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

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

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

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