also guaranteed for those future overseas students who want to study under our name at institutions either overseas or in this country. They can then be assured of a quality course and protection from providers that are somewhat questionable. (Time expired)