Julian Leeser (Berowra, Liberal Party) Share this | Hansard source

I rise to support the VET Student Loans Bill 2016 and cognate bills, as presented by the minister. The state of vocational education and training in Australia is scandalous. The Gillard government's ill-considered changes in 2012 to the VET FEE-HELP loan scheme have seen a free-for-all in the vocational education and training market. Colleges with questionable business practices have rorted the federal government for all they could get, building unsustainable financial models that, when they fail, have a devastating impact on students, teachers, staff and the broader VET sector. Dishonest providers have engaged in price gouging and rorting. Training organisations are charging outrageously inflated VET FEE-HELP tuition fees compared to state subsidised courses. Some diplomas cost more than 500 per cent more than their state subsidised equivalent. This is a cost that is being directly borne by taxpayers. The VET sector is also developing a terrible reputation for the outrageous exploitation of vulnerable students.

We need a high-quality VET sector in Australia for a skilled nation, and jobs that require a vocational education qualification can provide a rich and rewarding life for people who undertake them, but we have all seen in recent months the public reporting that college agents hunt around Centrelink offices and train stations in low-income areas offering incentives such as free iPads and laptops to encourage enrolments in diplomas. We have heard of the colleges preying upon people with intellectual disabilities, preying on older Australians in retirement villages and preying on Indigenous students in remote communities—our most vulnerable Australians. In many instances, people who had no hope of finishing their courses were recruited and people who had no opportunity to repay their debt were recruited. Providers have been recruiting students into training programs with little or no hope of employment. Can you imagine what the demand might be for graduates in a diploma of veterinary Chinese herbal medicine or energy healing? Close to none. Colleges have outsourced student recruitment to third-party brokers with no oversight of their activities and recruitment methods. This is a terrible business practice and shirks at basic ethical and legal responsibility to their customers and to the broader community.

As an indication of how badly they have exploited some students, providers have been charged with unconscionable conduct and false and misleading representation. Further to these terrible and unethical practices of exploitation, reports of training organisations going bust have become distressingly common. Having set themselves up with little or no experience in education and, presumably, a similar level of business experience, these companies have taken the government for a ride and abandoned their students. These shonky practices have led to a loss of confidence by Australians in the vocational education and training sector, and that loss of confidence, sadly, is warranted given the results that the VET sector is delivering. Completion rates are dismal at only 22.9 per cent for all students. For online students, completion rates are only 7.8 per cent. That is outrageous. How can the government provide funding for a system that sees fewer than eight out of every hundred students finish their cause? This is a failing system.

Another indication of how badly the VET FEE-HELP program is delivering can be seen in the incredible blowout in costs. It has been four years since the Gillard government provided inadequate regulation for the scheme and we can finally see the true damage done by their irresponsible regime. Costs blew out from $325 million in 2012 to $1.8 billion only two years later, in 2014. That is a 550 per cent increase. Then costs exploded to $2.9 billion in 2015, a further 160 per cent increase. That is a total of 890 per cent increase in cost in only four years.

Sadly, these practices and these results have had a very real reputational impact on good providers, who continue to deliver high-quality courses and outcomes and whose businesses are being tarred with the same brush as those who have no interest in employment or educational welfare of students, but are only looking to make a fast buck.

The VET FEE-HELP program is further proof that Labor is absolutely incompetent in implementing government programs. Pink batts, school halls and now vocational training—program after program being implemented with inadequate regulatory frameworks. The Labor Party consistently puts in place billions of dollars worth of programs with no guidance and no regulation: no guidelines to ensure success and no boundaries to protect programs from spivs and shonky operators. Nothing could be better for a dodgy business, someone who takes shortcuts and plays with people's lives, than a Labor government.

The VET Student Loans Bill 2016 will fix Labor's mess. It is the next instalment of more than 20 changes that the government has made over the last two years to the vocational education and training system to fix Labor's poorly implemented scheme. The reforms we have put in place to date have had some impact on the problems in this sector, so much so that it is estimated that loans offered under VET FEE-HELP in 2016 will be several hundred million dollars less than in 2015. However, it has become clear that there is only one way to fix this broken scheme. It needs to be shut down. It is the only way to deal with the dodgy business schemes, the exploitation of students and the continuing reputational damage being done to bona fide training organisations.

The VET Student Loans Bill closes down Labor's failed VET FEE-HELP scheme. It introduces a new program with the required regulation and structure to ensure success. This bill will ensure that training organisations are high quality, that students are genuine and are supported in their education, and that loans are provided for courses that align to skill needs. This bill will protect students, taxpayers and the reputation of the majority of training providers and teachers who are doing the right thing.

Vocational education and training itself is an excellent and much needed element of the tertiary education system in this country. It is a sector that contributes to ensuring that Australians are properly skilled for employment. The VET sector that deserves to be supported by government, if supported properly, will contribute to better prospects for students, better outcomes for business and the growth of Australia's economy. In 2015, around 45 per cent of the financial assistance provided to the VET sector was delivered through the VET FEE-HELP scheme, and that scheme has not served the sector will. The lack of regulation tempted questionable operators to join the sector. It encouraged good operators to take shortcuts and it led to the loss of reputation of good businesses who have done nothing at all wrong.

The VET sector deserves well targeted, effective government funding that delivers outcomes for the sector, for students and for the Australian economy. The VET Student Loans Bill introduces a new program to provide loans to VET students. It delivers on the Turnbull government's commitment to redesign the VET FEE-HELP scheme so that it is affordable, sustainable and student focused. The new loan program introduced in this bill will address the most pressing issues facing the sector. Most importantly, this loan program is designed to support employment outcomes for students. Quality of providers is a critical element in achieving this. This program will see strong and proven performers, including TAFEs like the Hornsby TAFE in my electorate and other public providers, receive automatic entry into the new scheme. That is a great boon for TAFE. But new training providers will face a much more stringent test before they can access VET student loans. This will include assessing their relationships with industry, their student completion rates, the employment outcomes of their courses and their track record as education providers. It will no longer be possible for fly-by-night operators to exploit the system for their own profit at the expense of students and taxpayers.

We have a responsibility to ensure that education that is publicly subsidised meets the needs of the country as well as the needs of the student. As a government, we should not be subsidising people's general interest or lifestyle choices. Everyone has the right to explore new fields of interest; however, not every course should be subsidised by the taxpayer. Taxpayer-subsidised education should be restricted to education that adds value to our economy, quality education that is linked to employment and building the individual's capacity and future prospects. Government-funded education makes a valuable and important contribution to our society. It should not be watered down and have its impact lessened by including courses designed solely to satisfy the personal whims of individuals.

This program will direct funding to courses with proven employment outcomes that are linked to Australia's national skills priorities and align to industry needs. The government has worked closely with the states to ensure that the list of approved colleges aligns with their skills priorities lists. The list of approved courses includes those with the best employment prospects, proven through results. It ensures that the government is not subsidising courses relating almost purely to personal interest. It also ensures that students will not be duped or deceived into believing that there might be real jobs waiting at the end of their course unless that is an actual possibility. This measure will not only protect the taxpayer, but students as well. The program will put an end to the unaffordable and limitless subsidising of training organisations. Loan caps linked to the cost of course delivery should see course fees drop significantly as training providers no longer look to government to fund their profits.

The Labor Party went to the last election proposing a flat $8,000 cap on loans. Given the scale of the problem represented by the VET FEE-HELP scheme, which I have only touched on, this is an unbelievably inadequate response. A flat cap does not solve the problem of shonky recruitment. It does not ensure quality providers or support better completion rates or student satisfaction. This bill introduces a stepped loan cap based on the cost of course delivery. The outcome is fair for providers and will have a positive impact on students, as it will place strong downward pressure on course fees. It will also stop the enormous cost blow-out to government that we have seen over the last four years. It will stop the unsustainable impact on the budget.

This new program is forecast to see loans issued reduced by almost $2.4 billion per year, and it will see outstanding HELP debt—bad loans carried by the government—reduced by $7 billion by 2020. That is a reduction of $25 billion over the next 10 years. These are the outcomes the federal budget needs, and they will be achieved at the same time as course quality is improved, student outcomes are improved and the sector's reputation is repaired.

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