Institutions make feelings felt on student levy

By KEVIN TAYLOR

Universities and private English language schools have attacked a tax which they say punishes the success of the growing foreign student education industry.

They told a parliamentary select committee yesterday that the levy was being forced on them to address a market failure in the $1 billion industry that did not exist.

Associate Education Minister Steve Maharey announced the levy last month. It will pay for an industry body to do development, promotion and quality assurance work.

The Education Ministry was worried that the market was failing because providers were not investing in areas of benefit to the whole industry, such as research, professional development and generic promotion.

But Victoria University vice-chancellor Professor Stuart McCutcheon told the education and science committee that he was stunned when he heard of the levy.

Speaking for the Vice-Chancellors Committee, he said he could not understand what the problem was.

Universities would prefer problems to be sorted out with the people involved, rather than for the whole industry to be taxed.

"We are opposed because it's a solution to a problem that as far as the universities are concerned does not exist."

Universities were also concerned that the levy - said to be initially 0.5 per cent of income from foreign student fees - was punishing the successful.

"We object to having to pay a tax to cross-subsidise other parts of the sector."

The Government already took $125 million in GST from foreign student fees, and no other country taxed foreign student fees.

English language schools told the committee that they were concerned the Government was using oppressive tactics to impose a levy that would not benefit them.

No school supported the levy, said the Association of Private Providers of English Languages.

The association said quality issues were being dealt with by a proposed code of practice and New Zealand Qualifications Authority audits.

There was no evidence of market failure, it said. Export education was a major business success.