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House of Representatives

Education Legislation Amendment (Provider Integrity and Other Measures) Bill 2017

Explanatory Memorandum

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


This Bill makes important changes to key legislation governing higher and international education to strengthen regulatory controls and student protections in these sectors. This will proactively address instances of unscrupulous providers transitioning operations into the FEE-HELP scheme and international education sector in the wake of reforms to vocational education and training (VET) student loan arrangements.

The Government's actions to address unscrupulous practices in the VET sector have resulted in a surge of VET providers, including some which had their VET FEE-HELP approval revoked, seeking to transition their operations into the higher education and international education sectors. It is clear that amendments to the higher education and international education legislative settings are necessary, when viewed against reforms to enhance regulatory tools and protections in VET Student Loans (VSL).

The Higher Education Support Act 2003 (HESA) is the main piece of legislation providing funding for higher education in Australia, providing for Government subsidies and tuition support for students. The Tertiary Education Quality and Standards Agency Act 2011 (TEQSA Act) provides regulatory enforcement powers and quality assurance mechanisms to assure the reputation of higher education.

The Education Services for Overseas Students Act 2000 (ESOS Act) is the key legislation governing international education to enable the Government to take action to monitor, prevent and address unscrupulous businesses from gaining registration to deliver education services to overseas students. The ESOS Act sets out the legal framework governing delivery of education to overseas students in Australia on a student visa. The ESOS Act governs the registration process and obligations of registered international education providers, the Tuition Protection Service (TPS) and associated enforcement and compliance arrangements.

The Bill amends HESA, the TEQSA Act and the ESOS Act to protect students from unscrupulous providers. The amendments will bolster enforcement powers and oversight capabilities of relevant regulators, enabling them to intervene as necessary to prevent malicious practices across the higher and international education sectors.

It is critical to implement measures to ensure appropriately high standards are in place to assess applications and ensure ongoing compliance by those seeking to enter the higher education sector and the international education sector, the latter of which is Australia's largest service export worth $21.8 billion in 2016.

There is a corresponding need to ensure that the TEQSA Act provides appropriately stringent controls to protect students from potentially unscrupulous provider actions. The proposed amendments to the TEQSA Act will improve student protection mechanisms by ensuring greater scrutiny of providers in the registration process and during a registration period. The amendments also improve the Tertiary Education Quality and Standards Agency's (TEQSA) capacity to efficiently perform its functions by clarifying that TEQSA may delegate its powers or functions to its Chief Executive Officer.

The measures contained in Schedule 1 (amendments to the ESOS Act) will:

strengthen fit and proper person provisions to increase the scope of matters and persons which may be taken into consideration
expand reporting of certain events to the ESOS agency
extend information sharing provisions to allow the Secretary of the department responsible for administering education and training, and ESOS agencies, to share information with the Overseas Students Ombudsman, as well as any enforcement body to assist with its enforcement activities
allow the Secretary and ESOS agencies to share and publish information about the exercise of functions of education agents
amend late payment penalties to ensure the timeframe for payment is appropriate.

The measures contained in Schedule 2 (amendments to the TEQSA Act) will enhance TEQSA's compliance capabilities and introduce more stringent provider application requirements to better equip TEQSA to implement robust student protection mechanisms, by:

enabling TEQSA to take into account the history of related entities, as well as the history of a provider's delivery of education generally, in its regulatory decision-making
introducing a requirement that all registered higher education providers, and key personnel for those providers, must be fit and proper persons
expanding the scope of matters about which providers must notify TEQSA
addressing administrative efficiencies by clarifying that TEQSA may delegate its functions or powers to the Chief Executive Officer
providing greater protection of Australian qualifications - this includes clarifying the definition of 'vocational education and training course' to make clear that courses which lead to Diplomas, Advanced Diplomas, Graduate Diplomas and Graduate Certificates are required to be accredited under the TEQSA Act or under vocational education laws
bolstering financial viability and transparency requirements - these include requiring general purpose financial statements for providers of a certain size, and amending the definition of 'qualified auditor' to ensure that the auditor of a higher education provider's financial statements must be a 'registered auditor' for the purposes of the Corporations Act 2001 or otherwise be approved by TEQSA.

The measures contained in Schedule 3 (amendments to HESA) will:

enhance student protections by prohibiting unscrupulous marketing practices and barriers to withdrawal from study; and requiring that in order for a student to be and remain entitled to FEE-HELP they must be a 'genuine student', have been assessed as academically suited to undertake the relevant unit of study, and have a reasonable unit completion rate
improve compliance capabilities including the ability for the Minister to vary conditions of approval for providers, to vary determinations relating to advance payments where there are concerns as to whether a provider is reporting genuine students, the introduction of civil penalties in cases of non-compliance, and adding provisions to ensure HESA is subject to monitoring under the Regulatory Powers (Standard Provisions) Act 2014 (the Regulatory Powers Act)
introduce more stringent provider application requirements - these include requiring a history of course delivery from the provider, the expansion of the fit and proper person requirement, an application exclusion period of six months after a failed application, and provisions for Commonwealth, State and Territory-established bodies to be exempt from the body corporate requirement
increase financial viability and transparency requirements, including enhancing audit requirements for providers, and introducing the capacity to add additional financial viability or reporting requirements in the Higher Education Provider Guidelines 2012 (Higher Education Provider Guidelines).

These measures are directed at reducing the risks to students and taxpayers associated with providers seeking to transition operations and/or students to the higher education sector following reforms to VET student loan arrangements. Accordingly they currently apply to providers not listed in Table A, B or C of HESA, and to students enrolling at these providers. These are generally private, non-university providers who offer courses of study eligible for FEE-HELP assistance. The Bill extends to providers approved under section 16-25 of HESA. Providers listed in Tables A-C, primarily universities, are subject to a range of oversights and legislative requirements including through their establishing legislation and under program specific accountability arrangements. The specific risks targeted by these measures arise in respect of a sub-set of providers which operate outside of the legislative and accountability requirements which apply to universities and which potentially presents a significantly higher risk to Government in terms of their organisation, business structures and student outcomes.

Collectively, these measures are intended to target and mitigate unscrupulous behaviour by higher and international education providers while avoiding interference with the operations of legitimate and reputable providers operating in the sector. This Bill is intended to mitigate similar provider compliance and conduct issues that occurred in the VET sector.

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