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Education Services for Overseas Students
(Registration of Providers and Financial Regulation) Amendment Bill
Date Introduced: 24 June 1998
House: House of Representatives
Portfolio: Employment, Education, Training and Youth
Commencement: Royal Assent
This Bill extends
the sunset clause in the Education Services for Overseas
Students (Registration of Providers and Financial Regulations) Act
1991 (ESOS Act) by providing for cessation on 1 January
The ESOS Act provides assurances of education
quality and financial protection to overseas students studying in
Australia. It does so by registering providers of international
education and training, based on State or Territory approval and
accreditation, and by imposing financial conditions on private
International education and training currently
earns $3.3 billion per annum for Australia's export industry. The
industry also contributes to the Australian economy generally,
through the creation of jobs and the input to domestic
The number of overseas students studying in
Australia has increased from 21,118 in 1988 to 151,464 in 1997.(2)
Students are primarily from countries in the Asian Region -
accounting for 77 per cent of the total international student
population. In addition to their studies, they gain insights into
Australian culture, law, institutions and business practices, which
fosters a better understanding of Australia overseas. The industry
has a relatively high profile in terms of providing perceptions of
Australia as a trade and investment partner with future
participants throughout our region. The industry is also supported
by Government participation in bilateral and multilateral
activities and program assistance.
Today, there are over 1000 education and
training providers in Australia. Half of these are administered by
State/Territory education authorities or are entitled to receive
Commonwealth recurrent funding.(3)
The majority of providers are privately
operated. Multinational education and training providers have also
entered the Australian market.
A cooperative model within a framework
consisting of three tiers of regulation currently regulates the
industry. They are:
- voluntary industry codes of practice
- State/Territory legislation and policy which set requirements
for provider and course quality which are pre-requisites to entry
into the industry and
- Commonwealth regulation under the ESOS Act.
The ESOS Act
The ESOS Act seeks to address three major
problems, which have the potential to damage Australia's
international reputation as a provider of educational services.
These problems emerged in the late 1980s/early 1990s and are
- maintaining high standards and reliability among Australian
education and training providers;
- ensuring that overseas students get the education and training
for which they have paid; and
- ensuring that taxpayer's funds are not required to recompense
overseas students from loss as a result of the actions of
disreputable Australian education and training providers.
Providers and the education and training courses
they intend to offer to overseas students must first be accredited
and approved by the appropriate State/Territory authority. Once
providers and courses are approved and accredited, State/Territory
authorities notify the Department of Employment, Education,
Training and Youth Affairs (DEETYA) to admit them to the
Commonwealth Register of Institutions and Courses for Overseas
Students (CRICOS). The ESOS Act specifically provides that only
those on the CRICOS register may offer or provide courses to
Under the Migration Act 1958 and
associated Regulations an applicant for a student visa must
nominate a CRICOS-listed provider and course. Once in Australia,
overseas students must maintain enrolment with a provider and in a
course registered on CRICOS. To maintain registration on CRICOS,
providers must comply with the requirements of the relevant
State/Territory authority and the ESOS Act.
Under the provisions of the ESOS Act, providers
must operate a Notified Trust Account (NTA).(5) Withdrawals from
the NTA must only be made in accordance with Regulations made under
the ESOS Act, which also contains provisions for refunds to
students in the circumstances where a provider or a student
The Tuition Assurance Scheme (TAS) offers
alternative tuition placement to overseas students who are affected
by a provider closing, defaulting or ceasing to offer a course in
which they are enrolled.(7) Providers must make tuition guarantee
arrangements before they enrol students in their courses registered
on CRICOS. These include membership of a TAS, an insurance policy,
bank guarantee or parent organisation guarantee, which protects
A provider registered on CRICOS on 1 January
1998 is liable to pay the Annual Registration Charge (ARC) for 1998
based on total enrolments of overseas students in 1997. The amount
of the charge is set out in the payment schedule.(8)
Schedule 1, the only provision of the Bill,
amends section 20 of the ESOS Act by providing for the Act to cease
on 1 January 2002.
Australia has experienced a decade of growth in
education export. However, a range of non-economic factors has
contributed to a decline in the number of overseas student visas
issued offshore. In addition, recent dramatic currency movements in
a number of key Asian markets are believed to be most responsible
for the declining growth in recent months.(9)
The stakeholder groups affected by the
regulatory environment are overseas students, current and potential
service providers, industry associations, State/Territory education
and training authorities, Commonwealth agencies and the community
generally. The general conclusion drawn from the Regulation Impact
Statement (RIS) is that the extension of the sunset clause is
preferred by all stakeholders in the short term, but greater
industry self regulation is the Government's preferred longer term
The ESOS Act provides an alternative to legal
action under the Trade Practices Act 1974 or for breach of
contract and can be accessed by students either on shore or off
shore. It can also place a student quickly in an equivalent course.
Furthermore, the trust account provisions enhance the integrity of
the industry as a whole.
There are costs to the Commonwealth in
maintaining the regulatory framework, including the register. The
costs are shared by the Commonwealth and industry through the
collection of annual and initial registration charges, introduced
Finally, the three-tiered regulatory approach
affects the notion of conformity. The specific legislative
provisions for accrediting and approving providers may differ
- A 'sunset clause' deactivates legislation. Section 20 of the
ESOS Act specifically provides for the Act to cease on 1 January
1999. This Bill extends this section for three years.
- DEETYA Overseas Student Statistics 1997.
- These providers are exempt from the financial and tuition
guarantee requirements of the ESOS Act, but are subject to
Commonwealth and State audit requirements under their funding
arrangements, such as those under the Higher Education Funding
Act 1988 and State Grants (TAFE Assistance) Act
- Education Services for Overseas Students (Registration of
Providers and Financial Regulation) Act 1991, section 4.
- Ibid., section 6A.
- Ibid., sections 6B and 6C.
- Ibid., section 7A.
- Education Services for Overseas Students (Registration of
Providers and Financial Regulation) Amendment Bill 1998,
Explanatory Memorandum, p.11.
- Ibid., p.2.
- Ibid., p.3.
- The Explanatory Memorandum (page 11) states that the current
administrative cost to DEETYA of administering the ESOS Act is
approximately $1.9 million. The amount expected to be reimbursed
each year through the charges is $0.94 million.
30 June 1998
Bills Digest Service
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