House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Education and Training, Senator the Honourable Simon Birmingham)

Schedule 1 - Amendments relating to education services for overseas students

Summary

The Government is taking action to monitor and prevent unscrupulous businesses from gaining registration to deliver education to overseas students. The Bill contains five key measures to enable greater scrutiny in relation to providers seeking registration on CRICOS.

Strengthening the fit and proper person requirements

This measure will enable the Minister to specify, through a legislative instrument, additional matters, if any, to be taken into consideration by the ESOS agencies when determining whether a provider meets, or no longer meets, the fit and proper person requirements for registration purposes. This measure will ensure that the persons governing individual education providers are fit to deliver high quality services, which will preserve the integrity of the international education sector and protect students' interests.

Expanding notifiable event requirements

This measure will expand the scope of events that a provider must report to ESOS agencies. Registered providers will be required to notify the relevant ESOS agency when they become aware of the occurrence of any event that will significantly affect the provider's ability to comply with the ESOS Act. A notification must also be made if the provider becomes aware a related person has been convicted of a serious offence under a Commonwealth, State or Territory law, or has had regulatory action taken against the person's approval to deliver programs, services and activities on behalf of, or with funding by the Commonwealth, States or Territories.

This measure will protect the integrity of international education by supporting the Government to monitor and prevent unscrupulous persons who are operating in one sector from entering another sector.

Extending information sharing provisions

This measure will enable the Government to be responsive in identifying and responding to unscrupulous practices occurring across its programs and services. It enables the Secretary of the department responsible for administering education and training, or ESOS agencies, to share information obtained or received for the purposes of the ESOS Act with any enforcement body (within the meaning of the Privacy Act), to assist the body in its enforcement activities, or with the OSO.

An additional measure allows the Secretary or ESOS agency to share information about the functions of education agents to providers, or publish this information more broadly, for the purposes of promoting compliance with the ESOS legislative framework or student visa conditions. This will increase transparency about education agents' performance and assist both international students and education providers to use high quality agents.

Amending late payment penalties

This administrative measure removes a requirement for providers who are late in paying the Annual Registration Charge, Entry to Market Charge, or Tuition Protection Service (TPS) Levy to pay the associated late payment penalty within seven days of being given a written notice. Giving providers only seven days to pay a late payment penalty does not align with current Government money collection practices, which are to allow a 30-day payment period for any invoice issued.

Detailed explanation

Part 1 - Amendments

Education Services for Overseas Students Act 2000

Items 1 and 2 - Section 7A

Section 7A of the ESOS Act concerns decisions to be made by ESOS agencies and designated State authorities about whether providers registered, or applying to be registered, under the ESOS Act, are fit and proper persons.

Subsection 7A(2) specifies the matters that an ESOS agency or designated State authority must have regard to when making such decisions. Item 1 amends subsection 7A(2) by adding a new paragraph 7A(2)(ga), which requires regard to be given to any matters that the Minister specifies in a legislative instrument made under new subsection 7A(2A).

Item 2 amends section 7A by adding a new subsection 7A(2A) which provides that the Minister may, by legislative instrument, specify matters for the purposes of paragraph 7A(2)(ga).

Including this content in a legislative instrument provides the Minister with the flexibility to supplement and refine the considerations that relevant regulatory agencies must take into account when making decisions about the suitability of persons to provide education services students. This flexibility is important to ensure that the fit and proper person requirements remain responsive to market developments and are sufficiently detailed to properly articulate the circumstances which may be relevant to such determinations. This will ensure that the individuals governing education providers are fit to deliver high quality services, preserve the integrity of the international education sector and protect students' interests.

Item 3 - At the end of section 7A

This item inserts a new subsection 7A(5) which provides that if the Minister determines that an entity is an ESOS agency for a provider or a registered provider under subsection 6C(2) or (3); and the entity is not a Commonwealth authority (within the meaning of section 85ZL of the Crimes Act); then the entity is taken to be a Commonwealth authority for the purposes of Part VIIC of the Crimes Act.

There is a provision in the ESOS Act for an ESOS agency for specified kinds of providers to be determined by the Minister (see section 6C of the Act). In theory, this means a non-Commonwealth authority (within the meaning of section 85ZL of the Crimes Act) could be named as an ESOS agency in a subordinate determination. While the ESOS Act does not compel the disclosure of spent, quashed or pardoned convictions that would otherwise be protected under Part VIIC of the Crimes Act (see subsection 17(2)), the protections afforded by the spent convictions scheme under Part VIIC of the Crimes Act would not apply in cases where an ESOS agency was a non-Commonwealth authority. The implication of this is that proposed new paragraph 17(1)(aa) could require a person to disclose a quashed or pardoned conviction, which would ordinarily be protected by disclosure limitations from the date those convictions were quashed or pardoned.

This amendment explicitly provides that an ESOS agency is a Commonwealth authority for the purposes of section 85ZL of the Crimes Act. By deeming an entity to be a Commonwealth authority for the purposes of Part VIIC of the Crimes Act, the disclosure limitations which apply under that Part in relation to quashed or pardoned convictions will apply to protect Commonwealth or Territory convictions disclosed to any person or where State convictions are disclosed to a Commonwealth authority (see sections 85ZT and 85ZV of the Crimes Act).

Items 4, 5 and 6 - Section 17

Section 17 of the ESOS Act concerns the requirement for registered providers to notify their ESOS agency of offences committed by, or other disciplinary or regulatory actions being taken against, their associates and high managerial agents.

Subsection 17(1) lists the matters that the registered providers must notify the ESOS agency of. Items 4, 5 and 6 add new matters to the subsection 17(1) list. Under new paragraphs 17(1)(aa), (ba) and (da), registered providers must inform their ESOS agency, as soon as practicable, if they become aware that an associate or agent of the provider:

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has ever been convicted of an offence under any Commonwealth or State or Territory law (the definition of 'State' in section 5 includes the Australian Capital Territory and the Northern Territory) that is punishable by 2 years' imprisonment or longer, or a fine of 120 penalty units or more at any time during the last 5 years (item 4 - new paragraph 17(1)(aa))

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is or has ever been approved (however described) to provide a program, service or activity on behalf of, or with funding from, the Commonwealth or a State and has ever had their registration cancelled or suspended other than at the associate's or agent's own request (item 5 - new paragraph 17(1)(ba))

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is or has ever been approved (however described) to provide a program, service or activity on behalf of, or with funding from, the Commonwealth or a State and has ever had disciplinary, remedial or other compliance action taken in relation to their approval (item 6 - new paragraph 17(1)(da)).

The expansion of the notifiable events under section 17 is intended to facilitate monitoring of unscrupulous providers which may be or have been operating between different educational sectors, and more broadly between different programs administered by State or Commonwealth governments, particularly where provision of public funding is involved.

By way of illustration, such notifiable events may include:

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serious criminal convictions, such as those involving fraud, embezzlement, misappropriation of Commonwealth or State monies, identity theft, tax evasion, assaults on the person, child sexual offences

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adverse regulatory or other compliance action taken in relation to:

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approval to administer Commonwealth or State funding for the provision of education and training services

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registration as a higher education provider or as an National VET Regulator registered training organisation, or

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approval to operate as a school or as a child care service provider.

Requiring a provider to notify the ESOS agency of convictions for any serious offences under a law of the Commonwealth, State or Territory is not an unreasonable interference with the privacy of individuals providing education services to vulnerable people. Overseas students are a particularly vulnerable cohort, as many are from non-English-speaking backgrounds and some are minors. In this regard, providers registered to deliver education to overseas students have responsibilities which extend to student welfare and pastoral care. They are not simply delivering a service.

The new paragraph 17(1)(aa) contains limitations to ensure the right to privacy is sufficiently protected. It only requires convictions to be reported, not charges, so the person must have been found guilty by a court. In addition, only recent convictions, up to 5 years old, need to be reported. Finally, the provision is subject to the spent convictions scheme in Part VIIC of the Crimes Act.

Item 7 - Paragraph 17(1)(e)

This item makes a consequential machinery change to the paragraph numbering in paragraph 17(1)(e) in recognition of new paragraphs 17(1)(aa),(ba) and (da) inserted by items 4, 5 and 6.

Item 8 - At the end of section 17

Subsection 17(1) provides that a registered provider must inform its ESOS agency as soon as practicable if the provider becomes aware that an associate or high managerial agent of the provider has been engaged in conduct or activities enumerated in paragraphs (a) to (e).

This item inserts a new subsection 17(3) which provides that if the Minister determines that an entity is an ESOS agency for a provider or a registered provider under subsection 6C(2) or (3); and the entity is not a Commonwealth authority (within the meaning of section 85ZL of the Crimes Act); then the entity is taken to be a Commonwealth authority for the purposes of Part VIIC of the Crimes Act.

There is a provision in the ESOS Act for an ESOS agency for specified kinds of providers to be determined by the Minister (see section 6C of the Act). In theory, this means a non-Commonwealth authority (within the meaning of section 85ZL of the Crimes Act) could be named as an ESOS agency in a subordinate determination. While the ESOS Act does not compel the disclosure of spent, quashed or pardoned convictions that would otherwise be protected under Part VIIC of the Crimes Act (see subsection 17(2)), the protections afforded by the spent convictions scheme under Part VIIC of the Crimes Act would not apply in cases where an ESOS agency was not a Commonwealth authority. The implication of this is that proposed new paragraph 17(1)(aa) could require a person to disclose a quashed or pardoned conviction, which would ordinarily be protected by disclosure limitations from the date those convictions were spent, quashed or pardoned.

This amendment explicitly provides that an ESOS agency is a Commonwealth authority for the purposes of section 85ZL of the Crimes Act. By deeming an entity to be a Commonwealth authority for the purposes of Part VIIC of the Crimes Act, the disclosure limitations which apply under that Part in relation to spent, quashed or pardoned convictions will apply to protect Commonwealth or Territory convictions disclosed to any person or where State convictions are disclosed to a Commonwealth authority (see sections 85ZT and 85ZV of the Crimes Act).

Item 9 - After section 17

This item adds a new section 17A to the ESOS Act entitled 'Registered providers must notify their ESOS agency of certain other events'.

New subsections 17A(1) and (2) provide that a registered provider must notify its ESOS agency of the occurrence of an event that would significantly affect its ability to comply with the ESOS Act, within 10 business days after the occurrence of the event.

New subsection 17A(3) provides that a registered provider must notify its ESOS agency of:

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any prospective changes to the ownership of the provider

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any prospective or actual change to a related person of the provider.

A related person includes associates and high managerial agents of the provider. A high managerial agent of a provider is an employee, agent or officer of the provider with duties of such responsibility that his or her conduct may fairly be assumed to represent the provider in relation to the business of providing courses. An associate includes significant decision-makers of the provider as described in the ESOS Act.

Notice of these changes must be given as soon as practicable before the change occurs, unless (in the case of a change of managerial agent) the change cannot be determined before it takes effect - in which case, the notice must be given within 10 business days of the change taking effect.

A notice of change of ownership or related person must include information that allows the ESOS agency to make a decision under section 7A of the Act as to whether the provider is fit and proper to be registered (subsection 17A(4)). Personnel changes can directly impact the continued operational integrity of international education providers. Therefore, when such changes occur, this measure triggers a fit and proper person evaluation. This ensures that ESOS agencies apply ongoing scrutiny to providers as appropriate, and swiftly detect any unscrupulous persons seeking to operate in the sector.

Subsection 17A(5) allows an ESOS agency to specify the manner and form of the notice to be given to it under subsection (1) or (3).

A note to section 17A clarifies that, if a registered provider breaches the section, the ESOS agency for the provider may take action under Division 1 of Part 6 of the ESOS Act against the provider.

The purpose of this measure is to mitigate the risk of key persons of influence associated with former VET FEE-HELP providers who had their approval revoked, and more broadly any provider with poor business practices, seeking registration in the international education sector. It is imperative that ESOS agencies have the necessary capabilities to identify and monitor organisational linkages across the sectors in order to prevent individuals formerly associated with unscrupulous VET FEE-HELP providers, and more broadly any provider with poor business practices, from entering the international education sector. Changes in ownership or key managerial personnel of providers can be a key precursor to a diminution in the effective management, performance, compliance handling and future solvency of a provider entity.

Items 10 and 11 - Paragraphs 23(2)(b), 23A(3)(b) and 53D(2)(b)

Currently, providers who do not pay an annual registration charge (under paragraph 23(2)(b) of the ESOS Act), second and third entry to market charge (under paragraph 23A(3)(b)), or TPS levy charge on time (under paragraph 53D(2)(b)) must pay a late payment penalty for that charge. The amount of the late payment penalty is set out in section 172 of the ESOS Act.

This administrative measure removes a requirement for providers to pay the associated late payment penalty within seven days of being given a written notice.

Giving providers only seven days to pay a late payment penalty does not align with current Government money collection practices, which are to allow a 30-day payment period for any invoice issued. This amendment will ensure the timeframe for payment is appropriate and also ensure providers are not automatically suspended due to non-payment of the late payment penalty within seven days of receiving a notice. It will still ensure providers are automatically suspended if they do not pay the original amount within seven days of receiving the notice.

These items therefore amend paragraph 23(2)(b), paragraph 23A(3)(b) and paragraph 53D(2)(b) to remove reference to the late payment penalty, thereby allowing for invoicing of late payments only after the provider has paid the original amount.

Item 12 - Section 175 (heading)

This item repeals the heading to section 175 and replaces it with a new heading 'Giving information to relevant bodies etc.' to reflect the expanded information sharing capabilities for the purposes of that section.

Item 13 - After paragraph 175(1)(g)

Section 175 of the ESOS Act concerns the giving of information by the Secretary or an ESOS agency.

Under subsection 175(1), the Secretary or the ESOS agency for a provider or registered provider may give information obtained or received under the ESOS Act for the purposes specified in paragraphs 175(1)(a) to (d) to the persons and bodies listed in paragraphs 175(1)(e) to (h).

Item 13 amends the list of persons and bodies to whom the information can be given by adding a new paragraph 175(1)(ga).

Under new paragraph 175(1)(ga), the information can also be given to the OSO, the statutory office established under Part IIC of the Ombudsman Act to investigate complaints about private providers registered under the ESOS Act. Information held by the Secretary may assist the OSO in investigating student complaints in a timely and effective manner, which will support the student experience in Australia.

This rectifies a long-standing omission in the list of recipients of information in subsection 175(1) of the ESOS Act, and clarifies that information can be given to the OSO without the need for the Ombudsman to formally require production of that information using his or her compulsive powers in the Ombudsman Act. Nevertheless, any information given to the OSO will still be protected by the secrecy provisions in the Ombudsman Act.

Item 14 - After subsection 175(1)

This item adds a new subsection 175(1A) to section 175, which will authorise the Secretary or an ESOS agency to give information obtained or received under the ESOS Act to an enforcement body, if the Secretary or ESOS agency is satisfied that giving the information is reasonably necessary for one or more enforcement related activities conducted by, or on behalf of, the enforcement body.

The terms 'enforcement body' and 'enforcement related activities' have the same meanings as in the Privacy Act.

Subsection 175(1A) will allow the provision of information about education providers, students and agents by the department to other enforcement bodies to assist their enforcement activities. For example, this clarifies that information can be given to the FWO without the need for the Ombudsman to formally require production of that information using his or her compulsive powers in the Fair Work Act. Nevertheless, any information given to the FWO will still be protected by the secrecy provisions in the Fair Work Act. This provision will give students a better study experience and ensure the Government is agile in identifying and responding to unscrupulous practices occurring across its programs and services.

Item 15 - At the end of section 175

Item 15 amends section 175 by adding new subsections 175(3), (4) and (5). The new subsection (3) provides that the Secretary or the ESOS agency for a provider or registered provider may give information relating to the exercise of functions by education agents of providers to registered providers for the limited purpose of promoting compliance with the ESOS Act, the National Code, the ELICOS Standards and the Foundation Program Standards or with the conditions of a particular student visa or visas, or of student visas generally.

The new subsection (4) provides that the Secretary may also publish information relating to the exercise of functions by education agents of providers.

Such information, given or published under subsections (3) and (4) may include (without limitation):

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the number of applications for student visas made by or on behalf of students recruited or otherwise dealt with by an agent that have been either granted, refused, withdrawn or are invalid

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the number of student visas granted to students recruited or otherwise dealt with by an agent that have been cancelled or have ceased to be in effect

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the number of students accepted for enrolment in courses provided by registered providers by students recruited or otherwise dealt with by an agent

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the completion rates of accepted students recruited or otherwise dealt with by agents.

The purpose of new subsection 175(3) is to enable the limited release of information the Secretary holds about education agents in the form of performance reports to providers, including, for example, education agent performance data linked to outcomes or completion rates of students they help to enrol for an expressly defined purpose. This supports due diligence by enabling providers to make an informed choice about which agents they work with, and assisting providers to meet their obligation to work with ethical education agents under Standard 4 of the National Code.

The new subsection (4) will enable the Secretary to publish information about the performance of education agents and will significantly increase the transparency of education agents' performance and assist both international students and education providers to identify and use high quality agents, which will protect Australia's continued reputation as a high quality study destination.

Information shared with providers or published under this provision would be classified as personal information for the purposes of the Privacy Act and the associated APPs. Accordingly, any information shared or published will be done in a manner consistent with APP requirements.

As required by APP 5, which concerns the notification of the collection of personal information, reasonable steps are being taken to notify education agents of the matters referred to in APP 5.2, or to otherwise ensure the individual is aware of any such matters. This has been done through amending the privacy notice on PRISMS, where the information is held, to state that users' personal information may be collected and disclosed. Education providers are also being encouraged to include a similar statement in their written agreements with education agents.

The use and disclosure of personal information permitted in item 14 is consistent with the requirements under APP 6.2(b), which allows the disclosure of information for a purpose other than the purpose it was collected for (i.e. a secondary purpose) without obtaining the individual's consent if that use or disclosure is required, or authorised by, or under an Australian law or a court/tribunal order.

Part 2 - Application provisions

Item 16 - Application of amendments

Item 16 sets out the application provisions relating to measures contained in the ESOS Act amended by Schedule 1.

Subitem 16(1) provides that the amendments to section 7A of the ESOS Act made by Schedule 1 apply in relation to:

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applications for registration made after the commencement of the Schedule

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applications for registration made before the commencement of the Schedule but not yet decided

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providers registered before or after the commencement of the Schedule.

Subitem 16(2) provides that the amendments to section 17 of the ESOS Act apply in relation to providers registered before or after the commencement of Schedule 1.

Subitem 16(3) provides that new section 17A inserted into the ESOS Act applies in relation to providers registered before or after the commencement of Schedule 1.

Subitem 16(4) provides that the amendments to sections 23, 23A and 53D of the ESOS Act apply in relation to notices given after the commencement of Schedule 1.

Subitem 16(5) provides that the amendments to section 175 of the ESOS Act made by Schedule 1 apply in relation to information given or published after the commencement of the Schedule, regardless of when the information was obtained or received.