Monday, 16 March 2015
National Vocational Education and Training Regulator Amendment Bill 2015; Second Reading
Labor supports the Vocational Education and Training Regulator Amendment Bill 2015, although we wish the government had moved much sooner to ensure appropriate regulation of the VET sector. The bill aims to prevent shonky operators from exploiting vulnerable people by offering inducements to undertake courses of dubious worth. Labor has been warning about these schemes for almost 18 months. Beyond that, the government must be aware that there is a long history of dodgy private providers with flimsy credentials—or none at all—in higher and vocational education. We have had to clean up this sort of mess before. The former Labor government did so and, as I think is recognised, there are now no more shopfront degree mills. We introduced the regulators which cover these areas to stamp out these practices. There are no more purported universities run out of diving shops on Norfolk Island, whisky wholesalers in Adelaide, or post-office boxes in the vicinity of the black stump.
There is now, however, renewed cause for concern. Some of these fly-by-nights may be poised to fly back if the Abbott government succeeds in deregulating higher education fees and opening up that sector to more private provision. But at least the government has finally decided to act against the unscrupulous amongst the registered training organisations, or RTOs, and their agents in the VET sector. It could hardly have done otherwise. At Senate estimates, the national regulator of the sector, the Australian Skills Quality Authority, indicated that it was investigating 23 providers. The authority reports that it has received almost 4,000 complaints and conducted 3,000 audits since it was established by the former Labor government in 2011.
Last year the member for Cunningham and I called on the Auditor-General to investigate VET FEE-HELP to ensure that skills funding was being used in accordance with the intent of the legislation. The Auditor-General has requested that a performance audit be included in his office's 2015-16 work program. There have been a spate of media reports about the practices of VET operators. I draw the attention of senators to a report published in The Australian today concerning students enrolling in a one-year, part-time diploma in salon management at the Australasian College in Sydney. This course costs students $27,880. That is more than the cost of a three-year arts degree at the nearby University of Technology, Sydney, which is $18,456 after federal government subsidies. But graduates of the salon management course are not qualified to work as hairdressers or beauticians. At least they know that—or they should.
Some dodgy operators whose activities have been reported over the past 18 months, however, do not tell their students what they need to know about the courses being spruiked. They prey on the unsuspecting, signing them up for large VET FEE-HELP debts. In many cases, new students are not even aware that they have signed up for a course, let alone a debt that is often about $20,000. The problem is exacerbated when these RTOs employ brokers to recruit students on their behalf and then attempt to distance themselves from those operators.
The bill contains no specific consumer protection provisions, but it does allow the minister to respond more rapidly on issues of quality control. The minister will be able, through legislative instrument, to declare quality standards. This bill also takes some steps towards making registered training organisations responsible for the actions of their brokers. It prohibits a person from advertising or offering to provide all or part of a VET course without including the name and registration code of the responsible RTO; it makes satisfying the quality standards a condition of registration; it extends the operation of penalty provisions to trading corporations; and it clarifies the definitions of 'quality standards', 'registered training organisation', 'registration code', 'VET information' and 'ministerial council'.
Last week the Assistant Minister for Education and Training announced further changes to deal with rogue providers. They will come into effect on 1 April under the new National Standards for Registered Training Organisations. Providers will be banned from offering inducements—such as cash, meals, laptop computers or other prizes—to get people to sign up for courses they do not need. It will be impossible for providers to levy all fees in a single, up-front transaction. This will ensure that students have a chance to consider their options before incurring a VET FEE-HELP debt. Providers will also be required to give students clear information explaining that VET FEE-HELP loans are real debts that they must repay and which may affect their credit rating. It will be easier for the government to cancel student debts generated by providers who breach the guidelines. Miraculously short 'diploma' or 'advanced diploma' courses will be banned and a requirement for a minimum number of units imposed. Brokers and marketing agents will be prevented from freelancing—signing up as many students as possible—without the training provider being held responsible for their actions. Labor is pleased that the government has finally heeded our warnings about shonky operators. We look forward to receiving details of the new measures and to supporting them if it is clear that they will operate as the minister has indicated.
Dodgy operators load not only their immediate victims with debt; in many cases the debt is borne by the taxpayer and increases pressures on the federal budget. The report in The Australian that I mentioned earlier states that some private colleges are charging up to four times as much as government-run TAFE courses. The nation's student debt bill is ballooning. This is another respect in which the experience of part-privatisation of the VET sector provides a cautionary tale for what might happen in a deregulated higher education sector. In 2013, $709 million was spent on VET FEE-HELP. Last year that figure had blown out to $1.6 billion. A report by the Grattan Institute has warned that 40 per cent of these loans will never be recovered. Therefore, they are a burden on the Commonwealth and on the taxpayers of Australia.
The government has an opportunity to learn from the intervention that it has had to make in the VET sector. What we are seeing is how open markets can easily get out of control. Where there is deregulation and subsidisation of private providers, people will charge whatever they think they can get away with. That is what has been happening in the VET sector. The changes are undermining the traditional, publicly owned and operated TAFE colleges, which train people in skills that are vital to the economy. The changes are allowing private operators to transfer to the nation the cost of boutique courses that may be briefly fashionable but which do not offer students long-term career prospects and which add little or nothing to the national skills base. This is already a disaster. If the government succeeds in its goal of allowing the higher education sector to suffer the same fate, this disaster will become far worse.