Senate debates

Friday, 22 June 2012


National Vocational Education and Training Regulator (Charges) Bill 2012; Second Reading

12:20 pm

Photo of Brett MasonBrett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | | Hansard source

The National Vocational Education and Training Regulator (Charges) Bill 2012 relates to the oversight of the vocational education and training industry by a national regulator. This bill does not conjure up rhetoric or emotion, but I will do my best.

Vocational education and training is an important industry, as you know, Mr Deputy President, so the oversight of quality and standards in VET is an important responsibility of any Australian government. It is crucially important for Australia both domestically and of course internationally. Lately, the discussion of education in this country has focused largely on our schools. Honourable senators would of course be well aware of the debate raging about our schools, subjected as they have been over the past five years to the government's amorphous Building the Education Revolution program, and about our universities, which are currently undergoing the most significant reforms in a generation, sponsored of course by the Bradley review of higher education, which uncapped student places. So there is much reform in the education space.

This reform, following the recommendations of the Bradley review, is meant to assist the government in its goal of ensuring that at least 40 per cent of young Australians hold an undergraduate degree by 2025. That is four young people out of 10—four young Australians having a bachelor degree or more—continuing the trend of the past few decades of vastly expanding the number of Australians with a tertiary education. One of the hard things for educators, and, indeed, policy makers, to get their minds around is that no longer are our universities elite institutions catering to a small minority of students; increasingly, of course, they are institutions of mass education. So their role has changed fundamentally over the last 20 to 30 years.

While VET does not generate as much media interest or debate as schools or universities, it is nevertheless very important for the economic wellbeing of our nation. Particularly at the time of a mining boom, our economy needs a large number of workers qualified in many trades. The resources sector—its mines and all the associated infrastructure—is generating a tremendous demand for construction workers, electricians, welders, boilermakers, truck drivers, excavation equipment operators and countless others. Our VET institutions face a crucial challenge in trying to supply all these qualified workers. I see in the chamber my good friend Senator Cash, who is from Western Australia. She knows the difficulty that the mining industry has, in Western Australia, in particular, in trying to locate sufficiently qualified people to undertake all the duties associated with the mining industry. That largely falls on vocational education and training.

But it is not just the mining industry: the health and growth of all the other sectors of our economy require a large cohort not just of professionals but also of people with those allied technical and trade skills. Our economic growth, our productivity and our employment growth depend on the VET industry being able to satisfy domestic needs. So it is a critical part of Australia's productivity and educational infrastructure.

As I mentioned earlier, the importance of the VET sector is not just domestic in nature. I think I have said this perhaps 100 times over the last few months to honourable senators, but let me say it yet again: education is Australia's fourth largest export, after coal, iron ore and gold, and it is our largest services export industry, ahead even of tourism. Most people do not appreciate that education services which Australian institutions provide to hundreds of thousands of overseas students every year contribute almost $16,000 million dollars to our economy—$16 billion a year to the Australian economy from the international education sector. That is from schools, from VET and from our universities. So it is an enormous industry and one I think is still underappreciated by the public and at some levels by parliamentarians and public policymakers. But I think we are getting there. We are making some progress. VET accounts for $3.1 billion of the total of $16 billion, and English-language training for a further $675 million per annum.

It is not surprising that maintaining, and indeed improving, quality and standards is of crucial importance in the VET sector. Quality and standards are critical. We need to supply people with good, respected and worthwhile vocational education and training qualifications because otherwise they will not find appropriate employment and our employers will not find qualified workers to fill vacancies—or we will have no choice but to fill them with underqualified, unsuitable candidates. Either outcome will have dire consequences for our economy. Western Australia is a great example of this. There is still concern from some of the mining companies that operators of various pieces of equipment and those with trades and technical skills are not sufficiently qualified or indeed their training does not sufficiently meet the needs of the industry. These are very difficult issues that TAFE and VET have to come to terms with.

VET is also an export service that we in effect sell overseas to international students, so we need to maintain quality and standards to stay ahead of our competitors overseas who would want to help themselves to our share of the international education market. International education is a very competitive industry, in VET and particularly in universities and higher education. It is a very competitive marketplace. Any sense that there has been a slip in standards or quality means a fall-off in international student demand, and therefore a fall-off in what this country earns through our largest services export industry. We are talking about a major potential impact. Quite simply, unless the reputation of the VET education we provide is strong, overseas students will not continue to come to our shores to gain qualifications and contribute billions of dollars a year to our economy.

There is more at stake here than just VET itself. We have to look at international education as a whole and even though VET is only part of the industry and is dwarfed by universities, it is nevertheless part of what many of us in this place call Brand Australia—it is so powerful, so attractive and often so very lucrative. Damage VET and you can damage our overall reputation as an international education provider. It is fair to say that over the last two years some dodgy VET providers have undermined Brand Australia. It affects not just the VET sector; it affects also the university sector. We saw not so long ago institutions in Melbourne—hairdressing institutions and other VET providers—actually causing concern about the quality of university education being provided by this country. In other words, problems with standards in the vocational education training sector can impact on our university export industry. That of course is a big problem.

To be fair I must pay tribute here to Senator Evans and Senator Kim Carr, both of whom have looked at this issue and I think taken appropriate action in many cases. In fact, I remember when I first came into the Senate one of Senator Kim Carr's great crusades was against dodgy providers who did not measure up to standards. I have to pay credit both to Senator Kim Carr and to Senator Evans, because they have prosecuted many of these issues very well on behalf of the government and the community.

We cannot allow the collapse in standards, because it will have an effect right across the sector—universities, VET and English training. Standards and quality are critical. The national regulator is the outgrowth of this valid concern for the health and wellbeing of the sector. The Australian Skills Quality Authority, ASQA, was established in 2011. It replaced state and territory run regulatory bodies, there being the view that Australia's international reputation deserves a unitary focus or indeed a national one. ASQA, was established through agreement at COAG, with the majority of states and territories seeking to address quality concerns and lack of consistency within the VET sector. Clearly, there were different standards in the states and territories and the government did the right thing to try to bring those different standards of quality and quality assurance into one particular body, ASQA.

ASQA has responsibility for the registration and monitoring of vocational education providers. It fulfils its responsibility for monitoring ongoing compliance with registration standards by undertaking compliance audits and investigating complaints about national vocational educator registered training organisations. Compliance audits are the main method used for monitoring compliance as well as investigations into complaints received about the performance of training providers.

The object of this bill, the National Vocational Education and Training Regulator (Charges) Bill, is to enable ASQA to charge registered training organisations for compliance audits and substantiated complaint investigations conducted by the regulator. That is the aim of the bill. In setting up ASQA, COAG agreed that the regulator would be established on a cost recovery basis, initially funded by partial cost recovery. This is in contrast with the previous system, where state and territory arrangements did not operate on a cost recovery basis, opting instead to partly subside registration and regulation costs. Under the COAG agreement, states and territories are still able to provide subsidies and/or financial support to registered training organisations to assist with registration cost; however, it is their choice whether they wish to do so.

The coalition has some concerns. The coalition has always been a strong supporter of the VET sector. We understand its importance to our economy as an export industry. We want to ensure the wellbeing and future growth of the sector. I do not have to remind the Senate that the coalition is a staunch champion and defender of quality and standards in education, be it primary, secondary, at schools, at universities or at VET institutions. I have made this point frequently in relation to universities, but it is just as applicable and important in relation to vocational education and training.

The coalition acknowledges the role for an industry regulator and supports its work to maintain quality and standards through the VET sector, and in particular to prevent the re-run of the provider collapses of just a few years back. As is so often the case the opposition does not have a dispute with the government about ultimate ends or aspirations, but we do about implementation and about the way the government seeks to get there. We believe that there will be significant cost impositions on providers as a result of this bill. Many registered training organisations are small businesses that are already confounded by the vast amounts of red tape under the compliance regime. In their submission to the inquiry into the bill, ASQA acknowledged this reality. They said:

… for most RTOs, the proposed ASQA fees and charges will be an increase on what they have paid in the past. This is because most state and territory governments have subsidised the cost of regulation.

That is something that they—the state and territory governments—will not necessarily continue to do, particularly in the current tight fiscal environment. These costs are not insignificant. Based on the average salary of a compliance officer and making allowances for on-costs and overheads, ASQA indicate that the hourly rate would be in the vicinity of $111 per hour. Additional costs would be incurred where various subtasks were completed by other employees within ASQA.

Proposed section 7 in the bill also states that the regulator can charge both for the costs incurred in Australia and, as it says in part (b):

… if the audit is conducted outside Australia in whole or in part—any reasonable expenses incurred by the Regulator relating to the audit or part of the audit.

Since educating overseas students is such a big part of the VET industry, such costs would not be at all unusual nor would they be insignificant.

The coalition is concerned that the high cost of compliance may cause financial difficulties for some smaller providers, given that their costs may equal those of some of the larger or publicly funded providers. Providers in rural or remote areas may also be further disadvantaged by the proposed cost recovery for auditing if they are required to fund the travel costs of the auditors. In their submission to the Senate inquiry, the Australian Council for Private Education and Training, ACPET, highlighted this, querying whether the cost of conducting an audit would also include travel costs and other costs associated with the travel. If this is in fact the case, providers in rural and remote areas will have a significant additional cost burden relative to that faced by those operating in metropolitan areas. In addition to identifying the likely cost imposition, ASQA acknowledges:

… the higher fee may discourage the accreditation of some vocational courses that are currently delivered in the community education sector such as those offered by Neighbourhood Houses or welfare agencies.

As the coalition senators said in their dissenting report on the bill:

1.1 The Coalition holds grave concerns about the increased economic and regulatory burden this Bill will place on providers. The Australian Skills Quality Authority’s submission even states that: 'for most RTOs, the proposed ASQA fees and charges will be an increase on what they have paid in the past. This is because most state and territory governments have subsidised the cost of regulation'.

1.2 We acknowledge that the Intergovernmental Agreement makes provision for states to continue to assist in meeting these costs. However, if the states are not required to help reduce the end cost to the providers, in all likelihood they will not.

1.3 The submissions received by the Committee reiterate the concerns held by the sector and the Coalition, that there will be a lack of transparency with potential fees and charges and the impact this could have on smaller rural and regional providers in particular.

That is the concern of the coalition.

While the coalition believes in the crucial importance of maintaining quality and standards in the VET sector, we consider that the mechanism in this bill has the potential to be too onerous for too many providers, particularly in rural and regional areas. For this reason, the opposition will be opposing this bill.

12:38 pm

Photo of Catryna BilykCatryna Bilyk (Tasmania, Australian Labor Party) Share this | | Hansard source

I rise to speak on the National Vocational Education and Training Regulator (Charges) Bill 2012. In March last year, I spoke in this place on the National Vocational Education and Training (Regulator) Bill and associated bills which established, for the first time in Australia's history, a national regulator for vocational education and training. The establishment of a national regulator for the VET sector was a key recommendation arising from the 2008 review of higher education led by Professor Denise Bradley AO.

I find it unfortunate that those opposite opposed this measure last year, because this key reform has a great many benefits for Australia's VET sector and its stakeholders. But, if I am going to give the federal opposition credit for anything, it has to be for their consistency. They are consistent in opposing any positive measures to cut red tape and help strengthen the Australian community. I note that the opposition also opposed this bill, the National Vocational Education and Training Regulator (Charges) Bill 2012, in the House, which is no great surprise given that this bill is an important part of the national regulatory framework for the VET sector and they are opposed to sensible national reform.

Unlike those opposite, this government is committed to improving the quality and consistency of training across the VET sector. We now have a national vocational education and training regulator, the Australian Skills Quality Authority, or ASQA, and I am pleased that this important reform was able to pass the parliament despite the relentless negativity of those opposite. ASQA's functions are: registering training providers as registered training organisations; recommending organisations as providers that can enrol international students; accrediting vocational education and training courses and ensuring that organisations comply with the conditions; and standards for registration, including by carrying out compliance audits.

Of course, those on this side of the Senate understand and appreciate the benefits of a national regulator. We know that there are a number of businesses and industries operating across state borders that require particular vocational skills and are concerned to ensure there is consistency between qualifications, regardless of where those qualifications were obtained. In trying to establish the skills needs of their business or industry, they do not want to have to deal with nine regulators in nine different jurisdictions. Also, in a country that is a world leader in the export of education, this is an important reform to ensure the quality and sustainability of international education in this area. Thirty-seven per cent of international students in Australia are enrolled in vocational education and training, and they deserve to have the confidence that they are receiving a quality product. Having a national system of regulation will help ensure that quality and will improve the marketing of Australian VET courses to students overseas. The other major benefit of national regulation is that it assures the quality of vocational education and training, and the confidence of industry and students in that quality.

So I am pleased that the Bradley review made this recommendation, I am pleased that the majority of the Ministerial Council for Tertiary Education and Employment have signed on to this reform and I am pleased that we have been able to get it through the parliament despite, as I said, the negativity of those opposite. There are, unfortunately, two states that have chosen not to refer their powers and come under the jurisdiction of ASQA, and they are Victoria and Western Australia. However, I am confident that, over time, the benefits of a national system of vocational education and training will become apparent to the governments of Victoria and Western Australia and eventually they will come to the conclusion that it is also in their interests to sign on. But here we are now with a national regulator that has responsibility for the registration and performance-monitoring of registered training organisations, and undertakes various monitoring activities associated with that role.

That brings me to the bill before the Senate today. ASQA levies fees and charges through its monitoring activities on a partial cost recovery basis and will be progressively moving to full cost recovery by 2014-15. ASQA's fees and charges were subject to extensive consultation throughout 2011. The National Vocational Education and Training Regulator Act authorises fees and charges that are application based, and the purpose of this bill is to authorise charges for services that are not application based—that is, additional monitoring activities. These monitoring activities are important to maintaining the ongoing compliance of RTOs and include compliance audits and complaint investigations initiated by ASQA. I will just go into a little bit more detail about those.

First, with regard to the compliance audits, ASQA uses a range of indicators, such as financial management, governance arrangements and the training provider's past performance, to assign each provider a rating that indicates its non-compliance risk. Each provider's risk is rated as low, medium or high, and this determines the level of monitoring that ASQA will apply. For example, a provider that is considered to have a high risk of noncompliance will obviously have more rigorous monitoring applied to it. Complaints may be lodged by any member of the community who is not satisfied with the quality of training delivered by an RTO, but generally it is expected that the complaints would be from students, their parents, employers or other industry representatives. Complaints also provide important information regarding RTO compliance for standards of registration. Following the investigation of a complaint or the conduct of a compliance audit, ASQA has a range of sanctions available to it to enforce compliance. These include fines, suspension of registration and, in the worst case scenario, closure. The charges allowed by this bill for compliance audits and complaints investigations conducted by ASQA will be payable by the provider to which the complaint or investigation relates.

For audits, charges will apply for the cost of the audit. For complaint investigations, the charges are payable for the costs and expenses incurred by ASQA in conducting the investigation and any compliance audit conducted as part of the investigation. However, charges for complaint investigations will only apply where ASQA finds the complaint to have been substantiated. For Senator Mason to imply that the costs will be prohibitive is of great concern to me—

Photo of Brett MasonBrett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | | Hansard source

I did not say it was prohibitive.

Photo of Catryna BilykCatryna Bilyk (Tasmania, Australian Labor Party) Share this | | Hansard source

I said 'imply' that the costs would be prohibitive. You have got to listen, Senator Mason, rather than chat. If you had listened, you would have understood what I had said. If there has been a complaint and it has been substantiated, I do not understand the concern from the other side. I think it is important that everybody is assured of quality, and this is certainly a way to make sure that that happens.

The charges supported by this bill were subject, as I said, to extensive consultation throughout 2011. I am not certain whether Senator Mason mentioned the consultations. But the consultations included face-to-face meetings with state and territory senior officers, peak RTOs, unions and industry representatives. So it is not as though the government is plucking prices out of mid-air. We have had quite extensive consultations. Public comments were invited regarding the draft schedule of fees and charges and an exposure draft of ASQA's cost recovery impact statement. The charges were established having regard to the resources required, to effectively audit and investigate an RTO. The feedback received from consultations was extremely helpful in ensuring that the new cost arrangements are appropriate to the sector.

The charges were agreed by the ministerial council on 30 June last year and will now be authorised by legislative instrument. A strong, nationally consistent regulatory framework is key to achieving quality and consistency across the VET sector. The integrity of that framework means you must have a strong regulator—a regulator with teeth. You need a regulator that can ensure that VET providers—registered training organisations—are complying with registration standards at all times. Senator Mason reflected on the fact that occasionally that did not happen. It is imperative that we ensure—and I agree with Senator Mason—that this does happen and that the standard is high. It is an area, as Senator Mason mentioned, that is sometimes disregarded by the media and even by the public. I wholeheartedly agree with that view. I think the way to help overcome that disregard is to make sure that the system is tight and that we have quality standards to offer. The compliance audit and complaint investigation powers of ASQA provide a strong incentive for RTOs to comply. They are an incentive, therefore, for RTOs to improve quality if they need to.

The bill currently before the Senate empowers ASQA to charge for these additional monitoring activities. It provides a schedule of fees and charges that allows ASQA to recover reasonable costs and expenses. It also supports a fair and proportionate framework for ASQA's cost recovery arrangements.

I note that the bill was referred to the Senate Economics Legislation Committee for inquiry. Despite some concerns around clarification of terms and costs for regional and overseas institutions, the committee recommended that the bill be passed in its current form. The committee expressed the view in its report that adequate explanations had been provided regarding the services provided as part of the registration process. The committee also found that the cost recovery impact statement sufficiently explains all relevant fees and charges and clarifies any uncertainties relating to the extraneous nature of compliance audits and additional monitoring activities. In conclusion, this bill is an important component of the national regulatory framework that this government has established for Australia's vocational education and training sector. I commend the bill to the Senate.

12:50 pm

Photo of David FawcettDavid Fawcett (SA, Liberal Party) Share this | | Hansard source

I rise to address the National Vocational Education and Training Regulator (Charges) Bill 2012. There are a number of important points that I would like to cover. Unfortunately, given the guillotine that the government and their Greens alliance partners have yet again imposed, I only have about nine minutes to cover them. I would like to talk about the importance of vocational education, the principle of regulation, the practice of regulation by this new authority as it has been encountered by small businesses in the sector, and some particular concerns with this bill.

Firstly, in terms of vocational education, obviously with the need to sustain and hopefully grow the manufacturing sector and the services sector in Australia we need vocational skills. There are a number of areas that provide that, but the small business sector and the 4,500 RTOs across Australia are a very important part of providing that. Quality is an important element to that. There is no point having organisations that give out pieces of paper where people do not actually receive the required skills. The determination of that quality, though, brings me to a point that I want to get on the record again. Industry led curriculum is the best way to make sure we have young people, or older apprentices, who are trained, who come out job ready and who can add value to their employers and to the economy.

I cite yet again the example of the technical colleges established as Australian technical colleges under the Howard government. I look in my own state of South Australia at St Patrick's Technical College, which has a board led by industry so that the curriculum, the rate of work, the type of training and the topics covered are actually focused on what industry needs. When people come out of that college they are snapped up by employers because they have the quality and the training that the employers want. I place on the record that, if it is led by the training institution, you may well have quality but it may not be what the employers need. That straightaway means that those young people, or adults, are not as employable as people who are trained in an organisation which is led by industry.

I notice a number of people in the private sector, Mr Forrest amongst them, are pushing the idea, for example in the area of Indigenous employment, that if industry will guarantee a job but the government will allow industry to direct the training then you will get good outcomes. That is a principle that we in this place must consider as we look at training programs and funding for training programs. We need to engage industry, who at the end of the day are the employers, to make sure that the training is focused. Almost by default, quality will follow, because that is what employers are demanding.

Having said that, the principle of regulation and then audit is something the coalition agrees with. We support the concept of a national regulator. I also put on record the fact that this does not only apply to the training sector. Across a number of areas, the coalition supports the concept of local control, local delivery and local accountability, whether that is within government departments or whether that is out in the private sector, as opposed to centralised control and delivery from big government in Canberra. But the way you achieve that in terms of having a quality outcome is by having a regulatory structure with a closed feedback loop of audit and reporting.

So in principle we support and have supported the creation of a national regulator for the vocational training sector. The issue is: how does it work in practice? That is part of the concern we have with the system that is in place. That is partly because, as has been pointed out by the government, not all states have signed up to it, which indicates that they are still exercising their rights in a federation, which is what Australia is, to say what is in their state's best interests. Rather than criticising them for that, we should be asking: what is wrong with the system that they are not prepared to sign up for it? At the end of the day, one of the strengths of Australia is that we have checks and balances in the fact that we are a federation and states have a head of power that they can exercise to decide whether or not they support legislation that comes out of this place. If we cannot get their support, rather than just criticising them we need to work with them to find a way forward that will achieve the benefits that the legislation for the national regulator intended.

Some of the issues that small business are pointing out to us in terms of the implementation are the very large increases in costs, some going from in the order of $2,000 to $3,000 to up around $37,000 in costs that are being borne by business. For a small business, those kinds of costs are just not sustainable in the long term. The unintended consequences, sometimes, of legislation are something that politicians from all sides need to make sure that they understand so that when we announce policy and think it through we actually look at it from a systems engineering perspective and we understand all the unintended consequences.

One of those unintended consequences for small business—and this is a particular concern—is the delay. We have had reports of anything from six to 12 months for a small RTO trying to get an approval for a Certificate III. Given the kind of marketplace reaction time a small business needs to be able to capture a particular market element, the dead hand of regulation from a centralised body is just stifling the ability of that organisation to make its product and its business work. Regulation is fine if it is effective, if it is supporting and if it is timely—if it is actually working to make the product offered by that business better, as opposed to making it almost impossible for the business to get on and deliver its role.

Particular concerns for the charges bill go to regional providers. The bill is talking about the fact that this regulator can charge reasonable costs in terms of the audits and also any investigations. That might be fine if you are in a capital city, but in South Australia, for example, if you are Balance Training Services, a training group in Mount Gambier, or if you are the Australian College of Community Safety, in Berri, or if you are the Regional Training Organisation in Whyalla Norrie, the costs to get out to those places, the overnight accommodation costs and the hourly rates are significantly higher. If all of those are going to be passed on to small business, it makes it a non-viable and an unfair impost on regional training providers. And often it is the small businesses providers who are prepared to go and set up in a regional area to meet the needs of regional businesses, because young people there do not necessarily have access to the larger corporate or government training organisations that people who are based in the city may well have.

There are a number of areas in which I think we could try and make this charges bill better. Some people have asked why it is a separate bill. The wisdom of the parliamentary system here is that under section 55 of the Constitution these charges essentially form taxes, and therefore it needs to be a separate bill. We are here in the Senate, and a tax bill cannot be amended in the Senate. Therefore, despite the fact that some amendments may be able to make the bill better, we are in a position where we will have to oppose this bill.

It is not that we are opposed to vocational education. The coalition have a strong record of supporting vocational education, particularly industry-, business- or employer-led vocational education so that we get the focus and the quality that makes the graduates job-ready. We are not against the principle of setting a standard and holding people to account to make sure that they meet that. That is a good model to allow distributed control of activities, accountability of the person providing them and meeting a standard. We support that concept.

But we also recognise that the implementation is as important as the principle. If the implementation is not right, if it actually represents for small business the dead hand of central government regulation which stymies their efforts to create jobs and to create opportunities for young people to move into existing jobs, then it is not something that the coalition is prepared to support. So, whilst we support vocational education, we support the principle and we have in the past supported the concept of the national regulator, for this bill and the charges that go along with it the coalition is not prepared to—

Photo of Louise PrattLouise Pratt (WA, Australian Labor Party) Share this | | Hansard source

Order! The time allocated for the consideration of this bill has expired. The question is that this bill now be read a second time.