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Thursday, 22 September 2011
Page: 11158

Mr GARRETT (Kingsford SmithMinister for School Education, Early Childhood and Youth) (09:06): I move:

That this bill be now read a second time.

In 2009, the Prime Minister, in her then role as Minister for Education, asked the Hon. Bruce Baird AM to conduct a review of the Education Services for Overseas Students Act 2000 and its associated legislation.

At the same time, a number of amendments to the Education Services for Overseas Students Act were introduced to strengthen registration requirements and enable the re-registration of all providers delivering to overseas students in 2010.

When the Baird report was released the government committed to a staged response to the review. I am pleased to say we have delivered on that commitment with the government's first-round response to the Baird review enacted in April this year, and subsequent legislation introduced in June to adjust the annual registration charge for cost recovery. The bill that I am introducing today forms the government's second response to the review and the fourth piece of legislation to strengthen the regulation of international education in two years.

This is in addition to broader reforms to the student visa program and the establishment of national regulators for the vocational education and training and higher education sectors.

The Education Services for Overseas Students Act 2000, or ESOS, protects Australia's reputation for delivering quality education services. It does this by establishing a regulatory regime for the provision of international education and training services and through this protects the interests of overseas students by establishing minimum standards and providing tuition and financial assurance.

ESOS also complements Australia's migration laws by ensuring providers collect and report information relevant to the administration of the law relating to student visas.

Education is one of Australia's largest export industries, generating in the order of $18 billion annually and supporting around 125,000 jobs across Australia.

The background to the current problems facing international education is by now well known. In 1990, Australia welcomed 47,000 international students to our shores. By 2000 this number had grown to 153,000 and in 2010 there were 619,000 international students studying in Australia. This jump in the student population has led to significant growth in the number of education providers offering services to international students, particularly in the private vocational education and training space.

There are now over 1,200 providers ranging from large universities and TAFEs, public and private schools, to small private colleges and English language providers. Together this has resulted in pressures on the underpinning regulatory frameworks, exacerbated by external factors such as global economics.

To keep pace with this growth and change in the sector, since first written in 2000, the ESOS Act has been amended several times and is widely recognised as one of the best legislative frameworks for international education in the world.

The Baird review report, Stronger, simpler, smarter ESOS: supporting international students, was released on 9 March 2010 and made 19 recommendations generally focusing on strengthening the registration process, more effective monitoring and enforcement, empowering students with information and improved complaints handling, ethical recruitment and a simpler, more robust consumer protection regime.

The government's first-round response to the Baird review enacted earlier this year had a dual focus on better managing risk upfront and throughout a provider's registration, and more effective enforcement. It also introduced changes to the Ombudsman Act 1976 to ensure students of private registered providers have access to a robust complaints handling process.

The bill I am introducing today is the second phase of the government's response to the Baird review and addresses many of the remaining recommendations made by Mr Baird in his final report. A number of other recommendations will be progressed in subordinate legislation, such as the National Code and the ESOS Regulations.

The centrepiece of this response is reforms to strengthen tuition protection to ensure that students are looked after in a timely and effective way should problems arise or their provider closes. This was a key recommendation of the review following a spate of closures that highlighted weaknesses with the current arrangements, originally designed around a much smaller sector.

From a student's perspective, the biggest concerns have been delays in getting a placement offer or refund, and a lack of choice when that placement offer finally comes through.

On top of the reputational damage associated with provider closures that has affected all providers in the international education sector, currently non-exempt providers have to belong to a tuition assurance scheme and also have to pay into the ESOS Assurance Fund. This involves separate application processes and fees as a condition of CRICOS registration and the benefits or burden of placing affected students are not always evenly distributed.

The proposed new Tuition Protection Service, or TPS, is for a single point of placement, or refund as a last resort, which involves all possible placement options, placement incentives for providers and greater student choice in the process.

A single TPS will provide a more seamless and flexible service, one contact point for students, one set of fees for providers, and greater accountability to government. The TPS will incorporate a TPS director, TPS Advisory Board, Overseas Students Tuition Fund and an online information and access service for overseas students.

The TPS is a universal scheme and to recognise the reputational benefits to the sector of a robust and sustainable tuition protection arrangement, a new annual risk based TPS levy will be applied to all registered international education providers.

This means that the new TPS will be backed by all international education providers, it will increase the pool of placements available, turn the placement and refund process into one that is streamlined, responsive and efficient, and stop the multiple charges that providers are currently paying.

When considered in conjunction with the rebasing of the annual registration charge, legislation for which was passed through parliament last week, the financial impact on the vast majority of providers is expected to reduce from its current level, giving these providers considerable relief.

Providers who place students will now also receive the equivalent of the students' unexpended pre-paid fees as a financial incentive to take these students. There will be no compulsory placements and providers will not be obligated to take on students that do not meet their entry requirements or who are unable to pay any difference in fees.

To support the TPS, the bill will introduce a suite of complementary initiatives. Student refunds will change to include only the unspent portion of the upfront fees paid. In the past, if a provider closed in the last weeks of a student's study, the student would receive a full refund, even though they could usually obtain credit for completed units of study. Significantly, only 11 of the 54 providers that closed between 2008 and the end of March 2011 met or partially met their refund obligations to students. Providers will also be limited in the amount of prepaid fees they can collect at any one time. All but the lowest risk providers will also have to keep initial prepaid fees in a designated account until the student commences their first study period. This will stop providers from using prepaid fees for operating expenses before the student commences, and will encourage more sustainable business models. Together with limiting refunds, this will mean that providers are better able to meet their student refund obligations in a timely way and there is less recourse to the TPS.

Satisfactory placement of students affected by a closure will be supported by requiring providers to strengthen their record-keeping processes related to students' contact details and academic progress. This will ensure timely contact and placement of students and the calculation of a more accurate refund entitlement in the event of a provider closure.

It will also help address concerns raised during the debate of the 2010 ESOS reregistration bill about students' access to their records and credit transfer. Strengthened record keeping will also assist in keeping students informed of their course progress, and early intervention if the student is not maintaining good progress.

The other main reform being introduced by this bill is national registration for providers operating in more than one state or territory, or across a number of locations within one state. This will reduce duplication of effort as well as support risk management and simplify processes for providers.

One of the issues highlighted through the recent provider closures was the ability to gain a national picture of a provider to determine how many students were going to be affected. The ESOS Act currently requires providers to be registered to provide a specific course for a state. For providers that operate in a number of locations in one state, or across a number of jurisdictions, this has led to them acquiring a large number of registration numbers.

Current figures indicate that approximately 230 providers operate across sectors and across 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 duplication in terms of registration assessments which are more global to the organisation rather than local to the courses being delivered at a particular campus.

National registration has been recommended to better position ESOS regulation for the anticipated transfer of ESOS functions next year to the national regulators currently being established for the VET and higher education sectors.

It will also enable monitoring of a provider's activities nationally as well as in each jurisdiction, support comprehensive risk assessment and management and provide greater transparency in the event of the closure of a provider that operates in a number of sectors or jurisdictions.

A key theme of the Baird review was making ESOS stronger, simpler and smarter. With this in mind, a number of amendments are being made to clarify and simplify the act as well as introduce stronger penalties for noncompliance around reporting and the misuse of prepaid fees.

Timely passage of this bill will ensure these measures can commence quickly. This is particularly crucial for the establishment and transition to a new TPS.

This bill completes the government's response to the Baird review recommendations to strengthen regulation and quality in the international education sector.

I commend the bill to the House.

Debate adjourned.