Ogilvy Bernie: Education (Export Education Levy) Amendment Bill — First Reading 
Ogilvy Bernie: Education (Export Education Levy) Amendment Bill — First Reading 
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BERNIE OGILVY (United Future) 
: 
 I rise on behalf of United Future to oppose the first reading of the Education (Export Education Levy) Amendment Bill. We opposed the export levy when it was introduced in a rush as part of the Tertiary Education Reform Bill last year for several reasons. We believed back then that it would clearly impact on profitability and lead to subsequent fee increases thereby reducing competitiveness which we now see with other countries providing export education. 
There were also question marks at the time as to whether the levy would achieve what it was supposed to do. The generic marketing approach funded by the levy was not sufficiently targeted to students for particular courses and at that time at least there was no evidence of market failure in the sector in terms of marketing quality assurance or even pastoral care. The select committee consideration of the levy found that a significant portion of the industry was not supportive of the levy at all. Although the Tertiary Education Reform Bill included a provision that required the Government to show there was sufficient support among industries for a levy to fund industry training organisations as I recall there was no similar requirement for an export education levy. 
So we come to this bill tonight which takes the levy and increases the amount but for one class of providers only—that is the private training establishments. This has arisen as we know from the collapse of the Modern Age Institute of Learning and Carich Training Centre—both private providers—which saw the Government dipping into what I call the fiduciary fund to assist international students affected by those closures. As a consequence the bill also enables the Government now to recover those costs. 
The levy was intended to enhance the development promotion and quality assurance of the entire industry but the uneven nature of this change to the levy undermines any attempt to create a unified sector. We all know that a State provider such as a school or a polytechnic would not be allowed by the Government to collapse as we have already heard but I have severe doubts that in that case the Government would seek to recover its costs from the levy fund. The industry not the taxpayer should be asked to bail out State providers that falter as well. In any case public sector institutions are able to cross-subsidise losses from Government-funded domestic student operations in a way that the private sector cannot. Of course the point could also be made that State providers—particularly schools—get into export education to avoid going under because of insufficient Government funding; that is a debate I guess for another day. 
This issue goes even further than the providers. Export education is we have been told the fourth-biggest export earner for the country with estimated revenue of $1.8 billion. Yet we know that only one-third of the revenue from foreign fee-paying students comes from tuition fees some of which then is passed on to the employees of the providers. The other two-thirds is pumped into the economy as a result of students spending on accommodation food telecommunications recreation and travel. The portion that goes back to the State in the form of GST is considerable going up to about $250 million—just for GST. 
It is significant that the Tertiary Education Reform Bill did not include provision to differentiate the rate of the levy according to the type of provider as the whole aim of the levy was to create a unified industry. But this bill means that law-abiding providers that are compliant with the conditions of their registration will be penalised for the mistakes of others. Perhaps the most bizarre aspect of this is that the private sector in this industry is being held accountable for the failing of a competitor or competitors. That is not exactly standard business practice in an open economy. It is the Government that controls entry to the industry as only registered private training establishments can enrol overseas students yet the industry is expected to pick up the tab for the Government’s errors of judgment. 
I note that the Government’s original discussion document from last year on the imposition of the levy recognised the competitive nature of the industry but also included a number of areas where industry cooperation adds value. What is proposed in this bill could conceivably come under this rubric if it can be couched in a generality such as the need to preserve the industry’s reputation. But the emphasis throughout this discussion document is on national industry cooperation across the whole sector and providing a unified voice. Nowhere does it talk about differentiating between the private and public sectors. If anything the message is that the different parts of the industry must pull together yet this bill threatens to drive them even further apart. 
Interestingly the submission of the New Zealand Vice-Chancellors Committee on the original discussion document proposed that if there was to be an export education levy it should come from the students’ student visa or permit as this would be much more equitable uniform and in fact upfront. If this bill is going to discriminate then it should at least waive the increase in levy for those providers that took on at no charge students who because of those collapses had lost their prepaid fees. 
Yesterday I received a timely reminder that the overall impact of those collapses on the industry seems to have been rather minor if not negligible. Despite a spate of bad publicity the number of foreign fee-paying students in New Zealand schools continues to rise. There are now I am told nearly 17500 fee-paying students which is 14 percent up on last year. Government figures show that the number of Asian students resident in this country also increased substantially and I am sure that the Minister of Education’s recent charm offensive in countries like China had a lot to do with this. 
But I still suggest that this bill is perhaps not as necessary as first thought. Net of GST the fiduciary export levy fund has to have received at least $3 million this year even without adding the 0.45 percent levy. This fund has to be way ahead of its projections as the number of students was not expected to increase by 14 percent. How large could this fund be when the levy is raised to 0.7 percent for the largest slice of the market providers—that is the private training establishments? So what is the need for this punitive legislation? What has happened to the export education levy fund? I notice today that even the Vice-Chancellors Committee has no idea how much has been collected for this year 2003. 
Hon Trevor Mallard 
: We’ll table the report in the House on Tuesday. 
BERNIE OGILVY 
: OK. Indeed it does not know how much has been spent. Education New Zealand as I think the funds manager is called has really gone quiet at the moment as the bill is before us. 
United Future is voting against this legislation and if it progresses to the Education and Science Committee I would like to think that those in the industry will have a real chance to have their voices heard on this bill including the imposition of the levy in the first place. United Future wants to see the select committee ask some hard financial questions about where the existing levy money has gone. Surely there is at least $700000 left over from the worldwide trips that were made this year.