Australia’s education sector is once again at a crossroads, as the proposed Education Services for Overseas Students Amendment (Quality and Integrity) Bill 2024 faces fierce opposition from key stakeholders. The bill, which aims to introduce new caps on international student commencements for 2025, has ignited concerns across the sector regarding its potential to irreparably damage the businesses of education providers. What was initially a policy discussion has now escalated into a full-fledged legal battle, spearheaded by Melbourne-based lawyer Nick Galatas. As Galatas and the CRICOS Providers’ Justice Group gain momentum in their efforts to challenge the bill, the implications for Australia’s higher education landscape are becoming increasingly clear.
The Controversial ESOS Bill and Its Repercussions
The Education Services for Overseas Students Amendment (Quality and Integrity) Bill 2024 seeks to implement a National Planning Level, effectively capping the number of new international student commencements for 2025. According to the government, this measure is intended to ensure better quality and regulatory oversight of international education. However, for many higher education providers, particularly those registered with the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS), the bill poses an existential threat.
The caps outlined in the bill would not only limit the revenue potential of education providers but also drastically alter the terms under which they operate. The broad discretionary powers granted to the minister under the bill raise further concerns about fairness and transparency. Providers fear that such discretion could lead to arbitrary decisions that put their businesses at risk. As a result, the stakes are high for many of these institutions, which have invested heavily in building their capacity to educate international students, only to see their business models upended by the proposed legislation.
Nick Galatas and the CRICOS Providers’ Justice Group
Enter Nick Galatas, a seasoned lawyer and founder of Galatas Advisory, who has taken up the mantle of defending the rights of education providers impacted by the bill. Galatas represents the CRICOS Providers’ Justice Group, a collective of education providers who are united in their opposition to the caps. Together, they are preparing a legal challenge that seeks to expose the flaws in the legislation and prevent it from being enacted in its current form.
Galatas has quickly garnered support from providers across the sector, many of whom have contributed up to $3,000 each to the group’s "fighting fund" to cover the costs of building their legal case. The collective action, he believes, will be powerful enough to challenge the bill and put the government on notice that any attempt to enforce the caps will face significant opposition.
Building the Legal Case: A Fight for Survival
At the heart of Galatas’s legal argument is the claim that the bill fundamentally alters the commercial bargain that education providers entered into when they applied for CRICOS registration. By imposing caps on international student commencements, the government is effectively rewriting the rules of the game, leaving providers to grapple with new compliance requirements that may be impossible to meet.
Galatas argues that the legislation exposes providers to financial ruin. In addition to the obvious loss of income from fewer student enrolments, the bill exposes education providers to claims from landlords, service providers, contractors, and financiers, all of whom rely on the financial viability of these institutions. Directors and guarantors are particularly vulnerable, with many at risk of losing their personal assets — including their homes — if their institutions are forced to default on financial obligations due to the caps.
In his communications with interested providers, Galatas warned that the bill “traps them into the unknown.” The certainty that laws typically provide — certainty which encourages investment and business growth — has been eroded, leaving education providers at the mercy of changing regulations and discretionary decisions by the minister.
The Internal Contradictions of the ESOS Act
One of the key aspects of the legal case is the identification of what Galatas calls the “inherent and internal contradiction” within the ESOS Act, as well as related legislation such as the Tertiary Education Quality and Standards Agency (TEQSA) and National Vocational Education and Training Regulator (NVR) Acts. These laws require education providers to maintain certain standards of financial viability and compliance with regulatory obligations. However, the caps legislation would force many providers into financial distress, making it impossible for them to comply with these very standards.
The contradiction is stark: the government is imposing regulations that could push providers into default, while at the same time mandating that these providers remain financially sound. Galatas points out that this places institutions in an impossible position, where compliance with one set of laws inevitably leads to non-compliance with another. It is this contradiction that forms the crux of the legal challenge.
Momentum Gathers: The Senate Inquiry and Public Hearings
As opposition to the bill grows, the Senate committee tasked with reviewing the ESOS Amendment Bill has agreed to hold an additional public hearing and extend the deadline for further submissions until September 26, 2024. This move reflects the increasing pressure from education providers and other stakeholders to reassess the bill before it becomes law.
Galatas is actively preparing a joint submission to the Senate inquiry on behalf of the CRICOS Providers’ Justice Group. This legally substantiated submission will outline the collective concerns of providers and present a unified case against the caps. According to Galatas, the submission could be “very powerful” in highlighting the legal and financial implications of the bill, potentially swaying the committee’s decision and preventing the legislation from moving forward in its current form.
Meanwhile, discussions within the sector are intensifying, with providers growing more vocal about the damage the caps could inflict on their businesses. A letter circulated by Galatas to members of the education sector underscores the urgency of the situation. In the letter, Galatas reveals that he has briefed a King’s Counsel and barrister to prepare the legal case, signaling that the legal challenge is not merely hypothetical but actively progressing.
A Legal Argument Rooted in Injustice
Galatas’s legal case is built on the argument that the caps legislation is unjust and disproportionate. The government’s decision to impose caps, he argues, shows a fundamental misunderstanding of how education providers operate. Many providers, particularly Higher Education Providers (HEPs) and Registered Training Organisations (RTOs), have developed their business models around their ability to enroll international students. The caps, in reducing these numbers, could force these providers to lay off staff, reduce services, and ultimately close their doors.
CRICOS providers, in particular, are placed in a precarious position. Their registration includes a maximum capacity for student enrolments, which they have relied upon to build their businesses. The proposed caps would lower this capacity without regard to the providers’ existing obligations to maintain compliance with statutory and regulatory requirements. As Galatas notes, providers would be forced into defaulting on their legal obligations, even as regulators continue to enforce compliance with often overzealous scrutiny.
The caps not only undermine the financial viability of education providers but also erode the value of their businesses. Galatas argues that many providers have invested significant capital into their institutions, expecting to see a return based on their ability to enroll international students. The caps, he says, have “slashed the value of their businesses to nothing overnight,” leaving them with little recourse.
The Wider Impact: A Threat to Australia’s Education Sector
The potential fallout from the ESOS Amendment Bill extends far beyond the individual providers facing caps. Australia’s international education sector is one of the country’s largest export industries, contributing nearly AUD$50 billion to the economy and supporting hundreds of thousands of jobs. The proposed caps threaten to destabilise this vital sector, leading to job losses, reduced services, and a diminished global reputation for Australian education.
Galatas and the CRICOS Providers’ Justice Group are not the only ones voicing concerns. Many in the sector have expressed frustration with the government’s approach, arguing that the caps legislation is out of touch with the realities of running an education business. Providers feel that they have been relegated to the bottom of the government’s priorities, despite their significant contributions to Australia’s economy and global standing.
A Fight for the Future
As the legal case against the ESOS Amendment Bill 2024 gathers steam, the future of Australia’s international education sector hangs in the balance. The caps legislation, if passed, could fundamentally alter the landscape for CRICOS providers, Higher Education Providers, and Registered Training Organisations, with long-term consequences for the entire sector.
Nick Galatas and the CRICOS Providers’ Justice Group are determined to fight the bill, both in parliament and in court if necessary. Their case, grounded in legal precedent and supported by a growing coalition of providers, aims to expose the flaws in the caps legislation and prevent it from coming into force. The coming weeks will be critical, as the Senate inquiry hears further submissions and prepares its report on the bill. For now, the battle lines have been drawn, and the fight for the future of Australia’s international education sector has only just begun.
