Review of Education Services for Overseas Students (esos) Act 2000

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Australian Government

Stronger, simpler, smarter ESOS: supporting international students

Final Report - February 2010

Review of Education Services for Overseas Students (ESOS) Act 2000

© Commonwealth of Australia 2010

ISBN 978-0-642-32946-2
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The views expressed here are those of the author and do not necessarily represent the views of the Australian Government Department of Education, Employment and Workplace Relations.

This report can be accessed via the Australian Education International website at:

The Hon Bruce Baird

Education Services for Overseas Students Act 2000 Review

The Hon Julia Gillard MP

Deputy Prime Minister and Minister for Education

Parliament House

Canberra ACT 2600
Dear Deputy Prime Minister
In August 2009 you asked me to review the Education Services for Overseas Students (ESOS) regulatory framework and report back to the Government with changes designed to ensure Australia continues to offer world-class, quality international education.
I am pleased to present you with my final report – Stronger, simpler, smarter ESOS: supporting international students.
This review was recommended by the Bradley Review of Australian Higher Education to take place before 2012. It was brought forward in the context of significant growth in the number of overseas students, the changing composition of the international student body and emerging issues in the sector, including recent attacks against international students.
Extraordinary growth in the sector, from 228 119 students in 2002 to 491 565 students in 2009 resulting in an industry worth $17.2 billion in 2008-09, has enhanced Australia’s cultural richness, strengthened diplomatic ties and delivered great economic benefit to Australia. It has also put a number of pressures on the sector in terms of education quality, regulatory capacity and infrastructure.
The recent attacks, predominantly on young Indian students, have saddened me as an Australian. I have a strong interest in Australia’s successful multicultural ethos through my involvement in refugee issues, and it is extremely disappointing to see Australia’s reputation as a safe and tolerant country damaged. I condemn these acts of violence.
In undertaking this review I considered the need for enhancements to the ESOS legislative framework in the four key areas set out in the terms of reference: supporting the interests of students, delivering quality as the cornerstone of Australian education, effective regulation and sustainability of the international education sector. I have also looked at issues of concern closely related to recent provider closures.
Following the release of my issues paper on 23 September 2009, I spoke to nearly 200 students and education providers from the tertiary, school and English-language sectors and other stakeholders at consultation forums. I also met with provider and student peak bodies, regulators, state and territory government officials, embassies, education industry bodies and Members of Parliament. The review received around 150 formal submissions and more than 300 people registered with the online discussion forum. I have also considered recommendations from the International Student Roundtable held in September 2009.
Concerns raised during consultations included reports of: false and misleading information provided by some education agents, poor quality education and training, gross over-enrolments, lack of appropriate education facilities, providers paying exorbitant commissions to education agents, limited financial scrutiny of providers, ineffective application and enforcement of regulation, low English language entry requirements, poor social inclusion of students in their institutions and the broader community, inadequate complaints and dispute handling services and some duplication between Commonwealth and states and territories leading to confusion and unnecessary regulatory burden.
Many related issues raised were out of the scope of the review such as alleged workplace exploitation, migration and visa issues, deficient and expensive student accommodation, lack of transport concessions and health matters. Perhaps surprisingly, concerns around student safety and racism were rarely raised in student forums. Nevertheless, these are important issues and have formed part of my considerations.
While the concerns were numerous, support for international education in Australia remains strong. Overwhelmingly there was acknowledgement of Australia’s long-standing reputation for quality education and training: that the majority of providers are doing the right thing; that ESOS is a sound regulatory framework; and international students are, by and large, satisfied with their Australian education experience.
Individuals and organisations alike offered valuable, practical suggestions to deal with the issues facing the sector. These included how to improve education quality, tighten registration, create stronger, simpler, smarter regulation, inform and support student choices and enhance the student experience.
ESOS can play a major role in achieving these objectives and I have made specific recommendations within this report about how the legislative framework can be amended to do so.
However, ESOS can only do so much. Governments, providers, peak bodies, students, agents and the broader Australian community all have a role to play. They must work together to achieve these goals. Governments and providers need to reinvest in compliance and enforcement, infrastructure, student services and in the students’ educational experience. There is an urgent need to develop, implement and enforce relevant and robust solutions to address those issues outside of ESOS, including student safety, accommodation, employment, transport and health matters.
In providing you with my report I am mindful of the complementary processes taking place including the development of the Council of Australian Government (COAG) strategy for international students, reforms to the quality frameworks for the vocational education and training sector, the imminent establishment of the national regulators in both the vocational education and training and higher education sectors and the forthcoming transfer of the marketing functions of Australia’s international education brand. With this latter development I caution that the focus of promoting Australia’s international education needs to be about quality, not pursuing growth at all costs. I believe the initial separation of these functions is a first step in clearly articulating the Australian Government’s various roles in international education and further consideration of how to support and gain the substantial public diplomacy benefits of this vital export sector.
I am confident that if all players within the sector take responsibility for their roles and make necessary changes now, Australia’s reputation for offering world-class quality, international education will be restored and enhanced.
Thank you for engaging me to conduct this review. I am impressed with the dedication of good providers and the enthusiasm and obvious ability of the international students I have met.
I look forward to the Government’s response to the report.
Yours sincerely

The Hon Bruce Baird, AM

26 February 2010

Executive summary
Australia’s international education sector provides life-changing opportunities for international students, strengthens Australia’s diplomatic relations, brings considerable benefits to our education institutions and builds on our already unique and successful multicultural society. In addition, international education is Australia’s fourth largest export industry generating substantial income and jobs.
This review was conducted at a time of substantial challenge for international education. While recent unparalleled growth in the sector has brought undeniable benefits onshore and abroad, it has also resulted in damaging pressures affecting education quality, regulatory capacity, students’ tuition protection and infrastructure. These pressures are adversely impacting on international students’ experiences in Australia and Australia’s reputation for international education.
This review examined what changes need to be made to ESOS, the legal framework for the delivery of education to overseas students in Australia, to ensure Australia continues to offer world-class quality, international education.
Extensive consultation with stakeholders across Australia found ESOS is considered a sound legislative framework which has served Australia’s international education sector well. However, the lack of consistent and rigorous enforcement of the legislation generated significant concern. There have been reports of ineffective monitoring activities, complex and duplicative procedures and limited information sharing between government, providers and students. In addition, its tuition protection arrangements were considered in need of substantial revision to provide support to international students.

This report proposes a number of recommendations that aim to strengthen, simplify and streamline ESOS, which would in turn provide greater support for international students in Australia and protect Australia’s reputation for quality education. Changes are also required beyond ESOS around student safety, access to transport concessions, accommodation and community engagement – key factors that contribute to a student’s overall experience in Australia.

Supporting students
Adequately and appropriately supporting students in Australia is at the heart of the sustainability of the sector.
Recommendations to better support students include requirements for improved information prior to students coming to Australia and during their stay, an enhanced process to address the role of education agents, more support to study and live in Australia, including having somewhere to go when problems arise, and stronger consumer protection mechanisms.
When students are making decisions about moving to Australia to study they require clear, accurate information. They need to be able to choose which city they would like to live in, what type of provider they wish to enrol with, and what courses they would like to study. Students need to be able to compare consistent information to make the most accurate choices. Students also need to be aware of what it is like living in Australia: culture and customs, services and resources as well as protections, rights and responsibilities.
Currently some providers and overseas education agents are issuing incomplete, irrelevant, old and/or misleading information to students. There is a need for strengthened requirements for information provision about learning and living in Australia by both providers and governments and increased emphasis on providers taking responsibility for their agents’ actions. Once in Australia, international students need ongoing access to comprehensive, informative and relevant orientation programs and ongoing access to orientation information.
Students need somewhere to go for support and advice, referral services, information on how to engage with the community and an avenue to have their voice heard. This review supports the International Student Roundtable recommendation and the suggestion from many students throughout the ESOS review consultation process to create international student hubs in all capital cities.
Even with improved information and support, there will still be times when international students have a complaint. Providers are already required to have suitable dispute resolution processes but the review considers the final step in this process – an independent, robust external complaints handling process – would be improved by mandating all providers use the relevant Ombudsman.
The recent dramatic growth in students coming to Australia, alongside the increase in Vocational Education and T raining (VET) providers offering a narrow range of courses linked to migration outcomes and sourcing students from a limited number of countries, has increased the risk of closures. This has put considerable pressure on the current tuition protection framework, with fears it is unsustainable. Consultation with key stakeholders and independent actuarial advice has informed the recommendation to replace the current arrangements with a single tuition protection service. This service would be fully funded by industry and could either be run by a Commonwealth body or outsourced and independently operated.
Protecting Australia’s reputation for quality education
Whilst recognising the primacy of domestic education quality frameworks, recommendations have also been made to rebuild and assure Australia’s reputation for quality education. This includes improved regulation of providers, enforcement of clear minimum standards and support for better integrated and automated systems for information sharing.
Education is important for domestic and international students alike and there is no need to duplicate education quality assurance frameworks already in place. However, more needs to be done to improve the link between ESOS and education quality assurance frameworks.
The entry requirements need to be strengthened for providers wanting to enter the sector. Changes need to be made to ensure providers have the financial resources to operate and a sustainable business model. They need to have the right capacity, capability and intent to operate successfully.
Risk needs to be better identified at entry into the sector and a range of indicators need to be used that go to the heart of whether the provider will be able to operate successfully now and in the future. This assessment of risk should guide whether the provider gains entry to the sector, and it should be used to test and scrutinise providers already through the gateway.
There needs to be a much stronger regulatory presence and the move to national regulators is a step in the right direction. However, there also needs to be greater transparency of regulatory activity so that both providers and students can monitor the level of regulatory activity and be informed by its outcomes.

Beyond ESOS
Migration-skewed demand has undoubtedly impacted on the reputation of our international education sector but the recent changes to general skilled migration will go some way to address this. Where possible, future changes should be grandfathered to soften the impact for students.
Beyond ESOS, Australia’s international education reputation depends on how well we provide for the wellbeing of international students and their whole experience of studying and living in Australia. We need to ensure they are safe, have appropriate health insurance, have access to adequate and appropriate accommodation and are not being exploited by landlords or in the workplace. The development of COAG’s strategy for international students is an important step in this regard. The inequitable treatment of transport concessions for international students by some state governments is strongly felt by affected students.
The recommendations and findings in this report acknowledge the challenging environment in which the sector is operating and are designed to build on what is working and improve those areas that are not.
Immediate implementation of the recommendations in this report will position Australia’s international education sector for a sustainable future. All stakeholders - governments, providers, peak bodies, students, agents and the wider Australian community - need to play their part in delivering these much needed changes.

Recommendations and findings
Chapter 2 – Enhancing Australia’s reputation for quality education

  1. That ESOS be amended to require providers to demonstrate that the:

          1. delivery arrangements for each course do not undermine the integrity of the student visa program

          2. English language entry levels and support are appropriate for the course and, where relevant, the expected professional outcomes.

Chapter 3 – Building a stronger gateway

  1. That ESOS registration be amended to only allow providers to be registered and maintain registration if they have:

          1. access to the financial resources to meet the objects of ESOS

          2. a sustainable business model

          3. the capacity, capability, governance structures and management to uphold Australia’s reputation for quality education and training to international students.

  1. That ESOS regulators adopt a consistent, comprehensive risk management approach developed and maintained in consultation with stakeholders and experts to:

    1. profile providers at entry to determine the level of scrutiny, evidence, tests and costs that apply at registration and through the period of registration

    2. update every provider’s profile on a regular basis to reassess the level of scrutiny and tests that should apply.

  1. That ESOS be amended to support better risk management by:

  1. allowing conditions on initial registration and throughout the registration period so a provider can be subject to additional scrutiny and tests as their risk profile demands

  2. limiting the period of registration for each provider.

Chapter 4 – Stronger, simpler, smarter regulation

  1. That ESOS be made stronger by:

  1. introducing financial penalties for a broader range of non-compliant behaviour

  2. establishing clear, objective and enforceable standards that providers must meet

  3. ensuring resourcing levels for regulatory activities are adequate

  4. publishing targets and regularly reporting on all regulatory activities undertaken.

  1. That ESOS be made simpler by:

    1. allowing national registration of providers with assessment of the suitability and capacity of individual courses at each location

    2. supporting the principle that wherever possible each provider should have only one regulator

    3. developing shared regulatory philosophies and business practices to ensure a consistent and effective approach to regulation.

  1. That ESOS be made smarter by:

  1. giving the Australian Government Minister for Education the discretion to exercise otherwise delegated powers where necessary, and authority to issue directions as to the consistent application of ESOS

  2. ensuring the level of prescription in the standards is only that which is required to achieve the intent.

  1. That ESOS be amended to specify that all providers must utilise a statutorily independent complaints body as their external complaints and appeals process, and amend the Ombudsman Act 1976 to extend the Commonwealth Ombudsman’s jurisdiction to include those providers without access to such a body.

  1. That the Migration Act 1958 be amended to enable a more flexible approach to the current visa cancellation requirements for students who are reported for failing to maintain satisfactory course progress or attendance.

Chapter 5 – Ensuring accurate information and ethical recruitment

  1. That ESOS be amended to ensure students can accurately compare potential study choices by requiring information from all providers relating to the:

      1. history, scope, location and type of provider

      2. student cohort

      3. course, including entrance standards, costs, award and anticipated professional outcomes

      4. academic and student support services offered

      5. local employment opportunities, the accommodation situation in the locality and safety risks.

  1. That the Australian Government expands the Study in Australia website to include a comprehensive international student manual, available in the languages of major source countries.

  1. That ESOS be amended to restrict unethical recruitment practices by:

  1. introducing financial penalties for providers whose offshore agents act unethically

  2. implementing a unique identifier for each student

  3. requiring all provider payments to agents to be contingent upon disclosure of the recruiting agent and their commission structure to both students and regulators

  4. expanding the requirements of student written agreements to more completely describe the course, course costs, refund provisions and transfer limitations

  5. prohibiting the payment of any commission or inducement to anyone for securing the transfer of any currently studying onshore international students

  6. prohibiting a provider from enrolling a student who is currently studying with another provider and who has yet to complete the first study period of their initial course.

  1. That the Australian Government should work with industry stakeholders and foreign governments to strengthen students’ consumer protection rights in their home country; and continue to support the professional development of education agents.

Chapter 6 – Supporting students in Australia

  1. That ESOS be amended to require providers to demonstrate that they deliver a comprehensive induction program and access to information on a continuing basis that:

  1. is reasonably adapted to the needs of their students

  2. allows students to easily access the information on an ongoing basis

  3. includes information on safety, student rights, and where to seek support in making complaints.

  1. That the Australian Government, working in conjunction with states and territories, establish international student hubs in each capital city as a place for international students to seek information, access referral and advocacy services, build ties with the Australian community and strengthen the voice of international students to providers and government.

Chapter 7 – Safeguarding students’ interests: stronger tuition protection

  1. That ESOS be amended to establish a single Tuition Protection Service that:

  1. provides a single mechanism to place students when a provider cannot meet its refund obligations and as a last resort provide refunds

  2. allows placement with any appropriate provider

  3. makes the cost of being a member of a tuition protection scheme risk based

  4. requires providers to regularly maintain student contact details in PRISMS and other information on a risk basis

  5. removes providers having ministerial exemptions from membership of a tuition protection scheme.

  1. That ESOS be amended to:

  1. only refund the portion of the course not delivered or assessed when the provider fails to meet their obligation

  2. establish that where a provider does not meet their refund obligations, this would be an issue in the fit and proper test for any future registration application.

  1. That ESOS regulators impose conditions on higher risk providers that only allow the collection of ‘course monies’ as defined in ESOS.

  1. That the Australian Government explores harmonising tuition protection arrangements for domestic and international students.

Chapter 2 – Enhancing Australia’s reputation for quality education

  1. Education Ministers should:

  1. ensure the vulnerabilities exposed in the education quality assurance frameworks by unscrupulous international education providers are addressed

  2. consider whether the current education quality assurance frameworks appropriately assure Australian education and training delivered offshore

  3. ensure regulators and policy makers actively take into consideration student outcomes and industry benchmarks, where available, when considering the adequacy of a provider’s resources, facilities, teachers and support services.

  1. The Australian Government should:

  1. consider changing the skilled migration program settings to remove the bias towards particular courses and instead focus on higher skilled qualifications in the VET and higher education sectors

  2. ‘grandfather’ future changes to skilled migration policy, where possible and appropriate, for international students and recent graduates.

  1. The Australian Government should work with the sector to adapt the Good Practice Principles for English Language Proficiency for International Students in Australian Universities to each education sector and encourage implementation.

Chapter 6 – Supporting students in Australia

  1. Further research should be undertaken to better understand the causes and frequency of violence against international students.

  1. The state and territory police forces should work with providers, student representative bodies and the international student hubs to deliver better safety information to international students.

  1. International students should have access to equitable travel concessions.

  1. Providers should play a more active role in securing accommodation for international students.

  1. The Fair Work Ombudsman should continue to deliver outreach programs that work with providers, unions, students and peak bodies to promote and enforce the safeguards of the Australian industrial relations system.

  1. The Department of Health and Ageing (DoHA), in consultation with international students, should work with health insurance providers to make a wider range of health insurance policies available to international students.


Letter to Deputy Prime Minister, the Hon Julia Gillard MP….………………………………………. ………….. 3

Executive summary………………………………………………………………………………………………………………………5



1.1ESOS: part of the picture of building a sustainable international education sector into the future 16

2Enhancing Australia’s reputation for quality education 19

2.1Improving the link between ESOS and the education quality assurance frameworks 19

2.2The impact of Australia’s migration policy on its reputation for education quality 21

2.3Ensuring ESOS supports Australia’s reputation for quality 23

3Building a stronger gateway 27

3.1Current registration requirements and process 27

3.2Registration requirements for the future – supporting a sustainable sector 28

3.3Registration processes for the future – supporting a sustainable sector 32

3.4Working smarter: ensuring our reputation for quality by better managing risk 32

4Stronger, simpler, smarter regulation 37

4.1Stronger regulation – better compliance monitoring and enforcement 37

4.2Simpler regulation – streamlining roles and responsibilities 39

4.3Smarter regulation – operating effectively and efficiently 40

4.4Complaints handling – a case study in stronger, simpler, smarter regulation 42

5Ensuring accurate information and ethical recruitment 46

5.1Providers and their courses 46

5.2Students making good decisions 48

5.3Providers’ responsibility for education agents 48

5.4Supporting providers’ work with agents 49

5.5Monitoring agents’ activities 50

5.6Unethical recruitment of transfer students 52

5.7Living in Australia 53

7Supporting students in Australia 56

7.1On arrival and ongoing 56

7.2International student hubs – space to support, inform, advocate and connect 57

7.3Living as part of the community 59

7.4Beyond ESOS – protecting international students’ human rights 59

8Safeguarding students’ interests: stronger tuition protection 65

8.1Why change? 65

8.2Current system – how it operates 67

8.3Current system concerns 68

8.4Moving forward – towards a sustainable, effective system 71

8.5Cost analysis of options 76

8.6Analysis of options 77

8.7Where does this leave us? 79

8.8Future considerations 80

9Conclusion 82

10Acronyms or abbreviations of titles 85

11Glossary and definitions 86

12Appendix A: Terms of Reference 89

13 Appendix B: ESOS review process and personnel 91

14Appendix C: ESOS review submissions list 96

15Appendix D: Better managing risk in international education 101

16Appendix E: Summary of Taylor Fry cost analysis 107

17Appendix F: Tuition Protection Service Diagram 119

18Appendix G: Tuition protection options: advantages and disadvantages 121

19Report references 122

International education in Australia has a proud history. Beginning with the Colombo Plan in the 1950s, international students were welcomed to Australian shores to study under full or partial scholarships from the Australian Government. Many of these students are now prominent citizens in their own countries with links to Australia that run much deeper than fond memories of their time studying here. For example, the current Malaysian Minister for International Trade and Industry, Dato’ Mustapa Mohamed, studied at the University of Melbourne.
In the late 1980s, Australia moved beyond this first wave of international education to welcome full fee-paying international students to its education institutions. This move towards greater internationalisation of Australian education has served Australia well. The growing number of international students over the past two decades, and remarkably over the past five years (up 84 per cent from 2005 and 20091), has embedded a cultural richness in our education institutions and their communities, built linkages and goodwill and fostered a sector that delivers great economic benefit to Australia in terms of export income in the order of $17.2 billion2 and 126 000 jobs3.
The Education Services for Overseas Students Act 2000 and associated legislation (referred to collectively as ESOS) was born from this second wave of international education. It is widely acknowledged as contributing to the success of international education during this period. The principal objects of ESOS are to:

  1. provide financial and tuition assurance to overseas students for courses for which they have paid

  2. protect and enhance Australia’s reputation for quality education and training services

  3. complement Australia’s migration laws by ensuring providers collect and report information relevant to the administration of the law relating to student visas.

ESOS is administered by the Australian Government. However, there is a significant role for state and territory governments in applying the legislation. Chapter 4 explores how this will change as national regulators in the areas of higher education and VET, as announced by the Australian Government and COAG respectively4, take on ESOS functions. Therefore throughout this report I have used the phrase ‘ESOS regulators’ as an inclusive term for any group or body responsible for the regulation of the international education sector.

International education in Australia is at a crossroad. Its success is not necessarily assured into the future. Nefarious incidents in Australia over the past year involving young Indians, many of them students, have tarnished Australia’s reputation as a safe and welcoming country. These attacks have also highlighted the pressures from the extraordinary growth in the numbers of international students studying in Australia and a small segment of the Australian international education sector with questionable motivations, poor education quality and a distinct lack of concern for providing a rewarding student experience.
These emerging pressures impact on education quality, regulatory capacity, local communities and infrastructure such as transport and accommodation. Much is being done to address these challenges: regulators are looking at issues relating to quality within their states and territories; providers are looking at issues within their own institutions; police have been dealing with an increase in incidents; and immigration officials have been reviewing the skills needed for the future. Yet, no one has been drawing the threads together in a coherent strategy. Government has failed to view the situation holistically. Perhaps this is why some of the cracks have appeared.
Negative publicity about these issues has damaged Australia’s international education brand. There are reports of students looking to the United Kingdom and North America as alternative destinations to study. The deteriorating image of Australia’s international education sector is likely to spill over into broader relations, detracting from science and research collaboration, trade and investment and business relationships.
The objects of ESOS are well founded and ESOS provides a sound regulatory structure. However, the current environment has decisively shown that ESOS needs to be strengthened and applied by regulators more consistently and rigorously. Compliance and enforcement efforts need to be stepped up. It is clear the rapid growth of international education was not matched by a commensurate increase in resourcing of regulatory functions with the negative consequences we have now seen.
Significant changes are needed to restore Australia's reputation for high quality education and training. We need a focus on quality and student experience rather than volume and dollars, and we need to recognise the contribution of international students to their institutions and community and the formation of long lasting people-to-people linkages, and its vital contribution to Australia’s public diplomacy and role in the region. As a former Trade Commissioner I believe the forthcoming separation of the marketing functions of Australia's international education brand from the regulatory functions of the industry should be an interim measure only, with the Government giving consideration to other possible models, such as the British Council and Education New Zealand as possible useful starting points. In considering these models, I would urge a more holistic approach to managing and supporting the international education sector to fully realise its benefits for Australia.
While immediate action is needed, I caution that changes to ESOS and other areas that impact international education should not be so draconian that they cripple the sector.

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