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Education Services for Overseas Students (Registration Charges) Amendment Bill 2021 [and related Bills]



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ISSN 1328-8091

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BILLS DIGEST NO. 4, 2021-22 23 JULY 2021

Education Services for Overseas Students (Registration Charges) Amendment Bill 2021 [and related Bills] Dr Hazel Ferguson Social Policy Section

Contents

Purpose of the Bills ......................................................... 2

Background ..................................................................... 2

Current cost recovery model for overseas education .................................................................... 2

Proposed cost recovery model ................................... 3

Committee consideration ................................................ 4

Senate Standing Committee for Selection of Bills ...... 4 Senate Standing Committee for the Scrutiny of Bills .............................................................................. 4

Policy position of non-government parties/independents...................................................... 5

Position of major interest groups..................................... 5

Financial implications ...................................................... 5

Statement of Compatibility with Human Rights................ 5

Parliamentary Joint Committee on Human Rights ..... 6 Key issues and provisions: The Registration Charges Bill .................................................................................. 6

Other provisions ............................................................. 6

The Cost Recovery Bill ................................................. 6

The TEQSA Charges Bill ............................................... 6

The TPS Levies Bill ....................................................... 7

Concluding comments ..................................................... 7

Date introduced: 24 June 2021

House: House of Representatives

Portfolio: Education and Youth

Commencement: 1 January 2022

Links: The links to the principal Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website. Links to other Bills in this package are provided in the body of this Digest.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at July 2021.

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Education Services for Overseas Students (Registration Charges) Amendment Bill 2021 [and related Bills] 2

Purpose of the Bills This Bills Digest covers four related Bills which propose to revise regulatory cost recovery arrangements for overseas education.1

The principal Bill is the Education Services for Overseas Students (Registration Charges) Amendment Bill 2021 (the Registration Charges Bill). This Bill amends the Education Services for Overseas Students (Registration Charges) Act 1997 (Registration Charges Act) to repeal and replace current charging provisions with a framework to allow charges to be set in regulations.

The three related Bills, which include minor and consequential amendments arising from the Registration Charges Bill, are:

• the Education Services for Overseas Students Amendment (Cost Recovery and Other Measures) Bill 2021 (the Cost Recovery Bill)

• the Tertiary Education Quality and Standards Agency (Charges) Amendment Bill 2021 (the TEQSA Charges Bill) and

• the Education Services for Overseas Students (TPS Levies) Amendment Bill 2021 (the TPS Levies Bill).

These Bills are intended to give effect to the Government’s 2021-21 Budget announcement that charging for regulatory activities associated with overseas education would be simplified.2

Background

Current cost recovery model for overseas education The Australian Government regulates international education through the Education Services for Overseas Students Act 2000 (ESOS Act) and related legislation, together referred to as the ESOS Framework.3

Under the ESOS Act, education providers in all sectors (including higher education, English Language Intensive Courses for Overseas Students (ELICOS), vocational education and training (VET), and schooling) must be registered on the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) if they deliver education to students in Australia on a student visa.4

CRICOS registration is handled by existing bodies, known for these purposes as ESOS Agencies. A provider’s ESOS Agency depends on its sector:

• higher education providers are handled by the higher education regulator, the Tertiary Education Quality and Standards Agency (TEQSA)

• VET and stand-alone ELICOS providers are handled by the national VET regulator, the Australian Skills Quality Authority (ASQA) and

• schools are handled by the Department of Education, Skills and Employment (DESE).5

1. A Tudge, ‘Second reading speech: Education Services for Overseas Students (Registration Charges) Amendment Bill 2021’, House of Representatives, Debates (proof), 24 June 2021, p. 4. 2. Australian Government, ‘Part 1: Receipt Measures’, Budget measures: budget paper no. 2: 2021-22, p. 8. 3. Department of Education, Skills and Employment (DESE), ‘Education Services for Overseas Students (ESOS) Framework’, DESE

website, 2 June 2021. 4. Education Services for Overseas Students Act 2000 (ESOS Act), sections 8 and 14A. 5. DESE, ‘ESOS agencies’, DESE website, 2 June 2021; ESOS Act, section 6C.

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Education Services for Overseas Students (Registration Charges) Amendment Bill 2021 [and related Bills] 3

DESE is also responsible for a range of system-wide functions, such as providing education and information about the ESOS Framework, and managing CRICOS.6

To recover costs associated with these functions, DESE currently charges non-exempt CRICOS providers an entry to market charge (EMC) to cover initial registration costs, and an annual registration charge (ARC), calculated based on student numbers and registered courses by location.7 The charges are a condition of registration under the ESOS Act, and are imposed by the Registration Charges Act.8

The ARC comprises a $1,505 base fee, plus $10 per enrolment per year, and $115 per course per location.9 The EMC is paid in three instalments over the first three years of registration, totalling $17,342.10 Regulatory fee relief, provided as part of the COVID-19 response, exempted providers from these fees in 2020 and 2021.11

Government schools, state or territory VET institutions, and Table A providers are exempt from the EMC and ARC.12

Proposed cost recovery model Following the 2020-21 Budget announcement, DESE consulted with the international education sector on a revised cost recovery model.13 The model, which was set out in a departmental consultation paper, proposes to:

• remove the EMC for ASQA and TEQSA-registered providers, allowing those ESOS Agencies to manage their registration cost recovery directly (ASQA and TEQSA cost recovery is not dealt with in these Bills)

• replace the EMC with $2,691 registration and $1,083 registration renewal fees for schools

• replace the ARC with a new CRICOS Annual Registration Levy (CARL) with three components:

- Part A—a modified version of the current ARC, to be paid by all CRICOS registered providers, at a base rate of $440, plus $5 per enrolment, to cover DESE’s system-wide functions - Part B—to be paid by all CRICOS registered school providers, at a set amount of $116, to cover education and engagement with schools undertaken by DESE - Part C—to be paid by all CRICOS registered school providers with at least one enrolment in

the previous calendar year, at a set amount of $695, to cover DESE’s oversight and management of these providers.14 DESE has developed these charges in accordance with the Australian Government Cost Recovery Guidelines (the CRGs), to recover only the efficient cost of in-scope regulatory activities.15 The

6. DESE, Updating the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) charges: consultation paper, DESE, Canberra, May 2021, pp. 16-17. 7. DESE, ‘Fees and charges’, DESE website, 2 June 2021. 8. ESOS Act, paragraphs 11(g)-(h); Education Services for Overseas Students (Registration Charges) Act 1997 (Registration

Charges Act). 9. DESE, ‘Fees and charges’, op. cit. 10. Ibid.

11. Ibid.

12. Registration Charges Act, paragraph 5(7)(c) and subsection 6(9); Education Services for Overseas Students (Registration Charges) Regulations 2011, sections 6 and 7. ‘Table A’ refers to Table A in section 16-15 of the Higher Education Support Act 2003, which lists most Australian universities, including all government-founded universities.

13. DESE, ‘Consultation: revised Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) registration charges’, DESE website, 12 May 2021. 14. DESE, Updating the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) charges, op. cit., pp. 4-5, 11-12. 15. Ibid., p. 11.

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CRGs generally require that non-government recipients of government activities are charged for those activities.16

The Explanatory Memorandum to the Registration Charges Bill indicates that ‘[n]o substantive issues were identified during the consultation period that warranted changing the model.’17

As discussed in the key issues and provisions section of this Digest, the Bills do not guarantee that the details of the model outlined in the consultation paper will be implemented, since the amounts to be charged are to be set in Regulations.

Committee consideration

Senate Standing Committee for Selection of Bills At its meeting of 23 June 2021, the Senate Standing Committee for Selection of Bills deferred consideration of the Bills to its next meeting.18

Senate Standing Committee for the Scrutiny of Bills The Senate Standing Committee for the Scrutiny of Bills (Scrutiny of Bills Committee) commented on the Registration Charges Bill, noting that this Bill:

Provide[s] the minister with broad discretionary powers to exempt providers from the requirement to pay a charge by legislative instrument in circumstances where there is no guidance on the face of the bill as to when these powers may be exercised.19

The Scrutiny of Bill Committee requested the Minister’s advice on why these broad powers in delegated legislation are considered necessary and appropriate and whether the Bill could be amended to include at least high-level guidance on when such exemptions might be provided.20

The Scrutiny of Bills Committee has repeatedly raised concerns about inappropriately delegated powers in relation to Bills that are in similar terms to the Registration Charges Bill. Most recently, in relation to the Tertiary Education Quality and Standards Agency Amendment (Cost Recovery) Bill 2021, it stated:

… significant matters relating to the collection and administration of new charges and the review of related decisions should be included in the primary legislation unless a sound justification for the use of delegated legislation is provided …

The committee notes that a legislative instrument, made by the executive, is not subject to the full range of parliamentary scrutiny inherent in bringing proposed changes in the form of an amending bill. 21

The Explanatory Memorandum to the Registration Charges Bill states that the Regulations proposed in this Bill will provide flexibility to ensure that only the cost of relevant activities under the ESOS Act (and no more) is recovered.22

16. Department of Finance (DoF), Australian Government cost recovery guidelines, Resource management guide, 304, 3rd edn, DoF, Canberra, July 2014, p. 6. 17. Explanatory Memorandum, Education Services for Overseas Students (Registration Charges) Amendment Bill 2021, p. 3. 18. Senate Standing Committee for the Selection of Bills, Report, 7, 2021, The Senate, Canberra, 24 June 2021, [p. 4]. 19. Senate Standing Committee for the Scrutiny of Bills (Scrutiny of Bills Committee), Scrutiny digest, 10, 2021, 13 July 2021, p. 3. 20. Ibid.

21. Scrutiny of Bills Committee, Scrutiny digest, 8, 2021, 16 June 2021, p. 47. 22. Explanatory Memorandum, Education Services for Overseas Students (Registration Charges) Amendment Bill 2021, p. 9.

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The Scrutiny of Bills Committee had no comment on the three related Bills.23

Policy position of non-government parties/independents At the time of writing, no non-government parties/independents have commented on the Bills.

Position of major interest groups Independent Higher Education Australia (IHEA), which represents independent higher education providers, has indicated:

• it ‘does not support the rigid application of the Government’s cost recovery approach to higher education’, as the main source of revenue to fund charges will generally be student fees, leading to an increase in study costs for students to fund government activities24 and

• its members have specific concerns about:

- uncertainty about the impact of the proposed cost recovery model, especially in light of simultaneous cost recovery changes currently being pursued by a number of other agencies, including TEQSA

- maintaining the existing Provider Registration and International Student Management System (PRISMS) being subject to cost recovery—IHEA argues that improvements to PRISMS are needed to reduce duplication and administrative burden

- the possibility of duplication in charging and - the need for scaled fees in line with the size of providers.25 At the time of writing, submissions to the cost recovery model consultation have not been published on the DESE website.26

Financial implications The Explanatory Memorandum to the Registration Charges Bill indicates that the proposed arrangements will reduce charges paid by providers by approximately $7 million per year in total, with effects on individual providers varying depending on their size and sector.27 This reflects the expected reduction in charging by DESE under the Registration Charges Act, as per the proposed cost recovery model, which these Bills seek to enable. However, it does not factor in the proposed charges by ASQA and TEQSA to replace the EMC as this is not dealt with by the Bills.

The Government has assessed that the other Bills have no financial implications on the Commonwealth or on registered providers.28

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bills’ compatibility with the human rights and freedoms recognised

23. Scrutiny of Bills Committee, Scrutiny Digest, 10, op. cit., p. 17. 24. Independent Higher Education Australia (IHEA), CRICOS Cost Recovery Consultation, IHEA submission to the Department of Education in response to CRICOS cost recovery, 11 February 2020, p. 1. 25. Ibid., pp. 2-3. 26. DESE, ‘Consultation: revised Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) registration

charges’, op. cit. 27. Explanatory Memorandum, Education Services for Overseas Students (Registration Charges) Amendment Bill 2021, p. 2. 28. Explanatory Memorandum, Education Services for Overseas Students Amendment (Cost Recovery and Other Measures) Bill

2021, p. 3; Explanatory Memorandum, Tertiary Education Quality and Standards Agency (Charges) Amendment Bill 2021, p. 2; Explanatory Memorandum, Education Services for Overseas Students (TPS Levies) Amendment Bill 2021, p. 3.

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or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bills are compatible.29

Parliamentary Joint Committee on Human Rights At the time of writing, the Parliamentary Joint Committee on Human Rights had not yet considered the Bills.30

Key issues and provisions: The Registration Charges Bill Currently, sections 5 to 8 of the Registration Charges Act specify ARC and EMC amounts, and indexation. Item 2 of Schedule 1 to the Registration Charges Bill repeals these sections, and substitutes sections providing for the imposition of the CARL, as well as the initial registration and registration renewal charges for schools.

Unlike the current provisions, proposed sections 5 to 8 do not specify the amount or indexation arrangements for the charges. Instead, the amounts, any indexation, and any exemptions of one or more classes of provider would be in Regulations made by the Governor-General.

Prior to asking the Governor-General to make Regulations, DESE intends to seek stakeholder feedback on a draft Cost Recovery Impact Statement (CRIS) that will be consistent with the CRGs.31

Other provisions

The Cost Recovery Bill Items 1 and 3 to 16 of Schedule 1 to the Cost Recovery Bill contain minor consequential amendments to the ESOS Act, to ensure that CRICOS registration is conditional on payment of the CARL and (where applicable) initial registration and registration renewal charges for schools, rather than the ARC and EMC, which are to be abolished by the Registration Charges Bill.

The Cost Recovery Bill also contains (at items 17 to 19 of Schedule 1) new compliance audit provisions, to clarify that a provider’s ESOS Agency is able to audit whether the provider is complying with the ESOS Act, the National Code of Practice for Providers of Education and Training to Overseas Students 2018, and, where relevant, the ELICOS Standards 2018, and Foundation Program Standards. Adherence to these is already a condition of CRICOS registration.32

Proposed subsection 112A(3) would require the provider to cooperate fully with the ESOS Agency, and provide all reasonable facilities and assistance, for the purposes of a compliance audit. A note to this subsection clarifies that failure to adhere to these requirements would be grounds for the ESOS Agency to take action under section 83 of the ESOS Act, which deals with sanctions for non-compliance, including cancelling a provider’s CRICOS registration.

The TEQSA Charges Bill The TEQSA Charges Bill also deals with a consequential amendment arising from the Registration Charges Bill.

29. The Statements of Compatibility with Human Rights can be found at pages 4-6 of the Explanatory Memorandum to the Education Services for Overseas Students (Registration Charges) Amendment Bill, pages 4-6 of the Explanatory Memorandum to the Education Services for Overseas Students Amendment (Cost Recovery and Other Measures) Bill, page 3 of the Explanatory Memorandum to the Tertiary Education Quality and Standards Agency (Charges) Amendment Bill, and pages 4-5 of the Explanatory Memorandum to the Education Services for Overseas Students (TPS Levies) Amendment Bill.

30. Parliamentary Joint Committee on Human Rights, Index of bills considered by the committee, 2021, 23 June 2021. 31. Explanatory Memorandum, Education Services for Overseas Students (Registration Charges) Amendment Bill 2021, p. 9. 32. ESOS Act, paragraph 11(b).

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The Tertiary Education Quality and Standards Agency (Charges) Bill 2021, currently before the Senate, references the ARC and EMC to ensure regulatory costs are not double counted by TEQSA for the purposes of cost recovery. More information about this Bill is available in the Bills Digest.33

The TEQSA Charges Bill (item 1) would remove the references to the ARC and EMC if the Tertiary Education Quality and Standards Agency (Charges) Act 2021 is enacted, but maintain the reference to section 158 of the Tertiary Education Quality and Standards Agency Act 2011, which allows for fees to be determined by legislative instrument.

The TPS Levies Bill In addition to CRICOS registration charges under the Registration Charges Act, CRICOS-registered providers are also required to pay a levy for the Tuition Protection Service (TPS) under the Education Services for Overseas Students (TPS Levies) Act 2012 (TPS Levies Act).34 International students can seek assistance from the TPS if their education provider is unable to fully deliver their course of study. The TPS ensures the student is able to complete their studies (including at a replacement provider) or receive a refund of unspent tuition fees.35

Currently, calculation of the TPS Levy for CRICOS providers is partly based on total enrolments, worked out by adding together the number of enrolments of overseas students for each course for which the provider is registered in the year.36 In a given year:

• each student enrolled in a course of at least 26 weeks counts as one enrolment

• each student enrolled in a course of 13 or more weeks, but less than 26 weeks, counts as an enrolment of 0.5 and

• each student enrolled in a course of less than 13 weeks counts as 0.25 of an enrolment.37

These provisions are in section 5 of the Registration Charges Act, which is to be repealed by the Registration Charges Bill.

Item 2 of the TPS Levies Bill inserts a definition of total enrolments to the TPS Levies Act at proposed section 4A. The definition is in similar terms as the definition currently in the Registration Charges Act, but specifies that an enrolment is counted only if the student is ‘undertaking’ the relevant course. According to the Explanatory Memorandum to the Bill, this addition is intended to ensure that students who enrol, but subsequently withdraw before the course commences, or enrol but defer their studies for the year, are not included in calculating enrolment numbers for the TPS Levy.38

Concluding comments This package of Bills proposes to replace the current CRICOS cost recovery arrangements in the ESOS Framework with a framework that will allow for a new cost recovery model to be implemented, largely through Regulations.

Although consultations undertaken by DESE on the revised cost recovery model do not appear to have warranted any substantive changes to the proposal, uncertainty remains about the impact of

33. H Ferguson, Tertiary Education Quality and Standards Agency Amendment (Cost Recovery) Bill 2021 [and] Tertiary Education Quality and Standards Agency (Charges) Bill 2021, Bills digest, 67, 2020-21, Parliamentary Library, Canberra, 15 June 2021. 34. ESOS Act, paragraphs 11(g) and 11(h). 35. Tuition Protection Service (TPS), ‘Tuition Protection Service - International’, TPS website, n.d. 36. Education Services for Overseas Students (TPS Levies) Act 2012 (TPS Levies Act), section 4 and Registration Charges Act,

subsection 5(3). 37. Registration Charges Act, subsection 5(4). 38. Explanatory Memorandum, Education Services for Overseas Students (TPS Levies) Amendment Bill 2021, p. 8.

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the new charges, given the use of delegated legislation, and in relation to interactions with other cost recovery changes which are also currently underway.

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