Sharon Bird (Cunningham, Australian Labor Party, Shadow Minister for Vocational Education) Share this | Link to this | Hansard source

It is my pleasure to indicate my intention to support the bill but to move the amendments to the bill tabled in my name. The Higher Education Amendment (Vet Fee-Help Reform) Bill 2015, which is before the House, is in addition to previous changes made to the Vet Fee-Help system. Given the detail of the bill, which I will just cover briefly, the opposition has no problem with supporting the bill and its intentions. I have indicated that I have a second reading amendment for the House in order to put in place some options which we believe are critically important to strengthening the issue that this bill seeks to deal with. The bill before us has a number of changes to provide protections for both students and taxpayers in the operation of the VET FEE-HELP system, in particular dealing with debt cancellations for inappropriate signups, stronger requirements around the registration and trading history requirements of providers, infringement notices and penalties in regards to breaches of the guidelines, and a range of technical amendments.

I want to firstly put before the House the context of recent developments of the VET FEE-HELP operation across the VET sector in recent times and then, out of that, outline to the House the amendments that Labor is proposing in this debate. I believe these are sensible amendments and I hope the government decides to support them. I should indicate that Labor, as I said, intends to support the bill as we believe it does propose useful changes to the operation of the scheme. However, we believe that they would be significantly strengthened by the adoption of our amendments.

It cannot have escaped, I would suggest, anyone's notice over the last 12 months that there have been consistent and serious public and media reports about what could only be described as shonky and unethical behaviour by too many registered training organisations and brokers acting on their behalf. The report started with concerns about the marketing and recruitment practices that were targeting mostly disadvantaged people with the clear intention of luring them into training qualifications that were all too often inappropriate for either the person's learning level or their employment needs. Indeed, as a member of the House of Reps committee inquiry into the operation of TAFEs—and the parliamentary secretary at the table was a member of that committee as well at the time—I heard, along with other committee members, many stories of undercutting the TAFE provision of courses by some private providers who were recruiting students with such things as offers of free laptops, shopping vouchers and other inducements. The evidence that we heard was broadly beyond the very strict terms of reference of the inquiry but the committee was concerned enough about the frequency and the nature of this material to include a recommendation seeking action by government regulators to address the problem and that made up the fourth recommendation of the report, which stated:

The Australian Government should continue its current actions through the Australian Skills Quality Authority, other regulators, national Training Standards and any other involved parties, to take suitable action to address loopholes that are allowing high-risk and unscrupulous practices to endanger the experience of students and the reputation of training provision.

I would point out that despite this being a bipartisan report of the committee, the government has not yet responded to the report even though it was in tabled in November last year.

In June this year, the Senate committee tabled its report into the operation, regulation and funding of private vocational education and training providers in Australia, which made extensive recommendations regarding the operation of VET FEE-HELP scheme and it reflected the significance of the issue in the vast number of submissions that were received to the inquiry. A significant piece of work also was completed by the regulator, ASQA, on the marketing and recruitment practices in the sector. That report, titled Marketing and advertising practices of Australia's registered training organisations, highlighted a number of concerns. It said:

It has been found in this national review by scrutinising their web sites that 45.4% of RTOs investigated could be in breach of the national standards required for registration as an RTO under the National Vocational Education and Training Regulator Act 2011 and of the Australian consumer law and/or state and territory fair trading laws with respect to their marketing and advertising.

These potential breaches range from relatively minor concerns that can and should be rectified quickly and easily, to more serious breaches that could involve major sanctions being applied, including a loss of the RTO’s registration.

The report then went through some specific examples of the types of marketing and recruitment activity that had been causing ASQA some concern. The report made a series of recommendations about increased ASQA auditing, strengthening national standards—including the use of brokers and other third parties—and greater transparency measures to provide information to students. I have to say that the government has acted in many of these areas and Labor has supported these actions. However, the reality is that the behaviours have continued despite these actions. They have been insufficient to stop the shonky and unethical behaviour, and as a result the rip-offs and the damage to the reliability and reputation of the whole sector has continued to gather pace.

Extensive evidence was provided to the Senate committee by the Consumer Action Law Centre of the types of cases they continue to see. They said:

It has been widely acknowledged that there has been misuse of the Commonwealth government’s FEE-HELP loan scheme, misleading advertising, soliciting students for unsuitable courses, and inappropriate use of brokers to recruit students.

Their report indicated a particular area that was the centre of complaints they received. It said:

The profit maximisation principles of private VET providers mean low cost delivery modes are increasing, particularly the provision of online training … We have received reports of students enrolled in online courses being provided with no physical materials, faulty learning software and little ongoing support, while still incurring significant VET FEE-HELP debts.

I just want to share one example from that report with the House because it would not be unfamiliar, I would suggest, to most of us, as we see these sorts of reports coming in in our own electorates. The example is about a student called Luke that they dealt with. The report said:

Luke enrolled in an online course with a private VET provider, via an education broker. He was confused by the online format of the course, and says there were no help buttons. Luke called the education broker about his problems. The sales representative told Luke that he would follow up with the provider, but Luke never heard back from the provider. Luke could not complete the course as there was minimal support or information to assist him. He eventually withdrew from the course.

This is the sort of case example that I am hearing consistently from colleagues on this side of the House—and I am sure that it is no different for the minister—from their experiences.

The Consumer Action Law Centre submission details a range of issues with the provision of details about the nature and size of the debt that students are incurring under the scheme, and they raise issues of unfair contract terms and general consumer protection measures. The report also contains evidence of the problem that persistently arises with students being unaware that they have not only been signed up to a course but also to a VET FEE-HELP debt, often under high-pressure sales tactics. The report says:

We have heard reports from students that they did not understand the VET FEE-HELP debt they will incur, census dates, cancellation rights or cooling off rights. We have also received complaints from students who claim that their VET FEE-HELP debt has been incurred without their knowledge, or that barriers were placed on their ability to withdraw prior to the census date. Some claim never to have studied at the institution and cannot remember signing a Commonwealth Assistance Form.

Like a significant number of submissions, the CALC submission makes the point that there needs to be a dedicated external dispute resolution scheme in place to resolve disputes between students and providers.

In their supplementary submission to the inquiry, they specifically recommend that there be a national industry ombudsman. It is important to also recognise that the peak body for private providers, the Australian Council for Private Education and Training, or ACPET, in their submission to the inquiry also advocated that there be a national training ombudsman scheme established. The argument in their submission was:

The second concept proposed following the ACPET industry summit on 30 October 2014 is the introduction of a national industry ombudsman scheme for the Tertiary sector. ACPET advocates for a national consumer-focused complaint handling process for students and providers to complement the new National Training Complaints Hotline, as existing ombudsman arrangements focus either on government owned providers or international student issues.

They make the point that they believe the scheme would result in a number of major benefits. Specifically, they argue a national ombudsman would improve industry image, be a cost-effective resolution option, improve communication, provide early warnings to regulators and provide market research for the sector.

The proposal that Labor are putting forward in our amendment is that there be a national VET ombudsman established—an industry based ombudsman. We would argue it has been well canvassed in submissions from various stakeholders across the sector. In just the two examples I have given, you have had a peak, important and influential consumer rights organisation talk about the importance of the need for an industry ombudsman, as did the peak organisation of the private sector. Only recently I spoke at the ACPET conference and made the point that I recognise they have taken actions themselves to try to have their members sign up to a national code of conduct and practice—to give commitments about the way they will operate in the market. But, despite their actions and activities as a peak body on behalf of the private sector, they still feel that there needs to be an industry ombudsman for the sector. Labor absolutely agrees that that is a necessary outcome.

So the first part of our amendment, recognising that this bill is targeted at addressing some of the issues specifically with VET FEE-HELP, is to suggest to the government that they look to establishing a national industry ombudsman. There are of course important differences between the regulator and the role that an ombudsman would fill. The regulator certainly do, in their intelligence gathering across the sector, receive reports of complaints and concerns about providers and courses. They do use that—in particular, I would acknowledge the work that they do in their strategic reviews for particular sectors, most recently the childcare sector, aged care and so forth—but they do not directly deal on a one-to-one basis with complaints.

The government has established a National Training Complaints Hotline, but again that hotline is about directing people to another existing avenue in which to seek to have their complaint resolved. As we have seen in public discussion, too often the only outcome that students feel they are able to achieve is to go for legal advice or a legal process, and that of course is prohibitive for many people. That is why people like the Consumer Action Law Centre end up getting so many of the representations and concerns.

There is obviously a need for somebody with the expertise and the power to work on solving complaints that come from individuals. We are not proposing that the ombudsman only deal with VET FEE-HELP. They should be an ombudsman for domestic students across the sector. But it is well over time, I think, that they have that option put in place for vocational-education-and-training students. So I hope that in the first part of our amendment the government will hear not only our voice in the opposition in putting the amendment forward but, as I say, a significant number of stakeholders across the sector concerned about the reputation of their sector and seeking to have those issues resolved.

The second part of our amendment calls on the government to support Labor's proposal to have the Australian National Audit Office also look at the operation of the VET FEE-HELP scheme specifically. Of course, the VET FEE-HELP scheme is administered by the department, so I think it is an appropriate option to have the ANAO have a look at all the systems that are in place through that process and to be quite rigorous about providing the government and indeed all of us in the parliament and the community with advice on how that system might be improved and ensure that we are not seeing RTOs who should not be doing so get access to VET FEE-HELP and also that the systems for managing those communications with students are improved.

This is the reason that Senator Kim Carr, as the shadow minister, and I wrote to the Auditor-General in November last year, nearly a year ago. We had seen the significant number of reports from the media, industry and indeed the regulator, ASQA, and the concerns about unscrupulous behaviour, in particular the misuse of VET FEE-HELP. So we asked the Auditor-General to fully investigate VET FEE-HELP to ensure that skills funding is being used in accordance with the intention of the legislation—legislation that had bipartisan support at the time—and is not being squandered by unscrupulous behaviour and providers. I am pleased to tell the House that in January we were advised that the Auditor-General had requested that a performance audit of VET FEE-HELP be included in their 2015-16 work program.

It is of course imperative that taxpayers' funds are spent on quality training and that students are not incurring debts for either poor-quality or unsuitable courses. Consistently we hear examples where students firstly have a debt—and let us talk about the size of these debts. For some of these diploma courses that are being offered, people are being charged anywhere between $15,000 and $25,000—for a diploma. Some people are paying more for a one-year diploma than you would pay for a university degree. They are significant and sizeable debts.

Often, as we have now seen in more recent media reports and public debate, they are not completing the course. The completion rates in too many areas, whether it is at a particular provider or it is in particular student cohorts, are extraordinarily low, unacceptably low. Add to that the fact that, if people do not complete their course, it is unlikely and much more difficult for them in any reasonable time frame to reach the income level at which you repay the debt. It then has a real potential to become a bad debt for government—that is, in effect, the taxpayer. There is an emerging and very important debate going on publicly about how sustainable that is. I think we all have a vested interest in ensuring that the scheme works—as I said, it is legislation that had bipartisan support throughout the time of its introduction—in the way that it was intended to work.

We do not want students who have a debt and have no qualification that is recognised in industry as quality. We already have heard, for example, in Victoria, childcare providers saying they fundamentally have black lists of providers because they know that the quality of the training is just not up to speed. We do not want students having qualifications that actually do not give them an opportunity to work or to do further education, whichever option they are seeking to achieve. But, really importantly, we do not want students to have a debt and no qualification because they should never have been enrolled in the course in the first place.

Increasingly we hear of examples—I saw it in my own electorate, and I am sure many here have—of recruiters hanging around outside Centrelink offices and outside particular community centres, particularly targeting people who they believe will be desperate to sign up for something, because of course they are keen to get a job and they are keen to get a qualification, and signing them up to diploma level courses rather than appropriately assessing what their education needs are and directing them into the appropriate courses. In many cases there has been significant evidence from many community advocates that in fact people really needed to be enrolled in language-, literacy- and numeracy-level courses before they would be well set up to succeed in further vocational training, let alone a diploma-level course. This sort of behaviour is significant, and it is something that we think is absolutely contrary to what the intention of the legislation was in the first place. Therefore, it is something that is particularly pertinent for the Australian National Audit Office to look at.

I have to say that to date I have not had an indication from the government about this. We have a new minister, so I will give him credit that he may be looking at this particular issue. But it is whether the government also supports a call for the Australian National Audit Office to look at this matter. This is why I am giving the new minister the opportunity with this amendment, perhaps to have a bipartisan approach to the Australian National Audit Office looking from their remit at how the VET FEE-HELP scheme is operating.

I would like to foreshadow to the House that Labor will also propose some in detail amendments. These in detail amendments, just for the information of members, will be moved in order to put in place a mechanism that actually requires a far more proactive and responsible, if you like, opt in by students when they are signing up for these debts. We put this proposal forward because we would argue that the evidence is pretty overwhelming now that a lot of students are signing up and, at best, they might understand that they have signed up to a course but they do not always understand that they are signing up to the debt—let alone the size of that debt, the repayment arrangements in place for that debt, cooling off periods, what their recourse is if they are unhappy and how they can pursue having the debt waived. There are all of those sorts of issues.

The government has—and we have supported them—increased the standards around information and disclosure for RTOs and for taking responsibility for the behaviour of their brokers. But I do not believe that it has been sufficient. We are still seeing current examples of this sort of activity going on. It is clear that something far more significant is needed. Given that the government is the loan provider—the government is the one providing that loan to the student and the one which will be seeking to have it recouped from the student when they are earning the appropriate amount of money—then I think it is an important action for us to take at this point in time, given the absolute abuse of the scheme that is still going on, to say that the student cannot sign all those forms at the same time.

The bill before us proposes a two-day cooling off; I would suggest that still gives far too much leeway. We have to remember that we are trying to deal with people who are taking shonky and unethical actions. I would not put it past them, for example, just to have two different dates on forms and have people sit there and sign them. I think that it needs a far more significant mechanism. We propose that the student signs up to the course and they sign up for the loan application, then the RTO sends that to the department. It is the department which would then communicate with the student, and say to the student, 'You've applied for a VET FEE-HELP loan. This is what it is; this is how much you are looking at paying; these are the arrangements—the terms—under which this operates; and these are your rights in terms of disputing any outcomes or wanting to get your debt waived.' All the information that has been put in the standards for training providers to give to students we actually get from the government which, at the end of the day, is providing the loan. If it ends up as a bad debt, it is the government and the taxpayer who are then carrying that debt.

The student would then have to reply to the department and say, 'Yes, I understand that. I do want that loan, and I am applying for it.' I suggest to the House that very often we will find that students come back and say, 'Yeah—no; I didn't know anything about that. I don't want that and that's not what I wanted to do.' I think that by doing that we will enable students to make what should be a good consumer choice—an informed choice and a choice free of any pressure or sales tactics, or any of those sorts of things that are going on.

I acknowledge that there are many private providers out there—like all colleagues, I meet them regularly—who are doing a really important job. They behave really ethically themselves, they are focused on quality education and they are concerned that these rogues are eating alive their market share and destroying their reputation, and they want to see action taken. So in the third reading we will have the opportunity to debate that mechanism and proposal in more detail. But I am firmly of the view that we need something that is more removed from that direct point of contact either with the broker or the RTO before people sign up for these debts, because they can be very significant. Even if people feel that they are never going to get to the income to pay it back—and let's be honest: when you sign up pensioners at the community centre who are aged pensioners, it is pretty unlikely they are ever going to return enough to pay it back!—it is still a very significant worry to people. You hear it all the time, about their concerns and the real anxiety it creates when they realise they have this debt, because it is a lot of money to many of these people on fixed incomes. So I just foreshadow that we will move that in the in consideration section. I look forward to talking with the minister and seeing if we can get an agreement on that particular area as well.

In summing up, I particularly want to say that there has been some debate about it all being Labor's fault, and some criticism of us. I hope that the government recognises that in fact the previous bills, which we are seeking to amend, were bipartisan bills. They were agreed to by everybody in this House. In fact, if there was any criticism at the time, the then shadow minister was a bit critical of the fact that we were putting too much red tape in the system. So I would argue to people that it is not like a simple case of blaming either side here. I think that what we need to recognise is that regardless of what we have done for the agreed position in the last two years in an attempt to stamp out this behaviour, it has not worked. When you are dealing with people who are determined to use shonky, unethical practices and find their way around the system, I think it is time we get very hardline and make it far more difficult. It is time we get an ombudsman in place to give an accessible avenue for people to get issues resolved; get the ANAO to have a look at the operation; and have a talk about the in-detail amendments about changing the way people sign up for the debt in the first place and taking the responsibility, as the government providing that debt, of making sure that it is done in the best possible way.

So I recommend the second reading amendments to the House. I am happy to talk to anybody about the in-detail amendments as we lead up to that debate, and I indicate that we do support the bill and the intentions of the bill; we just would like to see it significantly strengthened by some of the measures that we have proposed. I move:

That all words after "That" be omitted with a view to substituting the following words:

"while not declining to give the bill a second reading, the House calls on the Government to:

(1) appoint a National VET Ombudsman with the power to:

(a) investigate consumer complaints;

(b) order Registered Training Organisations (RTOs) which have been found to have acted unscrupulously to refund course fees to the student; and

(c) order RTOs to refund the course fee to the Government and have the student’s VET FEE-HELP fee waived in cases where the course fees have been paid by the Government and the student has accrued a VET FEE-HELP debt; and

(2) support Labor's call for the Auditor-General to conduct an audit on the use of VET FEE-HELP".

Ms Anna Burke (Chisholm, Australian Labor Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Link to this | Hansard source

I second the amendment.

Ms Anna Burke (Chisholm, Australian Labor Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Cunningham has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. If it suits the House, I will state the question in the form that the amendment be agreed to. The question now is that the amendment be agreed to. I call the member for Calare.

Mark Coulton (Parkes, National Party) Share this | Link to this | Hansard source

Parkes.

Ms Anna Burke (Chisholm, Australian Labor Party) Share this | Link to this | Hansard source

Parkes—sorry. That is unforgivable of me. I looked at my notes and not at you—very rude. My apologies.

Mark Coulton (Parkes, National Party) Share this | Link to this | Hansard source

Madam Deputy Speaker, we could be brothers. It is an easy mistake to make.

Ms Anna Burke (Chisholm, Australian Labor Party) Share this | Link to this | Hansard source

No, it is really rude.

Mark Coulton (Parkes, National Party) Share this | Link to this | Hansard source

I am very pleased to be speaking on this bill, the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. I acknowledge that this bill has bipartisan support. I will not make any comment as to the amendments that the shadow minister just spoke about; I will leave that to the minister to deal with. But I will say that these issues were very apparent in the time of the previous government, and they chose not to take the action at the time, so I think the shadow minister should be a little measured in her expectations of what might happen. But I will leave those discussions to the minister.

I am a big fan of VET, and I am a supporter of the intention of VET FEE-HELP. Education is the key to solving a lot of the problems that our society deals with, whether it is poverty, skills shortages, health or bigotry. A whole range of things can be overcome when people have an education. The idea that people who may not have had the opportunities at a younger age to have a formal education can undertake higher education and receive a loan from the government to do that seems to me like a good scheme, and I know people who have undertaken higher education under this scheme.

But problems started to be brought to my attention more than 12 months ago, early in 2014. In the first instance, a registered provider from Dubbo came and saw me and explained that unscrupulous providers were signing up people to these courses at a retirement village. His concern was that people were signing up to a debt they did not know about. Obviously the whole concept of VET is to help people improve their skills to get into a higher skilled, better paid job, and the idea that this would be pitched to people who had already retired was just ridiculous. So the alarm bells started to go off there.

Not long after that, I was contacted by several people in Coonamble. The issues that happened in Coonamble made it very clear that this was not just people who had inadvertently done something where they were not really sure of the details. To me, what happened in Coonamble was orchestrated fraud of the Australian taxpayer and of innocent people on a grand scale. What happened in Coonamble was that providers came to town and hired a room at one of the local clubs, and word got around that, if you went to this particular room and signed your name, a $50 bill was handed to you, with the promise of being sent a laptop and an iPad at a later date. It is my understanding that this course that was being offered was at quite a high level, that it was at a value of $14,500, and that many of the people who signed up—there are some reports that some people did not even sign their name, because some of the people that went there and got their $50 were actually illiterate—did not have the skills or the levels of literacy to possibly undertake a course of this complexity. So here you have people walking in, getting their $50 and walking out, not knowing that they now had a $14,500 debt to their name. When they were going to maybe go for a loan to buy a car or a house or something, there would be this debt against their name that they did not realise they had signed up for. Anecdotally, there was talk of about 100 people doing this. At $14,500, that is nearly $1½ million of Commonwealth funds that this unscrupulous operator took out of the town of Coonamble for no positive result. If the Commonwealth government were going to spend $1½ million in Coonamble to help the education of its community, there would be much better ways of doing it than this.

So, following discussions that I had in the early days of this government with Senator Birmingham and subsequent conversations with Minister Hartsuyker, I am pleased that this legislation has come in. This is a rip-off of the Australian people and the Australian Commonwealth government of mammoth proportions. Quite frankly, as well as closing up these loopholes, I would like to see some of these operators pursued and the funds recovered from them, because this was an orchestrated fraud on the most vulnerable people in our society.

I support this bill. The information is all there. The minister would have mentioned that in his introduction of this bill. It would be shocking to find out what the magnitude of this fraud is. I suspect, across the nation, it would be in the hundreds of millions of dollars. I am pleased that we will be closing up the loopholes and that we can make sure that our dollars that go into VET education go to the people that need them, that the courses are appropriate, that the trainers are suitably qualified, and that there is a positive outcome for these people. I support this bill. I will leave commentary on the opposition's amendments for the minister in his summing up.

Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to 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.

John Cobb (Calare, National Party) Share this | Link to this | Hansard source

It is with a lot of feeling that I speak on our Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. The member for Wills mentioned that there are victims here, and he is quite right. The good providers who are doing the right thing are victims because it sullies the good name of everybody when providers take advantage of young people and of a government system that allows those people to borrow money from the Commonwealth. Obviously, the students themselves are victims if they are encouraged to get involved in a course that either is no good to them or does not leave them with anything substantive at the end of the day. It is good to see that, when there is a need to sort something out, all sides of the House support sorting it out.

The bill is about reforming the vocational education and training sector because of the actions of a minority of unscrupulous training providers and/or their agents. The bill will strengthen the administration of the VET FEE-HELP loan scheme to protect students who, in their youth and inexperience, are obviously vulnerable. It will also protect taxpayers and the reputation of the broader sector, as I said earlier, through pushing the minority of poor providers out.

Make no mistake, we, the government, are happy to support the VFH scheme that allows students to study higher level VET qualifications without the stress of having to pay up-front fees. We are serious when we say we are happy to do that. However, following Labor expanding the loan scheme in 2012, it has experienced significant growth. Generally, we would see a spike in education as a positive, but, unfortunately, some of this growth is a result of providers who aggressively market the scheme, roping in vulnerable people, young and inexperienced people. These people expect their study to lead to a world of opportunity, but some are just left with a significant debt and no real training outcome.

We have already taken a number of steps to crack down on VFH providers doing the wrong thing. In March this year, a series of measures was introduced, including banning inducements to students under the VFH loan scheme, tightening VET marketing and recruitment practices, and ensuring students have more information on training providers so that they can make an informed choice. These are just a few of eight measures, some of which have already been given effect through changes to VET guidelines or student communication products.

The bill intends to build on these measures with new safeguards. Its primary purpose is to prevent inappropriate enrolments and debts by introducing a two-day cooling-off period between enrolment and application for a VFH loan. Students will, from 1 January 2016, have two days after enrolment before they are allowed to submit a request for Commonwealth assistance. No longer will course enrolment be confused with the loan application. The bill ensures this cooling-off period is in place even with late enrolments close to the census date, which is when students incur the debt.

It will also introduce prerequisites to ensure students can complete the higher level VET courses—diploma and above—which the VFH is available for. It will protect vulnerable students from the outset, before they incur a debt, by requiring providers to establish minimum prerequisites for enrolment in each course. This ensures a student's capacity to complete the course, including assessment of language, literacy and numeracy proficiency, is properly assessed before they are enrolled and before they incur a debt. While we know there are many training organisations which already have stringent admission requirements, there are some who do not, so we are seeing vulnerable students being targeted and undertaking courses they do not have the capacity to complete. This bill makes this good practice a requirement for all VET FEE-HELP approved providers for courses for which students wish to access VET FEE-HELP.

The bill will also require a parent or guardian's signature before a student under 18 can request a loan. This is common sense as it will ensure young people who may lack financial literacy or the necessary life experience to make the right decision do not sign up to a course that will have no real benefits and get into debt they do not need.

The bill will further protect students and taxpayers by making it easier for a student to have their debt cancelled where they have signed up for a loan inappropriately. The bill broadens the circumstances in which students can have their loan cancelled where inappropriate behaviour has been used in their recruitment and acceptance into a course. The taxpayer should not and will not bear the cost. The government will be requiring providers to repay the costs of any loans that are remitted in such circumstances and may impose additional penalties on providers, such as fines or conditions on approval.

An extremely important consequence of this bill is the infringement notice scheme. This will see providers breaking the rule held to account through introducing a scheme of infringement notices attached to civil penalties for VET FEE-HELP training providers that engage in improper conduct.

The Department of Education and Training will now be able to deal with inappropriate behaviour by providers directly with a number of new powers available to them. The department will be able to cancel student debt and force providers to repay the Commonwealth. That is a very strong action and I believe a necessary one—that the department will be able to cancel student debt and force providers to repay the Commonwealth. The new suite of powers will also include administrative action such as suspension or revocation of approval or civil penalties including infringement notices. Dodgy providers will no longer be able to float under the radar without consequence. They will face the force of the law.

Administrative changes will be introduced lifting the standards for those who are approved to offer VET FEE-HELP funded courses. A higher bench mark will ensure that only the best providers will be approved to offer the scheme. It will weed out those doing the wrong thing. Australian students deserve the best access to education that provides high-quality outcomes. We must set a high benchmark for our providers. This is why we have introduced a new minimum registration and trading history requirement for new VET FEE-HELP provider applicants. This ensures all new providers will have a proven track record in delivering high-level qualifications.

It is necessary these reforms have come before the House. It has happened as a result of Labor failing to introduce appropriate controls and safeguards to protect students and taxpayers from low-quality providers when the scheme was widened. The reputation of the Australian VFH sector is at stake. We know the incredibly contribution many of these providers make. The majority of providers are obviously very conscientious and very good and are proud of their reputation. I hope they do not feel aggrieved by this because they are not being targeted. I think this is a situation where those who are doing the right thing know who they are and those who are not doing the right thing most definitely know who they are. I commend the bill to the House.

Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Link to this | Hansard source

I rise to speak in relation to the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. Over the last 18 months we have seen truly troubling and major problems emerge in the Australian vocational education and training sector. These problems have arisen as a result of quite scurrilous behaviour by some providers. We have seen outrageous practices and as a federal member in a marginal seat I have to say that we always keep in tune with what is happening on the ground.

On the weekend, I did my 201st mobile office since the last federal election at the Fernvale markets. Some of the things which keep coming to me and which I have seen over time are the flavours and the issues which really affect people. One of the things which has increasingly come to mind in my electorate office in Ipswich and across most of Ipswich and the Somerset region has been the issue of value for money and people being ripped off. There has been some quite scurrilous targeting of Indigenous people, of people from culturally and linguistically diverse backgrounds, unemployed people and people on Centrelink payments. One guy I saw in my electorate office came to see me after he had served time in prison, saying how he was ripped off by a scurrilous provider in relation to what was offered to him in his first time in prison and how he really felt betrayed by that provider. His story is one of many I have heard. Victims are frequently targeted by high-pressure and predatory sales practices, either by rogue RTOs or by third-party marketers known as brokers.

The recent Senate Education and Employment References Committee inquiry into the operation, regulation and funding of private VET providers heard many stories about the marketing practices in relation to courses. Particular concern was raised with the use of language, which obscured the fact that courses were funded by a loan from the government and there was an expectation, like all loans, that that loan would be repaid. One of the submissions I saw was from TAFE Community Alliance, which told the Senate inquiry that there was an older woman in her 70s at Bankstown Central shopping centre having lunch with a Bible group when approached by a young man asking would they like a free laptop and a free diploma in community services. All they had to do was to sign up. They would never earn more than $50,000 a year, so this group of pensioners would not have to pay back the loan. How unscrupulous and disgraceful is that, to exploit people in those circumstances?

The Redfern Legal Centre reported RTO brokers were targeting people door to door, selling in public housing blocks or on the footpath outside Centrelink. These are very vulnerable people often and this is a disgraceful and disgusting act by many people who have been undertaking this form of marketing. The Consumer Action Law Centre told the Senate inquiry:

We are deeply concerned about aggressive marketing tactics that target consumers who do not have the aptitude or ability to complete VET courses. When offering courses, we have seen providers … and brokers exaggerate the ongoing support available to students and reassure computer illiterate consumers that they will be able to easily complete a course online.

We have received reports of education brokers in particular cold calling or door-knocking potential students and pushing them to enrol in unsuitable courses over the phone or on their doorstep.

These are just some of the many stories that many members of this chamber have heard. I certainly have heard these stories from people who come into my electorate office.

Students often enrol in overpriced, low-quality courses, and fund their study with a Commonwealth VET FEE-HELP line. When enrolled, many find that they do not get the support they need and that the training is woefully inadequate. It is no surprise how many fail to complete the courses. When they do, they often discover that the courses they undertook did not correlate with their educational prospects and their potential employment in the future. So they were misled. Those who complete their courses often find that those studies have failed to improve their employment prospects at all, and they are still left with a crippling VET FEE-HELP debt.

I have heard story after story after story. I have attended a number of providers in my electorate and met with just in the last couple of weeks a new one that came to my electorate. I have heard these stories from constituents, parents and students, and from people from very vulnerable backgrounds who have been exploited.

This issue was raised again last week. And I am glad the shadow minister for employment and workplace relations is sitting at the table here because he was with me in Ipswich just last week in my electorate where we hosted a jobs forum, and this issue came up during that forum. The local media reported on issues in terms of mature-age workforce, youth employment and other issues germane to this particular issue that is relevant in the bill we are discussing in the chamber today.

More of these problems are emerging as the sector continues to explode. In the 12 months between 2013 and 2014, the number of students accessing VET FEE-HELP increased by 103 per cent. The average amount of those loans increased by 24 per cent per student. For the Commonwealth this is a 151 per cent increase in the cost of student VET FEE-HELP loans. We have a situation where the value of these VET FEE-HELP payments to providers increased from $699 million in 2013 to $1.75 billion in 2014—a number of providers soaring by 44 per cent. These are extraordinary figures. They are worth repeating. A number of people repeat them and I am very happy to mention this because these are staggering figures.

It goes to show that the government has taken their eye off the ball in this area. We have consistently called on the Abbott-Turnbull Liberal government to deal with the swindlers and charlatans ripping off students and taxpayers and damaging the reputation of reputable VET FEE-HELP providers in the sector. For two years we have poked and prodded the government about this issue, asking them to get serious about the rorting in the VET sector. We have called for the Auditor-General to investigate, to do an audit report. We have asked for an ACCC education campaign to be undertaken.

We welcomed the news in late October that the ACCC launched its first prosecution of a VET FEE-HELP provider. While not pre-empting the outcome of any case, can I say that we support strong action in the sector. Sadly, we are still awaiting strong action from this current government sitting in the Treasury benches. Despite Labor's calls, the government has dragged its feet and, true to form, the government has tried to scapegoat us. We have heard that from speeches here. But they have been in power for two years; two years and what have they done? They have tried to blame us when they have been in power. Ministers have shied away from talking about the problems in the VET sector. They have shied away from doing anything to protect students and taxpayers and they have shied away from doing the work that is necessary.

It has taken the government almost two years, and they have tap-danced around this issue for long enough. During those two years what has the government done? They ripped $2 billion from the skills portfolio. The government trumpeted the new national standards that came into effect in April this year but we have seen many of those problems persist. The recent Senate inquiry into the operation, regulation and funding of the VET FEE-HELP sector noted with concern that, despite the 2015 standards, it received evidence that some of those practices, such as offering inducements to enrol, had not been stamped out. The report noted:

3.55 While the new Standards explicitly forbid inducement-based marketing, the committee notes that their introduction has not had the effect of eliminating this behaviour by all RTOs. The committee therefore suggests that more rigorous enforcement and tighter regulations around RTO marketing practices are required.

And I say amen to that. It is about time the government did something about that. In evidence to the inquiry, the Yarraville Community Centre reported that banned tactics had continued to be practiced by some RTOs after commencement of the new standards. The Yarraville Community Centre, for the record, offers an English program to about 250 students at eight venues across the city at Maribyrnong.

In terms of the role of third-party brokers, submitters to that inquiry expressed concern that the new standards applied exclusively to the RTOs and not to the brokers. The Redfern Legal Centre stated:

Currently the standards and the regulations apply exclusively to RTOs, but it is the conduct of the brokers and the marketing agents which really leads to this whole mess in the first place. They are the ones with the incentive to get high volume sales without any real focus on what happens after that.

We are concerned that the standards do not go far enough. We are concerned about this bill. For example, this bill introduces a two-day cooling off period between the signing of a course for enrolment and the application of the associated VET FEE-HELP line. The intention is to provide some separation between the two applications forms to reduce confusion between the two documents. There is nothing, however, to prevent a shonky, scurrilous provider skirting around the cooling-off period simply by printing the loan application form with the date two days after the enrolment application. More broadly, nothing in the bill will address the soaring cost to students, costs that have seen the average student VET loan grow from $5,890 to $8666 in 2014—two years after the figure I mentioned before in 2012. This bill will provide no remedy or debt relief to students already ripped off by any rorting RTOs.

We need to go further, and I call on the government to protect students, taxpayers and the reputable providers in the sector. That is why Labor has proposed a national VET ombudsman, to give the regulator some real teeth. The establishment of an ombudsman is the recommendation of the report of that recent Senate inquiry I referred to. The report noted that numerous witnesses at the inquiry voiced their support for an ombudsman to help domestic students resolve their complaints with VET providers. The Consumer Action Law Centre noted a key feature of the student remediation framework should be a national industry ombudsman that would independently resolve disputes between students and training providers at no cost to students or the taxpayer. An ombudsman is strongly supported by the Australian Council for Private Education and Training.

We call on the government to do the right thing, listen to what Labor has had to say and listen to that Senate inquiry and the recommendations. We support the revitalisation of our TAFE system, which is so critical to the VET sector. At the jobs forum last Thursday, which I mentioned before, there was a great cheer in the room when the shadow minister spoke of Labor's commitment to TAFE. It really was spontaneous, straight-from-the-floor applause. Australians recognise that TAFE is a trusted provider of vocational education and training.

We also know that TAFE has been under attack from conservative governments across Australia. In Victoria the former Baillieu government cut $300 million from the state TAFE system, forcing closures, cancellations, job cuts and campus closures. Fortunately, Victorian voters rejected that government and turfed them out. In my home state of Queensland the truly lamentable former Premier Campbell Newman—an appalling premier almost as bad at Joh Bjelke-Petersen—cut TAFE funding and forced fees up as soon as he was elected. There was speculation in the media that his government intended to merge the Bremer TAFE in my electorate with TAFE in Toowoomba or the Gold Coast. There was no connection with the Gold Coast at all. We are seeing this pattern across the board from coalition governments. At the time, Premier Newman said, 'TAFE is being re-focused so it meets the needs of employers so we create jobs.' That was quoted in the Brisbane Times on 23 June 2014. His government achieved absolutely neither, and the Queensland opposition vowed to rescue TAFE from the LNP. The new Labor government of Annastacia Palaszczuk is doing just that.

You cannot trust the coalition when it comes to TAFE and the VET sector. In two years the Abbott-Turnbull government have cut $2 billion from skills and training, with $1 billion from apprentices alone. In the two years since this Abbott-Turnbull Liberal government was elected, we have lost 100,000 apprentices in this country. It is a disgrace. These are cuts which the current Prime Minister says he supports unreservedly and wholeheartedly, so there is no difference whether it is the member for Warringah or the member for Wentworth who sits in that chair. It is a disgrace.

Labor has put forward some very sensible proposals. We are ready and willing to fight for TAFE. I believe we are the only party that Australians can trust in relation to fostering and nurturing TAFE. Forty-one years ago Gough Whitlam increased Commonwealth investment in TAFE infrastructure, quality improvements and staff development in response to a government report. In the 1980s the Hawke and Keating governments continued to foster the links, and I am proud to be part of a former Labor government that when we were in office increased VET funding by 25 per cent in real terms with a $19 billion investment over five years.

The government should look again at what they are doing. They are not doing enough. They should rededicate themselves to TAFE. In relation to this bill they should listen to Labor's amendments and concerns and support Labor because only Labor backs TAFE and only Labor backs the VET FEE sector.

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

This Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 is an open-and-shut case. If ever a bill needed to pass, this is it. If ever there were a scheme that needed reform and tightening up, having its boundaries well and truly set and enforced, this is it.

Members on the other side have called on the minister for a widespread audit, but the minister cannot issue an audit. The Australian National Audit Office is the office responsible for that. Given the amount of press and coverage that this sector of government funding has received, I am sure the Australian National Audit Office is shining up the microscope and getting new batteries in the torch. I would be very surprised if they do not do a thorough audit of this.

But we have witnessed a decline in standards at the same time as an explosion in providers. Some of the figures the member for Wills mentioned I have read too. The $5 billion worth of debt accumulated in three years with the tripling of fees? For goodness sake, this is just not adequate at all. In fact it is a scandal. I support this legislation. To see fees rise from $699 million to $1.7 billion in one year tells you something. To have 44 per cent more providers from one year to the next is like a stampede of people who are trying to get access to easy money. It has not meant that there has been an explosion of quality vocational education and training providers.

Part of the problem that the fees these unscrupulous providers have charged is that 40 per cent of the people who get trained by them are never going to reach the threshold of earnings to trigger repayments. It is a problem because the HECS debts and the VET FEE-HELP loans are a liability to the government and, naturally, the taxpayer—because, when you are talking about the government, you mean the Australian taxpayer. It is billions and billions of dollars.

We do not like to regulate fees and I hate to say it, but we really need to clamp down on the outrageous fees that are being charged. Usually, if you set a limit on fees, people will charge the maximum available in the regulation. One would hope the competitive nature of education would mean there would be competition in fees, but it seems to have been open slather.

There are two stories that I found particularly disingenuous and illustrated how crooked some of these people are. In Cairns there were two providers offering the same course. Funnily enough, they were registered at the same address. One charged $12,750 on the VET FEE-HELP, but, for the same diploma of management from the same provider, you could get it direct if you paid up front $3,420. That is outrageous. In Sydney a diploma of business had an up front fee of $7,000—or you could go online and apply for a VET FEE-HELP loan, take it out, do the same thing through the same RTO and be charged $4,800. How outrageous is this?

Also in the spotlight is ASQA. It is their job to supervise this, so they are already investigating at least 23 RTOs, but I suspect there will be many more. When I looked back at this I was horrified to see all of these things happening. I looked into where this scheme came from. It was introduced in 2009, and I hate to say it but the regulation and the oversight of yet another scheme from that era has brought everyone into disrepute.

There has been a lot of action already. A ban on inducements was introduced on 1 April, so you cannot offer to sign up people on the promise of a free phone or an iPad, and withdrawal fees that were waved in front of people who realise that they were being scammed and wanted to withdraw—they were hitting them up with extensive withdrawal fees—have been banned as well. You can no longer advertise. These brokers cannot walk around train stations or areas of shopping centres and advise potential students or people to sign up to a course and call it free. The brokers must also disclose the name of the provider and disclose their commission.

There was also a phenomenon where they were getting people signed up on a promise of an iPad or an iPhone or some other inducement and claiming the whole loan up-front, and then the person would drop out but the loan had been paid. The unsuspecting person who signed up would not hear anything more until he or she is notified that he or she has a massive loan. There are sensible guidelines like prerequisite skills, namely, a certain level of literacy and numeracy is required and, like many contracts that you sign, there is a cooling-off period. These are all common sense mechanisms. Also, in regard to picking on vulnerable, inexperienced people, they cannot sign up anyone under the age of 18 unless they are formally declared under legislation and are receiving independent payments from DSS or unless they have their legal guardian or parent signing permission.

We can also, with this legislation, levy infringement notices that come with a hefty fine. I say: throw the book at them. I would take them to court. If they have been in breach of consumer laws and, in New South Wales, Fair Trading Regulations, I would go after them hammer and tongs to try to get the money back so that the taxpayer gets money that has been received under false pretences, and also, as a punishment, they should get a fine as well. Suspend them, cancel the debt and demand that the costs be repaid.

I suspect ASQA is going to be extremely busy. One in ten RTOs have already been cancelled, and there are many more that will be found out to be quite shady and shonky in their dealings. Amongst all of the RTOs in my part of the world, in the Lyne electorate, we have the North Coast TAFE. They are in Taree, they are in Port Macquarie and they do a great job. I have been up to the TAFE myself. It is co-located with the University of Newcastle, and it enjoys a very high reputation in town and in the region. Years ago, TAFE was historically the only provider in the VET space. Competition has been good for them because they have a great product, and they have become more flexible and nimble compared to some of the private RTOs who are actually responding to industry requirements a lot quicker than TAFE. The TAFE has not been involved in any of these shady dealings. They are quite above board, and I would like to hope that, as a result of this exposure of some of the shonky tradings, in the competitive market place people realise the value that they will get out of the TAFE.

We could go on with many more stories, but the essential thing is that I support this legislation. The sooner that it comes into force the sooner that the whole VET training space will be better off for students, and the taxpayer will not be ripped off as much.

Keith Pitt (Hinkler, National Party) Share this | Link to this | Hansard source

I am very pleased to be speaking here today in support of the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. This bill will strengthen the protections for students in the vocational education and training sector and push unscrupulous training providers out of the market. This bill addresses issues that are well known to my office. I will not name the students or organisations for privacy reasons, but I would like to share a couple of their stories.

I had a young woman who contacted the Hinkler office after she withdrew from studying a Diploma of Management and the college tried to charge her $12,000. She was led to believe the cancellation costs were just $600 and that she would have to return the so-called 'free' laptop she received. She had cancelled her enrolment because she felt the method of delivery and standard of content was poor. When my office contacted the college they advised that because the young woman had not withdrawn within the required two weeks or census date she would have to pay $6,000 in course fees she had incurred and would have to purchase the laptop. The laptop could not be returned because the young woman had used data and the device now contained her personal information and documents.

Another common problem in my electorate affects temporary foreign workers who enter Australia on student visas. When they get here their passports are confiscated and they never see the inside of a classroom. They work in the horticulture sector, where they are exploited by unscrupulous contract labour hire firms. I congratulate the government on forming Taskforce Cadena to address just this type of exploitation. Some registered training organisations are complicit in this exploitation because they take the foreign workers' money in exchange for silence. They know full well that those students will never set foot inside a classroom or submit an assignment.

Another example relates to the aggressive and false marketing of courses. A gentleman contacted my office in July concerned that when his son applied online for what he thought was a vacant job in warehousing with a contract labour hire firm, he was instead contacted by a registered training organisation. Their email confirmed he was registered to attend an induction session to enrol in a certificate III in logistics and warehousing. There was no job vacancy. I share his concern that these online job advertisements are completely misleading. To quote the gentleman directly:

These ads are making the Registered Training Organisations rich, while leaving people with a debt and no job.

What is also concerning is that the email from the RTO contained all the documentation that the job seeker would need to provide for enrolment but did not disclose any information about the course content, the course outcomes, the course costs or the course cancellation fees.

These kinds of unscrupulous training providers have been allowed to flourish since Labor made changes to the VET HELP loans scheme in 2012. Providers are preying on vulnerable people and signing them up to courses of dubious quality that they do not want and do not need. People in my region are particularly vulnerable, given the high unemployment rate and low job vacancy levels.

Between 2012 and 2014, the number of approved VET providers increased from 119 to 254, and the number of students increased from about 55,000 to 202,000. The total value of VET HELP loans increased from $325 million to $1.75 billion. That is in someone's pocket. To quote Chris Robinson from ASQA, the Australian Skills Quality Authority, the expansion 'precipitated unprecedented examples of unethical student recruitment practices and astronomical fees as dodgy operators jumped into a new and easy government supplied pool of money'.

In March this year, the government announced a suite of reforms to the VET FEE-HELP scheme to protect students, taxpayers and the reputation of Australia's VET sector. These reforms spanned areas such as marketing and inducements, consumer information, debt processes and provider standards. The first of these changes included the banning of inducements such as free laptops, cash or vouchers, and that came into effect in April this year. The second tranche of reforms came into effect on 1 July this year.

Since then, providers have been banned from charging a withdrawal fee. Costing several thousands of dollars in some cases, the fees acted as a barrier to some students withdrawing from a course before the census date, which is when the loan is levied. In addition, training providers and agents can no longer market VET FEE-HELP supported training as 'free' or—in italics—'government funded' or mislead students in any way into believing that VET FEE-HELP is not a loan that is expected to be paid back.

Providers must now publish on their websites which agents and brokers they use and are responsible for the conduct of their agent or broker. Agents must now disclose to the student the name of the VET provider and the course they are marketing, and they must also disclose that they will receive a commission for any referred student enrolment.

The government has also announced that, from 1 January next year, providers cannot levy the full debt load up front and in one hit. Instead, students will have a number of opportunities during a course to confirm if they wish to continue to be enrolled, and their debt will be levied accordingly.

This bill now implements the remainder of the government's announced changes. For example, the bill introduces changes that will protect vulnerable students at the starting point, before they incur a debt, by requiring providers to establish minimum prerequisites for enrolment for each course. This ensures that a student's capacity to complete the course—including language, literacy and numeracy proficiency—is properly assessed before they are enrolled and before they incur a debt.

The bill makes a number of technical amendments to enact a two-day cooling-off period, ensuring that students have time to make separate study and payment decisions. Students will, from 1 January 2016, have two days after enrolment before they are allowed to submit a request for Commonwealth assistance—the VET FEE-HELP loan application form. No longer will course enrolment be confused with the loan application. The bill ensures that this cooling-off period is in place even with late enrolments close to the census date, which is when students incur the debt.

The bill also increases protections for students under the age of 18 by requiring a parent's or guardian's signature before the student can request a VET FEE-HELP loan. Can you imagine if you rolled down to the bank to sign up for an $18,000 loan to buy a car? That certainly would not be as simple as this has been in the past, and we are addressing this problem. This is an appropriate protection to ensure that young people, who may lack the necessary life experience and financial literacy, are not being signed up to courses and debts they do not need. An exemption is provided for minors who are deemed independent under the requirements of the Social Security Act 1991.

The bill broadens the circumstances in which students can have their loan cancelled where inappropriate behaviour has been used in their recruitment. This is a cost that taxpayers should not have to bear, which is why the government will be requiring providers to repay the costs of any loans that were signed under inappropriate circumstances. It may impose additional penalties on providers such as fines or conditions on approval.

The bill introduces a scheme of infringement notices attached to civil penalties for VET FEE-HELP training providers that engage in improper conduct. In the 2015-16 budget, we allocated $18.2 million to strengthen compliance. The Department of Education and Training will now have a full suite of powers available to it to deal with inappropriate behaviour by providers or brokers. This ranges from cancelling student debt and forcing providers to repay the cost to the Commonwealth, to administrative action such as the suspension or revocation of approval, or civil penalties including infringement notices. The bill expands the department's and the Australian Skills Quality Authority's powers for monitoring and enforcement action against providers and brokers who are doing the wrong thing.

As well as protecting students, this bill also lifts the standards of organisations that are approved to offer VET FEE-HELP funded courses. Approved providers are entrusted by students and taxpayers with potentially millions of dollars in tuition fees. The government believes that VET FEE-HELP providers should meet a high benchmark of financial viability and training quality. That is why this bill introduces a new minimum registration and trading history requirement for new VET FEE-HELP provider applicants. This ensures that all new providers offering VET FEE-HELP have a proven track record in delivering high-level qualifications.

As the former owner of an RTO, I can tell you that the standards are incredibly strict, particularly for certification. Unfortunately, on entering this place, I had to sell that business because there were far too many conflicts, but I am very proud of the fact that I had it for over 10 years, and it continues to function on the basis that it provides quality training to real people for a real price. The fly-by-nighters I have had an enormous amount of experience with. I have seen them everywhere. I lost jobs all over the country in my previous life against the people who show up, who might be subsidised or who can track down government funding. It certainly is wrong. I would encourage all of those organisations out there—and they are out there—which are good, quality organisations which have been around for a long time and which continue to do the right thing. I would encourage them to hang in because we certainly need them to continue doing that. They provide good training to students with good trainers for a reasonable price.

I certainly heard the contributions from the two previous speakers about TAFE. Whilst TAFE do provide a good service, the issue that I discovered in the many years that I was involved was that TAFE simply do not have the ability to be flexible. They certainly did not at that stage; they may well have shifted now. They need to be able to provide services to people who work on shift, people who work away, people who work on site. They need to adjust their business model; otherwise, they simply will not survive.

There are positives, Mr Deputy Speaker. There are positives. The vocational education and training sector is a vitally important part of Australia's economy. It is a sector that has a long and proud tradition in Australia. For many young people, it provides the bridge between school and work. For unemployed people, it often provides a pathway back into employment and a life off welfare. And for people in work, it can be the mechanism by which they can expand their skills and progress in their careers.

I was certainly one of those. I completed a trade before going to university—before doing all sorts of things and then ending up in here, would you believe, Mr Acting Deputy President—it has been a very long and torturous path! But I understand the training sector, particularly for VET, and we desperately need those trade skills in Australia.

The coalition government is committed to ensuring that we continue to have a strong VET sector—a sector that helps students to develop the skills they need for the jobs of today and to adapt to the work of the future. That is why we have introduced programs like the $20,000 trade support loans for apprentices. As someone who undertook an electrical apprenticeship, I know how much difference such a loan would have made to me. Certainly, as I recall it, my first pay packet was some $63—

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

$39!

Keith Pitt (Hinkler, National Party) Share this | Link to this | Hansard source

I hear $39 from my good friend and colleague! The government supports the principle of VET students being able to access a loan so they may undertake quality training in the same way that a university student is supported through HECS-HELP. Certainly, the tradespeople of Australia are just as valued as those who do a university degree.

Unfortunately, Labor failed to put in place sufficient controls and safeguards to protect students and taxpayers' money when they introduced the VET FEE-HELP scheme. In typical fashion, they did not have an eye to the implementation risks. They are well aware that this is a problem of their own making. The shadow minister for higher education, research innovation and industry acknowledged as much only a few weeks ago. Senator Carr, from the other place, was quoted in The Sydney Morning Herald newspaper:

Labor Senator Kim Carr said Labor introduced VET FEE-HELP with good intentions but the scheme contains "fundamental weaknesses" that need to be fixed.

We are fixing those weaknesses. This bill is necessary to address Labor's failure with regard to VET FEE-HELP and to put in place proper controls and safeguards to protect students and taxpayers from the unscrupulous behaviour of some providers.

I commend the bill to the House.

Gai Brodtmann (Canberra, Australian Labor Party, Shadow Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I rise today in support of the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015.

This bill builds on legislation that passed in April, legislation that aims to strengthen the integrity of our VET sector. As we know, over the past 18 months—actually, it has been going a bit longer than that—the VET sector has been in the headlines for all the wrong reasons. Far too many vulnerable students are ending up with high debts, quite often with a qualification that is not recognised by employers because of quality issues.

In fact, a recent investigation by the Australian Skills Quality Authority, a national regulator established by Labor, found problems with two-thirds of the private training providers that it audited. That is a significant sum—two-thirds. In some cases, students are ending up with large debts and no qualifications because they were enrolled inappropriately in courses that were never going to meet their needs. I have heard some shocking stories, as we all have. I have just been talking to my colleague about some shocking stories from her electorate. I have heard shocking stories of students being offered iPads, laptops and shopping vouchers to lure them into signing up to a course. And I have seen news reports about $200 spotter fees being paid to people to sign up to courses costing up to $25,000.

Not only are these issues affecting students poorly they are also affecting all Australians through the impact on the Commonwealth budget. The ballooning of the VET FEE-HELP debt from almost $699 million in 2013 to $1.7 billion in 2014 is extremely concerning, particularly when combined with shockingly low completion rates. Between the end of 2013 and 2014 the number of students accessing VET FEE-HELP grew by 103 per cent. The average loan amount per student has increased by 24 per cent and the number of providers offering access to VET FEE-HELP has grown by 44 per cent. Clearly, these numbers are not sustainable.

Aside from the financial impact, dodgy providers and exploitative practices are also having a devastating impact on the reputation of the sector. And this is a really important sector. It is a really valuable sector, and not just for Australians: it is also, potentially, a very lucrative export market. I know this—I have just been to India for the inaugural Australia India Leadership Dialogue. Prime Minister Modi has an enormous agenda to rebuild that nation: to build universities, schools and roads. They need skills and they need tradespeople of every description, and they need education to be able to get those tradespeople. So this is an enormous opportunity for the VET sector in India, and we also know there is enormous opportunity in China and in the region.

Most people in this House know that I am a huge fan of vocational education and training. My concern is that these dodgy providers and exploitative practices are having a devastating impact on the reputation of the sector. I am a graduate of the wonderful Royal Melbourne Institute of Technology—a very proud graduate of that institution. I was actually union president of that institution too; it is where I cut my teeth on politics. RMIT, as many know, was established over 100 years ago, when access to education was limited only to the wealthy. It is the oldest workers college in the world—a very proud tradition. It currently opens up opportunities to people from lower socioeconomic backgrounds—from working-class backgrounds—and it has been doing that for more than a century. I am talking here not just in terms of trades but also in opportunities to access a range of learning in a range of sectors.

I also had the great pleasure, just before I entered this life, of tutoring out at the University of Canberra. Again, I got to see firsthand the benefits that students get from vocational education. Now, as the member for Canberra and just by going out into my community, I see what the Canberra Institute of Technology is doing across a broad range of areas. I have been out with the shadow minister for a number of visits around the electorate, most recently to the CIT down in Fyshwick, where I met with a number of young Canberrans and also Canberrans who are midcareer—in their 40s or 50s and wanting to update their skills. They had gone through their trade training in the seventies or eighties and the world has completely changed—particularly in automotive skills. So these men and women are now updating their skills to ensure that they can keep abreast of change and that they can stay competitive in the market. I have met not one but two family units at the CIT, with fathers and sons studying a trade together.

The member beforehand was saying that TAFEs, in his view, are not up to date, are not flexible enough, are not responsive enough to what is happening in the market and are not keeping up to date with technology. I disagree entirely. In a number of visits I have made to CIT at Fyshwick, I have been amazed by the way in which the teachers and educators are constantly looking at ways to innovate when it comes to teaching tools, learning tools and assessment tools. When I was there just recently, I met a plumbing educator who showed me how, with the beauty of an iPad, he can now take photos of the work that the students are doing, and that can be part of their assessment. So he has a visual representation of their assessment throughout the course, so he can actually track, through images on the iPad, the achievements and progress of the students. So I disagree entirely with the former speaker. TAFE is innovating, keeping abreast of changes and ensuring that it is constantly changing and evolving and constantly flexible so that its graduates can be competitive.

I have also had the opportunity to go and visit many, many trade training centres in my electorate. Just recently I went to the Trinity College trade training centre, which was funded by Labor and opened by the current ACT Liberal senator. I find it rather ironic that Senator Seselja has opened a number of trade training centres in Canberra despite the fact that his government has actually abolished all funding for trade training centres. But I have been to a number of trade training centres, and all are working incredibly well, and the schools that they are attached to are incredibly grateful. As I said, just recently I visited Trinity College. They have a beautiful new trade training centre for child care—cert III and IV, I think. St Mary MacKillop College has an extraordinary trade training centre for hospitality, carpentry, architecture and a range of other skills. That centre is allowing students to have a pathway, and it opens up a range of options to them for their careers. Erindale College has a fantastic hospitality centre, all thanks to Labor.

As I said, I am a big fan of vocational education. It gives people valuable, tangible skills that they can use to get a great job and have a wonderful career. I really cannot sufficiently underscore how vital the vocational education sector is to Australia's prosperity. So I am pleased to support this legislation today to address some of the issues surrounding VET FEE-HELP, because we must protect vulnerable students from shonky providers.

The bill is in addition to previous changes that were made in April 2015, and 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. It also introduces minimum prerequisites such as literacy and numeracy to make sure that students can complete the higher level VET courses at the diploma level and above for which VET FEE-HELP is available, and it requires a parent's or guardian's signature before a student under 18 can request a VET FEE-HELP loan, to protect younger students. The bill will further protect 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 for the government to recoup the cost from the providers. It also introduces minimum registration and trading history requirements to ensure new VET FEE-HELP provider applicants have a proven history of delivering quality training. It introduces infringement notices and financial penalties for breaches of the VET FEE-HELP guidelines, and it also introduces 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.

As I said at the start of my speech, Labor welcomes any opportunity to strengthen the integrity of VET—we are great fans of VET—and to crack down on shonky providers. The measures in this bill that I have just outlined will go some way to achieving that, but Labor believes they do not go far enough. Despite the introduction of new national standards, which came into effect in April, the problems and rorts within the system are still occurring. We are particularly concerned that there are no efforts to control the spiralling costs for students, with loans having grown in value from $5,890 in 2012 to $8,666 in 2014. That is a significant increase in just two years. The two-day cooling-off period could prove to be easy to manipulate by providers printing out enrolment forms with one signing date and VET FEE-HELP applications with a date two days later. There is no effort to re-examine previous approvals for providers, and there is no debt relief for students who have already been defrauded by dodgy providers.

Before I detail Labor's amendments to this bill, I might just point out that the Labor Party has a very proud track record when it comes to vocational education and training. I just mention the significant investment that we made in trade training centres. It completely changes the opportunities for young Australians, providing them with pathways so they can get their year 12 certificate, still continue to study French and also get a cert I or II in carpentry at the same time. The $3 billion we provided for the Building Australia's Future Workforce program provides some 130,000 new training places for apprentices. In 2011 we established a national regulator, the Australian Skills Quality Authority, as I mentioned earlier. We then amended the legislation in 2012 to increase the coverage of VET FEE-HELP to all diplomas and associate diplomas and also to conduct a trial to extend VET FEE-HELP to certificate IV courses. This meant that any Australian could have access to vocational training, no matter what their background or their financial position. So I find it frustrating to hear the government falsely claiming Labor in government failed to protect students and taxpayers from unscrupulous providers and wasted billions of dollars, because this is completely false. Labor has a strong record on investing in skills and helping students and workers to obtain the skills they need to participate and compete in the modern workforce, as well as introducing regulation and quality assurance.

Now to Labor's amendments, and I will be brief. Firstly, we are calling for the establishment of an industry ombudsman. A national VET ombudsman would add some real strength to the regulator. This has been backed up by the Australian Council for Private Education and Training, along with the report from the Senate inquiry into the operation, regulation and funding of private VET providers in Australia which also recommended a national VET ombudsman. An ombudsman would give students direct access to a complaint-resolution process—somebody on their side to get the issues resolved for them.

Secondly, Labor is calling on the government to have the Australian National Audit Office look closely at the operation of the VET FEE-HELP scheme. This is a view the Labor Party has had for some time. In fact, last year, the shadow ministers called on the Auditor-General to investigate VET FEE-HELP to ensure that skills funding was being used in accordance with the intent of the legislation. The Auditor-General has requested that a performance audit be included in its work program for this financial year.

Finally, the last amendment requires the department to write to the student with a clear statement on the amount of debt that they are about to undertake and for the student to reply to the department before a debt is raised. We will also 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 student loans.

Students, TAFEs, taxpayers and good quality providers are all the victims of this scandal. A Shorten Labor government will guarantee TAFE funding into the future by working with premiers and chief ministers on a comprehensive national priority plan that defines the role of TAFE and places it squarely as the public provider within the sector. Vocational training is a vital sector. I support it wholeheartedly. We must protect students, we must protect the integrity of the sector and we must ensure VET FEE-HELP is sustainable. I commend this bill to the House.

Teresa Gambaro (Brisbane, Liberal Party) Share this | Link to this | Hansard source

I wish to rise and speak in favour of the Higher Education Amendment (VET FEE-HELP Reform) Bill. The Vocational Education and Training FEE-HELP program was first introduced by Labor in 2009. It was set up so that students undertaking a diploma or an advanced diploma qualification could access a loan to help with their course fees. The government supports the principle of VET students being able to access a loan so that they can undertake quality training in the same way that a university student is supported through HECS-HELP. But when Labor introduced the scheme, they failed to put in place sufficient controls and safeguards to protect students and taxpayers' money. This was the first of the Labor Party's litany of errors.

Just three years later, the Labor Party expanded access to the VET FEE-HELP scheme by removing the credit-transfer arrangements between VET providers and universities. Again, they failed to think about the risk of taxpayers' money when these changes were made. The consequences have been a huge surge in enrolments by very unscrupulous VET FEE-HELP providers. These providers have sought out vulnerable people, and enrolled them in courses of questionable standards that were neither beneficial nor necessary. No promise of an education should come with a debt that cannot be repaid.

Labor had a chance to change the major flaw in their scheme in 2013, when the first complaints started coming in and they were reported to the national training regulator. But surprise, surprise, they did absolutely nothing. There were a litany of complaints about the scheme—and what did they do? They just sat on their hands and did absolutely nothing at all. The VET FEE-HELP scheme was established to give Australians a chance to better themselves, not to limit their opportunities.

To protect students, taxpayers and the reputation of Australia's VET sector, the government introduced a raft of reforms to the VET FEE-HELP scheme in March this year. These reforms reach right across areas such as marketing and inducements, consumer information, debt processes and provider standards. There is a huge breadth of reforms, which highlight the depth of the flaws that have existed in Labor's policy since it was introduced. The first of these changes was the banning of inducements such as free laptops—people were given cash, they were given vouchers—and that was to come into effect on 1 April this year. The second phase of the reforms came into effect on 1 July this year. Students will now have a number of opportunities during a course to consider their enrolment, and their debt will be levied accordingly. This legislation clears the waters that were left muddied by the opposition.

In this very next phase of the legislation, this bill will seek to prevent inappropriate enrolments and debts by introducing more standards so that vulnerable students will have more protection. And more protection is what it is all about. Between enrolment and an application for a VFH loan, this bill will introduce a two-day cooling off period, which is very much a relief. It is a very good measure that will enable students to have a period of time from when they enrol to consider their application. I welcome that particular change to this legislation.

To ensure that students can complete the higher level VET courses, this government will also introduce a minimum of prerequisites. Before a student under 18 can request a VFH loan, a parent or a guardian's signature will be required. Again, that is very much a welcome move, and I fully support that.

These measures are common-sense measures that will ensure that future students will not suffer the same fate as past victims, who have suffered time and time again. This legislation will act to protect those least able to protect themselves. To burden those already most burdened is absolutely morally bankrupt, and this act will make it punishable. Under this bill, the cancellation of a debt will also be easier, where students have signed up for a loan inappropriately. This is a cost that will be recouped from the provider and not the taxpayer. The government will also introduce minimum registration and a trading history requirement for new VFH provider applicants to ensure that those who are approved have a proven history of delivering quality education. And quality training is at the core of this bill. This will allow authorities to weed out those already caught preying on students in the past. They have absolutely no place in training students, if they have been caught doing this in the past.

If we provide an environment in which avenues of our education system have the potential to burden students more than benefit them, then we must do more to better the system. I commend all of the changes in this bill to the House.

Amanda Rishworth (Kingston, Australian Labor Party, Shadow Parliamentary Secretary for Health) Share this | Link to this | Hansard source

I rise today to support the Higher Education Amendment (VET FEE-HELP Reform) Bill and also put on record my support for the important amendments that Labor's shadow minister has put forward.

Vocational education is critically important to the future economic prosperity of our nation. Labor understands how essential vocational education is as a pathway to the practical hands-on, highly-skilled jobs of the future. That is why, when in government, we significantly resourced and reformed the vocational education sector—something that had been left neglected by the Howard government and that we put significant effort into.

Far from being the runner-up to Australia's higher education sector, VET plays an important part, or the other side of the coin, when it comes to higher education. We need to support our young people to follow pathways into further study, whether it is higher or vocational education—both are incredibly important. Equally important is ensuring that young people can access—and not just young people; I have to emphasise it is also about people retraining such as those who want to change career or, in some very unfortunate circumstances, have found themselves made redundant and need an alternative pathway into employment.

Whether it is higher or vocational education, it must be accessible and affordable. That is why our VET FEE-HELP, if it is used in a prudent, responsible way, is an important part of the process. However, in the last two years, we have seen reports that the reputation of Australia's vocational education training system and the VET FEE-HELP program are now at risk, increasingly, as a result of unethical behaviour. One can only call these people shonks and unscrupulous private vocational training providers.

I must say at this point: there are some great private providers who deliver high-quality vocational education and of course our public provider, TAFE, does a great job of delivering high-quality vocational education. But, unfortunately, we have seen reports of some private providers who have come into the marketplace and have not been providing high-quality education. We have seen reports—particularly in the area of child care, management and business—where less than suitable training has been provided. Some young people have signed up for courses thinking they will get a childcare qualification that will allow them to step into a job when all we have seen is very, very poor-quality training provided by these organisations. Some childcare providers have blacklisted graduates from some of these training providers. So it is not a good outcome, and these students have ended up with significant debt.

What is equally concerning are reports of students being signed up to training courses without their actual knowledge. Just last week an individual in my electorate told me that a training provider rang him and said, 'Look. Do you want to do a course in management?' He said, 'I'll think about it.' Without his knowledge, they signed him up to that course. They said they would send him an iPad to do his course on. He never received the iPad nor heard from them again. Unfortunately, at tax time, he found that he had a VET FEE-HELP debt, which he is now required to pay back after receiving no funding.

We have seen the VET FEE-HELP debt increase from $700 million in 2013 to $1.7 billion in 2014. This is extremely concerning, and I think that figures and time frame show that this has increasingly become a problem in the last 18 months or so. In fact at the end of 2013-14, the number of students accessing VET FEE-HELP had grown by 103 per cent and of course, unfortunately, a lot of these people who signed up for VET FEE-HELP and enrolled in vocational education training have not been supported to complete their course. In fact only 24 per cent of VET FEE-HELP assisted students actually completed their course.

So we have got a problem. We have got an issue, and the government has not taken responsibility for it. They continually blame Labor and of course they fail to recognise that they have actually been in government—and we may have a new Prime Minister—for the last two years. It is time they took some responsibility for this increasing problem and did something about it.

While it is belated, we certainly welcome these moves and some of the other moves that the government has made but we do not believe they go far enough. Our VET system should be designed to skill up people in preparation for a world of work, giving high-quality training and ensuring that they have the skills for the future. We have seen the Abbott-Turnbull government sitting on their hands, tinkering around the edges while not actually dealing with these shonks and unscrupulous training providers, who have exploited disadvantaged and vulnerable people in the name of obscene profits.

As I said, numerous people have contacted me and, unfortunately, we have seen the regulator being overwhelmed by these reports. It is time that we have a regulatory framework that is fit for purpose, which I why I think it is very important that the government takes Labor's amendments seriously, in terms of an ombudsman. We think that this is a very important improvement that the government should have a look at. This has been supported by the Australian Council for Private Education and Training—they have called for an ombudsman as well. The report from the Senate inquiry into the operation, regulation and funding of private vocational education and training providers in Australia has also recommended a national VET ombudsman. We think this is an important element to complement ASQA, the Australian Skills Quality Authority. We think that this is very important and that it is something that should be seriously looked at.

In addition to this, we have also called for an auditor-general to investigate VET FEE-HELP to ensure that skills funding is being used in accordance with the intent of the legislation. The Auditor-General has requested that a performance audit be included in the Australian National Audit Office 2015-16 work program, and we think this is really important. In fact, Labor has been calling for this for some time. We also think that the amendments we have put in place, to ensure that students are aware that they are signing up for and actually getting a debt, are really, really important. What Labor is calling for is making it really, really clear that students know what is happening and that they are signing off on it. We think the government should look very carefully at our amendments and ensure that they are brought into line.

Like I said, there are many good private training providers out there, and what these shonks in the system—these poor quality training providers—are actually doing is tarnishing the reputation of our whole vocational education system. Our vocational education system does and will play a critically important role into the future. But, without ensuring that there is a good reputation in the system and around the country, how will people know, when they sign up to a vocational education training pathway and incur a debt, that they are getting high quality vocational education and training and that that training will lead them to a job? This is so critically important.

I think it is also a timely reminder and it is concerning that, despite the evidence we do have on hand, the government does want to pursue open slather arrangements when it comes to higher education. Among a number of things in their plan to deregulate the university sector, one of the big calls they had was to include private providers and allow private providers to access HECS-HELP subsidies and Commonwealth support. I think what we have seen in the vocational education system is that you do need strong regulators and a strong regulatory framework to ensure that this is not abused and that vulnerable people are not abused. Certainly, I think it is time for the government to, perhaps, not just tinker around the edges, but actually do something concrete. We believe that the amendments that we have put forward strengthen the bill before the House and we really urge the government to look at this.

I think it is also important to recognise, and I will take this opportunity to talk about, the important role that TAFE has in the vocational education system. TAFE, as the public provider, is an important element. As I said, there are some strong, positive private providers in the system; however, we have also seen some shonks. Unfortunately, TAFE has not been treated well by Liberal governments, and Liberal governments have attacked TAFE. TAFE plays a critically important role; that is why Labor has made a commitment to and understands the critical role that TAFE plays for many industries. There are many areas that TAFE will provide courses in that the private providers will not. I think it is well recognised that, in industries that are going through significant transition, TAFE comes in and works with those employees to ensure that they get training for jobs.

It is important to recognise the role that TAFE plays in English as a second language, supporting people actually getting a handle on English as new migrants to this country. It is critically important. That is why Labor has announced, recognising the central importance of the role that TAFE plays, that Labor will work with premiers and chief ministers to ensure that there is a TAFE funding guarantee and a national priority plan which will properly define and support TAFE and the role that it plays. We think that this is an important move in strengthening our vocational education sector. It is an important move to ensure that the role that TAFE plays is properly recognised and ensure that they can continue to deliver the high quality education that they provide.

But, of course, in terms of some of the reports that have come out about some of the very poor practices that we have seen in the private vocational education sector, we need these to be dealt with and dealt with quickly. The government has been sitting on its hands and tinkering around the edges. It is now time for the government to act. We cannot have these vulnerable people being taken advantage of by organisations that have no intention of delivering training or, indeed, do, but provide very poor quality training that will not lead to young people and those transitioning into new careers finding a job.

It is time that we see the government act on these shonky providers and stop making excuses about why they have not acted. It is their responsibility, they are in government and it is time that they do not shirk their responsibility and actually address this issue. Please look at Labor's amendments. We think these are strong amendments and we hope the government will indeed accept them.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

Wow! It was interesting to sit in the House for 15 minutes and listen to the member for Kingston attempt to rewrite history and absolve the previous Labor government of all sins in relation to the issues that now face the VET FEE-HELP sector, because it was actually under the previous Labor government's watch that the framework and systems were put in place that have led to the catastrophe that faces the VET FEE-HELP sector today. It is not the first time that we have listened in this place to those opposite trying to rewrite history. There has been no acknowledgement whatsoever of their failings when in government, yet they come in here and pontificate about the fact that we, as a government, now need to fix all these problems posthaste. In stark contrast to the previous government, we have taken the time to work with the industry, work with the sector and come up with a sensible set of solutions to the problems that are genuinely facing the sector.

Everybody in this country and all of us in this House readily acknowledge that every Australian deserves the right to access quality education. That is why I stand in this place today to speak in support of the Higher Education Amendment (VET FEE-HELP Reform) Bill 2015. This bill seeks to amend the Higher Education Support Act 2003 to strengthen the protection for students in the vocational education and training sector, and it seeks to push those unscrupulous training providers out of the marketplace. There is one thing that I will agree with the member for Kingston on, and that is the notion that, whether somebody is going to university or going to learn a trade, we should provide a level playing field in terms of support. I have no doubt that that was the initial intention of the VET FEE-HELP model, which is effectively an extension of the Higher Education Contribution Scheme to the trade skills sector. That has been extremely well received.

We have seen in Australia a long and proud tradition of vocational and educational training. I remind the member for Kingston that it was actually under the Howard government that we developed the Australian industry trade colleges and that Labor, when they came into government, did away with Australian industry trade colleges. The member for McPherson, who is at the table, well knows the success and tremendous achievements of the Australian Industry Trade College at Robina.

Karen Andrews (McPherson, Liberal Party) Share this | Link to this | Hansard source

I do.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

I had the pleasure of meeting with principal Mark Hands last week and one of their students, and I listened to some of the terrific achievements of that college in working in the vocational educational system. The greatest value is that they have developed a curriculum that allows their students to gain the Queensland Certificate of Education; not only that, those students spend their two senior years also working in industry. The value of that to those students is that 93 per cent of students that graduate from that college have a job when they leave school. That innovation was put in place by the Howard government, and those opposite dismantled it.

In my electorate, where the youth unemployment rate is 17 per cent, vocational education and training is extraordinarily important. Part of the reason for my meeting last week with Principal Mark Hands was to look at developing a campus in Beenleigh to service the Yatala industrial area and other industrial areas in my electorate. So, on this side of the House, we fully support and acknowledge the importance of the vocational education sector, and we have some great service providers in all of our electorates, I am sure, and those include TAFE. The Meadowbrook campus of the Metropolitan South Institute of TAFE do a fantastic job not only in the trades and skills sector but in a number of other areas, particularly with our large migrant community.

As I have touched on, it was the previous Labor government that axed the credit transfer arrangements between VET FEE-HELP funded qualifications and university qualifications in 2012. Since then, VET FEE-HELP has undergone unanticipated growth. Between 2012 and 2014, approved education providers grew from some 119 to 254 and nominal loans debt more than quadrupled. Much of this growth was because of the unscrupulous behaviour of a minority of providers and agents, who have aggressively marketed the scheme, targeting vulnerable people who are left with significant debt but no benefit from training. I think we would all recognise that that is unconscionable. The people that are going to these organisations are looking for this training to help restore some self-confidence and pride and gain some new skills and new abilities to improve their opportunities in the workplace.

Those opposite failed our Australian students. As I said earlier, the system put in place by Labor failed to enact the necessary safeguards to protect students and taxpayers from these rorts, and out of control expansion precipitated unprecedented examples of unethical student recruitment practices, with promises of free laptops or iPads hiding astronomical fees, as dodgy operators jumped into new and easy-to-access government supplied pools of money. Labor not only failed Australian students but also failed the hardworking taxpayers whose money they treated with disregard. Those opposite had the chance to rectify these wrongs in 2013, when the first complaints were made to the National Training Regulator and the Australian Skills Quality Authority. Labor ignored these complaints. Yet, in a revelation some two years later, the shadow minister for higher education, Senator Kim Carr, finally acknowledged the need for stronger measures, outlining 'fundamental weaknesses that needed to be fixed'. I think this is a symptom of those opposite: they ignore the problem for years and years and then finally they have this hallelujah moment when they discover there is a problem and expect us to fix it in 60 seconds. I can assure those opposite that we have a diligent and prudent process. There have been many problems from those opposite that we have had to fix in the past two-and-a-bit years in government. We will fix this, and it will be for the better for the sector and, most importantly, for those people looking to study through the VET system in Australia.

I commend the Minister for Education and Training, Senator Simon Birmingham, for announcing earlier this year that a series of measures would be introduced to crack down on the unscrupulous behaviour which has left some students with a mountain of debt and no qualifications to show for it. The member for Kingston's comments earlier that the government have been sitting on their hands, doing nothing, is plainly incorrect, because we have been working on this since earlier in the year.

These important measures seek to stamp out those rorting the system and restore integrity into the higher education sector. These measures have been progressively introduced since April 2015 and are already making a positive impact. This bill provides the additional laws necessary to implement significant measures from 1 January 2016. The Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 seeks to prevent inappropriate enrolments and debts by implementing a number of measures, including the introduction of a two-day cooling-off period between enrolment and application for a VET FEE-HELP loan; the introduction of minimum pre-requisites to ensure students can complete the higher level VET courses for which VET FEE-HELP is available; and the requirement of a parent's or guardian's signature before a student under 18 years can request a VET FEE-HELP loan.

This bill also aims to further protect students and taxpayers by including a number of measures, such as making it easier for a student to have their debt cancelled where they have been signed up for a loan inappropriately—a cost that will be recouped from providers to protect taxpayers; introducing minimum registration and trading history requirements for new VET FEE-HELP provider applicants to ensure a proven history of delivering quality training; introducing infringement notices for breaches of the VET FEE-HELP guidelines; and making technical amendments to strengthen the department's administration of the scheme and its partnerships with ASQA to monitor and enforce compliance. Where Labor have failed to protect students and taxpayers, these measures are being introduced by the coalition government to rectify those weaknesses.

In addition to these reforms, the government's changes to VET FEE-HELP will include a number of measures to prevent students from being caught up in dodgy courses and high student debt. These changes include banning inducements for enrolment; banning withdrawal fees and other barriers if students change their mind about an enrolment; and banning inappropriate marketing, including marketing that describes a VET FEE-HELP funded course as 'free'. Education providers will also be responsible for the actions of their agents under these new changes, and providers will be banned from levying the full debt load up-front, regardless of a student's progress through the course. This will be achieved by requiring training providers to have multiple census dates and proportionate levying of fees across each course. The new measures that are being implemented by the coalition government will protect students from dodgy education and training providers and inappropriate incentives and marketing and will also protect the hard-earned tax dollars of Australians.

I commend the Minister for Education and Training and the new Minister for Vocational Education and Skills for consulting widely on the implementation of these reforms to ensure we get it right. The government has consulted with various stakeholders through a number of forums and has also appointed a VET FEE-HELP Reform Working Group—with representatives of training providers, students, employers and consumer law advocates and regulators—to advise on the implementation of the reforms, including the measures in this bill.

It is this government, on this side of the House, which is seeking to rectify the inadequacies of the previous Labor government that have led to the issues we are now facing in the VET FEE-HELP sector. For a community like mine, which has a large number of people of low socioeconomic status who are looking to improve their skills and their abilities so that they can get a job and work to contribute to their families and develop self-esteem and personal responsibility, these changes will go a long way to helping some of those who, over the past few years, have no doubt been victims of some of these rorts and rip-offs by unscrupulous VET FEE-HELP providers. I commend the bill to the House.

Alannah Mactiernan (Perth, Australian Labor Party) Share this | Link to this | Hansard source

Of course, both sides of the House support the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. Indeed, we on this side of the House have for the last 18 months been drawing attention to the rapidly escalating problem that has been occurring in the VET FEE-HELP area as more and more unscrupulous operators sought to take advantage of the loan scheme. I do find that last contribution really quite extraordinary. I mean, you have been in government for over two years now. This has been a matter of great public record with report after report. Part of a report into vocational education by a committee for which I was deputy chair was to show that these scams were escalating. There was also a very good report by the University of Sydney, entitled The capture of public wealth by the for-profit VET sector, as well as a very comprehensive report by the Auditor-General of Western Australia into what was going on with the standard checking.

It is quite bizarre that a government that has been in place for two years is considering a matter that has been the subject to a great deal of commentary, where we have seen the debt levels spiral. In the last year alone the debt level has gone from $699 million to $1.7 billion, and the $699 million was a doubling of the previous year. We have seen this problem grow out of all proportion. We thought that, when we got rid of the previous PM, we would have a little rationality and balance brought into the debate. I accept the current minister is working to attend to this problem, but there is no doubt that under the previous administration, under the Abbott government, that this problem was left to blow out of control.

The measures that are being introduced in this legislation are going to provide some protections. There will be some prerequisite entry requirements for enrolments and there will be a two-day cooling-off period. For students under 18 the signature of a parent or guardian is required before a contract has any force, as well as a variety of other provisions. But we know, for example, that the two-day cooling-off period is an insufficient provision because many people are unaware that they have signed up to a particular training program until quite some time afterwards, when they are advised that they have accumulated a debt. For those who are unaware that they have signed an agreement to enrol in a particular course and an agreement to take out a loan to fund the provider, it is a highly unsatisfactory control mechanism.

We have moved a series of amendments which we seriously ask the government to entertain. We do accept that the government is wanting to move to address this problem, because it is entirely unacceptable that we have so many young people who are accumulating absurd amounts of debt for qualifications that, in many instances, are quite meaningless and will not enhance their ability to find employment. These are programs that are fundamentally driven by unscrupulous profit taking. We do accept that the government wants to take some steps here, but we do say that, if you look at provisions such as the cooling-off period and at the sort of rorting which has been going on in the system, you will see that that is not really going to bring home the bacon in placing some very rigorous controls around the sector.

I want to talk very briefly about some of the findings that have come out of Western Australia. Although we have kept our own Training Accreditation Council, we do nevertheless apply the national standards. The WA auditor-general did a very interesting report on the standards of the RTOs in Western Australia; he was looking specifically at the checks undertaken by the Training Accreditation Council. What he revealed was primarily directed towards the RTOs, but he also expressed concern about whether the Training Accreditation Council was a sufficient mechanism to provide rigour in the system. When the number of non-compliant organisations is around 35 per cent, there is very genuine cause for concern that the mechanisms to regulate the RTOs are not strong enough to give us confidence that this system will deliver much-needed vocational training. In WA the auditor-general found that more than half of those organisations which were checked were non-compliant and around 35 per cent of the non-compliance was significant or critical. We are not simply talking about stuff at the margin such as 'You haven't completed the paperwork,' but really critical things like lack of evidence of student assessment, unqualified trainers, no assessment of the practical application of skills as required and allowing students to pass despite their written assessments showing incorrect or incomplete answers. We did see that sanctions were applied to suspend, vary or cancel around nine RTOs, but the numbers engaged in non-compliance are much greater than that.

I also want to say that part of this problem with the VET FEE-HELP liabilities that have been accumulating has been the massive increase in the cost of vocational training provided by state governments. In Western Australia, there has just been a huge increase in the fees for TAFE for the government provided services, which in return has created many, many more opportunities for opportunistic RTOs of questionable capacity and questionable intention to flourish because the public sector is being priced out of the reach of many.

We have a number of problems here that have come together in a perfect storm—the massive increase in fees and what we could only say is a problematic regime of regulation. If we have a system that shows that half of the organisations that are operating are noncompliant and 35 per cent of those are significantly noncompliant, then I do not think that we can say that we have a rigorous and strong system in place. These little pieces of amendments that have come in today are going to go a very small way to trying to bring some of the worst excesses under control; but they are not really going to the fundamental heart and the more critical problem, which is how we are going to make the for-profit RTO sector more rigorous and more reliable—because a 50 per cent noncompliance rate obviously is completely unacceptable.

Interestingly, we need to be looking at what we are seeing happen in the United States. As we are now merrily moving away from a very heavily subsidised and free provision of TAFE education to a more and more expensive TAFE education, I think it is very interesting to note that the number of states and jurisdictions within the United States of America that have actually decided that this is a pathway to economic doom. Indeed, they are reversing a decades-long practice of charging fees and in the key and critical areas of industry that they want to encourage within their states—within those areas that represent the industries that we want to encourage in the 21st century—they are in fact getting rid of technical and vocational education fees. They are moving towards a system where the government provides the funds for young people to embark on those careers and perhaps for older people to retrain in those critical areas, because they are recognising that this is a fundamental investment that is required for the promotion of industry. It is every bit as important as any of the other industry assistance schemes that we engage in in order to encourage a business formation around our country.

I make this plea, and we are supporting this legislation. This legislation is a very modest and somewhat belated attempt to deal with what is a very significant problem, but we do need to do more. We need to be looking at how we give more teeth and grunt to our regulatory regime so that we can have greater confidence and so that next time we do a review of compliance we would expect to see that the level of compliance is far higher and that the number of organisations where there are significant departures are significantly less. We need to take out the incentive for those people that are coming into this space simply to profiteer without delivering a worthwhile product. We support the legislation, but we di urge the government to seriously consider the important amendments that we are proposing to this legislation.

Karen McNamara (Dobell, Liberal Party) Share this | Link to this | Hansard source

I rise today in support of the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. I thank the Minister for Vocational Education and Skills, the Hon. Luke Hartsuyker, for his work on this bill. I also acknowledge the Minister for Education and Training, Senator the Hon. Simon Birmingham.

This bill seeks to strengthen the administration of the VET FEE-HELP loan schemes and these amendments seek to protect vulnerable students, taxpayers and the overall integrity of the entire vocational education and training sector. The amendments are a result of the actions of a small number of training providers or their agents who have unfortunately taken advantage of prospective students. The government proudly supports the VET FEE-HELP loan scheme as it encourages more training to be undertaken by more people. The students who utilise the VET FEE-HELP scheme often undertake training they would otherwise not have had access to due to the significant up-front fees.

The VET FEE-HELP scheme has been in a growth period since it was expanded by the then Labor government in 2012. Between 2013 and 2014, the number of students accessing VET FEE-HELP increased by approximately 103 per cent from just over 100,000 to almost 203,000 enrolled students. The total value of these loans more than doubled from $699 million in 2013 to $1,757 million in 2014. Since first made available to students in 2009, a total amount of $3.1 billion had been accessed under the VET FEE-HELP scheme by 2014. To an extent, the growth has been attributable to more providers entering the training market. Unfortunately, the industry has been scarred by a minority of opportunists taking advantage of vulnerable students. Due to the competitive growth in the market, unscrupulous conduct has included programs aimed at vulnerable people who are, as a result, left with large amounts of debt—and even, in some cases, an incomplete or useless qualification. This is simply not good enough.

This government has acknowledged the relationship between the growth in the VET FEE-HELP scheme and the marketing practices of a small group of training providers and has acted in response. A number of measures were introduced in March of this year by the then Assistant Minister for Education and Training, Senator Birmingham. Such measures included the banning of inducements such as free laptops, tablets, phones or even cashback offers to lure students under the VET FEE-HELP loan scheme. Marketing and recruitment practices have been tightened to ensure only appropriate marketing of the VET FEE-HELP loan scheme to potential students is undertaken. An education awareness component has also played a role with efforts to further explain how the VET FEE-HELP loan scheme works, as well as the rights and obligations of students under the scheme. Further measures included strengthening the debt waiver and revocation processes for students under the scheme and ensuring the debt incurred by students is in line with course delivery. Importantly, training providers are now prohibited from charging a withdrawal fee, which was a huge disincentive for students to withdraw from a course prior to the census date when the VET FEE-HELP loan would be charged—unfortunately an underhanded and dishonest method to fill the pockets of dubious providers at the expense of students.

The assessment criterion for training providers as well as scrutiny of these providers was also strengthened. Basic parameters were established in terms of literacy and numeracy requirements. This meant that prerequisites and prior education qualifications were introduced as a means of ensuring that the potential student is capable of completing the course in which they have enrolled. Perhaps the most noteworthy of the measures designed to crack clown on dodgy training providers is the clarification of training and outcomes information. Put simply, students will be informed about their choices in regard to training providers and courses. Further transparency has been implemented whereby providers are required to disclose who their agent or broker is and whether or not they are receiving a commission in return for enrolment. Some of these measures have already been implemented with appropriate changes to VET guidelines or products designed to communicate to students. Providers will soon be unable to levy the full cost of course enrolments for students in one hit, which provides a safety net of intermittent opportunities for a student to opt out of continuance in a course without carrying the full financial burden of the whole course fees.

The measures that have been implemented are a great start but this bill builds on all changes made to date and goes further to prevent inappropriate enrolments and debts through a variety of different methods. The introduction of a two-day cooling off period between enrolment and application for a VET FEE-HELP loan will ensure the impact of the decision regarding further debt is considered properly by the applicant. It also prevents past practices of dishonest providers who target the unsuspecting and obtain enough details to unwittingly sign them up to a debt they may never be able to pay. Further, ensuring students can actually complete the higher level of education is important, which is why minimum prerequisites are to be introduced. This measure, in particular, ensures the debt to be incurred is not going to be wasted with the student not being able to complete the degree or gain any real education training outcome from the course. We have all heard the stories of those less than 18 years of age being hoodwinked into a VET FEE-HELP loan. Amendments in this bill will require a parent's or guardian's signature before a student under 18 years can incur this level of debt.

The protection of both students and taxpayers has also been addressed in the amendments in this bill. Firstly, students will have an easier process to follow to have their debt cancelled if they have been signed up for a loan inappropriately. Secondly, the taxpayer will be protected as this amendment will see the course fee cost being charged to the provider in the event that a student signed up to a course under dubious circumstances or misinformation. A track record of delivering quality training outcomes is now a requirement in respect of VET providers entering the VET FEE-HELP loan scheme. This will ensure only those which have a proven history of training are registered. Breaches of the VET FEE-HELP loan scheme guidelines will also be accompanied by infringement notices attached to civil penalties with the changes in this bill.

There are also technical amendments to be made to strengthen the Department of Education and Training's administration of the VET FEE-HELP loan scheme. These technical amendments also apply to the interaction the Department of Education and Training has with the Australian Skills Quality Authority to monitor and enforce compliance with the VET FEE-HELP loan scheme. These are common-sense changes The students who are genuinely seeking training with the assistance of the VET FEE-HELP loan scheme should be able to do so with accurate information which will in turn lead to informed choices. Also, the minority of providers who are intentionally misleading prospective students should not be permitted to continue this shameful practice. This bill does introduce additional regulations on those training providers approved under the VET FEE-HELP loan scheme; however, it is only those regulations necessary to protect students and taxpayers which are to be introduced. The vulnerable students who have been led astray under the current system, the taxpayer who has footed the bill and the integrity of the vocational education and training sector in Australia will all benefit from the amendments to this bill.

As usual, once again this government is ensuring accountability that was clearly lacking under the former Labor government. In this instance the measures outlined in this bill are necessary given the failure of Labor to ensure compliance arrangements were in place for operators under the VET FEE-HELP loan scheme. Had they been, perhaps Peta, a constituent in my electorate of Dobell, who was approached by a training provider in a shopping centre about a so-called government-sponsored training course, would have been spared unwelcome debt. Upon filling out a few details on an inquiry form she later discovered she had unknowingly incurred a FEE-HELP debt as a result of basically unconscionable behaviour. It is appalling to think there are phony education providers, even in Dobell, who are preying on the naive in our community and putting them into debt to make a quick dollar for themselves. While the previous government knew of these problems and did nothing to put a stop to them, I am satisfied that the Turnbull coalition government has taken these vital steps to clean up this mess and spare thousands from this ruse.

The compliance measures missing from the former government's implementation would have ensured dodgy providers or their agents would not have been able to take unfair advantage of vulnerable students. Both students and taxpayers have been severely let down by the failings of the previous Labor government. Despite numerous complaints to the Department of Education and Training in 2011 and to the Australian Skills Quality Authority in 2013, Labor did nothing. Put bluntly, the Labor Party failed to anticipate the growth in this sector from dodgy providers looking to capitalise and failed to ensure compliance arrangements to protect students.

Concerns about the abuse of the VET FEE-HELP have not gone unnoticed by the media either. Earlier this year, The Age reported that the media had been flooded with complaints about shonky operators signing up vulnerable people to overpriced, unsuitable training courses—people including recent migrants, whose English was poor, or the long-term unemployed and people who were unaware at the time of what they were signing up to. The article points out the disparity between the debt incurred and the likelihood of the consumer to ever earn above the $53,345 income threshold at which they would then be required to begin repayments. ABC News noted late last year that one provider was charging $11,000 for a diploma of early childhood, but the median wage for an early childhood worker is $49,000. This wage is lower than the income threshold, and, therefore, it is unlikely that the loan will ever be repaid. The taxpayer then foots the bill.

Even in such cases, though, the fact is that many may not be aware that undertaking a VET FEE-HELP loan affects borrowing capacity in the future for credit cards, personal loans and home loans. It can have a sustained effect, and this is why it is so important to protect and inform potential students while appropriately monitoring and holding providers and their agents to account.

In December 2014, New South Wales Fair Trading issued a statement warning consumers about scammers and training marketers who were pretending to be government officials in order to get people to hand over their personal details. These scammers have used the temptation of incentives like cashbacks, vouchers, iPads or laptops in return for signing up to a course under the guise that it will be government funded. It is unethical and underhanded behaviour, and it is reassuring to see that the coalition government has taken vital steps to stop these practices from occurring.

It is true that the majority of training providers and agents have acted in good faith and have shown due diligence in all aspects of their recruitment practices. It would certainly be unfair to put all providers in one basket and call it rotten. Marketing is a natural occurrence throughout all business sectors, whether it be a local cafe or a training provider, and most act responsibly and ethically. Training organisations are vital to our local community. They provide essential training and retraining, delivering opportunities across a broad spectrum of students—from the young person who wishes to train to enter a specific industry or move from welfare to gain employment to the single mother who wants to upskill to work to support her family, from the new migrant who wishes to contribute and integrate into their new community to the semiretired person who wants to learn new technologies and stay up to date. The Turnbull coalition government is committed to providing every resource and assistance possible to help our unemployed, underemployed or underskilled gain meaningful employment.

These changes are especially important in supporting the Dobell electorate. Unemployment and jobs growth in Dobell have always been pressing issues. I will continue to fight to ensure constituents in my electorate have access to the best possible training, which will, in turn, give them the best possible opportunity to gain employment. The provision of the VET FEE-HELP scheme is an essential component to prospective students gaining access to the necessary training in order to enter the workforce in their desired field. In Dobell, approximately one in two students obtain a year 12 certificate. Only 24 per cent of residents over the age of 15 have obtained certificate-level qualifications, and only 18 per cent of residents over the age of 15 have an undergraduate or a postgraduate degree. These figures are a case in point for the importance of the continued provision of quality training organisations.

I commend the Minister for Vocational Education and Skills for his ongoing commitment to safeguarding both prospective students and taxpayers through the delivery of this important piece of legislation. I am confident that the integrity of the VET FEE-HELP scheme will be strengthened by its passage, and it will, overall, ensure the outstanding quality of education and training in Australia will continue.

I commend this bill to the House.

Joanne Ryan (Lalor, Australian Labor Party) Share this | Link to this | Hansard source

I, too, rise today to speak about the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. Today, we are here trying to reform a piece of legislation, but the amending legislation that has been put forward by the government does not do enough. It does not go far enough to address the issues with VET FEE-HELP. The amending legislation that is being put forward is in response to what has become 18 months of major national scandal. It is not just the loans aspect but the training industry itself. I am checking my watch to see what the year and the month are. It is November 2015. For 18 months we have had headlines that have let everyone in this country know what is going on in this industry. We have waited 18 months for this government to bring some amending legislation forward that will change things on the ground for young people and change things on the ground to stop the rorting of the system that is going on. We have waited 18 months. In what is becoming very indicative of the Turnbull government, this, just like the NBN, does not go far enough and it has not got here fast enough.

Labor come today to the chamber with some further amendments that we think will sharpen this piece of legislation and make it much more practical and much more useful on the ground.

When we talk about the scandal and the disgrace that have been occurring in this space of training organisations across an 18-month period, we do not have to go back far to find the headlines that are most disturbing. I am looking at an article here and the headline says: 'Childcare centres blacklist accredited training organisations providing poor graduates'. It dates back to September 2014. Our media outlets were alerting this country to the fact that the quality of some of the training that was occurring in this country, supported by government loans, was not what it needed to be—for 18 months. Today we are in the chamber with a piece of legislation in front of us with amendments that do not go far enough, let alone have come in fast enough.

In October 2015, in this last month, we have had headlines about private training colleges luring students with false promises of free iPads, the ACCC alleges. This is very late because I have heard several times in this chamber and in the Federation Chamber members of the House of Representatives bringing to the notice of the House occurrences like this happening in their electorates. Yet, we have been hearing those stories for 18 months and we are here today with amendments that do not go far enough. We have also heard media reports about the unscrupulous actions of some RTOs preying on vulnerable people, gaming a system to ensure their profits are skyrocketing while young people's training is diminishing and the quality of that training is being called into question.

While we look at this 18-month time line, I could put that into a Victorian perspective with the work that has happened in Victoria with Minister Steve Herbert and the things he has put on the ground in a very short space of time to tidy up this sector, to find those organisations which are operating in unethical ways and to straighten out the system, and in the process to put value back into the TAFE sector. Let us face it, we are having a conversation here about a sector which, through private operators, diminished our state-government-backed TAFEs across this country, TAFEs people could rely on to deliver a quality product, TAFEs which, over years, had delivered quality products and had been perceived to deliver reliable product to young people.

Over the 18 months, we have had three different ministers—Minister Macfarlane, Minister Birmingham, Minister Hartsuyker—but very little has been done while this debt and the loans have skyrocketed from $699 million 2013 to $1.7 billion in 2014. It is alarming that it has taken this long for action to occur. It is even more alarming that we are here today to see that action and it still does not go far enough. The government has known that this has been an issue for a considerable period of time and has done nothing. Strong regulation of this sector is essential to ensure young people receive quality training and are not signing away for a life of debt. Vulnerable students are still, as we stand here today, being ripped off by shonks and sharks and this needs to stop.

We have some amendments which Labor would put forward to build on the work done by the government to date, which we would strongly recommend go into the mix going forward. We want to see the government appoint an industry funded national VET Ombudsman. We want that person may. We want there to be a reliable complaints process of the highest quality, so that the space is marked clearly: if you are an unethical provider operating in this space, if you are gaming the system, we have put someone there who will track you, who will look into those complaints and who will hold you accountable. And we want the Auditor-General to conduct an audit on the use of VET FEE-HELP. We believe students require direct access to a complaints resolution process and we believe it because in our electorates, as in the electorates of those opposite, we are hearing stories every day of young people signing up for loans and for courses they are not accessing and sometimes are being blocked from accessing. We need to get this right and we need to get this right now.

Labor is also calling on the government to support what we had in place for over six months, to have the Australian National Audit Office look closely at the operation of this system. We also think some of the suggestions from those opposite, what appears to be, at first impressions, a two-day cooling off period, might sound fine but we are talking about an industry which has already gamed the system. We are talking about an industry which has already used incentives like iPad, which have already gone to the most vulnerable young people in our communities, and had them signed up for loans and for courses, without due diligence, without advice. We are talking about an industry that is advertising in our national papers, who are advertising online. We are talking about young people who think they are applying for a job to find that they are not applying for a job, who are called in for what they think is an interview, to find themselves with a course adviser who is suggesting they do these courses and who wants them to sign up then and there. With a two-day cooling off period, what would change? These people have already gamed this system: two pieces of paper, two different dates, the same vulnerable young person, they will sign it both times. It is not enough protection.

I am also alarmed today to read in our papers that the department has asked providers to provide them with the details of the young people who have loans. There seems to be a mismatch here. It seems crazy to me that the government and the department do not already know who has these loans. What Labor is suggesting today is that that is the step that needs to be put in place, so that a young person, a person wanting to retrain, a person wanting to access more training later in life, when they go to sign up for one of these courses and to sign up for a VET FEE-HELP loan, there is another step and that step is that the course provider provides that information to the department and the department contacts that person to have their interest in the loan verified. This is just another step, but is one that takes the provider out of the picture. Miraculously, the department would then have the contact details for everybody that has a VET FEE loan.

The two-day cooling off period for me is at the core of this something that appears to be not even a bandaid. It is too easily gamed. It is lacking in thought. It is lacking in real policy work around how we can stop these RTOs behaving in this way. How do we stop young people being saddled with guilt that they do not even realise they have taken on? How do we ensure that these costs do not continue to blow out—even if they were delivering a quality product to the person who signed up to do them, even if they were providing a quality product, and even if the organisations delivering that product had processes in place to satisfy what could only be called reasonable completion rates in these circumstances.

We have seen reports of a 24 per cent completion rate by some of these organisations. I do not know how the business model could possibly survive with a 24 per cent completion rate. There needs to be more done in this space, and the amendments in this piece of legislation and what Labor is putting forward would tighten this up very quickly. It would ensure that people who are signing up for the course and for the loan have been through a process where there is an extra layer of checking going on.

We need this because we have heard the stories. We need this because our papers have exposed some of the behaviours that are going on. It is belated. It is 18 months that we have been in this space, and the amendments do not go far enough. I urge those opposite to think carefully about the amendment that would include the ombudsman and about a contact specifically between the department and the person signing up for the course and signing up for the loan, because I believe that these two measures in themselves may go a long way to ensuring that people are aware of what they are signing up for.

As to the quality of the training the ombudsman could be a great resource on the ground, where people know they have a complaints process and they know that it is going to be seen by somebody independent. We would have somebody there tracking and monitoring, and not relying on our newspapers to cover it and not relying on constant calls for another Senate inquiry to see if these amendments have been further gamed by this sector.

You do not have to look far to see where actions have been taken quickly. You only have to look at some state governments. I suggest the government look closely at what is happening in Victoria, where this sector has had a microscope put over it, where courses have been very carefully scrutinised to ensure that people are getting quality.

Ultimately we are talking about a system where a potentially vulnerable person is going to put themselves into debt to access training in the belief that it will lead to secure employment. The history of this space is extraordinary. I have a story from my own electorate of a young man who applied for a position—or what he thought was a position—on Seek, and found himself on this rollercoaster of 'sign up for this course'. But the whole course did not get delivered, and the young person had to chase the trainer for months to get what was promised and what the federal government had paid for.

I think the harshest story I heard was the story of a choir and a young job seeker from Warrnambool, Ben Mutch that was reported by Henrietta Cook and Michael Bachelard. This young person was pursued, contacted like a door-to-door salesman. He thought he had been somehow talent identified to take on a loan to do a course that did not lead to an outcome of a job. We are in a space where there are some piranhas operating, and we need to be vigilant. I ask those opposite to support the amendments that Labor puts forward, to look through the eyes of our young people and the industry that needs them trained in specific areas. I ask them to look at our amendments.

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

I am pleased to rise to speak in support of the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 and to commend the work of the government in bringing this legislation before the House. This bill is about better protecting students and cleaning out dodgy training providers who have been taking advantage of a system Labor broke. Specifically, the bill before the House today amends the Higher Education Support Act 2003, and I would like to recognise the Minister for Vocational Education and Skills for his leadership of these reforms.

Before I go into why this bill is important to my electorate on the Central Coast, it is important to provide some context as to why we need to see changes made to secure the future of this sector. VET FEE-HELP has undergone major growth. This occurred when Labor axed the credit transfer arrangements between VET FEE-HELP funded qualifications and university qualifications in 2012. I am advised we went from 55,000 students and 119 providers in 2012 to more than 200,000 students and over 250 providers just two years later. That saw tuition fees deferred to the VET FEE-HELP loans scheme skyrocket from $325 million in 2012 up to $1.76 billion last year. In fact, it more than doubled in 12 months.

It should be noted that of course the government supports the principle of VET students being able to access a loan. For many students, this means they may undertake quality training in the same way a university student is supported through HECS-HELP. I understand that much of this growth has been because of the unscrupulous behaviour of a minority of providers and agents. They have been aggressively marketing the scheme, targeting vulnerable people, who are left with a significant debt but no benefit from training. It is often young people who are left with this debt. Quite frankly, this is not good enough.

Sadly but, unfortunately, not surprisingly, the system put in place by the former Labor government failed to put in place some necessary safeguards that would protect students and taxpayers from these rorts. Thankfully, Labor has admitted these failures. A couple of months ago the shadow minister for higher education, research, innovation and industry said:

Labor introduced VET FEE HELP with good intentions but the scheme contains 'fundamental weaknesses' that need to be fixed.

He also said 'regulators were not given enough power to crack down on rogue operators.'

The coalition is working hard on the right process to fix the mess left by the previous Labor government. We have announced a series of measures to restore integrity in the sector. These measures provide the laws necessary to prevent inappropriate enrolments and debts. This includes a two-day cooling-off period between enrolment and application for a loan. We are also introducing minimum prerequisites for higher-grade courses, and a parent's or guardian's signature is now required before most students under the age of 18 years can request a VET FEE-HELP loan.

The bill also protects 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. I am pleased to confirm that this cost will be recouped from providers, not taxpayers. We are also introducing minimum registration and trading history requirements and the ability to issue infringement notices attached to civil penalties for any breaches. The changes are designed to make it easier for the department to administer the scheme and also to assist in its partnerships with the Australian Skills Quality Authority. The government's changes also include banning flashy-but-misleading marketing like saying a course is free when clearly it is not and removing withdrawal fees and other barriers for students who want to withdraw from a course.

The government provided $18.2 million in the 2015-16 budget for compliance to support these measures. In short, we are protecting students and making it easier to enforce compliance. The government has consulted widely on the implementation of these reforms, including with dedicated forums. In my electorate these sorts of reforms are part of a conversation we have been having ever since I became the member for Robertson more than two years ago now. In March of last year I held a forum with a number of VET providers in my electorate, and we talked about the need for a robust skills industry. We discussed the need for flexibility, training, stakeholder communication, youth employment and a range of other issues. I have spoken with a couple of providers who were in attendance that day about whether they have confidence in this government's move to enhance the integrity of their sector, and the answer overwhelmingly is yes.

Tony Mylan, the CEO of ET Australia, based at Gosford, said that these proposed reforms are very welcome. Tony said that this should assist in better eliminating certain VET providers who were employing questionable methods, preventing them profiting from unscrupulous business methods in this sector. He shared with me that on the Central Coast there are many prospective students still being told that the diploma they are thinking of doing is free. In his words, Tony Mylan said: 'I hope that the changes will assist those people who cannot see through the marketing hype of the shonks. I hope it forces VET providers to explain to prospective students in easy-to-read statements that the VET FEE-HELP loans, if taken on, will affect their credit ratings.' Tony said, 'It is vital that high-quality training is provided so genuine students may gain from completing their training course and gain employment in their field of study.' ET Australia is working to see all training providers focused on delivering high-quality training for students on the Central Coast.

Eagle Wing Education and Training, who we have also been working with on a local level to hear from them what matters to them, also back these measures. Its CEO, Andrew Church, told me that Eagle Wing previously had 1,500 trainees successfully enrolled in traineeships, with high completion rates but that Labor's changes to the VET sector have resulted in an unworkable system that is confusing and convoluted, which meant that many young, middle aged and unemployed people are not able to access the system and the opportunities to gain further education. As a result, Andrew said Eagle Wing Education and Training now only have 30 people enrolled. He told me that small operators who have a history of successfully training and educating students are being pushed aside. No longer under these reforms.

Nationally, the Australian Council for Private Education and Training also backs these measures. CEO Rod Camm said the council fully supports protecting the interests of students from exploitation by a small number of training providers who have tarnished the reputation of the VET sector. He said these changes have the full support of all training providers committed to quality, integrity and student welfare. Jim Barron, CEO of Group Training Australia, said they firmly back efforts to ensure that training is robust and that taxpayer funds are not squandered on dubious courses and qualifications offered by rogues and dodgy providers.

The government's moves are strengthened by our strong investments in the sector. We have invested $5.6 billion this year for VET through funding to the states and territories to support their training systems and TAFE. There are also up to 250 training places funded through the $664 million Industry Skills Fund, which supports businesses to train their workers and provides free, independent skills advice. The government's budget measures are also benefiting small businesses and organisations in my electorate that are linked to this training industry. This includes cutting the small business company tax rate to the lowest in almost 50 years and for two years giving all small businesses an immediate tax deduction on any asset they buy costing up to $20,000. We are also providing up to $200 million a year for the new Australian Apprenticeship Support Network to provide more help to employers in recruiting, training and retaining apprentices. Trade support loans of up to $20,000 each are also available, and I am pleased to advise that nearly 30,000 trade support loans have been accessed since the program began.

The minister, in his speech, described the VET sector as one 'that has a long and proud tradition in Australia'. For many young people, it provides that the bridge between school and work. For unemployed people, it often provides a pathway back into employment and a life off welfare. And for people in work, it can be the mechanism by which they can expand their skills and progress in their careers. Today I joined with the minister and my colleagues in declaring that the Australian government is committed to ensuring that we have a strong VET sector that helps students and ensures there is public confidence in the system. I note that many of those opposite have shared the government's concerns about the VET FEE-HELP program. I look forward to hearing their support in this debate for these reforms to improve the integrity of this vital scheme for our future. I commend this bill to the House.

Pat Conroy (Charlton, Australian Labor Party) Share this | Link to this | Hansard source

The contribution by the member for Robertson unfortunately typified some of the problems that we have in policy reform in this area. The member for Robertson was very happy to blame Labor for the flaws in this area—and we have acknowledged that we did not put in enough safeguards when the system was designed—but the member for Robertson neglects to admit that they have been in power for over two years. This is a problem that has occurred under them. They have come to it late and they have tried to solve it, and I applaud them for coming to it. This is a problem that has occurred because of mistakes made by both sides of politics, but what we have heard from those opposite was a just a straight blame game about what occurred over two years ago. It is very unfortunate, because on this issue everyone should be committed to getting rid of, to driving out and to prosecuting some of the most outrageous and exploitative behaviour that I have seen in the private sector in this country.

That is why I am pleased to speak on the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. Vocational education is fundamentally important to jobs, economic growth and our future productivity and prosperity. It is an area I am passionate about, given the importance of manufacturing and mining to my home region of the Hunter. It is so disappointing that, in my home state of New South Wales, the Liberal government has decimated the TAFE sector, sacking thousands of employees and drastically increasing fees. This short-sighted approach will have a devastating impact on the future New South Wales economy when we are faced with a significant shortage of skilled workers.

I am contacted regularly by young constituents who have incurred a debt they knew nothing about for a course they did not do or a qualification they did not obtain. Labor are of the view that this bill does not go far enough but we will support the bill nonetheless. Labor call for the Auditor-General to investigate this issue and for the government to appoint a national VET ombudsman. There is a major problem regarding student loans for vocational education. The following figures clearly identify the significant challenges facing this sector: the number of students accessing VET FEE-HELP has grown by 103 per cent, Commonwealth funding for student loans in vocational education has increased by 151 per cent, the average loan amount per student has increased by 24 per cent, and the number of providers offering access to VET FEE-HELP has increased by 44 percent. It is unconscionable that scurrilous providers are preying on young Australians for their own financial reward. Labor has been calling on the government to act on this problem for the last two years, and it is high time that this legislation is before the House.

As I said earlier, Labor will support this bill and is moving a sensible amendment recommending that the government appoint a national VET ombudsman and have the Auditor-General conduct an audit on the use of VET FEE-HELP. The department should also be required to provide students who access loans with a statement of the amount of debt they will incur and to ensure that the student responds to this statement before the debt is raised.

This bill aims to prevent inappropriate enrolments and debts through the following methods: a two day cooling- off period will be introduced between enrolment and the application for a VET FEE-HELP loan so that course enrolment is no longer confused with the loan application process; minimum prerequisites including literacy and numeracy will be introduced to ensure students can complete the higher level VET courses for which VET FEE-HELP can be accessed; and for minors under the age of 18 there will now be a requirement for a parent or guardian to sign-off on the loan, which will help protect younger students seeking vocational education.

There are other sensible safeguards and protections that are necessary. The bill will ensure that it is easier for students to have their debt cancelled when they have signed up to a loan inappropriately and for the government to recoup the cost from providers, minimum registration and training requirements will be introduced to make sure that new VET FEE-HELP provider applicants have a proven history of delivering sound training, and infringement notices and financial penalties will be introduced for breaching the VET FEE-HELP guidelines.

Labor welcomes the fact that the government is finally acting on this issue, but more needs to be done. It is a clear that we need to appoint a national VET inspector for the sector. The government should be creating this position to ensure the problems we have seen now do not continue to happen. The Australian Council for Private Education and Training supports the appointment of a such an inspector, and the reports of the Senate inquiry into the operation, regulation and funding of private vocational education and training also recommend such an official.

The amendment moved by my colleague the member for Cunningham would require the Department of Education to notify prospective students in writing about the amount of debt they are about to undertake and would require a response from the student before the debt is raised. This is a sensible and logical amendment which will provide a much needed safeguard. Labor has also requested that the Auditor-General investigate VET FEE-HELP to make sure that skills funding is being used in accordance with how the legislation intended it to be used, and it is pleasing that the Auditor-General has requested that a performance audit be included in the Australian National Audit Office's work program for 2015-16.

I now turn to the broader debate around vocational education and training. Labor has a proud record of investing in skills and ensuring that students and workers have the skills they need to contribute to and participate in the modern workforce. The Liberal approach to vocational education is very different. The Abbott-Turnbull government has cut $2 billion from the skills portfolio. The coalition should hang their heads in shame at this counterproductive and illogical cut. The new Prime Minister likes to talk about innovation and productivity and new technologies. I say to him: it is pointless to talk about these things when you are cutting investment in skills and vocational education that are so fundamentally important for jobs, innovation and productivity. And at the state level, the Liberal approach is the same. The Baird Liberal government in my own state has a distinctly anti-TAFE agenda. At both the federal and state levels, the conservative side of politics is giving up on vocational education and, in so doing, is damaging Australia's future prosperity and economic growth. This is the context within which we debate this bill.

Before talking about some of the experiences of my own constituents that has driven this change, I briefly want to bring to the attention of the House a particularly disturbing incident in Sydney. The Australian Competition and Consumer Commission has commenced proceedings against Unique International College in the Federal Court, alleging that its enrolment and marketing system was 'in all circumstances, unconscionable and in contravention of Australian consumer law'. The ACCC alleges that Unique targeted members of rural, remote and Indigenous communities to sign up to diploma courses without properly explaining to the students that they would be taking on a government debt as a result of the program. The offer of a free laptop was targeted at disadvantaged groups. Unique has collected approximately $140 million in government loans. This is worse than cowboy behaviour. This is deliberately targeting and preying on vulnerable young people and vulnerable communities. I commend the ACCC for its actions in deregistering Unique, and in commencing the proceedings against it in the Federal Court.

I have been contacted by several constituents who have had horrible experiences regarding HECS-HELP for vocational courses. A constituent of mine named Colin, from Edgeworth, came to my office recently seeking help with a debt he had accrued as a result of enrolling in a Diploma of Business at Evocca College last year. Within two weeks of enrolling in the course he changed roles with his employer, which resulted in significantly increased work duties. Realising he was no longer going to be able to complete the course, he explained to a representative from the college that he wished to withdraw. Whilst the option of deferment was discussed, I am told that he insisted on withdrawing completely and was assured by the representative that this would be arranged. He recalls being told that there was nothing further he needed to do.

However, when he completed his tax return this year, he was informed by his accountant that Evocca College had charged him for the whole course and he now had a HECS-HELP debt in excess of $11,000. He immediately called the college and spoke with a compliance officer about the debt and was advised that, despite not taking part in any study modules or submitting any assessments, he was still liable to pay for the course as the withdrawal he had requested was not processed. He told her about his request to cancel the course verbally over the phone, but was told nothing had been written down or recorded and unless he could prove that he had spoken to a representative of the college to cancel it, he had no recompense. My office has supported this constituent to seek a formal withdrawal and waiver of fees from the college. Whilst I am pleased that this has now occurred—and I am grateful to all the public servants involved in such a process—I note this involved long and complex interactions with the Department of Education and the Australian Taxation Office. This is clearly a less than ideal process.

How is it fair that a prospective student, with little affiliation with a provider and its systems, bears the full burden of responsibility when it comes to documenting their withdrawal from a course? How is it fair that, despite it being patently obvious to the provider that a student has not engaged with course content in a meaningful way, that the responsibility of proving this falls upon the student? How is it fair, if you contact the person who signed you up for a course, to be told there is nothing further required of you when you seek to withdraw from it, and are then charged tens of thousands of dollars anyway? Colin's example demonstrates why we are debating this bill and why these reforms are so urgently needed.

Another constituent has contacted my office regarding a HECS FEE-HELP debt accrued with the Australian Institute of Professional Education. Her name is Danielle and she recently started her first full-time job and submitted a tax return for the first time. Understandably, she was shocked to discover from her accountant that for the past two years she had been accruing a debt which is now worth more than $7,500. After seeking assistance from my office, she was able to ascertain that she unknowingly signed up to an online training course with the provider and contacted them to request an investigation in to how the debt has been accrued. Whilst the matter is still ongoing, this person has indicated to me that she has no recollection of signing up to this course. She tells me that she can recall being approached over the phone and in person by brokers representing a training provider some years ago, and on one occasion she gave personal details such as her tax file number and date of birth to a representative. She does not believe that at any time it was explained clearly to her that providing this information would result in fees being charged. She has never had any interaction with the college, has received no qualification yet she has a debt in excess of $7,500 as a result. Worse still, she had no idea that the debt had been sitting there for years. How many other people have debts that they have no idea about?

As I said at the start of my contribution, vocational education is of fundamental importance if the Australian economy is to grow, if employment opportunities are to expand, and if we are to remain competitive in an ever-changing and dynamic global economy. Labor proudly believes in the dignity and power of work, and vocational education is a vital component in ensuring a skilled and productive workforce. What has happened relating to VET-FEE HELP loans these past two years is a disgrace. This bill is a welcome step in addressing the problems the sector has faced.

Labor calls on the government to pass our sensible amendments which would bring greater security and safeguards to the system. That said, I do welcome this overdue action by the government. I applaud them for coming to the party and I applaud them recognising that there is a problem. After two years in power they are trying to fix it and I do genuinely thank them for their approach on this issue. More can be done. The amendments should be accepted by the government and should be passed.

I will finish on this point: ultimate responsibility for what has occurred does not rest with the current coalition government, it does not rest with the previous Labor government but with the shonks who have distorted the system and who have ripped hundreds of millions of taxpayers' money out of system while exploiting vulnerable people by making promises that they could not fulfil with offers of free laptops and guaranteed jobs. They targeted people with low literacy, low numeracy and people who were desperate to get a job to advance themselves, to have a house, to pursue a career. I stand here and will conclude by condemning those people. Those people, quite frankly, are scum. They are people who exploit the hopes and dreams of the most vulnerable in our community and, in doing so, rip off Australian taxpayers. So no matter what happens in this place, no matter if the amendments get up or not, those people need to be held responsible for their exploitative actions that give every private sector training provider in this country a bad name.

Michael McCormack (Riverina, National Party, Assistant Minister to the Deputy Prime Minister) Share this | Link to this | Hansard source

Strong words indeed from the member for Charlton. I do commend him for those comments he made towards the end of his speech about the fact that the blame does lie specifically with those unscrupulous merchants who want to take advantage of, as he put it, 'some of our most vulnerable people'. I also commend him for the work that he has done in his own electorate office to help those people who have been victims. That is what good local members do. But he did get a little bit political and so I cannot let him go completely unscathed. I cannot just give him praise entirely without pulling him up—

Ms Butler interjecting—

but I am not going to, member for Griffith—about the fact that Labor did have the opportunity to do something about this and Labor chose not to. We, as a coalition government, are getting on with the job of fixing what Labor did not.

The Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 amends Higher Education Support Act 2003, strengthening the protections for students in the vocational educational training sector and pushing unscrupulous training providers out of the market. The member for Charlton understands that those unscrupulous training providers need to be pushed out of the market. He called them scum—he is probably right, it is a little bit strong——but he is probably right. They are taking advantage of vulnerable people. They are ripping off money from government coffers that could otherwise be spent far more wisely—indeed, far better in the entire education sector.

Why is this bill necessary? Well, VET FEE-HELP has undergone higher than expected growth since Labor axed the credit transfer arrangements between VET FEE-HELP, funded qualifications and university qualifications back in 2012. If you look at the figures, in 2012 nominal loans for VET FEE-HELP were $225 million, with 55,115 students and 119 approved providers. If you look at the figures just two years later, in 2014 nominal loans were $1.757 billion, with 202,776 students and approved providers numbering 254. That is massive growth. Much of this expansion is because of the unscrupulous behaviour of—I would like to say a minority—providers and agents who aggressively market the scheme.

They target vulnerable people, as we have heard from the member for Charlton, members on my side and other opposition members as well. What the unscrupulous providers do is leave those on whom they prey with a significant debt, but no benefit from training—absolutely no benefit. The system under the former Labor government failed to put in place the necessary safeguards to protect students and taxpayers from the rorting and from the rip-offs. Do not just take my word from it. The chief commissioner and the chief executive officer of the Australian Skills Quality Authority, Chris Robinson, had this to say in The Australian on 17 July this year; that the expansion:

precipitated unprecedented examples of unethical student recruitment practices and astronomical fees as dodgy operators jumped into a new and easy government-supplied pool of money.

As the member for Lalor quite correctly pointed out, they were gaming the system—absolutely gaming the system.

But Labor had a chance to act in 2013 when the first complaints were made to the national training regulator, the Australian Skills Quality Authority. What did Labor do? Nothing. They did not do anything. They did not act. That is why it has taken the member for Cowper, the minister responsible, the Minister for Vocational Education and Skills, to come into this chamber on 15 October—

Terri Butler (Griffith, Australian Labor Party) Share this | Link to this | Hansard source

Two years later.

Michael McCormack (Riverina, National Party, Assistant Minister to the Deputy Prime Minister) Share this | Link to this | Hansard source

No, it is not two years later. You should have done something about it back in 2013. I appreciate you were not here then. The minister is doing something about it. The member for Cowper was the assistant minister for employment for two years and four days before taking on his new role, and he understands the need for jobs.

Not only will this bill weed out and eradicate those unscrupulous operators; it will, ultimately, with funds being better distributed to where they ought to go, I believe, lead to an increase in jobs. That is what training, vocational education, TAFEs and universities are all about: getting people into the workforce and getting people better paid jobs. That is why this bill is important.

On 18 September, the shadow minister for higher education, research, innovation and industry, Senator Kim Carr, finally acknowledged the need for stronger measures and, as reported in Melbourne's The Age, he said:

Labor introduced VET FEE-HELP with good intentions but the scheme contains 'fundamental weaknesses' that need to be fixed.

And he added:

… and regulators were not given enough power to crack down on rogue operators.

They should have been given enough power and could have been given enough power when Labor was in power, but they were not. On 12 March this year, the Assistant Minister for Education and Training at the time, Senator Simon Birmingham, announced a series of measures to finally target that unscrupulous behaviour which has left some students with debt but, unfortunately, no qualifications. That is the great sadness about this. Young people—many ofwhom are young, some are not so young—think they are doing the right things by themselves and by their future career prospects are going into debt and taking the inducement of an iPad or a laptop or whatever else. And all they left with is just a huge debt and no qualifications and no improved prospects for a better career, which is what they hoped to do in the first place and what got them in the first place.

Senator Birmingham said that these measures, which he talked about back in March, would seek to stamp out unscrupulous behaviour, which will assist in restoring integrity in the sector. We heard the member for Robertson earlier talking about the need to restore integrity to the sector. These measures have been progressively introduced since 1 April this year, and they are already—I am pleased to report to the chamber—having the desired effect. They are having a good impact.

This bill provides the laws necessary to implement specific measures from 1 January next year, and it needs to be passed as a priority. We have only three weeks of parliament left. It needs to pass through this House. It needs to get through the Senate. It has to be passed as a priority.

This bill seeks to prevent inappropriate enrolments and debts by doing the following: introducing a two-day cooling-off period, as it is called, between enrolment and application for a VFH loan; introducing minimum prerequisites to ensure that students can complete the higher level VET courses, diploma and above, for which VET FEE-HELP is available; and requiring a parent's or guardian's signature before a student who is under 18 years—and there are many of those—can request a VET FEE-HELP loan, with exemptions for minors considered independent under the Social Security Act 1991. This bill will further protect students and taxpayers because it will make it easier for a student to have their debt cancelled where they have been signed up for a loan inappropriately, and the costs will be recouped from providers to protect taxpayers. It is important to protect the taxpayers because it is all our money that is being ripped off here.

This bill will introduce minimum registration and trading history requirements for new VET FEE-HELP provider applicants to ensure that those approved have a proven history of delivering quality training. So there will be checks and balances and measures to make sure that those people who are approved providers are in fact just that. It will also introduce infringement notices attached to civil penalties for breaches of the VET FEE-HELP guidelines, and let us hope those penalties are high and severe. They need to be. It will introduce 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.

Minister Hartsuyker, in introducing this legislation on 15 October, described it as 'a very important and timely bill', and he is right, of course. He is very right. As he said at the time:

This bill will strengthen the protections for students in the Vocational Education and Training sector and push unscrupulous training providers out of the market.

It absolutely has to.

I am pleased to represent the Riverina electorate, where we have so much training going on. In fact, I have described my home town of Wagga Wagga as 'Australia's learning capital' because it is. This is why not only will this legislation strengthen the national effort but certainly, in the Riverina, the improved benefits are going to flow right through. I am not saying that there are unscrupulous providers in the Riverina, but the money that will be gained because it is not going to unscrupulous providers will provide benefit for the entire system and hopefully flow on and trickle down to those regional areas, one of which is the Riverina, where so much training is done.

I will give a bit of a snapshot for the benefit of the House of the sorts of things that we do in Wagga Wagga. The Riverina is blessed that its two cities are such important regional hubs and leaders in their fields of expertise, Griffith being the irrigation capital and the centre of the nation's food basket and Wagga Wagga, as I said before, being Australia's learning capital. We have Charles Sturt University providing both on-campus and many offshore international courses for many, many students, including my son Alexander at the moment, who is doing a business course there as a cadet accountant. My daughter, Georgina, also studied there. She studied her English and drama teaching as a high school teacher. Wagga has a wonderful TAFE college. My youngest son, Nicholas, who is starting out as an electrical apprentice on 18 January, will no doubt reap the benefits of what they do at Wagga Wagga TAFE.

Every Royal Australian Air Force person at some stage or another, if they have an extended career in the Air Force, will end up at Forest Hill, Wagga Wagga. Wagga Wagga is also the home of the soldier, with every Army recruit being trained at Blamey Barracks, Kapooka. I know that the member for Canberra, opposite, in her shadow Defence role, knows well—she has been there; I have been there with her to witness the passing-out parade—just what a great job the commandant, Colonel Steve Jobson, and his officers do in putting the polish on those fine young recruits, men and women, who go out to serve this nation and do it so very well, continuing on that long line of khaki which stretches right back to 25 April 1915.

Wagga Wagga has a Navy base, an important training and strategic facility. It is many hundreds of kilometres from the nearest drop of sea water, but we have a Navy base at Wagga Wagga doing important training with HMAS Albatross at Nowra.

The Regional Express Australian Airline Pilot Academy, out at the airport, in Don Kendell Drive, is a truly outstanding facility run by people who demand the best. They are inspiring the new breed of young pilots. You can add two rural clinical schools, Notre Dame and UNSW, providing medicine courses for the training of our future doctors. You have so many training opportunities and so many places of teaching excellence at Wagga Wagga that it deserves the title of Australia's learning capital. Indeed it does.

I will just get back to this bill. The Australian government are committed to ensuring that we continue to have a strong VET sector which helps students to develop the skills that they need for the jobs of today and to take advantage of being in the most exciting time in Australia's history. As the Prime Minister has pointed out, it is an exciting time to be in Australia. We have new ministries in innovation and in productivity. I am glad to see that science is back as a portfolio. Certainly we are doing the sorts of things that are benefiting business. We are getting on with the important task of fulfilling the three most important things in Australia, and they are (1) jobs, (2) jobs and (3) jobs. That is what we need to do as a government. That is what we are doing as a government. Jobs are so very critical to our future prosperity and our future growth.

We need Australia's best and brightest going to our colleges and our universities. They do not deserve to be ripped off. They will not be ripped off under this higher education support amendment bill, and that is why I commend this very important legislation to the House tonight.

Terri Butler (Griffith, Australian Labor Party) Share this | Link to this | Hansard source

I want to say to Australians: your taxes should support vocational education for the community's benefit, not for the private benefit of a handful of companies. In contributing to the debate in relation to the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015, I want to talk about vocational education and why it is needed to make sure that Australians have the skills to do the jobs of the future. I also want to record that there is a strong community benefit in having an educated, trained workforce, and so it is right that vocational education and training should be publicly funded. Taxpayers' money should work for community benefit, not for private interests.

As society and technology change, so does the nature of work. The jobs of the future will likely be different to the jobs of today because of widespread automation, amongst other reasons. In this year's report, Australia's future workforce?, the Committee for Economic Development of Australia said:

Economic progress has not been smooth nor has it been clean. Technological change has frequently created losers, but when job losses have been caused by productivity-enhancing technologies, they have tended to create demand via higher incomes and lower prices, which have generated new jobs economy wide. The next stage of the industrial revolution promises to continue this trend but in new challenging ways. The extension of computerisation into almost all aspects of human activity threatens to radically reshape the workforce of tomorrow.

It went on to say:

Modelling conducted for this report suggests almost five million jobs face a high probability of being replaced in the next decade or two while a further 18.4 per cent of the workforce has a medium probability of having their roles eliminated.

Future jobs will more often than not be skilled jobs, and will require digital literacy. Vocational education and training can equip students with the foundational skills they will need for the future.

For example, at Southbank in my electorate, TAFE Brisbane is offering courses in digital design and IT and in business, along with many other courses. The increasing demand for skills and the changing nature of the skills that will be needed, means that Australia needs a strong, high-quality and accessible vocational training and education system. That sort of system serves the interest of the individual, who gets the benefit of the education and training, and, more broadly, serves the community and national interests.

It is imperative that we as a nation prepare for the future economy and the future of work. We need to build productivity, to grow workforce participation and to spur economic growth. We also need to combat the rising inequality that threatens the peaceful and prosperous nature of our country. If we are serious about those tasks then we must ensure, among many other things, that we have a vocational education and training system that is fit for its modern purpose of giving all Australians the opportunity to build their foundational skills and knowledge.

That means that when our community invests in vocational education and training, we are investing in our nation's future. That is why the Abbott-Turnbull government's $2 billion cuts to skills funding is such a problem for our country. In contrast, the last Labor government increased Commonwealth annual funding for vocational education and training by 25 per cent in real terms, with over $19 billion invested over five years as well as investing in TAFE campus infrastructure and technology upgrades. And because we understand the importance of vocational education and training to Australia's economy and to our community, Labor backs publicly funded TAFE. In March this year the opposition leader, Bill Shorten, announced that Labor in government will continue to back TAFE. At the time he said:

Labor has expressed its concern on numerous occasions that the massive expansion of private providers in training has brought with it unintended consequences where we’re seeing some private providers gaming the system. And I think one of the solutions here is to help rebuild and restore confidence in TAFE, …

…   …   …

There is a role for private providers in training and there are some private provider organisations doing outstanding work, but I think there is mounting community concern that on the one hand we’ve seen the Liberals dismantling and attacking TAFE, and the on the other hand, we’ve seen the ‘leave it to the market’ attitude of private providers in training and we’re seeing a long tail of underperformance and indeed in some cases scandalous behaviour.

In my view, the best way you can make sure you get a great vocational experience as a consumer is to choose TAFE.

The Liberals hate TAFE, and have tried to undermine it at every opportunity—gutting its funding, just like Campbell Newman did in my state of Queensland. Thankfully, Premier Palaszczuk and her government are working to save TAFE. The Labor government is reinvesting in TAFE and reinvigorating an institution that has successfully trained more than 1.3 million Queenslanders, working hand in hand with industry partners and delivering strong employment outcomes for our next generation of skilled workers.

Funding vocational education and training is an investment in Australia's future, as I said. And taxpayers' money should work for the community benefit, not for private interests—as I have also said. But in the past 18 months VET FEE-HELP, which is the income-contingent loans scheme for vocational education and training, has become a major national scandal, and is severely affecting students, the Commonwealth budget and the nation.

Damian Oliver and Serena Yu of the University of Sydney wrote about what is currently going on in the vocational education and training sector in their report entitled The capture of public wealth by the for-profit sector. And the figures about the rise of the private sector vocational providers and the corresponding impost on the public purse paint quite a picture. The National Centre for Vocational Education Research has reported:

There was a significant increase in VET FEE-HELP activity in 2013 and 2014 compared with earlier stages of the contingent loan scheme. Specifically, the number of approved VET FEE-HELP providers has doubled since 2012, to be just under 250 by 2014, with the number of VET FEE-HELP assisted students more than tripling over the same period, to nearly 160 000. Most of this growth has come from the private provider, full-fee-paying market, which constituted 76% of VET FEE-HELP assisted students in 2014 (compared with 54% in 2012).

The VET FEE-HELP debt ballooned from around $699 million in 2013 to $1.7 billion in 2014. In that period the average loan amount per student increased by 24 percent. These increases suggest that there is a problem in the way that these income-contingent loans are being used, and they indicate a very significant impost on taxpayers. And there are shockingly low completion rates for courses covered by these loans.

The National Centre for Vocational Education Research has said:

The students most likely to access VET FEE-HELP in 2013—14 are those attending externally and who are not employed.

When looking at the probability of course completion for eligible students who commenced their training during the scheme’s earlier years (between 2009 and 2012), those studying externally who are not employed have a particularly low predicted probability of completion (with a 10% probability of completing their training). This is compounded further should they be studying an advanced diploma (with an 8% probability of completing their training).

The centre goes on to say:

Given the substantial increase in recent years in the number of assisted students now attending externally who are not employed (increasing from 11 128 to 52 506 students between the two periods, an increase of about 370%), this may not bode well for future course completions of VET FEE-HELP assisted students.

This year there has been extensive media coverage of dodgy conduct on the part of some providers. For example, Fairfax has reported:

The industry, by design, is "demand driven". But it's colleges, not students, driving the demand. They employ an army of salesmen (known euphemistically as "brokers") who can earn millions in profits from taxpayer subsidies.

The dodgy brokers, such as some of those working for Melbourne's Phoenix Institute, target people living in public housing, the intellectually disabled, the drug addicted and non-English speakers.

They offer a free laptop as an incentive to get the signature of a new "student", then fill out the literacy and numeracy test themselves (or coach the client through it).

That was, as I say, a report from Fairfax. I have heard similar stories in my work as chair of Labor's cost of living committee. Community groups tell stories of people getting signed up into long-term debt, for a qualification they will likely never complete, with the offer of a free iPad. The Consumer Action Law Centre are particularly concerned at some of the alarming reports they have been receiving, and they are encouraging the Commonwealth to take action—greater action than has been taken in this bill, I might add.

The recent Senate inquiry heard of concerning marketing techniques and business models from private providers. And, significantly, the wholesale transfer of public money into private hands was revealed in detail in that Senate report. Private company Careers Australia had grown from 5,000 students in 2011 to 20,000 in 2015—300 per cent growth. Australian Careers Network had grown more than 400 per cent in one year, with an average taxpayer payment of $3,303 per student. As the report says:

Figures for VET FEE-HELP payments show that the growth in payments for some private companies has been dramatic. Careers Australia has had payments increase—

this is taxpayer money—

from $3.539 million in 2011 to $108.172 million in 2014. Evocca College, trading as ACTE Pty Ltd grew from $1.831 million in 2011, to $24.958 million in 2012, to $131.25m in 2014.

All of this is taxpayers' money. So it is not just the individuals who suffer from the current system; taxpayers suffer because rorting the income-contingent loans system really just takes taxpayers' money out of public hands and gives it to private, for-profit firms, and the whole sector suffers because of the reputational damage this causes the sector. That is a problem for the ethical providers seeking to attract students, and it is a national problem too, because education is an important export for us, and that means that quality matters. As I mentioned earlier, those private sector firms have low completion rates, meaning not only that the individual goes into debt and the taxpayer pays the company but that the individual generally does not even end up with a qualification. So, under the current arrangements, the individual loses, the taxpayer loses and the nation loses. Only the private firms' shareholders and executives are the winners.

Labor has been calling for action for almost two years. We have called for an investigation by the Auditor-General. We have asked that the ACCC run an education campaign to help people recognise shonky practices. We have spoken to ministers and their departments about a number of issues over this time. There has been a House of Representatives inquiry and two Senate inquiries, which heard of numerous abuses of the system. The government introduced new national standards that came into effect in April 2015, but the problems with the system are still occurring.

This legislation seeks to address some of the issues in relation to VET FEE-HELP loans, but it does not go far enough. That is why we are moving amendments and that is why we will continue to call for the government to crack down on shonky practices. I hope that the government will support our amendments. I hope that the government will support, for example, a requirement that people actually tell the department that they have accepted the new obligation to enter into the arrangement with the college to get the qualification before finding out some time later that suddenly they have a $7,000 or $11,000 debt, as the member for Charlton spoke of in respect of some of his constituents. I hope that the government will take further and stronger action to try to crack down on these incredibly shonky and dodgy practices that are happening in the vocational education and training sector through the misuse of income-contingent loans—which, as I have said, is the wholesale transfer of taxpayers' money into private firms' hands. I hope that the government will take further action, because people's taxes should support vocational education for the community's benefit, not for the private benefit of a handful of companies, their shareholders and their executives.

This is a significant national issue. We face immense challenges because of automation and the other issues that are going to change the shape of work in the future. Work is going to be very different in 10 years, in 20 years and in 50 years. It is imperative that Australians have the skills and the knowledge needed to be able to do the new jobs of the future. When those five million jobs disappear because of automation, we need Australians to be ready for the high-skilled jobs of the future—the types of jobs that require digital literacy. That means being in a position where we have a strong and high-quality vocational education and training system that can deliver to students so that all students, regardless of background or socioeconomic status, have the opportunity to obtain those skills and that knowledge.

We know that that is important for their own individual lives and prosperity, but it is also important for the nation's prosperity. When you have increasing inequality, as this country does, and when have an increasing spread of income distribution and are seeing higher amounts of income at the top levels, that is the beginning of a serious inequality problem. We know on this side of the House that inequality matters not just because some people are better off than others but because great inequality contributes to destabilisation and insecurity and, as Christine Lagarde of the IMF has said, is actually a handbrake on economic growth.

We are a party that believes in economic growth, and we are a party that believes in opportunity. We believe that all people in this community and this society should have the opportunity to benefit from the nation's prosperity and to form a part of the nation's prosperity. That means, among a range of other things, workforce participation. That is why, for Labor, TAFE is not some sort of side issue and vocational education is not some sort of thing that you tack on; it is a fundamental, foundational responsibility of the Commonwealth to ensure that all people in Australia can gain access to vocational training and education in a way that allows them to develop their knowledge and skills and play a part in the future workforce. I commend the amendments to the House.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

The Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 amends the Higher Education Support Act 2003 to strengthen the protections for students in the vocational education and training sector, and to push the unscrupulous training providers out of the market.

VET FEE-HELP—why is it needed? VET FEE-HELP has undergone unanticipated growth since Labor axed the credit-transfer arrangements between VET FEE-HELP-funded qualifications and university qualifications in 2012. Throughout this debate, I have been disappointed to hear Labor members suffer from selective and collective amnesia about the source of this problem that we are seeking to address with this bill. Listening to the Labor members speak, it is really an attempt to rewrite history; pretend that they were not responsible for the dreadful legislation that enabled the rorts and the unconscionable conduct that we have seen in this instance. Much of the growth in this sector has been because of the unscrupulous behaviour of, probably, a minority of providers and agents who aggressively market the scheme, targeting vulnerable people who are left with a significant debt but no benefit from the training itself. This has put a real stain on the quality providers. It is something they certainly feel very greatly. It is a real issue for those young people, especially those who do not achieve any qualification as a result of signing up to a course.

The system under the former Labor government failed to put in place the necessary safeguards for these young people; to protect students, and taxpayers as well, from rorts. Labor failed to do this. Let there be no equivocation on this: Labor failed to do that. They actually had the chance in 2013 when the first complaints—I have heard many statements here about when the government should have acted—were made to the national training regulator, the Australian Skills Quality Authority, but Labor failed to do anything.

Labor's system allowed colleges to sign up students for, often, useless or quick-fix type courses, and to inflate the costs of courses. On 18 September 2015, the shadow minister for higher education, research innovation and industry, Senator Kim Carr, finally acknowledged the need for stronger measures. It took a while. Senator Carr, as reported in The Age, said:

Labor introduced VET FEE-HELP with good intentions but the scheme contains 'fundamental weaknesses' that need to be fixed.

And he said:

… regulators were not given enough power to crack down on rogue operators.

This is the first time that Senator Kim Carr and Labor actually admitted that they had created a problem in the way that they had drafted the legislation for this system.

What we have seen, as has been articulated by others, is that this has been a licence to print money—in some instances, taxpayers' money. A great many young people were affected by this. On 12 March, the Assistant Minister for Education and Training at the time, Senator Simon Birmingham, announced a series of measures to crack down on unscrupulous behaviour—the sort of behaviour that has left some students with debt and absolutely no qualifications. What a disaster.

These measures which seek to stamp out unscrupulous behaviour will assist in restoring integrity in the sector, especially for the good operators, and there are many of those. We want to see the young people end up with the skills and training that they so need for the future. The government has been introducing these measures progressively since April 2015, and they are already having an impact. The bill provides the laws necessary to implement specific measures from 1 January 2016. It should be passed as a priority. It seeks to prevent those inappropriate enrolments and debts by introducing a two-day cooling off period; introducing minimum prerequisites to ensure students can complete the higher level VET courses, for which VFH is available; and requiring a parent's or guardian's signature before a student under 18 can request a VFH loan.

The bill will also further protect students and taxpayers—it is important to protect taxpayers—by making it easier for a student to have their debt cancelled, where they have been signed up for a loan inappropriately; a cost that will be recouped from providers to protect the taxpayers as well as the student. It will introduce minimum registration and trading history requirements for new VFH provider applicants to ensure those approved have a proven history of delivering quality training; introduce infringement notices attached to civil penalties for breaches of the guidelines; and introduce technical amendments to strengthen the department's administration of the scheme, and its partnerships with Australian Quality Skills Authority to monitor and enforce compliance.

There are a raft of measures here. In addition to the reforms introduced by this bill, the government's changes to VET FEE-HELP also include banning inducements for enrolments—we have heard plenty about that—from 1 April; banning withdrawal fees and other barriers to students wishing to withdraw from a course before a debt is incurred; banning inappropriate marketing; making providers responsible for the actions of their agents; and, from 1 January 2016, banning providers from levying the full debt load up-front, regardless of a student's progress through the course. This is achieved in this legislation by requiring training providers to have multiple census dates and proportionate levying of fees across each course. The government provided $18.2 million in the 2015-16 budget for compliance to support these measures. The government has been aware of the problem created by Labor and has been progressively working through trying to fix just another mess. The government consulted widely, as is important, on the implementation of the reforms, including through dedicated forums after the announcement in March.

The government also appointed a VET FEE-HELP reform working group, comprised of representatives of training providers; students—of course, importantly; employers, the ones who have to employ young people and those who take these courses; and consumer law advocates and regulators to advise on the implementation of the reforms, including the measures in this bill.

Labor set up the VET FEE-HELP scheme and expanded access to it in 2012 but, as I said earlier, they simply failed to put in place the necessary safeguards to protect students and taxpayers from its abuse. That is what we are trying to fix tonight with this bill. The first complaints were received by the Department of Education and Training as far back as 2011, yet Labor failed to take any action. They failed to introduce a dedicated compliance regime for the VET FEE-HELP scheme.

The government has committed $5.6 billion this year for VET through funding to the states and territories to support their training systems and TAFE; direct funding for apprenticeships and the Industry Skills Fund; and student loans for VET students. We have also funded up to 250,000 training places funded through the $664 million Industry Skills Fund, which supports businesses to train their workers and provides free, independent skills advice to help businesses take advantage of growth opportunities—great practical initiatives.

We will also provide financial support to almost 80,000 employers this year to help with the costs of employing an apprentice through the Australian Apprenticeships Incentives Program. Again, these are very practical ways of assisting both the employers and the people seeking employment.

The government has invested in very tough new standards for all training providers that started on 1 April 2015, including $68 million to establish the Australian Skills Quality Authority to target poor-quality providers, whilst lifting the red tape burden on consistently high-performing providers—something that is important in the system.

We have developed in conjunction with states and territories a new national training complaints hotline—13 38 73, if you are listening—to make it easier for people to have their complaints about training heard and actioned. And we are supporting the Australian Competition and Consumer Commission's investigation into VET FEE-HELP complaints

By contrast, Labor cut more than one billion dollars from apprenticeships between the 2011-12 budget and the 2013 federal election, including millions of dollars in incentives taken out overnight on the eve of the 2013 election. In the 12 months after Labor discontinued the $1500 standard employer commencement incentive for existing worker apprentice and trainees in non-National Skills Needs List occupations, apprentice and trainee commencements halved from 126,200 in June 2012 before the cut to 61,600 in the June quarter after the cut. The number of apprentices and trainees in training dropped by more than 100,000 over the same period.

Labor failed to deliver appropriate national standards for registered training organisations, failed to properly fund the regulator and failed to protect students and taxpayers from dodgy providers. And tonight we are attempting to clean up some of the dreadful mess that Labor created.

An independent review of Labor's signature Productivity Places Program found it could not be determined—and this is a classic—who had been trained, how many people had been trained and how many had been given the contracts to do the training. What an absolute mess, and even Labor abandoned it before the funding was due to run out.

When I look at the skills that are needed—and each member in this place knows of the opportunities and challenges ahead—I am pleased that we are also trialling innovative P-TECH style models of education in schools to give students an industry supported pathway in science, technology and maths. Our goal is to put industry at the heart of the training system by establishing the Australian Industry and Skills Committee and reforming training package development while, at the same time, abolishing more than a dozen of Labor's bureaucratic skills committees—a committee to have a committees.

We are also cutting the small business company tax rate to the lowest rate in almost 50 years and, for two years, giving all small businesses an immediate tax deduction on any asset they buy costing up to $20,000. This will benefit more than 95 per cent of all Australian businesses, including thousands of small businesses and tradespeople who employ an apprentice.

The government is providing up to $200 million a year for the new Australian Apprenticeship Support Network to provide more help to employers, particularly small business employers, to recruit, train and retain apprentices. The government will support more than 300,000 apprentices a year across more than 420 locations—much more than under Labor's old Apprenticeship Centres.

Our policy targets apprenticeship completions, which hovered at around 50 per cent under Labor. We will do this by providing more financial support to apprentices through Trade Support Loans of up to $20,000, and nearly $30,000 of these Trade Support Loans have been accessed since the program began in July 2014. The loan assists apprentices with the costs of living with the greatest support available in the early years when the apprenticeship wages are at their lowest. This is practical direct encouragement for not only for business but young people seeking training and, again, as I said when I started: we are cleaning up yet another Labor mess with this legislation this evening. I commend the bill to the House.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

I am speaking in support of the amendment moved by the member for Cunningham, which offers a very sensible and reasonable amendment to the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 to ensure that we tackle the problem of burgeoning debt for people taking on VET courses in Australia.

I think one of the greatest shames of the combination of a federal Liberal government and a state Liberal government has been the debacle that they have made of our vocational education and training system in this country. In New South Wales, we have seen massive cuts to the TAFE system. In the community that I represent, 40 TAFE teachers have gone from the local Randwick TAFE. We have seen the cost of courses increase by 10 times on the amount that they were a couple of years ago. As a result, we are beginning to see the number of tradespeople and the number of people graduating with diplomas and associate diplomas from our TAFE system decrease. This is not going to be good for our economy in the future, particularly when we are talking about building the next generation of infrastructure for the country, transitioning away from a mining boom and supporting intelligent manufacturing in this country. Attacking the sector of the education system that provides you with that technical and trade competence to grow our economy is, quite simply, a dumb move. But that is exactly what the combination of a federal Liberal government and a New South Wales Liberal government has done.

Over the course of recent years, we have seen a large increase in the number of people who are enrolling in VET courses, vocational education and training courses, throughout the country. In fact, we have seen a large increase in the number of people taking on higher education. This should be a good thing. In 2014, domestic enrolments in universities and higher education providers reached one million in Australia for the first time. Online enrolments continue to skyrocket, while the higher education workforce is also increasing rapidly, with more than 50,000 people holding academic jobs.

Unfortunately, in the past two years, the higher education system and, more specifically, the VET FEE-HELP system—the government system which supports people to pay their fees to undertake vocational education and training courses—have been embroiled in some controversy and scandal. Between the years 2013 and 2014, the number of students accessing this VET FEE-HELP loan scheme has grown by 103 per cent. The amount of money that student loans in the VET sector have cost the Commonwealth has increased by 151 per cent. The average loan amount per student has increased by 24 per cent. The number of providers offering access to VET FEE-HELP has grown by 44 per cent.

Obviously, there is a cost to the Commonwealth budget associated with this. If the increase in the number of people taking on these courses and the increase in government support for people to take on these courses were sustainable and resulted in people graduating with qualifications from these courses, then it would be a positive development because we all know that the more education a person gets, the greater their value in the jobs market will be and, ultimately, the more productive our economy will be.

But over the past couple of years in particular, we have seen some scandalous and outrageous attempts by particular private providers in the VET sector to encourage almost predatory behaviour by some institutions to coax people into taking on courses that are beyond their means, into taking on a course that those providers, in some circumstances, also have a very good indication the person will not be able to graduate from.

One such example was well covered in Australian newspapers and outlined recently. A private Sydney college was accused of recruiting illiterate and disabled students to take out thousands of dollars in loans to fund courses that they were not told they were being signed up for. There have also been examples of very aggressive sales techniques where elderly or disabled people are telephoned or doorknocked and offered a free laptop or a loan for a course that they did not really want to sign up for or, in many respects, are not capable of undertaking.

We have seen some outrageous and unscrupulous behaviour by some private providers in this space over recent years. It outlines for me the importance of necessary and appropriate regulation when it comes to our education system. That regulation, unfortunately, must be there from the earliest years possible. It is important that we have standards in childcare centres throughout the country when we are talking about people educating our kids at the youngest of ages. When Labor were in government, we introduced new quality assurance standards for childcare centres. Unfortunately, they resulted, in one case, in a death within a childcare centre and severe injuries to children. So you do need appropriate regulation in the education sector. What is important is getting the balance right and ensuring that people cannot take advantage of vulnerable people and people whom they know will not be able to graduate from those particular courses at the end of the day.

This bill seeks to deal with some of those issues by putting in place some regulation to reduce the amount of unscrupulous activity that has been uncovered in this particular industry. It will do this by introducing a number of changes. Firstly, it will introduce a two-day cooling-off period between an enrolment and the application for a VET FEE-HELP loan so that course enrolment is no longer confused with the loan application process. Hopefully, the applicant will get a clear understanding that there is a difference between enrolling in the course and taking out the loan. Importantly, this will provide an opportunity for people to think about whether or not they want to take on what, in some cases, is going to be a heavy financial burden before they begin the course. The second element of these reforms is the introduction of a minimum prerequisite, such as literacy and numeracy, to ensure students can complete the higher level VET courses—diploma level and above—for which VET FEE-HELP is available. This is just plain common sense. It is common sense to ensure that, if someone is going to sign up for a particular course, they meet the necessary literacy and numeracy requirements and there is a reasonable prospect that the person will be able to complete the course. Providers and the government have an obligation to work together to ensure that there is the necessary support there for people to actually complete the course. The final element is requiring a parent's or guardian's signature before a student under 18 years can request a VET FEE-HELP loan to protect younger students.

The bill will also further protect 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 for the government to recoup the cost from providers. This importantly introduces that incentive for providers to undertake some level of scrutiny and accountability in respect of the people they are signing up to their courses and ultimately coxing into taking on VET FEE-HELP loans. Another element is the introduction of minimum registration and trading history requirements to ensure new VET FEE-HELP provider applicants have a proven history of delivering quality training. There is also the introduction of infringement notices and financial penalties for breaches of the VET FEE-HELP guidelines and 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.

Labor supports these amendments. I support these amendments. They are sensible amendments that will introduce a greater level of scrutiny with respect to the selling and the signing up of people to vocational education and training courses by private providers in Australia. I lament the fact that it has taken the government almost two years to come up with these sensible amendments and proposed legislation to address these issues. As I mentioned earlier, there has been many anecdotal cases presented to the government over the course of the last couple of years about some of the outrageous activities that have been undertaken by some providers in this area. Nonetheless, the government has acted and we support those measures. However, Labor believes that these measures are manifestly inadequate, that more could be done to ensure that people are not rorting this system, signing up people to courses which they have a very good understanding the applicant will never be able to complete. Our concerns are that there are no efforts to control the spiralling costs for students, with loans having grown in value from $5,890 in 2012 to $8,666 in 2014.

The two-day cooling off period could prove to be easy to manipulate by providers printing out enrolment forms with one sign date and VET FEE-HELP applications with a date two days later. There is a concern that that particular amendment could be manipulated. There is no effort to re-examine previous approvals for providers and there is no debt relief for students who have already been defrauded by dodgy providers.

In response to these issues, which have been uncovered by numerous inquiries—and I must say uncovered by the work of the shadow minister the member for Cunningham, who has done a wonderful job consulting throughout the country not only with providers but also with students who have been affected by some of these unconscionable practices. The shadow minister has also offered a number of further reforms which we believe will provide the right balance and will strengthen this legislation and the operation of this system to ensure that many of the rorts and many of the unscrupulous activities which have been outlined throughout the course of this debate and have been highlighted throughout Australia do not occur again and that the system is sustainable into the future, that students are taking on courses they know they can complete and, importantly, that the burden on the government in terms of providing the funding for those loans but also importantly having to chase them up when people may not be in a position to pay for them at the end of the day because they have not graduated from the course and they have not increased their earning capacity, that we are reducing that burden on the Australian taxpayer.

So Labor has suggested a number of measures. They include a national vocational education and training ombudsman and support for Labor's call for the Auditor-General to conduct an audit of the use of VET FEE-HELP throughout the country. Labor believe it would be sensible to offer transparency and accountability in the operation of this system, both initially through an inquiry, an audit conducted by the Auditor-General—at the end of the day we are talking about the expenditure of millions of dollars of taxpayers money in a system where there is cogent evidence that there has been unscrupulous activity by particular providers and there is ample justification for the Auditor-General to conduct that inquiry—and then to have that system overseen by an ombudsman, so that if there were allegations of inappropriate conduct, people involved within the industry, most notably students and their families, had somewhere to go to seek advice and redress.

Labor has also put forward an amendment which requires the department to write to prospective students with a clear statement on the amount of debt that they are about to take on and require the student to reply to the department before a debt is raised. In many cases, students were not aware that they were taking on such large debts when they were signing up for these courses and being induced by the offer of laptops and other trimmings, that they will get a clear indication from the department that is offering them the loan about what they are taking on in terms of a financial burden. This is a sensible amendment and reform that will ensure people have a clear picture about their studies and their future. Finally, Labor will refer this legislation to a Senate committee to look at options to cap tuition fee levels for courses covered by VET FEE-HELP and to lower the lifetime limit on VET FEE-HELP student loans.

All in all, the bill has some positive elements but in my view it does not go far enough. There are further sensible reforms in the form of an ombudsman, in the form of an Auditor-General's inquiry and in the form of writing to prospective students that would strengthen this bill.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

(   Mr Deputy Speaker Irons, I believe this is the first time I have spoken with you in the chair. So congratulations on your elevation to the Speaker's panel.

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

Thank you.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

This legislation is long overdue. It has languished in the back room of the government for far too long. Students around Australia have been incurring debts on a very regular basis. The government's failure to act has led to a budget blow-out and to more students incurring massive debts and failing to complete courses. It is just not good enough.

There has been research done into the VET FEE-HELP student loans system. The Australian indicated on 6 November that up to $6 billion in taxpayer funded loans had been doled out to students and these students will never finish their courses. The figures released revealed that 21 per cent of students eligible for loans under VET FEE-HELP completed their course during the scheme's early years. That means that 79 per cent are not completing the courses. The article goes on to say that they believe that this has become even worse. That was compiled by the Adelaide based National Centre for Vocational Education Research. The Australian suggested that $530 million of the $670 million allocated through the scheme during those years went to cover the fees of people who never graduated. According to The Australian, it is estimated that up to $1.94 billion was loaned during 2013-14 to students who did not complete their courses. It is not good enough. If the government was on its game, it would have been right onto it.

I, like most members in this House, have had constituents come and talk to me about this issue. I will give three examples to the House. Firstly, I might concentrate on why these students failed to complete their courses. They sign up for reasons of suitability for the courses, the quality of the courses, the quality of the trainers and the support they get during the course—all this contributes to the fact that they will not complete the course. Now I will go to the three examples I want to share with the House tonight.

The first one is a young woman, who was sitting in the library at Newcastle university when she received a phone call from one of these providers. This provider signed her up to a diploma course. The reason she was sitting in the university library was that she was doing the Newstart course for people who fail to score high enough in their HSC. She was trying to upgrade her skills so she could attend university. Her ATAR score was 37, and she was signed up to a diploma course which required a high level of literacy and really good educational skills. Needless to say, she sat for the same module three times and failed it three times. She incurred a debt of $20,000. She had no qualification, no job and a $20,000 debt. This is the way this scheme has been operating. This government has taken so long to address the issue.

The next person I will mention to the House is a 70-year-old man who lived in department of housing accommodation within the Shortland electorate. He was retired. He was getting his pension, and he was really quite happy with his lifestyle. He could afford to pay his rent. He could afford to pay his electricity. He could afford his food. But he was pursued by one of these providers telling him, 'You sign up to this course and we'll give you an iPad'. The gentleman in question said: 'I don't want an iPad. I don't need to train. I have retired.' Yet this person continued to ring him and pursue him, trying to get him to enrol in the course. In the end they went away because the constituent was a man of some stamina and he was able to stand up to the deluge of pressure that was placed upon him.

The third person was pretty similar to the other young woman I mentioned. This young girl signed up to the course and ended up with a $16,000 debt she was unable pay. She did not have the skills to complete the course—once again it was a diploma course. These students—particularly the last one I mentioned—contacted the provider, asking for support. She did not hear back from them. In her case we were lucky to be able to have the $16,000 debt waived, because of intervention from my office. But there are so many people out there that this is happening to, people who have ended up with debts and people who do not go and see their federal member. I am sure that members on both sides of this House would step in and fight for their constituent to have that debt removed. But, unfortunately, because the government has not acted, because they have sat there and let this explode, each and every day there are more young people who are ending up in the situation of those that I mentioned.

Just to reinforce the fact that it is still happening, I was contacted by a constituent last week from Kahibah—actually I was contacted by two constituents. This particular constituent emphasised to me how emphatic the provider was, how they pursued him, how they would not let him off the phone and how they continually rang him back and tried to get him to sign up to the course. He did not sign up, but simply the fact that these practices are taking place, that this level of pressure is being put on people—particularly when it is put on young people, they find it hard to resist the temptation, particularly when a free iPad and many other inducements are thrown in.

This legislation will be introducing a two-day cool-off period between enrolling and the application for a VET FEE loan, so that course enrolment is no longer confused with the loan process. That is really not very long. Two days is a very short period of time. It is not even as long as the cool-off period when you buy a car. It also introduces a minimum prerequisite such as literacy and numeracy to ensure students can complete the higher level of their courses—diploma and above. It will address some of the issues that I have raised, but I would very much have liked it to have been in place before. I would like to know how this is going to operate and how it is going to be monitored. I would like to feel confident that these rorts by these shonky operators will not continue. It is going to require a parent's or guardian's signature for a student under the age of 18. They can resist a VET FEE-HELP loan to protect younger students.

In the cases of the two young women I spoke about who had incurred the big debts, they had both completed their HSC, so they were 18 years of age. They certainly were not world-wise. They certainly did not understand what they were getting themselves into. Their failure to complete the course was a barrier to them finding employment. They had failed the course. They had not done very well on their HSC. This was just another barrier that had been put in front of them. It has been a very long time to have it addressed. This does make it easier for students to cancel their debts. It does introduce a minimum registration and trading history requirement and makes a few technical amendments to the legislation.

I cannot let this opportunity go by without mentioning TAFE.

Terri Butler (Griffith, Australian Labor Party) Share this | Link to this | Hansard source

Hear, hear!

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Yes. The Labor Party has a policy to direct 70 per cent of VET funding to TAFE. When a student enrols in TAFE, they are enrolling in a quality course. The courses are conducted by teachers, not trainers. The teachers have qualifications. They are accountable. They have a requirement to provide assistance to the students who are enrolled in their courses, unlike what we have seen with these shonky providers. In New South Wales the Baird government has introduced its Smart and Skilled program, which makes every VET program contestable. Put that alongside what we have had happen federally. It is a terrible situation for young people. In New South Wales that is also coupled with the fact that the Baird government is actually selling off TAFE sites. It is in the process or had identified a TAFE site in the Shortland electorate that it intends to sell off. My message to them is that, instead of selling off TAFE sites and putting training out to private providers, they would be much better served by ensuring that all students have access to a quality education through TAFE.

Eighty per cent of private profits come from government funds. If public funding is stopped and it does not go to the RTOs that are providing such poor-quality training but goes to TAFE instead, with that 80 per cent funding that comes from the private sector the TAFE sector will be strengthened even further.

In the few moments I have remaining I would like to talk to the amendment and give my wholehearted support to it. We definitely need to appoint a national VET ombudsman with the power to investigate consumer complaints. I was at a meeting yesterday where this very issue was raised with me. A person said to me: 'Has the opposition thought about an ombudsman? Wouldn't this address some of the problems that are happening in the VET system?' Of course the answer is yes. The shadow minister has drafted an amendment, and this national VET ombudsman would investigate consumer complaints—there are so many at the moment—and hold those private providers accountable for their actions and accountable to the students that they enrol. The amendment also includes ordering RTOs which have been found to have acted unscrupulously to refund course fees to students and orders RTOs to refund course fees to the government and help the students with VET HELP.

This is a good amendment. I hope the government accepts it, because it will make a real difference to students undertaking vocational education.

Chris Hayes (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

Over the past 18 months or so we have seen dozens of media reports about unscrupulous VET providers targeting vulnerable Australians to sign up to shonky diploma courses, certificates and even so-called advanced diplomas for the purpose of having people access Commonwealth funded VET FEE-HELP loans. These unethical practices have resulted in hundreds of disadvantaged people, including people who are disabled and some who are illiterate, entering into courses that they do not understand. But, more importantly, it has saddled them with thousands of dollars of debt. While the Liberal government has now introduced legislation concerning national standards for registered training organisations, the RTOs, which require them to declare commercial relationships with sale brokers and that allow the regulator to hold the RTOs accountable for the actions of their sale brokers, the problem with the VET system is still occurring.

The Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 is an attempt by the government to address some of these issues around VET FEE-HELP including the introduction of a two-day cooling-off period between enrolment and the application for VET FEE-HELP loan, the introduction of minimum prerequisites such as literacy and numeracy skills and the requirement of a parent or guardian's permission before a student under the age of 18 can request a VET FEE-HELP loan. These are sensible propositions—they may be a little late, but nevertheless they are sensible—particularly in relation to the issue about prerequisites, because that has been one of the biggest concerns. People have been signed up even though they do not have the prerequisite skills to allow them to complete a particular course of study. If you are the private provider, it is not necessarily within your purview to ensure that your students actually graduate. The main thing is people being able to access the government funded loans.

While these proposals might address some of the concerns that people have about the VET FEE-HELP loans, I for one do not believe they go far enough. My concerns relate to a couple of things. Firstly, there is currently no effort to control the spiralling costs for students undertaking a VET course. With the average loan per student increasing by 24 per cent over the last year—in real terms, from $5,890 in 2012 to $8,666 in 2014—that is a significant jump in terms of a vocational education course. Course fees are accelerating well beyond inflation, but they are doing it within a pretty lucrative vocational education market. Since the introduction of VET FEE-HELP in 2008, the system has grown exponentially from $25 million in 2009 to $1.7 billion in 2014. Largely, this is attributable to the fact that there is an increasing number of students accessing VET FEE-HELP. That has grown by 103 per cent, and that is largely due to the increasing number of VET providers in the market and also to the way the VET providers are going about marketing their courses and signing up potential students. This has not only increased the amount of money that a student loan in the VET scheme is costing the Commonwealth but also increased the average loan per student by 24 per cent. This is particularly concerning given that reports have estimated that 40 per cent of all VET FEE-HELP loans will never be repaid as the recipients will never earn the threshold of $53,000 required to trigger the repayments. In many instances—and we will come to a few of them in a minute—many students do not complete the courses. For many of the private providers that is not what they are in business to do—that is, to ensure that people actually attain graduation. They are in business to make profits out of their courses, and that is what they are doing; they are simply selling the education.

My second concern relates to practices of, for want of a better term, shonky providers in the VET sector. As of October this year, the Australian Skills Quality Authority, ASQA, an industry regulator which was established by Labor in 2011 to regulate course training providers, has received widespread complaints of inappropriate marketing practices, poor standards and rorting of the lucrative VET FEE-HELP loans scheme. Of the 21 RTOs that have now been ordered by ASQA this year, eight have now had licence conditions imposed on them, while another six are still subject to ongoing investigation. We do not want a repeat of what we saw in the Unique International College, a private college located in Granville, which had its registration cancelled by ASQA on the basis that it was offering potential students up to $2,000 to sign up to documents that, in many instances, they could not read or, if they could, did not understand but that they signed up to in order to take out a Commonwealth loan of up to $25,000.

That is not insignificant, particularly when they are targeting a certain group of people in that respect. Therefore, this unconscionable conduct was clearly targeted at some people who would be regarded as falling into the category of being illiterate—many were disabled. But the college went on to offer students a $500 bonus if they were able to refer a friend to take up one of its courses as well. These are unscrupulous marketing practices. We have all heard about them offering the iPads and laptops. This is very much an extreme continuation of all that. It came only a week or so after reports in the media about the Melbourne based Phoenix Institute, which was told its registration would be cancelled following very similar complaints of students.

Nearer to home for me, you would recall there were press reports this year that a college that operates within my electorate and in many other places for that matter, the Evocca College, barely graduated one in 1,000 students as a result of the assessment scheme. It was attributed also to the inaccuracy of its marketing. Clearly that college or company received a significant number of complaints. When it was investigated, it was found that its policies and procedures were largely non-compliant with industry standards. These are just a continuation of serious concerns in the VET sector, where people are undertaking courses of vocational education but not receiving what they think they are going to get, which is a qualification that will lead them to employment.

For two years now Labor has been calling for action from the regulators including the ACCC. We do need to send a strong message to the VET sector. We have also consistently called for the government to crack down on the rorts in the VET FEE-HELP system. However, it has taken the government a little over two years and three ministers to develop these half measures, which we do not believe fully address the issues. Students, TAFE colleges, taxpayers and good quality private providers are all victims of what has been occurring here, these scandals. They all deserve better. They all deserve to have comprehensive safeguards put in place. I have been working closely with Phil Chadwick, the president of the New South Wales TAFE teachers association, who is also a good friend and an electrical trades teacher at the Miller TAFE College. Phil has consistently spoken about the impact that some of these shonky providers like Unique International College are causing to the reputation of providers in the VET sector as well is the impact that they are having on the quality of courses being offered.

The idea of vocational education is to get people up to being job ready or to enhance job opportunities; it is not to sell a piece of paper, a certificate, a diploma or whatever you want to call it. It does not have much value unless it is going to achieve the result that everyone thought it was going to when they signed on—that is, being a pathway to employment. Regrettably, all this is occurring at a time, particularly in New South Wales, when TAFE is under sustained pressure from government. Colleges including the TAFE college in my electorate of Fowler are experiencing serious funding cuts from various traditional trade based courses including plumbing, carpentry, electrical courses. All of this is undermining the reputation of vocational education. This is why Labor will be moving a number of amendments to the Higher Education Support Amendment (VET FEE-HELP Reform) Bill, to strengthen the existing measures and to protect vulnerable students. In particular, Labor will be referring the legislation to the Senate legislation committee to look at the options to cap tuition fee levels for courses offered under VET FEE-HELP and to lower the lifetime limit on VET FEE-HELP student loans. This will ensure that students are not entering into financial arrangements that could result in the prospect of anything up $100,000 debts as a result of signing on with some of the shonky providers.

In conjunction to this, Labor is also putting forward an amendment which will require the department to write to prospective students a very clear statement on the amount of debt that they will be undertaking as a consequence of signing onto a particular course so that they will know in advance what it is that they are actually agreeing to. Furthermore, we will be calling on the government to appoint an industry funded national VET Ombudsman as well as require the Commonwealth Auditor-General to conduct an audit of the use of the VET FEE-HELP loan scheme. I think these are all good things which will go to assisting the VET sector generally but, more importantly, they will assist those who are reliant on genuine vocational education for the very clear purpose of having a pathway into employment or for improving employment opportunities.

I believe the amendments that will be proposed by Labor will deliver greater protection not only to students but will also offer the taxpayer and the economy generally greater efficiency and a greater use of taxpayers' dollars when it comes to vocational education. Under Labor, we will guarantee TAFE funding into the future by working with state and territory governments on a comprehensive national priority plan that clearly will define the role of TAFE and clearly establish TAFE as being in the front and centre of public funded vocational education in this country. TAFE is a body which, regrettably, has been much maligned. I think TAFE offers quality vocational education to students. It offers great opportunity for business to ensure that business has available to it the skill sets of employees they need for the future. I support the legislation and I commend Labor's amendments as trying to make a genuine effort to improve vocational education in this country.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

In areas like the one I represent from Western Sydney, we not only need good educational opportunities in primary schools, secondary schools and universities but also, importantly, in vocational education. We do need to be able to train up people for the massive skill shortages that exist across a number of industries, and we need to have the confidence that when students take up a course in a vocational provider, be it public or private, that they are getting a good quality course. There have been concerns for some time, particularly with the private providers, whom I do support existing within the system because they do provide an opportunity for us to increase the number of pathways open to people who want to engage in vocational education. There have been concerns about the way in which people are being lured into particular private providers and the methods that are being used and the consequence of bringing people into courses and not delivering the outcomes that are required.

Back in March, ABC via 7.30 detailed some of these cases. It was brought home to me in very stark terms, because the people that were involved or whose experiences had been covered by that particular report came from Mount Druitt, a suburb within the Chifley electorate. When I heard some of the stories, I was astounded at what was occurring. One former teacher at Evocca College, Mount Druitt, detailed to 7.30 the types of instances where people would, literally, get off the train at Mount Druitt, walk down to a Westfield shopping centre and they would go straight in and there would be Evocca set up in a stall in the shopping centre—day after day. They had been there for nearly two years according to this report. The representative spruiking on behalf of Evocca College would say: 'Oh, just take the iPad. Just sign up, just take it. It's all good. It doesn't cost anything, it's free.' But it is not free, for reasons I will detail later.

And what would happen? Some of these students hard pressed for income would take the iPads down to local pawnbrokers and try to sell them. The pawnbrokers know they cannot accept the equipment because the equipment is still the property of the college until the student graduates. There would be reports, as detailed in this 7.30 report, where some pawnbrokers were getting five students a day attempting to sell their iPads. This is not the worst of it. It was deemed by the teacher that I quoted earlier, Steven Fogerty, who was on the report, that it was:

unscrupulous, absolutely unscrupulous. Zero interest in education and training, it is all about getting these people in, keeping the number up and churning them through—churning them through.

What is happening as a result? These students are then forced to shoulder huge, huge debts. The coalition government claims that this type of case is a minority. But this minority, in Evocca's case, was one where they had received nearly $150 million in federal funding and were enrolling students to courses where the students doubted they would be able to hit the income level to be able to start repaying the debt. The concern has been—again, detailed in this report—that most of the students struggle with basic reading and writing and it was unfair of Evocca to sign them up for courses they did not have the skills to complete. So they are lured in, they are not tested properly to see whether or not they have got the capability to go through and complete the course and they then get, debts that are in staggering amounts. In one case, one student whose story was detailed in this 7.30 report, owed nearly $30,000 for a diploma he is not sure he will ever finish. As another branch manager of Evocca said:

It's just dishonest. I'm unhappy that students have so much debt for either nothing or for very little outcome.

This, at its heart, is the massive problem that is being created, particularly for young people who feel the guilt of wearing a debt that they doubt very much they will be able to repay.

I spoke about this back in March in the Federation Chamber. I raised the point that we need to be able to see more people undertake vocational education and we need more skilled people in our economy. I certainly want more young people from our area involved. In fact, I was proud to be associated with the launch of Evocca Collage in Mount Druitt a few years ago because it is good to see more opportunities present for young people to be able to build up their skills base.

I have also seen some great students from Evocca in my area. In fact, on the weekend I was out at the Shalvey PCYC at the Festival of Hope, an initiative designed to raise funds for the PCYC in helping people in our area who are doing it tough and need to get their lives back on track. The PCYC has had a long-standing commitment to doing just that in our community. A lot of the event was organised, supported and run by Evocca Collage students. They are a great asset to our local area, but these students should not be tarred by the misdeeds and the 'unscrupulous', as it has been labelled, decisions by people within the management chain who are quite happy to lure people in, and not make sure that the people who are in can complete the course or do complete the course.

I had people from different parts of the country contact me after they had heard my criticisms of Evocca and they said that they were stunned at the way they had been treated. In fact, they had written to Evocca about their incompetencies and unprofessionalism, and one student: 'to which I address to Evocca to announce my cancellation after many issues with them and have since found out so many more discrepancies with this college I am completely appalled with. I have been lied to by course consultants, student service officers, tutors and now compliance managers—possibly more than I have found evidence of yet.'

Another person who wrote to me detailed, over a six-page letter, a series of concerns that they had—for example, that Evocca had failed to weed out students who honestly did not have a chance of finishing the course; that they had even been expected to google required answers or assistance if they needed it; that they would get tutorials sourced off YouTube; and that the course structure had been changed midstream. That was in one letter from someone from Queensland who wrote to me, from Deception Bay. This person—and this is the human toll—said: 'All this time I have felt that I am a failure, that I am the one who is stupid for struggling so badly. Today my eyes were opened when I researched Evocca to find out how many people in gaming have had the same issues as I've had.' People should not have to feel that way. People should not have to feel that they have been in some way, shape or form to blame for this.

What have we had in response from the government? I have heard a number of speakers because I have been following this with keen interest. A number of government speakers have said: 'Oh, Labor knew about this in 2013.' What happened in 2013? In 2013 we had a federal election, a change of government. You have known since that time that there has been a problem. What was your response? Your response was to continually blame Labor the whole way through. In fact, in early January this year, Minister Birmingham was again going out blaming Labor. It took a 7.30 report in March, and now, nearly at the end of the year, we get some legislation to deal with it. How many students have had to go through this process of wearing the extra debt, being saddled with something that they cannot possibly repay and feeling guilty that they will be unable to pay it back? They want to repay the government. They have not been able to complete the course, but they have the debt hanging over their head.

Mr Chester interjecting—

Accept responsibility, Parliamentary Secretary. You do not need to go and read quotes and go back. You have had two years to do it. It is on your watch, Parliamentary Secretary. You and him and him and all of your side have had two years to fix it up. It has been on your watch, and what have you done on it? What have you done?

Darren Chester (Gippsland, National Party, Assistant Minister for Defence) Share this | Link to this | Hansard source

Be honest, Ed.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

No, you be honest, Parliamentary Secretary. Stump up. How many times have we had to sit in this place and listen to the coalition use the disgraceful term 'man up'—' man up and accept responsibility'? Well, why don't you take your own advice? Man up and accept that under your watch the amount of money that has gone to VET FEE-HELP has nearly doubled from—what is it?—nearly $600 million to $1.7 billion. You have known for ages that this has been a problem, and all you have engaged in is to blame, to distract, and to try to make other people look the other way. When you have always claimed that you think you have the answers, you have been unable to step up and put forward a solution. Instead of playing the blame game, why don't you work out what is going on?

Mr Chester interjecting—

Well, it is nice that you can sit there and read that. Why don't you go and talk to the students who are saddled with the debt? Why don't you talk to the students in the two years of your administration, more and more—

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I remind the member that he is speaking through the chair.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

Chair, through you, why doesn't the parliamentary secretary go through and talk to the students that are being saddled with the debt, maybe even in his own electorate? Instead of sitting there and reading quotes, why doesn't he step forward with a solution—or the other minister at the table, who has finally got round to something?

Luke Hartsuyker (Cowper, National Party, Deputy Leader of the House) Share this | Link to this | Hansard source

I've only been the minister for six weeks!

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

Well, your government has known about it for ages.

Labor have put forward—and I am proud to see that we have put forward—a series of important amendments. I want to commend the shadow minister, the member for Cunningham, on coming forward and thinking of a range of areas where we have put forward amendments that we think will strengthen the response to what has occurred. We have, for example, said that there should be an industry funded, national VET ombudsman to go through and to provide a greater degree of protection. We have said, for example, that the Auditor-General should do an audit of the VET FEE-HELP scheme. We have said that the department should write to people—that we should have measures in place to avoid people being saddled with this debt, that they should be made aware of the likelihood of the debt that they will assume and that they should respond. It is not enough just to send the letter out and let people know. The prospective students should respond, come back and say that they acknowledge the likelihood of the debt that they are going to be taking on board. We have also called, for instance, for examining the options to cap tuition fee levels and lower lifetime limits on the size of the loans.

These are all practical, sensible suggestions being put forward to ensure that there is greater integrity in this system. A number of us have been concerned to see the types of trials and struggles that people have had to undergo, particularly in my area, as a result of the misdeeds and, as people have called them, the shonky operators. It is not good enough to just sit on our hands and believe that this situation will resolve itself. The sector has in fact, I think, not moved quickly enough to deal with this.

My biggest concern is that it undermines confidence in particularly the private providers of vocational education, who do have a role to play—a definite, concrete role to play—in providing vocational education. We should not have to put up with this. Particularly in my area, I feel strongly that students in Mount Druitt should be able to get a top-quality vocational education. They should be skilled up. This is an area where we have unemployment higher than the national average, and we have the scourge of youth unemployment affecting us. We know that there are jobs there. I know from the employers that I speak with in my area, where there is massive job growth expected. I do not want to see those jobs necessarily going to people outside the area when we have a massive issue that we need to deal with in terms of unemployment.

We need to train people up. We need to have them ready for those jobs. We need to be prepared for those requirements and make sure that employers can have the confidence that people have been trained up properly. We do not need people sitting in debt; we need people working in jobs, and they need to ensure that they have the skills to do those jobs. I certainly commend the amendment that Labor, the opposition, have put forward because we believe that this will provide a stronger response to something that has been a massive issue for people, particularly the people I represent in this place.

Debate interrupted.