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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(a) investigate consumer complaints;

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

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

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

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