Wednesday, 2 December 2015
Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015; In Committee
by leave—I move government amendments (1) to (13) and (15) to (25) and request (14) on sheet GZ155 together:
(1) Schedule 1, page 3 (after line 6), after item 1, insert:
1A At the end of section 137 -18
(5) A person's *VET FEE-HELP debt in relation to a *VET unit of study is taken to be remitted to the extent that the person's *FEE-HELP balance is re-credited under clause 46B of Schedule 1A in relation to the unit.
(2) Schedule 1, item 3, page 3 (lines 9 to 20), omit the item, substitute:
3 Paragraph 6(1)(c) of Schedule 1A
Repeal the paragraph, substitute:
(c) the body is a *registered training organisation, as listed on the *National Register, that has been a registered training organisation since at least 1 January 2011; and
(ca) the body has been offering:
(i) at least one *qualifying VET course continuously since at least 1 January 2011; or
(ii) one or more series of qualifying VET courses since at least 1 January 2011, with each course in a series superseding the other without interruption; and
(3) Schedule 1, page 3 (after line 22), after item 4, insert:
4A After paragraph 6(1A)(d) of Schedule 1A
(da) the body has been offering:
(i) at least one *qualifying VET course continuously since at least 1 January 2011; or
(ii) one or more series of qualifying VET courses since at least 1 January 2011, with each course in a series superseding the other without interruption; and
4B After subclause 6(2) of Schedule 1A
(2A) For the purposes of (but without limiting) paragraph (1)(g) or (1A)(i), the requirements set out in the *VET Guidelines can include requirements relating to a body's capacity to satisfactorily and sustainably provide *VET courses of study.
Note: These requirements could, for example, relate to the stability of the body's ownership and management, its experience, its business relationships with particular kinds of educational institutions and its record in providing quality student outcomes.
(4) Schedule 1, item 7, page 5 (lines 2 to 4), omit subclause 23B(4), substitute:
(4) For the purposes of subclause (3), the *VET Guidelines may empower:
(a) a person or body:
(i) to decide whether to approve a particular tool for use when assessing whether a student is academically suited to undertake a *VET course of study; and
(ii) to charge a fee for making such a decision; and
(b) a person or body to charge a fee for the use of a tool for such an assessment.
A fee so charged must not be such as to amount to taxation.
(5) Schedule 1, page 6 (after line 2), after item 7, insert:
7A Subclause 26(1) of Schedule 1A
Repeal the subclause, substitute:
(1) The Minister may require a *VET provider to be audited:
(a) about compliance with any or all of the following requirements:
(i) the *VET financial viability requirements;
(ii) the *VET fairness requirements;
(iii) the *VET compliance requirements;
(iv) the *VET fee requirements;
(v) other requirements for VET quality and accountability set out in the *VET Guidelines; or
(b) about any or all of the following matters relating to *VET courses of study provided by the VET provider:
(i) the approaches used to recruit or enrol students (or potential students) of those courses who receive (or who could receive) *VET FEE-HELP assistance for *VET units of study forming part of those courses;
(ii) the veracity of enrolments in those courses of students who receive VET FEE-HELP assistance for VET units of study forming part of those courses;
(iii) the level of teaching resources, or the quality of those resources, for any of those courses;
(iv) the level of engagement in any of those courses of students who receive VET FEE-HELP assistance for VET units of study forming part of those courses;
(v) the completion rates for any of those courses of students who receive VET FEE-HELP assistance for VET units of study forming part of those courses.
(6) Schedule 1, page 6 (after line 4), after item 8, insert:
8A Before subclause 36(1) of Schedule 1A
Suspension pending revocation
8B At the end of clause 36 of Schedule 1A
Suspension for poor performance
(5) The *Secretary may, in writing, suspend a body's approval as a *VET provider if:
(a) an audit of the body has been conducted about any or all of the matters in paragraph 26(1)(b); and
(b) the audit identified one or more concerns; and
(c) those concerns have yet to be resolved as described in paragraph (6)(b).
(6) The suspension:
(a) starts on the day of the decision under subclause (5); and
(b) ends on the day (if any) that the *Secretary notifies the body, in writing, that the Secretary reasonably believes that those concerns have been satisfactorily resolved by the body in accordance with a plan agreed between the body and the Commonwealth.
(7) Before making a decision under subclause (5), the *Secretary must give the body a notice in writing:
(a) stating that the Secretary is considering making the decision; and
(b) stating the reasons why the Secretary is considering making the decision; and
(c) inviting the body to respond to the Secretary, in writing, within 14 days; and
(d) informing the body that, if no response is received within the 14 day period, the Secretary may proceed to make the decision.
(8) In deciding whether to make the decision under subclause (5), the *Secretary must consider any response received from the body within the 14 day period.
(9) The *Secretary must give written notice of a decision under subclause (5) to the body. The notice must be given within 14 days after the day the decision was made.
8C Before subclause 37(1) of Schedule 1A
Suspension pending revocation
8D Subclause 37(1) of Schedule 1A
Omit "clause 36 is of no effect for the purposes of", substitute "subclause 36(1) is of no effect for purposes of or relating to".
8E At the end of clause 37 of Schedule 1A
Suspension for poor performance—no impact on existing students
(6) A suspension of a body's approval as a *VET provider under subclause 36(5) is of no effect for purposes of or relating to assistance payable to the body's students under Part 2 to the extent that the assistance relates to students of the body who have not completed the *VET courses of study in which they were enrolled with the body before the day the suspension starts (see paragraph 36(6)(a)).
Note: One consequence of this subclause is that clauses 45E and 46B (which apply if the body's VET FEE-HELP account is in deficit at the end of a calendar year) will continue to apply to the body during the suspension.
(7) Schedule 1, page 6 (before line 5), before item 9, insert:
8F Subclause 39(1) of Schedule 1A
Omit "may revoke", substitute "must revoke".
8G After subclause 39(2) of Schedule 1A
(2A) The revocation is subject to the condition that, after the revocation:
(a) clauses 45E and 46B continue to apply to the body as if the body were still approved as a *VET provider; and
(b) other provisions of this Act, or the *VET Guidelines, that:
(i) relate (directly or indirectly) to entitlements to *VET FEE-HELP assistance arising before the revocation; and
(ii) are specified in the notice of revocation under subclause (3) of this clause;
continue to apply to the body as if the body were still approved as a VET provider.
(8) Schedule 1, page 6 (after line 12), after item 10, insert:
10A After paragraph 43(1)(f) of Schedule 1A
(fa) in a case where the student is not already entitled to VET FEE-HELP assistance for another VET unit of study forming part of the course—the body with whom the student is enrolled is approved as a *VET provider:
(i) for the day of the enrolment; or
(ii) if that day falls within a period when the body's approval as a VET provider is suspended under subclause 36(5)—for a later day because that suspension has ended; and
(9) Schedule 1, page 6 (before line 13), before item 11, insert:
10B Before paragraph 43(1)(g) of Schedule 1A
(fb) if the VET provider was approved as a VET provider after 2015, the course is:
(i) one of the *qualifying VET courses that enabled paragraph 6(1)(ca) or (1A)(da) to be satisfied for the purposes of that approval; or
(ii) a qualifying VET course that superseded such a course directly or indirectly without interruption; and
(10) Schedule 1, page 6 (after line 16), after item 11, insert:
11A Subclause 43(1) of Schedule 1A (note)
Repeal the note, substitute:
Note 1: For the purposes of paragraph (e), clause 45A affects whether a person undertakes a VET unit of study as part of a VET course of study.
Note 2: For the purposes of paragraph (fa), a body's approval as a VET provider ceases while the approval is suspended (see clause 29). If this approval is suspended when the student first enrols in units forming part of the course, the student can only become entitled to VET FEE-HELP assistance when that suspension ends.
(11) Schedule 1, item 12, page 7 (after line 8), after paragraph 45C(1)(b), insert:
(ba) if the student enrols in the course after the day the Higher Education Support Amendment (VET FEE-HELP Reform) Act 2015 receives the Royal Assent—the student being entitled to the VET FEE-HELP assistance for the unit:
(i) would not cause the VET provider's *VET FEE-HELP account to be in deficit at the end of that census date (see subclause 45D(7)); and
(ii) would not cause or contribute to that account being in deficit at the end of 2016 or a later calendar year; and
(12) Schedule 1, item 12, page 7 (lines 11 to 24), omit subclause 45C(2), substitute:
If VET provider incorrectly treats student as being entitled
(2) However, for the purposes of this Act (other than clause 39DH), if:
(a) either or both of the following things happen:
(i) the student fails to comply with paragraph (1)(a) of this clause by not giving the request at least 2 business days after the enrolment referred to in that paragraph;
(ii) paragraph (1)(ba) of this clause is not complied with; and
(b) the *VET provider treats the student as being entitled to *VET FEE-HELP assistance for the unit;
those paragraphs of this clause are taken to have been complied with.
Note 1: The VET provider should not treat the student as being entitled to VET FEE-HELP assistance:
(a) if the student requests the assistance during the 2 business day cooling-off period after the enrolment; or
(b) if being entitled would cause or contribute to the provider's VET FEE-HELP account being in deficit.
Note 2: However, if the provider does treat the student as being entitled, the provider will contravene subclause 39DH(1) (a civil penalty provision), and the student may still be able to receive the assistance.
(13) Schedule 1, item 12, page 7 (after line 24), after clause 45C, insert:
45D Notional VET FEE -HELP accounts
(1) There is a notional VET FEE-HELP account for each *VET provider.
Note 1: The VET provider will need to monitor the balance of its account, as it will have to repay an amount to the Commonwealth if the account is in deficit at the end of 2016 or a later year.
Note 2: This account applies in relation to all students entitled to VET FEE-HELP assistance for VET units of study with census dates on or after 1 January 2016 (whether or not the student received VET FEE-HELP assistance for earlier units before that day). See subclause (7).
Credits to the VET provider ' s VET FEE -HELP account
(2) A credit arises in the *VET provider's *VET FEE-HELP account as follows:
(a) if the VET provider is already a VET provider on 1 January 2015, a credit arises on the first day of each later calendar year that is equal to the amount worked out under subclause (3);
(b) if the VET provider becomes a VET provider during 2015, a credit arises on the first day of each later calendar year that is equal to the amount worked out under subclause (4);
(c) if the VET provider becomes a VET provider on a day after 2015, a credit arises on that day that is equal to the amount worked out under subclause (5);
(d) if the VET provider pays on a particular day any part of any amount that becomes due under subclause 45E(2), a credit arises on that day that is equal to the amount of that payment;
(e) if another body ceases to be a VET provider, a credit may arise in accordance with a determination under subclause (6).
A credit that arises as described in paragraph (e) arises at the time of the cessation, and is equal to the amount worked out under that determination.
(3) For the purposes of paragraph (2)(a), the amount to be credited is the amount equal to:
VET provider ' s adjusted 2015 total loan amount means the sum of the amounts of *VET FEE-HELP assistance paid for students undertaking, with the *VET provider, *VET units of study that had *census dates during the period starting on 1 January 2015 and ending on 31 August 2015.
(4) For the purposes of paragraph (2)(b), the amount to be credited is the amount equal to the sum of:
(a) the *VET provider's fee revenue for the period:
(i) starting on 1 January 2015; and
(ii) ending on the day before the VET provider was approved as a VET provider;
for *domestic students undertaking *qualifying VET courses in that period; and
(b) the sum of the amounts of *VET FEE-HELP assistance paid for students undertaking, with the VET provider, *VET units of study that had *census dates during 2015.
(5) For the purposes of paragraph (2)(c), the amount to be credited is the amount equal to the *VET provider's fee revenue for the 2015 calendar year for *domestic students undertaking in that year the *qualifying VET courses that enabled paragraph 6(1)(ca) or (1A)(da) to be satisfied for the purposes of the VET provider's approval as a VET provider.
(6) The Minister may, by legislative instrument, determine:
(a) whether credits arise in the *VET FEE-HELP accounts of specified *VET providers when another body ceases to be a VET provider; and
(b) the amounts of such credits.
Debits to the VET FEE -HELP account
(7) A debit arises in the *VET provider's *VET FEE-HELP account if a student is entitled to *VET FEE-HELP assistance for a *VET unit of study:
(a) that is to be undertaken with the VET provider; and
(b) that has a *census date on or after 1 January 2016.
The debit arises at the end of that census date, and is equal to the amount of that assistance.
45E Effect of VET FEE -HELP account being in deficit at the end of a calendar year
(a) a *VET provider's *VET FEE-HELP account is in deficit at the end of a calendar year; and
(b) the *Secretary gives the VET provider a written notice about the deficit;
the VET provider must pay to the Commonwealth an amount equal to the amount of the deficit (the excess loan amount).
(2) The excess loan amount is due on the seventh day (the due day) after the day the notice is given.
Late payments of the excess loan amount attract the general interest charge
(3) If some or all of the excess loan amount remains unpaid after the due day, the *VET provider must pay to the Commonwealth an amount (the general interest charge) relating to the unpaid amount for each day in the period that:
(a) starts at the beginning of the day after the due day; and
(b) ends at the end of the last day on which, at the end of the day, any of the following remains unpaid:
(i) the excess loan amount;
(ii) general interest charge on any of the excess loan amount.
(4) The general interest charge for a particular day is worked out by multiplying the *general interest charge rate for that day by the sum of so much of the following amounts as remains unpaid:
(a) the general interest charge from previous days;
(b) the excess loan amount.
(5) The general interest charge for a day is due and payable to the Commonwealth at the end of that day.
(6) The *Secretary may give written notice to the *VET provider of the amount of the general interest charge for a particular day or days. A notice given under this subclause is prima facie evidence of the matters stated in the notice.
(7) The *Secretary may remit all or a part of the general interest charge payable by the *VET provider if the Secretary is satisfied:
(i) the circumstances that contributed to the delay in payment were not due to, or caused directly or indirectly by, an act or omission of the VET provider; and
(ii) the VET provider has taken reasonable action to mitigate, or mitigate the effects of, those circumstances; or
(b) that it is otherwise appropriate to do so.
(8) An amount payable under this clause may be recovered by the Commonwealth from the *VET provider as a debt due to the Commonwealth.
(14) Schedule 1, page 9 (before line 28), before item 15, insert:
14A Before clause 47 of Schedule 1A
46B Re -crediting a person ' s FEE -HELP balance—VET FEE -HELP account in deficit at the end of a calendar year
(1) A *VET provider must, on the *Secretary's behalf, re-credit a student's *FEE-HELP balance with an amount if:
(a) the student receives *VET FEE-HELP assistance in a calendar year for a *VET unit of study undertaken with the VET provider; and
(b) under subclause 45E(1), the Secretary notifies the VET provider that the VET provider's *VET FEE-HELP account was in deficit at the end of the calendar year; and
(c) the VET provider reasonably believes that some or all of that assistance caused or contributed to the deficit.
(2) The amount to be re-credited is equal to so much of that assistance as the *VET provider reasonably believes caused or contributed to the deficit.
Note: A corresponding amount of the student's VET FEE-HELP debt relating to the unit will be remitted (see section 137-18).
(3) The *Secretary may re-credit the student's *FEE-HELP balance under this subclause if:
(a) the *VET provider is unable to do so under subclauses (1) and (2); and
(b) the Secretary knows how much of that assistance that the VET provider reasonably believes caused or contributed to the deficit.
If not all of the deficit can be re -credited under subclauses (1) and (3)
(4) If the deficit exceeds the total amount able to be re-credited under subclauses (1) and (3) for all of the *VET provider's students who received *VET FEE-HELP assistance in the calendar year for *VET units of study undertaken with the VET provider, the *Secretary may re-credit the *FEE-HELP balance of each of those students with the amount equal to:
That excess × Student's percentage of the total assistance
student ' s percentage of the total assistance means the percentage equal to the percentage that the student's *VET FEE-HELP assistance referred to in paragraph (1)(a) is of the total VET FEE-HELP assistance received by students of the *VET provider in the calendar year for *VET units of study undertaken with the VET provider.
14B At the end of Subdivision 7 -B of Schedule 1A
51A Implications for the student ' s liability to the VET provider for the VET tuition fee
If a student's *FEE-HELP balance is re-credited in accordance with this Subdivision with an amount for a *VET unit of study, the student is discharged from all liability to pay or account for so much of the student's *VET tuition fee for the unit as is equal to that amount.
(15) Schedule 1, page 9 (after line 30), after item 15, insert:
15A Clause 60 of Schedule 1A
Repeal the clause, substitute:
60 Time and manner of payments
(1) Amounts payable by the Commonwealth to a *VET provider under this Schedule are to be paid in accordance with an applicable determination under subclause (2) or (3).
(2) The Minister may, by legislative instrument, determine the way (including payment in instalments or in arrears), and the times when, amounts payable by the Commonwealth under this Schedule are to be paid to specified kinds of *VET providers.
(3) The Minister may, in writing, determine the way (including payment in instalments or in arrears), and the times when, amounts payable by the Commonwealth under this Schedule are to be paid to a particular *VET provider.
(4) A determination under subclause (3) is not a legislative instrument.
(16) Schedule 1, page 10 (after line 25), after item 20, insert:
20A Clause 91 of Schedule 1A (after table item 1B)
(17) Schedule 1, page 11 (before line 1), before item 22, insert:
21A Before clause 98 of Schedule 1A
97A Compensation for acquisition of property
(1) If the operation of this Schedule would result in an acquisition of property from a person otherwise than on just terms, the Commonwealth is liable to pay a reasonable amount of compensation to the person.
(2) If the Commonwealth and the person do not agree on the amount of the compensation, the person may institute proceedings in a court of competent jurisdiction for the recovery from the Commonwealth of such reasonable amount of compensation as the court determines.
(3) In this clause:
acquisition of property has the same meaning as in paragraph 51(xxxi) of the Constitution.
just terms has the same meaning as in paragraph 51(xxxi) of the Constitution.
(18) Schedule 1, item 22, page 11 (before line 3), before the definition of responsible parent, insert:
general interest charge rate has the same meaning as in section 8AAD of the Taxation Administration Act 1953.
qualifying VET course means a structured and integrated program of vocational education or vocational training, usually consisting of a number of modules (units of study) or shorter programs, and leading to the award of a *VET diploma, *VET advanced diploma, *VET graduate diploma or *VET graduate certificate.
(19) Schedule 1, item 22, page 11 (after line 9), after the definition of student entry procedure, insert:
VET FEE -HELP account has the meaning given by clause 45D of Schedule 1A.
(20) Schedule 1, item 24, page 11 (lines 13 to 16), omit subitem (1), substitute:
(1) The amendments of clause 6 of Schedule 1A to the Higher Education Support Act 2003 made by this Schedule apply in relation to decisions whether to approve bodies as VET providers made on or after 1 January 2016.
(21) Schedule 1, item 24, page 11 (after line 23), after subitem (3), insert:
(3A) Paragraph 26(1)(b) of Schedule 1A to the Higher Education Support Act 2003 (as inserted by this Schedule) applies to matters happening before, on or after 1 January 2016, to the extent that those matters are relevant to VET courses of study provided wholly or partly on or after 1 January 2016.
Example: When auditing a VET provider about a 2016 VET course of study, the audit could look at:
(a) any approaches used in 2015 for recruiting students to the 2016 course; or
(b) teaching resources, student engagement or completion rates for the corresponding course provided in 2015.
(3B) The amendments made by this Schedule of clause 39 of Schedule 1A to the Higher Education Support Act 2003 apply in relation to requests for revocation made on or after 1 January 2016.
(22) Schedule 1, item 24, page 12 (after line 2), after subitem (6), insert:
(6A) Subclause 45E(1) of Schedule 1A to the Higher Education Support Act 2003 (as inserted by this Schedule) applies in relation to the 2016 calendar year and later calendar years.
(23) Schedule 1, item 24, page 12 (after line 5), at the end of the item, add:
(8) Clause 51A of Schedule 1A to the Higher Education Support Act 2003 (as inserted by this Schedule) applies in relation to the re-crediting of FEE-HELP balances on or after 1 July 2016.
(9) Clause 60 of Schedule 1A to the Higher Education Support Act 2003 (as inserted by this Schedule) applies in relation to amounts payable on or after 1 January 2016.
(24) Schedule 1, Part 1, page 12 (after line 5), at the end of the Part, add:
24A Transitional—pending applications
For the purposes of subclause 11(3) of Schedule 1A to the Higher Education Support Act 2003, any period referred to in that subclause that was underway on 2 December 2015 is taken to have paused at the end of that day until the end of 21 January 2016.
(25) Schedule 1, item 26, page 23 (lines 22 and 23), omit "an APS employee in the Department", substitute "a person".
Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015
Statement of reasons: why certain amendments should be moved as requests
Section 53 of the Constitution is as follows:
Powers of the Houses in respect of legislation
53. Proposed laws appropriating revenue or moneys, or imposing taxation, shall not originate in the Senate. But a proposed law shall not be taken to appropriate revenue or moneys, or to impose taxation, by reason only of its containing provisions for the imposition or appropriation of fines or other pecuniary penalties, or for the demand or payment or appropriation of fees for licences, or fees for services under the proposed law.
The Senate may not amend proposed laws imposing taxation, or proposed laws appropriating revenue or moneys for the ordinary annual services of the Government.
The Senate may not amend any proposed law so as to increase any proposed charge or burden on the people.
The Senate may at any stage return to the House of Representatives any proposed law which the Senate may not amend, requesting, by message, the omission or amendment of any items or provisions therein. And the House of Representatives may, if it thinks fit, make any of such omissions or amendments, with or without modifications.
Except as provided in this section, the Senate shall have equal power with the House of Representatives in respect of all proposed laws.
The effect of this amendment is to provide for the re-setting of the cap on the total amount of VET FEE-HELP assistance payable for a student. It is covered by section 53 because it will allow further payments of assistance to be made for the student from the Consolidated Revenue Fund under the standing appropriation in section 238-12 of the Higher Education Support Act 2003, and so will increase a "proposed charge or burden on the people".
Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015
Statement by the Clerk of the Senate pursuantto the order of the Senate of 26 June 2000
The effect of this amendment is to allow a student's VET FEE-HELP assistance to be re-credited in certain circumstances. Although the assistance is capped, the re-crediting is a further payment of assistance available to students. If such a further payment of assistance is made, the increased expenditure would be met directly from the standing appropriation in section 238-12 of the Higher Education Support Act 2003.
The Senate has long followed the practice that amendments which "clearly, necessarily and directly" affects an appropriation is regarded as an increase in a charge or burden on the people within the meaning of section 53 of the Constitution (Odgers' Australian Senate Practice, 13th edition, p. 394). On the basis that this amendment would result in increased expenditure under the standing appropriation in the Act, it is in accordance with the precedents of the Senate that this amendment be moved as a request.
In my summing-up speech last night in relation to this VET FEE-HELP reform bill, I outlined the range of government amendments that have been proposed. These are significant additions to the arrangements that the government has proposed for this legislation. They are important additional arrangements that are being put in place. Firstly, it is important for the chamber to appreciate that these amendments will put a very clear cap on the rate of growth in the VET FEE-HELP loan scheme. We have all acknowledged that there have been problems in relation to the way this scheme has been administered, and I thank all parties in the Senate for their support of the second reading and their indication of support overall for the government's measures.
What we are proposing to do through these amendments is, firstly, to stop any further growth in the VET FEE-HELP loan scheme by capping the loan amounts available to VET FEE-HELP providers in 2016 at 2015 levels. This will ensure that providers cannot continue to expand at the rate at which they have been, and they will, therefore, need to focus their activities on existing students. Importantly, within that, priority will be given to existing students in terms of the loan cap that will be applied to individual providers, making sure, therefore, that those who are already enrolled, should they still need to draw down further on their loans to conclude their studies, will have priority to be able to do so.
The next measure that the government is introducing is some further restrictions on approvals for new VET FEE-HELP providers to come into the system. In this space, we are seeking to make sure that only those who have a very strong and proven track record are able to still enter. There is a significant backlog of applications for new VET FEE-HELP providers. This measure will ensure that anybody who is a fly-by-nighter, or anyone who is a new entrant into this space, will not be able to listed as a new VET FEE-HELP provider. Instead, through this amendment, only those who have a strong trading history of at least five years in offering VET courses as a registered training organisation will be able to be registered as a VET FEE-HELP provider. They will only be able to offer the course through VET FEE-HELP that they have a history of providing and, consistent with the freeze on the total loan amounts, they will only be able to offer loans up to the value of their existing fee-for-service operations. So this is a very narrow process for any new providers to come into the system, but it does reflect, importantly, that there are some very high-quality providers who did not rush to become VET FEE-HELP providers but who have suffered damage on multiple fronts as a result of the problems with this system. They have suffered damage—as has everybody in the VET sector—to reputation, but of course they have also suffered a threat to their market share, because they are still only offering fee-for-service operations, whereas others are able to offer the very generous VET FEE-HELP loan. So this will provide a narrow window through which only those with a very strong and credible history would be able to come in the system now, and even then only to the extent to which they have operated previously in the fee-for-service market.
The further amendments that are proposed are to provide capacity for the minister to pause payments for poor performance. This is a very important reform; perhaps one of the most important now in the overall legislative package—because, by pausing payments for poor performance, the government will be empowering the minister to be able to step in where there are relevant concerns about the way in which an entity is operating, and to stop them from being able to enrol new students under the VET FEE-HELP scheme. The only new students they would be able to enrol while such a pause were in place are students who actually pay for their services themselves. So the only opportunity for new student enrolments while a pause on payments for any new enrolments occurred would be fee-for-service students. This is a very significant power for the minister to have, and it will enable the minister to be able to step in in areas where there are concerns about completion rates for some providers, or about other dubious activities that may be occurring.
I should stress in relation to this measure—and indeed in relation to the final measure that I will highlight, which is the measure that provides for a payment-in-arrears system—that it is not the government's intention that these measures would apply to well-performing providers. We do not envisage they would apply to public providers such as TAFEs, nor to others who have taken a more cautious approach in this sector. But that does lead me into that final significant measure in the government's reforms, which is to also give ministerial discretion to shift some providers—it would be intended that these be the major, high-volume providers—to a payment-in-arrears structure. This will enable the department and the government greater opportunity to scrutinise the activities that these providers are undertaking prior to payments being made, and will of course put an additional impost into their business operations, to make sure that they are managing their cash flow and their operations in an appropriate and responsible way.
It is the government's view that these measures complement the existing legislation and build upon it; and that they are obviously additional, by their very nature—which is something we have flagged an openness to at all stages of the VET FEE-HELP debate to date. We have always been very open, and we were very open right through the drafting of this legislation, that if additional measures were warranted the government would pursue and implement those additional measures. That is exactly what we are doing through these measures.
Importantly, the freeze on total loan payments to providers is of course a temporary measure, in the sense that we have committed to a wholesale revamp of the VET FEE-HELP scheme next year to try to ensure that we have a scheme that works in terms of providing quality training with good value-for-money outcomes for those participants. It is not expected that such a freeze would apply year on year, because obviously that is an administratively difficult thing for the organisations in the VET FEE-HELP space, but it is an important signal that we are going to stop the growth and stop the expansion of the loan scheme while we undertake this rewrite during next year. I commend the amendments to the Senate.
The CHAIRMAN: Is it the wish of the committee that the statements of reasons accompanying the request be incorporated in Hansard immediately after the request to which they relate? It so ordered.
I table a supplementary explanatory memorandum relating to the government amendments to be moved to this bill.
I indicate to the minister, for the Hansard record, my profound disappointment that the government has sought to present these amendments in this way. This is a matter that has been the subject of two Senate inquiries. The measures in this bill were the subject of a report tabled on Monday which contained the immortal recommendations from government senators that things were just fine and, on the next day, the government took those amendments to its party room and publicly released them, just as I was about to speak on the second reading debate. You will say, 'So what?' It is a hell of a way to consider such fundamental and far-reaching proposals and it should have been done much earlier. I understand they were with the Parliamentary Draftsman at least on Friday last week, so one presumes they were with the government prior to that. The normal process is that these matters would go to cabinet. Instructions would have to have been prepared prior to that, and you would have thought it would be at least a courtesy to engage the opposition in the government's proposals. It may well have been the case that you would get a better result.
As I read it, there has been no consultation outside of the department on these proposals. There has been no consideration of the impact of these proposals within the sector itself. Well may it be that the government is now acknowledging the central truth of the opposition's claims on this matter, that we have to turn off the tap. I welcome the government's acknowledgement of that matter. I am concerned about the nature of these amendments and the extent to which they will indeed fix the problem. My concern also is that the implementation of these measures will be a continuation of the shambolic and chaotic approach that we have seen to date. I will have more to say on this theme, but I ask the minister whether he can enlighten me and the chamber: what is it that the department will need to do between now—that is, 2 December—and the implementation of this matter on 1 January? What will the department actually need to undertake to implement these emergency measures?
I will not repeat my closing remarks of last night except to note that the government has, through the course of this year, acknowledged the importance of turning off the tap in relation to the way this scheme has worked. I also commented last night that in many ways those opposite are like an arsonist who has lit a fire and now complains that the fire brigade is taking too long to get here. We have long acknowledged the problems in this scheme. We have been working to try to resolve and rectify them. We have conceded now that to rectify them is going to require a wholesale rewriting of Labor's scheme, and we are committing to do so.
In relation to the measures that apply to the pausing of payments for new enrolments or to moving to payment in arrears for certain providers, those measures are powers that are to be provided to the minister and would be exercised on a case-by-case basis. In those instances there is not necessarily a specific time line for departmental implementation but advice will be received on a case-by-case basis.
In relation to the new entry requirements for an RTO wishing to become a VET FEE-HELP provider, if anything this will ease the administrative workload of the department. As they have indicated, there are hundreds of outstanding VET FEE-HELP applications. The passage of those amendments will allow the department to discard a number of those applications who do not meet the very clear terms that are set out in the amendments.
In relation to freezing the total loan limit for existing VET FEE-HELP training providers, that is a relatively simple measure. That amendment essentially takes payments over the first eight months of this year and averages them into a 12-month cap. The department already has data across that eight month time horizon for the 260-odd VET FEE-HELP providers who are registered, so it will be able to fairly neatly average out that eight months into a 12-month cap on what they would be eligible to claim as payments in 2016.
The payments that are made to providers at the moment are, of course, based on claims that are actually made by the providers—I trust that that is the case. Is it not the case that claims for payments may still be made—and, in fact, are still being made—after 1 January and that you are averaging arrangement will not necessarily take that into account?
If I understand your question correctly, yes, providers are still receiving payments now as they do during the course of this year. What our legislation is saying is that, in relation to calculating a 12-month cap on payments, we are taking the first eight months of payments for 2015 and extrapolating that into a 12-month payment. Essentially, we will average those eight months into the average monthly payment across those eight months and multiply that by 12 to establish a 12-month cap. I have an important clarification there: it is not necessarily the actual payment transaction within those eight months; it is the data in applications lodged by providers in that eight-month period. In a sense, that is a time sequencing matter, probably, as much as anything, in that payments lag applications, so payments that would have been made in January may well apply to applications made in December or November or the like. So—whichever—in a sense, it is simply just applying what seems to be the administratively simplest means by which the department can quickly establish a 12-month per-provider cap for 2016, essentially using 2015 data, albeit using the first eight months of 2015 data.
I think I understand what you are trying to do here, Minister. Is it the case that the current arrangement depends on estimates of enrolments, not actual enrolments? And will that still apply?
Payments made in advance, as they are at present, are made on estimates—that is correct, Senator Carr. The data method proposed in terms of setting this cap is data informed by actual enrolments. So there is a distinction between those two. Of course the other amendments that seek to make payments in arrears mean that those payments would shift to an actuals versus an estimates basis.
What is the appeal mechanism here, given that there is quite a lot of money involved and it is likely that people will dispute the department's assertions? What is the appeal mechanism?
What do you think the implications of that are going to be, given that there are 260 providers there? Perhaps you could refresh my memory in the answer to that question: what is the total amount at stake here? What is the total freeze which you are establishing?
Just for clarity, Senator Carr: it is around 264 providers, I believe, and the total freeze is expected to be a value of around $3 billion when the sums are finally calculated. As we have all discussed during the debate, the very rapid growth that occurred after the changes that opened the scheme up occurred in 2012, which is exactly why we are seeking to stymie that growth. It is a relatively straight formula that is being applied here, so the expectation is that—whilst anybody is, of course, free to seek to bring forward court proceedings—the grounds on which somebody may wish to pursue those proceedings would have some limitations, given the very clear and prescriptive formula that we are seeking for the parliament to apply.
In the considerations of the preparation of this formula, has there been any assessment as to whether or not it would be possible for providers who are intent on rorting the scheme—and remember: of those 260 providers, we do know there are rorters that will be locked into this system; this is freezing the rorters into the system itself—and would it not be more efficient for such providers intent on rorting the system to actually enrol more students at higher prices within their cap?
Providers seeking to rort the system will, if you look at the collective amendments that are proposed, run the risk of finding that their provision and ability to enrol more students could be withdrawn at any time, based on ministerial discretion, as a result of the pause in payment provisions being applied. Providers may wish to contemplate how to rort the system further, if they are of that nature, but there are serious consequences for them.
The greatest problem we have had in this scheme is not, necessarily, that legitimate students have been signed up at too high a price in relation to their cost—and it is legitimate students who a provider incurs a cost to teach, because those students are engaged in the teaching and learning process. The primary problem we have faced is that students with little or no intention, and little or no likelihood of ever engaging in the teaching, learning and training process, have been signed up.
That is the practice, overall, that the government's changes through the course of this year have sought to stamp out. I make that point because if those students are not seeking to undertake training or otherwise they come out at relatively low per-person cost to the training provider. The need or incentive to try to sign up fewer people at greater price, for profit motivation—if that is the argument you are making—is not really where the prime problem has tended to be. The prime problem has been a willingness to sign up people with no intention or likelihood of undertaking the study, regardless of the price, knowing the cost of teaching those people is negligible because they are never going to turn up to anything.
I do appreciate that point very much. The problem is, then, catching them out because of the audit processes being structured in such a way. That has been a profound difficulty, because of the available resourcing. I acknowledge that the government has increased resourcing for this particular regulator, but there is this huge problem of identifying colleges that have a quality provision. It is not, usually, until you establish that only one in 10 students is actually completing—that is a post-factor analysis, that you discover there has been this type of rorting going on. The qualified teachers, the quality of the programs and the contact hours are all measures that have been the subject of substantial public criticism. This is particularly difficult to identify when we are dealing with online courses.
There are no provisions in these amendments to deal with this and no way of really checking to see the quality of the teaching undertaken until such time as you look at the completions. Under this range, we are locking in this very poor performance of completions for the next year. Where would I find, in this series of amendments, reference to the fact that this is a temporary measure? Where would I find that reference, the sunset clause in these amendments, that says these are temporary measures to allow the government time to, essentially, revamp the whole scheme? Where do I find that in these amendments?
I will directly answer your question, Senator Carr, and then I want to touch on some of the preceding remarks. You will not find a sunset clause in the amendments. The government has made a public commitment and a commitment in the chamber that it is our intention to revamp the scheme next year. I imagine that providers of all shapes and sizes would expect to be holding the government to account in that regard to make sure that new arrangements are put in place, otherwise the 2015 cap will carry forward indefinitely. That is not something that the providers, the states or others would want to have. In some ways I think a sunset clause would be counterproductive. By having a sunset clause for that one provision we would, in a sense, remove the gun to the head that would make us get on with making sure that, overall, the scheme is rewritten and new arrangements are put in place. So I would caution the Senate against the concept of a sunset clause there and I urge the Senate to join, no doubt with others, in holding the government to account to make sure that a new scheme that rewrites all of these rules in a much more effective manner is operational from 2017.
Senator Carr, I want to pick up on your comments about completion rates and whether or not there is effective regulation of teaching practices, completion rates and other factors. I acknowledge that you have acknowledged the extra resources that have been provided to both ASQA and the Department of Education and Training to enhance audit activity and compliance. I also draw the Senate's attention to some of the provisions that would, potentially, lead to the pausing of payments for poor performance to providers. These are quite broad provisions and they touch on some of these significant quality issues. I draw the Senate's attention to amendment (5), which inserts item 7A. In particular, I draw attention to the proposed changes to subclause 26(1)(b) of schedule 1A of the act:
(i) the approaches used to recruit or enrol students …
(ii) the veracity of enrolments …
(iii) the level of teaching resources, or the quality of those resources, for any of those courses—
which I think is a particularly important component for consideration, in relation to how some of the online enrolments may occur—
again, a very important provision that means swift action could be undertaken were enrolments to be proceeding but students not turning up or participating, in any way, in those courses—
(v) the completion rates for any of those courses …
The government does have profound concerns about some providers and the very poor completion rates that are in place. We equally have concerns about the level of engagement in a number of courses and we have spent much time talking about recruitment and enrolment practices of providers during this year. We want to make sure that the provisions are there that enable us to take swift action in response to those concerns. In terms of the power of the different amendments we are proposing, this one is most notable. Providers should expect that the government would be looking to use these provisions, if they are passed, in a relatively swift time line, and if you are out there with poor levels of engagement of students in your courses or poor completion rates it is highly probable that we are looking at you.
These are matters that provide powers for the department, in regard to all VET providers. Is that the case? That is how I read it. That is the first question. Secondly, what is the appeal mechanism here, given the far-reaching nature of these powers? I am indicating to you that I support the Commonwealth having those powers, but what is the appeal mechanism for those parties that feel aggrieved by an unjust determination by a departmental official?
Senator Carr, these are provisions that apply only to VET FEE-HELP providers, as distinct from all VET providers, so in that regard we are talking about the 264 or thereabouts VET FEE-HELP providers as distinct from the some 4,700 or thereabouts registered training organisations. These provisions—the pausing of payments provisions, which are subject to a ministerial discretion or determination—are also subject to AAT appeals mechanisms as well. So—as distinct from the earlier provisions, which are a clear rule that applies consistently across all VET FEE-HELP providers in terms of a calculation of an annualised cap on their loan limit—because these are individual, subjective decisions that are undertaken in accordance with an assessment and against the terms of the amendments, there are appropriate appeals mechanisms through the AAT provided for.
I want to take this opportunity to put the Greens' position on these amendments on record, and we certainly welcome the government coming to the table and putting forward some amendments that will improve the protections for students within this space. We welcome that. Like Senator Carr from the Labor Party, we do have some frustrations around the process. It would have been useful to have had more of an opportunity to consider these amendments. Given the significance of these to the sector and given the community interest in this issue, it would have been very beneficial for us to have the opportunity to consult with the community around that and to have more of an opportunity to consider what the government has put forward.
Nonetheless, we do welcome the fact that the government has finally recognised that there is a need to act on this issue. Of course, we know this is a system that the Labor Party put in place. They set the ball in motion for what has been a complete calamity, but the government have sat on their hands for the last two years and have really failed to take action. So we do welcome the fact today that finally it appears that we might be about to introduce more rigour into this sector and ensure that there are better protections for students.
From the Greens' perspective—and we have made this point throughout—we do not support public funding going to for-profit providers. That has always been our view. So, whether it is the Labor amendments, the Liberal amendments or the whole bill, we do not believe that, fundamentally, this is going to be adequate in terms of addressing the needs of students in this space, because when you have for-profit providers that are focused simply on making money—that is their business model—you are setting up a recipe for disaster in terms of preying on vulnerable students, and we are very concerned about that. We would like to see public money being redirected to our TAFE system. It is a quality education provider in this country. It is accountable to the taxpayer, and we know that it is able to deliver quality outcomes. But, unfortunately, we recognise that that is not the space we operate in, because of the position of the Labor and Liberal parties, so we do welcome the opportunity to strengthen the protections for students within the VET FEE-HELP model.
I also have a few questions for the minister. I have heard talk today—and certainly the minister has talked a little bit about this—about this idea of a new model for VET FEE-HELP that will come into effect in 2007, but I am still very unclear about what exactly will be the characteristics of this new model. What will it look like, and what consultation will the government conduct with the sector and the community in developing and shaping this new model that will take effect from 2017?
Senator Simms, what the government is proposing is that we will look at how we would reconceive of VET FEE-HELP as a means that provides for a higher quality of training outcomes, is more directly relevant to likely employment outcomes and has mechanisms in place to try to drive efficiency in the cost and pricing of delivery of those courses.
We are committed to consulting with the sector. I note that both TAFE Directors Australia and ACPET, representing private providers, welcomed the government's additional amendments that were introduced this week. We would work with them along with community colleges and all other providers. We would consult with the states and territories as we would with industry, employers and students to make sure that the system applied in future is one that people can have confidence in.
The principles behind an income-contingent loan scheme are sound principles of equity. That is why the Howard government proposed to apply the expansion of income-contingent loans to students in this vocational education sector, but it did so in a cautious way that required courses to have an articulation agreement with universities. The previous government, as has been well canvassed in this debate, removed that requirement and opened up some of the other measures of access to it, which has led to the very rapid rate of growth. That does not change the fact that income-contingent loans are good, equitable means of avoiding people having to pay up-front fees.
While noting the Greens' philosophical objection to private education, I would encourage Senator Simms, over the Christmas break, to have a look at the total VET activity reporting data released in the last few weeks. It is quite striking. If you have a look at the fee-for-service VET market—those providers outside of VET FEE-HELP and those providers operating outside of state government subsidy arrangements—some of the strongest completion rates and some of the strongest employment outcomes are derived by private providers and evidenced by the total VET activity reporting.
There is a challenge, Senator Simms, as to how we make sure we get those high-quality outcomes for training and employment—that those private providers have demonstrated they deliver—expanded in areas where the government wants to apply a subsidy but without the type of rorting we have seen to date. TAFE does an outstanding job, in many instances, but there have been widely acknowledged problems over the years that without some semblance of competitive pressure, without some degree of contestability, TAFEs may not be as driven to change their ways—to focus on delivering good value-for-money outcomes—as they should be. Equally, the sorry saga of the VET FEE-HELP episode demonstrates that without appropriate safeguards in place you will see profiteers, shonksters and fraudsters stepping into the mix and ripping off the taxpayer.
It is knowing all of those lessons the government embarks upon—saying we want to try to reconceive this scheme in 2017. We will consult with all the relevant stakeholders in doing so, and we will do so very well aware of the problems. In my changed capacity, over the last couple of months, in having responsibility for higher education, I have acknowledged, in talking at higher education fora, that I have been somewhat burnt by the VET FEE-HELP saga and the experiences I have seen here on how you might expand access and structure arrangements. They are lessons that, equally, I take in contemplating where higher-education reform might go. They are lessons that we, the government, have at the forefront of our minds when reconceiving the scheme in 2017. I welcome your contributions and inputs, just as I will Senator Carr's. I know Minister Hartsuyker will be happy to hear from all those who have ideas.
Senator Kim Carr interjecting—
Senator Carr, as I have said in this debate before, has been big enough to acknowledge the mistake that happened in 2012 and where things went wrong. He, at least, acknowledges some of the mistakes and lessons that need to be learnt as well. We may not agree on all the benefits of some of the competition that, perhaps, we should find ways to preserve in any new model but, if he has innovative ideas in that space, I am happy to hear them.
I thank the minister for his reply and for the suggestion of some Christmas reading. I look forward to undertaking that, particularly on nights when I have difficulty sleeping. I will certainly follow that up. In terms of the timetable around this exercise of envisaging a new scheme, which the minister has touched on, are there some actual time frames in place? I know the minister has talked about 2017, but what consultation time frame do you have in place or are working towards? Are there particular milestones in what we can expect in the lead-up to the announcement of this new model?
Senator, I would expect that, in the next couple of weeks, Minister Hartsuyker will meet and discuss with some of the first-tier stakeholders exactly how the approach will play out, if I can put it that way, in terms of those who represent the various VET providers and other key players. The first point of those consultations will, indeed, be to, perhaps, set down some of the benchmarks and time lines that you ask about, so that it is developed in a cooperative manner. We have, perhaps too much so in not having brought this legislation to the Senate earlier, sought to be very consultative in our approaches.
In March, when I announced the suite of eight reforms to the VET FEE-HELP scheme that we applied then, I established, working within the department, a VET FEE-HELP working group. That working group brought together TAFE directors, ACPET and the community colleges. It brought in representatives of industry and consumer affairs. I think we had the New South Wales consumer affairs commission represented. We had Gerard Brody from the Consumer Action Law Centre in Victoria, who I had not met at that point in time, but who I had noted, through media, as being one of the strongest critics of the way the scheme was operating, so I wanted to have his input around that table as well on the reforms that are contained in this legislation.
The government, I think, has shown a strong commitment to consultation and a consultation which does stretch beyond the immediacy of providers and tries to make sure it has representatives, importantly, of both student and employer interests around the table, because we should never lose sight of the fact that we are debating vocational education and training. The outcome and objective we seek is that students are trained and skilled for jobs.
I will follow through on the theme. The process has been haphazard and piecemeal, and of course it has followed the long tradition in this area—that is, there is usually a scandal brought about by public exposure of corruption in one form or another, and I regard what is happening here as corruption. Unfortunately, we have a continuation of that theme developing. I remind senators—and I acknowledge the minister's comment that John Howard started this process—that it is all very well to point to the previous government—
I will ask you a specific question, but I want to make a few comments. On the question of articulation, since you have raised it—and I acknowledge that you have raised it—is it your intention to revisit the question of the restoration of credit transfer arrangements? The reality is that, under that scheme, universities had a stake in quality assurance, because they did not want to be associated with crooks and shysters. All too often, I have had to point out in this chamber and at estimates that universities have let themselves down by being associated with such disreputable elements. They have subcontracted out their scripts and they have engaged brokers who behaved in a shocking way. One of their fundamental assets is their reputation for quality. I ask the minister specifically: are you prepared to consider the issue when you go to the issues of the design of the new scheme?
The view was taken at the time, in 2009—they have acknowledged that this is one of the unintended consequences—that the TAFE system was given too strong a position as a result of the credit transfer and there was reliance upon a quality assurance regime based on reputation and based on experience. The view at the time was generated from within the bureaucracy. The same bureaucracy that I have no doubt is advising you on these matters now advised the previous government that there needed to be an evening up by allowing the rapid expansion of the private sector, which of course has produced these, as said, unintended consequences.
I cannot possibly believe that an official would recommend or that a minister would agree to a proposition knowing that these types of events would occur—that has to be acknowledged—any more than I can blame John Howard for some of the abuses that occurred. The reality is that all of us in government have to take responsibility for what is on our plate at the time. It is a very short-sighted view to simply say, 'The previous government made some errors.' It is the nature of government, of course, that there is always a need to update, modernise and take into account learned experience. This area in particular has been a product of that. In the over 20 years that I have been engaged in these issues, that has been the pattern, irrespective of which government is in office.
The big difference here is that, in philosophical terms, in general, you could say that conservative governments have sought to deregulate because they want to see a higher level of private engagement in the provision of these services. The real irony is that this is a government that has pursued vigorously a deregulation agenda in education, and now it finds itself heavily regulating. That is what we have before us: a series of measures which have probably the most onerous regulatory powers that we have seen in the sector for a Commonwealth official with regard to a Commonwealth program. I take the view that, in fact, this could go much further and should go much further. I do not think these measures are adequate in terms of dealing with the problem.
I think, Minister, if I might offer this advice: you are about to discover just how inadequate these rearrangements will be. Even if you do think they are very robust at this time we will be back to actually have to enlarge these powers because there will be very smart folk out there who will find a very easy way to get around many of these provisions. And the same officers who have advised you, advised previous ministers responsible for vocational education.
I must say to you—I will make this observation—I never had the privilege of actually administering the vocational education system in my time in government; I had all the others. But I have had a deep interest—a profound interest—in this area and so I am familiar with the consequences. That is why I am concerned by your response on the question of the design of the new program that you are envisaging. It is my suspicion that there are very few real elements of the architecture prepared at this time. That is my suspicion.
I would be very pleased to hear if you are actually moving to a contract based arrangement which, of course, the states rely upon, so that individual providers actually have to have a direct contract with the Commonwealth. That would provide the Commonwealth with much greater capacities to manage this expenditure. But I am particularly concerned that any consultations that are undertaken are not limited to a series of informal discussions. There is a grave danger that proposals which involve the expenditure, as you have indicated to us today—even with your attempt to put a cap on this at $3 billion—involve just the VET FEE-HELP working group. There should be a much more formal process for discussion of specific proposals that the government has. It may be that you do not have time to do a green-and-white paper process, but that to me is the gold standard. That is the approach that we are taking with regard to the university system.
I believe that if you were actually advancing your thinking you could put out a government discussion paper outlining what you are actually seeking to do and getting people across the board to make comment upon that in an open and transparent way. The groups that have a profound interest in it are, as you said, student groups and employer groups. After all, this is the vocational education system—as you made the point. But there are also state governments, and the unions have a profound interest.
My understanding of the conversations you had with unions when you were minister for vocational education is that they were about the destruction of union involvement in the skills councils. Historically, there was a tripartite approach to these issues, which this government has sought to overturn. So those representatives of workers should have an opportunity here, because there are profound levels of expertise within the trade union movement on the questions of vocational education. But the idea of crisis management, whereby you have a meeting with this group and that group to try to shut up one group or another which makes a complaint is no way to redesign a program of this importance.
I make this observation, Minister: the Commonwealth is seeking to take over the entire VET sector. It has put those propositions to state ministers. There is no way—there is just absolutely no way—you are going to get the states to sign up to a transfer of responsibilities for vocational education to the Commonwealth when this sort of shambolic behaviour is going on. There is absolutely no way that the minister in Victoria, for instance—Steve Herbert, the minister for training—who has led this campaign to clean up the system is going to recommend to the Victorian government, as I said, to transfer powers to the Commonwealth when this sort of shambolic behaviour is in play. And there will need to be a demonstration that the states actually have a capacity to provide substantive policy advice on the administration of any new scheme.
Now, we have already indicated that there is no suggestion within these amendments that these measures are in fact temporary. I am deeply suspicious that what this program is really all about is getting past the next election. We will see what happens after that. It may well be that there will be a change of government at the next election, and there may well be an entirely different approach to the way in which these questions are dealt with.
Minister, I ask you, when you are considering these questions: will you look at the issue of the restoration of the credit transfer? I will leave it at that.
Let me deal with a few of the issues that Senator Carr has raised. He quite rightly indicated that the government of the day needs to take responsibility for the circumstances that it finds. This government has been very clear that it takes responsibility for seeking to clean up the mess that it has discovered in the VET FEE-HELP scheme. It has been a process of attempting to apply reforms that we think will fix it. We have acknowledged this week that we think it will take a profound overhaul and rewrite of the scheme to address it, but we completely take responsibility for fixing the mess we inherited. That is exactly what we have been doing, and that is exactly what we are doing through this debate today.
Senator Carr may never have been the minister responsible for VET FEE-HELP or vocational education, but, of course, he was a minister in the government that did enact the various changes that opened this scheme up. It is important that we recognise the history of the scheme. Senator Carr is right: the idea of having an income contingent loan scheme was conceived by the Howard government, but it was with very tight arrangements in place. It was with a requirement that an articulation agreement and credit transfer agreements were in place with universities and that those universities therefore acted as a quality control measure in relation to the VET FEE-HELP providers.
Senator Carr asks me whether reintroducing any provisions in that regard is something that we would consider in rewriting the scheme. I say to Senator Carr: yes, we may consider that in certain circumstances. I think it is important when we consider access to public subsidy, be that public subsidy directly paid as a subsidy or be it paid indirectly via an income contingent loan, that we consider the thresholds of standards that providers need to meet. In the VET sector we have 4,700 registered training organisations. They need to meet a standard to be an RTO, and that should be a strong standard that gives people confidence in the qualifications that are delivered. But, of course, if you are dealing in public funding then it is not unreasonable that a much higher standard is expected, because the fee-for-service market, which I was talking to Senator Simms about before, is far better able to self-regulate itself in many instances because people are making fully informed value judgements about the service they are purchasing. Whether it is an employer paying for the training or an individual paying for the training, they are assessing the value and merit of that training at the time they part with their hard-earned cash. But if they are not parting with hard-earned cash—because they are racking it up on a student loan or because the taxpayer is paying for it—then, unfortunately, we do not seem to see that same serious, informed decision making by individuals occur before they sign on the bottom line, so we do need to expect, therefore, a higher standard from those providers.
What that higher standard may be in a new model is something that we are open to. Articulation agreements may be a means—I say 'may', in a hypothetical scenario—by which you may be able to access whatever a new VET FEE-HELP model looks like, without perhaps having to jump through other hoops. So you might conceive of a model where that is one criterion of high-performance recognition that could be met that saves you having to jump through or demonstrate other hoops—that saves you, perhaps, from having to enter into a contract arrangement if that was something else that was conceived of. These are all scenarios that could be contemplated.
In terms of the process that may be undertaken and your statement that we will be back here, we certainly will be back here because to conceive of a new model will require change to this legislation. So we will be back here to rewrite this legislation under the terms of a new model. But, before that occurs, I am happy to give the Senate the commitment that we will make sure the approach that will be taken is spelt out in a manner that provides an opportunity for public commentary and feedback and that we will not be just rushing through informal consultations to a point of legislation. There will be an opportunity for informed public comment in relation to what changes may look like, not just through an informal consultative mechanism.
Lastly, I will touch on the comments around a takeover of VET. That is an idea that is encouraged by the South Australian government and the South Australian Premier as part of a grander bargain in relation to federation responsibilities that he has publicly spoken about: enhanced opportunities for the states to pursue options in early learning in return for the Commonwealth undertaking an enhanced role in vocational education and training. I think there is a real problem that the VET sector is seen, all too often, as the poor cousin of the university sector and particularly perceived, sadly, by parents, perhaps by teachers, as students are making their postschool decisions, as being something of the poor cousin. I think the inconsistencies that occur from state to state, the inconsistent policies within states and, indeed, challenges with the VET FEE-HELP system all help to plague those perception problems, whereas, notwithstanding various changes in debates over the time, we have had relatively continuous arrangements and certainty for universities since the advent of HECS. Throughout those decades, students have had confidence with how they access a university place, what the funding support for them will be and, indeed, the quality arrangements that should sit alongside that. In an ideal world, students would have the same type of confidence and the same type of certainty built up in the VET sector over a period of time.
Whether or not those discussions proceed, absolutely the Commonwealth needs to look like it would be a competent and responsible steward of the sector were we to have a greater role in funding, noting that we already have the primary national role in the setting of qualifications and the regulation of RTOs. Those two responsibilities are already largely nationalised in any event, and it is only the funding and the student support that now have this odd arrangement where the Commonwealth is the primary agent for student support for high-level VET qualifications, in the diploma and advanced diploma space, while the states are the primary provider of support through the certificate level qualifications—yet another complication to the way the whole scheme works. A federation solution might provide a better outcome. Those are discussions that will be had between the Prime Minister and the state premiers, and the questions will resolved through that context, not here. I am very open to making sure that, if they are progressed, we then get a model that works for all qualification levels settled in a very sensible and careful way that ensures we do not repeat any of the mistakes we have seen in this qualification level.
I just indicate for the benefit of the chamber that I have been a supporter of a national vocational education system since Paul Keating's efforts. I was working in the office of the Victorian education minister at the time, Joan Kirner. So this has been a long-cherished objective of many—to build a national vocational education system. I understand there is actually a working group; it is not just a question of the South Australian Premier. The vocational education ministers have actually established a working group, and I believe the Commonwealth may well be involved with that as well.
Senator Birmingham interjecting—
You are not involved? It is just the states? I understand there is a working group, but it will not happen if (1) you cannot organise a proper funding regime and (2) you cannot demonstrate capacity. This is what really disturbs me about these provisions. I am still not satisfied that the capacity is there. I am not criticising individual officers—we have got officers in the box here at the moment. This is not a suggestion about their personal integrity or abilities, but I am just saying that the Commonwealth bureaucracy does not seem to me, at this time, to have the capacity. This is part of the problem we have had with this arrangement, not to mention the problems with ASQA not being fit for purpose.
These proposals that we have before us will provide greater opportunities to extend the reach of the Commonwealth—I acknowledge that—but it is only to the 260 VET FEE-HELP providers. I reiterate that the fact that we have had 18 pages of explanatory memorandum and 13 pages of amendments dropped on us in the manner we have means that one cannot be confident that these measures are going to be able to do the job. The Labor Party will be supporting these amendments, but with a caveat that these provisions have been put together in such a rushed manner that one cannot be certain that they are going to do what the government is seeking to be done, even if we take at face value the minister's good intentions in the matter.
While I am on my feet, I want to acknowledge the minister's efforts yesterday in calling together a conference to discuss these matters last night. I approached the minister and I indicated that he acted very promptly to at least get a conference of senators to allow us to consider these matters in more detail. I acknowledge that that action was entirely appropriate. It is just that it is not adequate to deal with the questions that we have before us. But it was certainly a better approach than we have seen from your junior minister, publicly announcing these at a press conference and seeking senators to go along with that, without any discussion or opportunity to go through the detail in any manner.
You have indicated that these measures are not intended to apply to TAFE, but that is not the way I read the amendments. TAFE is picked up in these questions. Can you confirm that? While I am on my feet, the second area that I would ask you to consider is clause 36(5), which allows the secretary to suspend a provider's approval. I just want the government's response formally on the record about the secretary's capacity to suspend a provider. There are provisions for the Commonwealth to establish a plan for the provider if there are problems, but the amendments do not seem to allow for the re-crediting of VET FEE-HELP funds and the wiping-out of student debts. Can you please explain to the chamber how it is that students could actually have their debts wiped off, forgiven, under these arrangements, where it is demonstrated that there has been malfeasance by a provider? Thirdly, what is the retrospectivity in regard to these measures for students who can now demonstrate that they have been badly treated and abused? What recourse do they have?
I thank Senator Carr for acknowledging the bringing together of different parties for discussions yesterday. I again apologise for the fact that, having called the meeting swiftly, I was stuck here for half an hour of the meeting because of the proceedings of the chamber. But so be it.
I will answer the TAFE question first and I might need to seek a bit of extra advice in relation to the repayment arrangements. You are correct that the amendments that the government has brought forward apply equally to all VET FEE-HELP providers. That does mean that, in terms of the value of loans that a provider can receive payment for in 2016, all providers will be capped at their 2015 level, including TAFEs. I note that the growth in TAFEs has been pretty astronomical in this space as well. My recollection is that New South Wales TAFE went from receiving VET FEE-HELP payments in 2013 of about $90 million to receiving VET FEE-HELP payments in 2014 of about $190 million. So they have by no means been exempt from the phenomenal rates of growth that we have seen and, I am sure, can comfortably live within the proposed caps for 2016, given the huge expansion in growth that they have undergone.
It is not the government's intention or expectation that the provisions in relation to payment in arrears or the provisions in relation to pause in payments would be likely to or need to be applied to those TAFEs. There are no foreseeable circumstances where that would arise, given that we think that the administration and the capability are there and that the oversight applied by the state governments is sound enough. I guess there is always a risk that a provider somewhere may undertake some sort of egregious activity and could prompt such intervention, but there is no intention by the government to use those provisions for that category of provider.
Your questions then shifted to student reimbursement and how that applies. I assume, Senator Carr, you are asking about the substantive bill as distinct from the amendments that we are currently debating. The provisions there are prospective so they apply to students who are enrolled in future, not to students who may have been enrolled in the past. It is another sad failing of the way the legislation was structured that there are limited provisions to be able to wipe clear a student's debt and for the Commonwealth to be able to recover payments from providers. Our intention through these amendments is that we will in future have some provisions to be able to do that. I do note that a number of providers, where individual complaints have come forward, have been reasonable and even generous in taking the step of wiping a student's debt, of repaying the funding to the Commonwealth for the wiping of that student debt in relation to a concern or a complaint about the enrolment practices that have occurred. That has probably been the largest category of reason or cause for providers to repay debts to date. But, rather than that being essentially a voluntary activity on the part of the provider, we are looking for it now to be something where, if the Commonwealth is satisfied that a provider has acted in breach of the VET FEE-HELP guidelines in the recruitment or the treatment of a student, the Commonwealth would have the capacity to recoup those payments from the provider and to refund the student to ensure that they are treated fairly in future.
I move amendment (1) on sheet 7835:
(1) Amendment (13), item 12, omit subsection 45D(2), substitute:
(2) A credit arises in the *VET provider's *VET FEE-HELP account as follows:
(a) if the VET provider is already a VET provider on 1 January 2015, a credit arises on the first day of each later calendar year that is equal to the amount worked out under subclause (3);
(b) if the VET provider becomes a VET provider during 2015, a credit arises on the first day of each later calendar year that is equal to the amount worked out under subclause (4);
(c) if the VET provider becomes a VET provider on a day after 2015, a credit arises on that day that is equal to the amount worked out under subclause (5);
(d) if the VET provider pays on a particular day any part of any amount that becomes due under subclause 45E(2), a credit arises on that day that is equal to the amount of that payment;
(e) if another body ceases to be a VET provider, a credit may arise:
(i) in accordance with a determination under subclause (6) at the time of the cessation; and
(ii) that is equal to the amount worked out under that determination;
(f) if the *Secretary, on application by the VET provider, is satisfied on a particular day that:
(i) the VET provider is offering a VET course of study that confers skills in an identified area of national importance; and
(ii) the course is relevant for employment in a licensed occupation; and
(iii) one or more students are unable to readily access training places in courses of this kind with any other VET provider; and
(iv) insufficient credits have arisen in the VET provider's VET FEE-HELP account for an appropriate number of students to undertake the course with the VET provider; and
(v) granting an extra credit of a particular amount is appropriate (which need not be the amount specified in the application);
the Secretary may grant a credit, which arises on that day, that is equal to the amount considered appropriate under subparagraph (v).
I support the bill because I want to curb the rorting that is happening in this sector, but I am concerned about the impact of the bill on important and honest operators and training sectors in this country. This bill may have unintended consequences on industry training sectors such as the aviation training sector. The world is experiencing exponential growth in the aviation sector. The demand for qualified commercial pilots is expected to double in the years to come. Australia is considered one of the best providers of commercial pilot training in the world. We have eight commercial pilot training schools in Australia, several of which are based in my home state of Queensland. The aviation sector is highly regulated and unique. Due to the nature of the industry and the growing demand for pilots, the aviation training industry is expensive and in a strong growth phase. It is therefore important that this bill includes a provision for the secretary of the department to have the discretion to provide additional credits to industries and/or organisations which are considered to be of national importance and which meet certain requirements.
I would like to thank the minister for listening to my concerns in relation to the aviation training sector and for committing to support my amendment. It is imperative that we support this sector and that we ensure it is exempt from the potentially harmful, unintended impacts of the bill. We need to ensure that the sector is allowed to grow, that Australian men and women are able to pursue careers as commercial pilots, and that we support an important and growing training industry which provides jobs and economic benefits for this great country, Australia.
Australian men and women pay a lot of money to undertake training to become commercial pilots. The first stages of training involve undertaking a recreational pilots licence and then a private pilots licence, all of which are funded by the student. These are very expensive courses and can cost students up to $30,000 or more. These courses are funded by students, out of their own pockets—not by the taxpayers. Once students have completed these courses, they can then undertake a commercial pilots licence course, which is eligible for funding under VET FEE-HELP. Commercial pilots licence courses can cost up to $90,000. There is no doubt the level of safety, compliance and risk associated in deliver of the commercial pilots licence course results in high costs. Despite this, Australia is still much cheaper in this area of training than the rest of the world, and people come from all over the world to undertake commercial pilots licence training in Australia.
It is for this reason that I will not be supporting Labor's amendments, which seek to put a cap on VET FEE-HELP for students. The cap will cripple the aviation and training sector and put aviation completely out of reach for most Australians. This means that men and women and boys and girls across the country will no longer be able to undertake a commercial pilots licence training. Only the ultra-rich and famous will be able to become commercial pilots in this country. The pipeline of Australian pilots will definitely dry up. Our airlines will no longer be able to source Australian pilots. Our airlines will be forced to employ overseas pilots. The aviation sector is a unique sector and, unfortunately, it will be hardest hit by this bill. If we look at the aviation training sector we see that most course providers generate less than 30 per cent of the revenue from VET FEE-HELP compared to other providers and industries that generate 100 per cent of their revenue through the VET FEE-HELP scheme.
In summary, I will not be supporting Labor's amendments. I thank the government for supporting my amendments, which will ensure that the aviation sector, and every Australian's dream of becoming a commercial pilot, is not inadvertently damaged as a result of this bill. I commend my amendments to the Senate.
I am very disappointed to hear that Senator Lazarus is not supporting our amendments in return for the government supporting his amendments. That is essentially what you have said. You have misunderstood our amendments. Our amendments provide for a discretion but on a more rational basis than the way this has been written up. Our amendments actually authorise the secretary to be able to be provided with the power to set caps, as happens in the university system. We already have caps in place for the most privileged. Your concern is about justice issues. In the university system, doctor's fees are set by the way in which the HEC scheme is administered for medical students, and it is within three broad bands of student contribution. Our amendments would actually allow you to have some discretion, but the amendments moved by Senator Lazarus provide for a carve-out, I presume.
Senator Lazarus interjecting—
That is what the implication is, Senator—a carve-out. Minister, does that carve-out apply just to aviation? If so, where do I find that in these amendments?
I am very happy to point Senator Carr to the details of the amendments. The amendments amend the government's amendments. We have been discussing this morning the fact that one of the government's amendments provides a cap on the value of loans that a provider may write in 2016 and caps that value of loans at a 2015 level. These amendments provide scope for limited exemptions to that cap. The scope is very tightly controlled, though.
The VET provider, having demonstrated that they are going to hit the cap and not be able to enrol anymore students under VET FEE-HELP must then demonstrate that they are, firstly, offering a course of study that confers skills in an identified area of national importance; secondly, that the course is relevant for employment in a licensed occupation. So just highlight that one, Senator Carr.
A licensed occupation, Senator Carr—a very narrow band in that category. Then, of course, they must also demonstrate that the students are not able to readily able to access training places in courses of this kind with any other VET provider. So if, Senator Carr, you are living in Brisbane—seeing as these are Senator Lazarus's amendments—and you are a student who wishes to study aviation and the aviation providers in Brisbane have already hit their cap in relation to the number of places they can offer under VET FEE-HELP, those providers would be able to make application to the secretary to have that cap lifted for a specified amount—not unlimited, by any means, but a specified amount. This is very much akin to the kind of contracting arrangement for such an extension that you might have encouraged me to contemplate before. So they can make application to have that cap lifted for a specified amount if they can demonstrate that the skill is in an area of national importance, that it is relevant for employment in a licensed occupation, that students cannot access it anywhere else and, of course, that they have hit the cap.
So insofar as this creates an opportunity for exemption to the overall cap, it is an incredibly tightly prescribed exemption that really is only to ensure that we do not end up with the type of scenario that Senator Lazarus has described in his comments, where we had an inadvertent consequence of insufficient pilot training, for example, occurring in Australia.
Perhaps you could advise, Minister, whether it is the case that there are a whole range of licensed occupations that might well fit within a designation, if a secretary so wished, of national importance? For instance, what about licensed aircraft engineers or enrolled nurses? They are licensed. We could talk about the security industry. We could even talk about aspects of the transport industry. These are all licensed occupations contained within those industries which could be designated as being in an area of national importance should a secretary in the future choose to do so. Is that not the case?
Senator Carr, you can draw out the hypothetical of what could be designated as an area of national importance if you wish. Of course, there needs to be some rationale as to why something might be designated as an area of national importance, and the skills demand for such categories would be an obvious area of consideration in such a determination. I think you are mischievously attempting to create fear around Senator Lazarus's very well intentioned amendment, and the well-intentioned amendment is only intended and expected to have very narrow scope. Overwhelmingly, the government expect that the fee cap that we are proposing will apply to the vast majority of, if not all, VET FEE-HELP providers.
I do not doubt the good intentions of Senator Lazarus. This is not a point that has been raised by anyone other than you, Senator Birmingham. I have raised the simple question about what happens when you try to do these sorts of things on the fly, overnight, without proper consideration of the consequences. I know what the deal is here. Senator Lazarus has been decent enough to outline it. The government will vote for this amendment no matter how ill conceived and no matter what the technical problems are, which the department knows only too well and the minister knows only too well. The government will ask Senator Lazarus to vote against our propositions, which actually do fix the problem properly in a coherent way, in return for this proposition, which I say is not just for this minister—you might have an undertaking with this minister—but for the secretaries and secretaries to come.
Remember, there is no provision in this bill for a sunset clause. These provisions will stay until such time as we have to rewrite the bill at some point in the future. I think this minister is going to have some trouble getting together a new package within a year, given that we will have an election in the middle of it, which of course is the real question we have before us today. What is the real issue here? Why have we got all these amendments so late? It is because the government wants to close down public debate about these issues in the run-up to the election.
What we have, though, is a proposition, Senator Lazarus, that I do not think meets your criteria but will open up a whole series of other abuses in the future, so I am a bit concerned about that. I do not know if I could support, or recommend to my colleagues to support, such a proposition, given the way it has just been dropped on us now. That follows the pattern that I think we have seen from the government—this colossal amount of new material being presented to us today.
I also have some concerns about this amendment. I have to say that the assurance of the minister that it is well intentioned does nothing to allay those concerns. I am certainly not being critical of Senator Lazarus here. I understand he is concerned about a particular aspect or potential implications of the legislation and is seeking to address that, but this amendment is very, very broad. The fact that it might have consequences that may be unintended seems to be being dismissed by the minister with a fairly cavalier attitude, saying that it is well intentioned. The road to hell is paved with good intentions, as we know from the scandal that has unfolded within the VET sector.
I very much doubt that, when the Labor Party put this scheme in place and set this train in motion when they were last in government, they could foresee that there would be this conga line of scandals, rorts and stuff-ups that would eventuate. I very much doubt that anyone thought that that would be the case when this was put in place. But this is what has happened, and now we are talking about looking at an amendment that potentially leaves the door open for a whole range of exemptions well beyond the aviation industry.
We have spent the last two days talking at great length about wanting to turn off the tap, wanting to crack down on rorters and wanting to ensure that there is more rigour in this process, and now we are dealing with an amendment which will potentially be opening the door for a whole range of exemptions, and we are being told to just accept that because it is well intentioned: 'Let's just suck it and see how it goes.' That has been the problem with the way that this whole scandal has unfolded. We cannot afford to just go with it on a wing and a prayer. We need to make sure that we have appropriate safeguards in place.
I feel very concerned that this amendment will have unintended consequences that extend far beyond the aviation industry. It is not difficult to conceive of a situation of the government of the day saying: 'Okay, this is something that is of public importance. We've got a shortage in this particular area. Let's loosen some of these restrictions.' As a result, we would find ourselves in a situation of dealing with more scandals and more exploitation of vulnerable young people. I am very concerned about this. I encourage crossbench senators to think very carefully about going down this path and the implications of what we may be doing here as a Senate should this be supported.
After this huge debate, after months of debate within the public and now days of discussion here in the chamber, the community are looking to the Senate to take action and to ensure that, heading into the new year and the new academic year, there are appropriate safeguards in place. I do not want to see any loopholes in this legislation that are going to give potential rorters and shysters a get-out-of-jail-free card. I do not want to see that, so we need to think very carefully about what we are doing today.
I indicate that I support the amendment moved by Senator Lazarus and Senator Muir. I think this amendment was born out of concerns that Senator Lazarus has principally in relation to aviation training colleges. There has been a huge increase in the demand for aviation training. Australia is acknowledged as a world and regional leader in terms of high-quality aviation training. The scandals involving a number of colleges have not touched on aviation training colleges—that is my understanding. So that if there is a demand for aviation training, for pilot training, which goes well in excess of the cap that has been proposed, there is a discretion contained in this amendment that does allow an application to be made by the provider that the section needs to be satisfied of a number of particular criteria, including skills in an identified area of national importance, being a licensed occupation and the like. So it gives a discretion to the department to be used, I hope appropriately and rarely, where there is a genuine bottleneck, for a demand for something like pilot training.
I think Senator Lazarus and Senator Muir are doing the right thing by their states and this will also have a significant flow-through benefit in South Australia where there are aviation training schools. All I ask my crossbench colleagues to consider is that, when Senator Carr's amendment is being considered shortly in relation to the issue of giving discretion to the secretary to cap fees, that it be considered seriously because I see that amendment being in the same vein, in a sense, to allow a discretion but it would not be proper for me to debate Senator Carr's amendment now. I understand what Senator Lazarus and Senator Muir are trying to do. I will support the amendment but I ask my colleagues on the crossbench to keep an open mind to Senator Carr's amendment in relation to that.
No doubt we will have an opportunity to discuss this with the minister. I think we all in this room want to get rid of the rorters, the shysters and the sharks in vocational training. It has turned into a multibillion-dollar mess that is costing taxpayers and exploiting and letting down students who want to do a course and get appropriate qualifications. I support this amendment. I just ask that, when we deal with Senator Carr's amendment, it is given due consideration. I hope I can engage, as I have with the minister on this previously, in a constructive discussion with him in relation to Senator Carr's amendment.
I thank Senator Xenophon, at least in relation to Senator Lazarus's amendment, for bringing some common sense back to the debate. I think we saw a level of scaremongering being attempted by Senator Carr and Senator Simms in terms of the Lazarus amendment. Senator Lazarus's amendment sensibly provides provisions for determinations on a case-by-case basis. Let us be crystal clear here. It is not a proposal that would mean that for a category of qualification or a category of occupation that there would suddenly be some blanket exemption that applied. It is about a case-by-case basis, that an application would need to be made by a provider who had reached their cap and, in reaching their cap, was able to demonstrate the national interest in extending that cap, the relevancy of the qualification and the fact that the qualification was a prerequisite for the licensing requirements in relation to that qualification, and that they would need to demonstrate the merit and worthiness of the value of the proposed extension of that cap. So the cap itself would in fact just be increased—not lifted by increased—by a fixed and finite number on the case-by-case basis.
Senator Lazarus's amendment is carefully crafted and ensures that, by placing the cap on the total value of VET FEE-HELP loans across the board that the government is proposing, there is scope to make sure, if there are inadvertent consequences in an area—and he has highlighted, as has Senator Xenophon, aviation as a potential area. I do not seek to prejudge that in this chamber. That is a matter that would be judged under the provisions of this amendment by the secretary to the department or he delegate. I would encourage the chamber to view this amendment as in some ways analogous to the way in which the government has crafted the amendment in relation to the admission of new providers of VET FEE-HELP services.
The government has not slammed the door shut on any new providers of VET FEE-HELP because we recognise that there are a small number of longstanding registered training organisations who have long delivered high-quality outcomes, who have applications in, and if we shut the door on every single new application then of course we would be acting to the serious detriment and disadvantage of those providers. So we have provided a test to ensure you must have been in the sector for five years, that you can only do it in relation to the qualifications you have already offered and that you will only be able to offer those qualifications and up to a loan value that is consistent with what the fee-for-service value of your operations had been previously.
This is analogous to that in the sense that it is recognising that in applying a blanket rule, as we seek to, in terms of the application of the cap across the total loan value, this amendment provides very narrow criteria to make sure that we do not end up with circumstances where that is to the detriment of others.
I commend Senator Lazarus for considering the consequences, for bringing this amendment forward and for ensuring that it is tight. I re-emphasise to the chamber, as Senator Xenophon did in his contribution, that this is very limited, that it will only apply on a case-by-case basis, that each one will have to be presented on its merits.
Finally, I take issue with the remarks Senator Carr made in his last contribution that the government is pursuing these amendments overall and our reforms to VET FEE-HELP to somehow close down public debate. Chair, let me assure you and the chamber that the government wants to close down rorting and we want to close down those who are ripping off the taxpayer, who are taking advantage of vulnerable students and destroying the reputation of the VET sector. But we are damned happy to have a public debate on this. We are very happy to have a public debate about the failings of VET FEE-HELP because I think, just like the pink loans scheme, we want to make sure going into the next election that Australians remember that the Labor Party cannot be trusted to set up schemes such as this, cannot be trusted with public policy and programs because when they are, we end up with disasters like pink batts or VET FEE-HELP where huge sums of public money are squandered and where, indeed, Australian businesses suffer as a result because of shonksters and fraudsters who are let in.
We are very happy to continue the public debate, Senator Carr. The only reason we want these measures through this parliament, ideally today, is that we want to clean up the mess we inherited.
I want to reiterate that this is not scaremongering. I acknowledge that Senator Lazarus is acting to pursue a particular concern that he has, but my concern is that this amendment does not do what Senator Lazarus was seeking to achieve. So it is not scaremongering. I think this is badly worded. I am going to presume that it was written up on departmental advice from the way it is structured, but it is very badly worded and it is wide open for a future secretary to interpret words such as 'national importance' and 'licensed occupation' to be much broader than airline pilots, much broader.
On a case-by-case basis. We all know what happens when you have a political problem. A minister in the future—I am not making accusations of this minister—long past this debate will not recall this discussion, will not recall these circumstances and will say to a secretary: 'I want this problem fixed'. A future secretary will be able to go to this clause—and we are talking about the cap on their loans, not their fees, but the cap on their loans—and say 'Oh yes, the case-by-case arrangements demonstrate that this is a matter of national importance and it is towards the employment in a licensed occupation, so this applies to a licensed aircraft engineer or to an enrolled nurse', and a range of other areas can be exempted to fix a political problem for a minister.
The better approach is to go to the question of the cost of the course. What happens here is that you have a loan which then, of course, determines the cost of the course. It is around the wrong way and, of course, this is exactly what has been happening—the fact that you can have up to $97,000 worth of borrowings means that that is where the course rises go to. Whereas the approach that I think needs to be taken, as occurs in the universities, is that you limit the amount of money that a provider can charge the student. That is what happens in universities, and we do that for universities with no great ill effect that I can identify. My proposal allows for the discretion to be with the secretary, agreed, through disallowable instruments so we get to see in detail what it means. This provision is too broad and does not directly meet the criteria that Senator Lazarus, I think in good intent, has sought to present to this chamber in terms of the constituents he is representing in Queensland.
Let me deal with one factual error that is in Senator Carr's argument. He seems to be ignoring the fact that this amendment of Senator Lazarus's is specific to the government's proposal to cap the total loan volume of what a training provider can access. It does not matter what the training provider might be charging for their course under that proposal; the proposal the government is applying is a cap on the total value of the loans that that provider will be able to write. So Senator Lazarus's proposal is for this very narrow, clearly tested exemption to be able to apply.
I think it is scaremongering, Senator Carr, to talk about what a future secretary may or may not do with this provision and to suggest that it might somehow be blown wide open. I think it is also inaccurate to suggest that a cap on fees would negate the need for this amendment. If the government's amendment to cap the total loan value still went through—so think about it here, Senator Carr and others—and, say, your amendment to cap fees went through, but if the aviation college Senator Lazarus is worried about is charging reasonable fees today, and if that were the cap that was set, then you would still have the problem that Senator Lazarus's amendment is trying to fix and address. It is disingenuous to try to conflate the two issues. They are separate issues in relation to how the cap on fees may work and the issue that Senator Lazarus is seeking to fix today.
I understand you want to have a fulsome debate around a cap on fees and, obviously, we will have that shortly. But I think that, in relation to Senator Lazarus's amendment, he is addressing a particular problem that could arise with the government's amendments to cap the total value of loans. The proposal he has put forward is a rational way of dealing with that. The threat of mass exemptions applying is, I think, quite hypothetical and quite unlikely. But, Senator Carr, were it to occur, I have no doubt that the government of the day, the minister and the secretary providing those mass exemptions would be held to account for their reasoning for doing so. With these arrangements where exemptions are applied, they are usually pretty closely scrutinised by all to assess the reason and rationale for those exemptions. The government of the day would rightly be scrutinised as to on what grounds they had determined the national importance of the qualification, and on what grounds they had determined it was right and proper to be able to lift the volume of loans that that provider could offer.
In terms of the approach to these matters, could I advise the chamber that the Labor Party will be supporting the government's amendments. We will be opposing Senator Lazarus's amendment to the government's amendments. We will not be proceeding with amendments to schedule 1, given the conversation we had last night, and I accept the advice that was tendered to us last night. I might remind Senator Lazarus that there was some advice on this matter tendered last night, too. We will be proceeding with schedule 1 after item 8 and we will not be proceeding with the third request that is listed on the running sheet.
In regard to the question of containing the costs to students, I will be seeking to argue the case strongly in regard to those provisions about putting caps on the prices that students are charged as distinct from the ceiling on the loans, which has been the government's approach. I am saying that our amendment to schedule 1 is quite compatible with the government's position—it is not inconsistent with the government's position—but it provides a proper and thorough supporting measure to provide the secretary with the capacity to set prices as occurs within the university system at the moment. I will explain how that can be done and done within the period for the start-up date. I know there has been some advice tendered that this cannot be provided within three weeks. I can show how it can be. The advice that I have sought overnight from state officials has explained how it can be done. I believe the advice the government has received on this matter to be incorrect; that there are schedules that are readily available and there are at least two ways in which this matter can be attended to within the three weeks that this government wishes to introduce these emergency measures. I hope that is helpful to the chamber.
Before we move to the vote on the government's main amendments, given the second reading amendment to this bill has been carried and we have an international Ombudsman operating for overseas students, what is the government's intention of applying the principle of the international Ombudsman to domestic VET students?
Consistent with discussions that I think our officers have had, Senator Carr, I am happy to give the government's undertaking to progress a model that could see application of an ombudsman. My understanding is that it may require some further referral of powers from the states, if they were to apply in a manner consistent with the international Ombudsman. There may be scope for some narrower application that just deals with VET FEE-HELP-type matters, which could be an alternative.
In light of the constructiveness with which we have dealt with some of the issues at least, the government did not oppose your second reading amendment and is willing to work through those issues.
I would remind you that the constructiveness extended right through this conversation. It may well be that we will have a difference of opinion which we have not abrogated our responsibilities to express, particularly on something as significant as these matters.
It would be incorrect for you to suggest that the opposition has not been constructive in these questions. These are matters of deep concern, involving expenditure of $3 billion. I just indicate and repeat that the opposition will be voting in favour of the government's amendments, despite our reservations about the speed with which they have been put together; despite our concerns as to whether or not they will do the job that the government intends them to do. Nonetheless, as I think was put to me yesterday, these amendments are a step in the right direction. I think, however, there may well be a broader application required—I trust I am wrong on this, but my expectation that it will soon become apparent that the private colleges will find ways around these measures. I have no doubt that there will be substantial concerns expressed by some private colleges about the way in which these measures are being brought forward without consultation. There may be well be others that claim that there have been injustices imposed on them and, obviously, the appeal mechanisms, which have been outlined, will mean for many people there will not be an opportunity to appeal them. There are no appeal mechanisms, as far as I can see, for students, and the problem within the scheme is that the Commonwealth's approach is to give priority to company operations rather than the welfare of students. With those reservations, we will indicate our support for these amendments.
I move amendment (2) on sheet 7835:
(2) Amendment (16), item 20A, omit the item, substitute:
20A Clause 91 of Schedule 1A (after table item 1B)
Question agreed to.
The CHAIRMAN: Amendments (13) and (16) have been amended. So the question is that the government amendments as amended and the request No. 14 on sheet GZ155 be agreed to.
Question agreed to.
I move opposition amendment (2) on sheet 7800:
(1) Schedule 1, item 7, page 6 (after line 2), at the end of clause 23C, add:
(5) Before a *VET provider enrols a student in a *VET unit of study, the VET provider must advise the student that, if the student gives or has given a *request for Commonwealth assistance that relates to the unit or the *VET course of study of which the unit forms a part:
(a) the student will not be able to receive *VET FEE-HELP assistance for the unit unless the student, before the end of the *census date for the unit, accepts an offer from the *Secretary to lend the student VET FEE-HELP assistance for the unit; and
(b) the student will be taken never to have enrolled in the unit if the student does not accept the offer before the end of that census date.
(2) Schedule 1, page 6 (after line 4), after item 8, insert:
8A After subclause 27(2) of Schedule 1A
(2A) A *VET tuition fee for the unit determined under subclause (2) must not exceed the amount specified by the regulations for the unit.
(3) Schedule 1, item 12, page 7 (line 10), omit "date.", substitute "date; and".
(4) Schedule 1, item 12, page 7 (after line 10), at the end of subclause 45C(1), add:
(d) before the end of that census date, the student accepts in accordance with clause 45E an offer by the *Secretary under clause 45D to lend the student *VET FEE-HELP assistance for the unit.
Note: If the student does not accept an offer under clause 45D before the end of the census date, the student is taken never to have enrolled in the unit (see subclause 45D(4)).
(5) Schedule 1, item 12, page 7 (after line 24), after clause 45C, insert:
45D Offer of VET FEE -HELP assistance
(1) If a student enrols in a *VET unit of study and the student has given an *appropriate officer of the *VET provider a *request for Commonwealth assistance that relates to the unit or the *VET course of study of which the unit forms a part, the VET provider must give the *Secretary written notice of the enrolment.
(2) If the *Secretary is given a notice under subclause (1), the Secretary must, by written notice given to the student, offer to lend the student *VET FEE-HELP assistance for the unit.
(3) The offer must do the following:
(a) set out:
(i) the name of the *VET provider; and
(ii) the name of the *VET unit of study; and
(iii) the name of the *VET course of study; and
(iv) the *VET tuition fee for the unit;
(b) explain how the amount of *VET FEE-HELP assistance to which the student is entitled is worked out;
(c) inform the student that the student will incur a debt in respect of any VET FEE-HELP assistance lent to the student for the unit;
(d) explain how the amount of that debt will be worked out (including the effect of subsection 137-18(2)) and how that debt will be repaid;
(e) explain how to accept the offer, should the student decide to do so;
(f) inform the student that the student does not have to accept the offer;
(g) explain the effect of subclause (4).
(4) The student is taken never to have enrolled in the *VET unit of study if the student does not accept the offer in accordance with clause 45E before the end of the *census date for the unit.
45E Accepting offer of VET FEE -HELP assistance
A student accepts an offer under clause 45D to lend the student *VET FEE-HELP assistance for a *VET unit of study if:
(a) the student gives the *Secretary the acceptance in writing in the approved form; and
(b) the acceptance contains or is accompanied by an acknowledgement that the person understands the effect of accepting the offer.
(6) Schedule 1, item 24, page 11 (line 30), omit "and clause 45C", insert ", and clauses 45C, 45D and 45E,".
(7) Schedule 1, item 26, page 17 (line 11), omit "paragraph 45C(1)(c)", substitute "paragraphs 45C(1)(c) and (d)".
(8) Schedule 1, item 26, page 17 (line 30), omit "paragraph 45C(1)(c)", substitute "paragraphs 45C(1)(c) and (d)".
(9) Schedule 1, item 26, page 18 (after line 9), after subclause 39DH(1), insert:
(1A) For the purposes of paragraph (1)(d), disregard paragraph 45C(1)(d).
(10) Schedule 1, item 26, page 19 (after line 29), after clause 39DI, insert:
39DIA Civil penalty—failure to advise about accepting offer of assistance
A person contravenes this clause if:
(a) the person is a *VET provider; and
(b) the VET provider enrols another person (the student) in a *VET unit of study; and
(c) before enrolling the student, the VET provider failed to advise the student that, if the student gives or has given a *request for Commonwealth assistance that relates to the unit or the *VET course of study of which the unit forms a part:
(i) the student will not be able to receive *VET FEE-HELP assistance for the unit unless the student, before the end of the *census date for the unit, accepts an offer from the *Secretary to lend the student VET FEE-HELP assistance for the unit; and
(ii) the student will be taken never to have enrolled in the unit if the student does not accept the offer before the end of that census date.
Civil penalty: 60 penalty units.
(11) Schedule 1, item 30, page 26 (line 22), after "clauses", insert "39DIA".
(12) Schedule 1, item 31, page 28 (line 1), after "and (2)", insert ", and clause 39DIA,"
This is the substantive opposition amendment and this is the only position I am pursuing in regard to the amendments the opposition had foreshadowed because of the subsequent and late series of amendments that the government has put in, which I have described as somewhat panicked and desperate and rushed. All of those things reflect the current situation, which, of course, was presented to us at the very last minute for this bill. They are clearly an admission of what the Labor Party have been saying for some time: the original bill was inadequate. The government has now made crystal clear the point that its own proposals were grossly inadequate, and I have some sympathy for Senator McKenzie's role in this matter as the government chair of the Education and Employment Legislation Committee. The committee's report, presented to the Senate just on Monday night, told us:
The committee therefore commends the bill as a vital reform that will improve the integrity of the VET FEE-HELP scheme and restore confidence in the VET sector.
The report also said:
The committee recommends that the Senate pass the bill.
It is clear that the government did not accept that advice, despite the fact that, if normal custom and practice is followed in this place, the government had actually written the report that the government senators had relied upon. It is a pity they did not tell the government senators they were about to abandon them, because that is what the consequences of these provisions are. On the one hand, the government senators are told to give the scheme a clean bill of health with this particular bill, and then, as my colleague in the other place, the member for Cunningham, said, she was summoned to a meeting with the Minister for Vocational Education and Skills. That meeting took place yesterday at 12.15 pm, and I was on my feet at 12.30 pm.
With that in mind, these complicated amendments which we have just carried—13 pages of amendments and 18 pages or so of secondary amendments—have been described in this morning's papers as 'desperate', 'emergency measures' and 'urgent'. One report said it was 'a dog's breakfast'. If you look at what is actually going on here, with these are measures they are, in effect, freezing in place the status quo to allow the government time to develop a whole new scheme, allegedly within one year. As I have indicated before, I think the real issue here is to get past an election.
The Minister for Vocational Education and Skills has announced that the new scheme will be in place by 2017. There are no details and no principles. We have probably heard a little bit more today than we have heard at any other time, and I am sure many senators would be familiar with these matters because we saw the government's attempts to deregulate the university sector end in disaster. It strikes me that you have got to have a real leap of faith to think that in a year's time we are going to end up with a fully formed scheme to replace the existing scheme within the vocational education system. So I am a little sceptical, to say the least, and a little cynical about what the government's intentions are here, particularly given that we are running into an election, which, of course, will take a very substantial period of time in any process of policy development out of the political year.
Labor are proposing one simple proposition here, and the intent of the amendment is simple: it gives the minister an additional tool to control the rorts in the VET sector. It allows the minister, through a delegated responsibility to the secretary of the department, to control prices, as we do within the universities. The minister could seek to fix the costs of all courses or only some courses. That discretion would be available, and of course he would be politically accountable for that. But in no way could we afford the proposition that there needs to be price controls imposed on the VET sector, because what has happened has been an explosion in the costs of VET certificates. We know that because of what is published on TAFE courses, where there used to be fees scheduled, and we now see that the private colleges are charging three, four or five times what a TAFE college had and in many cases still do.
You've got to cap prices otherwise people can really rort the system.
To protect the system from itself, the government has to move in quickly and regulate prices.
The government will no doubt argue that there are technical problems with this approach and that it will take too long to get up and running. I say to you that that is just not right. We have already determined that the government is seeking to establish a new scheme within a year. This proposal that I have put before the chamber can be done very, very quickly. The original bill sought to bed down changes to cooling-off periods, to make providers aware of new prerequisites and to introduce new requirements for parents of those under 18 to sign loan forms. The department will need to put all those things in place within three weeks. It will need to introduce new systems for students to claim refunds, minimum registration periods and the change to VET guidelines for new penalties. So it goes a bit further than what the minister had indicated in a conversation we had had earlier on this matter as to what is actually required—
in this bill. The new amendments require a number of new administrative activities in determining the loan balance for each provider. The minister has explained they will do that on the basis of averaging eight months' activity applied over the whole year. That is essentially the principle. They will have to determine what is and is not a qualified VET course. They will have to establish a system of payment to providers for payments in arrears and establish a process to suspend payments to providers who have a record of poor performance, although I believe we will have some real issues about determining that record, particularly given the history in the last two years.
I am told that the new amendment allowed us to carve out providers for courses of particular industries, and we have seen that carried today. I am sure the chamber will excuse me when I treat, with some scepticism, the department's claims, which are reflected in the government's advice to us last night, that this would be too difficult, given all these other things. I have sought advice, overnight, from experts as well, and I am reminded that TAFE prices are already published. Private provider courses are supposed to be published. We had experience of one particular college that said it was a model. It appeared before the Senate inquiry, and we asked the question: where are your prices, and, of course, they could not be found. We now discover that the ACCC is still looking for a whole lot of other things that this 'model provider' claimed it had provided.
It is not hard to establish how it could be put in place, given the current regulations to require the publication of prices, and for TAFE that already occurs. There is a second way that this can be done. Our university students are currently charged according to three broad bands of subjects that they study. At university, in this country, the maximum amount that university students are required to pay is $10,440 per year for law, for commerce, for dentistry, for medicine and for veterinary science. It is $8,900 for engineering, science, allied health, agriculture and mathematics. It is $6,256 for education, nursing and humanities. It is not hard. Those models are in place now and have been for some considerable time.
There is another little problem with this question about, 'It's too hard for us to work out what prices to charge.' In New South Wales, the Independent Pricing and Regulatory Tribunal currently reviews all VET courses in that state, and their findings are published for every course in the state. In Victoria, TAFEs charge between $5,000 and $7,000 for low-cost courses such as business or IT. There are fee-for-service courses processes. At Holmesglen, one of the more expensive courses, nursing, is at $20,000; early childhood is $10,000; and disability is $9,000. So it strikes me that it is not hard to identify what the prices actually are. But more than that, where else within the Commonwealth do we allow people to charge whatever they like and the Commonwealth picks up the bill? Where does that occur?
There is, of course, a situation now where we are having online business diplomas with minimum operating cost and people being charged up to $20,000 for them. They are actually more expensive under the VET system now than the price people are charged to do medicine. This is particularly the case when you end up with double-diploma enrolments and the like. That is if people actually know they are enrolled. We have at the moment a cost structure which is way over the odds and has increased to extraordinary levels in the last two years.
My proposal here is that we reduce, not increase prices. We put a price cap in to control the cost of running these programs. You can use TAFE as a model. You could use the university system as a model which allows for the provision of quality training which leads to real jobs and real qualifications and still provides a reasonable profit for private operators but not these superprofits these companies have been getting. They are reliant on government subsidies through this scheme for up to 80 per cent of their revenue. You have to remember that it is not jus the Commonwealth that is tipping into this; the states are tipping in as well.
The government has a responsibility to ensure the value for taxpayers' money. We in this chamber now all accept that there are abuses and that it is better to seek boundaries for the expenditure of public moneys. We protect the most privileged professions like medicine through setting of fees at universities. We have no trouble with that. Administratively there is no difficulty whatsoever. It may well be that those same schedules could equally be applied in the VET sector with very little modification. But it appears that it is too difficult to protect the most vulnerable in the vocational education system— (Time expired)
The Australian Greens support the Labor amendments. We encourage crossbenchers to do the same. I do not want to talk on this for too long. Indeed, I think my mum would be very unhappy if I didn't make it home for Christmas! I think we are at risk of getting to that point if we continue to debate this, but I do want to make the point that these measures are a really important safeguard to protect students. We do need to have a cap in place to guard against the skyrocketing fee increases that we have seen within the sector. This is an important measure that would provide additional support to students. We support it on that basis and we encourage others to do the same.
I indicate my strong support for Senator Carr's amendments. I think we need to put these amendments in context. They simply give the power to the secretary of the department to cap fees. They do not mandate the capping. It is an additional tool in the tool kit to sort out the rorting in this sector. With the Chairman's indulgence, I wish to read a brief opinion piece by Natasha Bita in The Australian this morning which I think sums up beautifully what has occurred here. I think it is worth putting on the record. It is called 'Reform dog's breakfast fails to fix VET flaws'.
The Turnbull government has pulled its punch in the fight against financial rorting by private training colleges.
In a belated admission that its planned reforms fall short, the government yesterday introduced 13 pages of amendments to its own legislation in the Senate.
The result is a dog's breakfast of stopgap measures that freeze the status quo while failing to fix basic flaws in the structure of vocational training in Australia.
Training Minister Luke Hartsuyker yesterday declared he had "turned off the tap" of taxpayer funding that will total $2.75bn this year alone.
The government plans to freeze funding at existing levels, to the very same colleges that are pocketing fat profits at taxpayer expense.
Despite two Senate inquiries this year, the government will spend another year consulting with the industry about ongoing reforms to start in 2017. In April, the government banned colleges from offering "free" laptops, smartphones, cash or meals, after The Australian revealed how some colleges were bribing students to enrol in costly courses billed back to the taxpayer through the VET Fee-Help student loans scheme.
The current bill, which the government hopes will take force on January 1, would ban colleges from charging full fees upfront, give students a two-day cooling off period and require parental consent for teenagers to take out student loans.
But it fails to treat a financially cancerous system that combines open-ended public funding with poor quality control.
The government must regulate the price of training courses, which have trebled in the three years since university-style student loans were made available to vocational training students. It is outrageous that colleges can charge as much for an acting diploma as a university does for a medical degree.
Until the government controls costs — by capping course prices or limiting how much students can borrow for each course — colleges can continue to binge on public funding while schools and universities go begging.
Well said by Ms Bita at The Australian.
I understand the minister's dilemma here. The minister has had to pick up an absolute mess. Without incurring Senator Carr's wrath, I think there was a complete mess of the system. The way the Gillard government handled this was a complete mess that opened up the floodgates to rorting. I understand the government is trying to do something about it, but for the life of me I cannot understand. I believe Senator Birmingham and Minister Hartsuyker genuinely want to do the right thing. I do not feel sorry for Senator Birmingham. I do not want to say that in a patronising way; I actually think he is diligently trying to sort out a mess that he has inherited. I am sorry that he has that role, but—I say this as a compliment to Senator Birmingham—I think he has easily the capacity to deal with this. I have confidence that he will be able to deal with this. I do not understand why the government will not support Senator Carr's amendments—unless there has been a change of heart.
I do not get it. Why wouldn't you have this sword of Damocles hanging over the head of those dodgy private training colleges where you could say to them: 'We can cap fees. We can go through this process'? You do not even have to use it; simply having that mechanism in place would fundamentally assist the intent of this bill. I commend Senator Carr for moving these amendments.
I thank Senator Xenophon for his very kind words and thank senators for their contribution in relation to this amendment. I think Senator Carr started his remarks by offering sympathy to Senator McKenzie in relation to the Senate inquiry that was undertaken. I think it is important just for the record to be very clear that, yes, Senator McKenzie's inquiry recommended that this bill be carried and the measures within this bill be passed.
Despite the debates we have had on amendments in this chamber today, none of those amendments have, of course, changed any aspects of the actual bill that was presented. They have added to it. They have complemented it. They have built upon it. But that Senate committee was quite right—
They are significant amendments, Senator Xenophon. They are significant, new and additional amendments, but they are not amendments that in any way vary or undermine the amendments in this substantial bill. So I think Senator McKenzie and her committee did the right thing in arguing for the passage of the bill.
I want to turn now to the particular amendment that is before us, and that is Senator Carr's amendment. In turning to it, I want to reflect on the fact that the arguments that were used particularly by Senator Carr in relation to the government's amendments that were presented in this place were arguments that criticised the government for the timing of the amendments. He quoted and claimed that the timing of the amendments had variously been described as 'panicked', 'desperate' or 'rushed'. I think Senator Xenophon used the word 'stopgap'. Yet, if the government were to now accept the opposition's amendment on this, all of the same arguments could apply. There was no further or earlier knowledge of the opposition's amendment, no further or additional scrutiny provided to the opposition's amendment—in fact, from the government's perspective, less, because we had not seen it until it was introduced into this place. They are not reasons why the government will oppose it. I just highlight the hypocrisy in the arguments that are presented.
But I want to deal with the substance of the amendment and the arguments around the setting of individual course fee caps, whether they are set on an individualised basis or in some type of banding structure, as Senator Carr has suggested. The amendment that is put before us—Senator Xenophon is right—provides the power for the setting of caps without any suggestion as to how or by what means they may be set. Senator Carr made some suggestions in his contribution, which I will touch on shortly, but the amendment does not prescribe in any way how such caps may be applied.
It is important that we remember the diversity of the VET sector when we are discussing this, because in effect the Senate would be asking the government to go away and try to conceive of some process where we would set caps for everything from courses in business administration or marketing to courses in nursing or landscaping, through to courses for pilots or aircraft engineering.
Of course, there are inherent risks that would come if the government were just to trundle along on our own way and set such price caps in relation to those courses. There is the risk of what happens if you set the price caps too low. Set the price caps too low and essentially you will drive providers out of business. You will stop the offering of those courses. You will force state governments to have to increase subsidies to their TAFEs if they are to continue to offer those courses. You risk creating skills shortages in those areas where you have set price caps too low.
There is an alternate risk if you set a price cap too high. The history of price caps tends to be that the market operates at the price cap. So it is not that you set a price cap and people then differentiate underneath the price cap. That is certainly not the experience in the university sector. It is that, when you set a price cap, everybody simply shifts to the price cap. If you set it too high, you will simply drive providers, most likely, to that maximum price and in fact see the prices in some quarters go up. So by virtue of setting a price cap, because people tend to operate at the cap, we know that we would destroy any sense of pricing competition across the sector and simply be, in effect, establishing a government sanctioned price.
To go through the process of doing so would require extensive consultation. It would require additional regulation to be applied not just in setting the price but in relation to the unit structure of courses and having the government try to ensure some consistency of that unit structure across VET courses and the way in which they are priced. So it is not just as neat as discussing the price itself and how that might be regulated; there would be flow-on implications for doing so as well.
Senator Carr has suggested that perhaps we could simply adopt the price schedules of the states or of the TAFEs. The obvious question that flows from that is: which states or which TAFEs? Would he propose that we adopt one at a lower price than some of the TAFEs and some of the states and therefore force those states which are higher than that to lower their prices through their TAFEs and, if they think those courses are operating at a break-even point at present, to come up with subsidies or to withdraw course places? Or would he propose that we set it at the highest of the TAFE rates amongst the states, thereby giving the green light for the other states to simply increase their fees to be equivalent with that new highest level? Senator Carr suggested that, if we set it at the TAFE rates, providers would still be making a profit from their operations. Is that necessarily the case? The states provide various subsidy arrangements to those TAFEs. I do not think you can come in here and simply say there is an easy solution for how this might be done if it were to be done. It is a much more complicated decision that would require some greater thought than is the case.
Senator Carr makes great play of the fact that university undergraduate places operate within this type of price cap banding structure, and he particularly makes great play of medical places in that debate. Most universities, of course, would say they actually run medical places at a loss, so to draw a parallel between how university medical places are capped and the vocational sector would be to suggest that you would have to somehow then be conceiving of another layer of potential complexity in the setting of these caps—if you wanted to follow the medical example set by Senator Carr—and work out how you applied effective cross-subsidies across the different places that might be offered. That is what universities do: they run medical places largely at a loss and they cross-subsidise them with other courses that they run more cheaply. So that argument in and of itself does not particularly hold up.
I would also point out to Senator Carr and to others in the chamber that universities are but one part of the higher education sector and that we do not seek to cap the prices of other, non-university higher education providers. In fact, the universities are the only part of the education sector where the government and the parliament seek to cap prices as we do for undergraduate courses. We do not do it for other higher education providers. We do not do it for those non-university providers. We do not currently do it in VET. We do not do it elsewhere. We are not in the business of price setting, generally speaking, as a parliament, and yet that is what Senator Carr proposes we seek to do in relation to these courses.
He also highlighted the IPART processes that the New South Wales government uses for trying to set efficient prices. Of the various points you make, Senator Carr, that is one of the interesting ones that I am minded to go away and take a closer look at—it was already on my radar, I have to say—as we contemplate where overall reforms for VET FEE-HELP might go in 2017. But that is not a quick process. That is not a simple process. That is quite a detailed, analytical process.
The point that I would make to the chamber is that what we have achieved today—and pretty much all senators have worked cooperatively to implement a series of reforms—is reforms that stop the growth in the VET FEE-HELP scheme for next year. Yes, they are emergency measures, in the sense that they are trying to put an immediate stop to growth, but by doing that they are giving us the breathing space to be able to go away and design a new scheme that can actually deal with the nuances that might be required in trying to drive more efficient and effective pricing behaviour.
The greatest driver of efficient and effective pricing behaviour should be student choices. I spoke before about the way the full-fee-paying market operates and the high-quality outcomes we seem to see through that sector and the fact that that seems to work because people put a very clear value on what it is that they are buying. Somehow we need to make sure that, when it comes to the operation of income contingent loans, people equally are putting a clear value on what they are buying, because they are still buying it. There is still an expectation those loans should be repaid. They are making a purchasing decision, and they should be making that purchasing decision to undertake that course based on the merits of what they are getting as a value-for-money proposition—the quality of the training, the likelihood of an employment outcome. That is the aspiration that I hope we will be working towards in working towards a model for a reformed VET FEE-HELP scheme.
But it would be a crude and likely ineffective measure today for the parliament to simply pass this amendment, which Senator Xenophon accurately said does not mandate that the government go in and applies fee caps. But I have supreme confidence that, in passing this amendment, we would instantly hear from Senator Carr and those opposite calls for the government to mandate those fee caps and that we would be under pressure to do so and under not unreasonable expectation from people that, if the government accepted this amendment, it was our intention to use those provisions. But the government has real reservations about the impact that the use of such provisions for fee caps would have on the operation of the vocational education and training sector. We have real concerns about the administrative complexity of it.
We do not think the arguments put by Senator Carr today, that there are easy way through this, stand up to any type of rational testing, as I have outlined. And we do have confidence that the measures we have put in place through this legislation, along with other measures that we have introduced throughout the course of this year, will give us a much better-functioning VET FEE-HELP system, will stop much of the abuse, will empower the minister to be able to step in where abuse is occurring and instantly stop new enrolments and new payments to providers, will make sure that we end the rorting that we have seen and will give us time to write a proper new scheme, rather than what this measure would be, which would be essentially to attempt to apply another bandaid to the program but another bandaid that would distract attention and resources from trying to work out how to set a new scheme in place rather than enabling us to get on with what should be the proper policy task of developing that new scheme. So I urge the chamber to reject this amendment, whilst thanking senators for their cooperation in dealing with the overall suite of reforms that we have proposed today.
I genuinely meant it when I said that I think it is terrific that Senator Birmingham is Minister for Education and Training. I think that he does have the smarts and the capacity to do a really good job of this portfolio. But I have got to say the arguments that he has put up against Senator Carr's amendment are so anaemic they are in need of a blood transfusion. This just does not make sense. Let us go through some of these arguments. They do not make sense. Senator Birmingham, the minister, says these are last-minute amendments.
Sometimes if you highlight what you say is hypocrisy—it sounded like an argument against it. But the fact is: we have had to do this on the run. It is not satisfactory. I was prepared to support Senator Lazarus's and Senator Muir's amendment, in terms of aviation colleges, primarily, because I thought that it had merit because it picked up on an unintended consequence of the legislation. So I am prepared to be flexible. I think the opposition has been pretty flexible with a whole stack of amendments that were thrown into the chamber yesterday, and that is why I thought Natasha Bitters' column was very apposite in terms of what has been going on here. This does not mandate a capping of fees but it gives an additional weapon for the government to deal with dodgy providers. It also sends a clear signal. I think that just having this power would, in itself, have a moderating effect on prices. Simply knowing that the government has this power would give some private college providers that are not ethical, that are not doing the right thing, pause for thought in terms of some of their behaviours. We know that the current system has not worked. We know that this is a stopgap measure to try to deal with it, according to Natasha Bitters in The Australian, and I agree with her.
My concern is if the government's argument is that there will be an expectation for us to do something if this amendment is passed. There might be an expectation but the government still does not have to do it. The government has raised a number of concerns about how it would be capped—whether it is too low or too high. Surely it is up to the government to come to the right decision if, in some cases for some courses, there ought to be a cap. I think that it would give a very powerful signal to those operators that are not behaving ethically, in addition to all the other measures in this bill. So I cannot see the harm in the government having this extra bit of power that it could use, should it decide to do so, to deal with this. Minister Hartsuyker said he had turned off the tap of taxpayer funding that will total $2.75 billion this year alone. I am suggesting that we are not turning off the tap, because the tap is still leaking, and this will give the government an opportunity to turn it off for those courses that are not behaving properly. To have the power to cap is absolutely critical for this bill to work. I see this amendment as enhancing the bill in a meaningful way, even sending a signal to those dodgy operators that they need to be aware that the government has the ability to cap their fees. That, to me, is a very useful mechanism.
I thank Senator Xenophon for his remarks, but I do think I need to deal with some of the comments the minister has made to try to rebut these propositions. I do not intend to spend a lot of time on this. First of all on the question of timing: this is an amendment that the Labor Party have canvassed for some time. There have been two Senate reports and two Senate inquiries that led to those reports. We established the first inquiry back in October 2014 and it reported earlier this year. The evidence before that inquiry dealt specifically with this issue and this matter was a subject of that report. I remind the senator of the advice from Bruce Chapman, Peter Noonan and others who participated in the public debate about this question. This is not something that has been dropped at the last minute. We canvassed this specifically in the second report, which was tabled on Monday, and I have publicly made numerous interventions in support of this proposition. So for the minister to say, 'we only just heard about this' defies logic, as he says.
If we deal with the issue of price capping as a principle, I think this is significant because the government does not actually like the idea of controlling the costs, which is an essential element. There is a very important philosophical difference. We say these amendments are additional measures, insurance measures, for allowing the Commonwealth to contain the costs of vocational education under this scheme. We know that unless you control the costs—and that is what all the education experts point to—you will not be able to contain the rorting that has been going on. So the government's approach has been inadequate because of a philosophical question about the role of the private sector, and this is why it has dragged the chain so much in all of this. The idea that a panacea will be arrived at by student choice has been demonstrated to be completely wrong. Students have very little choice in this because the fundamental premise of the scheme is that 90 per cent of them will not actually ever have to pay back the loans. It is predicated on the assumption of incredibly small success rates.
The minister suggests that the vocational system is somehow different from universities. Let me tell you, Minister, I am sure you would be aware of this. Your officials will tell you this. There are probably over 10,000 university courses operating at the moment, and they seem to be able to manage with the three broad brands of student contribution being set in regulation. There are in fact 10,000 or so university courses and there are only 6,300 vocational courses. There is actually more activity in the universities, more diversity than in the vocational system. There are 750,000 domestic university students. You say, 'It doesn't regulate in regard to non-university providers.' The truth is that they do not get the level of subsidy so they do not get the Commonwealth supported places subsidies that the universities get. That is all the more reason that you have got to regulate costs of provision. That to me is a really big question, because you are forgetting that in the vocational system there is an additional subsidy that is provided and that is by the states
They are crying out for this. My conversations suggest to me that states are demanding controls on the prices.
Senator Birmingham interjecting—
They are providing a subsidy. A huge number of VET FEE-HELP providers also get a state subsidy; they are not relying entirely on Commonwealth monies. Why is it that in Victoria probably up to 10,000 qualifications have had to be withdrawn on—
Senator Birmingham interjecting—
Because they get state subsidies as well. When it comes to the question of confidence, Minister, you said the same in March when you announced these changes. Much was said about confidence, and we know that the rorting and malpractice continued.
Labor's amendment is fair, reasonable and necessary. It is necessary to protect the Commonwealth; it is necessary to protect students; and it is necessary to restore confidence. This is where real confidence is required—not by the government but by the public in our VET system. The public needs to be confident that we have reputable, quality provision of training that leads to real qualifications of high standing and real jobs. That is what is lacking at the moment.
I firstly want to deal with the inaccuracy inherent in what Senator Carr was saying about state subsidies. States do provide subsidies in their VET system. Since the expansion of VET FEE-HELP, states have largely withdrawn the rate and the amount of subsidies they provide for diploma and advanced diploma courses. It is important to remember that VET FEE-HELP is only available for those diploma and advanced diploma course. Overwhelmingly, state subsidies are directed to certificate level courses. The VET FEE-HELP scheme is not generally available to certificate level courses. So, in that regard, Senator Carr, you are quite wrong.
Do the states want to see the rorting in VET FEE-HELP ended? Yes, absolutely. Does the government want to see it end? Absolutely. Do you want to see it end? Absolutely. We all want to see it end, Senator Carr. We might have disagreements on how we can best end the rorting that has occurred, but we all want to see it end. But by no means are the states on the hook for additional payments because of the growth that has occurred in VET FEE-HELP. It is quite the contrary: the states have actually reduced their support as a result of the growth of VET FEE-HELP across those diploma categories since the previous government opened it up.
As I have said before during this debate, the primary problem that we have seen in the way VET FEE-HELP has been used and abused is not the case of good, well-intentioned students seeking employment outcomes being ripped off in terms of the price of the course. The primary problem has been the targeting of vulnerable individuals to sign up for courses that they are either ill-equipped to undertake or have no intention of actually undertaking. Overwhelmingly, the government's reforms rightly target the primary problem. We are targeting that primary problem in a range of ways. We are making sure that there are minimum prerequisites for students entering into those courses, so that there will be confidence in future that, if you are starting a course, you are in fact capable of being enrolled and completing that qualification.
Of all of the tightening that has occurred in relation to other enrolment practices that we have put in place, importantly, we are also tightening the ability of providers to be in the system. We have now tightened the value of the loans to stem the growth while we seek to re-write the system and enhance the powers of individual students to be able to seek recourse and get their money back for wrongful practices and enhance the powers of the minister to be able to intervene where wrongful practices occur and to be able to suspend new enrolments and payments to those students. So it is quite a comprehensive reform package. It is a comprehensive range of reforms that are directly targeted to the primary problem of the dubious enrolments that have occurred and the serious malpractice of providers around those dubious enrolments.
Senator Carr, I acknowledge that, on this issue, we differ. That is clear for the Senate and all to see. I want to drive efficiency in pricing across the VET sector, but I do not want to drive out competition in pricing and I do not want to drive out innovation and differentiation in the VET products that are offered. I am afraid that that is what would be the logical consequence of the amendment that you are proposing. That is why the government cannot accept it. As we look to redevelop this scheme in 2017, we will absolutely be looking to find ways to get the most efficient pricing behaviour across both providers and students to occur in the VET sector. But we will not support what we think are measures that would stamp out competition and risk innovation and diversity in the offering that is available to students to help them train and be skilled and secure jobs in the future.
The CHAIRMAN: The question is that amendment (2) on sheet 7800 be agreed to.