Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

This is a continuation of my speech. I had a few minutes earlier today just before question time, and for those who might be listening and paying attention to this debate at the moment I would just like to lay out the land a little of where we got to just before question time. At one o'clock, when I was sitting in the chair, let me tell you that there was a flurry of activity and a whole lot of amendments that had just landed in this chamber as a result of the government's hasty response to an even more hasty lodgement of a report from the Senate Education and Employment Legislation Committee, which just yesterday put forth a document—quite a detailed document, I will say, but nonetheless fairly rushed at the end so that this government could finally do something about a problem it has been sitting on for two years.

This government is so incompetent and so out of control and so full of hubris. Granted, it does have a new leader with a nice suit and wonderful elocution lessons clearly, but there is a problem with this government and it is a failure to actually attend to the things that matter to Australians. What it wants to do with this piece of legislation just shows how out of touch it is with reality and it just shows where it puts education on its list of priorities. This is the government that wants to put a 15 per cent tax, a 15 per cent GST, on education. Families sending their kids to school under this government come next year would end up having to pay 15 per cent more.

This is the reality of what they think about education, and you see it revealed at every turn in what they have done with regard to the VET sector. The VET sector, for those who do not know, is not to do with veterinarians—horses or small animals et cetera. The VET sector we are talking about is the vocational education and training sector. That VET sector is a critical part of enabling Australians to learn in a skills based way the things that they need to participate in the economy and to get jobs. It is the place where many kids decide that they want to continue their learning. School might not have been a great place for them, but I can tell you I know hundreds—thousands—of tradies on the Central Coast and right across the state of New South Wales and, indeed, the nation who have benefited from the opportunity to go to a high-quality technical and further education college and learn the skills of their trade. It has given them a lifetime of opportunity, great skills and in many cases the chance to grown their own businesses and employ other Australians.

TAFE is a critical part of Australia's history. We have a growing population. We have changed somewhat and we now have some private providers, but there is a bit of a problem that has been going on since 2013, when this government was elected. They have not been watching. They have not been paying attention to what was going on. I will let you know how much they were not paying attention. The report indicates that in 2012 there were 55,000 VET students across the country. Those are students who were engaged in vocational education and training. The cost of the investment in those young people and mature-age people whose careers may have hit a juncture where they either did not like the work they were doing before, had an injury and needed to retrain for another profession or might have just decided that they might choose another career for the rest of their life to meet their community, family or personal monetary needs—the investment in those people—was costing the Commonwealth $235 million.

I do not begrudge investment in education. Those opposite do at every turn. They generally begrudge it. The average cost there was $5,800 per student for the delivery of this retraining opportunity. By 2014, while this government was on watch, the number of people in the VET sector had grown at the most phenomenal rate of 367 per cent. That scale of an expansion of the sector while this government was not looking ended up costing the country $1.8 billion. This was going on while they were in government.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

It was your decision.

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

You can hear the senator over there. He is doing everything he can to avoid any scrutiny or accept any blame. This is what children do before they realise they have to accept responsibility for their actions. This is a childlike government that wants to come in here and pretend that they have arrived and everything will sort itself out. They were on their watch and failed to do anything to prevent that blow-out.

The average debt went up to $10,000 from $5,800, nearly doubling. That is 124 per cent growth in the cost to those students of the debt that they have acquired in going in to do these sorts of courses. That is what has been going on. There is lots of evidence that there is a huge number of problems in this area. We have been hearing it all over the country. Some of the stories that we have heard nearly break your heart. They reveal the ugly side of human beings: greedy, selfish, self-interested people who have chosen to exploit others for whatever short-term personal gain they can get for themselves. The evidence we heard in Sydney related to companies that decided to set themselves up as training organisations and went out to the area of Waterloo. They targeted an underprivileged community. They walked through there, doorknocking and saying: 'Would you like a free laptop or a free iPad? Just sign this form and we'll give you the course that you've always dreamed of.' One of them was hairdressing management. The problem was you did not get to learn how to do hairdressing before you got to be the hairdressing manager, but those are the sorts of courses they were offering.

People signed up. The evidence we heard was that, when people signed up to this, they did not realise that, in doing so, they had incurred a debt. People who are on a low or fixed income and do not engage with the Taxation Office might not ever know that they have got that debt until such time as they earn enough to participate in communicating with the taxation office. Or perhaps in their demise their family finds out that this is a debt that has been sitting there and accruing over a period of time. These are the stories that the committee has been hearing. That is what has been happening while this government was in and took its eye off the ball. It was not paying attention, and that has happened to thousands of Australians.

Finally they got onto it. They figured out that it was a problem and they had better do something about it, so on 1 April we had the minister, representing himself as 'The Fixer', who came in and said: 'Oh, we can fix it. I'll tell you what we'll do. We'll sort it out, and this is how we're going to fix it.' They banned VET providers from offering inducements such as free laptops, cash and vouchers. It is good that they did that. They said that VET providers and their markets could no longer market VET FEE-HELP supported training as free or government funded. They were no longer allowed to mislead students into in any way believing that VET FEE-HELP is not a loan and not expected to be paid back. It goes on.

They came in here and said: 'We fixed it. Everything's fine.' Except here it is, the last week of parliament, and they have rushed in this report. They have rushed in amendments close to the end of this sitting period. While the debate is on here they have rushed in these amendments because they are trying to fix up what they already said they had fixed. The problem is they are doing this is in haste. They are not allowing fulsome and careful consideration of this piece of legislation. It has implications for thousands and thousands of Australians across this country. I tell you what: the 10,000 or 12,000 people in Victoria who have lost their qualifications while dodgy operators were operating under the scheme that the government oversaw will not be real happy with this government that says it is going to be all things to all people and then breaks every promise that it makes anyway.

I am very concerned about this dodgy piece of legislation that has come in. It is half-cooked. It is not properly considered. As Senator Xenophon said in his remarks earlier today, it is a mess. What can we do about a government that acts in this way? We can bring in some amendments to try to fix up the mess that they are offering here—fix the inadequate response which I fear may lead to the same sort of outcomes we have seen since April.

In his second reading speech, Senator Carr indicated a number of amendments that call on the government to do a few very important things. One of those was to appoint a national VET ombudsman with the power to investigate consumer complaints, because one of the things we were finding was that when people had problems they could not actually go and get those problems dealt with in a quick way. There were delays and delays and delays. There was nowhere easy for them to access. That is a critical thing that needs to happen, as we have suggested in our amendments. We also call for a national VET ombudsman to have the power to investigate consumer complaints and order registered training organisations that have been found to act unscrupulously to refund course fees to the student. We believe that the ombudsman should also be able to order RTOs to refund the course fee to the government and have the students' VET FEE-HELP fees waived in cases where the course fees are being paid by the government and the student has accrued a VET FEE-HELP debt.

As Senator Xenophon says, the mechanisms around that, which look like they are going to be by regulation, are critical to making sure that we are not back here on 1 April next year trying to fix up the next lot of mess that they are implementing in this area. They told us they had fixed it in April, but we have testimony after testimony, not only in our committee but also on the public record in a range of newspapers, citing what is going on still because they failed in their legislative reform the first time. Fairfax Media reported that one of the nation's biggest private colleges, Careers Australia, enrolled 2,762 students using VET FEE-HELP. Guess how many they graduated? Of 2,762 students, how many do you reckon they graduated?

Senator Carol Brown interjecting—

Senator Brown, it was 300. These figures were disputed by Careers Australia. We had a hearing in Melbourne. We were told that a broker had targeted Vietnamese students studying English at a community centre by offering inducements. This is after they said they had fixed it—in the member for Sturt's model of 'the fixer'. The Age investigation revealed that brokers operating for the Phoenix Institute of Australia—and you would have heard about that last week in the paper—offered free laptops for disabled public housing tenants in rural Euroa. So much for the disincentive of the legislative reform that the government undertook on 1 April this year, when the minister stood up and said he had fixed it and sorted it.

The Australian Competition and Consumer Commission have got involved. It is so bad that they have commenced court action against Unique International College in Sydney. They are alleging that the college sent sales people into Aboriginal communities and handed out free laptops in return for their signatures on applications for online diplomas. There are pages and pages of these sorts of stories. Cornerstone Investment paid $46 million for VET FEE-HELP in 2014 for 4,000 students. Guess how many they graduated?

Carol Brown (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Families and Payments) Share this | Link to this | Hansard source

Five?

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

You are right, Senator, it was five.

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

Ignore Senator Brown's interjections.

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Senator Brown is an extremely wise woman and was absolutely knowledgeable about the fact that there were only five students who graduated from the course. These examples that I have just referred to indicate that this happened after they had 'fixed it' on 1 April. If that was their fix on 1 April, you can understand why I am sceptical about their fix on 1 December. On 1 December they have come in here to fix it, and the fix that they are offering, as I said, is extremely late in arriving and really does not allow the Senate to properly consider, in careful detail, the implications of what they are proposing.

We know that there are a number of issues that will, hopefully, get some consideration as we move to the consideration of this bill in detail. I see that the minister has come in here in the last few minutes, and he will have some remarks to make here. Whatever the minister might say, let us just get it on the record that when it comes to education there is only one party in this country, the Labor Party, that has advanced the interests of public education consistently for decades. There is only one party, the Labor Party, that is going to stand up to make sure that that lot on the other side does not put a 15 per cent GST hike on all elements of education. The Labor Party will hold this government to account.

We will consider the amendments that are coming forward, but we have to note that this has been a shoddy process. It is a mess, as Senator Xenophon said. It is an inadequate piece of legislation, as Senator Lines said. This is sloppy work in a policy area that this government has sought to destroy from the minute it has come in: $30 billion taken out of school education; who cares less about what happens in the VET sector; and let us see if we can take out the higher education sector and put $100,000 degrees on students. Today they have had a go at every single way they could break education in this country. This piece of legislation and the shoddy amendments they have brought in here at the last minute reveal yet again the contempt that they really have for education, their ineptitude as a government and their failure to take seriously the terrible implications of not looking after this on their watch. That is a characteristic of this government every single day.

Carol Brown (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Families and Payments) Share this | Link to this | Hansard source

I rise to speak also on the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. I concur with Senator O'Neill's comments in her contribution here today. Over two years, we have had three different ministers in the Abbott-Turnbull government who have tinkered around the edges with the VET FEE-HELP loans, and the loans have skyrocketed from $699 million in 2013—

Government Senators:

Government senators interjecting—

Carol Brown (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Families and Payments) Share this | Link to this | Hansard source

You have had two years. Maybe not you, Minister—

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

Order! Address you remarks to the chair, Senator Brown.

Carol Brown (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Families and Payments) Share this | Link to this | Hansard source

Thank you, Mr Acting Deputy President, I will endeavour to do so. The VET FEE-HELP loans have skyrocketed from $699 million in 2013 to $1.7 billion in 2014. In 2014 there were 202,776 students, an increase of 367 per cent, and fees had shot up to $8,666 per student, an increase of 147 per cent. The bill before us seeks to introduce changes in addition to those that were introduced in April this year to address these rising debts and inappropriate enrolments that have been spoken about in the many contributions that we have heard today on this bill. Labor will support the measures in the bill but the bill is not strong enough and we call on the government to do more to address what has become a major national scandal impacting on students and the Commonwealth budget and threatening the reputation of our vocational education sector.

It seems that not a week goes by without media revelations about dodgy providers, exploitative practices and large debts. Last month, it was reported that Cornerstone Investments was paid $46 million for VET FEE-HELP in 2014 for 4,000 students. But, as has already been articulated by Senator O'Neill in her contribution, only five of those 4,000 students graduated. Last week, it was reported that one private college is going into voluntary administration, four have been deregistered by the industry regulator and the Australian Competition and Consumer Commission is launching legal action against a further two colleges. Many of these stories were raised in this place earlier this week in the context of the debate on the education services for overseas students amendment bills.

While I stress that not all, or even a majority, of providers in this sector are dodgy, it is clear that we have recently seen escalating problems with shonky providers that have brought the sector to a crisis point. With the collapse of Vocation Ltd, a private college that has been placed in voluntary administration, up to 12,000 students across Australia are in limbo. It is time that those opposite took action to protect students and quality providers rather than removing protections. It is clear that Australia's international reputation as a quality education provider is now in jeopardy after two years of reports of shonky colleges taking advantage of students and abusing the system and with little action from the government.

We have also seen the ACCC launch legal action in the Federal Court against Phoenix Institute for false, misleading and unconscionable conduct, and it is seeking the repayment of $106 million in Commonwealth funding provided through VET FEE-HELP. At the time, the ACCC stated that it was investigating nine or 10 vocational colleges. But, yet again, we have seen no action from the government. The shonks and the sharks are destroying the reputation of the whole vocational education sector. The Turnbull government is determined to bury its head in the sand, tinker at the edges and just hope that the shonks and sharks will magically disappear. The unprecedented crisis in this sector has escalated over the last two years and, in my view, those opposite are really only offering a weak response. While this bill is a belated start, the measures in it are simply insufficient to stop the dodgy providers and protect vulnerable students. TAFE Directors Australia said in their submission to the Senate inquiry into the bill:

Put simply, there is a culture of private ‘for-profit’ providers who have exploited—and without stricter legislation will continue to exploit—any and every loop hole or weakness in the VET FEE-HELP guidelines and legislation.

TDA cautions that current legislation and policy settings appear to be insufficient, and that far stronger control and governance of the VET FEE-HELP loan scheme is warranted in the face of incontrovertible evidence of abuse.

Rather than tinkering around the edges, the government needs to turn off the tap of government VET FEE-HELP assistance for the dodgy providers who are suspected of unconscionable conduct. For this reason the Senate Education and Employment Legislation Committee inquiry into the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015, which we are discussing here today, has proposed tougher amendments to deal with this issue. Labor senators on the committee have recommended that the Senate support tougher amendments to deal with the issue such as capping tuition fees, reducing lifetime VET FEE-HELP loan limits and improving measures to strengthen student protection when entering into a VET FEE-HELP loan. In line with this, Labor will move amendments which will strengthen this bill by capping tuition fees for VET courses eligible for VET FEE-HELP; lowering the lifetime limit for VET FEE-HELP loans, halving the limit from just over $97,000 to $48,864; and ensuring loan applications for students are handled by the Department of Education and Training rather than by a private college or broker.

Strong action is needed to address the growing crisis in the VET sector. For this reason, I urge those opposite to support Labor's common-sense proposals that will protect students, taxpayers, the economy and the reputation of the sector. In addition to the amendments that Labor will move, we also call on the government to implement a number of other measures which will help ensure the integrity and quality of our VET sector. Specifically, Labor is calling on the Turnbull Liberal government to ban or restrict the use of brokers to recruit students to courses funded by VET FEE-HELP, give the minister the power to suspend payments to a private college under investigation and establish an industry funded VET ombudsman to help protect vulnerable students from exploitation by shonky training colleges.

So far, this government has failed to stop dodgy training colleges from targeting vulnerable students, and taxpayers are paying the price. In spite of clear evidence that dodgy providers are targeting people with intellectual disabilities, people in Aboriginal communities and people in low socioeconomic areas, according to recent media reports shonky brokers and training companies are going from door to door in Queensland targeting vulnerable Australians with offers of free laptops.

Earlier this year it was reported that brokers were targeting elderly people and people with disabilities, in public housing in the suburb of Prahran, with inducements like iPads. Taxpayers and students are being left to foot the bill for the government's inaction. Other reports have revealed that jobactive clients are being referred to brokers to sell diplomas, with a sales target of one diploma per day. Unemployed Australians who are jobactive clients of the Department of Employment can lose their benefits if they refuse work or are fired from their employment. This places them in a very difficult position, when they are asked to do such work.

These reports prove why the government should be supporting Labor's proposals for a VET ombudsman and a requirement for a stricter opt-in application system for students taking out a VET FEE-HELP loan. The VET stakeholders, including the Australian Council for Private Education and Training, have been calling for a VET ombudsman to help protect students and restore the reputation of the sector. Yet the Liberals have refused to support these common-sense amendments.

Under this government, hundreds of millions of dollars have been wasted on training, with low completion rates and low quality, and the reputation of the sector has suffered. The minister must take action—urgently—so students signing up for courses in the new study year can have the confidence that they are receiving good quality training for their future employment. This bill is a belated but still inadequate step to address a crisis in our VET sector.

As Labor senators' additional comments to the Senate committee report on this bill state:

1.1 The Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 seeks to play catch-up in terms of regulating the operation of VET FEE-HELP and providing some measure of redress for the victims of the shonks and shysters who have been perpetuating a scam on students and the Australian people.

1.2 This Bill—

While welcomed—

is expressly inadequate. It continues this Government's practice of addressing the symptoms, but not fixing the underlying problems, that plague the VET FEE-HELP system and vocational education across the country.

Apparently, now even the government recognise this and are seeking to make a number of amendments to their own bill at this late stage. It is time the minister started to work with Labor to put in place strong measures to protect students and the sector. Students, the taxpayers and quality VET providers can no longer afford this government's inaction. Tough talk is not going to drive the shonks out of the sector. It is going to take real common-sense action—as proposed by Labor.

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

I thank those who have contributed to this debate. I am disappointed that some of those contributors opposite did not start their contributions with an apology for getting the nation in this mess in the first place. Nonetheless, I thank them for their contributions and the indications of support for the legislation.

The approach of the Labor Party and their commentary on this matter is a little bit like arsonists who lit a fire and complained that the fire brigade came too late. The truth is, we have been working to put this fire out, for some time. We have been quite open and transparent about the problem, the need for us to confront the problem, the reforms we have been implementing and the time line within which those reforms are implemented. Some of the reasons for reforms taking a little longer to be brought to the table and to be brought to effect than might be ideal are that we have real students enrolled in real circumstances, right around the country, and we have to make sure their studies—where they are in legitimate areas of study—are not disrupted.

It is important for the chamber to remember that it was in 2012 that the previous Labor government opened up the VET FEE-HELP scheme. They changed it and, in their changes, there were insufficient controls or safeguards to protect students' or taxpayers' money. Let us have a quick look at some of the statements made during those 2012 debates and discussions, in the parliament, to open up the scheme. In the other place, Ms Bird, the then Parliamentary Secretary for Higher Education and Skills—now shadow minister for vocational education and training—said:

… improving access to VET FEE-HELP is just one of a range of reforms the Labor government is driving to help more people get the skills they need to improve their job prospects and get better pay, a more rewarding career and a better future.

Some people have benefited from the expansion of VET FEE-HELP but, sadly, many have been ripped off, including the taxpayer. Ms Bird went on to say:

This approach will further reduce the administrative and regulatory burden placed on applicants and providers and encourage increased uptake of the scheme by quality providers, and ultimately students.

She was damned right about the increased uptake; that certainly occurred. Sadly, it was not always by quality providers or students seeking the right outcome.

In this chamber we had similar contributions. Senator Bilyk said, during that 2012 debate:

By simplifying the administrative aspects of the VET FEE-HELP scheme, we will also see a further increase in the number of training organisations that will offer courses under the scheme.

What we heard from Senator O'Neill and others—

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

Did she apologise?

Simon Birmingham (SA, Liberal Party, Minister for Education and Training) Share this | Link to 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.