BILLS DIGEST NO. 36, 2020–21              7 December 2020

Education Services for Overseas Students Amendment (Refunds of Charges and Other Measures) Bill 2020

Hazel Ferguson
Social Policy Section 

Date introduced: 11 November 2020

House:  House of Representatives

Portfolio: Education, Skills and Employment

Commencement:  The day after the Act receives Royal Assent, except Schedule 1, Part 1, which commences on 1 July 2021.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at December 2020.

Purpose of the Bill

The purpose of the Education Services for Overseas Students Amendment (Refunds of Charges and Other Measures) Bill 2020 (the Bill) is to amend the Education Services for Overseas Students Act 2000 (ESOS Act) to:

•       provide for the Secretary to refund Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) charges in special circumstances from 1 July 2021 and

•       change the definition of ‘course’, to allow certain education and training to be provided to overseas students without the need for CRICOS registration.

Background

The ESOS legislative framework

The ESOS Act and related legislation is intended to provide protection for overseas students studying in Australia. For the purposes of the ESOS legislative framework, an overseas student is a person (whether within or outside Australia) who holds a student visa.[1]

It is an offence for a person to provide a course to an overseas student, or offer to provide a course to an intending overseas student, without registration under the ESOS Act.[2] All Australian education providers approved to offer courses to overseas students are listed on CRICOS, which is maintained by the Department of Education, Skills and Employment (DESE).[3] In order to be registered, a provider must meet a range of requirements, including paying an Annual Registration Charge (ARC) and Entry to Market Charges (EMC) imposed under the Education Services for Overseas Students (Registration Charges) Act 1997 (ESOS Registration Charges Act).[4]

Each year, all providers registered or suspended on CRICOS on 1 January are required to pay the ARC.[5] In 2020, the ARC consists of a $1,505 base fee, plus $10 per overseas student, $115 per course by location, and $1,156 if, in the past 12 months, the Minister has imposed sanctions on the provider for non-compliance under section 83 of the ESOS Act.[6]

The EMC is imposed in the first three years of registration, with the first charge due at the time the provider becomes registered, and then the latter two charges due on the first and second anniversaries of the day of registration.[7] In 2020, the first charge is $8,676, and if the provider remains registered, the second charge is $5,784 and the third charge is $2,882.[8]

The effect of COVID-19

In 2020, Australian providers of education to overseas students have been affected by COVID-19 travel restrictions first announced for travellers from mainland China on 1 February 2020, then for all foreign nationals (excluding Australian permanent residents and some other persons) from 20 March.[9]

The Australian Government has provided regulatory flexibility for overseas students to study online, and at September 2020, there were at least 87,626 enrolled students studying from outside Australia.[10] However, data covering January to September 2020 shows the number of overseas students commencing new courses, and the total number of overseas students enrolled, has fallen compared with the same period in 2019 (Figure 1).[11] The declines in 2020 follow a period of sustained growth since 2013, and have been seen in all sectors except vocational education and training (VET). A sector breakdown of overseas student commencements and enrolments is provided in the appendix to this Bills Digest. The Government is working on the assumption that overseas students will gradually return to Australia ‘through the latter part of 2021’.[12]

Figure 1: Overseas students, total enrolments and commencements, January to September, all sectors, 2011–2020

Source: DESE, ‘International Student Data 2020’, DESE website, extracted 16 November 2020.

Declining overseas student numbers, coupled with other challenges related to COVID-19, such as restrictions on face-to-face teaching, have resulted in significant financial losses for many providers. For universities, where overseas student fees accounted for 27.3 per cent ($10.0 billion out of a total $36.5) of revenue in 2019, COVID-19 has resulted in additional expenditure on on-line learning and student support, as well as investment losses, and losses of fee income.[13] Universities Australia (UA) has estimated university revenue losses due to COVID-19 from 2020 to 2023 at $16 billion.[14] The English Language Intensive Courses for Overseas Students (ELICOS) sector, which had already seen declines in student numbers in 2019, has reported that complete reliance on students from overseas has left ELICOS providers particularly vulnerable to closure due to COVID-19.[15] So far, three CRICOS registered English language colleges have reported temporary closure due to COVID-19, although this is out of a total of 77 temporary VET provider closures.[16]

Committee consideration

Senate Standing Committee for the Selection of Bills

The Senate Standing Committee for Selection of Bills has deferred consideration of the Bill to its next meeting.[17]

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills recommended that the Bill not be referred to a committee.[18]

Policy position of non-government parties/independents

At the time of writing, no non-government parties/independents have expressed a position on the Bill.

Position of major interest groups

At the time of writing, no major interest groups have expressed a position on the Bill.

Financial implications

The Explanatory Memorandum states that changes to the Provider Registration and International Student Management System (PRISMS) required to implement the changes proposed in the Bill have an estimated cost of $0.2 million.[19]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[20]

Parliamentary Joint Committee on Human Rights

At the time of writing, the Parliamentary Joint Committee on Human Rights had not yet considered the Bill.[21]

Key issues and provisions

Fee changes

On 12 April 2020, in response to COVID-19, Minister for Education Dan Tehan and Minister for Employment, Skills, Small and Family Business Michaelia Cash announced the Higher Education Relief Package.[22] This package included regulatory fee relief, including, for CRICOS-registered education providers, waiver of the ARC in 2020 and 2021, and EMC from 1 January 2020 to 30 June 2021.[23]

According to the Explanatory Memorandum, refunds for fees for 2020 that had already been paid were provided using the act of grace provisions of the Public Governance, Performance and Accountability Act 2013, which allow the Finance Minister to authorise waiver or offset of payments owing to the Commonwealth, or, in special circumstances, to authorise payments to a person.[24] ARC and EMC refunds totalled more than $10.9 million.[25]

Those charges that had not already been paid—the ARC for 2021, and EMC from 12 April 2020 to 30 June 2021—were waived by providing an exemption for all providers through the Education Services for Overseas Students (Registration Charges) Regulations 2011, made under section 9 of the ESOS Registration Charges Act.[26]

Item 1 of Schedule 1 of the Bill inserts proposed section 176D into the ESOS Act, to allow the Secretary (currently the Secretary of DESE) to refund charges under the ESOS Registration Charges Act (that is, the ARC and EMC) if they are satisfied that special circumstances justify doing so. The provision would commence on 1 July 2021, and the application provision at item 2 specifies that the new arrangements would only apply to charges paid on or after that date. Since the waiver and refund of fees in response to COVID-19 has already been given effect by other means, the purpose of the amendment is to provide power for the Secretary to act in similarly unexpected circumstances in future, rather than to provide a response to the current circumstances surrounding COVID-19.

No definition of special circumstances is provided in the Bill, nor is the term currently used in the ESOS Act or the ESOS Registration Charges Act. The Explanatory Memorandum indicates that special circumstances would generally be characterised by ‘unexpected events or situations, across the sector, creating undesirable or anomalous outcomes that could be improved or remedied by refunds of charges.’[27]

The Bill does not propose to make any changes to exemption arrangements.

Course changes

In the 2020–21 Budget, the Government announced it would remove the requirement for eligible supplementary and VET courses to be registered on CRICOS, in order to ‘allow education providers to offer additional courses to encourage international students to take up new training opportunities linked to their education, employability and welfare’.[28]

The Bill implements this decision by amending the definition of course in the ESOS Act. Currently, the ESOS Act captures all teaching of overseas students as requiring CRICOS registration, by defining a course as ‘a course of education or training’.[29] Narrower definitions are used in other Commonwealth legislation—for example, the Higher Education Support Act 2003 (HESA) limits its definition of course to study that leads to:

•       a higher education award under the Australian Qualifications Framework (AQF) or

•       an enabling course, which is provided with the purpose of enabling a person to undertake a higher education award, but does not normally lead to a qualification.[30]

The AQF is the national policy for regulated qualifications in schools, VET, and higher education, as agreed by Commonwealth and state and territory ministers with responsibility for higher education.[31] It includes:

•       the Senior Secondary Certificate of Education

•       VET sector qualifications including Certificates I to IV, Diplomas, and Advanced Diplomas and

•       higher education qualifications including associate, bachelor, honours, masters, and doctoral degrees, and Undergraduate Certificates, Graduate Certificates and Graduate Diplomas.[32] 

Items 4 and 5 repeal and replace the current definition of course in the ESOS Act, with a new definition in proposed section 5AA. The new definition includes:

•       a course leading to a qualification recognised in the AQF

•       a course of primary or secondary education under section 15 of the Australian Education Act 2013

•       a Foundation Program—that is, nationally recognised courses designed to equip these students with the skills and capabilities to seek entry into first year undergraduate study or its equivalent in Australia[33]

•       an ELICOS—that is, a course solely or predominantly of English language instruction provided, or intended to be provided, to an overseas student[34]

•       a course offered by a registered higher education provider

•       a VET course within the meaning of the National Vocational Education and Training Regulator Act 2011—this includes the units of competency within a training package, the units of competency or modules of a VET accredited course, or the units of competency or modules of a course accredited by a VET Regulator of a non-referring State[35] and

•       a course determined by legislative instrument by the Minister.

This captures all formal qualifications under the AQF, all other accredited schooling and VET, all other courses taught by higher education providers, and all Foundation Programs and ELICOS.

Proposed subsection 5AA(3) will allow the Minister to determine, by legislative instrument, that a course of education is not a course for the purposes of the ESOS Act. It appears that any such instrument will be disallowable.[36] The Explanatory Memorandum states that it is the Minister’s intention to specifically exclude courses not intended to be in scope, following consultation:

It is intended that the Minister will exempt certain types of courses (sometimes referred to as short courses, supplementary courses or microcredentials) from the definition of course for the purposes of the ESOS Act. The proposed exempt courses are typically short in duration and low cost, such as first aid, infection control, construction white cards, or responsible service of alcohol courses. It is intended that the Minister will exempt hobby and recreational courses (that are considered non-award courses) offered by higher education providers that overseas students wish to take in addition to the main course for which their student visa was granted.[37]

Any exclusion of a course from the ESOS Act will have consequences for that course’s treatment in other related contexts. For example, an excluded course would no longer be subject to the protections of the ESOS Act, such as the Tuition Protection Service, which ensures a refund or replacement course is provided if an overseas student’s provider does not deliver their course as promised.[38] Courses that are not CRICOS registered are also not able to be used as a basis to apply for a student visa.[39]

Item 3 also makes a consequential amendment, inserting a definition of the AQF into section 5 of the ESOS Act, stating that it has the same meaning as in HESA.

Concluding comments

This Bill is part of the Government’s response to COVID-19, but will not of itself address the challenges faced by Australian providers of education to overseas students due to COVID-19.It does however propose two relatively non-controversial measures: powers for the Secretary to determine, in special circumstances, that refunds of CRICOS charges are to be provided; and a new definition of course, which will include powers for the Minister to include or exclude certain courses from requiring CRICOS registration.

Appendix: Overseas student enrolments and commencements by sector

Table 1: Overseas students, enrolments by sector, January to September, 2011–2020

Sector

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Higher Education

235,960

224,299

223,227

240,301

262,111

294,726

337,921

384,140

428,563

410,827

VET

153,232

130,404

119,593

131,357

148,296

164,511

189,281

213,074

247,133

276,551

Schools

19,797

17,617

16,799

17,259

19,471

22,095

24,470

25,769

24,701

20,257

ELICOS

78,139

75,604

91,929

108,961

115,957

120,746

125,912

126,241

129,711

94,462

Non-award

26,781

24,102

26,811

32,833

36,373

41,721

47,548

46,870

45,039

30,132

Grand Total

513,909

472,026

478,359

530,711

582,208

643,799

725,132

796,094

875,147

832,229

Source: DESE, ‘International Student Data 2020’, DESE website, extracted 16 November 2020.

Table 2: Overseas students, commencements by sector, January to September, 2011–2020

Sector

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Higher Education

90,503

83,083

88,213

100,360

107,236

120,393

137,524

151,562

165,064

128,852

VET

80,959

70,200

68,507

81,104

88,660

96,198

108,826

116,548

134,193

137,220

Schools

8,180

7,499

7,812

8,485

9,970

11,201

12,211

12,105

11,102

8,000

ELICOS

55,414

55,668

68,620

79,170

82,357

85,028

88,389

87,851

90,519

56,345

Non-award

20,701

19,448

21,692

26,665

27,817

32,451

34,600

34,064

32,556

18,238

Grand Total

255,757

235,898

254,844

295,784

316,040

345,271

381,550

402,130

433,434

348,655

Source: DESE, ‘International Student Data 2020’, DESE website, extracted 16 November 2020.

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[1].              Education Services for Overseas Students (Registration Charges) Act 1997 (ESOS Act), section 5 (definition of overseas student). Certain kinds of students can be excluded from this definition in the Regulations. Current exemptions are in section 6 of the Education Services for Overseas Students Regulations 2019, and include the following within the meaning of the Migration Regulations 1994: a Foreign Affairs student, Defence student, a secondary exchange student, or a person who satisfies the secondary criteria, but not the primary criteria, for the grant of the student visa. Section 6 also exempts an overseas student who has been approved under a scholarship scheme, or an exchange scheme, sponsored by the Commonwealth to undertake a course of study or training in Australia. 

[2].              ESOS Act, section 8.

[3].              ESOS Act, section 14A.

[4].              ESOS Act, sections 9, 10 and 11. Under section 6E, a provider is a registered higher education provider, registered vocational education and training (VET) provider, approved school provider, person or entity that provides an ELICOS or a Foundation Program, or another person or entity specified by the Minister by legislative instrument.

[5].              ESOS Act, section 23; Education Services for Overseas Students (Registration Charges) Act 1997 (ESOS Registration Charges Act), section 5. Under the ESOS Act, a provider’s CRICOS registration is automatically suspended if they are no longer fit and proper to be registered (section 89) or if they fail to pay a levy or charge (section 90). In both cases, the suspension is lifted if conditions set out in the relevant section are met. 

[6].              Department of Education, Skills and Employment (DESE), ‘Fees and charges’, International education website.

[7].              ESOS Registration Charges Act, section 6.

[8].              DESE, ‘Fees and charges’, op. cit.

[9].              S Morrison (Prime Minister), M Payne (Minister for Foreign Affairs), P Dutton (Minister for Home Affairs) and G Hunt (Minister for Health), Updated travel advice to protect Australians from the novel coronavirus, joint media release, 1 February 2020; S Morrison (Prime Minister), M Payne (Minister for Foreign Affairs) and P Dutton (Minister for Home Affairs), Border restrictions, joint media release, 19 March 2020.

[10].              Tertiary education Quality and Standards Agency (TEQSA), ‘Coronavirus (COVID-19) – latest regulatory advice’, TEQSA website, last updated 28 September 2020; Australian Skills Quality Authority (ASQA), ‘CRICOS and ELICOS delivery’, ASQA website; DESE, ‘September 2020 international student data update’, Research snapshot, November 2020.

[11].              Enrolments count the total number of students studying a course within the reference period. A student attending two different courses will have both enrolments counted. A commencement is a new student enrolment in a particular course at a particular institution. Total enrolments include commencing and continuing students. DESE, ‘Explanatory notes for international student enrolment data’, International education website. 

[12].              Australian Government, Budget strategy and outlook: budget paper no. 1: 2020–21, p. 2-6.

[13].              DESE, 2019 Higher Education Providers Finance Table, 18 November 2020; I Marshman and F Larkins, Modelling individual Australian universities resilience in managing overseas student revenue losses from the COVID-19 pandemic, Centre for the Study of Higher Education, University of Melbourne, 28 May 2020; TEQSA, ‘Coronavirus (COVID-19) – latest regulatory advice’, op. cit.

[14].              Universities Australia (UA), COVID-19 to cost universities $16 billion by 2023, media release, 3 June 2020; UA, Submission to the Senate Select Committee on COVID-19, [Submission no. 275], May 2020, p. 4.

[15].              DESE, ‘National survey of ELICOS providers in Australia in 2019’, Research snapshot, July 2020; English Australia, Message from our CEO - Actions to save the ELICOS sector, media release, 23 March 2020.

[16].              ASQA, ‘Table of providers reporting temporary closures’, ASQA website.

[17].              Senate Standing Committee for Selection of Bills, Report, 11, 2020, The Senate, Canberra, 12 November 2020, [p. 4].

[18].              Senate Standing Committee for the Scrutiny of Bills, Index of Bills considered by the Committee, 2 December 2020.

[19].              Explanatory Memorandum, Education Services for Overseas Students Amendment (Refunds of Charges and Other Measures) Bill 2020, p. 4.

[20].              The Statement of Compatibility with Human Rights can be found at page pp. 5–8 of the Explanatory Memorandum to the Bill.

[21].              Parliamentary Joint Committee on Human Rights, Index of Bills considered by the Committee, 13 November 2020.

[22].              D Tehan (Minister for Education) and M Cash (Minister for Employment, Skills, Small and Family Business), Higher education relief package, media release, 12 April 2020.

[23].              Ibid.; DESE, ‘Fees and charges’, op. cit.

[24].              Explanatory Memorandum, op. cit., p. 2; Public Governance, Performance and Accountability Act 2013, sections 63, 64 and 65.

[25].              Explanatory Memorandum, op. cit., p. 2

[26].              The exemption was introduced through the Education Services for Overseas Students (Registration Charges) Amendment (COVID-19 Exemptions) Regulations 2020, which amended the Education Services for Overseas Students (Registration Charges) Regulations 2011.

[27].              Explanatory Memorandum, op. cit., pp. 10–11.

[28].              Australian Government, Budget measures: budget paper no.2: 2021–22, p. 63.

[29].              ESOS Act, section 5.

[30].              Higher Education Support Act 2003 (HESA), Schedule 1 (definition of course of study); DESE, ‘Courses of study’, Higher education administrative information for providers, March 2020.

[31].              Ibid.; DESE, AQF website.

[32].              AQF Council, Australian Qualifications Framework, 2nd edn, AQF Council, Adelaide, January 2013; AQF Council, Addendum no. 3 to AQF second edition January 2013, AQF Council, [Adelaide], n.d.

[33].              Foundation Program Standards, 19 June 2011, made under section 176C(1) of the ESOS Act, which refers to the National Standards for Foundation Programs. See p. 1.

[34].              ELICOS Standards 2018, made under section 176B(1) of the ESOS Act. ELICOS does not include programs for non-student visa holders, English as an additional language programs or support services provided within the school sector as part of the school curriculum, or Foundation Programs.

[35].              National Vocational Education and Training Regulator Act 2011, sections 3 (definition of VET course) and 7. The non-referring states are Victoria and Western Australia. Rather than referring powers for VET regulation to the national VET regulator, these jurisdictions continue to use their own state regulators, the Victorian Registration and Qualifications Authority (VRQA) and Western Australia Training Accreditation Council (TAC), to register providers and accredit courses, but only for VET provision that is not for overseas students or students studying outside the jurisdiction of the state regulator. See ASQA, ‘About the standards for VET accredited courses’, ASQA website.

[36].              There is no provision in the Bill, or under the ESOS Act, which would prevent an instrument made under proposed subsection 5AA(3) from being subject to the parliamentary disallowance processes set out in section 42 of the Legislation Act 2003. Instruments may also be exempted under the Legislation (Exemptions and Other Matters) Regulation 2015; however, the Government has not indicated it intends to do so in the current case.

[37].              Explanatory Memorandum, op. cit., p. 12.

[38].              ESOS Act, Part 5; Australian Government, ‘Tuition Protection Service – International’, Tuition Protection Service website.

[39].              Under the Migration Regulations 1994, Schedule 2, clauses 500.111 and 500.211, a person must usually be enrolled full-time in an approved CRICOS course to be eligible for a student visa.