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Wednesday, 29 February 2012
Page: 1180

Senator McKENZIE (Victoria) (11:47): I too rise to comment on the Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Bill 2011 and associated bills. For the record, I acknowledge the many overseas students whose presence in our regional universities, TAFEs and colleges offers benefits to all Australian students as well as to our regional communities more generally. Only last week I participated quite vigorously—though probably less vigorously than I had in the late 80s—in the O-week celebration at Latrobe University in Bendigo. There I was able to see firsthand the social and cultural value of international students studying at our institutions as domestic and international students got to know each other through a range of social activities prior to commencing their university studies.

Australians are known to value the wealth of cultural diversity and social sophistication brought by international students to campuses and their associated communities. The internationalisation of Australian education provides people in all areas of Australia with the opportunity to learn about other cultures and languages. In addition, it provides Australia with a ready-made supply of future advocates in the best laboratories and the brightest boardrooms in countries right across the world. All overseas students need our recognition and our support.

According to the ABS, during the last 20 years there has been strong growth in transnational education. There are more than 3 million tertiary students worldwide who are enrolled outside their country of residence. That is an increase of more than 200 per cent since 1985, when just under 1 million students travelled overseas to study. Since the 1980s Australia has become a major player in the international student market by offering globally recognised courses and qualifications. Australia's international students are currently our second largest group of temporary entrants. In 1990 Australia welcomed 47,000 international students to our shores; by 2004, Australia attracted six per cent of all tertiary students enrolled outside their country of residence and was the fifth most popular destination for overseas students. Already by the year 2000 the number of international students had grown to 153,000. In 2005, overseas students represented approximately 18 per cent of all higher education students. In 2010, we welcomed more than 619,000 international students to universities, TAFE colleges and schools throughout Australia.

So the provision of education services to full-fee-paying overseas students is an important industry for the Australian economy, and many of the senators who have been commenting on this bill have made reference to that fact. Education services provided in Australia to international students were valued at over $9 billion in export earnings in the financial year 2004-05. At the time, it was the fourth-highest-earning export industry for Australia: in total, it generated more revenue than either wool, wheat or beef. Today, according to the Commonwealth government's Department of Education, Employment and Workplace Relations, education services are Australia's third-largest export industry behind coal and iron ore—that is saying something—and the largest service export industry, ahead of personal travel services.

Full-fee-paying overseas students are therefore an important revenue source for Australian universities. In 2005, revenue from full-fee-paying overseas students represented 15 per cent of all revenue within the higher education sector, which is a significant proportion. As universities work towards delivering quality educational infrastructure right around our nation, it is important that they are well funded. By 2008, the Australian overseas student industry contributed $15 billion in export income to the Australian economy from spending on fees and goods. The latest comparable ABS estimate, which is for the year 2008-09, is $16.6 billion. Universities Australia, the peak body representing Australian universities, states that education exports are the clear No. 1 service export ahead of tourism. As well as being an important revenue source, overseas enrolments can help educational institutions reach the critical mass needed to diversify the range of educational programs on offer to all students. The international student population growth has led to significant expansion in the number of education providers offering services, particularly in the private vocational education and training space. There are now more than 1,200 providers ranging from large universities and TAFEs and public and private schools to small private colleges and English language providers, many in regional centres throughout Australia. Together this has resulted in pressures on the underpinning regulatory frameworks, exacerbated by external factors such as global economies and the increasing value of the Australian dollar.

The background to the more current problems facing international education in Australia is by now well known. Reputational damage associated with provider closures has affected all providers in the international education sector, and this has needed to be addressed. In my own home state of Victoria this was particularly the case. I have first-hand experience of this and it is great to see both institutions and jurisdictions working hard to repair the damage.

One of the issues highlighted through the recent provider closures was the ability to gain a national picture of education providers to determine how many students were going to be affected. Current figures indicate that approximately 230 providers operate across sectors and jurisdictions, contributing to a disjointed system for these providers in that they experience different processes and charges in each jurisdiction, and different initial and annual registration charges at the Commonwealth level. There may also be a duplication in registration assessments which are more global to the organisation rather than local to the course being delivered at a particular campus. Only 11 of the 54 providers that closed between 2008 and the end of March 2011 met or partially met their refund obligation to students. That would significantly play into the reputation of our Australian providers in this area, the issue obviously being that the international students—all 11,000 of them—are the ones left holding the can.

The Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Bill is part of a package of three bills to establish a tuition protection service for all our overseas students. The bill amends the Education Services for Overseas Students Act 2000 and places obligations on registered international education providers when a provider fails to start or finish providing a course or when the overseas student fails to start or finish a course. It also provides for a national regime of national registration of providers. It limits the amount of initial prepaid fees that may be collected by a registered provider and it provides that students are only eligible for a refund of the unused portion of prepaid tuition fees and specifies what details must be kept on student records.

In summary, the implementation of a new universal single-layer TPS framework will place students more effectively into the Australian tertiary education sector. It will limit refunds, remove unnecessary administrative layers and fees, and draw from a greater pool of available places in the education sector, with incentives for providers to place students. It will enable greater student choice and responsibility as well as direct contact with potential new education providers. It will also provide for transparent decision making and fee setting that better targets provider risks and ensures sufficient funds are collected from the sector to meet fluctuating requirements related to the risk of future provider default. We obviously appreciate greater transparency in this area. The changes will also complement Australia's migration laws by ensuring providers collect and report information relevant to the administration of the law relating to student visas.

As I examine the detail, I want to comment on one of the issues raised—that of prepaid fees. Providers will be limited to the amount of prepaid fees they can collect at any one time to no more than 50 per cent of the total tuition fees before the student has begun the course. The current ESOS provisions have no restrictions on prepaid fees, with students possibly paying 100 per cent of tuition fees, sometimes before a student visa is approved. While many providers take no more than one study period fees at a time, this amendment is designed to help reduce the liability to businesses by limiting the size of refunds owed to students and reduce any potential refunds.

The changes also propose to restrict a provider from collecting student tuition fees not more than two weeks before the commencement of a course. Stakeholders have regarded this restriction as impractical. The Council of Private Higher Education suggests the period should be extended to four weeks while the public university sector wants no time frame when a university can accept prepaid fees. All but the low-risk providers will also have to keep initial prepaid fees in a designated account until the student commences their first study period. Whilst the requirements do not apply to low-risk providers such as universities who receive Commonwealth funding and providers administered by the state education authority, they will apply to many smaller private universities, colleges and schools who are similarly low-risk providers and have quite strong reputations in the sector.

The Department of Employment, Education and Workplace Relations argues that the proposed changes will ensure providers are able to meet their refund requirements should the provider default or the student visa application be refused and will assist and encourage sustainable business practices. However, one-size policy solutions rarely result in a seamless implementation across a sector or an industry, so there is a bit of wait-and-see on this one. The change is designed to stop providers from using prepaid fees for operating expenses before the student commences, despite the fact that a lot of operating expenses in order to start teaching a student actually occur before they have to rock up on day one of classes and encourage more sustainable business models. Penalties have been recommended for non-compliance and for the misuse of prepaid fees. It is reasonable that if a provider defaults and fails to provide a course at an agreed location or a course does not start on an agreed date, then the student should be reimbursed. However, there needs to be some recognition of those providers with strong reputations such as the Holmes Institute, which has been operating for many years in this sector and offering a range of programs to international students, and similar low-risk providers who will be caught in these hasty policy implementations. Whilst it will protect Australia's reputation for delivering quality education services, it will mean that all providers are able to meet their student refund obligations in a timely way. This will obviously impact on the financial operations of the business and many institutions. I have reservations concerning the impact of this legislation on regional universities, TAFE colleges and boarding schools—all smaller institutions than the likes of Melbourne, Sydney or Monash universities. Invariably the most expensive two months of any year occur when the curriculum is being prepared, the teachers are gearing up and the equipment is being purchased—the charge will prove a challenging cashflow issue.

I recognise that the focus is on better managing risk upfront and throughout a provider's registration and that these need a legislative framework to provide security and support for all our overseas students. At the same time we must also ensure that the financial operations of all our educational providers is protected and a variety of educational providers is available in all areas of Australia. While international students provide welcome financial input into our tertiary sector and are a rich addition to the cultural and social experience for Australian students studying alongside them, it is incumbent on legislators and regulators to ensure that our higher education sector remains world-class. We have a responsibility to all students studying in Australia to ensure that they have a high quality educational standard. We also need to guard our reputation abroad as a destination of choice for the world's brightest. Financially, educationally and socially the experience of our international students needs to be positive, transparent and rewarding. There are challenges on these fronts, which universities, governments and communities are addressing. This legislation, based on the Baird review recommendations, goes towards addressing these concerns.