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Tuesday, 23 August 1994
Page: 47

Senator BELL —by leave—I withdraw business of the Senate notices of motion Nos 1, 4 and 5 standing in my name for today for disallowance of the Education Services for Overseas Students (Registration of Providers and Financial Regulation) Regulations (Amendment), as contained in Statutory Rules 1994 Nos 101, 146 and 154 and made under the Education Services for Overseas Students (Registration of Providers and Financial Regulation) Act 1991. I seek leave to make a brief statement of explanation.

  Leave granted.

Senator BELL —I gave notice of these motions in the first place in response to industry concerns about the regulations that had been proposed by the government. Industry representatives agreed with the Democrats that the proposed tuition insurance scheme in particular was not needed; that colleges might be left alone to run their own businesses.

  The amendments to those regulations have largely achieved that purpose. Nevertheless, I remain unconvinced that we need to retain the act and all of its associated bureaucracy. But today we are agreed to withdraw the notices of motion on the basis of the promise to bring in further regulations to exempt providers from depositing 20 per cent of the prepaid fees into trust accounts, and from depositing a $250 enrolment fee.

  I would be happier had the minister provided a draft of the regulations that he intends will give effect to this obligation. In the absence of a draft of those regulations, I seek leave to table and incorporate in Hansard a copy of the minister's letter to the chair of the Senate Standing Committee on Employment, Education and Training.

  Leave granted.

  The letter read as follows—

Minister for Employment, Education and Training

Simon Crean, MP

22 August 1994

Senator Olive Zakharov


Senate Standing Committee on Employment,

  Education and Training

Parliament House


Dear Senator Zakharov

I am writing to advise you of developments associated with the Regulations under the Education Services for Overseas Students (Registration of providers and Financial Regulation) Act 1991 (the ESOS Act).

You will recall that the Regulations relating to the operation of notified trust accounts into which providers are required to deposit all pre-paid course money received from international students, and the requirement for providers to be members of a tuition assurance scheme (TAS), were subject to a notice of motion of disallowance. These Regulations then were referred to the Senate Standing Committee on Employment, Education and Training (SSCEET) for inquiry.

On 28 June 1994, following the SSCEET hearing, I advised you of proposed amendments to the ESOS legislation. These amendments were to address industry concerns about agents' commissions and enrolment fees in return for retaining the TAS provisions in a modified form to meet the Government's concerns for a safety net to protect the interests of international students. In its report of June 1994 on "The nature, implications and effects of the Statutory Rules 1994 Nos. 146 and 154", the Senate Committee indicated that it accepted my proposals as forming a sound basis for resolving its concerns and postponed the debate on the disallowance of the Regulations to the 1994 Spring sittings of Parliament.

I have since amended the Statutory Rules 1994 No. 154 to give effect to my proposals regarding the TAS requirements. In particular, under Regulations 11 and 13, a TAS must be operated by an association of providers which has, as one of its objects, the operation of a TAS to ensure that overseas students receive the education and training for which they paid. This is in keeping with my commitment that a bona fide industry association that has, as part of its membership criteria, a commitment to a student placement scheme, may be approved as a TAS. The amended TAS Regulations (copy attached) commence on 24 August and providers have until 30 November 1994 to join a TAS or be exempted from the requirement to join a TAS.

Individual providers may seek exemption from membership of a voluntary association because of the special nature of the courses that they offer, or because it is unreasonable in the circumstances to expect them to be members of a TAS, or they do not wish to become a member of a TAS. In these circumstances, providers seeking exemption from the TAS requirement, must have appropriate insurance or bank guarantees, or a guarantee from a parent company or organisation, which cover the risk to students' pre-paid fees.

With regard to the trust account Regulations, I have proposed that providers will be exempt from depositing 20 per cent of the pre-paid tuition fees into trust accounts. This recognises the common industry practice of off-shore agents deducting their commission before forwarding the balance of the student's course fees to the provider in Australia. Providers will also be exempt from depositing into their trust accounts an enrolment fee of no more than $250.

In light of advice from the Attorney-General's (AG's) Department that implementation of the amendments to the trust account Regulations requires an amendment to the ESOS Act, I have sought the Prime Minister's approval to amend the ESOS Act in the Spring sittings.

I had intended that, following the amendment to the ESOS Act, amendments to the trust account Regulations would come into operation with retrospective effect from 1 June 1994. However, AG's Department has since advised that while it would be possible to amend the ESOS Act with retrospective effect, it would not be advisable to amend the trust account Regulations with retrospective effect. This is because the proposed Regulations would exempt providers from depositing the entire 100 per cent of the pre-paid tuition fees into the trust account. In some circumstances, this would reduce the amount of pre-paid tuition fees that students are entitled to receive in the event of default by the provider, and it could disadvantage the students who are the principal clients of the ESOS legislation. A copy of AG's advice on this matter is attached.

In terms of providers having to comply with trust account provisions that differ over a short period, the Department will ensure that administrative procedures are in place to minimise the potential difficulties faced by providers having to comply with more stringent trust account requirements between 1 June 1994 and the amendment to the Regulations.

The proposed amendment to the ESOS Act, therefore, will commence on the date of Royal Assent. When the amendment to the Act is passed, appropriate amendments to the Regulations will be made to exempt providers from depositing 20 per cent of pre-paid tuition fees, and an enrolment fee of no more than $250, into their trust accounts.

My Department will be writing to industry representatives shortly advising them of the above.

Yours sincerely


Senator BELL —I thank the Senate. However, I still strongly suggest that when the minister brings in the bill to amend the act to enable the regulations to be made he at that time table those proposed regulations so that we know what we are dealing with. There is a constant feeling among those who have been involved with this matter that we have spent a lot of time shooting in the dark. To try to remove some of that uncertainty, I have been asking a considerable number of questions on notice about the government's promotion of the export overseas of education services. I have done that in response to requests from people involved in the enterprise of education exports.

  Without any fixed expectations of a particular outcome to those questions, I have been amazed at the results of the inquiries that I have made. I have found that the reputation of DEET and DEET officers could not be lower in this industry. With respect to the content of these particular regulations and the negotiations between DEET and the industry representatives, it ought to be of concern to the minister that the industry itself had no confidence in the integrity of the process of negotiations; nor any confidence in the department to abide by any negotiated position. That is why consideration of these notices of motion was postponed—to allow a resolution of those problems that have been identified by the industry itself.

  Now, for the first time in years, this industry has reported to me that it is satisfied with the outcome. My inquiries so far, and the information given to me by industry representatives, clearly show that there is no need for this legislation, and there never has been. We have built an edifice of legislation and regulation to provide a controlling mechanism for a situation that is unlikely to recur, and did not need to occur in the first place. A totally unnecessary burden has been imposed on education colleges, which are really small businesses, and that burden was to have been made more onerous by the original regulations which, thankfully, have now been modified.

  Participants in this burgeoning industry include flying schools, Bible colleges, schools of hospitality, business colleges and English colleges—all of which have been caught up in the fallout from the government's involvement in rapid expansion of the export of education, particularly during the late 1980s.

  More particularly, the sudden cessation of student visas of those from Beijing by the government resulted in massive hardship for thousands of students and, eventually, for Australian private colleges. One result of that fiasco was the ESOS Act and the minefield of subsequent regulations, created ostensibly to maintain Australia's overseas reputation as a reliable provider of education.

  Another result was the creation of CRICOS, the register of institutions permitted to accept overseas students and the transfer of the responsibility for approving institutions to provide courses to the states in 1990. This has had the effect of removing the mechanism which should remain in place instead of the nightmare of regulations under the ESOS Act.

  The answer from the minister that he has a committee to review the national code of conduct and the minimum standards for approval of institutions and courses is small comfort. Perhaps part of that review might be how best to monitor institutions so that we can dispense with the ESOS Act entirely.

  I suggest that the best protection the government could give students would be a real assurance scheme, a scheme which assured students and colleges that government departments would not cause unilateral contradictions of government policy and direction. With such a real assurance scheme there would be no need for any of this flummery we have before us.