Tuesday, 18 October 2016
VET Student Loans Bill 2016, VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016, VET Student Loans (Charges) Bill 2016; Second Reading
I rise today to speak on the VET Student Loans Bill 2016 cognate debate. In doing so, I begin by saying: finally we are seeing the government prepared to come into this House and take some action on an issue which has been growing and growing and being continually ignored under their watch. Unfortunately, we believe that these changes are too little too late, but I guess we do say 'Better late than never.' We should have seen legislation to improve VET FEE-HELP before the parliament years ago.
Let us just stop for a moment and consider what would have happened if the government had done their job when they should have—years ago. Years ago, if the government had acted sooner, billions of dollars—not millions, billions—could have been invested in apprenticeships and TAFE instead of being wasted on dodgy providers. We know that change is absolutely urgent and, now that the bills are finally before the House, I can offer Labor's in-principle support in the House as we await the outcomes of the Senate inquiry. But the reality is that the bills before the House today are only one part of the issue. We know that one incredibly important part of the puzzle is to close the loopholes in the VET FEE-HELP scheme but we also know that that is not the entire solution. The proposed changes do not do anything to turn around the decline in our public TAFE system. The government have stood by as unfair competition has run absolutely rampant, quality has declined and students have been squeezed out of our quality TAFEs and lured away by far too many shonks. We have seen the breadth and depth of TAFE courses decline; we have seen campuses close; we have seen fees rise. The bills before the House today do not fix the crisis that is currently being faced by TAFE, but it is a crisis that must be fixed. We on this side of the chamber will continue to stand up and fight for a quality TAFE sector across Australia because we know how incredibly important it is.
Not only do these bills not address the crisis, but from the middle of next year there is nothing in this government's budget to continue the national partnership that funds TAFE and skills—nothing. The Assistant Minister for Vocational Education and Skills has been on the record in the past week questioning whether there is even a need for a replacement agreement—essentially questioning the role of the Commonwealth government in supporting TAFE at all. That is extraordinary! Australians ask themselves time and time again: why does this government have such an ideological problem with supporting public education in this nation? And time and time again it is Labor, on this side of the House, who stand up and fight for public education. In this instance, it is Labor who will stand up and fight for quality TAFE and vocational education.
The tardiness in dealing with the billion-dollar blow-outs, the rorts and exploitation in VET FEE-HELP is, sadly, in line with the modus operandi of this Prime Minister and this government when it comes to policy. It seems to be the Turnbull template: they ignore a problem that is there in plain sight; they dither; they blame someone else; things get worse; and finally—sometimes, if the problem proves to be bad enough—they belatedly jump on board, try to copy Labor's policy and take the credit for it. The concept behind the bills before us today is no different. It is almost a carbon copy of the VET student loans policy that Labor announced in May and took to the last election. Of course, our concern is not necessarily with the concept. Our concern, when it comes to this government, is about the detail, the implementation and getting the delivery right. If history is anything to go by, there is nothing to suggest that they will not stuff those things up too.
We know that we were the ones who came forward and said we should cap student loans to stop rip-offs. In this legislation the government have copied that. We were the ones who said that we should crack down on the use of brokers. The government have come forward and copied that. We were the ones who said we should link publicly funded courses to industry needs and skills shortages, and here we see the government copying that too. We said providers should be required to reapply under new standards so that only high-quality providers could access the loan system. Here today—yes—we see that has been copied. And we were the ones who said that public funding should be linked to student progress and completion. That too has been copied here.
We have also advocated for an ombudsman for the system. There needs to be someone to hear student complaints, because far too many students have been the victims of government inaction in this area, and we will be moving some amendments towards that in the consideration in detail stage of the bill. Although I note that the government said last week that they would create an ombudsman—again, belatedly; again, copying Labor's ideas—there is nothing in this legislation that actually does that.
We know, of course, that mimicry is the sincerest form of flattery, and what is concerning here is not that they have copied Labor's ideas—that is fair enough; we wish the government would do it a whole lot more often—but the hypocrisy with which they have done it, after so roundly panning the very same proposals. It is a complete 180; it is a backflip of Olympic proportions. In May this year the Liberals were falling over themselves to criticise Labor's policy proposals. Today they are moving them in the Australian House of Representatives and trying to take the credit for them.
Let's just have a look at what they said on the record. When Labor announced a policy of capping student loans, the Treasurer, Scott Morrison, said it would 'pull the rug out from under the private education industry'. Today his government is proposing to do just that. The then minister, Scott Ryan, called it 'classist policy' and a 'thought bubble' that, he said, 'will lead to up-front fees for VET students'. He also dismissed Labor's suggestions as 'impulsive, ill thought through, ill-considered' and a 'sound bite'. Senator Simon Birmingham, now the minister, said they were: 'an ill-considered flat pack'. He also said a price cap—and I should point out once again that central to the legislation the government is putting forward here today is a price cap when it comes to vocational education—'would simply, in effect, establish a government sanctioned price'. He brushed off the concept, saying, 'When you set a price cap, everybody simply shifts to the price.' But in the bills we have here today the same senator is now proposing three different price caps, at $5000, $10,000 and $15,000.
Perhaps all of this is a symptom of the fact that there has been a revolving door in the government when it comes to responsibility for technical and vocational education. It shows just how little they think of this sector that each of the five ministers who have held the portfolio over the last three years—that is right: five ministers in just three years—has been focused more on politics than on policy.
This has not been a priority and the sector has suffered gravely as a result of that.
I fully anticipate that during the course of this debate what we will see from the talking points issued to those opposite is that one after another they will do what they always do. They will stand up and they will say that this is all Labor's fault, like everything else in this place—'It's all Labor's fault'. Blaming Labor for the blow-outs and the mess that have occurred under their watch is just not going to wash. The minister's own media release when he announced these reforms and his belated discussion paper made it clear that the annual value of VET FEE-HELP loans was about $700 million in 2013. In 2014, when they were in government, it jumped to $1.8 billion, an increase of around 250 per cent in just one year, a 250 per cent increase under their watch.
The next year, 2015, we saw the loan book balloon again, to about $3 billion, another massive annual increase, of around 160 per cent. In just two years, between the Liberals coming to government and the latest figures, the VET FEE-HELP scheme blew out, incredibly, by more than 400 per cent. To preside over this is not an indictment of Labor. It is an indictment of absolutely each of the five ministers who have held this portfolio and who have failed to act.
Listening to the government, I am sure that we could be forgiven for thinking that the crisis facing technical and vocational education was new, that the bills before the House were a quick reaction to an emerging problem. But, as I have just established, it is not. This is not a new or emerging problem. The alarm bells have been ringing for years about this issue. They have not been silent. They have been splashed across the front pages of papers. They have been exposed by Senate inquiries. They have been brought up time and time again by victims, teachers, experts and by Labor, who have been urging the government to act. The problems have not suddenly emerged; they have been around for years. And no policy is ever a success unless the government of the day is diligent, sober and responsible in managing its implementation and operation. No-one builds a hospital and then forgets about it. But that is exactly what seems to have happened to the VET FEE-HELP scheme.
By looking to place the blame on changes made in 2012, rather than taking responsibility for the scheme over the last three years, the government is admitting that they took their eye off the ball. They sat back, they wrote cheques and they failed to pay any attention to their responsibility for administering government programs. The department would have been making payments to providers on an ongoing basis throughout 2014 and 2015. Why wasn't this exponential growth trend properly addressed as it emerged? Did no-one tell the minister? Did the minister simply fail to read their briefs? Did the minister know what was going on, but fail to act? If trends and issues were identified, why wasn't effective action taken then? Those are the questions that we demand answers to. And those are the questions that Australian taxpayers demand answers to, after seeing billions of their hard-earned dollars wasted in this space.
Perhaps it was because the minister changed so regularly. Were they never in the seat long enough to understand the issues and do anything about them? One of these explanations has to be true. We just do not know yet which one it is. None of them is acceptable. And it does not matter which one is the truth, because they are all equally damning. They are all equalling damning on the government that sits at the table today.
There is one final and fatal logical flaw in the government's argument that Labor somehow caused the VET FEE-HELP program to blow-out under their watch. If they knew something was wrong on day 1, why didn't they fix it on day 1? It does not matter which way you look at the facts, the government is guilty of abdicating their responsibility for the careful use of taxpayers' money, and for protecting students from exploitation, because it is students as well as taxpayers who have suffered greatly as a result of the government's incompetence.
We know there are many facts that have been put forward that the government chose to ignore. In October 2014, the ABC reported that the Department of Education had received reports of students being signed up to courses without their knowledge. But there was no government response. Why didn't the government take action at that point to stamp out these practices?
The same report, in October 2014, showed inappropriate student enrolments and the blow-out in costs under some private providers, compared to TAFE. The government's own figures show that average VET FEE-HELP tuition fees have grown from $5,900 in 2012 to over $14,000 in 2015. Why didn't the government stop the price gouging when it was first identified, when it was pointed out clearly to them?
One of the many extraordinary stories of blatant misuse of this scheme was reported by the TAFE Community Alliance in the course of last year's Senate inquiry. They reported how a woman in her 70s, who was having lunch with her bible group at Bankstown central shopping centre, was approached by a broker and offered a 'free' laptop and what was explained was a 'free' diploma of community services. She was told she should not worry about signing up, because she would only have to repay the fee if she earnt over $50,000.
Did I mention that this was a woman in her 70s at her local bible group? We know that this was an example of misuse. She was then offered $400 as a spotter's fee if she was able to sign her friends from the Chinese community so they could also be a part of this scam. Just like in so many other cases, there was nothing free about this. Every cent of it was taxpayer's money. And there was nothing fair about this. In fact, it is an absolutely clear-cut case of exploitation. Why weren't brokers banned earlier, when these stories were publicly coming to light?
In 2014, the graduation rate for the 10 largest private providers was under five per cent: $900 million in federal money, over $215,000 for each graduate. Why wasn't something done then to re-accredit providers and make sure students completed courses? When some changes were made to the scheme last year, and Labor at that point warned they were inadequate to deal with this situation, why didn't the government take the opportunity to work with us to fix the situation properly?
Unfortunately, there is a very clear pattern of too many questions and not enough answers in the way the government has managed—or, indeed, entirely mismanaged—the VET FEE-HELP scheme.
Looking forward, though, we know that students must be the priority, for the government and this parliament, in restoring the quality, the reputation and the integrity of Australia's technical and vocational education system. We must work together to make sure that it does meet the needs of students, employers and the economy. And, more than anything else, we must make sure that students are protected from the kinds of exploitation that we have witnessed all too often in recent years.
The House will be familiar with some of the worst examples: shonks waiting outside Centrelink to take advantage of people facing difficult circumstances by signing them up to dodgy training and bad debt; brokers travelling to remote Aboriginal communities and convincing locals to sign up en masse. The minister's own discussion outlines a 650 per cent increase in Indigenous VET FEE-HELP enrolments since 2012, a 500 per cent increase in students from very remote communities, a 180 per cent increase for students with a disability, and a 172 per cent increase in students with low socio-economic backgrounds. All of these vulnerable groups have been over-represented, and there is no doubt that this is a consequence of the unethical selling which has been so widely reported, yet which the government have failed to act on. As a result, many disadvantaged students now carry significant debt—and, as independent analysis shows, a significant proportion of them will probably never ever be in a position to repay it. Across the board, there are too many students whose hopes have been crushed by dodgy providers, and who have been left with big debt and no qualification to show for it.
So, whilst Labor does support the bills before the House in principle, we also have a number of concerns. In particular, we have concerns about the lack of available information at this stage on how the re-accreditation process will work for providers and on the ability of the department to assess providers against complex criteria in such a short period of time.
At this stage, the new standards have not been published, and they will contain a great deal of important information about how the new accreditation framework will operate. We hope that the Senate inquiry will provide an opportunity for the parliament and for stakeholders to consider these important elements.
It will no doubt be a significant challenge for the department to develop methods of assessing the suitability of providers in such a short amount of time—and with so little opportunity to consult on or to trial the methodology that they intend to use. It will also be an enormous challenge for the department to be able to rigorously assess hundreds and hundreds of providers against the standards in the available timeframe. We sincerely hope that the government ensures that there are adequate expertise and resources deployed for this task, because we know that the VET sector simply cannot afford for this process to fail.
Labor also wants to see the government engage meaningfully and constructively with the sector in finalising the approved course list. I hope that the minister is seeking expert advice about the demand for skills, the employment and business prospects of students as a result of courses, and the transferrable skills that students acquire.
While it is really easy to get headlines by striking some courses from the list, we know that it is predominantly courses in management and business administration that have caused the blow-out in VET FEE-HELP. It is really important that the minister gets the course list right and that he does not throw the baby out with the bathwater.
On this side of the House, we have already been contacted by good-quality and longstanding providers that have fallen foul of the government's proposed course list—particularly in some creative industries. The government needs to make sure that they do not use this opportunity in order to pursue some ideological crusade on what they consider to be 'worthy' study and that instead they use this opportunity to deal with rorting and exploitation.
Of course, the course list is not contained in the bills that we are debating here today; it will not be voted on in the House at this stage. But we do put forward that we have heard concerns, that we have significant concerns and that the minister needs to make sure that he gets it right. He needs to make sure that they recognise that there are many courses with value, and many good providers with a proud history. There are many courses which improve the skills, employability, work readiness and job prospects of Australians, and we need to make sure that we do not inadvertently limit those prospects.
We also have a particular concern about how the transition to the new scheme will impact on students—in particular, students who might, for whatever reason, need to extend their study under the VET FEE-HELP scheme past the end of 2017 when the grandfathering provisions in this bill expire. If the student needs to repeat units, or if they have been ill, or if they have had to undertake their studies part-time or to defer part of their course, for whatever reason, it would be incredibly unfair if they had to face large and unexpected gap payments as a result of this measure. More alarming still, they may be left liable to pay full course fees up-front because the provider or course is not approved under the new scheme. These circumstances, should they occur, would not be the fault of those individual students, and we believe that students have paid the price for this government's mismanagement in this sector too much already. We will be standing, looking and working very carefully to make sure that this does not occur again.
I did want to say that the changes in the bill to ban brokers are welcome, and, in the course of the Senate inquiry, we hope to get the full details about what this will mean in practical terms. The bill bans brokers from having a role in the VET student loan scheme, but it is unclear at this stage what this will mean for brokers more broadly.
I also note that concerns have been raised by the TAFE directors association and others that the bills do not go far enough in delivering the governance reforms that are needed to permanently clean up the sector. Again, I hope that this is something that can be clarified in the course of the Senate inquiry.
We understand the urgency of these bills. We have been arguing for them for years. But it is an urgency that the government have brought upon themselves. A consequence of this rushed process now has been a lack of consultation and a lack of scrutiny of the details of the proposed policies. I understand that many in the sector were promised that they would see a second discussion paper on these reforms and would have the opportunity to comment on detailed proposals. This promise has not been fulfilled, making it all the more important that the government presents full and accurate information to the Senate inquiry so that stakeholders can at least get across the detail of these changes in that contract.
Most importantly, the bills before the House will hopefully restore the integrity of the VET loans system but they will do nothing to fix the broader crisis. The government needs to recognise this. The government needs to recognise that Australia needs a healthy, strong and diverse vocational education sector. By the government's own account, as a result of this bill, there will be $7 billion less in federal funding going towards vocational education in just the next four years—$25 billion in the next 10 years. The government needs to ensure the long-term sustainability of this sector. The government needs to ensure that we have strong and healthy TAFEs. While we will work with the government to try and close loopholes and stop rorting in VET FEE-HELP, the government needs to come on board and work with us when it comes to standing up and fighting for TAFE and public education. The government needs to work with us when it comes to ensuring the long-term viability of a sector that is so central to our economic future. The government needs to stand with us when it comes to investing in skills, in traineeships and apprenticeships.
And the government will have the opportunity to do that because in just over six months time a new national partnership with the states and territories will be required. I can place the government on notice here today that Labor will be standing up and ensuring that this national partnership guarantees the strength of the sector. We will be standing up and ensuring that this national partnership reinvests in TAFE—that we prop up the TAFE system, which has suffered incredibly badly in recent years. Our overwhelming concern is that nothing in these bills will help to rebuild and restore our TAFEs.
We know that a lack of action on this front is not surprising from a government that has had such a poor attitude when it comes to TAFE. But we were shocked that just last week the senior minister, the member for McPherson, question whether the national partnership for skills was even needed in the future. She said she was meeting with the states to 'determine whether there are reforms to VET that warrant a new agreement'. This is deeply concerning. The current national partnership expires in the middle of the next year. What does this mean? It means over $500 million in Commonwealth support for TAFE and skills is on the line—and the minister does not seem to know whether they will need a new agreement to replace that at all!
Labor is absolutely clear: we back public TAFE. That is why we took a TAFE funding guarantee to the last election. We know that that is where people get the technical and semi-professional skills that they need for growing industries. We know that that is where the skills that are being demanded by industry are and it is where the skills that Australia needs to be competitive with other countries are. Generations of Australians know just how important TAFE is to our community and to our economy. They know the first-class skills and opportunities that going to TAFE can provide. Well, we need the government to know that too; and, more than that, we need the government to step up and act in that area. VET, TAFE and apprenticeships are crucial to jobs in our economy. They are crucial to the incomes, the wellbeing, the hopes and the dreams of so many Australians.
I genuinely hope the government has turned a corner from here—that after years of inaction and years of incompetence they will do what is best for students, employers and the sector. I genuinely hope they work to get the implementation of these changes right. But there can be no doubt that this government's maladministration of the VET FEE-HELP is one of the most egregious examples of waste and incompetence in the history of federal government; it is extraordinary. No amount of finger pointing, no amount of huffing and puffing from those opposite will be able to change that. It stands on the record. It stands on the record of the five ministers in three years who sat by and did nothing. But it also stands as a burden to every single member opposite who just did not think vocational education was worth standing up for, who did not think it was important enough to have a look at the information that was publicly available and ask some questions of their own government, who did not think it was important enough that they protect taxpayer dollars which were clearly being misused in the most ridiculous fashion. It is because of that that I move:
That all the words after “That” be omitted with a view to substituting the following words:
“whilst not declining to give the bill a second reading, the House condemns the Government’s failure to properly administer the VET FEE-HELP scheme, leaving taxpayers and students to deal with the consequences of their mismanagement.”
On listening to the contribution by the member for Adelaide I can only say that they have short memories with regard to public administration. Who can forget pink batts, green loans, cash for clunkers and $900 checks to dead people? The list is endless when it comes to Labor's maladministration. And who can forget that the members opposite are in fact the architects of the problems that we are fixing.
I am very pleased to speak on this reform package. In 2015, as Minister for Vocational Education and Skills, I introduced legislation aimed at strengthening protection for students, helping the interests of taxpayers, pushing unscrupulous operators out of the business and ensuring that our vocational education and training sector was held in the high regard that it should be. And I am pleased that good Minister Birmingham has continued that good work, and that has manifested itself in the legislation before the House today.
Australia's vocational education system is world leading. The outcomes delivered through our system are relevant and valuable in the modern economy of the 21st century. Our VET teachers and instructors are well regarded, and students and employers value the qualifications that can be earned through Australia's VET system. Unfortunately, Labor's VET FEE-HELP loans program has let the entire sector down. Labor's flawed scheme was not sustainable. It was characterised by rapidly rising fees, debts for students, poor student outcomes and the proliferation of unscrupulous providers. Labor removed the requirement for VET FEE-HELP courses to be linked to further study at a university level. They required little accountability from registered training organisations or their agents.
Labor designed the program with in-built incentives to rort the system, and it did not take long for unscrupulous providers to take advantage of Labor's architecture. It allowed training providers and their agents to market courses as free or government funded, when in fact they were not. Several years ago my staff observed brokers from a VET FEE-HELP provider standing outside the soup kitchen in Coffs Harbour using free iPads as bait to lure homeless people into signing up for expensive diploma courses.
When Labor threw open the VET FEE-HELP floodgates, the scheme blew out from costing $325 million in 2012 to $1.8 billion in 2014 and $2.9 billion in 2015. Student numbers jumped by almost 400 per cent, fees more than doubled and loans increased by 792 per cent.
In 2015 the government implemented a range of measures in an effort to put the program on a sustainable footing. We banned inducements and tightened the eligibility criteria for providers. We put new rules in place to ensure that prospective students had the minimum literacy skills needed to complete a course. We stopped brokers from marketing courses as free, and we required training providers to tell prospective students that VET FEE-HELP was a loan and not a grant from the government.
In total, we implemented around 20 separate measures to get VET FEE-HELP under control. However, it quickly became clear to me that Labor's VET FEE-HELP model was utterly beyond redemption. The only option was to freeze the program in 2016, stop the unsustainable growth and rebuild the program from the ground up.
The sad thing is that this whole situation is downgrading the reputation of hundreds of honest training organisations who are delivering quality services. This sad and sorry saga has harmed the reputation of the Australian VET sector. The entire sector has been dragged down by the handful of dodgy training organisations. We need to restore trust in the sector, and this legislation will go a long way towards doing that. VET FEE-HELP was a mess of Labor's making—just like pink batts, green loans, cash for clunkers and cheques for dead people. However, the reform package that we have before the House will introduce a new concessional loan program for vocational education students studying at the diploma level and above.
Loans under the new VET student system will only be available for courses that are a national priority, align with industry needs and provide a reasonable prospect of employment. Australia's vocational education system offers a wide variety of courses, which is a good thing. But there are many courses that could be described as lifestyle courses—subjects that may be interesting and that may be stimulating, but are unlikely to lead to employment. There is nothing necessarily wrong with these types of courses, but they should not be funded by the Australian taxpayer. If someone wants to do a diploma of energy healing, that is fine; but taxpayers should not pay for it. The same principle applies to diplomas of fashion styling, veterinary Chinese herbal medicine and many other qualifications that are interesting but not a national priority.
The minister has released a long list of courses that will be eligible when the new VET Student Loans program begins. Interested stakeholders can provide feedback on that list until 23 October. As national priorities change, the list will be updated.
This package of reforms is dynamic, flexible and sustainable; but, more importantly, it is sensible and fair. It will put a cap on the loan amounts for specific courses, whereas under Labor's system the sky was the only limit on course cost. One of the great problems with Labor's VET FEE-HELP system was that it contained no price signals for students or providers, so training organisations just charged whatever they wanted. I saw numerous examples of courses for a cash price of $3,000 to $4,000 but a VET FEE-HELP price of $15,000 or more—outrageous behaviour.
The properly considered caps that are part of this program were chosen based on analysis of the course prices under the NSW Smart and Skilled program and validated against average VET FEE-HELP fees prior to the exorbitant rises in course fees in recent years. There will be some exemptions to the caps where there is a demonstrated need, particularly in areas such as aviation, where courses can cost as much as $80,000 or more.
It is worth noting that providers can still charge above this cap, and, if so, students will be required to pay the difference. Some students may choose to do this; however, many are likely to seek an alternative provider who charges fees that are within the allowable cap. The loan caps are not an attempt to stymie business or to prevent providers from making a profit. But it is expected that loan caps will put a stop to the exorbitant rises in course fees that we have seen in recent years.
In addition to the fee caps, students will need to show progression through a course to be able to continue to access to a VET student loan. Students undertaking a longer VET FEE-HELP course will be able to apply to have their current arrangements grandfathered until the end of 2017. A fee will now be required for providers of VET FEE-HELP loans to enable them to offer VET FEE-HELP courses; they will also be required to pay an annual levy for this service. Existing VET FEE-HELP providers—with the exception of some existing bodies such as TAFEs—will have to apply under the new program. Again, the aim of the reform package is to put checks and balances in place to better regulate the sector and to raise the bar.
The reform package also bans the use of brokers and agents to recruit students for VET Student Loans courses. Brokers were a large part of the problem with Labor's VET FEE-HELP system, as they had a financial incentive to sign up as many people as possible, but they had no accountability when the students proved incapable of completing a course or repaying the loan. This reform package will also retain many of the reforms introduced last year, including a ban on the use of inducements such as iPads or laptops, and a requirement for a parent or guardian to approve a VET student loan for a student under the age of 18.
I have met with numerous excellent training organisations in my electorate of Cowper and around the country. Our local North Coast Institute TAFE is an excellent provider of quality training and is doing a wonderful job in developing and delivering high quality qualifications. Many of the organisations are delivering absolute quality outcomes, and they are frustrated that their reputation, along with the reputation of the whole sector, is being dragged down by rogue operators who profited under Labor's VET FEE-HELP regime. Unfortunately, many of my constituents have been left with large loans as a result of the scheme introduced by Labor—loans that they cannot repay for courses they did not want and were effectively tricked into signing up for by unscrupulous brokers and operators.
I am pleased that the government is moving further down the path of reform through the changes that we are debating in the House today. This is important legislation. It protects the students and the taxpayers of the North Coast and it protects the students and the taxpayers of Australia more generally. The changes that come into force with this legislation will build on the legislation that I introduced last year. It will protect North Coast students from the sharks and unscrupulous operators who have done so much damage to the VET system and so much damage to many students. I commend these bills to the House.
I rise today to speak to the importance of a robust and effective VET sector. As an educator first at TAFE and then at higher education institutions, I know that not every person can, should or, indeed, wants to go to university. I also know that not every industry, not every job and not every vocation can have, should have or, indeed, needs to have university graduates. What they need is a well-trained workforce, focussed on competencies and practical skills.
Australia's training framework was world-renowned for its responsiveness to industry needs and for its quality framework. Education is one of Australia's most valuable exports, and it is one that is worth protecting. But this government's inexplicable sluggish and tardy response to malfeasance in the VET sector has put the education industry and Australia's reputation as a world-class, quality training provider in danger.
VET works for students, for employers and for the community. Western Australia is facing increasing unemployment as the mining boom winds down and people need access to training courses to acquire new skills and develop their employment potential. It is all very well and good for this government to talk about jobs and growth, growth and jobs, but people cannot get jobs if they are not trained or qualified to do the work and if they cannot get the quality training they need to do the work.
In my own life, training and education have played a significant role in helping me to get off a single parent pension and improve the economic and social circumstances for me and my children. I am living proof of just how life-transforming good education and training can be. I started out my career as a teacher at TAFE, where I set up a program that focussed on outcomes—a program that helped adult learners who were re-training in the health sector to ensure that they not only successfully enrolled in their course but, more importantly, successfully completed their course.
Today it is a very different story. The focus on outcomes and on getting successful completions has completely been lost with the blow-out of the VET FEE-HELP scheme under this government's watch. Less than one third of students enrolled in VET FEE-HELP courses finished within three years. Completion rates for online diplomas are shocking—deplorably shocking—with just seven per cent of students completing their course. The government bill for VET FEE-HELP loans blew out by $315 million last year to $1.6 billion, or thereabouts. Modelling by the Grattan Institute estimates 40 per cent of those loans will never be repaid, meaning that taxpayers will wear that cost. According to a University of Sydney study, some of Australia's largest RTOs are raking in profit margins of more than 50 per cent off these loans. The examples are mind-boggling. Two providers owned by the same operator can charge $3,500 and $12,750 for the identical qualification. The previous speaker gave us several more examples, all of which occurred under his watch—not just as a member of the government but as the actual minister responsible.
VET reform is important, but we cannot let this government off the hook on its persistent mishandling and refusal to do anything about this, despite being called upon time and time again to do so. A comment from a piece in TheAge in 2015 says:
It beggars belief that the federal government has waited until now to freeze the level of funding it is providing to the myriad private companies offering vocational education courses via the VET FEE-HELP scheme. And even now, its efforts to curb the fraud and rorts in the industry seem tepid.
Labor supports the VET Student Loans Bill 2016 and related bills in principle, but in so many ways it is a case of too little, too late. Over the last three years, the Liberals have shown that they simply do not care about technical and vocational education or about TAFE. They have ripped $2.75 billion out of TAFE, skills and apprentices. Under the WA Liberals, TAFE fees have increased by more than 500 per cent and dozens of courses have been cut. It is simply not good enough.
Of course we support these bills, but that does not let the Liberals off the hook for sitting on their hands while dodgy private providers ran rampant and students were ripped off, leaving them saddled with massive debts. While it is commendable that finally something is being done about this, let's not forget that before the election it was Labor that proposed VET reforms, and now the government has copied them. Capping student loans to stop rip-offs—copied. Cracking down on brokers—copied. Linking publically funded courses to industry need and skills shortages—copied. Requiring providers to re-apply under new standards so only high-quality providers could access the loan system—copied. Linking funding to student progress and completion—copied. And a VET loans ombudsman—you guessed it: copied. Yet when Labor announced a policy of capping student loans, as we heard from the member for Adelaide, the response from the other side, from senior ministers in the government, was to rubbish it as 'ill-thought-out', 'ill-considered' and a 'classist policy'.
In closing, we do hope that the Senate inquiry into the bill will give stakeholders a chance to properly examine these issues, because the government did not consult properly with students or the sector on the detail of any of these changes. It should never have come to this, but now, after billion-dollar blowouts, the government seems to have finally woken up to itself. VET, TAFE and apprenticeships are crucial to jobs and our economy. As a representative of an outer-suburban electorate, where TAFE represents not just second-class alternatives for those who could not get into university but an actual pathway, a real pathway, a quality training framework for real jobs and real job creation, I hope, and Labor sincerely hopes, that the government will use these changes to do what they can for the best interests of students and for the best interests of employers. We genuinely hope that they work to get the implementation of these changes right.
I rise to support the VET Student Loans Bill 2016 and cognate bills, as presented by the minister. The state of vocational education and training in Australia is scandalous. The Gillard government's ill-considered changes in 2012 to the VET FEE-HELP loan scheme have seen a free-for-all in the vocational education and training market. Colleges with questionable business practices have rorted the federal government for all they could get, building unsustainable financial models that, when they fail, have a devastating impact on students, teachers, staff and the broader VET sector. Dishonest providers have engaged in price gouging and rorting. Training organisations are charging outrageously inflated VET FEE-HELP tuition fees compared to state subsidised courses. Some diplomas cost more than 500 per cent more than their state subsidised equivalent. This is a cost that is being directly borne by taxpayers. The VET sector is also developing a terrible reputation for the outrageous exploitation of vulnerable students.
We need a high-quality VET sector in Australia for a skilled nation, and jobs that require a vocational education qualification can provide a rich and rewarding life for people who undertake them, but we have all seen in recent months the public reporting that college agents hunt around Centrelink offices and train stations in low-income areas offering incentives such as free iPads and laptops to encourage enrolments in diplomas. We have heard of the colleges preying upon people with intellectual disabilities, preying on older Australians in retirement villages and preying on Indigenous students in remote communities—our most vulnerable Australians. In many instances, people who had no hope of finishing their courses were recruited and people who had no opportunity to repay their debt were recruited. Providers have been recruiting students into training programs with little or no hope of employment. Can you imagine what the demand might be for graduates in a diploma of veterinary Chinese herbal medicine or energy healing? Close to none. Colleges have outsourced student recruitment to third-party brokers with no oversight of their activities and recruitment methods. This is a terrible business practice and shirks at basic ethical and legal responsibility to their customers and to the broader community.
As an indication of how badly they have exploited some students, providers have been charged with unconscionable conduct and false and misleading representation. Further to these terrible and unethical practices of exploitation, reports of training organisations going bust have become distressingly common. Having set themselves up with little or no experience in education and, presumably, a similar level of business experience, these companies have taken the government for a ride and abandoned their students. These shonky practices have led to a loss of confidence by Australians in the vocational education and training sector, and that loss of confidence, sadly, is warranted given the results that the VET sector is delivering. Completion rates are dismal at only 22.9 per cent for all students. For online students, completion rates are only 7.8 per cent. That is outrageous. How can the government provide funding for a system that sees fewer than eight out of every hundred students finish their cause? This is a failing system.
Another indication of how badly the VET FEE-HELP program is delivering can be seen in the incredible blowout in costs. It has been four years since the Gillard government provided inadequate regulation for the scheme and we can finally see the true damage done by their irresponsible regime. Costs blew out from $325 million in 2012 to $1.8 billion only two years later, in 2014. That is a 550 per cent increase. Then costs exploded to $2.9 billion in 2015, a further 160 per cent increase. That is a total of 890 per cent increase in cost in only four years.
Sadly, these practices and these results have had a very real reputational impact on good providers, who continue to deliver high-quality courses and outcomes and whose businesses are being tarred with the same brush as those who have no interest in employment or educational welfare of students, but are only looking to make a fast buck.
The VET FEE-HELP program is further proof that Labor is absolutely incompetent in implementing government programs. Pink batts, school halls and now vocational training—program after program being implemented with inadequate regulatory frameworks. The Labor Party consistently puts in place billions of dollars worth of programs with no guidance and no regulation: no guidelines to ensure success and no boundaries to protect programs from spivs and shonky operators. Nothing could be better for a dodgy business, someone who takes shortcuts and plays with people's lives, than a Labor government.
The VET Student Loans Bill 2016 will fix Labor's mess. It is the next instalment of more than 20 changes that the government has made over the last two years to the vocational education and training system to fix Labor's poorly implemented scheme. The reforms we have put in place to date have had some impact on the problems in this sector, so much so that it is estimated that loans offered under VET FEE-HELP in 2016 will be several hundred million dollars less than in 2015. However, it has become clear that there is only one way to fix this broken scheme. It needs to be shut down. It is the only way to deal with the dodgy business schemes, the exploitation of students and the continuing reputational damage being done to bona fide training organisations.
The VET Student Loans Bill closes down Labor's failed VET FEE-HELP scheme. It introduces a new program with the required regulation and structure to ensure success. This bill will ensure that training organisations are high quality, that students are genuine and are supported in their education, and that loans are provided for courses that align to skill needs. This bill will protect students, taxpayers and the reputation of the majority of training providers and teachers who are doing the right thing.
Vocational education and training itself is an excellent and much needed element of the tertiary education system in this country. It is a sector that contributes to ensuring that Australians are properly skilled for employment. The VET sector that deserves to be supported by government, if supported properly, will contribute to better prospects for students, better outcomes for business and the growth of Australia's economy. In 2015, around 45 per cent of the financial assistance provided to the VET sector was delivered through the VET FEE-HELP scheme, and that scheme has not served the sector will. The lack of regulation tempted questionable operators to join the sector. It encouraged good operators to take shortcuts and it led to the loss of reputation of good businesses who have done nothing at all wrong.
The VET sector deserves well targeted, effective government funding that delivers outcomes for the sector, for students and for the Australian economy. The VET Student Loans Bill introduces a new program to provide loans to VET students. It delivers on the Turnbull government's commitment to redesign the VET FEE-HELP scheme so that it is affordable, sustainable and student focused. The new loan program introduced in this bill will address the most pressing issues facing the sector. Most importantly, this loan program is designed to support employment outcomes for students. Quality of providers is a critical element in achieving this. This program will see strong and proven performers, including TAFEs like the Hornsby TAFE in my electorate and other public providers, receive automatic entry into the new scheme. That is a great boon for TAFE. But new training providers will face a much more stringent test before they can access VET student loans. This will include assessing their relationships with industry, their student completion rates, the employment outcomes of their courses and their track record as education providers. It will no longer be possible for fly-by-night operators to exploit the system for their own profit at the expense of students and taxpayers.
We have a responsibility to ensure that education that is publicly subsidised meets the needs of the country as well as the needs of the student. As a government, we should not be subsidising people's general interest or lifestyle choices. Everyone has the right to explore new fields of interest; however, not every course should be subsidised by the taxpayer. Taxpayer-subsidised education should be restricted to education that adds value to our economy, quality education that is linked to employment and building the individual's capacity and future prospects. Government-funded education makes a valuable and important contribution to our society. It should not be watered down and have its impact lessened by including courses designed solely to satisfy the personal whims of individuals.
This program will direct funding to courses with proven employment outcomes that are linked to Australia's national skills priorities and align to industry needs. The government has worked closely with the states to ensure that the list of approved colleges aligns with their skills priorities lists. The list of approved courses includes those with the best employment prospects, proven through results. It ensures that the government is not subsidising courses relating almost purely to personal interest. It also ensures that students will not be duped or deceived into believing that there might be real jobs waiting at the end of their course unless that is an actual possibility. This measure will not only protect the taxpayer, but students as well. The program will put an end to the unaffordable and limitless subsidising of training organisations. Loan caps linked to the cost of course delivery should see course fees drop significantly as training providers no longer look to government to fund their profits.
The Labor Party went to the last election proposing a flat $8,000 cap on loans. Given the scale of the problem represented by the VET FEE-HELP scheme, which I have only touched on, this is an unbelievably inadequate response. A flat cap does not solve the problem of shonky recruitment. It does not ensure quality providers or support better completion rates or student satisfaction. This bill introduces a stepped loan cap based on the cost of course delivery. The outcome is fair for providers and will have a positive impact on students, as it will place strong downward pressure on course fees. It will also stop the enormous cost blow-out to government that we have seen over the last four years. It will stop the unsustainable impact on the budget.
This new program is forecast to see loans issued reduced by almost $2.4 billion per year, and it will see outstanding HELP debt—bad loans carried by the government—reduced by $7 billion by 2020. That is a reduction of $25 billion over the next 10 years. These are the outcomes the federal budget needs, and they will be achieved at the same time as course quality is improved, student outcomes are improved and the sector's reputation is repaired.