Chapter 1 - Majority Report
1.1
On 12 October
2005, the Senate referred the Higher Education Legislation
Amendment (2005 Measures No. 4) Bill 2005 and the Education Services for
Overseas Students Amendment Bill 2005 to the Employment, Workplace Relations
and Education Legislation Committee for report by 7 November 2005. The
committee received seven submissions and two supplementary submissions relating
to these bills.
Background and purpose of the bills
1.2
The main purpose of these bills is to amend the Higher Education Support Act 2003 (the
HESA) and the Education Services for
Overseas Students Act 2000 (the ESOS Act) to enable foreign universities which
meet stringent accreditation processes to operate in Australia and to provide
courses for domestic and international students. Specifically, the amendments
contained in these bills will allow the establishment in Australia
of a branch of Carnegie Mellon University (CMU), which is based in Pittsburgh,
United States.
1.3
The Opposition supported these bills in the House of
Representatives. Ms Jenny Macklin MP, Deputy Leader of the Opposition, stated
that they marked a significant point for the higher education sector:
Following their passage, Australia's
higher education system will, for the first time, be open to overseas based
higher education providers to seek accreditation to offer degrees to Australian
and overseas students in this country.[1]
1.4
The necessity for these bills emerged from Carnegie
Mellon University's
application to establish a campus in Adelaide,
to commence operations in March 2006. This was the first application to be
received under the National Protocols for
Higher Education Approval Processes (the National Protocols) from a foreign
owned and operated university seeking to establish a branch in Australia.[2]
1.5
Protocol 2 of the National Protocols has allowed for
applications from foreign higher education institutions since the protocols
were approved by the Ministerial Council on Education, Employment, Training and
Youth Affairs in 2000. However, the current provisions of the HESA and ESOS Act
apply only to locally established and operating universities and other
educational institutions. The amendments in these bills are intended to remove impediments
to the operation of accredited foreign universities.
1.6
Carnegie Mellon
University has undergone and passed
a rigorous assessment process conducted by an expert panel established by the South
Australian Government. The panel comprised three former vice chancellors of
Australian universities and two senior subject specialists currently employed
at Australian universities. The panel assessed CMU's
application in accordance with the National Protocols, including its status as
a university in the United States,
the quality of its courses and the viability of the institution's
proposed operations in Australia.[3] On 4 July 2005, the South Australian Minister for
Employment, Training and Further Education made a determination under the South
Australian Training and Skills Development Act 2003 recognising CMU as a
university for the purposes of that act.[4]
Carnegie Mellon made the following comment on Australia's
assessment system for overseas universities:
As the first foreign university to complete a National Protocol
2 application, I can say with some experience that the Commonwealth's
broad criteria and the State's process
demonstrate the necessary rigor [sic] to ensure proper protection of Australia's
higher education sector. Universities that are approved under this Protocol
should be able to enrol overseas students on their Australian campuses.[5]
1.7
Carnegie Mellon
University has a very strong
international reputation in education and research and has been ranked 38 out
of 200 in the Times Higher Education
Supplement ranking of universities and 54 out of the world's
500 top universities in the Shanghai Jiao
Tong University's
ranking system. CMU was ranked first by the US
News and World Report magazine survey of graduate schools in information
and technology management.[6] That
such a prestigious university should choose to establish a campus in Australia
attests to the success of the Commonwealth's
higher education policy which encourages openness and diversity in the sector.
1.8
The South Australian Government has committed up to $20
million to assist the establishment of CMU in Adelaide
because it believes the program will bring long-term benefits for the state.[7] For instance, the Australian branch of
CMU is expected to attract more students to Adelaide
from the Asia-Pacific region and improve the state's
trade and industry links with other parts of the world. It will also increase
diversity and choice in the higher education sector and make Australia
more globally competitive in the higher education marketplace. Carnegie Mellon's
Adelaide campus will offer United
States degrees, and is likely to attract a
new market for students who wish to obtain a United
States credential, but do not wish to study there.
The university may also retain local students wishing to seek a United
States qualification who would otherwise have
travelled to the United States
to study.[8] CMU's
Adelaide campus will initially
offer a Master of Science in Information Technology and a Master of Science in
Public Policy and Management.
1.9
The South Australian Government also outlined a number
of general benefits expected to result from the operation of overseas
universities in Australia:
Allowing quality overseas providers to operate in Australia
in this manner will act to enhance Australia's
reputation as a high quality provider of education services in an increasingly
competitive global marketplace. A greater range of high quality choices for
overseas and Australian students, should promote growth in Australia's
share of overseas students globally as well as participation of Australian
students in higher education. Both effects will have positive implications for
the Australian economy.[9]
1.10
An Advisory Board has been established to support the
new university. It will include among its members:
-
Mr Rupert Murdoch, Chairman of News Corporation;
-
Baroness Greenfield, Director of Britain's
Royal Institution;
-
H L Kam, Deputy Managing Director, Cheung Kong
Holdings;
-
Hon. Tim Fischer, former Deputy Prime Minister;
-
Rt. Hon. Mike Moore, former NZ Prime Minister
and World Trade Organisation Director General; and
-
Ms Margaret Jackson, Chairman of Qantas.
1.11
The South Australian Government's
submission noted that any delay in the passage of these bills will
significantly delay plans for CMU to open its branch campus in time for its
first planned student intake in early 2006. The submission further noted that
CMU will not be able to market courses to prospective international students,
nor advertise the availability of FEE-HELP to eligible Australian students
unless the proposed amendments are passed. [10]
Possible ramifications of establishing
the first foreign university in Australia
1.12
A number of organisations have raised concerns in
relation to the establishment of a Carnegie Mellon campus in Australia.
These concerns are addressed below.
1.13
The Council of Australian Postgraduate Associations (CAPA)
has raised concerns that allowing the establishment of a foreign university
offering overseas qualifications may devalue Australian degrees or dilute the
reputation of Australian universities.[11]
The committee does not believe this will happen. Rather, it is expected that
the availability of qualifications recognised by two jurisdictions will give Australia
access to a new market of students without affecting the rigorous quality
assurance scheme that protects the reputation of Australia's
universities.
1.14
The National Tertiary Education Union expressed concern
that overseas universities may be able to use the term 'university'
for their Australian branches if the institution has been approved to operate
as a registered training organisation or a non-university higher education
provider rather than a university:
In listing the name of the body corporate or the title under
which an institution has been established in its country of origin under Table
C...the legislation fails to sufficiently protect the standards and reputation
associated with the use of the title university in Australia.[12]
1.15
However, the committee believes that the Government, following
from the Greenwich University
experience, will ensure that normal accreditation processes apply, so as to
exclude 'degree mills' and 'diploma factories'. To allow such establishments to
offer courses would be to debase the reputation of the Australian education
market.
1.16
Concerns have also been raised that overseas
institutions operating in Australia
may lower the standard of higher education in Australia
or the level of support services provided to overseas students. The committee
believes the protections contained in the HESA and the ESOS Act mitigate this risk,
as overseas higher education institutions must satisfy the same requirements as
Australian institutions:
The Bill [to amend the HESA] will ensure that any overseas
providers approved under the National Protocols will be subject to the same
quality and accountability requirements that apply to local providers under the
Higher Education Support Act 2003.[13]
1.17
A number of submissions expressed opposition to the
South Australian Government's commitment of up
to $20 million to assist CMU to establish an Adelaide
campus. For example, the Student's Association
of the University of Adelaide (SAUA) submitted that the state government's
provision of funds 'is short sighted and
display[s] a lack of support for the three existing public universities in
South Australia, and are [sic] not in the spirit of Australian public education'.[14] CAPA raised the following concern:
We are particularly concerned about the South Australian
Government spending public funding to help set up a foreign private university,
particularly at a time when federal funding to the university sector is substantially
shrinking.[15]
1.18
While the committee would not seek to assess the
suitability of the South Australian Government's
allocation of funds, it notes that the evidence in the South Australian
Government's submission shows that it has considered
the risks and benefits to the state of providing assistance to help establish a
CMU campus in Adelaide.[16]
1.19
The SAUA and CAPA also expressed concerns that CMU will
take students from the state's three public
universities and that future Australian branches of overseas universities may reduce
the number of international students attending other public universities:
The international student market is not infinitely expandable
and ultimately Australian public universities may find that they are losing
market share to foreign private providers operating in Australia.[17]
1.20
The committee notes the South Australian Government's
belief that CMU Adelaide will attract more overseas students to South
Australia and draw attention to Adelaide
as 'a focal point for higher education in Australia'.[18] The submissions from the South
Australian Government and the Department of Education, Science and Training
(DEST) also point out that CMU is likely to serve a different student market
than the existing three universities, as students at CMU's
Adelaide campus will pay a premium
for qualifications that will be recognised in the United
States as well as Australia.[19] It appears that the other South
Australian universities support CMU's
establishment and are examining opportunities for collaboration. For instance, Flinders
University and CMU are negotiating
a memorandum of understanding to facilitate joint teaching, research and
facility sharing for the public policy courses offered by the two universities.[20]
Higher Education Legislation Amendment (2005 Measures No. 4) Bill 2005
1.21
The purpose of this bill is to amend the Higher Education Support Act 2003, which
provides for the regulation and funding of higher education. The amendments
will enable foreign universities to operate in Australia,
allow Australian students of such universities to access the FEE-HELP system
and improve consumer protection mechanisms for students. The amendments to the
HESA will allow Australian students more choice regarding the university they
attend, and the choice of undertaking a US
degree while studying in Australia.[21]
Permitting the operation of foreign
higher education institutions
1.22
At present, the HESA specifies two main categories of
higher education providers: Table A providers, which are eligible for the full
range of Commonwealth Government grants and Table B providers, which are
eligible for research and research training grants and in may in some circumstances
access the Commonwealth Grant Scheme.
1.23
The HESA amendments create a new category of Table C
higher education providers, which will cover foreign higher education
institutions with Australian branches. Like other private universities, Table C
providers will not be eligible for the Commonwealth Grants Scheme, any other
HESA grants or Commonwealth supported places. Australian students of Table C
providers will, however, be eligible for FEE-HELP and OS-HELP. Under the
amendments, Carnegie Mellon will be listed as a Table C provider.
Access to FEE-HELP
1.24
The amendments will make local students attending CMU's
Adelaide campus eligible for
FEE-HELP. Students without the financial capacity to pay up front fees will
have the opportunity to study at a private university and will have the same
entitlement as those who obtain a full fee paying place at Australian
universities.
1.25
It is expected that approximately 50 domestic students
will attend CMU in its first year of operation, with up to 200 domestic
students by 2009. The Commonwealth has budgeted expenditure under FEE-HELP for around
12 CMU students in 2006, 23 in 2007, 35 in 2008 and 46 in 2009.
Tuition assurance arrangements
1.26
The amendments contained in the bill will also
strengthen and better reflect the policy intent of the tuition assurance
requirement which all non-Table A providers are required to comply with.
Tuition assurance provides comprehensive consumer protection for students in
the event that units in which they were enrolled cease to be offered. Opposition
members expressed their support in the House of Representatives for this
amendment and the stronger student protections it will bring.[22]
1.27
The amendments will improve the current protections which
allow students to either choose a course assurance option of switching to
replacement units in a similar course with another provider, or the option to
receive a refund for uncompleted units. Where students choose the option of
student contribution or tuition fee repayment, their Higher Education Loan
Program (HELP) will be remitted and their student learning entitlement and
FEE-HELP balances will be re-credited. Where students choose the course
assurance option, they will not incur any additional cost for the replacement
units.
1.28
The changes will also protect students forced to
withdraw from replacement units because of special circumstances and the institutions
which provide replacement units without any fee. Eligible students will be able
to obtain a refund without any impost on the second provider.
Education Services for Overseas Students Amendment Bill 2005
1.29
The ESOS Act regulates education services provided to overseas
students. It ensures that overseas students studying in Australia
on student visas receive the education and training for which they have paid
and thereby protects the reputation and integrity of Australia's
international education and training export industry. The ESOS Act requires
approved higher education institutions for each state to be registered on the
Commonwealth Register of Institutions and Courses for Overseas Students (the
CRICOS). It also provides for the National Code of Practice for Registration Authorities
and Providers of Education and Training to Overseas Students (the National
Code).
1.30
This bill further strengthens the rigorous quality
assurance and consumer protection framework for overseas students studying in Australia.
It safeguards the reputation of this significant export industry and allows for
its expansion. The amendments contained in the bill demonstrate the government's
commitment to giving students greater choice in where they study by allowing
high-quality overseas education institutions to establish branches in Australia
and offer education and training services to students from overseas.
1.31
Carnegie Mellon
University's
submission outlines the benefits of international students being able to
receive a United States
qualification while studying in Australia:
Passage of the ESOS amendment will ensure that Australia
has access to this large market of students and we anticipate that the opening
of Carnegie Mellon
University will increase the number
of students studying in South Australia.
Both the State of South Australia
and the Australian Government have a strategic goal of branding Australia
as "an education destination" and we believe that Carnegie Mellon can
help achieve this goal.[23]
1.32
The main purpose of this bill is to amend the ESOS Act
to enable high-quality overseas education providers to establish institutions
in Australia and
offer education and training services to students from overseas.[24] Specifically, as a consequence of
amendments to the HESA, a foreign owned university—in this case Carnegie
Mellon University—will
be able to operate as a registered provider of education services to overseas
students in Australia.
The bill also reinforces the ability of higher education institutions
registered under the ESOS Act to continue to charge overseas students tuition
fees that include an amount for any action the institution is required to
undertake by the ESOS Act or the National Code of Practice for Registration
Authorities and Providers of Education and Training to Overseas Students.
1.33
In its submission, the NLC stated its support for and
confidence in the quality assurance processes under the ESOS Act:
...NLC is confident that the strict measures that any institution
must undergo to be registered with CRICOS would be applied to all overseas owned
institutions wanting to set up campuses in Australia
and that audit and quality processes would be undertaken following registration
as outlined in the Esos [sic] Act.[25]
1.34
The other amendment proposed by the bill reinforces the
capacity of registered education institutions to charge overseas students
tuition fees that cover costs incurred by the institution in meeting its
obligations under the ESOS Act or the National Code.
The registration of non-resident higher
education institutions
1.35
Currently, only Australian universities and other institutions
are able to offer education and training services to overseas students in Australia.
At present, foreign universities face the expense and complexity of establishing
Australian-owned subsidiaries if they wish to offer courses in Australia
to international students.
1.36
As outlined above, the HESA amendments create a new
category of Table C higher education providers, which comprises overseas higher
education institutions with Australian branches. If the amendments are passed,
and providing they comply with the requirements of the ESOS Act, Table C
providers may offer courses to overseas students in Australia.
1.37
The amendments in this bill would also bring the ESOS
Act into accordance with the United States-Australia Free Trade Agreement, which
permits American universities that meet appropriate standards to operate in Australia:[26]
Article 10.5: Local Presence
Neither Party may require a service provider of the other Party
to establish or maintain a representative office or any form of enterprise, to
be resident, in its territory as a condition for the cross-border supply of a
service.[27]
Tuition fees and support services
for overseas students
1.38
The bill adds a new subsection 18-2 to the ESOS Act
designed to clarify and reinforce the policy intention of the Act that registered
institutions must comply with the National Code, and can recoup the amounts
spent on providing the services required by the code. The new subsection states
that a registered provider does not breach its obligations under this or any
other education-related Act if it charges overseas students tuition fees which
include amounts for actions that the institution is required to undertake by
the ESOS Act or the National Code.
1.39
The code includes a requirement for registered higher
education institutions to provide appropriate support services to overseas
students, including independent dispute resolution, counselling services and
information about orientation, academic progress, further study and
accommodation. The registered provider must also appoint a suitably qualified
person as student contact officer. That officer is responsible for provision of
support services, which will:
48.1 Promote the successful adjustment by overseas students to
life and study at an Australian institution.
48.2 Assist students to resolve problems which could impede
successful completion of their study programs.[28]
1.40
A number of submitters raised concerns in relation to
this clause. However, the concerns appear to be based on a misapprehension that
this provision is related to the Higher Education Support Amendment (Abolition
of Compulsory Up-Front Student Fees) Bill 2005 currently before Parliament.
1.41
For instance, the National Liaison Committee for
International Students in Australia
(the NLC) stated that:
There is a clear link between this amendment and the VSU
legislation which prevents universities from charging a compulsory fee to
students for non academic related services. This amendment is only necessary
should the VSU legislation be implemented, to allow universities to require
international students to pay for non academic services while not allowing
universities to charge domestic students for any non academic services.[29]
1.42
Rather, this subsection reinforces the ESOS Act's
underpinning principles of quality assurance and consumer protection. It also
recognises that overseas students have different needs and less ability than
Australian students to negotiate their own access to support services.
1.43
The NLC suggested an amendment to the bill to require
that the:
...amount charged to international students for the provision of
services required under the Esos [sic] Act be included in the definition of
course monies within the Esos [sic] Act 2000 and not be included in the tuition
(by definition) fee but rather a separate itemised fee.[30]
1.44
NLC supports its calls for the services component to be
separate from the tuition fee by a table that demonstrates the difference
between annual fees for domestic full fee paying places and international full
fee paying places at twelve Australian universities. The average percentage
difference at each university ranges from 7 per cent to 53 per cent higher fees
for international students.[31]
The NLC would like to assume that the extra charge is actually
added on without itemisation to fund some of the services that are required
under the Esos [sic] Act obligations. The NLC would not like to assume that the
extra money is used to fund shortfalls in commonwealth funding fro university
revenue. However, the introduction of the above amendment is a very strong
indication that this may become the case in many institutions, as there is no
requirement for description, itemisation or indeed capping of amounts.
1.45
CAPA also raised concerns that this amendment may
increase the potential for the financial exploitation of international students
because universities are not required to quantify or itemise the amount charged.[32]
The committee notes that this amendment merely reinforces universities'
existing power to recoup expenses incurred in complying with the ESOS Act or
the National Code. CAPA's concerns are misplaced in the competitive environment
of higher education. The committee notes the warnings that have come from
within the sector about the need to safeguard the market through quality
control and high value for fees charged.
Conclusion
1.46
The passage of the Higher Education Legislation
Amendment (2005 Measures No. 4) Bill 2005 and the Education Services for
Overseas Students Amendment Bill 2005 will allow the establishment of the first
foreign university in Australia and enable overseas higher education
institutions of an acceptable standard to establish branches in the future. These
significant bills will support diversity and choice in the higher education
sector, make it more internationally competitive, and capable of generating
income for the sector and the country.
Recommendation
The committee commends the bills to the Senate and recommends
their passage without amendment.
Senator
Judith Troeth
Chair
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