Chapter 1
Introduction
1.1
On 19 August 2009 the Hon. Julia Gillard MP, Minister for Education,
Employment and Workplace Relations, introduced the Education Services for
Overseas Students Amendment (Re-registration of Providers and Other Measures)
Bill 2009 (the bill) in the House of Representatives. On 20 August 2009, the
Senate referred the provisions of the bill to the Senate Standing Legislation
Committee on Education, Employment and Workplace Relations for report by
16 October 2009.
Conduct of the inquiry
1.2
Notice of the inquiry was posted on the committee's website and
advertised in The Australian newspaper, calling for submissions by 11
September 2009. The committee also directly contacted a number of interested
parties, organisations and individuals to notify them of the inquiry and to
invite submissions. 19 submissions were received as listed in Appendix 1.
1.3
The committee decided to prepare its report on the basis of the
submissions received and thanks those who assisted by providing submissions to
the inquiry. The committee was also informed by the evidence to the Standing
References Committee on Education, Employment and Workplace Relations inquiry
into the welfare of international students. This inquiry is currently looking
at roles and responsibilities and broader issues including safety,
accommodation, social inclusion, support services and protection from
exploitation. It is due to report on 16 November 2009. A number of submissions
to the references committee inquiry deal with issues relevant to this bill and
will be referenced in this report.
Background
1.4
There have been a number of inquiries into the ESOS Act. This committee
has reported on the ESOS Act eight times since 1991.[1]
The 1991 ESOS Act (Education Services for Overseas Students (Registration of
Providers and Financial Regulation) Act 1991) was introduced in response to the
closure of a number of private education providers in the late 1980s and early
1990s. A reduction in student numbers, as a result of government visa
processing backlogs and tighter visa entry requirements to control the high
incidence of visa non-compliance, had affected the viability of some of these
providers.[2]
1.5
In November 2000, the committee reported on an ESOS bills package.[3]
The report covered five related bills including the ESOS Bill 2000 which became
the current ESOS Act (amended in 2007). As a result of reviews
undertaken by then DEEWR and DIAC, the 2000 bill addressed deficiencies
identified in the regulatory framework. The associated Migration Legislation
Amendment (Overseas Students) Bill 2000 introduced a regime of automatic
cancellation of student visas in certain circumstances.
1.6
As required by section 176A of the ESOS Act, an independent review of
its operation was commenced in 2004 and delivered in 2005. As a result of this
review, amendments were made to the Act by the Education Services for Overseas
Students Legislation Amendment (2006 Measures No.1) Bill 2006, the Education
Services for Overseas Students Legislation Amendment (2006 Measures No.2) Bill
2006 and the Education Services for Overseas Students Legislation Amendment
Bill 2007. These bills were not referred to the committee for inquiry.
1.7
In 2009, the closure of several private education providers and
allegations of corruption and substandard education services revealed
weaknesses in the regulation of training providers in the international
education sector and questionable practices by some education and immigration
agents. A small number of unscrupulous operators have been able to operate resulting
in damage to the reputation of the industry overseas. The Education Services
for Overseas Students Amendment (Re-registration of Providers and Other
Measures) Bill 2009 (the bill) addresses the growth of training providers
capitalising on rising demand, especially from India, for an education and the
chance for permanent residency. The key amendments of the bill strengthen the
registration process which is intended to reduce the number of high risk
providers currently in or seeking entry into the sector. The bill is a
transitional measure intended to address immediate matters of concern regarding
regulation of the industry while longer term issues are considered by the Education
Services for Overseas Students Act Review underway (see below).[4]
Purpose of the bill
1.8
This bill amends the ESOS Act to improve processes ensuring the quality
and accountability of international education and training services providers. The
key amendments include:
-
re-registration
of all institutions currently registered on the Commonwealth Register of
Institutions and Courses for Overseas Students (CRICOS) by 31 December
2010;
-
two new registration criteria which require state and territory
registration authorities to be satisfied that the provider's principle purpose
is to provide education and that the provider has demonstrated capacity to
provide education of a satisfactory standard;
-
requiring providers to publish the names of overseas and
Australian education agents used to recruit students and requiring providers to
comply with any matters prescribed in the regulations concerning their agents;
-
allowing the discretionary removal of the prohibition on
education providers collecting monies from students when a course has been
suspended;
-
allowing conditions imposed by states and territories on
education providers to be recognised by the Commonwealth;
-
allowing exemptions from punitive provider default refund
requirements for providers changing their legal entity; and
-
clarification of the definition of 'suitable alternative course'.
Changes in the sector
1.9
The international education industry provides services to international
students on student visas in the higher education, Vocational Education and
Training (VET), secondary school and English language sectors. The
international education sector has grown substantially over the past decade to
be worth $15.5 billion, making it Australia's third largest export industry.[5]
1.10
Most of the growth has come from the VET sector where enrolments have
more than tripled since 2002 to now account for the largest proportion of total
enrolments.[6]
Source: DEEWR, Monthly Summary
of International Student Enrolment data – Australia – YTD June 2009.
1.11
The private education sector is a significant stakeholder in this
industry and in the VET sector in particular. Enrolments in the non-government
sector grew from about a third of total enrolments in 2004 to half of all
enrolments in 2008.[7]
1.12
Research by Australian Education International confirms that the growth
in VET student numbers has been significant in the private education sector.
The majority of all VET enrolments were with the 437
non-government providers. The non-government provider share has grown from 73%
in 2002 to 84% in 2008 and is more dominant in New South Wales than in any
other state or territory – 92% of VET enrolments in the state are enrolled with
a non-government provider.[8]
1.13
India in particular has seen strong growth in VET commencements between
2008 and 2009 of 60 per cent from 13,014 to 20,656.[9]
DEEWR reported:
Most enrolment growth has been driven from the sub‐continent, notably
India and Nepal. Enrolments from this region (Southern and Central Asia)
increased from 33,848 in 2004 to 136,359 in 2008 (an increase of 302 per cent).
In 2008, they accounted for 25 per cent of total enrolments. China and the
North‐East Asia
region is still the source of most enrolments accounting for 37 per cent in
2008, although enrolments from this region have a more moderate rate of growth.[10]
1.14
The Bills Digest noted that half of the total growth in the VET sector
since 2005 has been in the cooking, hairdressing, hospitality and hospitality
management fields. In addition, the growth in the number of Indian students in
these courses has grown from 217 commencements in 2002 to 18,269 commencements
in 2008.[11]
Immigration policy
1.15
It is clear that the chance of permanent residency has been a driver of
the growth in international student enrolments. The committee understands that
some students intend to migrate when choosing to study in Australia. However,
this opportunity has been exploited by some agents and providers which have
used the lure of permanent residency to recruit students and provide them with inadequate
education or training. In most cases, this exploitation starts overseas with
expectations fuelled by unscrupulous education agents advertising courses solely
as a means to permanent residency.
1.16
Action in this area has already been taken to break the link between permanent
residency and education. The committee notes the changes announced by the
Minister for Immigration and Citizenship in December 2008 which focus on
skilled recruitment around employer and state government sponsorships.[12]
In July 2009 the Office of the Migration Agents Registration Authority (MARA) was
established to regulate the activities of the migration advice profession to
provide consumers with appropriate protection and assurance.[13]
In August 2009, the Minister announced that his department would be strengthening
checks on student visa applications to address fraud and ensure students have
the financial capacity to live and study in Australia.[14]
The Deputy Prime Minister as well as the Minister for Immigration both
reaffirmed that:
...coming to Australia to study is about being a student in
Australia while applying for permanent residence is about Australia's migration
system and the two should be seen as separate systems with no automatic link
between studying in Australia and access to permanent residence.[15]
Review of the ESOS Act
1.17
As noted above, the bill is an interim measure to address the regulatory
issues in the industry pending a review of the ESOS Act being undertaken by the
former Liberal MP, the Hon. Bruce Baird. The review of the ESOS legislative
framework, foreshadowed in the Bradley Review, has been brought forward to the
2009-10 financial year. On 8 August 2009, the Minister for Education
announced that Mr Baird would review and consider the need for improvements to
the ESOS legal framework in four key areas:
-
supporting the interests of students;
-
quality;
-
effective regulation; and
-
sustainability of the international education sector.
1.18
An issues paper was released on 23 September 2009 with written
submissions invited.[16]
An interim report will be provided in November 2009 with the review to be
completed in early 2010.[17]
Complementary measures
1.19
The amendments to the ESOS Act and the review are only two of a series
of measures to ensure that Australia continues to offer world class quality
international education. Complementary initiatives to enhance Australia’s
ability to deliver quality education services to overseas students include the following:
-
the establishment of the International Student Taskforce in DEEWR
to develop strategies to support the wellbeing of students and provide
secretariat services for the review of the ESOS Act;
-
from 2010 the Tertiary Education Quality and Standards Agency
(TEQSA) will be established which will oversee the new framework
for quality assurance and regulation for universities and private providers of
higher education;[18]
-
COAG has agreed to develop further reforms to the VET sector
including models for a national regulatory body for VET and a model could be
TEQSA;
-
the Study in Australia 2010 initiatives to promote
Australia's international education, such as on-line training of education
agents overseas;
-
establishment of a telephone hotline in DEEWR for students to
raise their concerns anonymously;
-
an international student roundtable was held in Canberra on 14-15
September 2009; and
-
the development of the National International Student Strategy
under COAG to improve the quality of education and student well-being for the
2010 academic year.[19]
1.20
The committee notes that the development of the International Student
Strategy will proceed in parallel with the review of the ESOS Act 2000 to
enable alignment of amended legislation and the new strategy by June 2010.[20]
The committee also notes the targeted audits of providers underway in states
and territories.[21]
Responsibilities
1.21
The provision of education and training to overseas students is a
responsibility shared by the Commonwealth and the state and territory
governments. The regulatory framework therefore involves Commonwealth and state
and territory legislation and the administrative effort of the Commonwealth
Department of Education, Employment and Workplace Relations (DEEWR), the
Commonwealth Department of Immigration and Citizenship (DIAC), the Department
of Foreign Affairs and Trade (DFAT) and state and territory education and
training authorities.[22]
Legislative framework
1.22
The ESOS legislative framework comprises:
-
Education Services for Overseas Students (ESOS) Act 2000;
-
Education Services for Overseas Students Regulations 2001 (ESOS
Regulations); and
-
The National Code of Practice for Registration Authorities and
Providers of Education and Training to Overseas Students (National Code).
1.23
These are supplemented by the following legislation which prescribe
charges and contributions:
1.24
It should be noted that ESOS legislation interacts with the Migration
Act 1958 and its regulations which impose visa-related reporting
requirements on students and providers.[24]
1.25
The Education Services for Overseas Students Act 2000 (ESOS Act) and
the regulations set out the Commonwealth legislative requirements for the
registration of providers, obligations of registered providers, the operation
of the ESOS Assurance Fund, enforcement of the ESOS legislative framework and
the establishment of the National Code.[25]
The focus of the ESOS Act is the regulation of providers to protect the
interests of students as consumers and Australia's reputation as an exporter of
education services. It requires approved institutions for each state to be
registered on the Commonwealth Register of Institutions and Courses for
Overseas Students (CRICOS)[26]
which is a database of Australian education institutions. To be registered on
CRICOS, providers must meet the quality requirements for the delivery of
education services which are generally set out in state and territory
legislation.[27]
Registration requires a provider to meet the standards set out in the National Code
which addresses areas such as marketing, recruitment and enrolment, student
support, monitoring and reporting educational progress and migration
requirements.[28]
1.26
The states and territories have primary responsibility for the quality
control of education providers and their courses. They achieve this through
approving, registering and monitoring providers and their courses. There must
be a recommendation from the relevant state or territory authority confirming that
the provider meets the quality standards for their education sector. Responsibilities
are detailed in the Shared Responsibility Framework agreed in 2007. This is
captured below:
DEEWR is responsible for registration, monitoring, compliance
and enforcement activities under the ESOS Act and supporting the provision of
consumer protection mechanisms. Under ESOS, state and territory registration
bodies are responsible for assessing applications for registering and
re-registering providers on the Commonwealth Register of Institutions and
Courses for Overseas Students (CRICOS). State and territories may also
undertake monitoring, compliance and enforcement activities under their own
state legislation relating to education services to international students
(where applicable). Educating providers about their ESOS obligations is
undertaken by both DEEWR and state and territory agencies.[29]
Enforcement
1.27
The responsibilities of the states and territories include the exercise
of enforcement powers which extend to the suspension and deregistration of
providers. The Bills Digest pointed out that both the Commonwealth and the
states and territories have responsibility for enforcement. Part B of the
National Code states that:
...while DEST [DEEWR] is primarily responsible for investigating
and instigating enforcement action for breaches of both the ESOS Act and the
National Code, state and territory governments often have enforcement
mechanisms available through their legislation. Pursuing enforcement action
through these mechanisms may be more appropriate given the nature of the
breach, particularly if the state or territory government has specific legislation
related to ESOS matters.[30]
1.28
As required by the ESOS Act, an independent evaluation of the Act was
conducted in 2005. It generally supported the regulatory model and many of the
41 recommendations to improve the effectiveness of the framework were
implemented in the amendments to the Act in 2006.[31]
There were further improvements through amendments in 2007 as detailed below.
1.29
The committee recognises that while there have been some claims that current
regulatory structures are inadequate, the overwhelming view in submissions to
this inquiry and to the inquiry into the welfare of international students was
that the current legislative and regulatory framework is adequate. However,
there is clearly evidence of regulatory failure where a small number of
unscrupulous agents and providers have been allowed to operate. This has been
compounded by an apparent lack of monitoring and effective enforcement at the
state level.
1.30
A number of reasons have been offered regarding the cause of this
regulatory failure. Some have attributed it to a lack of clarity about
responsibilities and a lack of resources:
...it is not through lack of regulation but due to a lack of
enforcement, as a result of under-resourcing of agencies by state and federal
governments, and a lack of jurisdictional clarity about enforcing compliance.[32]
1.31
The National Tertiary Education Union (NTEU) agreed that there is a lack
of clarity and division of responsibility 'regarding the relevant government
agency responsible for monitoring and enforcing compliance of education
providers listed on CRICOS'.[33]
It detailed how this lack of clarity affects accountability:
The State-Federal division of responsibility for maintaining
ESOS standards diminishes system accountability overall. This is significant
with regards to the delivery of education programs and training by non-self
accrediting private providers who are neither subject to periodic audits by
bodies such as the Australian University Quality Agency (AQUA) nor VET
providers whose teaching and learning performance is benchmarked according to
standards set by the Australian Qualification Framework (AQF).[34]
1.32
A lack of clarity and level of complexity was a finding in the position
paper of Skills Australia. This was informed by stakeholder feedback:
...on the desirability of simplifying, providing clearer
accountability and rationalising the multiplicity of authorities involved in
industry advice on regulation and quality matters at both state and national
levels. There is considerable complexity in the current governance of
regulatory and quality apparatus with auditing arrangements in place for the
AQTF [Australian Quality Training Framework], international students and for
user choice purchasing arrangements. This is further complicated for providers
operating in both the VET and higher education sectors.[35]
1.33
Mr Baird has also pointed to the complexity in his issues paper:
...the intersection of ESOS with these underpinning quality
assurance frameworks can be complex, cause confusion about roles and
responsibilities and raise concerns about consistency and duplication. For
example, a VET provider may be audited twice in close succession: by DEEWR for
its ESOS Act obligations and certain standards of the National Code. Then by
the state regulator for the AQTF, state legislation and the National Code as
well. The provider can also be audited by the Australian Government Department
of Immigration and Citizenship and other agencies.[36]
1.34
On this issue of divided responsibilities, the committee notes the
evidence provided by DEEWR to the welfare of international students inquiry
when asked about how responsibilities are agreed and dealt with between the Commonwealth
and the states and territories:
Firstly, it is a very complex
area—there is no question about that—and lots of witnesses have told you that
and we do not disagree. Frequently if you get complaints or issues arising they
do cross the state responsibilities under the Shared Responsibility Framework
and those powers. Most of the issues tend to revolve around quality and that is
a state responsibility so they tend to have the lead role in many cases. But
that does not mean that we cannot stimulate activity if the complaint or the
issue arises on our side.
In many cases if they involve issues which are our
responsibility under the Shared Responsibility Framework then we will get
involved and we will send a team. For example, under the Victorian rapid audit
process, which I think you have heard about, that has been conducted by
Victorian officers but our officers have also spent a lot of time with them so
that issues arising under our part of the Shared Responsibility Framework can
be dealt with at the same time.
Similarly, DIAC have contributed officers and time to that
exercise, and the same applies in New South Wales. How is it dealt with? I
think it is dealt with on a common-sense basis where we try and sit down and
deal with the cases as they arise and come along. So it is a complex area of
regulation. We try to deal with it on a common-sense basis. We have that the
Shared Responsibility Framework to refer to and that says what we do and what
the states do. We try to interpret that on a common-sense basis and take it
forward as you would expect us to do in the best interests of the public.[37]
1.35
Others submit that the regulatory failure is due to a lack of resolve or
commitment of the regulatory authorities to engage in effective enforcement
because they fear destabilising providers and the subsequent effect on their
students.[38]
David Phillips, an adviser to the Bradley review told the HES [Higher Education
Supplement]:
...the states already possessed a “big stick”. Their powers included
deregistration of providers. “It may be worth examining whether a lower level
of sanctions could be introduced to avoid the problem of states being reluctant
to intervene because of the impact of deregistration on students".[39]
1.36
The committee notes that all states have benefited from the growth in
international students[40]
but the income received is particularly significant for Victoria ($4.9 billion)
and New South Wales ($5.8 billion).[41]
The committee believes the loss of a number of unscrupulous and ineffective
operators will enhance the reputation of Australia as a provider of quality
education. It notes there are already measures in place[42]
and planning underway to assist any displaced students.[43]
Comment
1.37
The committee recognises that the issues this bill deals with are not
entirely new. Over the past 10 years, the ESOS Act has been amended to deal
with the closure of providers in the late 1980s and early 1990s and to address
deficiencies in the regulatory framework identified by reviews.
1.38
The committee notes the explanation from DEEWR about shared
responsibilities with the states and territories being discussed and agreed by a
'commonsense' approach. It would appear that this commonsense approach has not
worked particularly well and/or the parties have not adhered to the agreements.
In any case, where there is complexity and overlap in the responsibilities, the
committee believes there is scope for further clarification of responsibilities.
In addition, this 'commonsense' approach also lacks clear accountabilities.
1.39
Unfortunately the committee received little useful information from the
states or territories through this inquiry or to date for the references
committee inquiry into the welfare of international students. It is therefore
difficult to clarify the exact cause of the regulatory failure from their
perspective. The committee recognises a contributing issue, the increase in the
numbers of international students in the VET sector, may have hindered the
effective regulation by states and territories.[44]
The committee is concerned about the capacity of the regulatory system to
handle the increased workload in this bill given it does not appear to have
been able to cope to date. The committee refers to the Explanatory Memorandum
which mentioned a re-direction of existing resources from auditing activities
no longer required and notes that:
Any additional resources will be met jointly by the state and
territory governments and the Australian Government under existing funding
arrangements including national agreements.[45]
1.40
Despite these reassurances, the committee remains concerned that the
measures outlined in the bill will need to be implemented by the same
organisations which were involved in the regulatory failures. However, on the
issue of commitment by the states and territories, the committee is encouraged
by the Joint Communiqué of the Ministerial Council on Education, Employment,
Training and Youth Affairs & Ministerial Council for Vocational &
Technical Education which reported:
All Ministers are committed to enhancing the quality of our
education and training system to deliver high quality, internationally
recognised courses that maximise international students’ experiences and
outcomes. This will be achieved through renewed emphasis by registration
authorities and the Australian Government to address quickly any issues of the
quality of education and training providers in their jurisdiction. Ministers
have agreed that to achieve this, targeted audits of providers will be
undertaken as a matter of priority. In addition, there will be joint action by
all governments to design and implement the announced Tertiary Education
Standards and Quality Agency. All Ministers support the bringing forward of
the review of the Education Services for Overseas Students Act
2000 to commence in 2009-2010.[46]
1.41
In order to implement the measures contained in the bill, the committee
notes the importance of adequate and targeted resourcing and commitment from
all stakeholders. The committee notes that clarification of responsibilities and
adequate resourcing will be addressed in the review of the ESOS Act being
undertaken by Mr Baird. It is imperative that all the factors which contributed
to the regulatory failures are understood and addressed.
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