House of Representatives

Second Reading Speech

Senator Lundy (Parliamentary Secretary for Immigration and Citizenship and Parliamentary Secretary to the Prime Minister)

I table the explanatory memorandum relating to the bill and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows-

During the height of concerns confronting the international education sector last year the Prime Minister in her then role as Minister for Education asked the Hon. Bruce Baird AM to conduct the review of the Education Services for Overseas Students Act 2000 and its associated legislation that had originally been planned for 2012.

At that time she also introduced a number of amendments to the ESOS Act to strengthen registration requirements and enable re-registration of all providers by the end of this year.

This interim step was necessary to reinforce the integrity and quality of Australia's international education sector. When those amendments were passed in February she gave an undertaking to come back with further amendments at the earliest opportunity following the finalisation of the Baird review. This Amendment Bill is delivering on that commitment.

The Education Services for Overseas Students Act 2000, or the ESOS Act, protects Australia's reputation for delivering quality education services. It does this by establishing a regulatory regime for the provision of international education and training services and through this protects the interests of overseas students through the establishment of minimum standards and providing tuition assurance.

The ESOS Act also complements Australia's migration laws by ensuring providers collect and report information relevant to the administration of the law relating to Student visas.

Since first written in 2000, the ESOS Act has been amended several times to keep pace with change and is widely recognised as one of the best legislative frameworks for international education in the world. However, unprecedented growth in recent years has created new pressure points in the sector which continue to play out.

Following extensive consultation with the sector, Mr Baird reported back to the Government in February this year with 19 recommendations for making the ESOS Act stronger, simpler and smarter. Key messages have been that there needs to be a clearer focus on the interests of students and that, given the size and diversity of the international education sector now, a one size fits all approach to regulation will no longer suffice.

In general, the recommendations are about strengthening the registration process, supporting more effective monitoring and enforcement, empowering students with information and improved complaints handling, encouraging the ethical recruitment of students, as well as introducing a simpler, more robust consumer protection regime.

The Government released the final report of the ESOS review on 9 March and at that time indicated a staged approach to the Government's response, starting immediately with a number of the recommendations that build on recent changes to the Act.

Consistent with this staged approach, the Government's response to the remaining recommendations will be considered in a second tranche in the coming months.

The Education Services for Overseas Students Legislation Amendment Bill which I am introducing today is the first round of changes to the ESOS Act recommended by the review and will make adjustments to the ESOS Act as well as the Ombudsman Act 1976 and the Privacy Act 1988.

The dual focus of this Bill is risk management and more effective enforcement.

The Bill introduces provisions to further strengthen the registration process for approved providers. As part of proving their demonstrated capacity to provide education of a satisfactory standard, an amendment is proposed to make it clearer that providers will have to demonstrate access to the financial resources to meet the objectives of the ESOS Act; that they have a sustainable business model, and that they have the capability, governance structures and management to deliver education of a satisfactory standard. Recent college closures have highlighted that greater upfront scrutiny of these matters can help identify providers which are at greater risk of not meeting their legislated obligations.

This amendment will raise the bar of entry into the international education sector and is consistent with proposed changes to the Australian Quality Training Framework, announced by COAG in December 2009 and taking effect from July this year, to strengthen the gateway for all Registered Training Organisations.

Building on the risk managed approach developed for the re-registration process currently underway, this Bill will extend a risk management approach to all registrations both at the point of registration and throughout the registration period. The purpose is to better identify risk and ensure a consistent assessment of risk by all regulators and, in time, the national regulators being established for the Vocational Education and Training and Higher Education sectors. Together with the strengthened registration criteria, this amendment aims to reduce the number of high risk providers entering the international education sector, and set appropriate conditions on providers' registration, including for ongoing monitoring to better manage risk.

This will enable better targeting and reduced duplication of compliance efforts and will shift the regulatory burden to those providers that present the greatest risk to the student experience and the reputation of the sector as a whole.

While registration criteria will apply to all providers, higher risk providers may have new Commonwealth imposed conditions placed on their registration, such as a cap on enrolments, annual financial statements or restrictions on the fees that can be collected in advance; as well as more frequent and detailed auditing. This, in turn, will create incentives for providers to reduce their risk by rewarding low risk providers with less onerous monitoring regimes.

As part of this measure, consistent with common practice, when registering a provider, the regulator will assess the provider's risk profile and set a period of review and any conditions to ensure appropriate levels of scrutiny are applied to the provider's operations. The Commonwealth will also be able to assess risk and apply risk based conditions at any time, rather than only as a result of compliance activity. As with re-registration, the details of the risk management approach, such as the broad indicators of risk and type of conditions that should apply, will be further developed in consultation with states and territories through Ministerial Council processes, and with the sector, prior to implementation.

The risk management approach will be supported by limiting a provider's registration period, on the Commonwealth Register for Institutions and Courses for Overseas Students, to no more than five years. This will also help introduce consistency into the registration regime by allowing the ESOS Act to formally recognise and align with limited periods of registration for each provider set by the states under domestic quality assurance frameworks.

Amendments are introduced to strengthen the ability to take effective enforcement action by introducing financial penalties for a broader range of non-compliant behaviour and to enable regular publishing of targets and information on regulatory activities undertaken by the Commonwealth.

A perception raised during the Baird review consultations is that while the ESOS legislation is sound, it is not adequately enforced.

Financial penalties are a tangible immediate action against providers for compliance breaches, reducing the need to go through lengthy court processes or potentially compromising a provider's ability to continue operating. There is existing scope for financial penalties to be extended for a range of breaches of the National Code by making amendments to regulations. However, the amendments introduced in this Bill identify specific offences within the ESOS Act itself, which should attract a financial penalty because they get to the heart of emerging issues confronting the international education sector, such as unethical recruitment activity and poor maintenance of student records.

Similarly, by publicly setting and publishing targets and outcomes of regulatory activity, the sector and the rest of the world will know that Australia is serious about enforcement and committed to quality education and training. This amendment will allow the Commonwealth Government to publish any actions taken under the enforcement and monitoring parts of the ESOS Act. Any appeals by providers against enforcement action taken will be no bar to the publication of this information. The publication will be corrected if the appeal is upheld.

Finally, the jurisdiction of the Commonwealth Ombudsman will be extended to include students of private registered providers. This is a key recommendation arising from the Baird review. Currently, while private providers must provide access to an external complaints body (as required under Standard 8 of the National Code), unlike students of public providers, students of private providers do not have recourse to a statutorily independent external body, such as an ombudsman, competent to hear and investigate their complaints in a consistent and quality assured manner.

By doing this, all international students, whether studying at a public university or a small private provider, will now have the same level of access to an external appeals body. This will increase confidence in complaints handling processes by both students and providers, lead to greater acceptance of decisions and reduce lengthy and costly appeals processes for all parties.

The Commonwealth Ombudsman is well positioned to promote greater understanding of the complaints process and provider obligations, as well as provide useful feedback to government on complaint trends to further inform policy.

In his review, Mr Baird recommended a number of other measures, including the development of a risk based approach to various costs associated with registration - for example, consumer protection and the collection of non-course fees.

The Government has committed to further consultation on the remaining recommendations, including the proposed new tuition protection service. These recommendations will be taken forward in the next phase of the Government's response to the Baird review.

Timely passage of this Bill will ensure these measures can commence quickly to effectively respond to ongoing concerns and uncertainty in the international sector. The cooperation of the states and territories, along with the providers and many other stakeholders of the industry, will be required to implement these and any future recommended changes to the ESOS Act.

I look forward to bringing the second phase of the Government's response to Baird recommendations forward in the Winter 2011 sittings.

Ordered that further consideration of the second reading of this bill be adjourned to the first sitting day of the next period of sittings, in accordance with standing order 111.