Kelvin Thomson (Wills, Australian Labor Party) Share this | Hansard source

Labor put forward a positive plan to crack down on unscrupulous providers in the vocational education sector. I really welcome that, because this has been an area of considerable shame and scandal with very regrettable results, both for the revenue and for students—who, frankly, are entitled to better treatment than they have received.

In the amendments that my colleague the shadow minister, the member for Cunningham, has moved, we call on the government to appoint an industry funded, national VET ombudsman and we call for the Auditor-General to conduct an audit on the use of VET FEE-HELP. We will also be putting forward an amendment during consideration in detail which requires the department to write to prospective students with a clear statement of the amount of debt they are about to undertake and to require the student to reply to the department before a debt is raised. Looking at what has been going on in this area, I think that this is a really important safeguard. It is also our intention to refer the legislation to the Senate legislation committee to look at options to cap tuition fee levels for courses covered by VET FEE-HELP and lower the lifetime limit on VET FEE-HELP student loans.

The bill before the House is in addition to changes that we saw earlier this year, in April. It seeks to prevent inappropriate enrolments and debts by introducing a two-day cooling off period between enrolment and the application for a VET FEE-HELP loan so that course enrolment is no longer confused with the loan application process; introducing minimum prerequisites such as literacy and numeracy to ensure that students can complete the higher level VET courses—diploma level and above—for which VET FEE-HELP is available; and requiring, to protect younger students, a parent's or guardian's signature before a student under the age of 18 can request a VET FEE-HELP loan.

The bill also seeks to protect both students and taxpayers by making it easier for a student to have their debt cancelled where they have been signed up for a loan inappropriately and easier for the government to recoup the cost from providers, introducing minimum registration and trading history requirements to ensure that new VET FEE-HELP provider applicants have a proven history of delivering quality training, introducing infringement notices and financial penalties for breaches of the VET FEE-HELP guidelines, and introducing technical amendments to strengthen the department's administration of the scheme and its partnerships with the Australian Skills Quality Authority to monitor and enforce compliance.

I think it is fair to say that, in the past 18 months, VET FEE-HELP has become a major national scandal, that it is severely affecting both students and the Commonwealth budget. We have had some very serious investigations into this matter. I saw one just in the last couple of days, reported on by Natasha Bita in TheWeekend Australian. She wrote:

Even the Wolf of Wall Street sniffed the honey pot. Convicted New York swindler Jordan Belfort managed to cash in on the training jackpot that is costing Australian taxpayers billions of dollars each year.

Face to Face Training, a government-registered private college, hired Belfort to coach its staff and devise sales training programs at its Brisbane headquarters this year. The privately owned college pocketed $18 million in taxpayer funding last year, but the Queensland government cut its funding last month following an audit that was triggered by complaints about marketing and training delivery.

In Victoria, the state Registration and Qualifications Authority has revoked the training qualifications of 7,000 students, decreeing them to be worthless because of poor quality training.

This is a shocking outcome for those students—they go through, they get the qualification, but it is effectively worthless due to the poor quality of the training. Malcolm Turnbull has described Australia’s vocational education and training system as 'a shambles'. You have had entrepreneurs getting into this area in ways that have been totally unsatisfactory from whatever perspective you wish to look at them. Colleges have been selling courses to students who have no intention or ability to complete. Many of the courses are of poor quality. We’re seeing very low completion rates. The program’s grown at an unsustainable rate.

Governments will spend $6 billion this year on training courses for 1.79 million students enrolled in VET courses that range from motor mechanics to massage therapy. The figure does not include the $2.75 billion that will be spent this year on student loans through the federal government’s VET FEE-HELP scheme.

I understand that students have run up a $5.5 billion debt in the three years since federal, state and territory governments decided to deregulate the VET system and that the loan scheme is bleeding money as private colleges inflate the cost of training.

Average tuition fees have tripled in three years from $4814 to $12,308. The average cost of an information technology diploma soared from $2779 in 2011 to $18,735 last year. A diploma of business management that cost $4623 in 2011 now costs $15,493.

These are astronomical jumps in costs but they have not been accompanied by an improvement in quality of courses. On the contrary, the evidence there is very disturbing and discouraging.

It is also discouraging that colleges get to keep the cash even when students drop out. When students sign up for a loan, the federal education department pays their full tuition fees directly to the college, and the colleges get to keep the cash. Students can borrow up to $97,728—but they do not have to pay it back if they earn less than $54,000 a year. Taxpayers carry the debt.

The system gives colleges a strong incentive to sign up as many students as possible to cheap ''quickie" courses delivered online. Spruikers—known as "brokers"—are paid a commission to recruit students from schools and Centrelink offices, retirement villages, caravan parks, public housing estates and mental health units.

Students have been given things like laptops, footy tickets, meals and groceries to sign up for courses that are promoted as being 'free' but are in fact a debt to the government and for taxpayers.

The shame of this is that there are people who have been aware of, concerned about and raising this for years. I particularly mention the Australian Education Union and their TAFE division, who were aware of this right from the outset—aware of the risks of attacking the TAFE sector and the public provision in the name of competition.

The Australian Education Union’s federal TAFE secretary, Pat Forward, says deregulation has stripped funding from the government-operated Technical and Further Education system. Even though six out of 10 VET students attend TAFE, private colleges are getting three-quarters of the public funding.

Ms Forward says:

VET Fee-Help is just a honey pot. The system is broken. There are hundreds of millions of dollars taxpayers will not get back, and these kids will carry a debt for the rest of their lives for a qualification that is worthless.

I share that concern.

At the start of this year, Australia had 4609 registered training organisations, of which 3440 were privately operated. Worryingly, nearly one in 10 have had their registration refused, cancelled or suspended by the government regulator, the Australian Skills Quality Authority, in the past four years. In recent audits, ASQA imposed licensing conditions on eight large providers.

We also had a Senate inquiry into VET in the past year which uncovered 'harrowing and concerning evidence of misconduct'. All in all, it is a very unsatisfactory situation with a scheme that has really exploded.

The number of students using VET Fee-Help loans has grown tenfold since 2010, when 26,100 students borrowed $117m. Last year, 203,000 students borrowed $1.7bn. In the first six months of this year, they took out loans worth $1.37bn—on track to hit $2.75bn.

So a very disturbing explosion with the National Centre for Vocational Education Research predicting that four out of five students will drop out of their course. Of course that is completely unsatisfactory.

Against this background of large debts, poor-quality qualifications, dodgy providers and exploitative practices, Labor has called for the Auditor-General to conduct an inquiry into the use of VET FEE-HELP and we have urged the ACCC to take action against shonky providers.

This legislation seeks to address some of the issues around VET FEE-HELP—I commend that. I welcome that but I do not think that it goes far enough. We do not see efforts to control the spiralling costs for students, which I have referred to. I think that the two-day cooling off period could prove to be easy to manipulate. You could have providers printing out enrolment forms with one signed date, and the VET FEE-HELP applications with a date two days later. We do not see signs of an effort to re-examine the previous approvals for providers and we do not see debt relief for students who have been defrauded by dodgy providers.

One of things that we would like to see the government do is establish a national VET ombudsman to add some strength to the regulator. The Australian Council for Private Education and Training has called for an ombudsman, and the report of the Senate inquiry that I referred to has also recommended a national VET ombudsman. This is a proposal which is also supported by the ACTU VET committee, and so the Education Union, the AMWU, TWU, CFMEU, SDA and ETU are all part of that. It has also been supported by the Consumer Action Law Centre.

I think that this is the sort of thing that will help us to crack down on rorts in VET FEE-HELP. We have known for years now that this has been going on. People have been drawing it to public attention and our attention as policymakers. What we need is a comprehensive crackdown on private providers and we need an understanding from the government that there are crooks at work in this industry; and that students, TAFEs, taxpayers and the good-quality providers are all victims in this scandal and they deserve more than what they have been getting so far.

Labor has always supported TAFE. Gough Whitlam instituted the Kangan report into TAFE—and indeed the Kangan TAFE college is just to the north of my electorate and very much a part of the local community. That Kangan report into TAFE resulted in additional Commonwealth investment for TAFE infrastructure, quality improvement, staff development and equity programs. The last Labor government increased Commonwealth annual funding for VET by 25 per cent in real terms, with over $19 billion invested over five years; it also increased TAFE campus infrastructure and technology upgrades.

I think that TAFE must remain an essential part of Australia's skills and training sector. It plays a vital role in servicing our regions, industries in transition and disadvantaged groups. There is no doubt that, as the economy changes, the jobs of the future will change. Our trades will involve more technology based skills, and workers will need training in these skills to remain competitive in the employment market. Given that, it is absolutely critical that we invest in supporting our national asset: our public TAFE sector. I really regret the fact that we have had what is essentially an ideological move saying that what is needed is competition, that the VET sector should be opened up to anyone who can obtain registration as a training provider and that, regarding the use of the word 'choice', the noble thing to do is to give our fellow Australians choice about which training provider they can select.

Sadly, the result that we have seen as a consequence of this is, effectively, wreckage of the VET system and wreckage of the TAFE system. As I said, it is absolutely scandalous that the Victorian government had to send out letters to around 10,000 students notifying them that their qualifications needed to be revoked. It is completely unsatisfactory that these poor people have been exploited in this way, and I strongly support the amendment moved by the shadow minister.

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