2. Given the size and complexity of the Bill, this briefing paper has been divided into three parts:

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1 Chair Education and Science Select Committee EDUCATION AMENDMENT BILL (No 4) INITIAL BRIEF Introduction 1. This briefing paper is a supplement to the oral briefing to be given by the Ministry of Education and the New Zealand Qualifications Authority to the Education and Science Select Committee on Education Amendment Bill (No 4) (the Bill). The Bill was introduced into the House of Representatives on 6 April 2011, and received its First Reading on 12 April Given the size and complexity of the Bill, this briefing paper has been divided into three parts: International education (pages 2-6); Tertiary education matters (pages 7-11) and New Zealand Qualifications Authority law reform (pages 12 26). Constitutional and Legal Principles 3. The Bill complies with the following constitutional and legal principles: the principles of the Treaty of Waitangi; the rights and freedoms contained in the New Zealand Bill of Rights Act 1990 and the Human Rights Act 1993; the principles and guidelines set out in the Privacy Act 1993; the relevant international standards and obligations; and the LAC Guidelines: Guidelines on Process and Content of Legislation.. 1

2 PART 1: INTERNATIONAL EDUCATION Introduction 4. Part 1 of this briefing paper covers: The establishment of the Crown agency, Education New Zealand ; and International education related technical amendments. A. Education New Zealand (i) Context 5. The international education sector plays a significant role in the tertiary education system and the economy as a whole. Overall contributions to the economy are estimated at levels in excess of $2.1 billion per annum, with additional flow on benefits for tourism and research, as well as contributions towards skills migration and workforce needs. 6. Currently, the government efforts in international education are fragmented. Responsibility for the co-ordination, representation, and promotion of international education is split amongst a variety of organisations (both public and private), operating in different structures, towards different goals and objectives, and answering to different authorities. The common factor is that they all receive some form of public funding. 7. The establishment of a new Crown agent, Education New Zealand, is intended to create an umbrella organisation that can act as a single point of co-ordination and focus for international education activities in support of growth in the sector (promotions, marketing, and government to government relations). The new agency will have a variety of tools (official, promotional, commercial marketing) at its disposal, depending on the region or country it is dealing with. This will give the agency the flexibility it needs to adapt its approach according to particular environmental considerations, while creating more efficiency, better co-ordination, and transparency in return for public funding provided. (ii) Legislative Analysis General 8. Clause 37, new Part 21, of the Bill establishes the new Crown agent, Education New Zealand as a legal entity, as well as providing specific details on requirements such as: the functions of the agency; composition of the board and advisory committee; the role of the chief executive officer; government superannuation entitlements; and state sector employee transfer entitlements. 2

3 9. A number of the provisions in clause 37, new Part 21, are standard for the establishment of a new Crown entity. They are designed to operate in conjunction with the Crown Entities Act 2004, which documents generic requirements regarding the structure, organisational process, behaviour, and reporting obligations of Crown Entities. Similar examples of the standard provisions are contained in the Education Act 1989, in respect of the establishment of the Tertiary Education Commission and the New Zealand Qualifications Authority. 10. The following legislative analysis focuses on particular provisions which advisers wish to draw to the attention of the Select Committee. Functions 11. The functions of Education New Zealand can be divided into three broad groups: promotional and marketing activities; management of government representation activities in support of international education; and industry and student support. 12. Clause 37, new section 270(2)(a), sets out the critical function for the agency of delivering strategies, programmes, and activities for promoting, together with providers and other government agencies, New Zealand education overseas. This is supported by three specific functions: the promotion of New Zealand as an education destination (new section 270(2)(b)), the promotion of the provision of New Zealand education and training services overseas (new section 270(2)(c)), and the management of bilateral government activities related to international education (new section 270(2)(d)). 13. The remaining functions set out in clause 37, new section 270(2), relate to industry and student support activities. These address the need for the new agency to work closely with the sector, to provide assistance with professional development to support the growth of international education, and to maintain a role in supporting the study and welfare of international students in New Zealand. Governance Arrangements 14. Clause 37, new section 272, provides for a governance board comprising 5 to 7 members, to be appointed by the responsible Minister under section 28 of the Crown Entities Act Before appointing any members to the board, the Minister must consult with sector bodies, and any persons or organisations that the Minister considers have a substantial interest in the board s operations. 15. Under clause 27, new section 272A, the responsible Minister may appoint special advisers to the governance board. The appointment of special advisers is intended to ensure that the board receives expert advice and assistance from those government entities that will have a significant impact on the work and outcomes of the new agency, and whose own operations and policies are likely to be affected in turn by the activities of the new agency. 3

4 The special advisers will attend board meetings and provide advice on critical areas of concern, but will not have any voting rights. 16. The Secretary for Education and the chief executive of the department responsible for the administration of the Immigration Act 2009 are specifically identified as individuals who may be appointed as special advisers (new section 272A(1)(a) and (b)). This reflects the fact that the Ministry of Education and Immigration New Zealand have been identified as the two government entities most directly relevant to the business of the new agency. To provide the responsible Minister with maximum flexibility to appoint other advisers as and when required, new section 272A(1)(c) enables the Minister to also appoint any other person as he or she determines. 17. Under clause 37, new section 272B, the responsible Minister may establish a stakeholder advisory committee to provide expert advice to the board. Modelled on a similar arrangement in the maritime sector, the advisory committee will comprise industry experts who can provide targeted and relevant advice and feedback from the international education industry to the new agency on an ongoing basis. Staffing 18. Clause 37, new sections 273B and 274A, addresses particular issues associated with the transfer of state sector employees from one form of government entity to another. The new sections provide for continuity of service and entitlements as part of the transfer arrangements. 19. Employment conditions are maintained at the same level or on terms no less favourable (new section 274A(2)(c)). Similarly, state sector employees who are currently part of the Government Superannuation Fund can transfer across to Education New Zealand without any effect on their membership of the Fund. This offsets the Crown s liability for compensation and protects the investment of individual employees. (iii) Implementation 20. The Ministry of Education has initiated an establishment project to put in place the necessary structure, processes, resources, and personnel to enable Education New Zealand to commence operations from 1 September 2011, subject to the passage of Education Amendment Bill (No 4). This includes the selection and appointment of a designate board, with the aim of ensuring a working board is available to support the transition process and provide advice on business continuity matters. 21. The Ministry will be working with the State Services Commission, stakeholder agencies, and sector representative peak bodies over the appointment of the designate board. The appointment process will follow standard Crown entity board appointment procedures aimed at establishing a designate board for a fixed term prior to the passage of the empowering legislation (at which point the designate appointments would become permanent). 4

5 B. International education related technical amendments (i) Rationalisation of Definitions 22. The terms foreign student and international student are both used in the Education Act 1989 to describe a person who is not a domestic student. The unnecessary use of two terms to describe the same concept has created confusion. The Bill replaces all references to foreign student in the Act with international student. 23. The Bill repeals the existing definitions of assisted student and exempt student in sections 2(1), 60 and 159(1) of the Education Act These terms have become redundant. Refer to clauses 4, 14, 15 and 16 of the Bill. (ii) New Legal Obligation Enrolment of International Students 24. Clause 32, new section 238EA, clarifies the circumstances under which an education provider must enrol a person as an international student. A person must be enrolled as an international student where he or she is receiving educational instruction for two weeks or more or has paid tuition fees. 25. It is unclear in the Education Act 1989 under what circumstances a provider should formally enrol an international student. There have been cases where international students have not been enrolled at a provider, despite having paid tuition fees and commenced studying. This practice potentially enables a provider to evade legal obligations contingent on enrolment, such as becoming a signatory to the Code of Practice for the Pastoral Care of International Students, and paying the export education levy. 26. The change being made through clause 32, new section 238EA, will ensure that the relevant authorities will be able to effectively monitor and enforce provider compliance with legal obligations through accessing more accurate and up to date enrolment data. (iii) Grievance Procedures for International Students 27. Under section 238F(2)(e) of the Education Act 1989, only international students can complain to the International Student Appeal Authority (IEAA) about breaches by education providers of the Code of Practice for the Pastoral Care of International Students. In practice, the IEAA allows representatives to make complaints on behalf of students. This approach mitigates any cultural and, or language barriers which might prevent a student from making a complaint. Clause 33(a) of the Bill amends section 238F(2)(e) to enable authorised representatives to make complaints on behalf of international students. 28. The Code of Practice for the Pastoral Care of International Students currently allows the Code Administrator to refer complaints to the IEAA for investigation. To ensure consistency between the Act and the Code, clause 33(b) of the Bill amends section 238F(2)(e) to authorise the IEAA to investigate and determine complaints from the Code administrator. 5

6 (iv) The Making of Regulations on the Export Education Levy 29. Under section 238H of the Education Act 1989, the Governor-General may make regulations imposing an export education levy on those tertiary education providers who receive tuition fees from international students. Section 238H(4) requires the responsible Minister to consult with providers before recommending to the Governor-General that regulations are made that prescribe or amend an export education levy. 30. Since 2005, regulations have been made on an annual basis, whether required or not, due to uncertainty about the legal effect of section 238H(2)(b), which stipulates that the regulations must prescribe when the levy is payable and the period to which it, or any part of it, relates. To enable regulations to be made as and when actually required, clause 34 amends section 238H(2)(b) by omitting the phrase the period to which it, or any part of it, relates. 6

7 PART 2: TERTIARY EDUCATION MATTERS Introduction 31. Part 2 of this briefing paper covers: Compulsory student services fees; and Student loans and allowances. A. Compulsory student services fees (i) Context 32. Tertiary education institutions (TEIs) provide a range of student services, including careers information, library services, student health and counselling services, and sports and recreation. While some TEIs fund the provision of such services through revenue received from government subsidies and compulsory tuition fees, others have charged students an additional compulsory fee. In 2011, the eight universities and thirteen of the eighteen polytechnics charged an additional compulsory student services fee. 33. There has been growing concern over the rapid rise in the amount of compulsory student services fees charged by individual TEIs in recent years. In some cases, the increases in the amounts charged have not resulted in a commensurate increase in the level or range of services provided. 34. In 2009, the average compulsory fee for student services in universities was $222 for full time students 1. The average in institutes of technology and polytechnics (ITPs) was $111. These fees have increased significantly over the last two years. The average fee in universities is now $432 for full-time students, while the average is $166 in ITPs. The actual range of fees is quite broad. In 2011, the highest fee is $641 (Otago Polytechnic), while the lowest fee is $16 at Western Institute of Technology at Taranaki. 35. No private training establishments (PTEs) or wānanga currently charge a separate fee for student services. 36. There are also concerns being raised about the transparency of decisionmaking regarding compulsory student services fees. Students have expressed concern about the lack of clarity in determining what student services have been funded through the fees collected. This is particularly a problem where the money collected through fees is not ring-fenced for the purposes of funding student services. 37. In addition, there is an inconsistent approach amongst the TEIs to consultation with students. Some TEIs are working closely with students on fee setting and on determining the specific student services to be provided. For example, Victoria University of Wellington and the University of Canterbury have both established advisory committees in order to ensure collaboration with students over decisions relating to compulsory student 1 All figures are GST inclusive. 7

8 services fees. However, it is apparent from comments made by students that not all TEIs are consulting over compulsory student services fees. 38. It is unclear whether the responsible Minister has the power to regulate compulsory student services fees under the Education Act TEIs can set tuition fees and other fees. Section 227(1A) stipulates that a TEI council receiving funding via a plan cannot fix a fee (or a fee of a particular kind) exceeding a set maximum. The responsible Minister can specify conditions that set limits on fees under section 159L for Government funded tuition. It is uncertain whether the power to specify conditions can also be used to limit the other compulsory fees that a TEI s council may prescribe, including student services fees. 39. The third objective of the Bill is to increase transparency and accountability in the tertiary education system. Under the Bill, the responsible Minister will have an explicit power to give a direction to one or more TEIs, with the aim of ensuring accountability in the use of compulsory student services fees. 40. Private training establishments (PTEs) can also set compulsory student services fees. Under section 236C of the Education Act 1989, a PTE cannot fix a fee (or a fee of a particular kind) that exceeds a set maximum. As with TEIs, the responsible Minister can only specify conditions that set limits on fees for Government funded tuition. Accordingly, the Bill contains an equivalent Ministerial power to give a direction to one or more PTEs in respect of the use of compulsory student services fees. (ii) Legislative Analysis 41. The relevant clauses of the Bill are: Tertiary Education Institutions Clause 25(2)(1B) Clause 25(2)(1C) Clause 26, new section 227A Clause 29 Private Training Establishments Clause 30, new section 235CA(5) Clause 30, new section 234A(2) Clause 30, new section 235CA Clause 30, new section 234B Tertiary Education Institutions 42. Clause 25(2)(1B) of the Bill amends section 227 of the Education Act 1989 to clarify that TEIs may set compulsory fees for student services. Information about these fees must be provided to all prospective students (clause 29(3)). The ability of TEIs to set compulsory student services fees will be subject to the limits (if any) set by the responsible Minister under clause 26, new section 227A. 43. Clause 26, new section 227A(1), enables the responsible Minister to give a direction to an institution or institutions to do one or more of the following: hold the fees in a specified manner (for example, in a separate account), and if the fees are in an account, to ensure that the account is audited (new section 227A(1)(a)); 8

9 establish adequate arrangements for decisions related to student services to be made jointly or in consultation with students on one or more of the following matters: (i) the particular type of student services (ii) the amount that students may be charged (iii) (iv) the procurement of student services the method for authorising expenditure on student services (new section 227A(1)(b)); and include a description of the services delivered and a statement of fee income and expenditure in the institution s annual report (new section 227A(1)(c)). 44. Where the Minister s direction concerns the establishment of adequate arrangements for joint decision making or consultation between institutions and students, he or she can also identify the broad categories of or range of services that are to be considered (new section 227A(2)(a)). 45. Only in circumstances where an institution does not comply with a direction given under new section 227A(1), may the Minister give a second direction specifying the particular type of student services that the institution may provide and the maximum amount that students may be charged for those services (new section 227A(3)). The Minister s ability to intervene in a more targeted and prescriptive manner at this point is intended to act as a sanction for non-compliance with the first direction. 46. An explicit requirement for consultation prior to the promulgation of Ministerial directions is provided for in new section 227A(4), This is to ensure that the TEIs and students in particular have an opportunity to comment on the necessity for a direction and the operational implications of a proposed direction. Before giving a direction under new sections 227A(1) or 227A(3), the Minister must publish a notice in the Gazette setting out the proposed direction and inviting submissions to be received by a date no later than twenty days after publication of the notice. New section 227A(4)(b) places the Minister under a statutory obligation to consider the submissions received. 47. As a point to note, new section 227A does not provide for the amendment or revocation of a Ministerial direction. Section 15 of the Interpretation Act 1999 stipulates that the power to make or issue an instrument includes the power to amend or revoke it, or revoke and replace it with another. Private Training Establishments 48. In the PTE context, student services fees are defined as fees for the provision of student services that a student must pay to a registered private training establishment as a condition of enrolment in a programme or training scheme at the establishment (clause 30, new section 235CA(5)). PTEs are required to disclose the cost of such fees to prospective students before accepting enrolments (clause 30, new section 234B(b)(ii)). 49. The equivalent Ministerial powers to give directions to a PTE or PTEs regarding the use of compulsory student services fees are set out in clause 30, new section 235CA. The only difference is that whereas the responsible Minister may require TEIs to publish relevant information in each institution s Annual Report, the Minister may require a PTE to provide each year to 9

10 students a written report describing the services that have been funded out of the student service fee and a statement of the fee income and expenditure on each particular type of student services (new section 235CA(1)(c)). This takes account of the fact that the PTE sector covers a range of legal entities with different reporting requirements. (iii) Implementation 50. After the enactment of the Bill, the Minister for Tertiary Education intends to issue a direction to TEIs under clause 26, new section 227A(1). This is expected to have effect from 1 January B. Student loans and allowances 51. The relevant clauses of the Bill are: Tertiary Education Institutions Private Training Establishments Clause 23 Clause 30, new section 235E Clause 24 Clause 30, new section 236 (i) New Power to Request Details Reasonably Required for the Administration of Student Allowances 52. Sections 226A and 238B of the Education Act 1989 set out the categories of enrolment information that the Ministry of Social Development (MSD) can require tertiary education institutions (TEIs) and private training establishments (PTEs) to disclose. This includes details reasonably required by the chief executive for the administration of the student loan scheme (sections 226A(6)(h) and 238B(6)(h)). Sections 226A(6)(h) and 238B(6)(h) enable the MSD to obtain information clarifying whether a student is actively engaged in study post enrolment (for example, whether the student is meeting attendance and other course requirements). 53. There are no equivalent provisions to sections 226A(6)(h) and 238B(6)(h) in respect of student allowances. As a result, the MSD has been relying upon a less certain legal alternative to obtain equivalent information from tertiary education providers for the purpose of administering student allowances. This places the MSD at some degree of legal risk, if the collection of information was to be challenged. In addition, the misalignment of the ways in which the MSD can collect information relevant to the administration of loans and allowances creates inconsistencies between the two major components of the student support system. 54. Clause 23 and clause 30, new section 235E, address the current gap in the Education Act 1989 by enabling the MSD to obtain details reasonably required by the chief executive for the administration of the student loan scheme or for the determination or provision of an allowance or benefit. (ii) New Offence Knowingly Providing False or Misleading Information 55. It is an offence for a TEI or a PTE to intentionally fail or refuse to supply enrolment information to the MSD (sections 226B and 238C). The maximum penalty for the offence is a fine not exceeding $5,000 and where the offence 10

11 is a continuing one, a fine not exceeding $500 for each day the offence continues (sections 226B(2) and 238C(2)). 56. Clause 24 and clause 30, new section 236, amend the existing provisions to create a new offence, that of a TEI or a PTE knowingly providing false or misleading information in response to a request for enrolment information from the MSD. The maximum penalty is the same as that specified for the offence of a TEI or PTE intentionally failing or refusing to supply enrolment information. 57. The new offence is intended to act as a deterrent and also addresses a gap in the Education Act Section 307AA(1) specifies a similar offence in respect of information provided by recipients of student loans and allowances, and other persons, in response to requests from the MSD. 11

12 PART 3: NEW ZEALAND QUALIFICATIONS AUTHORITY LAW REFORM Introduction 58. Part 3 of this briefing paper covers: Part 18 Private Training Establishments; Part 20 The New Zealand Qualifications Authority; Enforcement Measures; and Transition Measures. 59. The Bill repeals and replaces the existing Parts 18 and 20 of the Education Act A number of existing provisions have been retained, with only minor amendments being made (for example, to section numbers). The following discussion of the New Zealand Qualifications Authority (the Authority) law reform focuses primarily on the substantive amendments to the Act which are being undertaken through the Bill. A. Part 18 Private Training Establishments (i) Context 60. The existing Part 18 of the Education Act 1989 was enacted in 1990, when the private training establishment (PTE) sector was considerably smaller and less sophisticated. The regulatory regime established under Part 18 has become dated, with the Authority experiencing increasing difficulties in managing emerging quality assurance issues. The PTE sector is now the largest and most diverse in tertiary education, and receives significant government funding. In 1996, PTEs received around $6.2m in tuition subsidies. In 2009, PTEs received around $140m. The value of the international education market has also grown substantially. 61. The Authority is confident that most PTEs are delivering good quality educational outcomes. However, there are a minority of poor performing PTEs. Quality issues in the PTE sector directly affect students and detract from the international reputation of New Zealand s tertiary education system. 62. In seeking to ensure a consistent quality of educational outcomes across the PTE sector, the Authority has had to adjust its quality assurance practices over time to address new issues. The limitations of the regulatory regime in Part 18 are now impacting upon the Authority s work. The revised regime established through the new Part 18, combined with the new enforcement measures, will facilitate the provision of high quality provision by PTEs, ensure that the interests of students are protected, and assist with ensuring that the PTE sector is secure from dishonesty and, or poor practice. 63. Officials note that for existing PTEs, well run organisations should be minimally affected by the new requirements set out in clause 30, new Part 18. However, there will be some one-off costs associated with meeting the new registration requirements, in particular the provision of information concerning the reliability and trustworthiness of governing members. For potential new entrants, it is expected that the process of becoming registered 12

13 will take more time than under the current regime. However, this has to be weighed against the overall benefits to the sector of filtering out those PTEs likely to be poor performers at the point of registration. (ii) Legislative Analysis Regulatory Regime Private Training Establishments 64. The Bill introduces a revised and expanded regulatory regime for PTEs. The new regime focuses on ensuring a more robust registration process, and a better alignment between the processes relating to entry, ongoing performance monitoring, and exit. Registration 65. Sections 234 and 236 of the Education Act 1989 contain the current registration requirements for PTEs. In the Bill, these sections are replaced by clause 30, new sections 232D to 233A. The major changes are: a PTE must provide documentary evidence of its proposed educational approach; the critical individuals involved in governance and senior management roles must satisfy new requirements regarding reliability and trustworthiness; and the tightening up of requirements on PTEs intending to deliver programmes and training schemes to international students. 66. Clause 30, new section 232D, sets out the application requirements for registration. These include the provision of: a written statement setting out the kinds of education to be provided and the outcomes sought; statutory declarations from governing members 2 covering material conflicts of interest, any interests in organisations in the education or immigration sector that provide goods and services to tertiary students, and elements of the fit and proper person test as described in clause 30, new section 233A; and a description of the PTE s arrangements for managing conflicts of interest as they arise. 67. After submission of an application, a PTE may be required to provide evidence verifying the identities of its governing members (clause 30, new section 232E). Examples of acceptable evidence of identity include passport and driver licence photographs. This provision addresses difficulties which can arise through the use of aliases. As an example, there have been instances where an owner of an existing PTE that is poorly performing has closed it down and set up a new PTE under a different personal name. It is important for the Authority to have the ability where necessary to identify the governing members of a PTE which is seeking authorisation to operate in the private education market. 2 The term governing member is defined in clause 30, new section

14 68. Clause 30, new section 233, concerns the Authority s decision to grant or refuse registration. New section 233(1) specifies the criteria to be applied. There are two critical differences from the criteria set out in section 236 of the Education Act Firstly, new section 233(1)(a) introduces a fit and proper test, with the Authority to be satisfied that every governing member of the PTE is a fit and proper person. Clause 30, new section 233A, specifies the criteria to be taken into account, which are targeted towards educational, financial, and honesty risk factors in particular. 69. Secondly, new section 233(1)(i), requires the Authority to consider in the case of a PTE intending to enrol international students, whether the PTE is or will become a signatory to the Code of Practice for the Pastoral Care of International Students. Under the Bill, the requirements to be met by a PTE intending to provide programmes or training schemes to international students have been tightened, in particular with regards to ensuring compliance with obligations placed on education providers through the Code of Practice (refer also to clause 30, new sections 232A and 232B). Post Registration 70. Section 236AA of the Education Act 1989 specifies the conditions that all PTEs must meet to maintain registration, and provides for the imposition of specific conditions on individual PTEs by the Authority. Clause 30, new section 233B, replaces this section. There are two main changes. Firstly, every PTE must keep up to date both the written statement outlining its educational approach, and the statutory declarations to be made by both existing and new governing members (new section 233B(2) and (3)). Secondly, the Authority may now place specific conditions on individual PTEs, and groups or classes of PTEs (new section 233B(4)). At present, the Authority has limited options for addressing issues affecting a group or class of PTEs, for example, flying schools or first-aid providers. 71. The Bill also contains other new obligations to be met by registered PTEs. These are: the payment of an annual registration fee to the Authority of an amount to be prescribed or determined through rules (clause 30, new section 233C); the provision of information to prospective students about a governing member s material conflicts of interest and, or her or his interests in organisations in the education or immigration sector that provide goods and services to tertiary students (clause 30, new section 234B(b)(iii) and (iv)); and the maintenance of student records (clause 30, new section 236A). 72. At present, only public institutions are required to keep and maintain student enrolment and academic records (section 225, Education Act 1989). Clause 30, new section 236A, creates specific duties for PTEs to meet in respect of such records. These include allowing identified government agencies to access the records on request (new section 236A(1)(d)). The importance of the need to maintain student enrolment and academic records is reinforced through the creation of a new offence (clause 38, new section 292D). A PTE commits an offence, where it fails, without reasonable excuse, to comply 14

15 with the requirements set out in new section 236A. The maximum penalty is a fine not exceeding $10,000. Exit Mechanisms 73. Section 237 of the Education Act 1989 enables the Authority to cancel a PTE s registration. Under the Bill, section 237 is divided into two new sections: clause 30, new section 233D (cancellation of registration); and clause 30, new section 233E (effect of cancellation). The only major change is the addition of a new ground on which the Authority may cancel registration, that of a PTE providing false or misleading information in its application for registration (new section 233D(1)(b)). 74. Clause 30, new section 234, provides for the lapsing of a PTE s registration where certain quality assurance requirements have not been met. This is intended to address particular problems which have arisen, particularly in Auckland. As an example, there have been instances where a PTE has obtained registration but then delivered education and training courses which the Authority has not quality assured. Prospective students are misled into believing that the courses are of a high quality based on the fact that the PTE is registered. Protection of Student Fees 75. The legislative requirements covering fees paid by domestic and international students to study at private training establishments (PTEs) are contained within sections 236 and 236A of the Education Act Extensive revisions were made to the requirements relating to international students through Education Amendment Act (No 3) The Bill brings together all of the requirements under the heading Protection of student fees, and covers: the obligations of persons handling fee payments (clause 30, new sections 234D and 234E); the refund entitlements of domestic students (clause 30, new section 235); and the refund entitlements of international students (clause 30, new sections 235A and 235B). 76. Officials note that clause 30, new section 235(4), enables domestic students attending programmes or training schemes of under three months duration to obtain a refund. Currently, domestic students are only entitled to obtain a refund where they are attending courses of study or training of over three months duration. The change from the status quo was unintended, and will be addressed in the Departmental Report. 77. The Bill makes significant changes to the current fee protection arrangements in one particular area, that of the legal obligations on persons handling fee payments made by both domestic and international students. To address increasing instances of misappropriation or mismanagement of fees, the Bill clearly sets out the obligations on critical individuals regarding: the receipt of fee payments (new sections 234D and 234E); and 3 Education Amendment Act (No 3) 2010 was previously referred to as Education Amendment Bill (No 2). 15

16 the management of fee payments during and after the withdrawal period (new section 235(2), and new sections 235(3) and 235A(3)) 78. Currently, prospective students can pay fees directly to a PTE, or to a PTE s agent or to a person acting as a broker. In the case of payments made to a PTE, where the PTE receives funds paid by or on behalf of a student, the funds must be deposited with an independent trustee approved by the Authority. Until this occurs, the funds are to be held on trust by the PTE for the student (clause 30, new section 234E(1)). 79. In the case of payments made to a person for the purpose of enrolling, or helping the student to enrol, in a programme or training scheme 4, the funds must be deposited with an independent trustee approved by the Authority or in accordance with alternative arrangements set up by the PTE which are acceptable to the Authority (clause 30, new section 234E(2)). Under clause 30, new section 234E(3), all components of the fee paid by the student (including agent commissions) are to be deposited with the independent trustee. This militates against the risk of unauthorised deductions being made from the fee paid prior to its receipt by the independent trustee. A new offence of contravening the requirements in clause 30, new section 234E(2), reinforces the need for compliance (clause 38, new section 292G). 80. The role of the independent trustee is critical to ensuring the prudent and responsible management of PTE funds. Clause 30, new section 234C, defines the independent trustee as [the] Public Trust, a trustee company under the Trustee Companies Act 1967, a chartered accountant in public practice, or a lawyer whose practising certificate allows the holding of trust funds. The Authority approves the appointment of the independent trustee in order to ensure that the statutory requirements have been met. The grounds under which approval can be withdrawn are set out in clause 30, new section 234E(5)(a). This contrasts with section 236A, which is silent as to the grounds for withdrawing approval of the individual appointed to fulfil the equivalent role of independent person. The Bill provides for an explicit regulatory sanction to address poor professional practice on the part of an independent trustee. 81. The obligations on the independent trustee in respect of managing the funds post receipt are similar to those placed upon the independent person in section 236A(2). However, there are two key changes. Currently, where a domestic student withdraws from a course within seven days of the first day of attendance, the independent trustee must pay the refund to which the student is entitled directly to the student (section 236A(2)(b)). Under clause 30, new section 235(2), the independent trustee must pay the refund to either the trustee of the student s new education provider or to the Ministry of Social Development where student loan money has been used to pay fees. In the event that neither criterion applies, the refund is then to be paid to the student. This eliminates the necessity for providers and the Ministry to follow up with students in order to obtain the appropriate payments. 82. Where a domestic or international student continues with her or his study, section 236A(2)(c) authorises the independent person to pay the refund amount to the PTE or to hold it for the PTE s creditors. Under clause 30, new sections 235(3) and 235A(3), the funds remain in trust with the money 4 Clause 30, new section 234D(1). 16

17 to be paid out by the independent trustee in accordance with rules made under clause 36, new section 253, or via alternative arrangements made by the PTE with the Authority s approval. B. Part 20 New Zealand Qualifications Authority (i) Context 83. Maintaining New Zealand s reputation for a high quality tertiary education system is critical to support its continued growth. Much of the current quality assurance system is between ten and twenty years old, and the range and delivery of tertiary education has changed considerably over this time. 84. Part 20 of the Education Act 1989 establishes the Authority, and the legal regime underpinning its quality assurance work, especially in relation to qualifications. While there have been minor amendments to Part 20 since 1990, substantive reform is now required to ensure that the legal regime remains relevant and effective. 85. In particular, the legal arrangements regarding New Zealand s qualifications system need revising and updating. The new Part 20 establishes the structure and key elements of the qualifications system in law, and provides for a wider range of powers for the Authority to administer the system and to undertake quality assurance. (ii) Legislative Analysis Technical Amendments Terminology 86. Two changes are made to reflect changes in common usage within the tertiary education sector over time. Firstly, the term course of study or training is used throughout the tertiary education related Parts of the Education Act The Bill replaces the term with programme and, or training scheme. In clause 36, new Part 20, the term post-school education and training is replaced by tertiary education. Definition of Institution 87. Section specific definitions of the term institution are used in Part 20 of the Education Act This approach has been retained in the Bill, with four definitions used as appropriate: institutions, government training establishments, registered establishments, relevant schools, and other bodies (clause 36, new sections 248A, 249, 251, 252); any institution, government training establishment, registered establishment, relevant school, or other body (clause 36, new sections 254 and 254A); an institution, government training establishment, registered establishment, or relevant school (clause 36, new section 250); and 17

18 a college of education, a polytechnic, a specialist college, a university, or a w[a]nanga (clause 36, new section 253C). Object of the Authority 88. Section 159AD(2) of the Education Act 1989 describes the role of the Authority as being the body primarily responsible for quality assurance matters in the tertiary education sector. Section 247 describes the object of the provisions of the Act relating to the Authority as being to establish a consistent approach to the recognition of qualifications in academic and vocational areas. An objects provision is no longer required in Part 20, given the existence of section 159AD(2) and the expanded functions provision in the Bill (clause 36, new section 246A). Accordingly, the Bill repeals section 247. Operation of the Authority Functions 89. Section 253 of the Education Act 1989 sets out the Authority s functions. It has been replaced by clause 36, new section 246A. Revisions have been made to existing functions to reflect the changes made elsewhere in Part 20, and three new functions added. These are: Powers to maintain mechanisms for the recognition of learning (for example, the recognition of learning through qualifications gained and standards met) (new section 246A(1)(c)); to maintain the Qualifications Framework and Directory of Assessment Standards (new section 246A(1)(d)); and to make rules, not inconsistent with this Act, under any provision of this Part that empowers the Authority to make rules (new section 246A(1)(e)). 90. Clause 36, new section 253, empowers the Authority to make rules. Currently, the Authority issues rules, policies and criteria under a wide range of statutory authorisations. Over the past twenty years, an extensive body of legal documents has been created, which is increasingly difficult for members of the public and organisations to access. This contrasts with the more structured and transparent rules based approach for operationally focused legal requirements used elsewhere in the State sector, for example, by transport based Crown entities such as the Civil Aviation and Maritime Safety Authorities. 91. Under new section 253(6), the rules will have the status of deemed regulations. This enables the Regulations Review Committee to scrutinise any rules made by the Authority, ensuring greater transparency and accountability. Making the rules deemed regulations was considered desirable, given the scope and impact of the rules regime on education providers and students. 92. Section 260 of the Education Act 1989 sets out the Authority s delegation powers. Under section 260(2), the Authority can delegate its powers to 18

19 another body set up by institutions other than by universities. Clause 36, new section 253A, replaces section 260. The major change is that any reference to the Authority s ability to delegate its powers to a body set up by institutions other than universities has been omitted. This omission streamlines the quality assurance system, and enables the Authority to manage the system to ensure government policy priorities are better reflected across the non-university part of the tertiary education sector. 93. Officials note that if an occasion arises where the Authority needs to make a delegation to another body, it can do so through section 73 of the Crown Entities Act This will require Ministerial approval Fees 94. Clause 36, new section 254, confers on the Authority the power to make fees. In contrast to section 266 of the Education Act 1989, new section 254 clearly sets out the services for which NZQA may charge fees. NZQA is subject to the Treasury Guidelines for Setting Fees in the Public Sector. Granting degree and postgraduate awards 95 Under the Education Act 1989, an institution may not award degrees without the Authority s consent. Applications for consent are made under section 264, with the Authority processing the application in accordance with the requirements set out in section 254. Section 292(5) makes it an offence for a person other than an university to grant an award described as a degree, or including the words bachelor, master, or doctor, in the description, without the Authority s consent. 96. Since 1990, when sections 254 and 264 were inserted into the Education Act 1989, tertiary education providers have also awarded post-graduate certificates and diplomas. This development has been recognised in clause 36, new section 253B(1)(b), which replaces the relevant sub-sections of sections 254 and 264. Consent will now be required to grant an award that is described as a post-graduate qualification, for example, a post-graduate certificate or diploma. New Zealand Qualifications System System Structure 97. Since 1990, the Authority has operated the National Qualifications Framework and the Register of Quality Assured Qualifications. Neither the Framework nor the Register has been explicitly recognised in Part 20 of the Education Act The Targeted Review of Qualifications concluded that a new, streamlined structure was required for the qualifications system, in order to address issues such as qualifications proliferation and credit transfer. In 2010, the New Zealand Qualifications Framework (NZQF) and the Directory of Assessment Standards (DAS) replaced the previous National Qualifications Framework and the Register of Quality Assured Qualifications. 19

20 99. Clause 36, new Part 20, establishes in law both the NZQF and the DAS, and the associated procedural requirements. Attached as Appendix A are explanatory diagrams to assist the Committee Clause 36, new section 248, establishes the NZQF, which will contain all qualifications approved and listed by the Authority. The Authority will have the power to amend, add to, remove, or alter the status of any qualification listed on the framework, in accordance with any applicable rules made under new section 253(1) (new section 248(2)(b)). The NZQF will also contain qualifications listed by the New Zealand Vice-Chancellors Committee (NZVCC) (clause 36, new section 253A(5)(a)). The NZVCC will have the power to correct any errors or omissions in the listing of qualifications on the framework (new section 253A(5)(b)) Qualifications listed on the NZQF need to be of 40 credits or more. Certificates have a minimum of 40 credits, diplomas a minimum of 120 credits, and bachelors degrees a minimum of 360 credits. There are ten levels on the NZQF, with different kinds of qualifications occupying ranges of levels Clause 36, new section 248A, establishes the DAS, which will contain all standards to be used in the assessment of students, and which have been approved and listed by the Authority. Assessment standards can be part of either a programme leading to a qualification or a training scheme leading to an award. In order for an assessment standard to be listed on the DAS, an application must be filed by a standard-setting body. Clause 36, new section 248B, specifies the organisations which can be standard-setting bodies, including industry training organisations (ITOs), the Ministry of Education, and the Authority itself. Procedural Requirements - Programmes 103. For each qualification listed on the NZQF, one or more programmes will be required. There are two types of authorisations which can be sought from the Authority in relation to programmes: approval of the programme itself; and accreditation of an institution to deliver all or part of a programme A programme can be described as the teaching and training manual. It is usually owned by the institution that applies for approval of the programme. For any institution to then teach that programme, it requires accreditation to provide an approved programme. For accreditation, the teaching resources (staff, premises, educational materials) and practices (including assessment and moderation) are looked at, along with the institution s approach to the ongoing evaluation and review of the programme The procedural requirements relating to the approval of programmes by the Authority are set out in clause 36, new sections 249 and 249A. The new sections are similar to those that apply to courses under the Education Act 1989 (sections 258 and 258A). The major change is that allowance has been made for two or more institutions to make a joint application for programme approval, where they have all been involved in the development of the programme (new section 249(4)). 20