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Raising the Export Education Levy

26 September 2018 | news

Do the latest proposals to lift the rate of the Export Education Levy (EEL) equate to an admission of failure on the part of the agencies charged with assessing and ensuring the quality of education offered to international students?

The Ministry of Education is consulting on raising the rate of the Export Education Levy (EEL) collected from international education providers for a range of activities and projects relating to the export education industry.

The EEL rate is 0.45% of total international student tuition fee income, the same level as when it was introduced in 2003. The initial flat fee of $185 per provider was removed last year when the coffers were full.

Promotion, marketing and quality assurance are all listed as activities funded by the EEL. Reimbursement for international students caught out by programme and provider closures is another funded activity—and one which has taken a toll in the past year.

The Ministry acknowledges that, due to high reimbursement costs related to programme and provider closures ($3.2 million in 2017/18), the EEL account is almost empty, with more payouts expected soon.

In response, it proposes that either:

  • PTEs are levied 0.83% of their fees, and non-PTEs (including universities) pay 0.55%; or
  • PTEs are levied 1.24% of their fees, and all others continue to pay 0.45%.

EEL revenue fluctuates annually, according to student numbers and the value of tuition fees. Up until the past couple of years, it has been ample to cover commitments. But the Ministry projects that $2.5-4.0m per annum will be needed for PTE-related closure costs over the next 2 years, and $2-2.5m per annum over the following 3 years.

The Ministry says the levy needs to go up to pay for the rising costs of failing PTEs, and they argue that PTEs should pay most of those costs. It rules out cost-cutting, or reducing the range of activities paid for from the levy, because most of the activities it funds benefit the whole sector.

While this seems reasonable, it doesn’t take account of the roles of NZQA and the TEC.

As part of its funding, the New Zealand Qualifications Authority (NZQA) receives $85m a year to, among other things, assess the quality of programmes and qualifications offered by tertiary education providers. The Tertiary Education Commission (TEC) receives $47m to, among other things, assess the viability of tertiary education providers and to assess the value and outcomes of programmes provided by these providers to students. 

NZQA approved each of the PTEs that failed, and the TEC assessed and [funded] the courses they provided.

Why should other education providers be charged more because NZQA and the TEC may not have properly carried out their roles in respect of PTEs in the first place?

Universities would argue that it is a failure to prioritise quality, rather than a lack of funding that creates the main problems for both students and the Government.

Universities agree that—given the large number of potential uses for the EEL funding—the Government needs to consult with the sector on priorities. More transparency is needed around why and how the EEL is spent, and who receives what benefits from the investment.

Ensuring the reputation of New Zealand’s international education offering is maintained is vital, but universities are under enough financial pressure already without having to divert a greater proportion of international student fees away from providing high quality teaching to those students. 

The consultation document is available from the Ministry of Education’s website, and an online survey is also open. Deadline for responses is 15 October.