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Wednesday, 29 February 2012
Page: 1174


Senator RHIANNON (New South Wales) (11:17): International students are significant for our education sector in terms of what they bring to our education communities and the commercial strength of our tertiary sector. We benefit from the rich social capital, knowledge, skills and diversity international students bring not only to our classrooms and campuses but also to our communities. Those students who stay after studying here keep directly contributing to our prosperity and wellbeing. Those students who return home provide links with the regions around us and assist to connect us to the rest of the world.

International students are an important conduit for the flow of ideas, of personal and national relationships and obviously with investment and trade. Economically, overseas students studying in Australia poured some $16.3 billion into our economy last financial year. Education services are still our largest services export industry and Australia's third-largest export industry after iron ore and coal. International students generate demand for nearly 181,000 full-time equivalent employees and, with the short-sighted historic decline in public funding for higher education, now represent a substantial investment in our universities from which all Australian students profit.

I just mentioned the huge amounts of money international students bring in, and I think it is relevant to this debate that we note that this has decreased. Last year we saw a significant drop of 12.5 per cent in the international student income. That is actually a hefty $2.3 billion plunge from the 2010 high of $18.6 billion. So how we manage this sector is obviously vitally important.

These bills before us, the Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Bill 2011, the Education Services for Overseas Students (Registration Charges) Amendment (Tuition Protection Service) Bill 2011 and the Education Services for Overseas Students (TPS Levies) Bill 2011, represent the latest in a line of legislation, beginning with the ESOS Act itself, seeking to strengthen protection of international students' interests. It is clear that there is a range of different approaches from the different parties represented in this parliament, but overall there is a commitment that protection needs to be in place. And the Greens certainly argue that the improvements are badly needed.

It is relevant to this debate to remember the terrible assaults experienced by Indian students in 2009 and also the default of a number of private providers, which has brought real disgrace on the sector in many areas. I understand that 49 private providers defaulted in 2009 and this affected about 11,000 students—and we know that it did severely damage Australia's reputation as a safe and welcoming country for overseas students. These problems have been compounded by some education agents and providers who in fact have misled students about courses, work opportunities and migration outcomes. This unethical behaviour has made it much more difficult, I believe, for Australia to present its best fact in an increasing sharp international competition. This competition is more and more attracting overseas students away from Australia. Again, it further underlines the need for this legislation.

Australia Education International has provided some very informative information for what we are considering here. Its September report showed that the perception of quality education as the most important factor for prospective students when choosing an international education destination. The same report showed Australia as ranking third out of five English-speaking competitor countries in perceived quality education. I would argue that that supports the Greens position for substantially more investment in our education systems.

These bills are the second in the tranche of responses to the Baird review, tightening regulation around the industry and protecting students' interests, and so working to rebuild and safeguard Australia's reputation and own interests in this incredibly important sector.

I would like to go on to some of the details of the bills. I mentioned the defaulting of private providers during 2009 and 2010. Out of the total of 54 college closures in the last five years only 11 have provided any refunds at all to their overseas students. Overseas students have been paying substantial amounts of money upfront for their education. In 2010 the cost of default refunds and student replacement services was $11.5 million. That was up by $2.2 million from 2009.

As of December 2010 there were 32 claims that were not finalised, and the government has been forced to subsidise the ESOS fund twice to cover unfunded student refunds. The centrepiece of these bills seeks to remove the risk of this happening again. Obviously, these are issues that are important for the reputation of the sector and there is also the issue of the financial burden that is put back on the public of Australia.

A new universal tuition protection service, or TPS, will be the centrepiece here. When providers default on commencing or completing a course at a particular location for which students have paid, TPS will organise alternative course placements or student tuition fee refunds. The Greens are pleased to see that low-risk publicly funded institutions will be exempt from two of the levy components: the base fee and the risk rated components. I note that low-risk private providers may also apply for exemption from the same components.

However, there is a major anomaly in calculating the TPS levy. The administrative fees are set at $100, plus $2 per enrolment for the previous year. The base fees are set at $200 plus $5 per enrolment for the previous year. I give emphasis to 'the previous year', but that is what this is all based on. Yet new providers seeking registration—and one could argue that they pose a higher risk of default—are in effect exempted from the $2 and $5 per student components because they do not have a prior history of enrolments. This is where we have an extraordinary anomaly.

I argue that this is an absurd contradiction in risk assessment terms. New providers must already provide projected domestic and overseas student numbers with their application for CRICOS registration. I will move an amendment to the Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Billto ensure that new providers are also charged per student, using their projected likely total enrolments to complete the calculation. This could actually also provide a check against overinflated claims of student numbers that new providers might be tempted to provide.

The overseas student tuition fund will also pay for placement services and the costs of TPS staff, its director and the board—which is intended to represent the different sectors of international education providers. Some in the sector have expressed concerns that there is no requirement in the bill to ensure that representation, so we are inserting an amendment that requires the seven non-department board members to represent providers from across the international education and training sector, including providers of ELICOS courses, which provide major pathways into further Australian studies for overseas students.

The amount of initial prepaid tuition fees a provider can collect from each student before the course starts will be limited to one study period of 24 weeks, and may not be more than 50 per cent of the total tuition fees for the course unless the total length of the course is less than 24 weeks. Thereafter, providers may not receive overseas tuition fees more than two weeks before study commences. This is to minimise the amount of refunds a defaulting provider may need to repay to students.

I fully appreciate that this is a logistical challenge for providers. However, we need to remember that last year calls on the ESOS Assurance Fund were an unsustainable 523 per cent higher than the year before, with some $11.5 million being drawn from that fund, which had to be topped up by the government twice. Clearly, it is not sustainable and something has to give. Let us not forget that last financial year the sector lost $3.2 billion in income compared with the previous year, and it is suffering for it. We have to take the hard steps to ensure that our international students' money—and let us always remember that it is their money—is protected and available to give back to the students when providers do not deliver what the students have paid handsomely for. Surely, that is something that we could all agree on.

To that end, any initial prepaid—that is, pre course commencement—tuition fees should be kept in a designated prepaid fees account, which may only be drawn to a minimum balance of the unused fees as the course progresses. In the case of default, the unused portion of those fees can be transferred to an alternative course provider if the student accepts another placement, or the unused balance can be refunded to the student. State education providers and publicly funded universities are exempt from this requirement as low-risk providers, being effectively underwritten by the government, unlike private providers. However, regulations may exempt other such providers if they are determined to be similarly low risk. Moving on to the issue of accommodation, these provisions provide protection to overseas students by ensuring their unexpended tuition fees are available for refund should their education provider default on course provision. Clearly, this is incredibly important. However, there is nothing in these bills to protect students when they pay what are often substantial upfront accommodation fees to providers, and these can disappear with shonky providers and have done so. Some measure of protection surely belongs in this legislation. I am concerned that it was not in there from the very beginning. We will be amending these bills to afford prepaid accommodation fees the same protection as tuition fees, except in item 11, where providers will be able to draw down below the protected amount in order to make advance payments to accommodation suppliers, and may do so before a course commences.

We have also given attention to the issue of record keeping. Record-keeping require­ments, which obligate the confirmation and updating of written student contact details, academic progress and attendance records every six months, streamline student replacement or refunds in the case of default. It will provide another way of ensuring overseas students do not slip by unnoticed in the system, which is also the justification for the requirement to report any provider or student default within 24 hours.

There has been some argument around the tightness of this reporting deadline, and I understand it has caused some logistical challenges for providers. The department has committed that the reporting system will be online and easy to reverse. However, there have been significant delays in cases where overseas students have gone missing, some in very serious circumstances, with overseas governments expressing grave concern. The duty of care for the welfare and safety of students remains paramount. Clearly, their friends and family need to feel confident that they are safe at all times and that, if there are problems, they will hear about them quickly. In many cases, foreign governments are also playing a role here and want to be confident. Again, it goes to the perception of how international students fare in our country with regard to the key issue of safety.

Providers must notify students if that provider defaults on the provision or completion of a course the student has paid for and must either organise for students to be placed in another similar course, if the student so chooses, or provide a refund of unexpended fees. The provider must then advise within seven days of how they have met those obligations. Conversely, in the case of student default, providers must have a written agreement with each overseas student or intending student setting out refund conditions in the case of student default. They must pay any refund due to the student under the agreement within four weeks of the student's claim unless the student did not pay outstanding payments, had their visa refused because they did not start the course on the agreed date or withdrew from the course at that location.

There is a need for the national code to be updated, and for benchmarks and minimum standards for refund policies of providers to be instated, to ensure all students are entitled to consistent refund policies. That first requires consultation outside this legislative process. This is another small protection which does not yet exist but which these bills should afford a student. I look forward to the debate in the committee stage, because there is clearly room for improvement on these bills.