Laurie Ferguson (Werriwa, Australian Labor Party) Share this | Hansard source

In relation to the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 it is manifest that there are some very significant changes by the government that are well and truly required. Very briefly touching on those, they include the proper assessment in regard to language abilities, the literacy and numeracy skills of people undertaking courses, the introduction of a two-day cooling-off period so that people have at least a minimum time to assess what they are getting themselves into, the requirement that parents or guardians be involved where under 18-year-olds are being persuaded to go into these courses, easier cancellation of debt where there is inappropriate behaviour by the providers, an infringement notice scheme giving the Department of Education a full suite of powers to deal with inappropriate behaviour et cetera.

There are some very worthwhile changes there that we would certainly support. I do associate myself with the opposition suggestions that there be an industry based ombudsman. Many speakers have detailed that the private providers' representative body, which would hold itself out as being the voice of the legitimate practitioners in the field, has supported this, and I gather it is also supporting a code of practice. The other suggestion by the opposition is that the Australian National Audit Office actually get moving in regard to looking at this field. I would certainly associate myself with that.

The government, in moving to rectify these issues, is not acting in a vacuum, because there has been a Senate inquiry into these issues. There have been concerns by the monitoring bodies. As detailed by the previous speaker, in April this year there were already some changes in regard to inducements and the ability to avoid very high costs if you seek to get out of these loans.

The report of the Senate Standing Committee on Education and Employment spoke of rampant abuse, accelerating costs and a doubling of bad debt to the government. It made a significant number of recommendations, about 15 or 16. The report spoke of a concerted and urgent blitz of providers and of opposition to the suggestion that one of the solutions, that some people are apparently putting forward, might be that we lower the threshold at which people have to repay debts from $54,000 to $30,000. It spoke of minimum hours standards of VET FEE-HELP courses et cetera and generally called for the actual practitioners to be reviewed more strongly.

It is not as though the government is acting without an urgent need. The pattern that we have been seeing in the industry up until now is of the Commonwealth paying colleges $18,000 a course. The colleges pay the brokers $5,000 a student in many cases. The brokers are then paying salesmen in the field $800 to $1,000 for a signature and the salesmen have been giving out inducements—iPads are often cited. I was very disturbed by the very crude example the member for Parkes gave this House today in Coonamble where it was 50 bucks a pop till you walk in the room and they might send you an iPad later. People are being signed up to this debt and, thereby, the Australian taxpayers basically in most cases are also being signed up to this problem. And then, at the end of the day, students take on an $18,000 deferred debt per course to be repaid if the student ever earns over $54,000 per year.

This is obviously of deep concern at a number of levels. There are many people who, quite frankly, should not be undertaking these courses. They are not assessed as to whether they are able to do them. There are people with minimal English, people who have only recently arrived in the country and people who do not have the intellectual capacity to accomplish these courses. I do not want to be negative about individuals but clearly we are seeing absolute organised exploitation of these people by practitioners in the field. It is a situation where it is clear that people are being signed up when they have no possibility whatsoever of repaying the debt so, therefore, as I say, it is just transferred to the taxpayer.

But that is not to say that there are not problems for a significant number of those people who do take out these loans. It is not as though, in going down this road, it does not have any emotional impact upon people. People actually do worry about debt. Some of them treat it very seriously. They do not just say, 'Oh well, the government is going to fix this up for me later on.' People have hopes in life and expectations that by doing these courses they will improve their circumstances, they will assist their families, they will be more productive and they are being basically manipulated to go into a situation they certainly should not. As I said, it is not an altruistic attitude by these companies. They are out to make big money. We are talking about a situation where the figures involved have gone from $325 million in 2012 to $1.76 billion in 2014 and, on projections, could go to $4 billion this year. There was a 440 per cent increase in enrolments from 2012 to 2014. It is a situation where the value of the VET FEE-HELP loan scheme has increased by 151 per cent between 2013 and 2014. Another worrying aspect of who is being hurt is that it has been accompanied of course by an overall reduction in the skill sector funding in this country. We have got a large number of providers out there, about 3,000-plus in the private sector. It is clear that there has not been a proper processing system to actually examine these people. Very disreputable elements have come into the industry.

I noticed in today's Sydney Morning Herald the sheer effrontery of some of these characters. The company ACN, Australian Careers Network, has, so far in the assessment of the regulators, used improper enrolment practices, poor compliance and governmental practices in their subsidiaries. They have been in significant disputation with the people policing this industry yet Mr Ivan Brown, the chief executive, has got the sheer effrontery to actually say that if VET vocational education and training funding ceases, a business with a valuation of $135 million will be destroyed. Well, I would not have thought, given its practices, that the major issue confronting Australian politics was whether that company will go down the spout. It just shows the kind of characters involved in this field. Mr Brown thinks that, despite all of this manipulation and exploitation in a ruthless fashion of these vulnerable people and the fact that the company has been hauled forward for these practices, the biggest issue in our faces is whether or not his company is going to have financial problems.

Of course he is not alone. We have seen a series of exposes. I have to get these second-hand because I am not a regular reader of The Australian newspaper but I have got to say that The Australian has certainly been on the job in \ this matter. I have got to give credit where it is due. On 6 November, John Ross wrote:

Up to $6 billion in taxpayer funded loans have been doled out to students who will never finish their training courses, an analysis by The Australian showed.

He spoke of figures released that day revealing that just 21 per cent of students eligible for loans under the scheme completed their courses during the scheme's early years. There have been cases—not speculation, not suburban myth—brought forward publicly of about one per cent to five per cent completion rates in this field. The article by John Ross detailed a compilation by the Adelaide based National Centre for Vocational Education Research, the key finding being that just one over one in five eligible borrowers who commenced courses between 2009 and 2012 went on to complete the courses. This suggests up to $530 million of the $670 million allocated through the scheme during those years went to cover the fees of people who never graduated.

The Financial Review had an article by Kylar Loussikian and Julie Hare that spoke of Cornerstone Institute. It has received $40 million in payments for the year to date despite just five graduations from more than 4,000 enrolments—not a very good batting average there. In January last year, Cornerstone was approved for VET FEE-HELP advance payments of half a million dollars, which would have covered up to 50 students under the college's current pricing. The article went on to detail a report from the Victorian government last week that revealed enrolments in private training courses had ballooned 374 per cent in the first six months of this year. It also shows only half of the state's training subsidies are direct to courses aligned to specific job outcomes.

The other area in this country very hard hit by this is the TAFE sector. The previous speaker, the member for Lyne, highly praised TAFE. He said that they were not involved in any of this corrupt practice and he wished them the best. But the reality is they are fighting shonky operators with their hands tied behind their back in the context of movement of money to the private sector and a reduction in support for them.

I want to briefly refer to South West Sydney Institute where we have seen the loss of 150 teachers in the areas of adult basic education, allied timber, auto, business and administration, information technology, language literacy and numeracy and metal fabrication. They have also cut 100 administrative and support staff in the last two years. There is also a situation currently where there is a review as to whether carpentry will lose eight of its 35 teachers; glass and glazing, three of its six teachers; a possibility that three of the seven at Granville College—in the suburb I reside in—in painting and decorating losing their employment; and six out of 20 plumbing teachers at Granville and Miller colleges.

This is an internationally renowned organisation. It has operated in this country since the 19th century. Its credentials are recognised around the world. It retrained the defence forces of this country after Second World War and gave people opportunity for a career and a life after they fought for the country. They did it very well and now it is very much up against the wall because of the practices in this industry, and, of course, because of the severe cutbacks by the New South Wales government in regard to support for this training.

It is not just a matter that people should not be signed up. It is not just the issue of these encouragements being given to people. It is not just a matter of the inability of these people to repay the moneys, therefore the Australian taxpayer. Some people here are always talking about the burden we put on people from taxation et cetera. When you squander money like this, it is no wonder that taxes have to be looked at. It is also, importantly, the lack of skills we will see from this because we are seeing courses that are totally inadequate. They are basically able to do courses in a very short period of time. Child care and aged care have been particularly cited. But it is not only there; it is the number of hours in which these courses can be done.

People are talking about online courses and the questionable ability of people to actually present them—all these types of things. One example was cited where the teacher forgot to teach half the course. That is the kind of reality out there for TAFE. It is not only these other aspects. It is a very serious assault on the ability of this country to train, to be competitive and to avoid high-scale, sometimes, very questionable migration policies to basically bring in people on part-time visas because of these shortages. Now we have a system here which is facilitated by the spread of these loans and the encouragement of questionable people coming into a field that is so important to the country. This will worsen the existing issues.

I want to commend the government for what it is doing. I hope that these measures are successful in capturing a very distinct problem in the field, but I also suggest that there is some merit in the opposition's proposals that we have an ombudsman to get feedback, to follow-up problems, to give people a voice, to let them have the view that there is someone there to accomplish change in the sector, and also the opposition's other proposal. I commend the legislation.

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