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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
Portfolio: Education, Training and Youth Affairs
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.
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:
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:
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:
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.
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.
Ross Kilmurray
20 November 1998
Bills Digest Service
Information and Research Services
This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.
ISSN 1328-8091
© Commonwealth of Australia 1998
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Published by the Department of the Parliamentary Library, 1998.