Terri Butler (Griffith, Australian Labor Party) Share this | Hansard source

I want to say to Australians: your taxes should support vocational education for the community's benefit, not for the private benefit of a handful of companies. In contributing to the debate in relation to the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015, I want to talk about vocational education and why it is needed to make sure that Australians have the skills to do the jobs of the future. I also want to record that there is a strong community benefit in having an educated, trained workforce, and so it is right that vocational education and training should be publicly funded. Taxpayers' money should work for community benefit, not for private interests.

As society and technology change, so does the nature of work. The jobs of the future will likely be different to the jobs of today because of widespread automation, amongst other reasons. In this year's report, Australia's future workforce?, the Committee for Economic Development of Australia said:

Economic progress has not been smooth nor has it been clean. Technological change has frequently created losers, but when job losses have been caused by productivity-enhancing technologies, they have tended to create demand via higher incomes and lower prices, which have generated new jobs economy wide. The next stage of the industrial revolution promises to continue this trend but in new challenging ways. The extension of computerisation into almost all aspects of human activity threatens to radically reshape the workforce of tomorrow.

It went on to say:

Modelling conducted for this report suggests almost five million jobs face a high probability of being replaced in the next decade or two while a further 18.4 per cent of the workforce has a medium probability of having their roles eliminated.

Future jobs will more often than not be skilled jobs, and will require digital literacy. Vocational education and training can equip students with the foundational skills they will need for the future.

For example, at Southbank in my electorate, TAFE Brisbane is offering courses in digital design and IT and in business, along with many other courses. The increasing demand for skills and the changing nature of the skills that will be needed, means that Australia needs a strong, high-quality and accessible vocational training and education system. That sort of system serves the interest of the individual, who gets the benefit of the education and training, and, more broadly, serves the community and national interests.

It is imperative that we as a nation prepare for the future economy and the future of work. We need to build productivity, to grow workforce participation and to spur economic growth. We also need to combat the rising inequality that threatens the peaceful and prosperous nature of our country. If we are serious about those tasks then we must ensure, among many other things, that we have a vocational education and training system that is fit for its modern purpose of giving all Australians the opportunity to build their foundational skills and knowledge.

That means that when our community invests in vocational education and training, we are investing in our nation's future. That is why the Abbott-Turnbull government's $2 billion cuts to skills funding is such a problem for our country. In contrast, the last Labor government increased Commonwealth annual funding for vocational education and training by 25 per cent in real terms, with over $19 billion invested over five years as well as investing in TAFE campus infrastructure and technology upgrades. And because we understand the importance of vocational education and training to Australia's economy and to our community, Labor backs publicly funded TAFE. In March this year the opposition leader, Bill Shorten, announced that Labor in government will continue to back TAFE. At the time he said:

Labor has expressed its concern on numerous occasions that the massive expansion of private providers in training has brought with it unintended consequences where we’re seeing some private providers gaming the system. And I think one of the solutions here is to help rebuild and restore confidence in TAFE, …

…   …   …

There is a role for private providers in training and there are some private provider organisations doing outstanding work, but I think there is mounting community concern that on the one hand we’ve seen the Liberals dismantling and attacking TAFE, and the on the other hand, we’ve seen the ‘leave it to the market’ attitude of private providers in training and we’re seeing a long tail of underperformance and indeed in some cases scandalous behaviour.

In my view, the best way you can make sure you get a great vocational experience as a consumer is to choose TAFE.

The Liberals hate TAFE, and have tried to undermine it at every opportunity—gutting its funding, just like Campbell Newman did in my state of Queensland. Thankfully, Premier Palaszczuk and her government are working to save TAFE. The Labor government is reinvesting in TAFE and reinvigorating an institution that has successfully trained more than 1.3 million Queenslanders, working hand in hand with industry partners and delivering strong employment outcomes for our next generation of skilled workers.

Funding vocational education and training is an investment in Australia's future, as I said. And taxpayers' money should work for the community benefit, not for private interests—as I have also said. But in the past 18 months VET FEE-HELP, which is the income-contingent loans scheme for vocational education and training, has become a major national scandal, and is severely affecting students, the Commonwealth budget and the nation.

Damian Oliver and Serena Yu of the University of Sydney wrote about what is currently going on in the vocational education and training sector in their report entitled The capture of public wealth by the for-profit sector. And the figures about the rise of the private sector vocational providers and the corresponding impost on the public purse paint quite a picture. The National Centre for Vocational Education Research has reported:

There was a significant increase in VET FEE-HELP activity in 2013 and 2014 compared with earlier stages of the contingent loan scheme. Specifically, the number of approved VET FEE-HELP providers has doubled since 2012, to be just under 250 by 2014, with the number of VET FEE-HELP assisted students more than tripling over the same period, to nearly 160 000. Most of this growth has come from the private provider, full-fee-paying market, which constituted 76% of VET FEE-HELP assisted students in 2014 (compared with 54% in 2012).

The VET FEE-HELP debt ballooned from around $699 million in 2013 to $1.7 billion in 2014. In that period the average loan amount per student increased by 24 percent. These increases suggest that there is a problem in the way that these income-contingent loans are being used, and they indicate a very significant impost on taxpayers. And there are shockingly low completion rates for courses covered by these loans.

The National Centre for Vocational Education Research has said:

The students most likely to access VET FEE-HELP in 2013—14 are those attending externally and who are not employed.

When looking at the probability of course completion for eligible students who commenced their training during the scheme’s earlier years (between 2009 and 2012), those studying externally who are not employed have a particularly low predicted probability of completion (with a 10% probability of completing their training). This is compounded further should they be studying an advanced diploma (with an 8% probability of completing their training).

The centre goes on to say:

Given the substantial increase in recent years in the number of assisted students now attending externally who are not employed (increasing from 11 128 to 52 506 students between the two periods, an increase of about 370%), this may not bode well for future course completions of VET FEE-HELP assisted students.

This year there has been extensive media coverage of dodgy conduct on the part of some providers. For example, Fairfax has reported:

The industry, by design, is "demand driven". But it's colleges, not students, driving the demand. They employ an army of salesmen (known euphemistically as "brokers") who can earn millions in profits from taxpayer subsidies.

The dodgy brokers, such as some of those working for Melbourne's Phoenix Institute, target people living in public housing, the intellectually disabled, the drug addicted and non-English speakers.

They offer a free laptop as an incentive to get the signature of a new "student", then fill out the literacy and numeracy test themselves (or coach the client through it).

That was, as I say, a report from Fairfax. I have heard similar stories in my work as chair of Labor's cost of living committee. Community groups tell stories of people getting signed up into long-term debt, for a qualification they will likely never complete, with the offer of a free iPad. The Consumer Action Law Centre are particularly concerned at some of the alarming reports they have been receiving, and they are encouraging the Commonwealth to take action—greater action than has been taken in this bill, I might add.

The recent Senate inquiry heard of concerning marketing techniques and business models from private providers. And, significantly, the wholesale transfer of public money into private hands was revealed in detail in that Senate report. Private company Careers Australia had grown from 5,000 students in 2011 to 20,000 in 2015—300 per cent growth. Australian Careers Network had grown more than 400 per cent in one year, with an average taxpayer payment of $3,303 per student. As the report says:

Figures for VET FEE-HELP payments show that the growth in payments for some private companies has been dramatic. Careers Australia has had payments increase—

this is taxpayer money—

from $3.539 million in 2011 to $108.172 million in 2014. Evocca College, trading as ACTE Pty Ltd grew from $1.831 million in 2011, to $24.958 million in 2012, to $131.25m in 2014.

All of this is taxpayers' money. So it is not just the individuals who suffer from the current system; taxpayers suffer because rorting the income-contingent loans system really just takes taxpayers' money out of public hands and gives it to private, for-profit firms, and the whole sector suffers because of the reputational damage this causes the sector. That is a problem for the ethical providers seeking to attract students, and it is a national problem too, because education is an important export for us, and that means that quality matters. As I mentioned earlier, those private sector firms have low completion rates, meaning not only that the individual goes into debt and the taxpayer pays the company but that the individual generally does not even end up with a qualification. So, under the current arrangements, the individual loses, the taxpayer loses and the nation loses. Only the private firms' shareholders and executives are the winners.

Labor has been calling for action for almost two years. We have called for an investigation by the Auditor-General. We have asked that the ACCC run an education campaign to help people recognise shonky practices. We have spoken to ministers and their departments about a number of issues over this time. There has been a House of Representatives inquiry and two Senate inquiries, which heard of numerous abuses of the system. The government introduced new national standards that came into effect in April 2015, but the problems with the system are still occurring.

This legislation seeks to address some of the issues in relation to VET FEE-HELP loans, but it does not go far enough. That is why we are moving amendments and that is why we will continue to call for the government to crack down on shonky practices. I hope that the government will support our amendments. I hope that the government will support, for example, a requirement that people actually tell the department that they have accepted the new obligation to enter into the arrangement with the college to get the qualification before finding out some time later that suddenly they have a $7,000 or $11,000 debt, as the member for Charlton spoke of in respect of some of his constituents. I hope that the government will take further and stronger action to try to crack down on these incredibly shonky and dodgy practices that are happening in the vocational education and training sector through the misuse of income-contingent loans—which, as I have said, is the wholesale transfer of taxpayers' money into private firms' hands. I hope that the government will take further action, because people's taxes should support vocational education for the community's benefit, not for the private benefit of a handful of companies, their shareholders and their executives.

This is a significant national issue. We face immense challenges because of automation and the other issues that are going to change the shape of work in the future. Work is going to be very different in 10 years, in 20 years and in 50 years. It is imperative that Australians have the skills and the knowledge needed to be able to do the new jobs of the future. When those five million jobs disappear because of automation, we need Australians to be ready for the high-skilled jobs of the future—the types of jobs that require digital literacy. That means being in a position where we have a strong and high-quality vocational education and training system that can deliver to students so that all students, regardless of background or socioeconomic status, have the opportunity to obtain those skills and that knowledge.

We know that that is important for their own individual lives and prosperity, but it is also important for the nation's prosperity. When you have increasing inequality, as this country does, and when have an increasing spread of income distribution and are seeing higher amounts of income at the top levels, that is the beginning of a serious inequality problem. We know on this side of the House that inequality matters not just because some people are better off than others but because great inequality contributes to destabilisation and insecurity and, as Christine Lagarde of the IMF has said, is actually a handbrake on economic growth.

We are a party that believes in economic growth, and we are a party that believes in opportunity. We believe that all people in this community and this society should have the opportunity to benefit from the nation's prosperity and to form a part of the nation's prosperity. That means, among a range of other things, workforce participation. That is why, for Labor, TAFE is not some sort of side issue and vocational education is not some sort of thing that you tack on; it is a fundamental, foundational responsibility of the Commonwealth to ensure that all people in Australia can gain access to vocational training and education in a way that allows them to develop their knowledge and skills and play a part in the future workforce. I commend the amendments to the House.

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