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NZ: industry hits back after education levy increase

Stakeholders in New Zealand’s international education industry have criticised the government’s decision to increase the export education levy after the central government fund it supplies almost ran out earlier this year, due to provider closures.

An original proposal would have seen PTEs pay almost triple the levy of other sectors. :Photo Samuel Ferrara/UnsplashAn original proposal would have seen PTEs pay almost triple the levy of other sectors. :Photo Samuel Ferrara/Unsplash

Hipkins also signalled an industry-wide review to address problems

From 1 January 2019, universities, private schools, and institutes of technology and polytechnics will pay 0.5% of international tuition fees into the fund, an increase of 0.05%. PTEs have been further impacted, however, with their rate almost doubled to 0.89%, while state schools and state-integrated schools will remain at the original 0.45%.

“We asked NZQA to ensure that any providers that are at risk in the future are managed better”

“We have listened to feedback from the sector and have decided on a balanced approach to address some of the key concerns raised during consultation, including the financial impacts on the sector, while continuing to address the immediate financial pressures on the EEL,” said education minister Chris Hipkins.

“This is the first increase to the EEL in its 15 years. The Ministry of Education is doing its bit by reducing annual expenditure commitments against the levy by NZ$300,000.”

Established initially to fund marketing and promotional activities, and reimburse student fees in the case of a provider closure, the EEL was almost emptied earlier this year, after several PTE closures accounted for $4.1 million in payouts over two years.

The closures prompted the rate increase, but representatives from both universities and PTEs have hit back, arguing reputable providers should not be held responsible for the behaviour of their low-quality counterparts.

“Any increase was unacceptable to us”

“Any increase was unacceptable to us as it is in effect the quality providers subsidising the poor-quality providers that have now been closed,” said Craig Musson, chair of private provider representative group ITENZ.

“Any increase in costs affects any business and the export education sector is no different. In many markets, any increase in fees will also make us less competitive in respect to other countries.”

Musson said it was a “saving grace” by the government to take into consideration ITENZ’s consultation submission, and step back from a more drastic proposal to almost treble the levy for PTEs. But he called for better handling of providers to prevent closures and limit need for the levy.

“We have asked NZQA to ensure that any providers that are at risk in the future are managed better to ensure that it is the provider that is responsible for covering any transfer costs for students,” he told The PIE News.

According to an ITENZ spokesperson, there is now discussion among PTEs over whether the increase should be passed onto students or assumed by the provider as an additional compliance cost. As Musson observed, private providers are already required to protect tuition fees in a trust.

“This is the first increase to the EEL in its 15 years”

Universities New Zealand also disagreed with the increase and chief executive Chris Whelan echoed Musson’s sentiments.

“The universities felt that they should not have to pay for costs associated with students caught out by program and provider closures among some PTEs,” he told The PIE.

“However, the actual EEL increase for universities is relatively small, and the sector is willing to meet this as a contribution to ensuring New Zealand continues to be seen as a high-quality education provider that cares about all its international students.”

The government itself appears to reflect industry concerns, with Hipkins signalling an industry-wide review to address problems and further potential changes to the EEL over time.

“It may be possible in future to introduce a system where PTEs that are delivering a consistently high-quality service might pay a lower levy while the few PTEs falling into risk categories, including having previous quality issues, might face a higher one,” he said.

The new EEL rate is the latest change from New Zealand’s government and sees it meeting yet another pledge made during the lead up to the 2017 election.

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