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Amendments to ESOS Act progressing through Australian parliament

Short on time? Here are the highlights:

  • An amendments bill for the Education Services for Overseas Students Act is currently being studied by the Australian Senate
  • The amendments streamline quality assurance and provider registration systems
  • They also reduce the administrative reporting requirements for Australian providers and remove the requirement to hold advance tuition payments in trust
  • The amendments appear likely to be passed into law in early 2016

(Editor’s note: Following the original publication of this article, the ESOS amendments passed both houses of the Australian parliament on 1 December and received royal assent on 11 December 2015. However, in a last-minute change, one item that we describe below – an amendment to remove a requirement that institutions hold advance tuition fees in trust in a designated bank account – was removed from the bill and did not pass into law. That is to say that the designated account requirement remains in place for Australian institutions.)

The Australian government continues to move on streamlining regulations in the international education sector. In July of this year, Minister for Education and Training Christopher Pyne introduced a wide-ranging series of amendments to the Education Services for Overseas Students (ESOS) Act.

The amendments bill is now working its way through both the Australian House of Representatives (where a third reading is pending) and the Senate. The Senate is preparing for a second reading of the bill at the end of this month, in conjunction with a report from the Senate Education and Employment Legislation Committee. There have been no amendments proposed to the bill as yet and it appears poised to be passed into law in early 2016.

In broad terms, the ESOS bill aims to:

  • Formalise and streamline quality assurance systems, including the efforts of the Tertiary Education Quality and Standards Agency (TEQSA) and the Australian Skills Quality Authority (ASQA);
  • Establish a clear enforcement mechanism for the enforcement of ELICOS standards;
  • Reduce the administrative reporting requirements of Australian education providers;
  • Remove a cap that prevents providers from collecting more than 50% of tuition fees in advance of the student’s programmed start – rather, students or agents will be able to request to pay more;
  • Remove a requirement that institutions hold advance tuition fees in trust in a designated bank account.

On the bill’s second reading in the House of Representatives, Minster Pyne said, “The bill I am bringing forward today reflects the government’s collaboration with the international education sector to reform the ESOS Act. In the development of this bill, the government consulted extensively. Comments were sought on a discussion paper which was released in October 2014, and an exposure draft of this current bill was made public and feedback was invited…In working collaboratively with international education stakeholders we will achieve a better system of quality and oversight in international education—and significant deregulatory savings for education institutions of an estimated AUS$75.9 million a year.”

Industry response

The Minister’s point was echoed in a formal submission on the draft bill from pathway provider Navitas, which noted of the costs associated with holding upfront fees in designated accounts: “In Navitas’ case this single piece of regulation has required the company at times to retain up to AUS$100m of additional funding facilities than would otherwise be required. This has added a considerable annual cost in commitment fees to retain these accounts, in direct funding cost, increased debt servicing costs and the lost opportunity cost of employing that capital for improved delivery services.”

Indeed, all peak international education bodies in Australia have now formerly responded to the amendment bill, including Universities Australia, English Australia, the International Education Association of Australia (IEAA), and the Australian Council for Private Education and Training (ACPET).

In a nutshell, these bodies all support the ESOS amendments – with rare qualification or condition – and expect that the changes will have an important impact on reducing red tape and boosting competitiveness in the Australian sector.

“We are pleased to see the government taking action to remove some of the meaningless ‘make work’ requirements that came out of the last ESOS review and to streamline the regulatory oversight of the sector,” now-retired English Australia Executive Director Sue Blundell said to Study Travel Magazine earlier this year. “Overall, these [amendments] will result in a number of positive changes that our member colleges will welcome.”

The ESOS framework

The current bill follows a previous round of ESOS amendments enacted in 2012, and the original ESOS legislation was passed into law in 2000.

The Act establishes a set of national standards for international education providers, the National Code of Practice.

It also led to the creation of the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS), a national registry and registration process that springs from the legislated requirement that only CRICOS-registered institutions and schools may enrol foreign students to study in Australia on a student visa.

Finally, Australia’s Tuition Protection Service (TPS), a consumer protection mechanism that assists international students whose education providers are unable to fully deliver their programmes of study, was also established under ESOS. The TPS ensures that students are able to either complete their studies with another provider or receive a refund of any unspent tuition fees.

The National Code and CRICOS registration processes, in particular, trigger a range of administrative demands and compliance costs for Australian institutions and schools. In its response to the 2015 amendments bill, Universities Australia said of one set of reporting requirements, “In summary, about 60 staff are employed full-time at universities to report to Government on an exceedingly low-risk, potential problem that to date has not occurred, or even been of concern — with universities incurring total compliance costs estimated at over AUS$6 million per annum.”

“[The 2015 amendments bill] is a significant step in ensuring the legislative framework for international education is contemporary, and that red tape is reduced, so that Australia’s education institutions can focus on their core business and be even more competitive,” added Minister Pyne.

Simplifying visas

The government’s move to streamline regulations and processes around ESOS come close on the heels of another major initiative to simplify the student visa system in Australia. The simplified student visa framework (SSVF) will come into effect in mid-2016, in essence, replacing the current streamlined visa processing (SVP) system.

The major features of SSVF are:

  • A reduction in the number of student visa subclasses from eight presently to two;
  • The introduction of a single immigration risk framework under which all international students will be assessed.

Phil Honeywood, CEO of the IEAA, said at the time that the SSVF was initially announced, “For too long the student visa system has been overly complex and overly expensive, so the sector welcomes any simplification of this process provided it weeds out the low quality providers from the quality providers.”

This same perspective – eliminating red tape and reducing costs but also emphasising quality assurance – seems very much to animate the current round of ESOS amendments this year. And all such streamlining measures are likely to have a positive impact indeed on the international competitiveness of Australian education.

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