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2013
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
EDUCATION SERVICES FOR OVERSEAS STUDENTS
AMENDMENT BILL 2013
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Education, the Hon Christopher Pyne MP)
EDUCATION SERVICES FOR OVERSEAS STUDENTS
AMENDMENT BILL 2013
OUTLINE
The purpose of Schedule 1 is to amend the Education Services for Overseas Students
Act 2000 (ESOS Act) to clarify existing provisions relating to pre-paid fees and to
ensure that relevant provisions contained in Division 2 of Part 5 of the ESOS Act
operate as intended.
The arrangements for refunds to students in the case of student default for the reason
of visa refusal or where there is no written agreement in place that satisfies the
requirements of the ESOS Act will be simplified and clarified by giving the Minister
the power to make a legislative instrument setting out relevant methods of calculation.
The Schedule will also amend the title of the National Code of Practice for
Registration Authorities and Providers of Education and Training to Overseas
Students 2007 (National Code). Reference to registration authorities is no longer
relevant to the function of the National Code after amendments to the ESOS Act in
2012, which resulted in the National Code applying to registered providers only.
FINANCIAL IMPACT STATEMENT
There is not expected to be any financial impact from the measures contained in the
Bill.
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 2013
This 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 main purpose of the Bill is to amend the Education Services for Overseas
Students Act 2000 (ESOS Act) to clarify refund provisions for overseas students
studying in Australia, as well as for intending overseas students yet to arrive in
Australia. The Bill will rectify unintended consequences of the implementation of the
measures introduced by the Education Services for Overseas Students Legislation
Amendment (Tuition Protection Service and Other Measures) Act 2012 (TPS Act),
which potentially constrained the type and amount of the fees to be refunded to
students in some circumstances.
Amendments to be made by the Bill will ensure that the refunds registered providers
are required to make to their overseas students can encompass tuition fees paid by
students both before and after the commencement of a study period, where those fees
are unspent at the time that a default occurs.
In addition, the Bill will amend provisions of the ESOS Act relating to refunds in the
case of an overseas student being refused a student visa, to clarify existing
arrangements and ensure that providers are required to refund both unspent tuition
fees and unspent non-tuition fees (such as for accommodation and text books) where
the student is yet to commence their course.
The Bill will also make a minor amendment to Part 4 of the ESOS Act to ensure that
the title of the National Code of Practice for Registration Authorities and Providers
of Education and Training to Overseas Students (National Code) properly reflects its
content and that its scope is appropriate to its function and consistency with the ESOS
Act.
Human Rights Implications
The Bill engages the right to education, contained in Article 13 of the International
Covenant on Economic, Social, and Cultural Rights (ICESCR). Article 13(2) of
ICESCR in particular makes provision for the availability and accessibility of
primary, secondary and higher education and the progressive introduction of free
education.
To the extent that the right to education is engaged, this right is promoted by the Bill
as the main purpose of the Bill is to clarify refund provisions by ensuring that the
refunds required of a registered provider to an overseas student can encompass tuition
fees paid by students both before and after the commencement of a study period,
where those fees are unspent at the time that a default occurs.
The measures in the Bill concerning the amendment of the title of the National Code
do not have any human rights implications.
Conclusion
This Bill is compatible with human rights because it advances the protection of
human rights.
EDUCATION SERVICES FOR OVERSEAS STUDENTS
AMENDMENT BILL 2013
NOTES ON CLAUSES
Clause 1 - Short title
This clause provides that the name of the Bill, when enacted, is the Education
Services for Overseas Students Amendment Act 2013.
Clause 2 - Commencement
This clause provides that Schedule 1 is to commence by Proclamation (or if
Proclamation does not occur within 6 months from Royal Assent, then Schedule 1
will automatically commence the day after that 6 month period). Everything else in
the Act commences on the day that the Act receives Royal Assent.
Clause 3 - Schedule(s)
This clause provides that each Act specified in a Schedule to the Bill is amended or
repealed as set out in the applicable items in the Schedule concerned, and that any
other item in a Schedule to the Bill has effect according to its terms.
For ease of description, this Explanatory Memorandum uses the following
abbreviation:
`ESOS Act' means the Education Services for Overseas Students Act 2000.
Schedule 1 Amendments
Summary
Schedule 1 amends the ESOS Act to repeal the definition of pre-paid fees and makes
consequential amendments so that refunds registered providers are required to make
to their overseas students as a result of a default can encompass tuition fees paid by
students both before and after commencement of a study period. Schedule 1 also
amends the ESOS Act so that where there is a visa refusal or a student default without
a written agreement in place, refunds are to be calculated in accordance with a
legislative instrument made by the Minister. Schedule 1 also changes the name of the
National Code.
Detailed explanation
Education Services for Overseas Students Act 2000
Pre-paid tuition fees amendments
Item 3 will repeal the definition of pre-paid fees in section 5. This is necessary to
correct an unintended consequence of the measures introduced by the Education
Services for Overseas Students Legislation Amendment (Tuition Protection Service
and Other Measures) Act 2012, which constrained the type and amount of the fees to
be refunded to students.
Pre-paid fees are currently defined in section 5 of the Act to mean tuition fees
received by a registered provider in respect of an overseas student or intending
overseas student, in relation to a study period for a course to be provided by the
provider, before the student begins the study period. In conjunction with the other
Items set out below, removal of the definition of pre-paid fees will ensure that refunds
registered providers are required to make to their overseas students as a result of a
default can encompass tuition fees paid by students both before and after the
commencement of a study period, where those fees are unspent at the time that a
default occurs.
Division 2 of Part 5 sets out the obligations on registered providers in the event of a
provider default (or a default on the part of the provider's student).
The following items make technical amendments consequent upon the removal of the
pre-paid fees refund limitation.
Item 1 will amend the definition of monitoring purpose in section 5 to replace the
reference to a provider not being able to refund `pre-paid fees' to its accepted
students, with a reference to the refunds under `Division 2 of Part 5'.
Item 4 will amend the heading of Division 2 of Part 3 so that the heading reads
`Tuition fees' instead of `Pre-paid fees'.
Item 5 will amend the heading to section 27 so that the heading reads `Tuition fees'
instead of `Pre-paid fees'.
Item 6 will amend the heading to subsection 27(1) so that the heading reads `Limit on
tuition fees received before course begins' instead of `Limit on amount of initial pre-
paid fees that may be received'.
Section 28 of the ESOS Act concerns the obligations on registered providers to
maintain accounts that must be designated as initial pre-paid fees accounts. Items 7, 8
and 9 will make amendments to section 28 to remove references to the need for the
accounts to be designated as pre-paid fees accounts. Item 7 will amend the heading to
section 28 so that the heading reads `Obligation for registered provider to maintain
account' rather than `Obligation for registered provider to maintain designated
account'. Item 8 will substitute the current heading to sub-section 28(2) with one that
notes the accounts are to be maintained with an Australian Authorised Deposit-taking
Institution (ADI)
Section 29 concerns the obligations on registered providers in relation to designated
account money. Item 10 will amend the heading of section 29 to remove the word
`designated'. Item 11 will amend the heading to subsection 29(1) to remove reference
to `pre-paid' and `designated', so that it reads `Tuition fees received before course
begins to be paid to the credit of account'.
Section 46D concerns the obligations on registered providers in the case of provider
default. Subsection 46D(6) currently states that the provider may pay the student a
refund of the amount (worked out in accordance with a legislative instrument made
under subsection 46D(7)) of unspent pre-paid fees received by the provider in respect
of the student. The note to subsection 46D(6) explains that where providers are
required to maintain an initial pre-paid fees account, refunds might be paid out of the
account. Subsection 46D(7) provides that the Minister may make a legislative
instrument setting out the method of working out the amount of pre-paid fees for the
purpose of subsection 46D(6). Items 14 and 16 will amend subsection 46D(6) and
subsection 46D(7) to replace the reference to `pre-paid fees' with `tuition fees'. Item
15 will amend the note to subsection 46D(6) to remove the reference to an `initial
pre-paid fees account' and replace it with a reference to an account in accordance with
section 28. Item 17 will make the same amendment to the note in subsection 47D(2)
(this note currently has exactly the same wording as the note to subsection 46D(6)).
Section 47D concerns refunds under written agreements about student default.
Section 50C concerns the consequences of a payment made by the TPS Director when
a call is made on the Overseas Students Tuition Fund. Item 20 will amend subsection
50C(1) to replace the reference to `pre-paid fees' with reference to `fees to which the
refund requirements under Division 2 relate'. Item 21 will amend the note to
subsection 50C(2) to replace the reference to the `initial pre-paid fees account' with
reference to the `account in accordance with section 28'.
Section 83 concerns the sanctions the Minister may impose on a registered provider
for non-compliance with the requirements of the ESOS Act or National Code. Under
paragraph 83(1A)(b), the Minister may take action if he or she believes on reasonable
grounds a provider might not be able to `refund pre-paid fees to its accepted students'.
Item 22 will repeal and substitute paragraph 83(1A)(b) so that the Minister may take
action if he or she believes on reasonable grounds a provider might not be able to
`refund amounts to its accepted students under Division 2 of Part 5'.
Refunds in the case of the refusal of a student visa or student default with
no written agreement in place
Currently, under section 47E of the ESOS Act, where a student has been refused a
student visa, his or her registered provider must pay the student a refund of any
unspent pre-paid fees received by the provider in respect of the student (worked out in
accordance with a legislative instrument made under subsection 47E(4)).
Item 18 will repeal and substitute subsection 47E(2) so that the requirement in the
event of such a student default will be for the provider to pay the student a refund
calculated in accordance with a legislative instrument made by the Minister under
subsection 47E(4).
Students who are refused student visas may have pre-paid their providers not only
tuition fees, but also other non-tuition fees such as for accommodation and text books.
The current restriction of refunds to unspent tuition fees in the case of the refusal to
grant a student visa is unduly narrow and should be expanded in accordance with both
the intent and long-standing practice to also cover unspent non-tuition fees in cases
where the visa is refused and the student has not yet commenced the course. This is
particularly so where a visa is refused and a student is still offshore.
Item 19 will repeal and substitute subsection 47E(4) to remove the reference to
`unspent pre-paid fees' and, instead, provide that the Minister may, by legislative
instrument, specify a method for working out the amount of a refund for the purposes
of subsection 47E(2).
In cases where the student has already commenced a course and a visa is refused
(usually an `onshore' visa refusal), the intention is that the legislative instrument to be
made by the Minister will ensure the amount a provider is required to refund is
limited to the amount of unspent tuition fees the student has paid the provider at the
time of the default. This will reflect the amount of tuition the student has paid for but
has not received due to their visa request having been refused. The intention is that
this same instrument will also establish the method for calculating a refund to a
student who defaults at a provider but where there is no written agreement in place
that satisfies section 47B. In this circumstance the refund arrangements are intended
to reflect the same arrangement as set out for a visa refusal where a student has
already commenced the course at the time of the refusal.
National Code amendments
Items 2 and 12 will amend the definition of national code in section 5 and the title of
the national code in subsection 33(2) to remove reference to `Registration
Authorities'. Requirements previously imposed by the national code on Registration
Authorities are now contained in the ESOS Act. The removal of the reference to
Registration Authorities will ensure that the title of the national code properly reflects
its content.
Item 13 will amend paragraph 38(g) to omit reference to `pre-paid fees' and replace
that with reference to `Division 2 of Part 5'.
Section 38 provides that the national code must contain some or all of a number of
matters. One of these specified matters is standards and procedures required of
registered providers in making agreements relating to refunds of pre-paid fees. The
reference to `pre-paid fees' will be amended to refer, instead, more broadly to refunds
`under Division 2 of Part 5' which covers the obligations on registered providers
when a provider (or student) defaults.
Application and savings
Item 23(1) will specify that, notwithstanding that the definition of pre-paid fees is
being removed from the ESOS Act by Item 3, the definition of pre-paid fees in
section 5 of the Act continues to operate in relation to agreements that were entered
into under section 47B and defaults under Part 5 where the agreements were entered
into or the defaults took place prior to the commencement of the changes in Item 3.
Item 23(2) will specify that, even though the name of the national code is being
changed by Item 12, the code that was in force prior to the name change continues to
be in force, after the change in name.
Item 23(3) will specify that the change to the scope of the national code under Item
13, will only operate after commencement of the change in Item 13.
Item 23(4) will specify that the changes in Item 14, 16, 18, 19 and 20 that relate to
the removal of the definition of pre-paid fees from the ESOS Act, only apply in
relation to defaults that occur after commencement of those items.