Bills Digest No. 238  1997-98 Education Services for Overseas Students (Registration of Providers and Financial Regulation) Amendment Bill 1998

Numerical Index | Alphabetical Index

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.


Passage History
Main Provisions
Concluding Comments
Contact Officer and Copyright Details

Passage History

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)

Main Provisions

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.

Concluding Comments

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.


  1. 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.
  2. DEETYA Overseas Student Statistics 1997.
  3. 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.
  4. Education Services for Overseas Students (Registration of Providers and Financial Regulation) Act 1991, section 4.
  5. Ibid., section 6A.
  6. Ibid., sections 6B and 6C.
  7. Ibid., section 7A.
  8. Education Services for Overseas Students (Registration of Providers and Financial Regulation) Amendment Bill 1998, Explanatory Memorandum, p.11.
  9. Ibid., p.2.
  10. Ibid., p.3.
  11. 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.


Contact Officer and Copyright Details

Ross Kilmurray
30 June 1998
Bills Digest Service
Information and Research Services

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Published by the Department of the Parliamentary Library, 1998.