Bills Digest no. 26 2006–07
Education Services for Overseas Students Legislation
Amendment (2006 Measures No. 2) Bill 2006
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
Financial implications
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Education Services for Overseas
Students Legislation Amendment (2006 Measures No. 2) Bill
2006
Date introduced: 6 September 2006
House: House of
Representatives
Portfolio: Education, Science and Training
Commencement: Sections 1 to 3 commence on Royal Assent. Schedules
1, 3 and 4 and Part 1 of Schedule 2 commence on 1 January 2007
and Part 2 of Schedule 2 on 1 July 2007.
The Bill, like the Education Services for Overseas Students
Legislation Amendment (2006 Measures No.1) Bill 2006, amends the
Education Services for Overseas Students Act 2000 to
strengthen the consumer protection aspects of the regulatory
framework that governs the provision of education and training to
overseas students. The Bill also clarifies aspects of the
administration of the legislation and updates provisions relating
to the National Code of Practice for Registration Authorities and
Providers of Education and Training to Overseas Students (the
National Code).
The provision of education and training to overseas students in
Australia is a responsibility shared by the Commonwealth and the
State and Territory governments. The States and Territories have
primary responsibility for the quality control of education
providers and their courses and exercise this through their
processes of approving, registering and monitoring providers and
their courses.
The Commonwealth s interest is in protecting the reputation of a
$7 billion per year export industry(1), maintaining the
integrity of the migration program and protecting the interests of
overseas students as consumers.
The regulatory framework therefore involves Commonwealth and
State/Territory legislation and the administrative effort of the
Commonwealth Department of Education, Science and Training (DEST)
and the Commonwealth Department of Immigration and Multicultural
Affairs (DIMA) and the State/Territory education and training
authorities.
The
Education Services for Overseas Students Act 2000 (ESOS
Act) and associated legislation is the legal framework governing
the responsibility of education providers to overseas students who
come to Australia on a student visa in the higher education,
vocational education, secondary school or English language sectors.
The associated legislation is the Education Services for
Overseas Students (Registration Charges) Act 1997, Education
Services for Overseas Students Regulations 2001 and the National
Code of Practice for Registration Authorities and Providers of
Education and Training to Overseas Students (National Code).
(2)
The ESOS Act introduced substantial changes to the
Commonwealth's arrangements for strengthening the regulatory
arrangements of education services to overseas
students.(3)
The arrangements under the ESOS Act include:
- provisions for the registration of education providers and
their courses on the Commonwealth Register of Institutions and
Courses for Overseas Students (CRICOS)
- the compulsory membership by providers of a tuition assurance
scheme
- contributions by providers to an assurance fund to ensure that
there are funds to pay for student tuition in cases of provider
collapse
- reporting obligations on providers for example, in relation to
disclosure of provider activities such as previous breaches, or
breaches by associates, and in relation to student breaches
- a compulsory national code which sets standards and benchmarks
for providers and their courses in order to qualify for
registration and which serves to guide States and Territories in
their approval, registration and monitoring activities
- compulsory compliance with the national code, and sanctions for
being in breach of both the Act and the National Code, and
- Commonwealth powers to investigate providers; impose sanctions
and exclude non bona fide operators from the
industry.
Section 176A of the ESOS Act required an independent evaluation
of the operation of the Act within three years of Royal Assent. The
evaluation assessed the effectiveness of the ESOS Act in achieving
its objectives to
- provide nationally consistent registration of education and
training providers for overseas students studying in Australia
- minimise the presence in the industry of providers lacking
integrity or who facilitate student breaches of their visa
conditions
- ensure students receive either alternative tuition or a refund
if they are unable to receive the tuition for which they have paid,
and
- support migration policy.
The evaluation considered the costs imposed by the Act on
governments and providers; administration of the Act; and
monitoring and reporting aspects of the Act s operation.
The evaluation commenced in May 2004 and reported in June 2005.
The evaluation team concluded that
The architecture of the quality benchmarks
represented by the ESOS framework is sound: standards for providers
of education and training that are mandatory and operate
nationally; a cooperative national regulatory model; the
characterisation of the student-institution relationship in
consumer terms; and the integration of export education and
migration policy.(4)
However the evaluation team made 41 recommendations to improve
the framework s effectiveness. Many of the recommendations require
changes to the National Code. Others require amendments to the ESOS
Act and related legislation. The amendments in the Bill are the
second stage implementation of the evaluation s
recommendations.(5)
The Explanatory Memorandum states the Bill will not increase
costs to the Commonwealth or the education export industry.
However, there may be significant costs to education providers in
complying with the strengthened regulations implemented by the
Bill.(6)
Schedule 1
Item 1 is a technical amendment relating to
membership of a Tuition Assurance Scheme (TAS). The ESOS Act
requires that all providers be a member of a TAS, unless exempt.
The amendment clarifies that where TAS membership is required it
must cover each course offered by the provider.
Schedule 2 Part 1
Item 1 amends paragraph 19(1)(d) to clarify
that a provider must advise DIMA when a student s study is
terminated before completing a course.
Schedule 2 Part 2
Items 4, 5 and 6 amend subsections 104(1),
104(3) and 104(4) relating to penalty points for offences
prescribed in regulations. The amendment will reduce from 60 ($6
600) to 50 ($5 500) the maximum penalty points for a provider s
failure to report visa breaches or provide the required information
about students.(7) It will bring the Act into line with
Commonwealth criminal law policy guidelines.
Item 2 relates to the reporting of breaches of
visa conditions. The ESOS legislation supports the integrity of the
student visa programme through the provider reporting conditions.
Under sections 19 and 20 of the Act, providers are obliged to
report students who are not attending fulltime or are not meeting
course requirements. Failure on either condition is a trigger for
automatic cancellation of the visa. The ESOS evaluation noted that
this brings the full weight of DIMIA s compliance process into play
too early in educational process that should be the responsibility
of the provider .(8) The ESOS evaluation concluded
that:
a gulf exists between the education system which
views student participation and progress as primarily matters of
educational judgement, and DIMIA which views them as facets of visa
control. Given their different goals and cultures, a tension is
inevitable, but it has been unnecessarily exacerbated by the lack
of specificity in the Code The National Code standards should be
rewritten in terms that fit the realities of teaching, learning and
assessment in each sector. (9)
Item 2 implements recommendation 28 of the ESOS
evaluation. It amends subsection 19(2) and 20(1) by deleting the
words student visa condition relating to attendance or satisfactory
academic performance and substituting the words prescribed
condition of the student visa . Reporting conditions will now be
clarified through Standards 10 and 11 of the National Code and
providers will devise appropriate policies and procedures to
monitor student progress and attendance. The visa conditions which
must be reported will now be prescribed in the Education Services
for Overseas Students Regulations 2001 (the ESOS Regulations) and
in the Migration Regulations and will be consistent with the
conditions in the National Code. This should satisfy the concerns
of the universities who initially were expected, at considerable
cost, to report on student attendance. Other sectors, including the
TAFE sector will still be expected to monitor attendance. The
extended date of implementation for Part 2 of Schedule 2 to July
2007 should assist providers in complying with the provisions.
Schedule 3
Schedule 3 deals with refunds to students.
Item 1 deals with the definition of student
default . It clarifies the circumstances for student refunds.
Current provisions suggest a student default occurs where a student
withdraws from a course. The amendments extend student default to
where a provider terminates a student s enrolment due to a student
s failure to pay course fees, breach of a visa condition or
misbehaviour.
Item 4 strengthens the consumer protection
aspects of the legislation. It prevents a provider from retaining a
significant proportion of a student s prepaid course fees when a
student is unable to commence a course due to a visa being
refused.
Item 6 inserts new subsection
76(1A) which introduces a twelve month sunset clause for
recourse to the ESOS Assurance Fund.(10)
Item 9 inserts new subsection
77(1A) which allows the Fund Manager(11) to
reduce the amount of a refund where it can be demonstrated that the
student is studying with a new provider and has obtained
recognition of prior learning with the new provider for study
completed with the former provider.
Item 10 is a consequential amendment to reflect
changes in item 9. The new provider will have to inform the Fund
Manager of any recognition of prior learning granted. The
amendments in items 9 and 10 will prevent students receiving both
academic credits and a refund for completed study.
Schedule 4
Schedule 4 deals with the National Code.
Item 3 repeals subsection 33(1) and substitutes
a new subsection 33(1) allowing the Minister to
amend or make a new National Code by legislative instrument.
Notification procedures under the Legislative Instruments Act
2003 will apply enabling Parliamentary scrutiny of changes to
the code, through the disallowable instruments
provisions.(12) Existing section 36 provides that State
and Territory Governments and education industry stakeholders be
consulted before the Minister changes the code.
Item 10 repeals section 42 which contains the
existing procedure to amend the National Code.
Item 8 proposes a new subsection
41(1) which provides that each registered provider be
given written notice of amendment of the National Code, the day on
which the amendment takes effect and means of access to the new
code. Proposed new subsection 41(2) provides that
such a notice to providers is not a legislative instrument. Despite
the provisions for consultation in section 36, stakeholders have
expressed concern that there has been no communication regarding
any future evaluation or review of either the ESOS Act or the
National Code. This is of concern as it implies a future of ad hoc
amendments .(13)
Other items in Schedule 4 are technical amendments making the
Act consistent with the operation of the Legislative
Instruments Act 2003.
Concluding comments
The Government is concerned that the ESOS legislation framework
continues to ensure the quality of education provision to overseas
students whilst providing consumer protection and maintaining the
integrity of the student visa system. The Bill clarifies the
consumer protection provisions and the student visa aspects and
introduces technical amendments aimed at streamlining the
administration of the Act. Stakeholder response has expressed
concern at an ever increasing compliance and reporting load on
providers, with impacts on customer service and administration
costs. These costs will have to be passed onto students, which in
turn will impact on Australia s international competitiveness.
(14) Furthermore, providers are concerned that the
legislation imposes more regulation on all providers in an attempt
to deal with the small minority of unscrupulous providers that
could be dealt with under the existing legislation.(15)
Peak bodies claim that the $6 million collected in the Annual
Registration Charge (ARC) provides the Government with the
resources to be more proactive in identifying and dealing with
those providers operating on the fringes of the industry who
continue to take advantage of international students, and
facilitate visa fraud and illegal immigration without imposing
additional administrative, regulatory and compliance burdens on all
providers .(16)
- The economic benefits of international education to Australia
are now estimated to be around $7.5 billion of which $6.9 billion
is from spending by onshore students. See: Department of Education,
Science and Training, Annual Report 2004-05, p.113.
- See
Easy guide to ESOS on the Department of Education, Science and
Training website.
- For details on the background to these changes, see Bills
Digest, Nos. 62-66, 2000-01.
- PhillipsKPA and LifeLong Learning Associates,
Evaluation of the Education Services for Overseas Students Act
2000 (Australian Education International, Department of
Education, Science and Training, Canberra 2005), p. xxxiii.
- The first stage is implemented in Education Services for
Overseas Students Legislation Amendment (2006 Measures No.1) Bill
2006. See Bills Digest, No. 13, 2006-07.
- In May 2006 The Australian Vice Chancellor s Committee (AVCC)
estimated compliance costs to universities of $33 - $41 million
(AVCC
Response to the Industry Consultation Draft National Code AVCC,
May 2006). Negotiations with the University sector have resulted in
that sector being exempt from student attendance reporting and
police checks relating to provision of services to under 18 year
olds. This will reduce but not eliminate compliance costs for the
sector. See:
Cost Compliance Report (May 2006).
- If the entity committing the offence is a corporation, the
maximum penalty will be five times this figure - 250 penalty units
($27 500) for each offence.
- PhillipsKPA and LifeLong Learning Associates,
Evaluation of the Education Services for Overseas Students Act
2000 (Australian Education International, Department of
Education, Science and Training, Canberra 2005), p. 153.
- ibid, p. 152.
- The ESOS Assurance Fund is established under Section 45 of the
Act. The purpose of the Fund is to protect the interests of
overseas students and intending overseas students of registered
providers by ensuring that the students are provided with suitable
alternative courses, or have their course money refunded, if the
provider cannot provide the courses that the students have paid
for. The assurance fund consists of contributions and levies from
providers, amounts recovered from providers, parliamentary
appropriations and penalties and fees.
- The Fund Manager is appointed by the Secretary and may be an
individual or a company. Functions of the Fund Manager include
determining the amounts of annual Fund contributions for providers,
collecting contributions and levies from providers, arranging
alternative courses for students and making payments from the
Fund.
- There may need to be clarification of the provisions of
subsection 44(1) of the Legislative Instruments Act 2003
as they apply to the National Code. Subsection 44(1) provides that
under certain conditions, legislative instruments dealing with
intergovernmental bodies or schemes are not disallowable.
-
Joint Peak Body Response to the Industry Consultation Draft
National Code (May 2006), p. 9.
- ibid, p. 8.
-
New legislation for international students will satisfy no one
Campus Review, 31 May 2006, p. 7.
-
Joint Peak Body Response to the Industry Consultation Draft
National Code (May 2006), p. 8.
Dr Coral Dow
Social Policy Section
12 September 2006
Bills Digest Service
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