Bills Digest No. 11 2003-04
Education Services for Overseas Students (Registration
Charges) Amendment Bill 2003
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details
Passage History
Education Services for
Overseas Students (Registration Charges) Amendment Bill
2003
Date
Introduced: 26 June
2003
House:
House of Representatives
Portfolio:
Education, Science and
Training
Commencement:
Royal
Assent
The purpose of this Bill is to amend the Education Services
for Overseas Students (Registration Charges) Act 1997 to
change the charges structure for the Commonwealth Register of
Institutions and Courses for Overseas Students (CRICOS).
Background
Providers of education services to overseas students are
required to be registered on CRICOS. The Education Services for
Overseas Students (Registration Charges) Act 1997 (the
Registration Charges Act) requires education service providers to
pay an initial charge and an annual charge for registration. The
initial charge is imposed when a provider is first registered or is
registered after having been de-registered. The annual registration
charge is a five tiered rate structure linked to ranges of numbers
of student enrolments. It is calculated on the previous year s
enrolments using the table in the Registration Charges Act adjusted
for an annual CPI increase.
The Registration Charges Act was
amended in 2000 to allow for an increase in charges. It was part of
a package of legislation to strengthen the Education Services for
Overseas Students (ESOS) regulatory regime. The increased revenue
from these charges was to defray some of the increased costs to the
Commonwealth associated with its new enforcement powers. The
increases ranged from 30 per cent for the first tier, 50 per cent
for the second, third and fourth tiers and 56 per cent for the
fifth tier. The rates for the annual registration charge in 2003
range from $432 for providers with 1-10 enrolments to a maximum of
$8,462 for providers with 401 or more enrolments. The expected
revenue from this charge for 2003 is estimated to be $1.8
million.
The provisions of this bill would change the annual registration
charge structure. The new structure would comprise a $300 base
charge, and added to this $25 for each enrolment for the provider
in the previous year. The effect of this would be to link the
charge more directly to the actual number of enrolments. The
Explanatory Memorandum (EM) states that this will strike a more
equitable balance between large and small providers .(1)
It estimates that for half the registered providers there will be
little or no change to the amount paid. However, for those with
higher enrolments there will be a sizeable increase eg. in the case
of a provider with 9,000 enrolments,(2) the new charge
will be $225,300 rather than the current maximum charge of $8,462.
The government has estimated that it will receive an additional
$5.1 million over 4 years on an ongoing basis which it says it will
use for increased compliance and enforcement activity
.(3)
The Commonwealth s enforcement role in the Education Services
for Overseas Students (ESOS) regulatory regime serves a number of
purposes including protecting the integrity of Australia s
education export industry, enhancing Australia s trade interests
and protecting Australia s immigration programme. The regime
provides for a sharing of the responsibilities and of the costs of
this regulation. It is shared between the Commonwealth Departments
of Education, Science and Training and Immigration and
Multicultural and Indigenous Affairs, State and Territory
governments, education providers and the overseas students
themselves.
Increased costs were expected to accompany the increased
responsibilities associated with the regulatory strengthening in
2000. The Commonwealth was given greater investigatory powers and
sanctions particularly to deal with education providers suspected
of assisting illegal migration activities; the State and Territory
governments activities relating to quality assurance and
registration were to be more rigorous; and education providers had
greater reporting responsibilities particularly in relation to
overseas students compliance with the study conditions of their
visas. In addition, providers were also required to make
contributions to the tuition assurance fund and to pay higher
registration charges.
The Commonwealth sought to defray some (not all) of the
increased costs it would incur in exercising its stronger
enforcement powers by increasing registration charges. It estimated
that these costs would increase from $1.1 million to $2
million(4) and that the revenue from the increased
registration charges would increase to $1.5 million.(5)
In 2003 the estimated revenue is $1.8 million, higher than that
expected. However, though there has been regulatory strengthening,
a higher than expected increase in revenue to fund it, and some
evidence that the enforcement activities have been
successful,(6) the EM reports concerns that despite the
stronger provisions of the ESOS Act there is insufficient
enforcement. The reason given for this is that the ESOS Charges Act
returns insufficient funds for proactive enforcement action
.(7) Therefore the changes to the cost structure, while
presented as fairer, are also clearly a mechanism for increasing
Commonwealth revenue significantly. Estimated as being worth an
additional $5.1 million over four years, the forward revenue
estimates show totals of $3.9 million in 2003-04, $4.5 million in
2004-05, $5.3 million in 2005-06 and rising to $6.1 million in
2006-07,(8) three times the amount which would cover the
costs of the Commonwealth s stronger regulatory responsibilities
which were anticipated in 2000.
The EM states that the proposed changes continue the existing
policy of seeking cost recovery from providers for the costs of
administering the ESOS Act . The extent of these revised costs
however raise some questions - what is the optimum level of
Commonwealth enforcement activity and associated costs required to
secure the industry, and how is the relative benefit of education
industry funded Commonwealth enforcement activity assessed against
making more resources available for State and Territory government
quality assurance and registration activities? Furthermore, to the
extent that the Commonwealth s activities serve the broader
interests of immigration and trade, what level of cost recovery
from the education industry is appropriate?
While the Regulation Impact Statement in the EM does not address
these questions responses to Senate Estimates questioning give some
indication of how the money may be used
The moneys that are obtained from the additional
appropriations and the contributions by institutions and by
students largely flows to ensure that we have a clean industry in
Australia that will be reputable with genuine providers and
students and that offshore we maintain standards and build a
reputation for Australia, including where Australia partners with
others, that will meet the expectations of people in the other
countries, whether they are the governments or the students
and
We intend looking at the compliance strategy that
we have in place and enhancing that significantly. We will look to
more rigorously use the powers that we have under the ESOS Act. We would progress or certainly look
to progress the use of, for example, monitoring warrants under the
act. We will make greater use of the provisions to deal with
registered providers without the financial capacity to stay in the
industry. We will take more collaborative action with the states
and territories to remove providers of concern from the industry.
We will take advantage of the information matching using our PRISMS
data to better target compliance activities. So when we add
together the range of activities that we will look to enhance, we
feel that we will significantly increase the output of the
compliance activity we will undertake
and
not being able to extend the ESOS Act internationally, we can either leave it to the
market, which could damage the Australian reputation, or we can
explore an industry self-regulation approach to look at how we can
develop a set of protocols for the operation of Australian
education and training providers in other countries. That is what
we seek to do. That the government has provided resources for us to
explore with the Australian institutions and providers our options
for developing a quality trademark for Australian education
overseas and mechanisms that can lead to an industry
self-regulation approach in support of that
trademark.(9)
It is also interesting to note that despite the significant
impact on some providers, there appears to have been limited
consultation regarding this proposal(10), and that such
significant changes are being introduced prior to an evaluation of
the ESOS Act which is due to commence by December 2003.
The effect of item 1 of Schedule
1 is to repeal the existing table of charges in subsection
5(2) and replace it with the new charges structure namely the sum
of $300 and $25 multiplied by total enrolments for the provider in
the previous year. Indexation of the new charges structure is also
provided for.
The effect of items 2-4 is to amend subsections
5A(1), (3) and (5) respectively . These subsections deal with
provisions for variation of the annual registration charge so that
it is compatible with the new charges structure.
The effect of items 5-6 is to amend the dates
in subsections 7(1) and (1A) which are the reference point for the
indexation of the initial and annual charges. The effect of
item 7 is to ensure that the means for indexing
the initial charge and the annual charge reflects the changes made
to the charge or allowed for under the variations.
-
Explanatory Memorandum, p. (6).
-
This figure corrects that which appears in the Explanatory
Memorandum on which an earlier version of the Bills Digests
was based.
-
ibid.
-
For details on the background to these changes, see
Bills
Digest, Nos. 62, 2000-01.
-
ibid.
-
Senate Estimates Hansard, Legal and
Constitutional Legislation Committee, Immigration and Multicultural
and Indigenous Affairs Portfolio, 28 May 2003. Departmental
evidence presented indicates that Fourteen providers have had
sanctions applied under section 83 of the ESOS Act that is either
suspension or cancellation for breaches of the ESOS Act or the
national code. Four have been suspended, five have been cancelled
and five have had conditions imposed on their registration .
-
Explanatory Memorandum, p. (5).
-
Budget measures 2003-04, Budget Paper no. 2, p. 12.
-
Senate Estimates Hansard, Employment, Workplace
Relations and Education Legislation Committee, Education, Science
and Training Portfolio, 5 June 2003.
-
ibid.
There is conflicting information about the level of
consultation. The EM states that additional consultations have not
been conducted for this regulation impact statement, but the
following Departmental evidence was presented recently - In
developing this package we did consult with the industry. There is
a strong willingness on the part of the genuine providers to
safeguard their reputation by making sure that non-genuine
providers are not able to continue. So our own assessment of the
need, the support from industry, together with the need for the
Commonwealth to work cooperatively with the states and, if
necessary, to undertake activity where the states will not has led
to the formation of this package .
Carol Kempner
7 August 2003
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 2003
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