Education (Export Education Levy) Amendment Bill

I will continue the ACT party’s opposition to this amendment bill, which brings in an education levy. It is being brought in to punish all private providers of English language education, all private providers of tertiary education. Why has the Government seen fit to bring it in? It is mainly because of two organisations that failed, the Modern Age Institute of Learning and, latterly, Carich New Zealand. If we look at the Modern Age Institute of Learning to see why it failed, we see that it did not fail because of all the other private providers; they had absolutely nothing to do with the failure of those two institutions, yet they will now be forced to take responsibility for them and for any other private institution that fails.

The New Zealand Qualifications Authority had already identified that the Modern Age Institute of Learning had serious problems, but the Qualifications Authority did nothing. It just sat on its hands and let it carry on. It saw that courses were being run without Qualifications Authority approval, and it did nothing. It saw that trust accounts were not being operated properly, and it did nothing until it was too late. Then it decided that the institute’s failure was a good excuse to bring in another tax—and this Government calls a tax a levy. The Qualifications Authority requirements were not met, and the Serious Fraud Office has now been asked to investigate. It did not need to get to that stage; the Minister could have called the Qualifications Authority officials into his office and asked them what on earth was going on and why the situation was allowed to continue.

To compound the situation and make it even worse, when the Modern Age Institute of Learning failed, the Minister of Education immediately decided that he would bail out the students. He was about to depart for China on a spin-doctoring, damage control mission, and wanted to take good news with him. He did not have to do that; the State did not have to step in, bail out those students, then recover the amount from the private sector, because an insurance company had covered those students and would have bailed them out. The State stepped in and let the company off the hook. It just shows the folly of Government interfering in the private sector, and how clumsy it is. The Government is now trying to redress that situation, but it should not have acted so precipitously. Other private providers, acting out of goodwill, moved to look after those students. No one wanted them out on the street if their home-stays kicked them out, but that never was in danger of happening.

On that note I notice that New Zealand First spoke against this bill. I would suggest that party, which has been fanning the anti-Asian sentiment, has to take some responsibility for what has been happening with these private providers of English language training. I just take an example of a Vietnamese home-stay girl whom I had, a student, who came home one day and said: “What is meant by this word ‘bleeping Asians’?”. I suggest that if there were English students crowding up and down Queen Street, people would not even notice, or they would say how wonderful it was. The anti-Asian, racist sentiment is contributing to a dip in our export education.

This levy goes on all private providers, to cover up for the unscrupulous behaviour of a few. There is no equivalent levy being placed on public providers to cover situations when their English language schools or their general operations run into financial difficulties. The cost was $40 million for one polytechnic, and, altogether, $100 million of taxpayers’ money has been used to bail out polytechnics. This measure is sending a message of similar morality to the private providers.

The Green Party will be supporting this bill to the select committee. We are taking a position consistent with our original support for the first bill, which enabled a levy on private providers and the export education industry. We consider it appropriate that there be such a levy.

We are interested in hearing from submitters the various issues that are raised around the activities of the industry, and the attempts that industry is making to ensure that it protects the students for whom it charges fees and things. We are also interested in finding out whether the levy is performing the functions—and providing the protections—for the students that it was originally intended to do.

We do not consider it unscrupulous behaviour on the part of those companies that have failed, but rather an unfortunate consequence of being involved in an industry such as this. We look forward to hearing from those companies, and from those who remain successful, about the nature of the export education levy and its effects on them. We will be supporting this bill.

According to Trevor Mallard, who is bringing in this bill, international students would have more confidence in New Zealand’s export education sector by paying more tax. Then private educational providers were made to collect this additional tax as a reminder of Labour’s loathing of private enterprise.

It is a move that would push international students into State schools. We have already seen State schools’ enrolment increase for 2004, probably at the expense of private providers. Our State schools have come to rely more and more on international students because funding for education has been channelled into bureaucracy. In the past 2 years, funding for bureaucracy in the education sector has increased by 50 percent, while schools are crying out for more resources. Schools are put on a compulsory diet while bureaucracy fattens.

Labour would argue that the additional tax imposed on international students could be justified on the grounds of user-pays. So let us examine then whether these users are getting good value for paying the existing tax of $183 per person, plus 0.45 percent of their fees. This provides them with the reassurance that the institutions they enrol with are accredited with the New Zealand Qualifications Authority, that institutions are monitored, that any necessary follow-up actions will be swift and effective, that trust accounts will be kept for prepaid tuition fees and accommodation funds, and that the standard of qualifications will be high.

Well, the failure of Carich Training Centre alone illustrates that reality is falling far short of expectation. Apparently, all tuition fees were to be paid into a trust account for the first week of enrolment, because students were entitled to a refund if they withdrew from that institution in the first week. However, I have in my hands a bank transfer form that clearly demonstrates that tuition fees were paid directly into Carich’s Visa account, rather than into a trust account.

That reminds me of the trust account at the failed Modern Age Institute of Learning. There was no money left in the trust account when that institution collapsed. Incidentally, the New Zealand Qualifications Authority had done two quality audits at the institute, and as late as May of this year—just 2 months before that institution went into liquidation—had obtained a reassurance from its accountant that the trust account was operating satisfactorily. It was hardly in the interests of the accountant, an employee of the Modern Age Institute of Learning, to tell the New Zealand Qualifications Authority that the accounts were not in order. How trusting!

I was approached by former Christchurch Carich students who found out that they could not enrol at Christchurch Polytechnic because the equivalent computing course offered by Carich was not compatible with the standards required by the polytechnic. Did Carich have the accreditation to offer that course? If so, does the New Zealand Qualifications Authority apply the same standard of accreditation to all institutions? The Auckland Carich students could not get a firm answer from either the New Zealand Qualifications Authority or the insurance company, Contractors Bonding Ltd, as to whether they could obtain refunds from the insurance cover. They did not even have access to a copy of the insurance cover, and I have still not managed to get the insurers to send me one.

This is a system of user-pays where the users have absolutely no say as to which alternative provider they can go to. The insurance company calls the shots. Some students went to an institution approved by the New Zealand Qualifications Authority and ended up sitting in classrooms without computers for 2 weeks. Some went to another institution and then got a letter from that institution asking them to make up the shortfall from the insurance company. That is why there have been reports of students being auctioned to the cheapest provider.

On the topic of Carich, I have in my hand photos of the Minister for Information Technology, the Hon Paul Swain, at the opening of the purpose-built Carich international students campus in the heart of Auckland on 30 May this year. Labour Ministers do love photo opportunities, do they not? When Carich was in obvious trouble 5 months later, the Hon Paul Swain was nowhere to be seen.

The lip service paid by Labour to export education is obvious when one reflects on the different treatments of other export industries. Our largest export industry is dairy, earning $6.4 billion, followed by tourism at $6.1 billion, forestry at $3.4 billion, with export education coming in at $1.7 billion. The Ministry of Agriculture and Forestry administers 98 pieces of legislation, and over 100 regulations to go with them. Tourism New Zealand got its own dedicated legislation. In the 2002 year, the Ministry of Agriculture and Forestry spent $68 million on enforcement and industry monitoring, and a further $82 million on biosecurity. Tourism New Zealand had a budget of $58 million. The Government appropriated an additional $15 million to target the US market and earmarked $34 million for the America’s Cup challenge.

In order to maintain our reputation, we pay so much attention to ensuring that a single can of export beef reaches a high standard before it leaves this country, yet when it comes to export education, Labour is callous and careless in ensuring the well-being of our young people, mainly from Asia. Not only do those international students have to pay for the systems of monitoring and follow-up, they also have to pay more when the system fails. They have no say in paying higher taxes and no control over how that money is spent. When this Government and its officials fail, they blame the private training institutions. They make successful institutions collect extra tax to bail out the Government.

Trevor Mallard’s so-called charm offensive trip to China this year was a disgrace. Mr Mallard was quoted in the Chinese media as saying that New Zealand did not want that many students anyway. I wonder why taxpayers wasted their money in funding his trip to China when he is trying to convince the Chinese not to send students over here. If Helen Clark is serious about holding individuals accountable, she should remove Trevor Mallard from the export education portfolio and give it to someone who cares and can provide leadership. Passing legislation to tax international students studying in private training establishments because of the failings of her Minister and officials is totally unacceptable. The National Party will certainly not support this legislation, which is a total outrage.

I support this excellent bill, which will correct a very difficult situation for New Zealand.

I too join with my colleague Helen Duncan, and all other Labour and Progressive colleagues, in supporting this bill. We should get on and get it passed.

I take this opportunity to support this bill, along with my colleagues.