Federal Register of Legislation - Australian Government

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Determinations/Other as made
This instrument specifies the dollar amounts payable by all non-exempt Commonwealth Register of Institutions and Courses for Overseas Students registered providers for the purposes of working out the administrative and base fee components of the Tuition Protection Service Levy under sections 6 and 7 of the Education Services for Overseas Students (TPS Levies) Act 2012.
Administered by: Education
Registered 17 Oct 2017
Tabling HistoryDate
Tabled HR18-Oct-2017
Tabled Senate19-Oct-2017

EXPLANATORY STATEMENT

 

Education Services for Overseas Students (TPS Levies)(Administrative and Base Fees) Determination 2017

Purpose and operation

The purpose of the Education Services for Overseas Students (TPS Levies)(Administrative and Base Fees) Determination 2017 (the Instrument) is to specify the dollar amounts payable by all non-exempt Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) registered providers for the purposes of working out the administrative and base fee components of the Tuition Protection Service (TPS) Levy under sections 6 and 7 of the Education Services for Overseas Students (TPS Levies) Act 2012 (the Act).

The TPS Levy is payable into the Overseas Students Tuition Fund (the Fund) which is established under section 52A of the Education Services for Overseas Students Act 2000.

This instrument maintains a high level of student protection and ensures sufficient funds are held to refund or place students in the event of provider closures, while also updating administrative arrangements for the ongoing effective operation of the TPS.

Authority

Section 7A of the Act allows the Minister for Education and Training to determine the administrative and base fee components of the TPS Levy by legislative instrument.

 

The Minister must, by legislative instrument before 1 January 2018, determine an amount for the purposes of paragraphs 6(a), 6(b), 7(a) and 7(b) of the Act for the 2018 levy collection (subsection 7A(1) of the Act). Under subsection 7A(2) of the Act, the Minister may choose to make a legislative instrument for the following calendar years (i.e. 2019 onwards).

 

However, if the Minister does not make a new instrument for the following calendar years, this Instrument will continue to apply but with annual indexation in accordance with section 8 of the Act, until the Minister makes a new instrument.

                                                           

The Minister cannot exceed the ‘upper limits’ set out under subsection 7A(3) of the Act in determining the administrative and base fee components. The Minister must also have regard to the sustainability of the Fund in making the instrument and any other matter he or she considers appropriate.

 

Overview

 

Under the Act, the Minister is able to make an instrument to set the administrative and base fee components of the TPS Levy, to proactively manage the balance in the Fund.

 

The TPS Director has identified the recent trend increase in student enrolments, resulting in exponential growth of the Fund. He has recommended to government it review the levy parameters, including the fixed components of the levy, the administrative and base fees.The Australian Government Actuary (AGA) recommended the balance of the Fund remain within a $30 million to $50 million target range. This recommendation was endorsed by the TPS Advisory Board.

 

Consequently, the Minister has acted on this advice from the AGA and the TPS Advisory Board and, through this instrument, will reduce the current administrative and base fee settings by 75 per cent. This has been supported by the TPS Advisory Board as providing a fee level which will ensure the Fund remains within the target range of $30 to $50 million. This reduction will enable the ongoing protection of students and taxpayers by ensuring sufficient, but not excessive, reserves remain to meet future claims on the Fund. The reduction will slow the growth of the balance of the Fund while still maintaining strong tuition protection arrangements for students.

 

Given the rate at which the Fund has increased over the last five years of TPS operations, there is a significant risk of accumulating excessive reserves. This has the potential to undermine industry commitment to the TPS.

 

The TPS Director has previously taken action to reduce the risk rated premium in order to slow its growth. However, as the risk rated premium is calculated based on the risk profile of each CRICOS provider, this is not a feasible mechanism to slow the growth in levy collection while ensuring an appropriate market signal to higher risk providers.

To slow the growth of the Fund, the Minister is making a determination to reduce the per enrolment component of the administration and base fees by 75 per cent (compared to the fees collected in 2017). It is anticipated that this will be a one-off reduction to the Fund and the fee settings may not be updated every year.  

 

In 2018, the administrative fee component is the sum of:

(a) $107; and

(b) $0.55 multiplied by the total enrolments for the provider for the previous year (2017).

 

In 2018, the base fee component is the sum of:

(a) $215; and

(b) $1.36 multiplied by the total enrolments for the provider for the previous year (2017).

Consultation

The department has consulted the TPS Advisory Board, Australian Government Actuary and international education peak bodies prior to the reduction of the administrative and base fees through this Instrument.

Regulatory Impact Statement

 

The Office of Best Practice Regulation (OBPR) considers the proposal to be machinery in nature with no resulting regulatory impact on individuals, businesses or community organisations (OBPR reference 21234).

Explanation of Provisions

Sections 1 and 2

Sections 1 and 2 of the Instrument are formal provisions setting out the name and date of commencement of the Instrument.

Section 3

Section 3 of the Instrument sets out the Minister’s legal authority to make the Instrument.

Section 4

Section 4 provides definitions for the terms ‘Act’ and ‘Registered Provider’.

 

The note explains that sections 6 and 7 of the Act set out the meanings of administrative fee component and base fee component.

Section 5

Section 5 sets the dollar amounts for the administrative and base fees for the calendar year beginning on 1 January 2018 and any later calendar year, unless otherwise determined by the Minister.

Sufficient reserves are required to maintain a strong balance in the Fund to meet claims each year, commensurate with an increase in student enrolments. After the reduction in the administrative and base fees for the collection in 2018, and based on current projections in student enrolments and expected claims on the Fund, the growth of the Fund will be slowed but the reserve will be sufficient to cope with refund payments resulting from a number of provider closures in successive years.

The Minister will retain the ability to increase the fees to an upper limit, to ensure adequate tuition protection for students, should a spate of large closures occur.

Subsection 5(1) provides the dollar amounts for the administrative fee components for the purposes of paragraphs 6(a) and 6(b) of the Act.

Subsection 5(2) provides the dollar amounts for the base fee components for the purposes of paragraphs 7(a) and 7(b) of the Act.

The Minister has considered the sustainability of the Fund in setting these amounts.

The note clarifies that indexation will apply to these dollar amounts in accordance with section 8 of the Act. Section 8 provides that annual indexation will apply from the calender year beginning on 1 January 2019 (and any later year) if the Minister does not make a new instrument and the amounts determined in this Instrument continue to apply.

 

 
Financial Impact Statement

 

This Instrument will result in a projected revenue reduction to the Fund in future years as it reduces the per enrolment amounts for the administrative and base fee components of the levy by 75 per cent.

Based on a projected 15 per cent growth in student enrolments, revenue from the administrative and base fees is expected to be approximately $1.4 million in 2018. This represents a saving to international education providers of approximately $3.3 million in 2018 and $16.57 million over the forward estimates.

Given the funds reside in a Special Account and are derived purely from industry contributions, they cannot be redirected toward any other program or portfolio, as legislation prescribes how the funds can be used.

In setting the fees the Minister has considered the sustainability of the Fund, consistent with advice from the TPS Advisory Board and the Australian Government Actuary.

 

In 2018, the amounts under this Instrument will be as follows:

 

A registered provider’s administrative fee component for a year is the sum of:

(a) $107; and

(b) $0.55 multiplied by the total enrolments for the provider for the previous year (2017).

 

A registered provider's base fee component for a year is the sum of:

(a) $215; and

(b) $1.36 multiplied by the total enrolments for the provider for the previous year (2017).

 

If the Minister does not make a new instrument for the following calendar years, this Instrument will continue to apply but with annual indexation in accordance with section 8 of the Act until the Minister makes a new instrument.

 

Any future revenue increases or losses may be affected by the TPS Director’s current ability to set the risk rated premium and special tuition protection components of the TPS Levy each year.

 

 


 

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 (TPS Levies)(Administrative and Base Fees)  Determination 2017

This Legislative Instrument 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 Legislative Instrument

The Education Services for Overseas Students (TPS Levies)(Administrative and Base Fees) Determination 2017 (the Instrument) specifies the dollar amounts payable by all non-exempt Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) registered providers for the administrative and base fee component of the Tuition Protection Service (TPS) Levy into the Overseas Students Tuition Fund (the Fund) under the Education Services for Overseas Students (TPS Levies) Act 2012.

Human rights implications

This Instrument engages the following human rights:

Right to education

To the extent that the right to education is engaged, the measures contained in this Instrument are compatible with the right to education.

This Instrument 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 high quality education services to international students by education service providers registered under the Education Services for Overseas Students Act 2000.

The Australian Government has overarching responsibility for protecting the reputation of Australia’s education and training industry and supports the capacity of the international education industry to provide high quality education and training services. 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 Instrument will enhance the right to education by ensuring that the Minister for Education and Training is proactively managing the balance in the Fund. This will ensure that the fees providers are paying into the Fund remain within the current target range of $30 million to $50 million recommended by the Australian Government Actuary and endorsed by the TPS Advisory Board.

This ensures that providers are able 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 Bill is compatible with the right to education. 

Conclusion

 

This Instrument is compatible with human rights because it advances the protection of human rights.