In an earlier post I criticised the government’s plans to cap international students by education provider and course.

This post goes through the capping legal detail of the Education Services for Overseas Students Amendment (Quality and Integrity) Bill 2024, which if passed would amend the Education Services for Overseas Students Act 2000.

The amending bill contains other provisions on education agents and education providers designed to limit misconduct in the international student market. This post does not cover these provisions, but Tracy Harris discusses them here.

In this summary, unless specified otherwise, the sections mentioned refer to the amending bill but use the section number as it would appear, if passed, in a revised compilation of the ESOS Act 2000. I also refer to the bill’s explanatory memorandum, which explains the intent behind some provisions. It can be downloaded from the bill’s webpage.

The amending bill is complex and I don’t know ESOS 2000 the way I know HESA 2003, so if I have missed or misunderstood something email me or leave a comment.

Italicised phrases other than section headings highlight powers that give the minister wide discretion. I see this as a significant problem over-and-above the direct consequences of capping.

On what can international student enrolment limits be imposed?

The minister can impose an enrolment limit on:

a) an education provider;

b) a specified class of education provider (both section 26B(1));

c) a specified course;

d) a specified class of courses (both section 26E(1));

e) a class of courses specified by reference to any matter, including course location (section 26E(4))

The class of education provider can be determined according to the kind of provider, the kind of courses offered by the provider, the location of courses offered by the provider, and other circumstances applying in relation to the provider: section 26B(6). For courses specific reference is also made to the number of international students enrolled at the provider: section 26E(5).

The explanatory memorandum gives as examples of a class of providers ‘Table A providers’ (commonly described as public universities), ‘newly registered providers’, or ‘higher education providers located in a metropolitan area’.

Possibly the ‘any other matter’ in section 26E(4) and ‘other circumstances’ in 26B(6) could be used to curb heavy reliance on one or two source countries, something the government would like to see happen.

Note that the minister can, for international students, completely cancel rather than limit enrolments in, courses or classes of courses. This power is discussed separately below.

How will the enrolment limit be expressed?

The limit can distinguish between new and ongoing students at a provider and/or course level: sections 26C(2), 26E(2).

For the first year of this law, 2025, the limit applies only to new students: sections 52(2) & (4).

The limit is likely to be a set number in most cases, but can be expressed as a method for working out the limit at a provider or course level: sections 26C(3), 26E(3). This might be how the stated intention of linking enrolment limits to student accommodation will be applied.

The limit can involve reference to other documents: sections 26B(8), 26E(7). The explanatory memorandum states that this could refer to ABS geographic classifications or Jobs and Skills Australia skills priorities.

The limits can be for one or more years and have different limits for different years: sections 26B(1), 26B(7), 26C(1), 26C(6).

The limit can exempt counting of enrolments in a specified course, a specified class of courses, such as courses in a specified location, or in reference to any other matter: sections 26C(4) & (5).

For higher education, the policy paper signalled exemption of postgraduate research courses and non-award courses. The explanatory memorandum gives teaching and nursing as examples of courses that may be exempted.

How much notice do providers get?

The minister’s decision must be made before 1 September in the year before the decision applies: section 26B(9), 26E(8). However the decision can be varied any time: section 26B(10), 26E(9).

However for the 2025 caps the government has until 31 December 2024: section 53(2) of the amending bill.

Who does the minister have to consult?

For VET courses the agreement of the skills minister must be secured: sections 26B(12), 26E(11). All other consultation is voluntary, the ‘Minister may consult’ TEQSA, ASQA, the Secretary of the Department of Education and the Immigration minister: sections 26B(11), 26E(10).

The minister says that he will consult with the sector on implementation but there is no legal requirement to consult with any entity outside the government.

What happens if the provider exceeds the enrolment limit?

If a provider exceeds the total enrolment limit their registration under the ESOS Act 2000 to enrol new students is suspended in all locations and courses for that year, other than those exempted under the limit: section 96.

If a student has accepted but not commenced their course the student cannot commence: section 96(2)(c).

A parallel course suspension provision is in section 96A.

When does suspension end?

Suspensions end on 31 December of the relevant year or at an earlier time at the discretion of the Secretary of the Department of Education: section 96A(5) & (6).

A provider may appeal a decision not to end the suspension at an earlier time: section 169AB, items 12 & 13.

For an internal review a person in the Department who was not involved in making the original decision assesses the decision: section 169AE of the principal ESOS Act 2000. They have 90 days to do so: section 169AF of the principal ESOS Act 2000.

A provider can go to the Administrative Appeals Tribunal (or the Administrative Review Tribunal, the proposed AAT successor) for a review of the original decision or the internal review decision: section 169AG of the principal ESOS Act 2000.

Cancelling ESOS registration for specific courses or classes of courses

The minister can cancel registration for a course or classes of courses if:

• There have been systemic issues in the standard of delivery in the course;
• The courses provide limited value to Australia’s current, emerging, and future skills and training needs and priorities;
• It is in the public interest to do so: section 96B(1).

In this case the minister must rather than may consult others – for higher education providers this will be TEQSA and the Secretary of the Department of Education: section 96B(6). There is no requirement to consult higher education providers or organisations. However, the possibility of judicial review (below) would make it prudent to contact the affected provider(s).

Evidence of ‘systemic issues’ for higher education providers could be breaches of the ESOS Act 2000, breaches of the provider’s registration (presumably ESOS registration but TEQSA registration might also be important), completion rates, and transfer rates to or from other courses: section 96B(2). However the considerations are not restricted to these matters: section 96B(3).

Although TEQSA is to be consulted, this is another example of how TEQSA is being sidelined in favour of political decisions. It also creates a potential situation where a course is suspended for new international students on ‘standard of delivery’ grounds but remains registered with TEQSA for domestic students.

The ‘public interest’ is of course a vague term that serves to lift restrictions on the minister’s power.

The minister is to exercise powers personally

Normally the minister can delegate his or her ESOS powers to the departmental Secretary or other senior bureaucrats: section 170 of the principal ESOS Act 2000.

However decisions to cap or cancel courses must be made personally by the minister: section 170(1A).

According to the explanatory memorandum, this is because ‘these powers are expected to have a profound effect on providers’.

Parliamentary review

The overall caps are made by a legislative instrument. A legislative instrument must be tabled in and can be disallowed by either the House of Representatives or the Senate, unless the Act creating the instrument specifies otherwise. The ESOS amending bill exempts other legislative instruments from disallowance but not the broad capping provisions.

However, the specific ‘notice’ given to a provider of their cap(s) is deemed not to be a legislative instrument: sections 26C(10) & 26F(9).

Judicial review

As noted above, the legislation provides for limited merits review on when a suspension is lifted.

There is no general right of review on the merits of a provider’s cap(s).

However the minister’s decision could be appealed on narrow grounds under the Administrative Decisions (Judicial Review) Act 1977. These include errors of law, failures to observe the correct processes, no evidence to justify the decision, and improper exercise of power. The latter can include exercising a power for a purpose other than for which it was conferred, exercising discretionary power without regard to the merits of a particular case, exercising power in a way that is so unreasonable that no reasonable person could have so exercised it, and abuse of power.

In my ideal world of higher education policy the government would set the rules of the game but not try to micromanage students or education providers. But as the system moves towards one based on ministerial and bureaucratic discretion the possibility of judicial review will put some constraint on government decision making.

Constitutional issues

The legislation recognises that these laws may breach the Constitution, by acquiring property other than on just terms. The explanatory memorandum indicates that this could be the case when a provider has to breach a contract to comply with the law. Cancelling the enrolment of a student who has accepted an offer is an example of when this may occur.

In these cases the Commonwealth is liable to pay a ‘reasonable amount’ of compensation: section 176E(1).

If the Commonwealth and the provider do not agree on the compensation amount the provider can take the Commonwealth to court: section 176E(2).

Conclusion

The Education Services for Overseas Students Amendment (Quality and Integrity) Bill 2024 takes the higher education sector into new legal territory. The level of ministerial discretion is unprecedented. While the explanatory memorandum offers reassuring statements about how some of these powers are to be used, the powers are there. The mere possibility of their use changes the government-university relationship.

We have to wonder what this bill means for how the Australian Tertiary Education Commission will be run. Will ATEC/the minister be setting caps by course for domestic students as well? If the government conceives of universities only as producers of job-ready graduates, the case for stopping domestic students doing courses that don’t meet Australia’s skills seems stronger than for international students, most of whom are not going to be long-term participants in the Australian labour market. Chinese arts graduates are China’s skills supply problem, not Australia’s.

With the government and opposition united against international students we have to accept that provider caps will happen. Soft caps on total enrolments are not unusual for domestic students; these are things that the sector has managed for a long time.

But course level caps are something else. As I argued in my earlier post, these will in practice reduce total enrolments to well below the official provider-level cap. They are in fundamental conflict with principles of student choice and university autonomy. The higher education sector should fight to have them removed from this bill.