Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Hansard source

Whilst the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 goes part of the way to tightening the VET system, we believe that it could go a lot further and indeed should go a lot further. I will be supporting the amendments moved by the member for Cunningham in that regard. Those amendments, in particular, do two things that I feel are necessary with respect to what has been going on with the tax system: firstly, that a national VET ombudsman should be appointed to oversee the VET system throughout Australia; and secondly, that the Auditor-General should conduct an audit on the use of the VET FEE-HELP program in this country.

There are two areas of government policy that over the last few years have been extensively rorted. It is interesting that both of them have come before the House this week in different debates. Firstly, I believe the visa system throughout this country has not only been totally rorted; the government has lost control of the visa system that is currently in place in Australia. The second area is with respect to the VET system. With both of those areas, the rorting has been exposed not by government but, rather, by the media and the journalists and who have done their own investigations into those areas and brought to the attention of the government and this House what has been truly going. For those of us who are out there in and amongst our communities, it has been obvious for some time now, whether it is the visa system or the VET system, that something needs to be done. It is encouraging to see that finally something is being done. The truth of the matter is that it should have been done earlier and more can be done.

The figures with respect to the rorting, literally, speak for themselves. We saw a cost blow-out in terms of the HELP loans from about $325 million in 2012 to somewhere in the order of $1.7 billion in 2014. That should have rung alarm bells for the government. We then also saw that only about 24 per cent of students have completed their courses. Again, that should have rung alarm bells, because no student is going to take a loan, get themselves into some sort of debt, and then not want to complete the course that they have taken the debt out for. It just does not make sense. It only makes sense if something shonky is going on.

It is interesting to see that some of the state governments—who have some responsibility in this area as well—have already taken action to try to address the problems. I am aware of actions taken by the Victorian state government and also by the South Australian state government, my home state, where they have become aware that system is being exploited and they are in turn trying to control what has been going and shut down the rorting that has taken place.

The most damning assessment with respect to the rorting comes from the Senate Education and Employment References Committee report, which handed down its report, I believe, only last month. There were some 16 recommendations in that report. I have read each one of them and all of them, in my view, are appropriate recommendations and all of them go to the heart of addressing individual and separate concerns that have been identified within the system. I just want to read their very first recommendation, which I think sums up the issues relating to what has been happening to the VET FEE-HELP loans in this country. Recommendation 1 states:

The committee recommends that, given the evidence of rampant abuse, accelerating costs, and doubling of bad debt the government launches an immediate review into the operation and regulation of VET FEE-HELP.

That recommendation just highlights the serious state that we have reached with respect to the abuse of the VET system in this country. It is also interesting to note that the number of providers has also escalated in recent years. As of 1 January this year, my understanding is that there were 4,609 registered training organisations in Australia of which 3,440 were privately owned. How there could be so many registered training organisations across the country in itself should be raising questions as to how each of those organisations were accredited, how they got heir accreditation and what courses they were offering. It is bewildering to me. I am surprised, again, that the alarm bells were not rung when there were so many entities wanting to register as registered training organisations. It is heartening to see that much of that is now being contained and measures are being put in place, including some of the measures that are contained in the government's bill, to try and ensure that the rorting no longer continues.

In summary, the recommendations from the Senate committee refer to serious allegations of rorting and profiteering, abuse of the system, shonky practices, poor outcomes for the students who pay for the courses and then do not complete them—even if they do complete them, you wonder about the authenticity of the accreditation that they have been given. Even worse, there was exploitation of students and possibly fraud. I mentioned at the beginning of my comments the question of visa rorting and VET rorting and I believe that in some cases there may even be a link.

I do not have time to go into each one of those recommendations but, if time had allowed, I would have done so because the 16 recommendations in that report actually do address specific concerns that I have noted during my time as the member for Makin and, in some cases, concerns which have been brought to my attention. Indeed, I spoke to a constituent about this matter only in recent weeks, who gave me the name of two registered training organisations and who asked me if I could inquire into their legitimacy and in particular into their mode of operation. In one case, I noted that the organisation was charging somewhere in the order of $16,000 for a course that TAFE was offering for—in round figures—$1,000 or $1,500. That alone is concerning but it should also again have begged the question: how can one entity be charging so much more for what is effectively the same course? The truth of the matter is—and this is only anecdotal evidence—the owners of those the two organisations that the person brought to my attention, in both cases, have literally become multimillionaires in the space of a couple of years. They are not Australian nationals or, if they are, they reside overseas and much of the money that they have made, I am told, was transferred out of the country. It seems that it was an opportunity for those people who wanted to corrupt the system to do so not only to get rich but to exploit students along the way. We have heard many other examples of such practices from other speakers in this debate.

Registered training organisations that have become accredited in recent years have also undermined the viability of the TAFE system throughout Australia. We have seen, as a result of the RTOs coming into the market, TAFE having to shut down courses that were previously offered. We have seen thousands of jobs across the TAFE sector lost and we are seeing some campuses even close. That undermines, what I believe is, one of the core needs of our society—that is, the ability to properly skill up people in this country for jobs that emerge from time to time. Nobody was doing that better than TAFE yet we have seen TAFE totally undermined by the RTOs that have rorted and exploited the system. I am pleased to see that Labor leader, Bill Shorten, has made a very strong statement in respect to our commitment to support TAFE into the future. We understand the value and importance of TAFE, we understand that the TAFE courses are accessible to those people on lower incomes and we understand the need to have a training institution out there that is not only fairly priced but offers the courses appropriate to the needs of this country into the future.

I also want to speak briefly about the role of the national regulator—that is, the Australian Skills and Quality Authority. It is clear to me that the national regulator is under resourced. Perhaps, had the national regulator been properly resourced, much of the rorting that we now hear about may not have occurred. But it is important, if we are going to continue allowing RTOs into this country, that the regulator must be properly resourced, have sufficient powers and ensure that those people who apply for a registered training organisation licence are not only fit to do so but do not exploit the system.

I now turn to the question of prosecutions. In fact, recommendation 7 of the Senate committee's report suggests that prosecutions of those who have rorted the system should be pursued. Firstly, prosecutions should be pursued and severe penalties should apply if anyone is found to have rorted the system. Secondly, the message needs to be made absolutely clear not only to registered training organisations but to anyone who contracts services that are paid for by the government that if they are going to rort the system, it is not acceptable. Thirdly, we need to do what we can if at all possible to recover funding that has been paid to some of these organisations if it can be found that they received that funding by fraudulent means. That needs to be pursued, and I hope the government does that as part of its ongoing management of the VET system in this country. We need to have a VET system in which the community has confidence. No-one is going to enrol in a VET course if they believe that the certificate they get, at the end of the day, is not worth the paper it is written on. Again, that means that we need to ensure that the RTOs who are accredited are reputable and are doing the right thing.

Whilst there has been a lot of criticism about RTOs in this country, it does not apply to all. There are many good RTOs in this country, in particular the industry run registered training organisations, who quite often are very clear about the training that is required by the students that go through their courses, know exactly what skills the employers require, and structure their courses accordingly. Some of those training organisations in my own home state, I believe, do an excellent job and indeed they ought to be supported but, as I say, they are predominantly what I call the industry registered training organisations.

I do not know how many of the registered training organisations, of the 4,600 that I referred to earlier, are individually owned. I suspect that in many cases it is probably the same people running two different entities—maybe using someone else as a front for them. I would not be surprised at all if it is a system that has been manipulated in that way. I would hope that if anyone is found to have corrupted the system in any way, or to have run a shonky training organisation, withdrawing their licence does not leave them any opportunity to reapply under a different name, or a different company name, and then allow them to continue to go on with the rorting of the system that by then they would have almost perfected.

The last point I make is this: I am aware that there has been a hotline and people are encouraged to call in and dob in and anyone who is doing the wrong thing. My concern, with respect to the hotline, is that many of the people who have been drawn into the VET system under the rorting that I and others have referred to, are not the sort of people that are likely to ring the hotline. In many cases I suspect that they have very little interest in the system. They have signed their name onto a sheet of paper somewhere without even knowing what they have got themselves into, and they are totally unaware of the exploitation that was done using them as part of the racket. With those comments, once again, I support the amendments moved by the member for Cunningham.

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