Education Services for Overseas Students (TPS Levies) Amendment Bill 2017 [2017] AUSStaCSBSD 271 (16 August 2017)

• Education Services for Overseas Students (TPS Levies) Amendment Bill 2017
• Significant matters in delegated legislation 13

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Education Services for Overseas Students (TPS Levies) Amendment Bill 2017

Purpose	This bill seeks to amend the Education Services for Overseas Students (TPS Levies) Act 2012 to enable the Minister to proactively manage the balance of the Overseas Students Tuition Fund
Portfolio	Education and Training
Introduced	House of Representatives on 10 August 2017
Scrutiny principles	Standing Order 24(1)(a)(iv) and (v)

Significant matters in delegated legislation ^[13]

1.12 This bill seeks to enable the Minister for Education and Training to proactively manage the balance of the Overseas Students Tuition Fund (the Fund). The Tuition Protection Service (TPS) assists international students whose education providers are unable to fully deliver their course of study by ensuring that international students are able to complete their studies in another course or with another education provider, or receive a refund of their unspent tuition fees. The TPS is funded by an annual levy on all international education providers. The levy compromises administrative fee and base fee components. Amounts collected are credited into the Fund, which is a Special Account established under section 52A of the Education Services for Overseas Students Act 2000 (the ESOS Act).^[14] Under section 52C of the ESOS Act amounts in the Fund can only be expended for making payments to affected international students and paying the Commonwealth's costs associated with managing the Fund.

1.13 Currently the administrative and base fee components are set out in the primary legislation, however the bill would enable the Minister to set the administrative and base fee components of the TPS levy through a legislative instrument.^[15] The explanatory memorandum explains this by noting that recent growth in student enrolments has resulted in an increased collection of the TPS levy and 'since this growth has not been offset by a similar proportion of claims on the Fund, reserves have increased sharply'.^[16] The explanatory memorandum further notes that:

An appropriate reduction to the current administrative and base fees is needed to ensure the Fund remains within the target range of $30 million to $50 million recommended by the Australian Government Actuary and endorsed by the TPS Advisory Board. It is anticipated that this will be a one-off reduction to the Fund and the fee settings may not be updated every year.
Giving the Minister authority to proactively manage the Fund will maintain sufficient reserves to meet claims each year, commensurate with an increase in student enrolments. It also allows the Fund to remain viable in case any unforeseen events or major provider closures occur.^[17]

1.14 Thus, in order to provide this flexibility, the bill proposes that the legislative instrument could set the administrative and base fee components of the TPS levy.^[18] In making such a legislative instrument, the Minister must have regard to the sustainability of the Fund, and may also have regard to any other matter he or she considers appropriate.^[19] The bill also sets an upper limit which the Minister cannot exceed in determining the administrative and base fee components through a legislative instrument.^[20]

1.15 One of the most fundamental functions of the Parliament is to levy taxation.^[21] The committee's consistent scrutiny view is that it is for the Parliament, rather than makers of delegated legislation, to set a rate of tax. In this case, the detailed explanation in the explanatory memorandum, the fact that a maximum cap is set in the primary legislation and amounts collected by the levy are credited to a Special Account (which limits the use of the funds to purposes specified in primary legislation) largely addresses the committee's scrutiny concerns. However, any delegation to the executive of legislative power in relation to taxation still represents a significant delegation of the Parliament's legislative powers.

1.16 While the committee welcomes the important limitations on the proposed ministerial power to alter the rate of the TPS levy, from a scrutiny perspective, the committee considers that it may be appropriate for the bill to be amended to further increase parliamentary oversight by:

• requiring the positive approval of each House of the Parliament before a new determination under proposed subsection 7A comes into effect;^[22] or

• providing that the determinations do not come into effect until the relevant disallowance period has expired (while retaining the usual procedures in subsection 42(2) of the Legislation Act 2003 so that any determinations are taken to be disallowed if a disallowance motion remains unresolved at the end of the disallowance period).

1.17 The committee requests the Minister's response in relation to this matter.

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[13] Schedule 1, item 5, proposed sections 6, 7 and 7A. The committee draws Senators’ attention to these provisions pursuant to principles 1(a)(iv) and (v) of the committee’s terms of reference.

[14] Explanatory memorandum, p. 2.

[15] Proposed subsections 7A(1)–(2).

[16] Explanatory memorandum, p. 2.

[17] Explanatory memorandum, p. 2.

[18] Proposed subsections 7A(1)–(2).

[19] Proposed subsections 7A(4)–(5).

[20] Proposed subsection 7A(3).

[21] This principle has been a foundational element of our system of governance for centuries: see, for example, article 4 of the Bill of Rights 1688: 'That levying money for or to the use of the Crown by pretence of prerogative without grant of Parliament for longer time or in other manner than the same is or shall be granted is illegal'.

[22] See, for example, section 10B of the Health Insurance Act 1973.