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CONTENTS
Passage History
Purpose of Legislation
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: 11 November 1998
House: Senate
Portfolio: Education, Training and Youth Affairs
Commencement: On 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)
This Bill was originally introduced in the House
of Representatives on 24 June 1998 but lapsed when Parliament was
prorogued on 31 August 1998. It is now being re-introduced in the
Senate. If passed by the Senate, the Bill will then require further
consideration by the House.
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.
Industry profile
In 1996-97 international education and training
earned $3.1 billion for Australia's export industry.(2) About half
this amount was spent on fees that were paid directly to
institutions. The remainder was spent on goods and services such as
accommodation, food, transportation etc.(3) Earnings were expected
to be in excess of $3.3 billion in 1998.(4)
In addition to export dollars, the industry
contributes to Australia's economy generally, through the creation
of jobs and the input to domestic taxation.
In 1997 the number of overseas student
enrolments in Australia increased by 5.4 per cent over 1996 figures
from 143 711 to 151 464. This was significantly lower than the 19.8
per cent growth rate experienced in 1996.(5)
Students are primarily from countries in the
Asian Region - accounting for 83.4 per cent of the total
international student population.(6) Five countries represented
over 50 per cent of total expenditure in 1997. The five countries
were:
-
- Malaysia ($371m)
-
- Indonesia (371m)
-
- Singapore (327m)
-
- South Korea ($324m), and
-
- Hong Kong ($314m).(7)
In addition to their studies, students 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 1 000 education and
training providers in Australia. Half of these are administered by
State/Territory education authorities or are entitled to receive
Commonwealth recurrent funding.(8) 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 Education, Training and Youth
Affairs (DETYA) 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.(9)
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).(10) 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.(11)
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.(12) 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.(13)
The ESOS Act provides an alternative to legal
action under the Trade Practices Act 1974 or for breach of
contract at common law 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.
Position of stakeholders
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.(14)
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, although during the first half of 1998 dramatic
currency movements in a number of key Asian markets contributed to
the decline in growth during that period.(15) Falling currency
values and general economic volatility make it harder for Asian
students to afford our education services. However, it now appears
that Asian currencies have stabilised. Recent newspaper reports
suggest that financial markets seem to be showing that investors'
interest in Asia has returned. Furthermore, the International
Monetary Fund (IMF) is predicting that the troubled Asian economies
will begin to turn the corner around the middle on next year.(16)
Despite this encouraging trend, earlier forecasts of longer-term
growth in the private sector may nevertheless require
review.(17)
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.(18)
Finally, the specific legislative provisions for
accrediting and approving providers may differ between authorities,
which may affect the notion of conformity.
-
- 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.
- Australian Bureau of Statistics Catalogue No. 5363.0,
1996-97, pp. 28-29.
- Australian International Education Foundation, Overseas
Student Statistics 1997, p. 9.
- Education Services for Overseas Students (Registration of
Providers and Financial Regulation) Amendment Bill 1998,
Explanatory Memorandum, p.22.
- Australian International Education Foundation, Overseas
Student Statistics 1997, p. 9.
- Ibid., p.10.
- Ibid.
- 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.
- Education Services for Overseas Students (Registration of
Providers and Financial Regulation) Amendment Bill 1998,
Explanatory Memorandum, p.3.
- Ibid., p.22.
- Korporaal, Glenda, 'Troubled countries on the mend', The
Sydney Morning Herald, 31 October 1998, p. 23.
- Education Services for Overseas Students (Registration of
Providers and Financial Regulation) Amendment Bill 1998,
Explanatory Memorandum, p.22.
- Ibid., p.11. The current cost to DETYA 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
20 November 1998
Bills Digest Service
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ISSN 1328-8091
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