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

by leave—I move government amendments (1) to (13) and (15) to (25) and request (14) on sheet GZ155 together:

(1) Schedule 1, page 3 (after line 6), after item 1, insert:

1A At the end of section 137 -18

  Add:

(5) A person's *VET FEE-HELP debt in relation to a *VET unit of study is taken to be remitted to the extent that the person's *FEE-HELP balance is re-credited under clause 46B of Schedule 1A in relation to the unit.

(2) Schedule 1, item 3, page 3 (lines 9 to 20), omit the item, substitute:

3 Paragraph 6(1)(c) of Schedule 1A

  Repeal the paragraph, substitute:

  (c) the body is a *registered training organisation, as listed on the *National Register, that has been a registered training organisation since at least 1 January 2011; and

  (ca) the body has been offering:

     (i) at least one *qualifying VET course continuously since at least 1 January 2011; or

     (ii) one or more series of qualifying VET courses since at least 1 January 2011, with each course in a series superseding the other without interruption; and

(3) Schedule 1, page 3 (after line 22), after item 4, insert:

4A After paragraph 6(1A)(d) of Schedule 1A

  Insert:

  (da) the body has been offering:

     (i) at least one *qualifying VET course continuously since at least 1 January 2011; or

     (ii) one or more series of qualifying VET courses since at least 1 January 2011, with each course in a series superseding the other without interruption; and

4B After subclause 6(2) of Schedule 1A

  Insert:

  (2A) For the purposes of (but without limiting) paragraph (1)(g) or (1A)(i), the requirements set out in the *VET Guidelines can include requirements relating to a body's capacity to satisfactorily and sustainably provide *VET courses of study.

Note: These requirements could, for example, relate to the stability of the body's ownership and management, its experience, its business relationships with particular kinds of educational institutions and its record in providing quality student outcomes.

(4) Schedule 1, item 7, page 5 (lines 2 to 4), omit subclause 23B(4), substitute:

(4) For the purposes of subclause (3), the *VET Guidelines may empower:

  (a) a person or body:

     (i) to decide whether to approve a particular tool for use when assessing whether a student is academically suited to undertake a *VET course of study; and

     (ii) to charge a fee for making such a decision; and

  (b) a person or body to charge a fee for the use of a tool for such an assessment.

A fee so charged must not be such as to amount to taxation.

(5) Schedule 1, page 6 (after line 2), after item 7, insert:

7A Subclause 26(1) of Schedule 1A

  Repeal the subclause, substitute:

(1) The Minister may require a *VET provider to be audited:

  (a) about compliance with any or all of the following requirements:

     (i) the *VET financial viability requirements;

     (ii) the *VET fairness requirements;

     (iii) the *VET compliance requirements;

     (iv) the *VET fee requirements;

     (v) other requirements for VET quality and accountability set out in the *VET Guidelines; or

  (b) about any or all of the following matters relating to *VET courses of study provided by the VET provider:

     (i) the approaches used to recruit or enrol students (or potential students) of those courses who receive (or who could receive) *VET FEE-HELP assistance for *VET units of study forming part of those courses;

     (ii) the veracity of enrolments in those courses of students who receive VET FEE-HELP assistance for VET units of study forming part of those courses;

     (iii) the level of teaching resources, or the quality of those resources, for any of those courses;

     (iv) the level of engagement in any of those courses of students who receive VET FEE-HELP assistance for VET units of study forming part of those courses;

     (v) the completion rates for any of those courses of students who receive VET FEE-HELP assistance for VET units of study forming part of those courses.

(6) Schedule 1, page 6 (after line 4), after item 8, insert:

8A Before subclause 36(1) of Schedule 1A

  Insert:

Suspension pending revocation

8B At the end of clause 36 of Schedule 1A

  Add:

Suspension for poor performance

(5) The *Secretary may, in writing, suspend a body's approval as a *VET provider if:

  (a) an audit of the body has been conducted about any or all of the matters in paragraph 26(1)(b); and

  (b) the audit identified one or more concerns; and

  (c) those concerns have yet to be resolved as described in paragraph (6)(b).

(6) The suspension:

  (a) starts on the day of the decision under subclause (5); and

  (b) ends on the day (if any) that the *Secretary notifies the body, in writing, that the Secretary reasonably believes that those concerns have been satisfactorily resolved by the body in accordance with a plan agreed between the body and the Commonwealth.

(7) Before making a decision under subclause (5), the *Secretary must give the body a notice in writing:

  (a) stating that the Secretary is considering making the decision; and

  (b) stating the reasons why the Secretary is considering making the decision; and

  (c) inviting the body to respond to the Secretary, in writing, within 14 days; and

  (d) informing the body that, if no response is received within the 14 day period, the Secretary may proceed to make the decision.

(8) In deciding whether to make the decision under subclause (5), the *Secretary must consider any response received from the body within the 14 day period.

(9) The *Secretary must give written notice of a decision under subclause (5) to the body. The notice must be given within 14 days after the day the decision was made.

8C Before subclause 37(1) of Schedule 1A

  Insert:

Suspension pending revocation

8D Subclause 37(1) of Schedule 1A

  Omit "clause 36 is of no effect for the purposes of", substitute "subclause 36(1) is of no effect for purposes of or relating to".

8E At the end of clause 37 of Schedule 1A

  Add:

Suspension for poor performance—no impact on existing students

(6) A suspension of a body's approval as a *VET provider under subclause 36(5) is of no effect for purposes of or relating to assistance payable to the body's students under Part 2 to the extent that the assistance relates to students of the body who have not completed the *VET courses of study in which they were enrolled with the body before the day the suspension starts (see paragraph 36(6)(a)).

Note: One consequence of this subclause is that clauses 45E and 46B (which apply if the body's VET FEE-HELP account is in deficit at the end of a calendar year) will continue to apply to the body during the suspension.

(7) Schedule 1, page 6 (before line 5), before item 9, insert:

8F Subclause 39(1) of Schedule 1A

  Omit "may revoke", substitute "must revoke".

8G After subclause 39(2) of Schedule 1A

  Insert:

  (2A) The revocation is subject to the condition that, after the revocation:

  (a) clauses 45E and 46B continue to apply to the body as if the body were still approved as a *VET provider; and

  (b) other provisions of this Act, or the *VET Guidelines, that:

     (i) relate (directly or indirectly) to entitlements to *VET FEE-HELP assistance arising before the revocation; and

     (ii) are specified in the notice of revocation under subclause (3) of this clause;

     continue to apply to the body as if the body were still approved as a VET provider.

(8) Schedule 1, page 6 (after line 12), after item 10, insert:

10A After paragraph 43(1)(f) of Schedule 1A

  Insert:

  (fa) in a case where the student is not already entitled to VET FEE-HELP assistance for another VET unit of study forming part of the course—the body with whom the student is enrolled is approved as a *VET provider:

     (i) for the day of the enrolment; or

     (ii) if that day falls within a period when the body's approval as a VET provider is suspended under subclause 36(5)—for a later day because that suspension has ended; and

(9) Schedule 1, page 6 (before line 13), before item 11, insert:

10B Before paragraph 43(1)(g) of Schedule 1A

  Insert:

  (fb) if the VET provider was approved as a VET provider after 2015, the course is:

     (i) one of the *qualifying VET courses that enabled paragraph 6(1)(ca) or (1A)(da) to be satisfied for the purposes of that approval; or

     (ii) a qualifying VET course that superseded such a course directly or indirectly without interruption; and

(10) Schedule 1, page 6 (after line 16), after item 11, insert:

11A Subclause 43(1) of Schedule 1A (note)

  Repeal the note, substitute:

Note 1: For the purposes of paragraph (e), clause 45A affects whether a person undertakes a VET unit of study as part of a VET course of study.

Note 2: For the purposes of paragraph (fa), a body's approval as a VET provider ceases while the approval is suspended (see clause 29). If this approval is suspended when the student first enrols in units forming part of the course, the student can only become entitled to VET FEE-HELP assistance when that suspension ends.

(11) Schedule 1, item 12, page 7 (after line 8), after paragraph 45C(1)(b), insert:

  (ba) if the student enrols in the course after the day the Higher Education Support Amendment (VET FEE-HELP Reform) Act 2015 receives the Royal Assent—the student being entitled to the VET FEE-HELP assistance for the unit:

     (i) would not cause the VET provider's *VET FEE-HELP account to be in deficit at the end of that census date (see subclause 45D(7)); and

     (ii) would not cause or contribute to that account being in deficit at the end of 2016 or a later calendar year; and

(12) Schedule 1, item 12, page 7 (lines 11 to 24), omit subclause 45C(2), substitute:

If VET provider incorrectly treats student as being entitled

(2) However, for the purposes of this Act (other than clause 39DH), if:

  (a) either or both of the following things happen:

     (i) the student fails to comply with paragraph (1)(a) of this clause by not giving the request at least 2 business days after the enrolment referred to in that paragraph;

     (ii) paragraph (1)(ba) of this clause is not complied with; and

  (b) the *VET provider treats the student as being entitled to *VET FEE-HELP assistance for the unit;

those paragraphs of this clause are taken to have been complied with.

Note 1: The VET provider should not treat the student as being entitled to VET FEE-HELP assistance:

  (a) if the student requests the assistance during the 2 business day cooling-off period after the enrolment; or

  (b) if being entitled would cause or contribute to the provider's VET FEE-HELP account being in deficit.

Note 2: However, if the provider does treat the student as being entitled, the provider will contravene subclause 39DH(1) (a civil penalty provision), and the student may still be able to receive the assistance.

(13) Schedule 1, item 12, page 7 (after line 24), after clause 45C, insert:

45D Notional VET FEE -HELP accounts

(1) There is a notional VET FEE-HELP account for each *VET provider.

Note 1: The VET provider will need to monitor the balance of its account, as it will have to repay an amount to the Commonwealth if the account is in deficit at the end of 2016 or a later year.

Note 2: This account applies in relation to all students entitled to VET FEE-HELP assistance for VET units of study with census dates on or after 1 January 2016 (whether or not the student received VET FEE-HELP assistance for earlier units before that day). See subclause (7).

Credits to the VET provider ' s VET FEE -HELP account

(2) A credit arises in the *VET provider's *VET FEE-HELP account as follows:

  (a) if the VET provider is already a VET provider on 1 January 2015, a credit arises on the first day of each later calendar year that is equal to the amount worked out under subclause (3);

  (b) if the VET provider becomes a VET provider during 2015, a credit arises on the first day of each later calendar year that is equal to the amount worked out under subclause (4);

  (c) if the VET provider becomes a VET provider on a day after 2015, a credit arises on that day that is equal to the amount worked out under subclause (5);

  (d) if the VET provider pays on a particular day any part of any amount that becomes due under subclause 45E(2), a credit arises on that day that is equal to the amount of that payment;

  (e) if another body ceases to be a VET provider, a credit may arise in accordance with a determination under subclause (6).

A credit that arises as described in paragraph (e) arises at the time of the cessation, and is equal to the amount worked out under that determination.

(3) For the purposes of paragraph (2)(a), the amount to be credited is the amount equal to:

where:

  VET provider ' s adjusted 2015 total loan amount means the sum of the amounts of *VET FEE-HELP assistance paid for students undertaking, with the *VET provider, *VET units of study that had *census dates during the period starting on 1 January 2015 and ending on 31 August 2015.

(4) For the purposes of paragraph (2)(b), the amount to be credited is the amount equal to the sum of:

  (a) the *VET provider's fee revenue for the period:

     (i) starting on 1 January 2015; and

     (ii) ending on the day before the VET provider was approved as a VET provider;

     for *domestic students undertaking *qualifying VET courses in that period; and

(b) the sum of the amounts of *VET FEE-HELP assistance paid for students undertaking, with the VET provider, *VET units of study that had *census dates during 2015.

(5) For the purposes of paragraph (2)(c), the amount to be credited is the amount equal to the *VET provider's fee revenue for the 2015 calendar year for *domestic students undertaking in that year the *qualifying VET courses that enabled paragraph 6(1)(ca) or (1A)(da) to be satisfied for the purposes of the VET provider's approval as a VET provider.

(6) The Minister may, by legislative instrument, determine:

  (a) whether credits arise in the *VET FEE-HELP accounts of specified *VET providers when another body ceases to be a VET provider; and

  (b) the amounts of such credits.

Debits to the VET FEE -HELP account

(7) A debit arises in the *VET provider's *VET FEE-HELP account if a student is entitled to *VET FEE-HELP assistance for a *VET unit of study:

  (a) that is to be undertaken with the VET provider; and

  (b) that has a *census date on or after 1 January 2016.

The debit arises at the end of that census date, and is equal to the amount of that assistance.

45E Effect of VET FEE -HELP account being in deficit at the end of a calendar year

(1) If:

  (a) a *VET provider's *VET FEE-HELP account is in deficit at the end of a calendar year; and

  (b) the *Secretary gives the VET provider a written notice about the deficit;

the VET provider must pay to the Commonwealth an amount equal to the amount of the deficit (the excess loan amount).

(2) The excess loan amount is due on the seventh day (the due day) after the day the notice is given.

Late payments of the excess loan amount attract the general interest charge

(3) If some or all of the excess loan amount remains unpaid after the due day, the *VET provider must pay to the Commonwealth an amount (the general interest charge) relating to the unpaid amount for each day in the period that:

  (a) starts at the beginning of the day after the due day; and

  (b) ends at the end of the last day on which, at the end of the day, any of the following remains unpaid:

     (i) the excess loan amount;

     (ii) general interest charge on any of the excess loan amount.

(4) The general interest charge for a particular day is worked out by multiplying the *general interest charge rate for that day by the sum of so much of the following amounts as remains unpaid:

  (a) the general interest charge from previous days;

  (b) the excess loan amount.

(5) The general interest charge for a day is due and payable to the Commonwealth at the end of that day.

(6) The *Secretary may give written notice to the *VET provider of the amount of the general interest charge for a particular day or days. A notice given under this subclause is prima facie evidence of the matters stated in the notice.

(7) The *Secretary may remit all or a part of the general interest charge payable by the *VET provider if the Secretary is satisfied:

  (a) that:

     (i) the circumstances that contributed to the delay in payment were not due to, or caused directly or indirectly by, an act or omission of the VET provider; and

     (ii) the VET provider has taken reasonable action to mitigate, or mitigate the effects of, those circumstances; or

  (b) that it is otherwise appropriate to do so.

(8) An amount payable under this clause may be recovered by the Commonwealth from the *VET provider as a debt due to the Commonwealth.

(14) Schedule 1, page 9 (before line 28), before item 15, insert:

14A Before clause 47 of Schedule 1A

  Insert:

46B Re -crediting a person ' s FEE -HELP balance—VET FEE -HELP account in deficit at the end of a calendar year

Main case

(1) A *VET provider must, on the *Secretary's behalf, re-credit a student's *FEE-HELP balance with an amount if:

  (a) the student receives *VET FEE-HELP assistance in a calendar year for a *VET unit of study undertaken with the VET provider; and

  (b) under subclause 45E(1), the Secretary notifies the VET provider that the VET provider's *VET FEE-HELP account was in deficit at the end of the calendar year; and

  (c) the VET provider reasonably believes that some or all of that assistance caused or contributed to the deficit.

(2) The amount to be re-credited is equal to so much of that assistance as the *VET provider reasonably believes caused or contributed to the deficit.

Note: A corresponding amount of the student's VET FEE-HELP debt relating to the unit will be remitted (see section 137-18).

(3) The *Secretary may re-credit the student's *FEE-HELP balance under this subclause if:

  (a) the *VET provider is unable to do so under subclauses (1) and (2); and

  (b) the Secretary knows how much of that assistance that the VET provider reasonably believes caused or contributed to the deficit.

If not all of the deficit can be re -credited under subclauses (1) and (3)

(4) If the deficit exceeds the total amount able to be re-credited under subclauses (1) and (3) for all of the *VET provider's students who received *VET FEE-HELP assistance in the calendar year for *VET units of study undertaken with the VET provider, the *Secretary may re-credit the *FEE-HELP balance of each of those students with the amount equal to:

That excess × Student's percentage of the total assistance

where:

  student ' s percentage of the total assistance means the percentage equal to the percentage that the student's *VET FEE-HELP assistance referred to in paragraph (1)(a) is of the total VET FEE-HELP assistance received by students of the *VET provider in the calendar year for *VET units of study undertaken with the VET provider.

14B At the end of Subdivision 7 -B of Schedule 1A

  Add:

51A Implications for the student ' s liability to the VET provider for the VET tuition fee

     If a student's *FEE-HELP balance is re-credited in accordance with this Subdivision with an amount for a *VET unit of study, the student is discharged from all liability to pay or account for so much of the student's *VET tuition fee for the unit as is equal to that amount.

(15) Schedule 1, page 9 (after line 30), after item 15, insert:

15A Clause 60 of Schedule 1A

  Repeal the clause, substitute:

60 Time and manner of payments

(1) Amounts payable by the Commonwealth to a *VET provider under this Schedule are to be paid in accordance with an applicable determination under subclause (2) or (3).

(2) The Minister may, by legislative instrument, determine the way (including payment in instalments or in arrears), and the times when, amounts payable by the Commonwealth under this Schedule are to be paid to specified kinds of *VET providers.

(3) The Minister may, in writing, determine the way (including payment in instalments or in arrears), and the times when, amounts payable by the Commonwealth under this Schedule are to be paid to a particular *VET provider.

(4) A determination under subclause (3) is not a legislative instrument.

(16) Schedule 1, page 10 (after line 25), after item 20, insert:

20A Clause 91 of Schedule 1A (after table item 1B)

Insert:

(17) Schedule 1, page 11 (before line 1), before item 22, insert:

21A Before clause 98 of Schedule 1A

  Insert:

97A Compensation for acquisition of property

(1) If the operation of this Schedule would result in an acquisition of property from a person otherwise than on just terms, the Commonwealth is liable to pay a reasonable amount of compensation to the person.

(2) If the Commonwealth and the person do not agree on the amount of the compensation, the person may institute proceedings in a court of competent jurisdiction for the recovery from the Commonwealth of such reasonable amount of compensation as the court determines.

(3) In this clause:

  acquisition of property has the same meaning as in paragraph 51(xxxi) of the Constitution.

  just terms has the same meaning as in paragraph 51(xxxi) of the Constitution.

(18) Schedule 1, item 22, page 11 (before line 3), before the definition of responsible parent, insert:

  general interest charge rate has the same meaning as in section 8AAD of the Taxation Administration Act 1953.

  qualifying VET course means a structured and integrated program of vocational education or vocational training, usually consisting of a number of modules (units of study) or shorter programs, and leading to the award of a *VET diploma, *VET advanced diploma, *VET graduate diploma or *VET graduate certificate.

(19) Schedule 1, item 22, page 11 (after line 9), after the definition of student entry procedure, insert:

  VET FEE -HELP account has the meaning given by clause 45D of Schedule 1A.

(20) Schedule 1, item 24, page 11 (lines 13 to 16), omit subitem (1), substitute:

(1) The amendments of clause 6 of Schedule 1A to the Higher Education Support Act 2003 made by this Schedule apply in relation to decisions whether to approve bodies as VET providers made on or after 1 January 2016.

(21) Schedule 1, item 24, page 11 (after line 23), after subitem (3), insert:

  (3A) Paragraph 26(1)(b) of Schedule 1A to the Higher Education Support Act 2003 (as inserted by this Schedule) applies to matters happening before, on or after 1 January 2016, to the extent that those matters are relevant to VET courses of study provided wholly or partly on or after 1 January 2016.

Example:   When auditing a VET provider about a 2016 VET course of study, the audit could look at:

(a) any approaches used in 2015 for recruiting students to the 2016 course; or

(b) teaching resources, student engagement or completion rates for the corresponding course provided in 2015.

  (3B) The amendments made by this Schedule of clause 39 of Schedule 1A to the Higher Education Support Act 2003 apply in relation to requests for revocation made on or after 1 January 2016.

(22) Schedule 1, item 24, page 12 (after line 2), after subitem (6), insert:

  (6A) Subclause 45E(1) of Schedule 1A to the Higher Education Support Act 2003 (as inserted by this Schedule) applies in relation to the 2016 calendar year and later calendar years.

(23) Schedule 1, item 24, page 12 (after line 5), at the end of the item, add:

(8) Clause 51A of Schedule 1A to the Higher Education Support Act 2003 (as inserted by this Schedule) applies in relation to the re-crediting of FEE-HELP balances on or after 1 July 2016.

(9) Clause 60 of Schedule 1A to the Higher Education Support Act 2003 (as inserted by this Schedule) applies in relation to amounts payable on or after 1 January 2016.

(24) Schedule 1, Part 1, page 12 (after line 5), at the end of the Part, add:

24A Transitional—pending applications

  For the purposes of subclause 11(3) of Schedule 1A to the Higher Education Support Act 2003, any period referred to in that subclause that was underway on 2 December 2015 is taken to have paused at the end of that day until the end of 21 January 2016.

(25) Schedule 1, item 26, page 23 (lines 22 and 23), omit "an APS employee in the Department", substitute "a person".

Parliamentary Counsel

Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015

GZ155

Statement of reasons: why certain amendments should be moved as requests

Section 53 of the Constitution is as follows:

Powers of the Houses in respect of legislation

53. Proposed laws appropriating revenue or moneys, or imposing taxation, shall not originate in the Senate. But a proposed law shall not be taken to appropriate revenue or moneys, or to impose taxation, by reason only of its containing provisions for the imposition or appropriation of fines or other pecuniary penalties, or for the demand or payment or appropriation of fees for licences, or fees for services under the proposed law.

The Senate may not amend proposed laws imposing taxation, or proposed laws appropriating revenue or moneys for the ordinary annual services of the Government.

The Senate may not amend any proposed law so as to increase any proposed charge or burden on the people.

The Senate may at any stage return to the House of Representatives any proposed law which the Senate may not amend, requesting, by message, the omission or amendment of any items or provisions therein. And the House of Representatives may, if it thinks fit, make any of such omissions or amen

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

I will not repeat my closing remarks of last night except to note that the government has, through the course of this year, acknowledged the importance of turning off the tap in relation to the way this scheme has worked. I also commented last night that in many ways those opposite are like an arsonist who has lit a fire and now complains that the fire brigade is taking too long to get here. We have long acknowledged the problems in this scheme. We have been working to try to resolve and rectify them. We have conceded now that to rectify them is going to require a wholesale rewriting of Labor's scheme, and we are committing to do so.

In relation to the measures that apply to the pausing of payments for new enrolments or to moving to payment in arrears for certain providers, those measures are powers that are to be provided to the minister and would be exercised on a case-by-case basis. In those instances there is not necessarily a specific time line for departmental implementation but advice will be received on a case-by-case basis.

In relation to the new entry requirements for an RTO wishing to become a VET FEE-HELP provider, if anything this will ease the administrative workload of the department. As they have indicated, there are hundreds of outstanding VET FEE-HELP applications. The passage of those amendments will allow the department to discard a number of those applications who do not meet the very clear terms that are set out in the amendments.

In relation to freezing the total loan limit for existing VET FEE-HELP training providers, that is a relatively simple measure. That amendment essentially takes payments over the first eight months of this year and averages them into a 12-month cap. The department already has data across that eight month time horizon for the 260-odd VET FEE-HELP providers who are registered, so it will be able to fairly neatly average out that eight months into a 12-month cap on what they would be eligible to claim as payments in 2016.

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

If I understand your question correctly, yes, providers are still receiving payments now as they do during the course of this year. What our legislation is saying is that, in relation to calculating a 12-month cap on payments, we are taking the first eight months of payments for 2015 and extrapolating that into a 12-month payment. Essentially, we will average those eight months into the average monthly payment across those eight months and multiply that by 12 to establish a 12-month cap. I have an important clarification there: it is not necessarily the actual payment transaction within those eight months; it is the data in applications lodged by providers in that eight-month period. In a sense, that is a time sequencing matter, probably, as much as anything, in that payments lag applications, so payments that would have been made in January may well apply to applications made in December or November or the like. So—whichever—in a sense, it is simply just applying what seems to be the administratively simplest means by which the department can quickly establish a 12-month per-provider cap for 2016, essentially using 2015 data, albeit using the first eight months of 2015 data.

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

Payments made in advance, as they are at present, are made on estimates—that is correct, Senator Carr. The data method proposed in terms of setting this cap is data informed by actual enrolments. So there is a distinction between those two. Of course the other amendments that seek to make payments in arrears mean that those payments would shift to an actuals versus an estimates basis.

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

Because it is a rule set out in a strict formula in the legislation, the only appeal mechanism that would be provided for would be for a provider to pursue some court challenge.

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

They would have to sue the Commonwealth.

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

Just for clarity, Senator Carr: it is around 264 providers, I believe, and the total freeze is expected to be a value of around $3 billion when the sums are finally calculated. As we have all discussed during the debate, the very rapid growth that occurred after the changes that opened the scheme up occurred in 2012, which is exactly why we are seeking to stymie that growth. It is a relatively straight formula that is being applied here, so the expectation is that—whilst anybody is, of course, free to seek to bring forward court proceedings—the grounds on which somebody may wish to pursue those proceedings would have some limitations, given the very clear and prescriptive formula that we are seeking for the parliament to apply.

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

Yes.

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

Providers seeking to rort the system will, if you look at the collective amendments that are proposed, run the risk of finding that their provision and ability to enrol more students could be withdrawn at any time, based on ministerial discretion, as a result of the pause in payment provisions being applied. Providers may wish to contemplate how to rort the system further, if they are of that nature, but there are serious consequences for them.

The greatest problem we have had in this scheme is not, necessarily, that legitimate students have been signed up at too high a price in relation to their cost—and it is legitimate students who a provider incurs a cost to teach, because those students are engaged in the teaching and learning process. The primary problem we have faced is that students with little or no intention, and little or no likelihood of ever engaging in the teaching, learning and training process, have been signed up.

That is the practice, overall, that the government's changes through the course of this year have sought to stamp out. I make that point because if those students are not seeking to undertake training or otherwise they come out at relatively low per-person cost to the training provider. The need or incentive to try to sign up fewer people at greater price, for profit motivation—if that is the argument you are making—is not really where the prime problem has tended to be. The prime problem has been a willingness to sign up people with no intention or likelihood of undertaking the study, regardless of the price, knowing the cost of teaching those people is negligible because they are never going to turn up to anything.

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

I will directly answer your question, Senator Carr, and then I want to touch on some of the preceding remarks. You will not find a sunset clause in the amendments. The government has made a public commitment and a commitment in the chamber that it is our intention to revamp the scheme next year. I imagine that providers of all shapes and sizes would expect to be holding the government to account in that regard to make sure that new arrangements are put in place, otherwise the 2015 cap will carry forward indefinitely. That is not something that the providers, the states or others would want to have. In some ways I think a sunset clause would be counterproductive. By having a sunset clause for that one provision we would, in a sense, remove the gun to the head that would make us get on with making sure that, overall, the scheme is rewritten and new arrangements are put in place. So I would caution the Senate against the concept of a sunset clause there and I urge the Senate to join, no doubt with others, in holding the government to account to make sure that a new scheme that rewrites all of these rules in a much more effective manner is operational from 2017.

Senator Carr, I want to pick up on your comments about completion rates and whether or not there is effective regulation of teaching practices, completion rates and other factors. I acknowledge that you have acknowledged the extra resources that have been provided to both ASQA and the Department of Education and Training to enhance audit activity and compliance. I also draw the Senate's attention to some of the provisions that would, potentially, lead to the pausing of payments for poor performance to providers. These are quite broad provisions and they touch on some of these significant quality issues. I draw the Senate's attention to amendment (5), which inserts item 7A. In particular, I draw attention to the proposed changes to subclause 26(1)(b) of schedule 1A of the act:

(i) the approaches used to recruit or enrol students …

(ii) the veracity of enrolments …

(iii) the level of teaching resources, or the quality of those resources, for any of those courses—

which I think is a particularly important component for consideration, in relation to how some of the online enrolments may occur—

(iv) the level of engagement in any of those courses of students who receive VET FEE-HELP assistance—

again, a very important provision that means swift action could be undertaken were enrolments to be proceeding but students not turning up or participating, in any way, in those courses—

(v) the completion rates for any of those courses …

The government does have profound concerns about some providers and the very poor completion rates that are in place. We equally have concerns about the level of engagement in a number of courses and we have spent much time talking about recruitment and enrolment practices of providers during this year. We want to make sure that the provisions are there that enable us to take swift action in response to those concerns. In terms of the power of the different amendments we are proposing, this one is most notable. Providers should expect that the government would be looking to use these provisions, if they are passed, in a relatively swift time line, and if you are out there with poor levels of engagement of students in your courses or poor completion rates it is highly probable that we are looking at you.

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

Senator Carr, these are provisions that apply only to VET FEE-HELP providers, as distinct from all VET providers, so in that regard we are talking about the 264 or thereabouts VET FEE-HELP providers as distinct from the some 4,700 or thereabouts registered training organisations. These provisions—the pausing of payments provisions, which are subject to a ministerial discretion or determination—are also subject to AAT appeals mechanisms as well. So—as distinct from the earlier provisions, which are a clear rule that applies consistently across all VET FEE-HELP providers in terms of a calculation of an annualised cap on their loan limit—because these are individual, subjective decisions that are undertaken in accordance with an assessment and against the terms of the amendments, there are appropriate appeals mechanisms through the AAT provided for.

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

Senator Simms, what the government is proposing is that we will look at how we would reconceive of VET FEE-HELP as a means that provides for a higher quality of training outcomes, is more directly relevant to likely employment outcomes and has mechanisms in place to try to drive efficiency in the cost and pricing of delivery of those courses.

We are committed to consulting with the sector. I note that both TAFE Directors Australia and ACPET, representing private providers, welcomed the government's additional amendments that were introduced this week. We would work with them along with community colleges and all other providers. We would consult with the states and territories as we would with industry, employers and students to make sure that the system applied in future is one that people can have confidence in.

The principles behind an income-contingent loan scheme are sound principles of equity. That is why the Howard government proposed to apply the expansion of income-contingent loans to students in this vocational education sector, but it did so in a cautious way that required courses to have an articulation agreement with universities. The previous government, as has been well canvassed in this debate, removed that requirement and opened up some of the other measures of access to it, which has led to the very rapid rate of growth. That does not change the fact that income-contingent loans are good, equitable means of avoiding people having to pay up-front fees.

While noting the Greens' philosophical objection to private education, I would encourage Senator Simms, over the Christmas break, to have a look at the total VET activity reporting data released in the last few weeks. It is quite striking. If you have a look at the fee-for-service VET market—those providers outside of VET FEE-HELP and those providers operating outside of state government subsidy arrangements—some of the strongest completion rates and some of the strongest employment outcomes are derived by private providers and evidenced by the total VET activity reporting.

There is a challenge, Senator Simms, as to how we make sure we get those high-quality outcomes for training and employment—that those private providers have demonstrated they deliver—expanded in areas where the government wants to apply a subsidy but without the type of rorting we have seen to date. TAFE does an outstanding job, in many instances, but there have been widely acknowledged problems over the years that without some semblance of competitive pressure, without some degree of contestability, TAFEs may not be as driven to change their ways—to focus on delivering good value-for-money outcomes—as they should be. Equally, the sorry saga of the VET FEE-HELP episode demonstrates that without appropriate safeguards in place you will see profiteers, shonksters and fraudsters stepping into the mix and ripping off the taxpayer.

It is knowing all of those lessons the government embarks upon—saying we want to try to reconceive this scheme in 2017. We will consult with all the relevant stakeholders in doing so, and we will do so very well aware of the problems. In my changed capacity, over the last couple of months, in having responsibility for higher education, I have acknowledged, in talking at higher education fora, that I have been somewhat burnt by the VET FEE-HELP saga and the experiences I have seen here on how you might expand access and structure arrangements. They are lessons that, equally, I take in contemplating where higher-education reform might go. They are lessons that we, the government, have at the forefront of our minds when reconceiving the scheme in 2017. I welcome your contributions and inputs, just as I will Senator Carr's. I know Minister Hartsuyker will be happy to hear from all those who have ideas.

Senator Kim Carr interjecting—

Senator Carr, as I have said in this debate before, has been big enough to acknowledge the mistake that happened in 2012 and where things went wrong. He, at least, acknowledges some of the mistakes and lessons that need to be learnt as well. We may not agree on all the benefits of some of the competition that, perhaps, we should find ways to preserve in any new model but, if he has innovative ideas in that space, I am happy to hear them.

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

Senator, I would expect that, in the next couple of weeks, Minister Hartsuyker will meet and discuss with some of the first-tier stakeholders exactly how the approach will play out, if I can put it that way, in terms of those who represent the various VET providers and other key players. The first point of those consultations will, indeed, be to, perhaps, set down some of the benchmarks and time lines that you ask about, so that it is developed in a cooperative manner. We have, perhaps too much so in not having brought this legislation to the Senate earlier, sought to be very consultative in our approaches.

In March, when I announced the suite of eight reforms to the VET FEE-HELP scheme that we applied then, I established, working within the department, a VET FEE-HELP working group. That working group brought together TAFE directors, ACPET and the community colleges. It brought in representatives of industry and consumer affairs. I think we had the New South Wales consumer affairs commission represented. We had Gerard Brody from the Consumer Action Law Centre in Victoria, who I had not met at that point in time, but who I had noted, through media, as being one of the strongest critics of the way the scheme was operating, so I wanted to have his input around that table as well on the reforms that are contained in this legislation.

The government, I think, has shown a strong commitment to consultation and a consultation which does stretch beyond the immediacy of providers and tries to make sure it has representatives, importantly, of both student and employer interests around the table, because we should never lose sight of the fact that we are debating vocational education and training. The outcome and objective we seek is that students are trained and skilled for jobs.

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

I met with some delegations of unions, when I was the vocational education minister, to talk about how the system was working. I am sure we would be happy to hear their views as well.

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

With articulation through university—

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

Let me deal with a few of the issues that Senator Carr has raised. He quite rightly indicated that the government of the day needs to take responsibility for the circumstances that it finds. This government has been very clear that it takes responsibility for seeking to clean up the mess that it has discovered in the VET FEE-HELP scheme. It has been a process of attempting to apply reforms that we think will fix it. We have acknowledged this week that we think it will take a profound overhaul and rewrite of the scheme to address it, but we completely take responsibility for fixing the mess we inherited. That is exactly what we have been doing, and that is exactly what we are doing through this debate today.

Senator Carr may never have been the minister responsible for VET FEE-HELP or vocational education, but, of course, he was a minister in the government that did enact the various changes that opened this scheme up. It is important that we recognise the history of the scheme. Senator Carr is right: the idea of having an income contingent loan scheme was conceived by the Howard government, but it was with very tight arrangements in place. It was with a requirement that an articulation agreement and credit transfer agreements were in place with universities and that those universities therefore acted as a quality control measure in relation to the VET FEE-HELP providers.

Senator Carr asks me whether reintroducing any provisions in that regard is something that we would consider in rewriting the scheme. I say to Senator Carr: yes, we may consider that in certain circumstances. I think it is important when we consider access to public subsidy, be that public subsidy directly paid as a subsidy or be it paid indirectly via an income contingent loan, that we consider the thresholds of standards that providers need to meet. In the VET sector we have 4,700 registered training organisations. They need to meet a standard to be an RTO, and that should be a strong standard that gives people confidence in the qualifications that are delivered. But, of course, if you are dealing in public funding then it is not unreasonable that a much higher standard is expected, because the fee-for-service market, which I was talking to Senator Simms about before, is far better able to self-regulate itself in many instances because people are making fully informed value judgements about the service they are purchasing. Whether it is an employer paying for the training or an individual paying for the training, they are assessing the value and merit of that training at the time they part with their hard-earned cash. But if they are not parting with hard-earned cash—because they are racking it up on a student loan or because the taxpayer is paying for it—then, unfortunately, we do not seem to see that same serious, informed decision making by individuals occur before they sign on the bottom line, so we do need to expect, therefore, a higher standard from those providers.

What that higher standard may be in a new model is something that we are open to. Articulation agreements may be a means—I say 'may', in a hypothetical scenario—by which you may be able to access whatever a new VET FEE-HELP model looks like, without perhaps having to jump through other hoops. So you might conceive of a model where that is one criterion of high-performance recognition that could be met that saves you having to jump through or demonstrate other hoops—that saves you, perhaps, from having to enter into a contract arrangement if that was something else that was conceived of. These are all scenarios that could be contemplated.

In terms of the process that may be undertaken and your statement that we will be back here, we certainly will be back here because to conceive of a new model will require change to this legislation. So we will be back here to rewrite this legislation under the terms of a new model. But, before that occurs, I am happy to give the Senate the commitment that we will make sure the approach that will be taken is spelt out in a manner that provides an opportunity for public commentary and feedback and that we will not be just rushing through informal consultations to a point of legislation. There will be an opportunity for informed public comment in relation to what changes may look like, not just through an informal consultative mechanism.

Lastly, I will touch on the comments around a takeover of VET. That is an idea that is encouraged by the South Australian government and the South Australian Premier as part of a grander bargain in relation to federation responsibilities that he has publicly spoken about: enhanced opportunities for the states to pursue options in early learning in return for the Commonwealth undertaking an enhanced role in vocational education and training. I think there is a real problem that the VET sector is seen, all too often, as the poor cousin of the university sector and particularly perceived, sadly, by parents, perhaps by teachers, as students are making their postschool decisions, as being something of the poor cousin. I think the inconsistencies that occur from state to state, the inconsistent policies within states and, indeed, challenges with the VET FEE-HELP system all help to plague those perception problems, whereas, notwithstanding various changes in debates over the time, we have had relatively continuous arrangements and certainty for universities since the advent of HECS. Throughout those decades, students have had confidence with how they access a university place, what the funding support for them will be and, indeed, the quality arrangements that should sit alongside that. In an ideal world, students would have the same type of confidence and the same type of certainty built up in the VET sector over a period of time.

Whether or not those discussions proceed, absolutely the Commonwealth needs to look like it would be a competent and responsible steward of the sector were we to have a greater role in funding, noting that we already have the primary national role in the setting of qualifications and the regulation of RTOs. Those two responsibilities are already largely nationalised in any event, and it is only the funding and the student support that now have this odd arrangement where the Commonwealth is the primary agent for student support for high-level VET qualifications, in the diploma and advanced diploma space, while the states are the primary provider of support through the certificate level qualifications—yet another complication to the way the whole scheme works. A federation solution might provide a better outcome. Those are discussions that will be had between the Prime Minister and the state premiers, and the questions will resolved through that context, not here. I am very open to making sure that, if they are progressed, we then get a model that works for all qualification levels settled in a very sensible and careful way that ensures we do not repeat any of the mistakes we have seen in this qualification level.

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

I thank Senator Carr for acknowledging the bringing together of different parties for discussions yesterday. I again apologise for the fact that, having called the meeting swiftly, I was stuck here for half an hour of the meeting because of the proceedings of the chamber. But so be it.

I will answer the TAFE question first and I might need to seek a bit of extra advice in relation to the repayment arrangements. You are correct that the amendments that the government has brought forward apply equally to all VET FEE-HELP providers. That does mean that, in terms of the value of loans that a provider can receive payment for in 2016, all providers will be capped at their 2015 level, including TAFEs. I note that the growth in TAFEs has been pretty astronomical in this space as well. My recollection is that New South Wales TAFE went from receiving VET FEE-HELP payments in 2013 of about $90 million to receiving VET FEE-HELP payments in 2014 of about $190 million. So they have by no means been exempt from the phenomenal rates of growth that we have seen and, I am sure, can comfortably live within the proposed caps for 2016, given the huge expansion in growth that they have undergone.

It is not the government's intention or expectation that the provisions in relation to payment in arrears or the provisions in relation to pause in payments would be likely to or need to be applied to those TAFEs. There are no foreseeable circumstances where that would arise, given that we think that the administration and the capability are there and that the oversight applied by the state governments is sound enough. I guess there is always a risk that a provider somewhere may undertake some sort of egregious activity and could prompt such intervention, but there is no intention by the government to use those provisions for that category of provider.

Your questions then shifted to student reimbursement and how that applies. I assume, Senator Carr, you are asking about the substantive bill as distinct from the amendments that we are currently debating. The provisions there are prospective so they apply to students who are enrolled in future, not to students who may have been enrolled in the past. It is another sad failing of the way the legislation was structured that there are limited provisions to be able to wipe clear a student's debt and for the Commonwealth to be able to recover payments from providers. Our intention through these amendments is that we will in future have some provisions to be able to do that. I do note that a number of providers, where individual complaints have come forward, have been reasonable and even generous in taking the step of wiping a student's debt, of repaying the funding to the Commonwealth for the wiping of that student debt in relation to a concern or a complaint about the enrolment practices that have occurred. That has probably been the largest category of reason or cause for providers to repay debts to date. But, rather than that being essentially a voluntary activity on the part of the provider, we are looking for it now to be something where, if the Commonwealth is satisfied that a provider has acted in breach of the VET FEE-HELP guidelines in the recruitment or the treatment of a student, the Commonwealth would have the capacity to recoup those payments from the provider and to refund the student to ensure that they are treated fairly in future.

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

I am very happy to point Senator Carr to the details of the amendments. The amendments amend the government's amendments. We have been discussing this morning the fact that one of the government's amendments provides a cap on the value of loans that a provider may write in 2016 and caps that value of loans at a 2015 level. These amendments provide scope for limited exemptions to that cap. The scope is very tightly controlled, though.

The VET provider, having demonstrated that they are going to hit the cap and not be able to enrol anymore students under VET FEE-HELP must then demonstrate that they are, firstly, offering a course of study that confers skills in an identified area of national importance; secondly, that the course is relevant for employment in a licensed occupation. So just highlight that one, Senator Carr.

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

A licensed occupation, Senator Carr—a very narrow band in that category. Then, of course, they must also demonstrate that the students are not able to readily able to access training places in courses of this kind with any other VET provider. So if, Senator Carr, you are living in Brisbane—seeing as these are Senator Lazarus's amendments—and you are a student who wishes to study aviation and the aviation providers in Brisbane have already hit their cap in relation to the number of places they can offer under VET FEE-HELP, those providers would be able to make application to the secretary to have that cap lifted for a specified amount—not unlimited, by any means, but a specified amount. This is very much akin to the kind of contracting arrangement for such an extension that you might have encouraged me to contemplate before. So they can make application to have that cap lifted for a specified amount if they can demonstrate that the skill is in an area of national importance, that it is relevant for employment in a licensed occupation, that students cannot access it anywhere else and, of course, that they have hit the cap.

So insofar as this creates an opportunity for exemption to the overall cap, it is an incredibly tightly prescribed exemption that really is only to ensure that we do not end up with the type of scenario that Senator Lazarus has described in his comments, where we had an inadvertent consequence of insufficient pilot training, for example, occurring in Australia.

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

Senator Carr, you can draw out the hypothetical of what could be designated as an area of national importance if you wish. Of course, there needs to be some rationale as to why something might be designated as an area of national importance, and the skills demand for such categories would be an obvious area of consideration in such a determination. I think you are mischievously attempting to create fear around Senator Lazarus's very well intentioned amendment, and the well-intentioned amendment is only intended and expected to have very narrow scope. Overwhelmingly, the government expect that the fee cap that we are proposing will apply to the vast majority of, if not all, VET FEE-HELP providers.

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

I thank Senator Xenophon, at least in relation to Senator Lazarus's amendment, for bringing some common sense back to the debate. I think we saw a level of scaremongering being attempted by Senator Carr and Senator Simms in terms of the Lazarus amendment. Senator Lazarus's amendment sensibly provides provisions for determinations on a case-by-case basis. Let us be crystal clear here. It is not a proposal that would mean that for a category of qualification or a category of occupation that there would suddenly be some blanket exemption that applied. It is about a case-by-case basis, that an application would need to be made by a provider who had reached their cap and, in reaching their cap, was able to demonstrate the national interest in extending that cap, the relevancy of the qualification and the fact that the qualification was a prerequisite for the licensing requirements in relation to that qualification, and that they would need to demonstrate the merit and worthiness of the value of the proposed extension of that cap. So the cap itself would in fact just be increased—not lifted by increased—by a fixed and finite number on the case-by-case basis.

Senator Lazarus's amendment is carefully crafted and ensures that, by placing the cap on the total value of VET FEE-HELP loans across the board that the government is proposing, there is scope to make sure, if there are inadvertent consequences in an area—and he has highlighted, as has Senator Xenophon, aviation as a potential area. I do not seek to prejudge that in this chamber. That is a matter that would be judged under the provisions of this amendment by the secretary to the department or he delegate. I would encourage the chamber to view this amendment as in some ways analogous to the way in which the government has crafted the amendment in relation to the admission of new providers of VET FEE-HELP services.

The government has not slammed the door shut on any new providers of VET FEE-HELP because we recognise that there are a small number of longstanding registered training organisations who have long delivered high-quality outcomes, who have applications in, and if we shut the door on every single new application then of course we would be acting to the serious detriment and disadvantage of those providers. So we have provided a test to ensure you must have been in the sector for five years, that you can only do it in relation to the qualifications you have already offered and that you will only be able to offer those qualifications and up to a loan value that is consistent with what the fee-for-service value of your operations had been previously.

This is analogous to that in the sense that it is recognising that in applying a blanket rule, as we seek to, in terms of the application of the cap across the total loan value, this amendment provides very narrow criteria to make sure that we do not end up with circumstances where that is to the detriment of others.

I commend Senator Lazarus for considering the consequences, for bringing this amendment forward and for ensuring that it is tight. I re-emphasise to the chamber, as Senator Xenophon did in his contribution, that this is very limited, that it will only apply on a case-by-case basis, that each one will have to be presented on its merits.

Finally, I take issue with the remarks Senator Carr made in his last contribution that the government is pursuing these amendments overall and our reforms to VET FEE-HELP to somehow close down public debate. Chair, let me assure you and the chamber that the government wants to close down rorting and we want to close down those who are ripping off the taxpayer, who are taking advantage of vulnerable students and destroying the reputation of the VET sector. But we are damned happy to have a public debate on this. We are very happy to have a public debate about the failings of VET FEE-HELP because I think, just like the pink loans scheme, we want to make sure going into the next election that Australians remember that the Labor Party cannot be trusted to set up schemes such as this, cannot be trusted with public policy and programs because when they are, we end up with disasters like pink batts or VET FEE-HELP where huge sums of public money are squandered and where, indeed, Australian businesses suffer as a result because of shonksters and fraudsters who are let in.

We are very happy to continue the public debate, Senator Carr. The only reason we want these measures through this parliament, ideally today, is that we want to clean up the mess we inherited.

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

On a case-by-case basis.

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

Let me deal with one factual error that is in Senator Carr's argument. He seems to be ignoring the fact that this amendment of Senator Lazarus's is specific to the government's proposal to cap the total loan volume of what a training provider can access. It does not matter what the training provider might be charging for their course under that proposal; the proposal the government is applying is a cap on the total value of the loans that that provider will be able to write. So Senator Lazarus's proposal is for this very narrow, clearly tested exemption to be able to apply.

I think it is scaremongering, Senator Carr, to talk about what a future secretary may or may not do with this provision and to suggest that it might somehow be blown wide open. I think it is also inaccurate to suggest that a cap on fees would negate the need for this amendment. If the government's amendment to cap the total loan value still went through—so think about it here, Senator Carr and others—and, say, your amendment to cap fees went through, but if the aviation college Senator Lazarus is worried about is charging reasonable fees today, and if that were the cap that was set, then you would still have the problem that Senator Lazarus's amendment is trying to fix and address. It is disingenuous to try to conflate the two issues. They are separate issues in relation to how the cap on fees may work and the issue that Senator Lazarus is seeking to fix today.

I understand you want to have a fulsome debate around a cap on fees and, obviously, we will have that shortly. But I think that, in relation to Senator Lazarus's amendment, he is addressing a particular problem that could arise with the government's amendments to cap the total value of loans. The proposal he has put forward is a rational way of dealing with that. The threat of mass exemptions applying is, I think, quite hypothetical and quite unlikely. But, Senator Carr, were it to occur, I have no doubt that the government of the day, the minister and the secretary providing those mass exemptions would be held to account for their reasoning for doing so. With these arrangements where exemptions are applied, they are usually pretty closely scrutinised by all to assess the reason and rationale for those exemptions. The government of the day would rightly be scrutinised as to on what grounds they had determined the national importance of the qualification, and on what grounds they had determined it was right and proper to be able to lift the volume of loans that that provider could offer.

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

Consistent with discussions that I think our officers have had, Senator Carr, I am happy to give the government's undertaking to progress a model that could see application of an ombudsman. My understanding is that it may require some further referral of powers from the states, if they were to apply in a manner consistent with the international Ombudsman. There may be scope for some narrower application that just deals with VET FEE-HELP-type matters, which could be an alternative.

In light of the constructiveness with which we have dealt with some of the issues at least, the government did not oppose your second reading amendment and is willing to work through those issues.

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

I was just pointing to the amendments.

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

I thank Senator Xenophon for his very kind words and thank senators for their contribution in relation to this amendment. I think Senator Carr started his remarks by offering sympathy to Senator McKenzie in relation to the Senate inquiry that was undertaken. I think it is important just for the record to be very clear that, yes, Senator McKenzie's inquiry recommended that this bill be carried and the measures within this bill be passed.

Despite the debates we have had on amendments in this chamber today, none of those amendments have, of course, changed any aspects of the actual bill that was presented. They have added to it. They have complemented it. They have built upon it. But that Senate committee was quite right—

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

They are significant amendments, Senator Xenophon. They are significant, new and additional amendments, but they are not amendments that in any way vary or undermine the amendments in this substantial bill. So I think Senator McKenzie and her committee did the right thing in arguing for the passage of the bill.

I want to turn now to the particular amendment that is before us, and that is Senator Carr's amendment. In turning to it, I want to reflect on the fact that the arguments that were used particularly by Senator Carr in relation to the government's amendments that were presented in this place were arguments that criticised the government for the timing of the amendments. He quoted and claimed that the timing of the amendments had variously been described as 'panicked', 'desperate' or 'rushed'. I think Senator Xenophon used the word 'stopgap'. Yet, if the government were to now accept the opposition's amendment on this, all of the same arguments could apply. There was no further or earlier knowledge of the opposition's amendment, no further or additional scrutiny provided to the opposition's amendment—in fact, from the government's perspective, less, because we had not seen it until it was introduced into this place. They are not reasons why the government will oppose it. I just highlight the hypocrisy in the arguments that are presented.

But I want to deal with the substance of the amendment and the arguments around the setting of individual course fee caps, whether they are set on an individualised basis or in some type of banding structure, as Senator Carr has suggested. The amendment that is put before us—Senator Xenophon is right—provides the power for the setting of caps without any suggestion as to how or by what means they may be set. Senator Carr made some suggestions in his contribution, which I will touch on shortly, but the amendment does not prescribe in any way how such caps may be applied.

It is important that we remember the diversity of the VET sector when we are discussing this, because in effect the Senate would be asking the government to go away and try to conceive of some process where we would set caps for everything from courses in business administration or marketing to courses in nursing or landscaping, through to courses for pilots or aircraft engineering.

Of course, there are inherent risks that would come if the government were just to trundle along on our own way and set such price caps in relation to those courses. There is the risk of what happens if you set the price caps too low. Set the price caps too low and essentially you will drive providers out of business. You will stop the offering of those courses. You will force state governments to have to increase subsidies to their TAFEs if they are to continue to offer those courses. You risk creating skills shortages in those areas where you have set price caps too low.

There is an alternate risk if you set a price cap too high. The history of price caps tends to be that the market operates at the price cap. So it is not that you set a price cap and people then differentiate underneath the price cap. That is certainly not the experience in the university sector. It is that, when you set a price cap, everybody simply shifts to the price cap. If you set it too high, you will simply drive providers, most likely, to that maximum price and in fact see the prices in some quarters go up. So by virtue of setting a price cap, because people tend to operate at the cap, we know that we would destroy any sense of pricing competition across the sector and simply be, in effect, establishing a government sanctioned price.

To go through the process of doing so would require extensive consultation. It would require additional regulation to be applied not just in setting the price but in relation to the unit structure of courses and having the government try to ensure some consistency of that unit structure across VET courses and the way in which they are priced. So it is not just as neat as discussing the price itself and how that might be regulated; there would be flow-on implications for doing so as well.

Senator Carr has suggested that perhaps we could simply adopt the price schedules of the states or of the TAFEs. The obvious question that flows from that is: which states or which TAFEs? Would he propose that we adopt one at a lower price than some of the TAFEs and some of the states and therefore force those states which are higher than that to lower their prices through their TAFEs and, if they think those courses are operating at a break-even point at present, to come up with subsidies or to withdraw course places? Or would he propose that we set it at the highest of the TAFE rates amongst the states, thereby giving the green light for the other states to simply increase their fees to be equivalent with that new highest level? Senator Carr suggested that, if we set it at the TAFE rates, providers would still be making a profit from their operations. Is that necessarily the case? The states provide various subsidy arrangements to those TAFEs. I do not think you can come in here and simply say there is an easy solution for how this might be done if it were to be done. It is a much more complicated decision that would require some greater thought than is the case.

Senator Carr makes great play of the fact that university undergraduate places operate within this type of price cap banding structure, and he particularly makes great play of medical places in that debate. Most universities, of course, would say they actually run medical places at a loss, so to draw a parallel between how university medical places are capped and the vocational sector would be to suggest that you would have to somehow then be conceiving of another layer of potential complexity in the setting of these caps—if you wanted to follow the medical example set by Senator Carr—and work out how you applied effective cross-subsidies across the different places that might be offered. That is what universities do: they run medical places largely at a loss and they cross-subsidise them with other courses that they run more cheaply. So that argument in and of itself does not particularly hold up.

I would also point out to Senator Carr and to others in the chamber that universities are but one part of the higher education sector and that we do not seek to cap the prices of other, non-university higher education providers. In fact, the universities are the only part of the education sector where the government and the parliament seek to cap prices as we do for undergraduate courses. We do not do it for other higher education providers. We do not do it for those non-university providers. We do not currently do it in VET. We do not do it elsewhere. We are not in the business of price setting, generally speaking, as a parliament, and yet that is what Senator Carr proposes we seek to do in relation to these courses.

He also highlighted the IPART processes that the New South Wales government uses for trying to set efficient prices. Of the various points you make, Senator Carr, that is one of the interesting ones that I am minded to go away and take a closer look at—it was already on my radar, I have to say—as we contemplate where overall reforms for VET FEE-HELP might go in 2017. But that is not a quick process. That is not a simple process. That is quite a detailed, analytical process.

The point that I would make to the chamber is that what we have achieved today—and pretty much all senators have worked cooperatively to implement a series of reforms—is reforms that stop the growth in the VET FEE-HELP scheme for next year. Yes, they are emergency measures, in the sense that they are trying to put an immediate stop to growth, but by doing that they are giving us the breathing space to be able to go away and design a new scheme that can actually deal with the nuances that might be required in trying to drive more efficient and effective pricing behaviour.

The greatest driver of efficient and effective pricing behaviour should be student choices. I spoke before about the way the full-fee-paying market operates and the high-quality outcomes we seem to see through that sector and the fact that that seems to work because people put a very clear value on what it is that they are buying. Somehow we need to make sure that, when it comes to the operation of income contingent loans, people equally are putting a clear value on what they are buying, because they are still buying it. There is still an expectation those loans should be repaid. They are making a purchasing decision, and they should be making that purchasing decision to undertake that course based on the merits of what they are getting as a value-for-money proposition—the quality of the training, the likelihood of an employment outcome. That is the aspiration that I hope we will be working towards in working towards a model for a reformed VET FEE-HELP scheme.

But it would be a crude and likely ineffective measure today for the parliament to simply pass this amendment, which Senator Xenophon accurately said does not mandate that the government go in and applies fee caps. But I have supreme confidence that, in passing this amendment, we would instantly hear from Senator Carr and those opposite calls for the government to mandate those fee caps and that we would be under pressure to do so and under not unreasonable expectation from people that, if the government accepted this amendment, it was our intention to use those provisions. But the government has real reservations about the impact that the use of such provisions for fee caps would have on the operation of the vocational education and training sector. We have real concerns about the administrative complexity of it.

We do not think the arguments put by Senator Carr today, that there are easy way through this, stand up to any type of rational testing, as I have outlined. And we do have confidence that the measures we have put in place through this legislation, along with other measures that we have introduced throughout the course of this year, will give us a much better-functioning VET FEE-HELP system, will stop much of the abuse, will empower the minister to be able to step in where abuse is occurring and instantly stop new enrolments and new payments to providers, will make sure that we end the rorting that we have seen and will give us time to write a proper new scheme, rather than what this measure would be, which would be essentially to attempt to apply another bandaid to the program but another bandaid that would distract attention and resources from trying to work out how to set a new scheme in place rather than enabling us to get on with what should be the proper policy task of developing that new scheme. So I urge the chamber to reject this amendment, whilst thanking senators for their cooperation in dealing with the overall suite of reforms that we have proposed today.

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

I didn't say that was a reason not to oppose them. I just highlighted the hypocrisy in Kim's argument.

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

I firstly want to deal with the inaccuracy inherent in what Senator Carr was saying about state subsidies. States do provide subsidies in their VET system. Since the expansion of VET FEE-HELP, states have largely withdrawn the rate and the amount of subsidies they provide for diploma and advanced diploma courses. It is important to remember that VET FEE-HELP is only available for those diploma and advanced diploma course. Overwhelmingly, state subsidies are directed to certificate level courses. The VET FEE-HELP scheme is not generally available to certificate level courses. So, in that regard, Senator Carr, you are quite wrong.

Do the states want to see the rorting in VET FEE-HELP ended? Yes, absolutely. Does the government want to see it end? Absolutely. Do you want to see it end? Absolutely. We all want to see it end, Senator Carr. We might have disagreements on how we can best end the rorting that has occurred, but we all want to see it end. But by no means are the states on the hook for additional payments because of the growth that has occurred in VET FEE-HELP. It is quite the contrary: the states have actually reduced their support as a result of the growth of VET FEE-HELP across those diploma categories since the previous government opened it up.

As I have said before during this debate, the primary problem that we have seen in the way VET FEE-HELP has been used and abused is not the case of good, well-intentioned students seeking employment outcomes being ripped off in terms of the price of the course. The primary problem has been the targeting of vulnerable individuals to sign up for courses that they are either ill-equipped to undertake or have no intention of actually undertaking. Overwhelmingly, the government's reforms rightly target the primary problem. We are targeting that primary problem in a range of ways. We are making sure that there are minimum prerequisites for students entering into those courses, so that there will be confidence in future that, if you are starting a course, you are in fact capable of being enrolled and completing that qualification.

Of all of the tightening that has occurred in relation to other enrolment practices that we have put in place, importantly, we are also tightening the ability of providers to be in the system. We have now tightened the value of the loans to stem the growth while we seek to re-write the system and enhance the powers of individual students to be able to seek recourse and get their money back for wrongful practices and enhance the powers of the minister to be able to intervene where wrongful practices occur and to be able to suspend new enrolments and payments to those students. So it is quite a comprehensive reform package. It is a comprehensive range of reforms that are directly targeted to the primary problem of the dubious enrolments that have occurred and the serious malpractice of providers around those dubious enrolments.

Senator Carr, I acknowledge that, on this issue, we differ. That is clear for the Senate and all to see. I want to drive efficiency in pricing across the VET sector, but I do not want to drive out competition in pricing and I do not want to drive out innovation and differentiation in the VET products that are offered. I am afraid that that is what would be the logical consequence of the amendment that you are proposing. That is why the government cannot accept it. As we look to redevelop this scheme in 2017, we will absolutely be looking to find ways to get the most efficient pricing behaviour across both providers and students to occur in the VET sector. But we will not support what we think are measures that would stamp out competition and risk innovation and diversity in the offering that is available to students to help them train and be skilled and secure jobs in the future.

The CHAIRMAN: The question is that amendment (2) on sheet 7800 be agreed to.