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2016-2017
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
EDUCATION SERVICES FOR OVERSEAS STUDENTS
AMENDMENT BILL 2017
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Education and Training,
Senator the Honourable Simon Birmingham)
EDUCATION SERVICES FOR OVERSEAS STUDENTS
AMENDMENT BILL 2017
OUTLINE
The Education Services for Overseas Students Amendment Bill 2017 (the Bill)
amends the Education Services for Overseas Students Act 2000 (ESOS Act) to
make consequential and technical amendments to reflect the changes to the
Education Services for Overseas Students (TPS Levies) Act 2012 made through
the Education Services for Overseas Students (TPS Levies) Amendment Bill 2017.
The Tuition Protection Service (TPS) is an initiative of the Australian Government to
assist international students whose education providers are unable to fully deliver
their course of study. The TPS ensures that international students are able to
complete their studies in another course or with another education provider, or
receive a refund of their unspent tuition fees.
The TPS is funded by an annual levy on all international education providers. The
levy comprises administrative fee and base fee components which are based on a
provider's enrolment numbers, a risk rated premium and a special tuition protection
component. Amounts collected are credited into the Overseas Students Tuition
Fund (the Fund), which is a Special Account under the Public Governance,
Performance and Accountability Act 2013. The Fund is established under
section 52A of the ESOS Act.
Recent growth in student enrolments has resulted in an increased collection of the
administrative and base fee components of the TPS levy. Since this growth has not
been offset by a similar proportion of claims on the Fund, reserves have increased
sharply.
The balance in the Fund is forecast to exceed the upper target recommended by
the Australian Government Actuary and the TPS Advisory Board. This has the
potential to undermine industry commitment to the TPS, and does not appropriately
recognise education providers that are managing risk effectively.
The TPS Director has already reduced the risk rated premium in order to slow the
growth of the Fund. Further reductions to the risk rated premium would result in the
loss of an effective price signal to higher risk providers. An appropriate reduction to
the current administrative and base fees is needed to ensure the Fund remains
within the target range of $30 million to $50 million recommended by the Australian
Government Actuary and endorsed by the TPS Advisory Board. It is anticipated that
this will be a one-off reduction to the Fund and the fee settings may not be updated
every year.
Giving the Minister authority to proactively manage the Fund will maintain sufficient
reserves to meet claims each year, commensurate with an increase in student
enrolments. It also allows the Fund to remain viable in case any unforeseen events
or major provider closures occur.
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FINANCIAL IMPACT STATEMENT
Nil.
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STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
EDUCATION SERVICES FOR OVERSEAS STUDENTS
AMENDMENT BILL 2017
The Education Services for Overseas Students Amendment Bill 2017 (the Bill) is
compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Overview of the Bill
The Bill amends the Education Services for Overseas Students Act 2000 (ESOS
Act) to make consequential and technical amendments to reflect the changes to the
Education Services for Overseas Students (TPS Levies) Act 2012 made through
the Education Services for Overseas Students (TPS Levies) Amendment Bill 2017
(TPS Levies Bill).
The Tuition Protection Service (TPS) is an initiative of the Australian Government to
assist international students whose education providers are unable to fully deliver
their course of study. The TPS ensures that international students are able to
complete their studies in another course or with another education provider, or
receive a refund of their unspent tuition fees.
The TPS is funded by an annual levy on all international education providers. The
levy comprises administrative fee and base fee components which are based on a
provider's enrolment numbers, a risk rated premium and a special tuition protection
component. Amounts collected are credited into the Overseas Students Tuition
Fund (the Fund), which is a Special Account under the Public Governance,
Performance and Accountability Act 2013. The Fund is established under
section 52A of the ESOS Act.
Recent growth in student enrolments has resulted in an increased collection of the
administrative and base fee components of the TPS levy. Since this growth has not
been offset by a similar proportion of claims on the Fund, reserves have increased
sharply.
The balance in the Fund is forecast to exceed the upper target recommended by
the Australian Government Actuary and the TPS Advisory Board. This has the
potential to undermine industry commitment to the TPS, and does not appropriately
recognise education providers that are managing risk effectively.
The TPS Director has already reduced the risk rated premium in order to slow the
growth of the Fund. Further reductions to the risk rated premium would result in the
loss of an effective price signal to higher risk providers. An appropriate reduction to
the current administrative and base fees is needed to ensure the Fund remains
within the target range of $30 million to $50 million recommended by the Australian
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Government Actuary and endorsed by the TPS Advisory Board. It is anticipated that
this will be a one-off reduction to the Fund and the fee settings may not be updated
every year.
Giving the Minister authority to proactively manage the Fund will maintain sufficient
reserves to meet claims each year, commensurate with an increase in student
enrolments. It also allows the Fund to remain viable in case any unforeseen events
or major provider closures occur.
Analysis of human rights implications
The Bill engages the following human rights:
Right to education
This Bill engages the right to education, contained in Article 13 of the International
Covenant on Economic, Social, and Cultural Rights, insofar as it relates to the
provision of education services to international students by education service
providers registered under the ESOS Act.
The Australian Government has the overarching responsibility for protecting the
reputation of Australia's education and training industry, supporting the capacity of
the international education industry to provide quality education and training
services, and maintaining the integrity of the student visa program.
The TPS delivers assistance to students by placing students in an alternative
course of study or refunds them where there is no suitable alternative course.
The measures contained in the TPS Levies Bill and consequential amendments in
this Bill enhance the right to education by ensuring that the Minister for Education
and Training is able to act flexibly and quickly in response to market conditions and
major shocks in the sector to proactively manage the balance of the Fund. This
ensures that the fees that providers are paying in relation to the TPS levy remain
within the new target range of $30 million to $50 million recommended by the
Australian Government Actuary and endorsed by the TPS Advisory Board.
The measures will allow providers to utilise remaining funds for alternative purposes
to enhance the quality of the services that they provide to overseas students. It also
ensures the Government is only charging providers fees required to meet the safe
reserve in the Fund recommended by the Australian Government Actuary, the
TPS Advisory Board and the TPS Director.
The Bill is compatible with the right to education.
Conclusion
The Bill is compatible with human rights because it advances human rights.
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EDUCATION SERVICES FOR OVERSEAS STUDENTS
AMENDMENT BILL 2017
NOTES ON CLAUSES
Clause 1 - Short title
This clause provides for the Act to be the Education Services for Overseas
Students Amendment Act 2017.
Clause 2 - Commencement
The table in subclause 2(1) sets out when the Act's provisions will commence. The
table provides that sections 1 to 3 and anything in this Act not elsewhere covered
by this table will commence the day the Act receives the Royal Assent. Schedule 1
will commence at the same time as the Education Services for Overseas Students
(TPS Levies) Amendment Act 2017 (TPS Levies Amendment Act) commences.
However, Schedule 1 does not commence at all if the TPS Levies Amendment Act
does not commence.
Subclause 2(2) provides that information in column 3 of the table at subclause 2(1)
is not part of the Act and information may be inserted into column 3 or information
in it may be edited in any published version of the Act.
Clause 3 - Schedules
This clause provides that any legislation that is specified in a schedule is amended
or repealed as set out in the applicable items in the schedule and that any other
item in a schedule has effect according to its terms.
LIST OF ABBREVIATIONS
Act Education Services for Overseas Students (TPS Levies)
Act 2012
Bill Education Services for Overseas Students Amendment
Bill 2017
ESOS Act Education Services for Overseas Students Act 2000
TPS Tuition Protection Service
TPS Levies Bill Education Services for Overseas Students (TPS Levies)
Amendment Bill 2017
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Schedule 1 Amendments
Summary
This Schedule amends the ESOS Act.This Bill makes consequential and technical
amendments to the ESOS Act to reflect the Minister's ability to set the
administrative and base fee components of the TPS levy. It clarifies that the TPS
Director must work out the amount of each provider's TPS levy in accordance with
the instruments made under the Act.
Detailed explanation
Education Services for Overseas Students Act 2000
Item 1 - Section 51
Item 1 clarifies that the TPS Director is responsible for working out the amount of
the TPS levy each year as opposed to setting the amount of the TPS levy each
year. This more accurately reflects the role of the TPS Director in working out the
TPS levy to be paid by each registered provider in accordance with the Act.
The amendments made through the TPS Levies Bill allow the Minister to determine
the administrative and base fee components of the TPS levy by legislative
instrument. The TPS Director will continue to be responsible for determining the risk
rated premium component and special tuition protection component of the TPS
levy.
Item 2 - Section 53A (heading)
Item 2 repeals the heading and substitutes the heading with 'TPS Director to work
out the amount of TPS levies'. This more accurately reflects the role of the TPS
Director in working out the TPS levy to be paid by each registered provider in
accordance with the Act.
Item 3 - Subsection 53A(2)
Item 3 clarifies that the TPS Director must determine the TPS levy amount in
accordance with the Act. This is a consequential amendment following the changes
made through the TPS Levies Bill to the Act.
Item 4 - Application provision
Item 4 provides that the repeal and substitution of subsection 53A(2) of the ESOS
Act made by Schedule 1 to this Bill applies in relation to the calendar year
beginning on 1 January 2018 and each later calendar year.
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