Thursday, 29 November 2018
Higher Education Support Amendment (VET FEE-HELP Student Protection) Bill 2018; Second Reading
That this bill be now read a second time.
I seek leave to have the second reading speech incorporated in Hansard.
The speech read as follows—
Today I am introducing the Higher Education Support Amendment (VET FEE-HELP Student Protection) Bill 2018, which will provide a remedy for students who, due to the inappropriate conduct of their VET provider, incurred debts under the VET FEE-HELP loan scheme.
This Bill is all about cleaning up another mess left for Australian taxpayers from the previous Rudd/Gillard/Rudd Labor Government. The VET FEE-HELP loan scheme changes of 2012 has resemblances with other poorly designed Labor programs such as the disastrous pink batts scheme and the schools halls debacle, which resulted in Australian taxpayers being ripped off.
The 2012 changes to the VET FEE-HELP scheme by the former Labor Government allowed a number of unscrupulous training providers to offer bogus courses to Australian students, often with the inducement of a free laptop or tablet, without advising them they were incurring a debt to the Australian Taxation Office. This arrangement left vulnerable Australian students and ultimately Australian taxpayers with the Bill. It also had the potential to damage the reputation of the overwhelming majority of training providers who were doing the right thing.
VET FEE-HELP scheme
The VET FEE-HELP loan scheme operated from 2009 to 2016, with some continuing students accessing loans during 2017 and 2018 under grandfathering arrangements. The VET FEE-HELP loan scheme was originally designed to assist students with the cost of VET studies that led to a higher education outcome, such as a Bachelor's degree. The loan to students covering their tuition fees for the cost of their study had income contingent repayment arrangements.
In late 2012, the VET FEE-HELP loan scheme was changed and the requirement that the VET course provide a bridge to a higher education outcome was removed. This opened up the scheme to more VET students, but unfortunately because of the Labor Government's very poor design work, unscrupulous training providers took advantage of vulnerable students.
The Australian National Audit Office, in its 2016 audit of the VET FEE-HELP scheme, characterised this amendment as:
heavily… supporting growth in the VET sector…. (while providing) insufficient safeguards for students from misleading or deceptive conduct, and inadequate monitoring, investigation and payment controls for poor or non-compliant (VET) providers.
The abuse of the VET FEE-HELP loan scheme after the 2012 changes is well known, including that students at a number of unscrupulous providers incurred debts as a result of being signed up to courses they would never complete. The 2012 changes meant that VET providers would receive payment of the amount of the student's loan in accordance with the data they reported on students enrolled in units as at the census date for the course (that is, the time at which the enrolment is finalised and the debt is then incurred).
Opportunistic providers attempted to enrol as many students as quickly as possible so they could benefit financially. In doing so these providers and their agents targeted some of the most vulnerable Australians, including people with limited educational opportunities, people with disabilities, and Indigenous people. They employed deplorable tactics including aggressive marketing schemes, using brokers and cold-calling people. They offered inducements such as laptops and iPads in exchange for a person's agreement to enrol in a course. They provided inaccurate advice regarding courses and the consequences of enrolment.
In many instances, these students were not advised that VET FEE-HELP was a Government loan that had to be repaid based on the student's income, so that if they reached a particular threshold this would trigger a requirement for repayment through the Australian Taxation Office (ATO). These aggressive marketing techniques were targeted at people who were not looking for a particular field of study but were enticed by the rewards on offer rather than genuine students focused and prepared to complete their course of study.
I am aware of the case of one student, Gabrielle, who has bi-polar disorder. Under the VET FEE-HELP program, she was contacted by an education agent acting for a training provider and encouraged to enrol in a Diploma of Business course. The agent convinced Gabrielle that the course was 'free'. Gabrielle was also offered a 'free' laptop as an added incentive to enrol in the course. Before the course commenced Gabrielle realised that due to her condition she really wouldn't be able to undertake any course at that time. Gabrielle contacted the training provider to explain her circumstances and asked to be withdrawn. Gabrielle said that the training provider convinced her to change courses and she subsequently enrolled in a Diploma of Counselling course. Realising her mistake, Gabrielle contacted the provider again and asked to be withdrawn from the second course. The provider did not action either of her requests to cancel her enrolments and Gabrielle incurred VET FEE-HELP debts of over $20,000 for the two courses. Gabrielle submitted an unacceptable conduct application to the department to have the debts cancelled.
This legislation will help ensure that those students, like Gabrielle, who were ripped off by the unscrupulous providers that were allowed to flourish under Labor's poorly designed program, can have their debts cancelled by the Department.
Increased regulation of Commonwealth assistance to VET students
The changes in this legislation build on earlier work from the Government to clean up Labor's mess.
The Higher Education Support Amendment (VET FEE-HELP Reform) Act 2015 and Higher Education Support (VET) Guideline 2015 commenced on 1 January 2016, and began the process of strengthening the safeguards within the VET FEE HELP scheme to address this exploitation. These reforms included introduction of the concept that the exploitative practices of providers amounted to 'unacceptable conduct'. Where a student successfully claimed unacceptable conduct occurred on or after
1 January 2016, the student's VET FEE-HELP debt was remitted. This went some way to limiting the most exploitive practices of VET FEE-HELP through 2016, but only applied to the 'unacceptable conduct' of providers post 1 January 2016.
From 1 January 2017, the VET FEE-HELP scheme was closed to new students, and no new applications to the scheme have been accepted from that date. It was replaced by the VET Student Loans program, which introduced greater regulatory controls and eligibility requirements to ensure that genuine VET students would benefit and unscrupulous providers would not.
VET FEE-HELP scheme oversight
Another essential reform was the establishment of the VET Student Loans Ombudsman on 1 July 2017 under the Education and Other Legislation Amendment Act (No.1) 2017. The Ombudsman is dedicated to receiving and addressing VET student complaints. The VET Student Loans Ombudsman and the Department of Education and Training have already identified a significant number of students who cannot have their debt remitted under existing legislation, even though they are clearly the victims of inappropriate conduct by VET providers or their agents. As these cases came to light it became clear that Government must address this inequity, which will continue to damage the reputation of Australia's VET sector if left unresolved.
VET FEE-HELP scheme remedy
This Bill aims to remedy the damage caused to these students and restore faith in Australia's Skills and Training system. The measures in the Bill also reaffirm the Government's commitment to the long-term viability of the VET sector. It is essential for the Government to ensure that there is no financial burden imposed on those who were unfairly caught up in the disreputable conduct that undermined the VET FEE-HELP scheme. While this measure will impose a cost, over the longer term the restoration of Australia's reputation in VET through ensuring we address this inequity will reap greater benefits.
Contents of the Bill
The Bill will provide a remedy for students who incurred VET FEE-HELP debt through the inappropriate conduct of their VET provider or their agents, by:
Whilst it is expected that all student complaints will be resolved by 31 December 2020, this is difficult to predict at this time. Therefore the Bill provides flexibility for the VET Guidelines to prescribe a later date, which also allows appropriate management of costs and resourcing.
This Bill is about cleaning up the mess of the former Labor Government, whose VET FEE HELP loans scheme saw thousands of Australian students ripped off. The Coalition recognises the valuable work of the Vocational Education sector who are training and upskilling Australian workers. We are ensuring that their reputation is not further damaged by the actions of unscrupulous operators who flourished under Labor's poorly designed scheme.
Most importantly, we are ensuring that the vulnerable Australians ripped off under Labor's program can have their debts cancelled.
I commend the Bill.
The Higher Education Support Amendment (VET FEE-HELP Student Protection) Bill 2018 will provide a much needed remedy for students who have been burdened with a VET FEE-HELP debt due to the unconscionable behaviour of some unscrupulous registered training providers. The bill amends schedule 1A of the Higher Education Support Act to introduce a broad remedy for students who incurred a VET FEE-HELP debt as a result of inappropriate conduct by vocational education and training providers or their agents. The bill will also give discretionary powers to the secretary of the Department of Education and Training to recredit a person's FEE-HELP debt.
After five years of government, finally the Liberals have taken action, and it is absolutely overdue. There are too many students, many of them very vulnerable, who have fallen victim to scandalous behaviour by dodgy VET providers. The scheme's costs exploded under the Liberals—$1.8 billion in 2014 and more than doubling to $3 billion in 2015. In fact, before the government finally took action, a staggering $6 billion in loans was issued over the course of just three years. According to the government actuary, $1.2 billion of the loans has been inappropriately raised. It's unknown how many individuals have been affected by the rorting of dodgy private providers and now hold unfair debts, but it is highly likely that the 9,000 complaints currently lodged with the VET Student Loans Ombudsman represent just the tip of the iceberg.
The Abbott-Turnbull-Morrison government has an abysmal record on vocational education and training. Australia's TAFE and vocational education system is under enormous pressure as a result of their poor and incoherent policy development and cuts. Since they were elected, the Liberals have cut more than $3 billion from TAFE, skills and apprenticeships and, in the last budget, as Treasurer, Mr Morrison cut a further $370 million from apprenticeship funding over the next four years. The scheme has been damaged by privatisation, poor regulation and unhealthy competition, which have diminished quality and damaged the reputation of quality providers in the system. Marketisation of vocational education has opened the way for the unscrupulous providers, the worst of which we have seen under VET FEE-HELP. As a result, we have seen an overall decline in outcomes for students. Enrolments are dropping, completion rates are low and costs are shifting back onto students as fees increase. Under the Liberals, TAFE courses have been cut back, campuses are closing, TAFE teachers are losing their jobs and dissatisfied employers continue to complain about skill shortages and skill gaps.
On this side, we understand the importance of vocational education, and we truly understand the importance of TAFE in our communities. We will restore public TAFE as the major provider of vocational education and training. We've now committed to ensuring that at least two-thirds of government funding for vocational education will go to TAFE. The balance will go to not-for-profit community and adult educators and only the very best of the private providers with demonstrable links to specific industry requirements. Labor will waive the up-front fees for 100,000 TAFE places and upgrade and refurbish TAFE campuses with a $100 million building TAFE for the future fund. Labor will fund 10,000 pre-apprenticeships and 20,000 advanced entry adult apprenticeships. Under a Labor government, at least one in 10 jobs on all major infrastructure and defence projects will be filled by an Australian apprentice.
We're living in a time of rapid technological change, and it's impacting on all aspects of our lives. Now more than ever we need a post-secondary education and training system that responds to those changes and works for every Australian. All Australians should have access through their working lives to the education, skills and training that they need for a decent job. Labor believes no-one should be excluded from access to vocational education and training as a result of financial disadvantage—course costs, fear of debt—or regional disadvantage. That is why Labor has made the commitment that, in the first 100 days of government, if elected, we will establish a once-in-a-generation national inquiry. It will examine all aspects of Australia's post-secondary education system and it will make recommendations about how our vocational and higher education systems address the country's economic and societal needs. The inquiry will build on the best of Australia's vocational education and training system. It will repair the damage that's been done to it by unscrupulous for-profit providers and the neglect of the Abbott-Turnbull-Morrison government.
Labor supports this bill. It is essential that these unfair debts are expunged. But we also call on the government to take vocational education, TAFE and apprenticeships seriously and work with Labor to make the Australian VET system truly excellent.
I rise on behalf of the Greens to speak to the Higher Education Support Amendment (VET FEE-HELP Student Protection) Bill 2018. This bill provides a long-awaited remedy for students who have incurred debts due to the inappropriate conduct of their VET providers. For that reason, the Greens support the bill.
The Greens oppose public money going to private colleges. Government funding should not go to VET or tertiary education providers that operate for profit. We need to end public funding for privately-provided, corporatised models of VET and support public TAFE to provide the same educational and training outcomes as public education. The Greens are proudly the party of public education. We know that, for years, the privatised TAFE sector has been plagued by complaints of wrongdoing by victims of dodgy service providers. Both Labor and the Liberal Party must accept the blame for this. Public money should never have been handed over to for-profit VET providers. Public TAFE is where public money should be going. The Greens have fought hard to keep public funding for TAFE at both state and federal levels. TAFE is the cornerstone of the vocational and education training sector.
The bill in front of us amends the Higher Education Support Act 2003 to provide for a student's FEE-HELP balance to be re-credited where the student incurred the VET FEE-HELP debt as a result of inappropriate conduct by VET providers or their agents, including where that conduct occurred prior to 1 January 2016. In certain circumstances, the bill also enables the Commonwealth to recover from the VET provider an amount that is equivalent to the amount remitted. These include circumstances where a dodgy VET provider misled students and treated them as entitled to VET FEE-HELP assistance when they were not entitled to it. The bill also amends the Ombudsman Act 1976 to provide for the VET student loans ombudsman to make recommendations in relation to the re-crediting of FEE-HELP balances.
In short, the bill allows the federal government to waive up to $1 billion of debt owed to students ripped off by dodgy colleges in the VET FEE-HELP loan scheme. It also gives a new discretionary power to the secretary of the Department of Education and Training to waive student debts incurred as a result of the inappropriate conduct of a VET provider or its agents. The changes in this bill build on earlier legislation, which the Greens also supported. These bills included the Higher Education Support Amendment (VET FEE-HELP Reform) Act 2015 and the Higher Education Support (VET) Guideline 2015. These reforms included the introduction of the concept that the exploitative practices of providers amounted to unacceptable conduct, which it absolutely was. Where a student successfully claimed unacceptable conduct occurred on or after 1 January 2016, the student's VET FEE-HELP debt was remitted. This went some way to limiting the most exploitative practices of VET FEE-HELP through 2016 but only applied to the unacceptable conduct of providers post 1 January 2016. The VET FEE-HELP scheme was shut down to new applicants at the end of 2016 after being misused by colleges that enrolled tens of thousands of students in courses they were unlikely to complete and, even if they were completed, were unlikely to help them find jobs. But while the colleges kept the fees for the course paid through the government's VET FEE-HELP scheme, the students were obliged to repay the fee through the tax system. In effect, students are still carrying debts that were incurred as a result of this dishonest conduct by some VET providers. From 2009 to 2016, both Labor and Liberal governments paid private colleges $7.5 billion through the loan scheme, and payments peaked at $2.9 billion in 2015. However, as it stands we do not know what proportion of the payments went to dodgy colleges. We know that students at a number of unscrupulous providers incurred debts as a result of being signed up to courses they would never complete.
On 13 October 2016, the Senate referred an inquiry into a different set of bills that reflected on this and other issues in the VET sector. The VET Student Loans Bill 2016, the VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016 and the VET Student Loans (Charges) Bill 2016 were referred to the Education and Employment Legislation Committee for inquiry. The submissions to this inquiry really do provide some very interesting and very disturbing case studies to understand how we got to this point. The National Tertiary Education Union represents the industrial and professional interests of some 28,000 staff working in tertiary education. In their submission, they state:
There is no question that the existing market based arrangements for the regulation and funding of VET in Australia have been a complete failure. The NTEU welcomes the significantly enhanced funding and regulatory arrangements included in the proposed legislation and, as outlined above, if appropriately monitored and enforced, the new registration and compliance arrangements should minimise the capacity of dishonest providers to exploit students and/or rort public funding.
Education is not a commodity. It should never be treated as a profit-making exercise. Students are not clients, and education institutions should not be businesses.
Another interesting perspective is that of the Consumer Action Law Centre, an independent not-for-profit consumer organisation based in Melbourne. They work to advance fairness in consumer markets, particularly for disadvantaged and vulnerable consumers, through financial counselling, legal advice and representation, policy work, and campaigns. In their submissions, they state:
It is well documented and generally accepted that vulnerable and low-income consumers and job seekers were specifically targeted by VET providers and third-party sales agents. Unsolicited sales were common, either through door-to-door sales in lower socio-economic areas, or cold calling "leads" generated through job search or competition websites. Much of this activity was unlawful under the Australian Consumer Law (ACL) due to practices involving misleading or unconscionable conduct. In response, the Australian Competition and Consumer Commission (ACCC) has taken enforcement action against individual providers or brokers.
These so-called education "brokers" and third-party sales agents wreaked havoc between 2012 and 2015 with enrolments surging from 55,000 to 272,000 during this time. Consumer Action's legal practice saw a similar spike in complaints about the enrolment practices of VET FEE-HELP providers and brokers over the same period.
A few years ago, triple j's Hack did an excellent expose of what was happening. It was called An insider's account of adodgy private college rorting student loans. I want to read some of the article onto the record. It is important that we don't forget the real impacts that these terrible changes that were brought on have had on people. The article reads:
For one year it was Megan's job to advise students enrolled at one of the many Australian private training colleges rorting the government and plunging thousands into severe debt. She was at the centre of one of the biggest blunders in government in recent years—the VET FEE-HELP affair.
The former employee told Hack what it was like working in the industry, and the kinds of aggressive stand-over tactics used to pressure the vulnerable into signing up to worthless courses.
Megan helped students access their online courses. This meant she was often the first, and only, person from the college to speak with the students after they had been recruited.
Many of the students she spoke with had been targeted by agents outside Centrelink offices or train stations in low-income areas and told they would never have to repay the student debt because they would never pass the income threshold.
Of the 1,000 students she had been assigned, some told her they had no idea they had even been signed up to courses that were costing them about $20,000.
"They didn't know where [the college] had gotten their details," Megan told Hack.
It was Megan's job to filter out the students who should not be enrolled, but she was sandwiched between the agents who made money out of each enrolment, and her bosses who were making money the same way. Her complaints were sidelined.
"We had a test ... that was meant to weed out the students who were not able to complete it, but often times the person signing them up for the course was actually doing that test for them, and when asked during orientation calls if they had done test they would lie and say 'Yes'.
"People would tell me, 'I don't even know what marketing is, can you tell me what marketing is? And they were signed up for a diploma in marketing.
Then there were the students who never answered when she called. If they did not answer, they were considered enrolled. She thinks many students were not even aware they were enrolled.
Earlier this year, Fairfax Media revealed that the Student Loans Ombudsman had been swamped by more than 5,000 complaints in just nine months from people who claim they've been ripped off by shonky private colleges or substandard vocational educational courses. The highest proportion of complaints came from people discovering loans issued by colleges without consent during one of the biggest rorts in the education history. We know that just 0.2 per cent of VET student loan complaints resulted in students getting cash back.
We need to support vulnerable students who have been cheated and scammed, and this bill is another step to enable us to do that. We can never undo the harm caused to so many students due to the decimation of TAFE and the handing over to private providers, in a complete neoliberal pursuit by governments, but this bill can at least right some of the wrongs.
Question agreed to.
( Quorum formed. )
Bill read a second time.