Education (Export Education Levy) Amendment Bill

The Education (Export Education Levy) Amendment Bill is the title of this bill, but I believe that it does not convey the substance of the bill. When the export education levy was first established, it was clear that the purposes that the fund or levy could be put to were to develop and promote quality assurance in the export education sector. Those purposes may include professional development, marketing, the implementation of scholarships, research, resource development, and support, or they may relate to other bodies engaged in the development, the administration, and the audit of the co-care or pastoral care of students, and the general administration of the levy and associated purposes.

The title of this bill is not very informative to the public. In fact, the Government proposes to increase one category of levy, and that particular levy will be charged to private education providers only. It will not be a levy imposed on the whole export education sector. That levy will be restricted to the private providers of the export education levy, and it will then be used to reimburse students’ fees or accommodation expenses and other expenses in cases where private education providers fail. We were told that was to be so whether the reimbursement was first paid out by ministries or departments—by the Crown.

All the submitters to the Education and Science Committee were unanimously against that. I could not summarise the opposition to the increased levy better than by referring to the submission made by the Association of Private Providers of English Language. Its representatives believed that the real priority, if the Labour Government was trying to give protection to students’ fees paid in advance, would not be achieved by punishing private education providers, but by improving enforcement. Those providers told us that if they believed that this bill would have an impact only every few years—that is, if the New Zealand Qualifications Authority did its monitoring job properly, and institutions that had not adhered to the proper guidelines were put on notice and had effective action taken against them—then they might not be hesitant to support this particular additional levy. But the fact is that in the last 10 months there were not one, and not two, but three major collapses of private educational institutions, and in all of those collapses, according to those providers, questions can be raised about the enforcement, or lack of enforcement, by the New Zealand Qualifications Authority.

When the private export education providers have no confidence in the enforcement agency, or gatekeeper, doing its job, then the export education additional levy that is to be charged on them will not be fair. The title “Education (Export Education Levy) Amendment Bill” should be a bit more—

The CHAIRPERSON (Ann Hartley): This is not the title debate.

💬 Hon Trevor Mallard: Part 1.

We still believe that the title is not informative. However, in terms of the substance of the bill, it has been pointed out by private providers that if the gatekeeper, the New Zealand Qualifications Authority, had done its job when people informed it that certain institutions had not adhered to the guidelines, or if it had used a robust auditing procedure, then some of the earlier high-profile collapses could have been prevented.

On behalf of the ACT party I rise to oppose this legislation, and in particular, Part 1. New section 238I(1A) inserted by clause 4(2) states that: “Subsection (1B) applies if—(a) an international student is or was enrolled with a private training establishment”. That is the whole ideological thrust behind this legislation, and is one of the reasons why we oppose it. This is yet another example of how private enterprise is being punished by this Government. The legislation does not apply to public tertiary training establishments. It does not apply to any public education establishments, but only to private training establishments. Yes, some private tertiary establishments have let their students down really badly, and in a reprehensible way. But why do we have to punish all of them, because of the actions of a few? Why is the Minister not applying the same sanctions against public tertiary institutions that have taken money to which they were not entitled? They will be let off with a slap on the back of the wrist with a wet bus ticket. Where is it stated that this Government will tax all the other public tertiary institutions, to make up for what Christchurch Polytechnic has done in the last few weeks? In exposing that matter I give credit to the National spokesperson on education, the Hon Bill English, because if he had not brought it to the Government’s attention absolutely nothing would have been done about it.

The Minister is hell-bent on getting the private sector out of education in this country. We have seen that with regard to tertiary education and early childhood education. Not only are private providers being prejudiced but parents who want to send their children to private providers are being disadvantaged. The other thing with regard to this bill is that it is not just the providers that are private tertiary establishments that will be damaged by this legislation. Consumers will be damaged, as well. This legislation reduces the choice for students, because the inevitable result of imposing the levy on all private providers is that they will have to put up their fees. That is one result the Minister will be quite happy about, because he will be able to herd more people into public institutions, where outcomes do not matter. It is a matter of statistics; it is just a matter of bums on seats. This afternoon in question time in the House the Government crowed about the drop in the unemployment figures. We do not hear it crow about the number of students who enrol in dodgy polytech courses. They are enticed into those courses, and that hides and distorts the statistics of the number of people who are unemployed. It is just a matter of statistics; it is not about outcomes and measuring achievement, at all.

💬 Hon Trevor Mallard: I raise a point of order, Madam Chairperson. I am aware that we are on Part 1, and that it is the broadest part of the bill. However, a general discussion on alleged dodgy polytechnics and the unemployment rate is beyond Part 1.

The CHAIRPERSON (Ann Hartley): I ask the member to stick to Part 1.

Part 1 does deal with private training establishments that cannot, have not, or will not provide, in whole or in part, the course of study or training. My point is that we oppose this legislation because it applies only to private establishments, and does not apply to public establishments. That is a gross omission from the legislation.

As I said, this legislation is ideologically driven. Why are we imposing this tax—because that is what it is? It is a tax, because it can be used for all sorts of reasons, such as making refunds once, twice, or three times. It opens the way for double-dipping. That has not been cut off. Why are we imposing this legislation on private establishments, which have no say over who enters the industry? The gatekeeper will be the New Zealand Qualifications Authority. It is the very gatekeeper that failed to do proper checks on private establishments that could not, did not, or would not provide courses to students, leading to the introduction of this legislation. The Minister should take a call, instead of taking a point of order, to explain why the New Zealand Qualifications Authority can be trusted.

This legislation is another Mallard mess mop-up. As far as I am aware, the Minister has been in charge of the education portfolio for about 5 years. He has some remarkable achievements in his name. For instance, each time he goes to China to talk about international education in New Zealand, student numbers here drop. I recommend that he stay at home and do his job properly.

We would not need Part 1 if the Minister had done his job properly. He has a public agency, the New Zealand Qualifications Authority, whose express function is to ensure the security of funds paid by overseas students, and it simply has failed in that function, and, I might say, it has failed in it for quite a long time. Going back to the 1990s, the authority did not do that job well, and, as far as we can see, it is still not doing that job well. The other agency that has failed, for which failure every other private training establishment will pay the price, is the Tertiary Education Commission. The most prominent collapse of recent times, which involved Carich and international students, was in circumstances known in detail for many months by the Tertiary Education Commission. In fact, the decisions it made over how to handle that organisation were directly related to its collapse. So the Minister should stay home, he should not go overseas and frighten off our potential customers, he should not be bullied by the Chinese Government into picking on one form of institution—that is, private training providers—and he should get public agencies to do properly the job they are meant to do.

Along with the ACT party, I share a concern about the way in which this legislation picks on private training establishments. In the Government’s mind they are marginal organisations that should not really exist and that do all sorts of dodgy things. If the Minister has not noticed, he needs to know that public organisations in education are doing much more damage to the reputation of this country and his policy than private training establishments are at the moment. Christchurch Polytechnic is just one of half a dozen New Zealand polytechnics, all of which have foreign fee-paying students, that have indulged in the worst sort of unprofessional and ruthless exploitation of the Government’s slack policies and weak education Ministers.

And those polytechnics are doing it without any punishment. That is the odd thing that is going on. The private training establishments are all being punished because of the actions of one, and they will all have to pay their levies, but in the polytechs the offenders are getting away with it, and all the polytechs that have kept the rules are getting punished. So at least that is consistent: whether one is in the public sector or the private sector, with this Government if one does the wrong thing nothing happens, but if one does the right thing one gets it in the neck—and, in the case of the polytechs, to the tune of millions of dollars. I would like the Minister to explain that.

I am very pleased that the select committee dropped out clause 5—another defeat for the Minister, and one of any number that he has had to deal with. He is a Minister who usually overreaches with his policy, then gets a whack on the nose and has to pull back. Part 1 originally set out to levy private training establishments for just the year 2004 in a way that was grossly unfair, bad public policy, and unsustainable. I want the Minister to tell me how it ever got into the legislation. How did it ever get through the officials process, past a Cabinet committee, and into this legislation, when it was so demonstrably unacceptable? It met almost no criteria of good public policy. One can only assume that, once again, the mighty pair of Mallard and Maharey sat in their offices one night and thought: “How can we really hit someone we don’t like?”.

When I came down this week I received a note from one of the major players in the export education field. It thanked New Zealand First for the work that it had done in getting this particular legislation as right as it possibly could be. The final point was interesting: “Let us hope that this is the last time this Government and this Minister actually tries to get the export education levy right.” This is about the third crack that he has had at it. It started off under the Education Standards Bill with a levy on monitoring pastoral care. Then a Tertiary Education Reform Bill was ready for deliberation by the Education and Science Committee—there was 1 day to go—and the Minister threw on board an Education (Export Education Levy) Amendment Bill that contravened the principles in the Tertiary Education Reform Bill.

When that bill went to the select committee—the Minister did not want it to go to the select committee—we ended up with only two parties actually agreeing with it. One was the Government and the other was the Education New Zealand Trust. The Education New Zealand Trust was supposed to be representative of all the providers, yet the providers came along in their own groups, representing themselves, and absolutely and utterly opposed the bill. The export education levy had not been laid down in front of them by the Minister. There had been no consultation and no buy-in. Of course, we know what happened. Although some parties tried to get it as good as it possibly could be—and that meant some modifications of that legislation, to make sure there was at least an element of consultation—it still was not good enough, and when Carich and the Modern Age Institute of Learning fell over, the Minister thought he would use the levy to cover the costs that the Government incurred in getting those people out of a ditch. That is not to mention the simple fact that, in particular, in the case of Modern Age, the real villain was the Government’s monitoring agent, the New Zealand Qualifications Authority, which did not recognise that the activities Modern Age was getting up to signalled there was danger ahead.

So the Minister decided to dig into the export education levy. There was only one little problem: it was ultra vires. He was not allowed to do it. So he decided that there was only one way to do it: “This is Clyde Dam stuff. We will do what the Nats have done in the past: we’ll just change the law, and we will change it retrospectively.” That has been mentioned. Even though the regulations that went through in December 2003 set a 0.45 percent levy on all providers, the Minister came along with this legislation, which set a 0.7 percent levy. It is a completely new regime. I think both sides of the House were very uncomfortable with this particular issue, and, finally, the Minister saw that he had perhaps overreacted—

💬 Hon Trevor Mallard: Good discussions with Brian Donnelly.

Maybe it was a little bit like the Panoho case. But, in fairness, I think the worst excesses were caught in the end—[Interruption]

💬 Hon Trevor Mallard: I raise a point of order, Madam Chairperson. I think the suggestion that a member in this Committee is a lapdog is certainly out of order. Mr English made that suggestion.

💬 Dr Wayne Mapp: I listened very carefully to my learned colleague Mr English, and he made no such imputation about an individual, so there is simply no point of order.

The CHAIRPERSON (Ann Hartley): Did the member make such a remark?

💬 Hon Bill English: I was referring to the collective of New Zealand First, and certainly not to an individual. You will notice that I used the plural, which was “lapdogs” —not “lapdog” —so, clearly, the comment was in order.

The CHAIRPERSON (Ann Hartley): A reference to a party is treated in the same way. It was not appropriate. The member should stand and withdraw that remark.

💬 Hon Bill English: Could you just explain that again? I am not exactly sure what the ruling is. I hope you are not suggesting that it is out of order to make a derogatory remark about another party in this House. That seems to me to be part of the business of Parliament.

The CHAIRPERSON (Ann Hartley): A party is made up of members of the House, and the remark was not appropriate. The member will withdraw.

💬 Hon Bill English: I withdraw. I raise a point of order, Madam Chairperson. Can I just get clarification on the ruling you have just made? Do we now take it that members cannot make a remark about a party that, if applied to an individual, would be regarded as out of order?

The CHAIRPERSON (Ann Hartley): I refer the member to Speaker’s ruling 47/1. If the member reads it he will see that it makes the situation quite clear.

💬 Dr Wayne Mapp: I raise a point of order—

The CHAIRPERSON (Ann Hartley): I have ruled on the matter. It is finished.

I guess that scenario demonstrates that New Zealand First is here to constructively make a difference for the good, rather than to play petty little games of the kind just demonstrated. The question that—

💬 Hon Bill English: I raise a point of order, Madam Chairperson. In terms of Speaker’s ruling 47/1, the member has just made a derogatory reference and used an offensive term. It was unparliamentary, in my view.

The CHAIRPERSON (Ann Hartley): I am sorry but I did not hear it. Could the member clarify whether he used an offensive term?

Certainly, to my mind I do not think I made an offensive remark at all. It certainly was not intended to be offensive. It was simply a description of some of the activity that was going on. I will withdraw it; I am quite happy to do that, if it makes things easier. As I said, we are here to be constructive, not destructive.

We already have a quite significant amendment that the Minister has put up on Supplementary Order Paper 240. He is inserting a whole paragraph as to what can be done with this levy, which seems to me to get to the very intention of the bill in the first place. I ask the same question that was asked of me: has the Minister finished with this legislation, or are there to be subsequent pieces of legislation? Have we finally got the export education levy operating in the manner that it should operate—that is, serving the purpose of that particular industry?

💬 Hon Trevor Mallard: Does the member want to help us?

I ask the Minister to take a call and to give this Committee some sort of guarantee that we will not be back here again debating some of the issues around the export education levy, which in the long run will make us less competitive in this particular industry. The Minister is aware it is a very important industry to New Zealand. We have to make sure we get it right. We certainly are not doing it by continuing to have legislation come back to this House.

I rise just to take a short call, and to follow through on what my predecessor spoke on. The amendments that have been added by the Minister of Education now clarify what the bill is all about. Anyone can now see what the intention is—yes, it is to penalise private training establishments—but also exactly how it will do that. I certainly concur with that.

But, contrary to the letters that the Hon Brian Donnelly has received, I have received all sorts of emails and letters of “no thanks” on this particular bill. I have not received any that have given any thanks for it, or that consider that it is worthy of taking up the time of this House and the Education and Science Committee. Everybody has been opposed to it, and that worries me. The entire industry is against it, and not only because of the way it has occurred—and the Hon Brian Donnelly laid out very well the historic flow of events, and the surprise that was caused when the original bill was pushed upon everybody.

I ask the same question: how many more times are we going to sit down to modify, change, strike out and/or correct legislation, to somehow capture those who have enough enterprise to keep in business? It is a huge business that we are referring to. In my second reading speech I established that it is a massive business of over $2 billion a year. The Government takes a huge slice of that—at least 25 percent—by way of taxes. As a result, the whole issue now is that, as the Minister has brought forth, to catch a little sparrow he is utilising a massive, great big machine. The little levies that he is asking for add up to a bit over $3 million, maybe $4 million. He, by the same token, in the recent Budget has just offered $10 million to export education. Why does he not just net it all out, and give away $6.5 million to the private tertiary industry for it to establish itself, work the whole process out, and work through the angst and the issues associated with this matter, thus getting all the establishments onside, being cooperative, and working together?

I am concerned that if this bill goes through the House, it will not solve the question marks that the industry has about it being penalised. I would be sad to see this bill go through the House, because I think, basically, it is a disturbance to an industry that is trying to do its best, is bringing umpteen hundreds of millions of dollars into the nation, and is doing it very well. Having withdrawn certain clauses out of the original bill, then today putting in a whole new paragraph by way of a Supplementary Order Paper, the Government has literally mashed this bill around in such a way that it no longer resembles a clean bill. We will certainly not be supporting it.

As is well known from the previous speakers and from our votes, National is opposed to this bill. Fundamentally, we are opposed to it because it is discriminatory and, in addition, reflects the lazy answer. It is the easiest answer the Government can come up with without really listening to the sector itself. Extensive evidence was given by various submitters to the Education and Science Committee about other options: insurance, bonds, trust funds, and the like, all of which were industry-based solutions as opposed to a Government-imposed solution. After all, in other sectors where there are questions of protecting people affected by a particular industry or institution, the result is a collective fund, insurance policy, or indemnity policy organised by the industry itself, not controlled by the Government. That is the distinction, is it not? That is the distinction between the Law Society and other similar entities, and this solution. This is the Government solution—the statist solution.

When that occurs there is a responsibility. For instance, at the very least, the sector should be able to rely on the governance entity, the New Zealand Qualifications Authority, to do its work properly. But it does not. For instance, about 12 months ago, the New Zealand Qualifications Authority knew that the Paramount Institute of Auckland, which was a private tertiary provider, was in trouble. At that point the deficiency was about $200,000. Over the succeeding 10 months, that deficiency grew to $800,000, which effectively now becomes an impost on all other private tertiary providers. So the sector is caught in a bind. It has to pay this money, which is mandated by the Government. It relies on the State entity, the New Zealand Qualifications Authority, to be the monitoring agency. If that agency was doing its job properly, the funds represented by the levy would be reduced, and, therefore, ultimately, the levy would be reduced. So not only are the providers stuck with the levy, but the bad supervision by the New Zealand Qualifications Authority, which the Minister is well aware of, causes the levy to be significantly higher than it otherwise would be.

I listened to the various speakers on Part 1. A person tuning into the radio just to hear this debate might well think New Zealand First is supporting the Government, and that has been referred to. But even those members, and they are well-known these days to be the tail that is wagged by the Government dog—[Interruption] Well, that is a phrase we are apparently not allowed to use, so I will say that they are the tail that is wagged by the Government dog. Even they see the deficiency. So one would think that the Government would take on board that all sensible parties in this House, and I even include New Zealand First in that category for this particular purpose, are voting against the bill, with the exception of the Green Party—and everyone knows that that party is not sensible.

So, essentially, the votes by the parties in this House demonstrate the bankruptcy of the Government’s solution here. The proper approach was to listen to the industry and look at the solutions that the industry was prepared to come up with—and it would check those with the Insurance Council, in particular. That would have been a reasonable approach. Everyone recognises that there is a problem to be dealt with. What the industry does not want is the statist, discriminatory approach—the lazy reversion to type by Labour—in imposing a centralised levy with poor supervision by the New Zealand Qualifications Authority.

I move, That the question be now put.

I really appreciate the opportunity to make a second contribution, because there is some very important information that I want to share with my fellow politicians, about why even the Greens should not support this bill. The unanimous action by all the export education providers to not support this additional levy is because of the lack of confidence in the way the gatekeeper, the New Zealand Qualifications Authority, is doing the job, which means that the private institutions that actually perform are punished.

Let me give two examples. I have some information in front of me concerning a high-profile college—the Paramount Institute of Auckland. On 14 November 2003 an ex - staff member wrote to the New Zealand Qualifications Authority about problems at the school and its lack of adherence to the authority’s criteria for providing good education. The person did not get much of a reply, so on 26 November she again wrote to the authority. This time she provided three pages of details outlining where the school had failed, in terms of individual students or collectively, in adhering to the authority’s guidelines. On 27 November she received from the authority a reply to the three-page complaint, thanking her and advising that if the authority were to act on the information, she would have to lodge an official complaint.

An official complaint form was attached for her. But how bureaucratic: a detailed complaint was lodged but not accepted because the correct form had not been used! Eventually, on 1 December she wrote to another person at the New Zealand Qualifications Authority saying: “What do I need to do before the NZQA will take positive and decisive action?”. I ask the Minister to give us one good reason why we should have confidence in the gatekeeper and why we should be supporting this bill.

I want to detail a train of events that happened in respect of the Modern Age Institute of Learning—-an example of another high-profile collapse. On 13 May 2002 the first financial statement filed by an accountant at that stage, already showed that the balance of the trust fund held at the institute as at 31 December 2001 was $611,054, while the accountant’s work paper indicated the amount should have been $1,011,714. One would have thought that by then alarm bells would be ringing.

In February 2003 the New Zealand Qualifications Authority, during its audit, met a representative from a chartered accountancy firm expressing concern about the management of the trust fund but took it as an assurance, at that stage, that something was going to be done to fix the matter. That was February 2003, and we moved on to 16 May 2003, and once again the New Zealand Qualifications Authority found out that a new trustee had been appointed for the Modern Age Institute of Learning trust account, and on 19 May the qualifications authority claimed it had obtained a written assurance from the new trustee that everything was fine. When I looked at that written assurance, all it said was that the new trustees confirmed they would consent to the receipt of student fees, which are to be held in trust in accordance with New Zealand Qualifications Authority quality assurance standard 1. It did not give any assurance whether the trust fund was operating or whether the funds in that trust were accounted for.

I move, That the question be now put.

I just want to refer briefly to the remarks made by Dr Wayne Mapp with regard to New Zealand First, and I have to say he demonstrated that some parties have not got out of the first-past-the-post mode. They have not worked out that what we are actually here for is to end up with a better New Zealand; and that there will be opportunities presented from time to time for parties to be able to work together with the Government to get the best possible outcome. An opportunity was presented in this particular case with regard to retrospective taxation of the export education providers, and we were able to work with the Minister to be able to get an outcome that I believe was in the best interests of all concerned.

Had the National Party had its way of just opposing, opposing, opposing, and saying “This is bad.”, then the export education providers would have had to stump up with an extra $1.7 million. So National can go along and tell them that that is what they believe should have been done to them. New Zealand First said: “No, let’s use the opportunities to come up with a better outcome.”

The point is, and it has been made by Dr Mapp, New Zealand First does not support this bill, and we have not supported the export education levy since it was first introduced. That is largely because it has been so poorly done. It has been introduced without the ownership of the providers themselves, and it was tacked on to a bill that had an industry training levy fund in it. The principles are that the members had to be balloted, if they wanted to impose a levy; 66 percent of all those balloted had to return; and there had to be a 66 percent response in favour of it. That was the principle that was applied to industry training levies. Yet when it came to the export education sector it was: “Whacko! We’re slamming this down on top of you. You’re not going to have any say, and if we want to come along and run right over the top of regulations, we’ll do that also.”

As I say, New Zealand First does not believe that this bill has been done well. It has not been done in the best interest of the industry itself. We believe that in the long run there is a real problem when, as the Government agency that accredits those who can provide—in other words, the export education providers, the private training establishments—they have no say in who can provide this form of export education, but when it comes to the monitoring agency failing in doing its duty, they are left carrying the can.

That is wrong. If there is to be accountability we either have to have the market running it all, and that is it, or we have to have a decent monitoring agency; in which case we do not need to have to use this sort of mechanism to provide the insurance policies. Unfortunately, we have not had that. Therefore, New Zealand First asks why those who are doing it right, and doing it well, should end up having to carry the can, when the agency of the Government itself has not done its job properly.

I know that a lot of work is being done on this, but at this particular time it still leaves one with a sense of insecurity about whether we have, in fact, got all the pieces in place. If we have not got the pieces in place, then more private providers will be falling over. The levy will be raised; purely and simply, again next year we will be debating the whole issue, the same principle, that the Minister has tried to put into this bill. So New Zealand First is not supportive of the bill. However, we used the opportunities to work constructively with the Government, and I think got the best possible outcomes. We are very pleased and proud to be able to stand here and say that that is what we did, rather than simply oppose for the sake of opposing, and costing the industry $1.7 million.

I move, That the question be now put.