Simon Birmingham (SA, Liberal Party, Minister for Education and Training) Share this | Hansard source

You are right, Senator Canavan, I do not think Senator Bilyk has had the front to come in and contribute to this debate, given her comments previously. But what we have heard from Senator O'Neill and others is, indeed, about the very rapid growth that has seen an increase in the number of training organisations offering courses under the scheme—far too great an increase from far too many offering dubious programs and courses.

Senator Collins was the frontbencher handling the legislation for the then Labor government. She said:

The amendments also strengthen the government's ability to protect the integrity of the—

HELP—

schemes and minimise risk to student and public moneys.

Senator Collins, indeed! I certainly understand why she is too embarrassed to come in and recant that statement when quite the opposite has occurred.

Far from the protection of the integrity of the HELP schemes, the HELP schemes have been undermined. Far from minimising the risk to students and public money, the public has been ripped off and vulnerable students have been taken advantage of. So, yes, we are working to try to—as Labor likes to say—turn the tap off. We are trying to turn the tap off as quickly and rapidly as we can. I just wish that those opposite who created the leaks in the pipes had not done so in the first instance.

On 12 March this year, I announced a suite of eight reforms to the VET FEE-HELP scheme to protect students, taxpayers and the reputation of the VET sector. These reforms spanned areas such as marketing and inducements, consumer information, debt processes and provider standards. They were backed by $18.2 million for stronger compliance measures announced in the 2015-16 budget. The first of these changes, the banning of inducements such as free laptops, cash or vouchers, came into effect on 1 April this year. Contrary to the misleading remarks of Senator O'Neill and others, at no point in April did I say the situation was fixed. The situation was far from fixed and, at that stage, we had acknowledged that further reforms would be implemented come July and come January. It was a package of reforms and we brought into place those that could come in under the guidelines, without legislation, as quickly as possible, whilst trying to consult with TAFE directors, consumer representatives and others to make sure all the rest of the reforms were gotten right.

Since April this year, further reforms came into effect, on 1 July this year. Providers have been banned from charging a withdrawal fee, which could have been, and was indeed, as high as several thousand dollars in some areas and acted as a barrier to students withdrawing from a course before the census date, the date when the loan was levied—it is remarkable that nobody had thought of doing so previously. In addition, training providers and their agents can no longer market VET FEE-HELP supported training as free or government funded, nor mislead students into any way believing that VET FEE-HELP is not a loan that is expected to be paid back. Providers must now publish on their websites which agents and brokers they use and are responsible for the conduct of their agent or broker. Agents must now disclose to the student the name of the VET provider and course they are marketing, and must also disclose that they will receive a commission for any referral.

The government also announced that, from 1 January 2016, providers cannot levy the full debt load up-front and in one hit. It is remarkable that they could ever do so in the first place. Instead, students will have a number of opportunities during a course to confirm if they wish to continue to be enrolled, and their debt will be levied accordingly. The incentive for providers will shift from being one of just enrolling people for the sake of getting an enrolment payment to one of actually progressing a student through the course and, during the duration of the course, thereby receiving payments because of the student's progression, rather than simply because of the student's enrolment.

This bill now implements the remainder of the government's announced reforms. The bill introduces changes that will protect vulnerable students at the starting point, before they incur a debt, by requiring providers to establish minimum prerequisites for enrolment for each course. This will ensure that assessment of the student's capacity to actually complete the course, including assessment of language, literacy and numeracy proficiency, has properly occurred before they are enrolled and before they incur a debt. Of course, many good training organisations already have stringent admission requirements and assessments into these higher level courses, but this bill will make sure that this good practice is a requirement for all VET FEE-HELP approved providers for courses for which students wish to access VET FEE-HELP.

The bill makes a number of technical amendments which will enact a two-day cooling-off period, ensuring students have time to make separate study and payment decisions. It is important to emphasise here that the census date process, which will allow students to withdraw without incurring a debt before the census date, remains and provides much more than the two days, but this measure—the cooling-off measure—separates the enrolment from the application for a loan. From 1 January 2016, students will have two days after enrolment before they will be allowed to submit a request for Commonwealth assistance—the VET FEE-HELP loan application form. No longer will course enrolment be confused with loan application, and the cooling-off period will ensure that, even with late enrolments close to the census date, students must submit separate enrolment processes and loan applications to the government.

The bill also increases protection for students under 18 years. I have to say it distressed me as minister to receive complaints and concerns from parents that their minor children had been signed up for loans about which they had no understanding and over which I, as minister, had no control because the legislation that the Labor Party put in place enabled 16- and 17-year-olds to be signed up for loans regardless of their age. We are putting in place an appropriate protection to ensure that young people, who may lack the necessary life experience and financial literacy, are not signed up to courses and debts they do not need. We are also making it easier to cancel debt. As well as preventing students from incurring unfair debts in the first place, this bill will help those who incur unfair debts after 31 December 2015. It broadens the circumstances in which students can have their loan cancelled where inappropriate behaviour has been used in their recruitment and acceptance into a course. Importantly, though, this is a cost that taxpayers should not have to bear, which is why the government will be requiring providers to repay the costs of any loans that are remitted in such circumstances and may impose additional penalties on providers, such as fines or conditions on approval, as well. We want to make sure that, in future, unfair debts are remitted but not at a cost to the taxpayer—instead, at a cost to the dodgy provider.

The bill introduces a scheme of infringement notices attached to civil penalties for VET FEE-HELP training providers that engage in improper conduct. The Department of Education and Training will now have a full suite of powers available to it to deal with inappropriate behaviour by providers or brokers. These range from cancelling student debt and forcing providers to repay the cost back to the Commonwealth, to administrative action such as suspension or revocation of approval, or civil penalties including infringement notices. The bill will also expand the department and the Australian Skills Quality Authority's powers for monitoring and enforcement action against providers and brokers doing the wrong thing.

As well as protecting students, the bill lifts the standards for those who are approved to offer VET FEE-HELP funded courses. The government believes such providers, who are benefiting from government and taxpayer subsidy and support of students, should meet a high benchmark of financial viability and training quality. The bill introduces a new minimum registration and trading history requirement for new VET FEE-HELP provider applicants. This will ensure all new providers offering VET FEE-HELP have a proven track record in delivering high-level qualifications.

The government acknowledges the support of those opposite for the measures in the bill. We also acknowledge there are additional concerns about the fundamental design and operation of VET FEE-HELP. I have flagged for some time, as has Minister Hartsuyker, that the contents of this bill and the reforms we have announced to date may not, and probably would not, be the end of the story in relation to VET FEE-HELP reform. We are of the view that, if we are to continue to offer students loans for VET courses, we need a scheme that better reflects the unique nature and practice of the VET sector. The model needs to be fit for purpose. That is why as a government we will seek to introduce a new model for VET FEE-HELP in 2017.

In the interim, to assist with the transition to the new model and to ensure that we fix and plug some of the holes in Labor's original model, in addition to the proposals already underway, the government has tabled a number of amendments to this bill which are designed to further ensure the integrity of the scheme in the year ahead. We want to ensure the existing scheme is as robust as it can be while we transition to and develop a new model. We want to ensure that unscrupulous providers cannot find new ways of bleeding the taxpayer or bending the rules for their own benefit while hurting vulnerable students and damaging the broader reputation of the many quality providers in the VET sector—public, private and not-for-profit. These measures are about restoring the integrity of the scheme and better protecting students and taxpayers. Our amendments enhance the accountability and performance requirements of providers.

There are four substantive changes which we propose to take effect from 1 January 2016. The first change will freeze the growth in VET FEE-HELP loans for all existing providers at 2015 levels. This scheme is growing at an unsustainable rate—from $279 million of loans in 2012 to $1.8 billion in 2014. We have seen too many training providers pursue aggressive growth strategies at the cost of quality training and good student outcomes. We are doing this to ensure the scheme is sustainable for the taxpayer who underwrites these loans to students and to stop the targeting of vulnerable students. Under our amendment, training providers will only be able to offer VET FEE-HELP loans up to the maximum of their 2015 loan amounts. Existing students will have priority access under the loan cap so that they can continue and complete their studies. As these existing students complete their training, a provider can replace them, but only up to their total loan limit. The amendments achieve this by using a notional VET FEE-HELP account for each existing VET FEE-HELP approved provider. If the notional account is in deficit at the calendar year end, the VET FEE-HELP provider must pay the Commonwealth the deficit. Given the significant increase in the total value of the VET FEE-HELP loans in recent years, the government considers it essential to hold the scheme at the existing level while we work to bring it under control with a new model. It would not be fair to taxpayers to allow the scheme to continue to grow at the same rate it has since Labor introduced the new model in 2012.

In addition, there will be new entry criteria for registered training organisations seeking to become a VET FEE-HELP provider. The government is determined to ensure that organisations that come forward into the scheme have a solid track record of delivery. The new requirements are that the provider must have been delivering the course in which they are seeking to offer a VET FEE-HELP loan for five years or more. And while the financial freeze is in place, any training provider that is newly approved must also operate within a financial cap. This cap will be the same as the provider's fee-for-service revenue in 2015 for the approved courses. This ensures that quality providers with long track records can still enter the system and can provide their students with VET FEE-HELP loans, but under very, very tight restrictions.

The government is also varying the manner and timing of payments to certain providers. VET FEE-HELP approved providers are currently paid monthly, in advance, on the basis of the forecasts agreed with the department. These payments are then reconciled on a half-yearly basis. Given the significant value of some of these payments in advance, the government believes it is more appropriate that payments are made on the basis of actual reported enrolments and paid quarterly in arrears for certain providers. The government believes it appropriate that the largest providers earning the largest amount of revenue carry some of the initial cost of tuition for students. In order to minimise the impact on smaller providers and those with lower growth forecasts, as well as to allow flexibility for public TAFEs or dual-sector universities in the scheme, the government will continue to pay these providers in advance on a monthly basis.

We are also proposing to give the Department of Education and Training the power to conduct audits of providers where there are grounds for concern about the veracity of their enrolments, the quality of their teaching, or student progression rates and outcomes amongst other things. Where there is concern, the department will be empowered to pause payments to these providers for any new enrolments until an agreed set of actions to lift performance is completed. This will ensure that poorly performing providers are not being paid for any new enrolments until they have addressed their performance issues and get their house in order.

The government notes that the Labor Party has also proposed a number of amendments. Our reforms address much of what Labor wants to do and in many areas eclipses them in terms of putting constraints on the growth of the scheme. We believe our amendments set out a proper course for reform, as well as our commitment to look at the scheme in a total reform model.

Even Senator Carr has said—and I acknowledge that he, unlike most of those opposite, has been willing to admit Labor's failures in this regard—the scheme contains 'fundamental weaknesses that need to be fixed'. That is why we have announced the move to develop a new model, and we will be very happy to work with all in terms of their ideas about what a new model may look like. But we need to make sure the existing rules are as tight as possible for the year ahead. Our amendments increase accountability requirements on poor performing providers while we transition to the new model. They put clear constraints on the growth or any potential growth in debt and make sure that the taxpayer is protected and students are better protected into the future. As part of that redesign, we will happily look at all options to achieve these goals.

In terms of Labor's specific amendments, we want to look at making sure that VET courses are affordable for students. We do not believe it is appropriate to necessarily use a one size fits all approach to tuition fees, which is why we have sought to cap the amount of the loans that providers can undertake, rather than simply attempt to implement, with no proper research or study, caps in relation to tuition fees specifically.

In relation to the offers of assistance and the idea that the loan application be handled by the department rather than the provider, I would point the Senate to the fact that the cooling-off period we are proposing to set up will work in tandem with the Department of Education and Training's proposals and plans for a new electronic application system for VET FEE-HELP loans. We want to make sure that this new system then ensures that providers are in a position where they cannot in any way rort the cooling-off period, and that students do, in effect, have to undertake two separate processes: the lodgement of an enrolment and the application for a loan.

Our bill is necessary to address Labor's failure with regard to VET FEE-HELP and to put in place proper controls and safeguards that protect students, taxpayers and the reputation of the many quality vocational education and training providers. It is with profound disappointment that we find ourselves in this position today dealing with the mess that we have inherited as a government. But it is with absolute determination that we seek to confront that mess, that we are seeking to limit the impact of the VET FEE-HELP scheme on students, taxpayers and the VET sector in the future and that we are committed to developing a new model that makes sure that the mistakes of the VET FEE-HELP scheme are learnt and are never repeated in the future.

I look forward to the Senate over the next day or so returning to the debate on this legislation, to constructively dealing with the amendments that have been proposed and to ensuring that we move into 2016 with a much more solid VET FEE-HELP scheme that achieves the outcomes it was designed to achieve rather than the rorting we have seen.

Debate adjourned.