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Economics Legislation Committee
15/02/2012
Estimates
INNOVATION, INDUSTRY, SCIENCE AND RESEARCH PORTFOLIO
Tertiary Education Quality and Standards Agency

Tertiary Education Quality and Standards Agency

[17:31]

CHAIR: I welcome Dr Nicoll to the Senate estimates session.

Senator MASON: Dr Nicoll, I was going to ask you about how you commenced your operations, the development of regulatory standards and so forth—indeed, even the university in South Australia where former President Clinton is involved—but I might hold that until the budget estimates if that is all right. I will be putting some questions on notice, as well—just to flag that for you.

I have not got long so I will devote my time to the unfortunate matter at the University of Queensland. I understand the matter is still under investigation by the Crime and Misconduct Commission in Queensland, so I certainly will not be delving into the issues in dispute at all. That is not my intention. I would like to find out about TEQSA’s processes. In effect, this is not a bad dry run for how TEQSA operates. Principally, Dr Nicoll, it is whether you believe that TEQSA has sufficient powers and how you would use those powers in this sort of instance. Is that all right? That is where I am intending to go.

Dr Nicoll : Yes.

Senator MASON: When did TEQSA first become aware that there was a potential issue surrounding the enrolment of a student?

Dr Nicoll : We became aware of it through the media, initially. I would be very happy to answer questions in terms of process. As you identified, we have an ongoing inquiry in relation to the University of Queensland and I would prefer, at this stage, not to say anything about the details of that because it is subject to an ongoing inquiry. But I would be very happy to explain to you the way we approached that and approach any other issue that comes before us, because that may assist in understanding the way we work, and it may assist you to understand the rich scope of the legislation that we have to apply.

Senator MASON: If there is a nub for the committee it is whether you believe that TEQSA has sufficient powers to investigate this issue appropriately and responsibly. This is the first big test for TEQSA, I suppose. It is an unfortunate incident, I should add, but it is a test for the regulatory agency.

Senator Chris Evans: I will let Dr Nicoll comment, but it is also important to note that there are other inquiries occurring, including police inquiries, as well as the Crime and Misconduct Commission. You know better than I about the Queensland authorities. I am not suggesting that you have been helping them with their inquiries. I suppose I am making the point that from TEQSA, no doubt, there are issues there about not crossing over, so when you say it is the first big test of TEQSA, it is important to note that there will be limits on what they can do, given there are other inquiries.

Senator MASON: I understand that.

Senator Chris Evans: It is a complex case, rather than being as straightforward as some people would like to suggest.

Senator MASON: Thank you, Minister.

Dr Nicoll : I do not think that it would be appropriate for me to offer an opinion on the scope of the legislation, either now or in the future, because it is an opinion. However, what I would like to do is to take the opportunity that you have given me to explain the way we go about addressing any issue, whether it is in relation to an admission practice or assessment. When something comes to our attention, either by notification by a provider or by other means, the commission’s first real perspective on that is to think about it in terms of the threshold standards, so to look at the issue in terms of the standards which are set up as a legislative instrument from the act to see where this issue fits. Is it covered by the threshold standards? If it is, then simultaneously we have to apply the objects of the TEQSA Act, which give us a certain scope about the way TEQSA functions. Most importantly, there are regulatory principles that are set up under the act. There are three of those. They are to reflect risk in the way we look at an issue. Let us say, hypothetically, it is in relation to an admission practice at a provider, remembering that it could be a range of higher education providers, not just a university, because we cover the full suite.

Senator MASON: Let us take that example.

Dr Nicoll : Yes, as a hypothetical.

Senator MASON: Yes.

Dr Nicoll : We look at that and we have to apply a risk approach to that particular issue. We have to apply proportionate response and we also need to look at it in terms of regulatory necessity. For an admission practice at a particular provider, it would be a matter of us undertaking inquiries with that provider to ascertain what has happened—what has actually occurred here—and what evidence the provider can give us to show that, firstly, they have identified the issue and, secondly, what measures they have taken to address whatever the problem may have been or how that particular issue occurred. In looking at risk we have to say that given what this provider has done now—and we have strong evidence to say that we are confident that these particular strategies and measures have been taken—is there such a low level of risk, given what the provider has now done, that it does not warrant a response by TEQSA to take more action? That is the first regulatory principle, to apply a risk approach, and we do that across a range of ways.

The second way we have to look at it is in terms of a proportionate response. We look at the issue. We make a decision about what is a proportionate response to this, given what the provider has shown us in mitigating or responding to the issue, and then we come up with a decision about what we are going to do. We have a range of ways that we can respond to a provider. We can put conditions on their registration. We can look at further consequences that have a stronger legal consequence, such as deregistration or suspension of registration. There is a range of escalating responses.

Senator MASON: Ultimately, they are quite significant. I accept that.

Dr Nicoll : The third approach has to be regulatory necessity. Is it necessary for TEQSA to come and take a response in this particular circumstance, given all the evidence and given everything we understand? Does it require one of the more heavy-handed possibilities in our toolbox of regulatory responses or are we actually comfortable and confident that this provider has responded to this issue appropriately; have they put in place all of the appropriate measures to attempt to mitigate the chance of this, whatever it might have been, occurring ever again? So when we look at an issue it has to be on an evidence base, in terms of the threshold standards and the regulatory principles that are integral to our act.

Senator MASON: That is an excellent explanation to the committee. Thank you for that. With respect to this particular case—I appreciate that you cannot go into it—have you written to the university and asked them to, in a sense, explain what they have done?

Dr Nicoll : It is on the public record that I wrote a letter to them. I can get the date for you if you want me to, but it is some months ago, at the end of last year. It is accessible through FOI on our website because an FOI proposal was put to us and we are in a position to disclose that to anybody who requests it.

Senator MASON: If you could disclose it to the committee when it is possible, then that would be appreciated.

Dr Nicoll : We would be happy to do that.

Senator MASON: What did you ask for?

Dr Nicoll : We asked for information in relation to what we had an understanding of.

Senator MASON: Have you received a reply?

Dr Nicoll : Yes, we did.

Senator MASON: Can I ask what the reply was?

Dr Nicoll : We now have ongoing inquiries. It would be my preference not to make any reference to those because they are ongoing, and I would not want them in any way to prejudice the effective conduct of the inquiry.

Senator MASON: Could you give any indication to the committee as to how long it will take to resolve this matter?

Dr Nicoll : I cannot tell you that.

Senator Chris Evans: I am sure that Dr Nicoll intends it to be quicker than Fair Work Australia has been.

Senator MASON: I was not going to bring that up.

Senator Chris Evans: I am a bit focused on it because I keep having it raised with me. I am sure that Dr Nicoll that will act in a manner, professionally, to bring it to a conclusion as quickly as possible, but again, it is worth noting that there are other inquiries and agencies involved, and that complicates things a bit.

Senator MASON: Can I ask you about that? It is a fair point that you make. I understand the CMC is investigating it. That is for them and it is clearly a different legislative remit than TEQSA. Does the CMC’s investigation or, as you speculated, Minister, it could be a police investigation in other contexts—there are all sorts of things.

Senator Chris Evans: I probably misspoke. I should have said the CMC. That is the only one that I am aware of.

Senator MASON: Yes, but in any issue there is the potential for other investigations. Does that inhibit or complicate your capacity?

Dr Nicoll : I think it would depend on the circumstances, but in this particular case the CMC has put out a media statement in relation to the scope of their investigation. Any inquiry by TEQSA has limitations according to the threshold standards which are our framework, and there is no reason for us to think that there is any challenge to that in terms of the CMC inquiry.

Senator MASON: What are your investigative powers?

Dr Nicoll : There are set out in the act. I could go through the act, but I do not think that is what you are looking for.

Senator MASON: No, I am not. I am concerned about making sure that the powers are sufficient to enable you to do your job correctly. To be honest, that is my concern.

Senator Chris Evans: Your old position was concern that we had too much power, was it not?

Senator MASON: It depends on the context. You know how it is; it always depends on the situation.

Senator Chris Evans: That is very true. It is where the politics are at the moment.

Senator MASON: It is not a partisan issue.

Dr Nicoll : We only started our regulatory powers on 29 January and I think it is really premature to speculate. I would not give an opinion on it. I think it is premature for any speculation to occur in the way the TEQSA Act may empower the commission to take action. We have certainly not encountered any issues yet, and we have to experience it.

Senator MASON: That is important. So thus far your investigative and other powers have been sufficient for you to do your job appropriately?

Dr Nicoll : Indeed.

Senator Chris Evans: In the 16 days she has had the role.

Dr Nicoll : Correct.

Senator MASON: That is fair enough.

Dr Nicoll : We have been busy.

Senator MASON: I appreciate that. You can see the point, Minister. This is a first test case, I know that.

Senator Chris Evans: That is why we engaged, very closely, with the sector to make sure when we drafted the legislation to make sure that it is a risk based approach—as you would know because you are involved. We do not want stormtroopers banging on doors in universities, but equally we need to have the power to make sure that there is appropriate regulation. We think we have the balance right with the legislation, but Dr Nicoll makes the appropriate point that we will see what our experiences are in what is a delicate balance between the independence of universities and the need for appropriate regulation. I am very conscious, as you are, of the need to respect the independence of universities, but as I said, also to make sure there is appropriate regulation. Dr Nicoll will have the job of making sure we tread that path in an appropriate way.

Senator MASON: Dr Nicoll, how about I hold off until the budget estimates and perhaps then we can have a fuller discussion about it? I suspect at this stage that would be sufficient.

Senator RHIANNON: You have answered a number of my questions, Dr Nicoll. I understand that formal risk assessments for all providers are required and I just wondered when they are due to occur?

Dr Nicoll : We are undertaking initially what we are calling a risk scan, because at this stage we have a limited data set. We intend to undertake a full risk assessment by later this year, probably in October or November. At that point we will have collected enough data from providers to be able to do a full risk assessment. Part of our challenge is that whilst the universities have provided, particularly the department, with a rich range of data for their performance, their inputs, outputs and to some degree outcomes, TEQSA covers universities and other higher education providers, and that other part—the private provider part of our scope of responsibility—has not provided data, except for those that were engaged in fee help.

It is not that they do not have the data. In fact, their peak bodies, ACPET and COPHE, have both been at pains to say to us that it is not that most providers do not have it, it is just that it has never been asked of them. Under our act we have the scope and capacity to seek that data and we will be doing that later this year. We have had a consultation about the risk assessment and we have taken on a number of pieces of feedback that we received. We think that we have an instrument and a risk approach which will evolve over time, but which will be a very good start.

Senator RHIANNON: From what you have just explained, is that how it is rolling out for the smaller private CRICOS registered providers?

Dr Nicoll : CRICOS is a register for providers to be able to have international students, so I am not quite sure as to the nature of your question?

Senator RHIANNON: So you do not cover them?

Dr Nicoll : Yes, we do. At the moment, from 29 January, TEQSA took over the CRICOS responsibility of the states and territories for the ESOS, the Education Services for Overseas Students Act. From 1 July we will have the delegated authority for some of the responsibilities that the Commonwealth department currently undertakes. We have responsibility for ESOS, but I am not quite sure what the nature of your question is.

Senator RHIANNON: It was really in the context of the previous questions with regard to moving to formal risk assessments, so what you described in your first answer.

Dr Nicoll : You actually identify a challenge for us. The TEQSA Act sets up one approach and the approach to risk assessment, that is the framework for the way we are operating, has really come out of that. The ESOS Act sets up a slightly different nuanced approach to risk and our role, our job, is going to have to be in some ways to accommodate those differences, but to still stay faithful to the primary act which sets us up, which is the TEQSA Act. We believe, in the longer term, that in the interests of streamlining for all providers in higher education, the coming together of the ESOS functions and the other regulation functions in TEQSA will be a much better outcome for providers. We will look at risk in terms of the ESOS Act, but it is a different construct from the way risk is looked at under the TEQSA Act. We are still coming to terms with how we are going to work through that.

Senator RHIANNON: I understand that prior to the establishment of TEQSA there was concern raised about its fee schedule, given the full cost recovery model in place. What concerns have been raised about TEQSA fees and by which type of providers?

Dr Nicoll : I would like to correct you first of all. We do not have a full cost recovery regime to implement. The way TEQSA has been set up is partial cost recovery. We have put out a fee schedule on 29 January after consultation with the sector, given the fact that cost recovery should be based on an understanding of how costs are derived. We are a brand new agency; we have no data of what the costs are going to be and how we would go about activity costing those. We have had to use historical data, including basing it on the fees of the states and territories, but it is very important to recognise that many of the states and territories significantly subsidised their approaches to this and were not working on full cost recovery. In some states it is fair to say that our fees will be higher. There are other states where full cost recovery was attempted, they were much higher than what we have set.

In response to the feedback we had we made changes to the draft schedule that we put out for consultation and we have undertaken to review the fee schedule later next year, after we have had a good year of actual operations—and we will be collecting data from now about how our operations work. It may be that the sector is either pleasantly or unpleasantly surprised by the outcome of that, but we will undertake a review.

Senator RHIANNON: So there is no particular grouping that is complaining at the moment? Is it the case that we have not got to that stage?

Dr Nicoll : We had responses. I can actually go through them.

Senator RHIANNON: I am not asking you to do it now. I was trying to see the trends. I am trying to get my head around how all this works. Is there any particular group in your providers that is exploring this with you and raising concerns?

Dr Nicoll : Given the time restraints of the committee, I would be happy to take it on notice and we could give you a summary of the issues that were raised through the consultation. We would be very happy to provide you with those.

Senator RHIANNON: Thank you.

Senator BUSHBY: Good evening and welcome to what I think is your first appearance at the economics committee?

Dr Nicoll : It is indeed.

Senator BUSHBY: I know there has been some to-ing and fro-ing about that, which presents us with some challenges, but nonetheless welcome. Welcome, also, as a new agency.

I have a quick follow-up question to some of the questions that Senator Mason was asking. In respect of the irregular admission—I was going to ask some questions about that, but I will just ask one instead—have you received a copy of the report of the University of Queensland inquiry?

Dr Nicoll : No, I have not yet.

Senator MASON: Have you asked for it?

Dr Nicoll : I would rather not say because it is an ongoing inquiry. I am prepared to say that I have not got it yet, but it is an ongoing inquiry and we are pursuing it to understand the full range of issues that have been raised by that particular issue.

Senator BUSHBY: I have some general questions that you touched on when you were dealing with Senator Rhiannon. As a new agency, just to get it on the record—presuming you are staying here, so we can gauge things in future—what is your budget allocation?

Dr Nicoll : I will invite Mr Emmanuel to outline that for you.

Mr Emmanuel : The current budget allocation is $14.867 million in total, including operating and capital. The initial appropriation was an administered appropriation through DEEWR, which was in the portfolio budget statement.

Senator BUSHBY: Was that for the entirety of that amount?

Mr Emmanuel : It was more than that. We had $17.233 million allocated.

Senator BUSHBY: Did that include some set-up costs?

Mr Emmanuel : Yes.

Senator BUSHBY: How much was allocated for the establishment?

Mr Emmanuel : There was no fixed amount allocated for the set up, but DEEWR, on behalf of TEQSA, incurred about $900,000 during July and August. We also had $1.466 million taken off for MyUniversity and that left us with $14.867 million as the total funding. Due to some capital expenditure we have sought and received some capital allocation through equity injection and departmental capital budget of $3.786 million, so that brings the operating appropriation to a total of $11.081 million.

Senator BUSHBY: So all of the money that we have been talking about has come from consolidated revenue or through the department?

Mr Emmanuel : Yes.

Senator BUSHBY: You will also be charging fees to some extent?

Mr Emmanuel : The fees charged will be administrative revenue and will be taken back to the Consolidated Revenue Fund.

Dr Nicoll : So we do not keep those.

Senator BUSHBY: As many other agencies do.

Dr Nicoll : Correct.

Senator BUSHBY: How many employees do you currently have?

Dr Nicoll : At the moment we have 47 and we are planning to grow to 80 or 90.

Senator BUSHBY: Does the budget allocation that you have been provided with make it possible to grow to that degree?

Dr Nicoll : We will be challenged, but we will certainly attempt to work within our budget.

Senator BUSHBY: Is the reason that you are growing to 80 or 90 because you consider that you need that many employees to be able to deliver the responsibilities that you have been charged with?

Dr Nicoll : That is correct.

Senator MASON: Is it only an assumption that it will be a combination of both universities and later on VET? The government is flagging that in the future there may be a combination of both the university and VET being regulated. Is that a different issue?

Dr Nicoll : By that, do you mean higher education and VET?

Senator MASON: Yes.

Dr Nicoll : That would be for the minister to speak to.

Senator Chris Evans: The answer is that TEQSA and ASQA are separate organisations that are funded separately. It has been envisaged in the future to bring the two together with one regulator, but that would require legislation through parliament and is well down the track.

Senator BUSHBY: With the money that has been allocated is that three years in the forward estimates? Does it have any growth in it in the forward estimates or is it static?

Mr Emmanuel : That is built in.

Senator BUSHBY: I heard what you said, Dr Nicoll, that you are yet to taste the workload, that you are not really sure how it is going to pan out and whether you have resources, but at this stage you believe, given what you have been given, that you can work with what you have given and deliver what you have been charged with delivering?

Dr Nicoll : It will be a challenge for us, but it is a challenge that we will live up to. I think part of the challenge for us, for the government—and it goes to Senator Mason’s earlier question—is that this has not been done before anywhere else in the world. It is an experiment in the sense that we do not know how it is going to work or what the actual costs will be. The department—the government—made a very good guess at it in coming up with a funding amount, but I do not think we know yet exactly how that will pan out over time.

Senator BUSHBY: I guess it will be an interesting exercise at future estimates, then, to follow your journey and see how that all pans out and see what we can do to ensure that the outcome is delivered.

CHAIR: Thank you, Senator Bushby. I thank the Tertiary Education Quality and Standards Agency, Dr Nicoll and staff, for attending and being of assistance.

Dr Nicoll : Thank you very much.