Bills Digest No. 238 1997-98
Education Services for Overseas Students (Registration of Providers and
Financial Regulation) Amendment Bill 1998
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
Concluding Comments
Endnotes
Contact Officer and Copyright Details
Education Services for Overseas Students (Registration
of Providers and Financial Regulation) Amendment Bill 1998
Date Introduced: 24
June 1998
House: House of Representatives
Portfolio: Employment,
Education, Training and Youth Affairs
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 2002.(1)
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 education providers.
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 taxation.
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 associated with:
- 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 international students.(4)
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 defaults.(6)
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 tuition fees.
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 option.(10)
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 in 1997.(11)
Finally, the three-tiered regulatory approach affects
the notion of conformity. The specific legislative provisions for accrediting
and approving providers may differ between authorities.
- 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 1989.
- 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.
Ross Kilmurray
30 June 1998
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 1998
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