Andrew Wallace (Fisher, Liberal Party) Share this | Hansard source

I am a proud graduate of Holmesglen College of TAFE, where I attended and completed my qualifications for my carpentry and joinery apprenticeship in the mid- to late 1980s. I have listened to the speeches of those opposite in the debate on the second reading of this bill and am dumbfounded at the hypocrisy of those opposite.

Australia's vocational education and training sector, VET, is one of the central pillars of our economy and our future. At a time when Australia is competing with the formidable economic power of many North Asian countries, which have highly skilled labour, we must ensure that our vocational educational sector is strong and secure. Our nation's economy and our future depend upon it.

Last week the Minister for Education and Training announced sweeping reforms to Australia's VET system. The purpose of the VET Student Loans Bill 2016 is to replace Labor's failed VET FEE-HELP loan scheme from 1 January 2017 and introduce a vastly improved student loan program for vocational education and training. These reforms are essential to safeguard the long-term relevance and integrity of vocational education in this country. They will protect the honest players in the industry and give value for money to both students and, importantly, taxpayers.

At the outset, I want to make it clear that I firmly believe that not all VET private suppliers are shonky, but many of them have been proven to have acted inappropriately, and that is something that this government has called out. The need for reform is obvious. In its current form, Labor's VET FEE-HELP scheme has a list of more than 800 courses, including many that have been superseded or are lifestyle focused with little relevance to Australia's workforce requirements. Since Labor expanded the scheme in 2012, all diploma-level courses have been automatically eligible for funding under the Labor scheme, leading to unsustainable growth and widespread rorting in the sector. What is more, far too many courses that will never lead to meaningful or paid work are being subsidised by the taxpayer. This has left many students with large debts and, in some cases, little to no training outcome or work prospects.

The key statistics tell a sorry tale of waste and rorting that must raise the eyebrows of even the most diehard Labor supporter. From a cost of $325 million in 2012, Labor's VET FEE-HELP scheme exploded to a staggering cost of $1.8 billion in 2014 and a whopping $2.9 billion in 2015. Student numbers jumped by 5,000 per cent from 2009. Course fees tripled and loans increased by 11,000 per cent from 2009. Modelling by the Grattan Institute estimates that 40 per cent of Labor's VET FEE-HELP student loans will never be repaid because the students' incomes will never rise above the repayment threshold of $53,000. What does that mean? It means the taxpayer is going to pick up the cost. According to a University of Sydney study, under Labor's deregulated system, where private training colleges are free to set their own fees, some of Australia's largest registered training organisations have profit margins of more than 50 per cent, enabled by loans funded by the Australian taxpayer.

The coalition takes very seriously its responsibility to ensure taxpayer dollars are spent wisely, and that includes funding education and training programs that have the maximum chance of leading to jobs. To this end, the government has taken a responsible and measured approach to reforming the VET sector by running a test over all of the available diploma-level and above qualifications to ensure they are on at least two state and territory skills needs lists.

The government has also looked at other areas of high economic need, such as science, technology engineering and mathematics—the so-called STEM subjects—skills or agricultural skills, to make sure the list meets out national economic priorities. As a result, the government has announced 347 courses that are expected to attract funding support under the new government's affordable, sustainable, student-focused VET Student Loans program.

The government's new student loans program will protect prospective students by banning brokers or agents from engaging or recruiting students in relation to loans; prohibiting contact with students regarding the availability of loans, unless the student has expressly consented to contact by the particular provider; and broadening the circumstances for which student loans may be recredited.

The government's new loans program will mirror and retain many of the important student protection reforms to Labor's VET FEE-HELP scheme, introduced through the government's Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. This includes measures such as the ban on prohibited inducements and cold calling, the requirement to have a parent's or guardian's signature for students under the age of 18, and relevant enforcement provisions. The government's new program will raise the bar for entry by providers to the program to ensure providers have robust governance and management arrangements and maintain acceptable student outcomes and, importantly, with industry links.

The program will introduce an application fee for bodies to apply to become approved course providers, imposing an annual levy on providers. It will link loans to courses that meet industry needs—fancy that: a course that will meet industry needs!—and will also address skills shortages and improve the quality of the course delivery by only enabling providers to subcontract training to other approved course providers or higher education providers.

It will toughen entry requirements for providers, with properly considered loan caps on courses, stronger course eligibility criteria aligned to industry needs, mandatory student engagement measures and a stronger focus on students successfully completing courses. It will strengthen compliance, governance and payment arrangements, including by triggering relevant regulatory powers from the Regulatory Powers (Standard Provisions) Act 2014.

It will limit eligible courses to those that align with industry needs and are based on analysis of employer and government data to ensure they lead to good employment opportunities. It will include three bands of loan caps, set at $5,000, $10,000 and $15,000 for courses, depending on their delivery cost, putting downward pressure on fees and addressing cost blow-outs. It will require students to log in and engage with the VET Student Loans online portal to ensure they are active and legitimate enrolments. The new program will feature a new application process, with a much higher bar to entry for providers wanting to access VET Student Loans, including examining student completion rates, the employment outcomes of courses offered and their track record as education institutions.

As part of these important reforms, the government will also strengthen legislative, compliance and payment conditions, including the ability to cap provider loan amounts and student numbers and to limit course scope. The government will also assume powers to suspend poor-performing providers from the program, cancel their payments and revoke their approval.

While TAFEs and public providers will automatically transition to the new program, private providers will be required to meet a range of quality measures to be granted an initial six-month trial period under the new program. Private providers will then need to apply, later in 2016, to access the new program from 1 July 2017. Providers that are not successful will not be able to access the new program.

There will also be a stronger focus on compliance, with the education department working with VET regulator, the Australian Skills Quality Authority, ASQA, and the Australian Competition and Consumer Commission to closely scrutinise providers. These measures will reduce the value of new student loans being issued by more than $2.4 billion per year by the end of the forward estimates in 2019-20. This will in turn lead to an estimated reduction in otherwise total outstanding HELP debt of more than $7 billion by June 2020 and by more than $25 billion by June 2026.

The Turnbull government wants to get the balance right and is consulting with stakeholders to finalise the list of courses to be funded from next year. If a case can be made that a course has very strong employment outcomes, then it will be reinstated. Alternatively, if a course that is included on the revised list should not be, we will reconsider that also.

VET Student Loans hits the 'reset button' on Labor's flawed VET FEE- HELP scheme, so that Australians can start to rebuild their trust in vocational education and taxpayers can ensure their money is not wasted. VET Student Loans will only support legitimate students to undertake worthwhile and value-for-money courses at quality training providers.

I call on my parliamentary colleagues to work with the government to help us ensure the new VET Student Loans program is legislated in time for commencement on 1 January 2017.

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