Monday, 30 November 2015
Education and Employment Legislation Committee; Report
At the request of the Chair of the Education and Employment Legislation Committee, Senator McKenzie, I present the report of the committee on the provisions of the Education Services for Overseas Students Amendment (Streamlining Regulation) Bill 2015 and a related bill, together with documents presented to the committee, and move:
That the report be printed.
Thank you very much. It may be somewhat unorthodox to speak to such a motion, but not quite as unorthodox as for the government to bring in a report in this manner—a report which then goes to a bill on which the government wishes to bring off a debate immediately. It may well be unorthodox as well given this importance of this issue. This is a bill that goes to our third largest export industry, and it is important, therefore, when we consider the report of a Senate education committee on this industry that senators actually get time to read the report, because it is more than likely that senators will not be aware that this report is being tabled and that people are seeking to have it printed so that the government can then bring on this bill.
This is a bill which, as I say, has quite considerable and far-reaching implications. The Senate committee has looked at this bill, having had the matter referred to it a little over a month ago, on 15 October. The report is based on the work of some 27 submitters, for a bill which has a start-up date for the private sector of the middle of next year. Yet the government wants to bring this bill in immediately after consideration of this report—a report most senators will not even know has been tabled.
I am particularly concerned that senators have the opportunity to look at the Labor Party's additional comments in regard to this report, because it goes to quite significant issues about the government's attempts to deregulate aspects of this industry. Given the government's experience in deregulation in higher education, this is a matter I would have thought would be of some interest to senators and would not be allowed to slip through without consideration of the issues involved.
This is a bill that seeks to reduce the level of regulation, particularly for private colleges operating in the international area. International education, as I have indicated, is of such vital concern. If there had been no problems here, one could reasonably expect that, upon discussion with the opposition, these matters could be dealt with in the manner which the government may well be proposing. But that has not happened, because there have been some 54 colleges that have gone belly up in one form or another since 2007.
There will be those that say, 'Well, that's all ancient history.' Of course, we know that that is not ancient history, because since the new organisational principles came into play just a couple of years ago a range of colleges have gone belly up in one form or another. I repeat that there was the case just in September of this year of the Gold Coast Language School, which on 29 September this year, because of business failure, was obliged to close. On 6 August of this year, I understand the St Stephen Institute of Education was deregistered. Symbiosis, on 6 August 2015, was deregistered. They are particularly significant colleges because they are at the centre of fraud charges by the Australian Federal Police because of their involvement with Australia Post.
These are not incidental questions. They go to the very heart of the integrity of our international education system. I could go back to 13 July of this year, when the Melbourne Senior Secondary College lost its registration because of gross abuses of the international education student body that it had enrolled at the school without providing the proper services that were available to them. On 12 April 2013, Ivy Business College was obliged to close for enrolling students and not providing qualified teachers to actually teach them. On 10 December 2013, the Sydney Technical Institute had its renewals rejected. On 22 November 2012, Milton College fell over because of business failure. On 10 December 2013, Ashmark Institute also lost its registration.
So these are quite serious matters which go to the very heart of our education system, because they affect our international reputation. But it is not just there. I might also draw your attention, Mr Acting Deputy President, to Careers Australia recently being the subject of considerable notoriety. They had some 590 students. They have been involved in the VET FEE-HELP scandals. Phoenix College, which was deregistered recently, had 40 international students. Unique International College, which was recently deregistered, had 400 students. There was the case of action pending in regard to Cornerstone Investment, which was a college that had a capacity to enrol over 900 students. There is the Australian Institute of Professional Education, which has a capacity to enrol nearly 4,000 students and is subject to action at the moment.
Cornerstone and Empower were trading in different names but were essentially the same entity. They received some $46 million in VET FEE-HELP assistance but only managed to graduate five students. I have complained in the past about the $100,000 degrees, but I have argued that in the VET FEE-HELP area we have seen examples of million-dollar diplomas. We now have a situation where we are looking at diplomas costing the better part of $10 million, where a college has $46 million of receipts from the Commonwealth but graduates only five students. That is at least a situation where you have to say their productivity is very high when it comes to rorting.
I put to you, Mr Acting Deputy President, that these are the types of issues that should be studied carefully. If we are being asked to consider further deregulation in the international student area, we should consider carefully the implications of that. This is not a new problem. We know that these are matters that have dogged the development of the ESOS Act, the subject of the bills inquiry. The history of the current act is one of ongoing iterative reform—that is, piecemeal reform. It is a bit like tax avoidance, where the taxation department has to constantly move to close down loopholes that emerge from very clever people who are in the business of constantly refining the way in which they rip off the tax system. In international education, there is a similar type of problem, but here the consequences not only are ripping off the taxpayer—the rest of us—but involve reputational damage to the whole country.
This is our third largest export industry. This is an industry that has profoundly far-reaching economic consequences. I will go around the country. In Victoria, this is an industry worth $5.6 billion; in New South Wales, $6.7 billion; in Queensland, $2.7 billion; in South Australia, $1.1 billion; and in Western Australia, $1.3 billion. This is an industry of profound significance, but, as we have seen on so many occasions, it has required a series of exposes, usually concerning unethical behaviour, to force the regulators to tighten up legislation, to change their administrative practices and to acknowledge that there are dishonest people in this world.
We have seen a series of changes. I have been involved with this question now since the beginning of the ESOS Act, which was back in the early stages of the 1990s. We have had repeated exercises to clean up abuses. Of course, the most savage were in 2006 and 2007, under the Howard government, where—and this followed an independent review in 2004 and 2005, from my recollection—amendments needed to be made. Then we had the extraordinary developments that occurred just prior to Labor coming to office. There needed to be further amendments made in 2009. The 2009 amendments required the re-registration of all institutions in the country, so serious were the claims. And then, of course, further changes were made following the Baird review, where there were some 19 recommendations. A further three tranches of legislative amendments were made in 2010 and 2011. They went to the issue of regulation of the providers and to a so-called risk management approach to registration—and we have seen how well that has served us! They went to the Tuition Protection Service, which was paid for by levies on the various colleges. There was a requirement to place student fees in a separate account to limit the amount of prepaid fees that could be collected, in order to make sure that refunds were actually available if a college went belly up. There was also a requirement to strengthen the record-keeping obligations of providers. All were necessary changes at the time.
This government has now proposed further changes to wind back some of those arrangements, and that is essentially the proposition in this report. There is an opportunity here for us to study the details. We will be moving amendments because, while many of the changes the government is proposing are nothing particularly out of the ordinary, the fact remains that ASQA—and I have made the claim on occasions that they are a body that have not been able to track a bleeding elephant through snow, on good evidence—themselves in 2012 said that they thought about five per cent of colleges that they viewed had serious issues of noncompliance. I understand that in recent statements they have made a claim that the number has grown to 10 per cent. When people tell me that they have actually taken action against colleges, I say it is the tip of the iceberg. That is why it is so important for us to consider these matters in the proper context of the way in which this industry actually operates.
The Federal Police have laid charges relating to fraud in the vocational education sector against three individuals just in this year. An extremely high level of proof is required for a fraud allegation. For the police to charge proprietors with that crime suggests that it is incredibly serious. In the case of the Australia Post affair, it is quite clear that the charges were warranted. Yet we are being asked to consider a bill which winds back the government regulation when it comes to the protection of students and the way in which their fees are paid.
For those reasons, I want to draw attention to this report. I trust that senators have the time to read it and to appreciate just how critical these questions are in terms of their being treated appropriately and with the necessary time.
I understand that the government will bring on this bill for debate pretty much after I sit down. There are a number of speakers who will be heard today but there needs to be time to consider the amendments, and I will be making an appeal to the crossbenchers to actually look at the detail here. Do not be swayed by people who will run up to you, particularly private colleges, and say, 'Listen, we don't want anyone looking over our shoulder. We've got to cut red tape. We've got to reduce the level of compliance.' I say there is plenty of evidence to suggest why we need red tape, why we need proper quality assurance and why we need to protect this industry from the unscrupulous. They abound and, unfortunately, are to be found in so many cases across the country.
Internationally, people look to the Commonwealth of Australia to assure them that the quality of the education provided by our international education providers is sound. They also look to us to ensure the proper probity arrangements are in place. People across the world who send their students, their young people, to this country do not expect us to turn away and say, 'We're going to streamline the regulations. We're going to have a risk management approach to these questions, and if things go wrong they are isolated incidents.' We have had too many 'isolated incidents' for us to take this matter lightly, and a number of the submitters to this committee report make the point that there needs to be careful consideration—this is too important just to take a cavalier attitude. While reasonable changes can be supported—I think the government has argued that there are better ways of dealing with the national code and there may well be ways we can address some of these regulatory questions in a more effective way—in the case of students' protections I am not persuaded that the government has taken the necessary measures, and I am particularly concerned about the student protection service and the designated accounts.
The explanatory memorandum of the bill explains that the provision is to remove the designated account requirements. As part of these arrangements, introduced only in 2012, it says:
… non-exempt (private) providers are required to maintain an account in which all tuition fees paid by students prior to the course commencing must be kept until the student starts the course. Removing this requirement will be of significant deregulatory benefit to non-exempt providers, creating a more level playing field between public and private providers and encouraging competition and innovation in the sector.
I know what sort of competition they will create. I know what sort of innovation; it may well be a race to the bottom. The purpose of the designated account is to provide a source of funds for students should colleges go wrong.
I simply make this point: in 2009 the problems were so great that if this fund had not existed there would not be the money available to refund students at that time. There were other assurance schemes in place prior to 2012, and it is important that there be sufficient reserves available so that students are not left in the lurch. That is why, for instance, the TAFE directors opposed the removal of the designated funds. The TAFE directors said:
In the current environment where there is so much public concern surrounding the actions of some less reputable private education providers, TDA feels it imperative that the requirement for retaining pre-paid student fees in a ‘designated account’ remains.
That is a proposition that I believe this Senate should take very seriously.
Of course we know that with limits on the collection of prepaid fees retained that the removal of the requirement to hold fees in the designated account reduces the risks of default and provides opportunities for us to be able to put real meaning behind quality assurance and student protection when it comes to colleges that are not able to meet their obligations to the students they have enrolled.
So I would urge the Senate to give very, very careful consideration to this bill. And that is why the government trying to slip in this little stunt should be clearly identified for what it is.
Question agreed to.