Wednesday, 29 February 2012
Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Bill 2011, Education Services for Overseas Students (Registration Charges) Amendment (Tuition Protection Service) Bill 2011, Education Services for Overseas Students (TPS Levies) Bill 2011; In Committee
Minister, you will be aware that the legislation is designed such that moneys are drawn down proportionately as courses are progressing. That is what the legislation allows for. One of the concerns I brought forward in the committee was that in some cases—for example in aviation training—the capital costs can be quite significant. One of the concerns expressed to the committee was that there may not have been sufficient time for some providers to restructure their debt arrangements prior to the commencement of this scheme. I was wondering if the government has paid heed to that, Minister.
I understand that the legislation was moved in September last year and that since that time there has been targeted consultation with key stakeholders. I am further advised that the fees structure is only 50 per cent up front and so contains flexibilities that will greatly alleviate the burdens you are describing.
I thank the minister for his answer. That is helpful, but the problem is this: the capital outlays in some particular courses are much greater than in others. I am receiving feedback all the time from higher education providers—and, indeed, it was among the evidence received at the hearings of both the Senate and the House of Representatives committees—that with this change in the fee structure the cashflow crisis that could occur in cases of great capital outlays has not been fully addressed. You say, Minister, it has been addressed, but I cannot answer that. Let me tell you, Sir, that there is still great concern within the sector about this. I thought you should know that.
I will take that as a remark and I thank you for the comment. By leave—I move government amendments (1) to (4) on ZA281:
(1) Schedule 1, item 1, page 8 (line 10), omit "24 hours", substitute "3 business days".
(2) Schedule 1, item 1, page 8 (after line 10), at the end of subsection 46B(2), add:
Note: For the definition of business day, see section 2B of the Acts Interpretation Act 1901.
(3) Schedule 1, item 1, page 13 (line 9), omit "24 hours", substitute "5 business days".
(4) Schedule 1, item 1, page 13 (after line 9), at the end of subsection 47C(2), add:
Note: For the definition of business day, see section 2B of the Acts Interpretation Act 1901.
It is true that the government's amendments today broadly reflect the views of both the House and the Senate committees. I draw the minister's attention to (1), which omits '24 hours' and substitutes 'three business days'. It is a good amendment. The committee certainly supported it and so does the opposition. I let the Senate know that the opposition will be supporting the government's amendments.
Question agreed to.
by leave—I move the Australian Greens amendments (1) to (3) on sheet 7193.
(1) Schedule 1, item 1, page 12 (line 19), omit "Note", substitute "Note 1".
(2) Schedule 1, item 1, page 12 (after line 19), at the end of subsection 47A(1), add:
Note 2: For an exception to subparagraph (1)(c)(iii), see subsection (3).
(3) Schedule 1, item 1, page 12 (after line 24), at the end of section 47A, add:
(3) An overseas student or intending overseas student does not default under subparagraph (1)(c)(iii) unless the registered provider accords the student natural justice before refusing to provide, or continue providing, the course to the student at the location.
These amendments essentially deal with the issue of natural justice. When these international students are in our country, they will clearly get into trouble at times—there will be misbehaviour, defaults on their commitments—and at the moment the way the system plays out results in students falling foul of the expectations and rules they are supposed to abide by. They end up being treated as second-class citizens. The amendments before us seek to deal with this situation. At the moment a student who is refused provision of their course because they have misbehaved is considered as defaulting and thus is not necessarily eligible for a refund of their prepaid tuition fees. Given that the bill is about ensuring the rights of overseas students are sensibly protected, we are seeking to raise the standards and ensure that international students are given a fair deal and are given a first-class education, that their rights are protected and that, if things go wrong, they are not going to lose out financially. Our amendment will insert: 'provider accords the student natural justice before refusing to provide, or continue providing, the course to the student' on the grounds of misbehaving. This allows due process because it allows students to appeal such a charge and it provides some surety that the student will not suffer disadvantage while waiting for the resolution of an appeal. It really is quite a simple mechanism. I think it is what any of us would expect to occur if we were in a similar situation in Australia or elsewhere. For students who default or where there is some form of misbehaviour they are allowed a fair form of justice so that they are not disadvantaged in the way that they are currently disadvantaged, with very few rights as it plays out. It could damage not only their immediate education but also their view of how these courses play out in Australia. I would be interested in the minister's response because it seems a necessary measure that is in keeping with the overall intent of the bill.
Senator Rhiannon, I begin by saying that I think the government is seized of the issues that you are describing. The government says that your proposed amendments are redundant because of existing protections that are found in the National Code of Practice for Registration Authorities and Providers of Education and Training to Overseas Students 2007—'the code', as it is generally referred to in this space. The code is enforceable under the ESOS Act. The government also notes that late last year the government established the Overseas Students Ombudsman to provide strong complaints handling for students. Notwithstanding those important facts, the government is happy to agree to the amendments proposed. I guess that is the happy end of it, Chair.
I thank Senator Rhiannon for her contribution. It does add an important dimension. I just add this: my understanding, like the minister's understanding, is that natural justice is implicit in the surrounding legislative framework. That is my understanding. Secondly, be alive to the fact that such additions in this contest can add to the regulatory burden for providers. Having said that and with that understanding, the opposition will support these amendments.
I indicate that I support these amendments. I think it is important to enshrine, make clear and make explicit the principles of natural justice, as these particular amendments do. Therefore, it is desirable that they are supported. I am pleased that the opposition is supporting the amendments. They would strengthen the intent of the bill and the framework of the bill. For those reasons, I support them.
by leave—I move amendments (1) to (5), standing in my name on sheet 7197, together:
(1) Schedule 1, item 1, page 20 (after line 9), after subsection 50A(4), insert:
Student incidental costs
(4A) A call is made on the OSTF if:
(a) a call is made on the OSTF under subsection (2), (3) or (4); and
(b) the Minister determines that the student should be paid an amount in respect of reasonable incidental costs (including accommodation fees and travel expenses) incurred by the student in connection with the course; and
(c) the Minister notifies the TPS Director of the determination and the amount.
(4B) The Minister must consult the TPS Director before making a determination under subsection (4A), and must not make such a determination if the TPS Director advises the Minister that to do so would jeopardise the sustainability of the OSTF.
(2) Schedule 1, item 1, page 20 (line 13), omit "or (4)", substitute ", (4) or (4A)".
(3) Schedule 1, item 1, page 20 (line 17), after "OSTF", insert "(other than under subsection 50A(4A))".
(4) Schedule 1, item 1, page 21 (after line 15), after subsection 50B(4), insert:
(4A) If a call is made on the OSTF under subsection 50A(4A) (incidental costs), then, as soon as practicable, the TPS Director must pay out of the OSTF an amount equal to the amount determined by the Minister under that subsection.
(4B) The TPS Director must, in accordance with a legislative instrument made under subsection (5), pay the amount to the student.
(5) Schedule 1, item 1, page 21 (line 30), after "section 50B", insert "(other than under subsection 50B(4B))".
These amendments provide the minister with the discretionary power to make payments to cover incidental costs where an education provider has failed to deliver services. These costs could include travel, accommodation and the like. The amendments provide that the minister must consult with the TPS director and that the payment may not be made if a director advises that doing so would jeopardise the financial sustainability of the Overseas Students Tuition Fund.
Amendment (1) provides that a call can be made on the Overseas Students Tuition Fund if the minister determines that a student should be paid a reasonable amount with respect to incidental costs. The minister must also notify the TPS director of the determination and the amount. Under this item, the minister must also consult with the TPS director and must not make such a determination if doing so would jeopardise the financial sustainability of the fund. Amendment (2) provides that such a determination may not be made after 12 months, so there is a reasonable time frame. Amendment (4) provides that the TPS director must pay the determined amount to the student in accordance with the minister's decision. Amendments (3) and (5) exclude the discretionary payments from the provisions in the bill relating to course refunds. That sets out the technical aspects of this bill.
They are similar to amendments I have previously moved which Senator Hanson-Young, from the Australian Greens, supported in substance. They are very similar amendments in terms of the general principle of ministerial discretion. This sends a signal to overseas students that, in the event that something goes wrong, the minister has the discretion to say, 'Your losses go beyond tuition fees.' If there are accommodation expenses and the like, the minister has the discretion to set what that amount could be. It could be capped, but in this case—and this is where it differs from previous amendments I have moved, which were supported by the Australian Greens, and I am grateful for their support—I have bent over backwards to ensure that there is a link back to the financial viability of the fund so that this would be seen to be consistent and responsible regarding the fund and the financial constraints of the fund. All it does is give the minister the discretion to say that additional compensation or additional matters can be considered. The minister does not have to use that discretion. If the minister chooses to use his or her discretion, the minister can determine to cap the amounts of compensation payable.
I note that Minister Evans, in his summing-up to the second reading contributions, said that he was not inclined to support these amendments. I have tried to engage constructively and positively with the minister's office because I, the government, the opposition, the Australian Greens and the DLP in this chamber all believe very much in the overseas students sector. It is an important part of Australia's economy and it is an important part of our education system. There does not seem to be any logical reason to reject an amendment that simply gives the minister the discretionary power. The minister does not have to exercise it; it just gives the minister the power to provide additional compensation if the minister sees fit. In the absence of the government providing support for this, what undertaking is the government inclined to give to ensure that this live issue of an adequate level of compensation is dealt with? You may have an overseas student—and I have heard these stories—who, when their college collapses, can get their tuition and enrolment fees back but has just forked out for rent, incidental expenses, airfares and a whole range of expenses that they are lumbered with as a result of the collapse. Getting back just the tuition fees is still going to cause significant hardship for these families. Some of these families, from the Subcontinent, for instance, make great sacrifices for their children to come to this country. I think that simply giving the minister that level of discretion would strengthen the intent of the bill in a substantial way.
I am sorry that Senator Feeney, and not the minister, is here to take this question. I am always glad to engage with Senator Feeney; I am not sure that the feeling is mutual on Senator Feeney's part!
It is always mutual, he said—I am not sure if he has misled the chamber! But I just want an explanation of why the minister does not even want the discretion for the minister to make certain determinations from time to time as he or she thinks fit.
Thank you, Senator Xenophon. As always, it is a pleasure dealing with you. Indeed, perhaps on a more serious note, I do honour the sentiments and the motivations that have encouraged you to bring these amendments, but, alas, as indeed you appear to understand, the government does not accept this amendment.
I will do my best to carry you through the government's reasoning. The government has implemented the Baird recommendation on this issue to allow regulators to impose any condition on a provider based on risk, including stopping them from collecting accommodation fees from the student. In addition, this issue has not been raised in submissions to the two inquiries that were conducted into this bill. Thirdly, the travel cost issues, we would submit, are easily managed through normal commercial travel insurance and do not require Australian government provisions. Fourthly, this proposed amendment would have financial implications for the TPS and for providers through the TPS levy. Fifthly, the reforms that the government is pursuing have at their heart the objective to deliver sustainable tuition protection. Your proposal, we would submit, seeks to expand the liability and it is worth noting, I think, that in the last two years the taxpayers of Australia have had to support the ESOS fund by injecting some $30 million into it. Lastly, the government believes this amendment is not straightforward and does not place any obligation on providers to refund a student's accommodation and travel expenses but instead expects the TPS to pick up that cost.
I might add further that the government have done, we would submit, a great deal in order to protect overseas students from unscrupulous providers. This is the third piece of legislation in two years to strengthen regulations under the ESOS. The government undertook systemic reregistration of all providers in 2010—I am sure you will remember that—which led to the removal of some 180 providers from the sector, and the government established two new national regulators for higher education and VET. They are taking over full responsibility for regulation under ESOS from 1 July 2012.
In summary, Senator Xenophon, while the government has resolved to not support your amendment, it certainly maintains that the concerns you have are not only fair, legitimate and, as I say, genuinely held but something that the government believes it has ably dealt with.
Let us demolish some of these arguments once and for all. You do not need a bobcat or a big demolition thing; just one of those toy demolition trucks you can buy from Toys R Us for $29.95 would do. Let us deal with some of these arguments. Firstly, you say that these issues were not raised in the inquiry. I think it is implicit that, if there is a loss, the inquiry did deal with the issue of losses. If there are incidental losses, I would have thought that would have been within the remit of the Baird inquiry. I think Bruce Baird did a terrific job in dealing with a whole range of issues, but this is something that still is left untouched. I take your point about travel insurance, but if they do not have travel insurance it is still an incidental cost.
In terms of the financial implications for the TPS levy, that argument verges on the Orwellian—it is not quite Orwellian, but it verges on the Orwellian—for this reason: the amendment actually specifies that there cannot be any payment made if it would jeopardise the fund and that there must be consultation with the TPS director. In terms of a sustainable tuition fund, it actually acknowledges that. It says you cannot make any determination unless you consider those factors.
You mention that $30 million of taxpayers' money has been spent on the ESOS fund. That is a lot of taxpayers' money, but also very significant is the risk if we continue to have a slide in the number of overseas students in this country. It is a multibillion dollar industry. I do not know whether Senator Mason off the top of his head can provide me with some gratuitous assistance, but I think it is about $15 billion a year.
Thank you—I should have asked Senator Rhiannon. It is a significant industry in my home state. If it means that we pay out another $10 million or $15 million a year, it is a very small insurance premium to pay to give certainty and confidence to overseas students, so students the world over will know that the responsible minister has the power, at his or her absolute discretion, to allow for additional compensation payments. Why is the government afraid of giving the minister a discretion that the minister can choose to use or not use? I do not understand why the government is so frightened of this amendment. Senator Feeney is not a man who knows the word fear—
He is frightened all the time!
I just do not get why the government will not give this level of certainty to overseas students by saying, 'If worst comes to worst, the minister has the discretion to make additional payments.' I would be very grateful if the parliamentary secretary, Senator Feeney, can respond to that, and I am looking forward to Senator Mason's contribution. If, by chance, he disappoints me with the position he takes, I would like to find out why he does not want to give overseas students that level of protection.
A great deal of what you said was obviously rebuttal and I do not have much more to add to what I said in my earlier remarks, but let me say at least a couple of things. Firstly, the minister is aware that the joint committee on education which operates under SCOTESE—I am advised that is an acronym standing for Standing Council on Tertiary Education, Skills and Employment, which is education ministers—is considering the issues described by you. Further, Senator Xenophon, the minister is willing to give an undertaking that he will review this issue again and report back to the Senate. So while the government remains of the view—
I am not in a position to talk to you about timing, alas—not for the absence of goodwill in my heart, Senator Xenophon, but probably for the fact that I do not have instructions to go further than I have.
I guess if you are still here in 2050, Senator Xenophon, I suspect you will be able to do whatever you please! On the one hand the government says that the amendment is not accepted by us, at least at this juncture, because of the issues I outlined earlier; but, above and beyond that, the minister is willing to undertake a review so that the issues exercising your concern will at least be able to be addressed. And I hope and trust you will all be thrilled with the demonstrable process and success of the bill.
Senator Xenophon may find the minister's arguments somewhat Orwellian or dystopian, but the opposition finds them, if not compelling, at least persuasive. I concede that it is a matter of balance and it is not clear-cut. I think even the minister would concede that. It is about the price of insurance and the regulatory burden on the one hand versus the convenience or the confidence of students on the other. Senator Xenophon, you are right to suggest that the last time we debated this group of bills on ESOS the opposition voted against a similar amendment. We did, not because we do not believe that, as the minister said, it is well intentioned; we do think it is well intentioned. These are often close calls. But on this occasion the opposition does agree with the government that it is a bridge too far for the providers and the Tuition Protection Service.
I will direct this to the opposition because they are the alternative government. Firstly, is Senator Mason, as the shadow minister responsible for this, saying that simply giving the minister the discretion, circumscribed by protections to ensure consultation with the fund and affordability of the fund, to deal with matters is a bridge too far? Is he honestly saying that? Secondly, does he concede—and this is a question for the government as well—that unless this amendment is passed there will be no mechanism to compensate students, in the event of a failure of an educational institution, for ancillary expenses or losses such as for accommodation? If there is a direct mechanism to cover other consequential losses, please outline that. There may be certain circumstances, but, as I understand it, there will be a whole range of loopholes where students will not have the ability to be compensated for the failure of an institution because at the moment that is constrained within the terms of the legislation. This discretion would allow for a safety valve for students that have been hard done by, that have been let down by an unscrupulous operator, to actually seek some redress.
To address Senator Xenophon's concerns, my point really was this: the price of insurance and the regulatory burden to be borne by higher education providers has to be balanced against other consequential losses for students. The point I am making, and I suspect the government would agree, is that it is not a one-way street; it is a very tough balance. Thus far, the opposition has been persuaded that it is appropriate that the current amendments as recommended by Mr Baird are enough. If the minister says he is going to review the situation at some stage, I am interested in that. But, thus far, the opposition is not persuaded that the balance should move any further.
I support the comments just made. Senator Xenophon, I would finish on this note. It is about striking the correct balance and it would seem to me that at some point here the government has to be firm about the fact that is not going to be the insurer of last resort for the sorts of failings that you are describing. Obviously the government is committed to establishing a regulatory framework that protects all the participants where possible and practicable, but at some point the balance has to be struck so that taxpayers are not continually exposed for what I might describe as market failure.
I should perhaps tell the chamber that I have just got a text message from someone who has been listening in, an academic who asks, 'What have you got against Orwell?' I do not have anything against Eric Blair, or George Orwell. I understand the parliamentary secretary's instructions are very limited, but there will be some review of undefined terms and with an undefined time frame. Will it be in the next 12 months? If it cannot be in the next 12 months then I cannot see that the government is serious about it, because it will then push it to a new parliament. I would have thought that a six- or 12-month time frame would at least be a useful exercise. Would it be undertaken by Mr Baird? Would it be undertaken by the department or some other mechanism? Or would the government be open to a Senate standing committee looking at this as a discrete issue? I do not know why you laughed then, Parliamentary Secretary, but I am interested in finding out why.
I only laughed, Senator Xenophon, because the proliferation of committees in this place, I am sure, is driving many of my Senate colleagues to distraction.
Senator Xenophon interjecting—
That is true. I am not denouncing your remarks, but I am chuckling at them! Notwithstanding what you say about a standing committee—and I cannot possibly comment on that—all I can really say about the review, based on the instructions I have, is that, yes, it would be conducted within the time frame of the next 12 months and it would be conducted by the department.
The Greens will support Senator Xenophon's amendments. We have amendments that also cover this issue. We actually think that it needs to go further than Senator Xenophon has set out, but we will certainly still support this. In doing that, Senator Xenophon and I have had a bit of a chat about this, which he has outlined, because what he is putting forward is quite minimal. The senator has set this out, but I think it is worth unpicking this a little bit further because it is extraordinary that this amendment is not being supported.
As Senator Xenophon said, it merely gives discretionary powers to the minister—powers that could possibly deal with losses additional to the tuition fees.
Senator Xenophon interjecting—
Yes, that is the emphasis here: that the minister could do nothing. It is the sort of thing that is amazing that the government did not come up with itself, so it would appear that it was doing something and then probably nothing would happen at all. I think we need to remember that what this ESOS bill is all about is seeking to strengthen protection of international students' interests. That is what many of us have spoken about here and that is what we are trying to achieve.
This issue does need to be addressed, because the damage that is being done to the education sector with regard to international students deciding if they will come to Australia is not just with regard to tuition fees. Many of them have been ripped off in other ways, and accommodation is a big one. I come from Sydney. I know how expensive accommodation in our city is, and this is so in many other areas. It can be a real burden on students and they often lose out. So here we have a minor regulatory mechanism that could be used if the minister so chose.
The fact that the government and the opposition are saying that they will not support it really does need to be emphasised because, while we have heard from the government and the opposition about the need for balance here, we are not seeing them striking a correct balance. What we are seeing is the balance being pushed to the providers and away from the students. The students are being left high and dry here. You can predict now that some international students are going to lose out when they are up for costs; they have put money forward and the services are not there. Accommodation is one of those areas where we know this will happen.
The failure of the government here again shows that while we have got a regulatory mechanism, which is essentially what this bill is all about, it is very minimal and in too many areas the providers are favoured over the students. I think the response we are hearing from the government and the opposition on this is actually very informative.
I move Greens amendment (4) on sheet 7193:
(4) Schedule 1, item 1, page 31 (after line 17), after subsection 55C(2), insert:
(2A) In appointing a Board member under paragraph (1)(b), the Minister must ensure that the Board members appointed under that paragraph, as a group, have qualifications or experience relevant to the operations of providers from across the international education and training sector, including providers of English language intensive courses for overseas students.
This takes up the issue of representation on the board. This does need to be tightened up. The current wording is quite loose, and it leaves it so open that it really ends up not being clear who would end up on the board. The Overseas Students Tuition Fund will pay for placement services and the cost of TPS staff and its director and the board, which is intended to represent the different sectors of international education providers. What we are dealing with here is who will be represented on that board. I understand that the sector has expressed concerns that there is no requirement in the Education Services for Overseas Students Legislation Amendment (Tuition Protection Service and Other Measures) Bill 2011 before us to ensure that representation, so that is what our amendment addresses. We are inserting an amendment requiring that the seven non-department board members represent providers from across the international education and training sector, including providers of ELICOS courses, which provide major pathways into further Australian studies for overseas students. Picking up English language courses is clearly needed here, but it is not just about that; it is about making it clearer about representation on this board in terms of the non-department participants. So I recommend the Greens amendment to my fellow senators because it is an area that needs to be tightened up, because the loose wording at the moment is a concern.
Before I respond to Senator Rhiannon, I indicate that procedurally we have to report progress to then come back to get the extra half an hour to 7.20, which should allow us to complete the bill. So I am not being rude to Senator Rhiannon; I will respond to her after I move the procedural motion. Progress reported.