Sussan Ley (Farrer, Liberal Party, Shadow Minister for Childcare and Early Childhood Learning) Share this | Link to this | Hansard source

I rise today to speak on the National Vocational Education and Training Regulator (Charges) Bill 2012. This bill seeks to enable the Australian Skills Quality Authority, which I shall now refer to as ASQA, the national VET regulator, to impose a cost recovery model on registered training organisations for compliance audits and substantiated complaint investigations conducted by the regulator. The national VET regulator commenced from 1 January 2011, with responsibility for registering and monitoring national VET regulator registered training organisations. The regulator is established under the National Vocational Education and Training Regulator Act 2011, which the coalition supported, and it has the power to examine quality concerns in all areas of the VET sector. National VET regulator registered training organisations must comply with the registration standards at all times. So that is the main act, and this is a subsequent proposed act. We in the coalition will not be supporting this proposed act.

The national VET regulator was established on a cost-recovery basis, and the main act entitles it to charge fees for registration. This act has moved away from the language of fees, which is a bit mysterious, and just talks about charges, particularly the ability of the regulator to charge for compliance audits and investigation of complaints about registered training organisations. Some fees apply from 1 July 2011; others will progressively apply in line with the regulators' implementation path to full cost recovery by 2014-15. So this bill is to authorise charges for services that are not application based—that is, the fees for registration—but which are instead for additional monitoring activities. This bill talks about these additional monitoring activities.

The regulator is financed by parliamentary appropriations of approximately $95 million between 2011 and 2015, but it is funded on a progressively cost-neutral basis. Charges for the additional monitoring activities are part of the regulator's cost-recovery arrangements. Current estimates anticipate that these charges will amount to $2.1 million in 2012-13, rising to $5.4 million in 2013-14. That is a considerable amount of money that will be raised by these additional monitoring activities, and it will be raised from the registered training organisations themselves.

We in the coalition have serious concerns about this. Before I get to some of the specifics, I say generally that we have already established a VET regulator. It does not work very well because not every state has signed up to it. This bill does not say exactly what the fees charged will be; only that they will be made by legislative instrument. It does not say to what extent they can be recovered, but it acknowledges that they will be quite high—an hourly rate, I believe, of at least $110, and that is just as a basis. If a complaint is substantiated, then an organisation has to pay. My question, just off the top of my head, is: what if it is only partly substantiated—who pays, and how much?

This is the government saying, 'We're here to help. We've set up a regulator because that's what we really like doing: regulating, controlling, saying that one size fits all and determining how you in the small business sector run your business and your lives. We've set up a regulator. We're not going to tell you exactly how much it charges, but we want the parliament to approve a bill that says it can charge pretty much what it likes, because we've had a consultation.' I have not seen the details of this consultation, but I know that small businesses, if asked to say how much they are prepared to let the government recover from them from compliance activities that they are being monitored under, are hardly going to put up their hands and say, 'Yes, we're happy with anything, including if we have an overseas partner in our organisation'—and we know the importance of overseas education; everyone in this place knows that—'and the national VET regulator wants to go overseas.' The bill before us talks about 'reasonable costs'—meaningless reasonable costs. Before we know it, members of an organisation are going to be travelling overseas to check out the veracity and the bona fides of education partners that domestic organisations wish to partner with. In a hugely competitive international education market, imagine the disadvantage it is going to put Australian RTOs—registered training organisations—under. That is just one aspect.

I know that the government is going to say that they are happy for the registered training organisation sector to proceed unregulated and unencumbered by any constraints on its activity and let loose to provide dodgy training. That is an old argument. We recognise the need for a regulator; we support the regulator; it is coalition policy that there be a national regulator. But I will in my further remarks alert the House to some alarming increases of costs, which really should not surprise anybody. You put a national regulator in place, allow it to recover fees and give it carte blanche. I mean no disrespect to the good public officers who work for compliance and regulatory organisations, but have we ever heard any of them say, 'I don't really need to be here, because everyone's doing a really good job'? No, they will tell you all of the problems in the sector and how, if they had enough resources, they would be out there checking and maintaining quality in a much more rigorous fashion. They tend to come from the perspective that people are doing the wrong thing. The coalition comes from the perspective that people generally do not do the wrong thing, but small business is struggling under the weight of the added cost burdens being imposed by this government, not least the carbon tax. We have no intention of supporting a bill that will impose an additional regulatory burden—no intention at all. The coalition supports the concept, as I said, of a VET regulator—no question. There are about 4,500 registered training organisations in Australia. Particularly where they operate in multiple states and territories, a national regulatory body makes perfect sense. Regrettably the system that we now have is not exactly what was intended, as two states, Victoria and Western Australia, have decided to retain responsibility for the regulation of their domestic VET sector, and Queensland is yet to pass legislation referring their powers and no date for the transition has been set. So ultimately ASQA has not got off to the best start.

In addition to this, COAG agreed that ASQA would be established on a cost recovery basis, initially funded by partial cost recovery. But, as I outlined to the House, that is ramping up pretty quickly to full cost recovery. Previously the cost burden was borne by the states. So, at a time when business is already struggling under economic uncertainty and the threat of increased operational costs, they are going to have to dig deeper to fund their own audits.

Section 7 of this bill states:

If the National VET Regulator conducts a compliance audit of an NVR registered training organisation’s operations, a charge is payable for:

(a) the costs and expenses incurred by the Regulator in conducting the audit; and

(b) if the audit is conducted outside Australia in whole or in part—any reasonable expenses incurred by the Regulator relating to the audit or part of the audit.

ASQA themselves acknowledged in their submission to the Senate committee that reported on this bill that, for most RTOs, the proposed fees and charges will be an increase on what they have paid in the past. This is because most state and territory governments have subsidised the cost of regulation. Okay, I acknowledge it was a COAG agreement that organisations will pick up the tab. But there was a submission from the National Meat Industry Training Advisory Council which talked about the rapid increase in the costs of establishing as an RTO. This council sought advice from its RTOs as to their response to this legislation. One of them stated that moving to ASQA had already seen their audit costs increase from $3,000 to $17,000, and full cost recovery based on earlier modelling would push that up to $32,000. So it has gone from $3,000 to $32,000 under this fabulous piece of legislation.

So the reality for many providers is a far cry from this vague acknowledgement of additional costs in ASQA's own submission to the Senate inquiry. Drilling down into their proposed fees we discover the following. Based on the average salary for a compliance officer, and making allowances for costs and overheads, ASQA indicates that the hourly rate would be in the vicinity of $111 an hour. You can see that for yourself in ASQA's submission to the Senate inquiry. Additional cost would be incurred where various subtasks were completed by other employees within ASQA. For a small business, $111 an hour is a very costly audit. Tradesmen charge a lower call-out fee. Couple this with travel costs and many RTOs, particularly those in rural and regional Australia, could really struggle to afford these charges. I note from a media article in yesterday's Fairfax press that the cost of a domestic airfare from Sydney to Mount Isa exceeds the cost of an airfare to Los Angeles. If costs like these are going to be passed on, then there would be providers forced out of business.

We understand that large training organisations can to some degree absorb costs or manage certain efficiencies. But this is not just about the effect on small business, difficult though that is. This is about recognising that not every RTO is big, multipronged and across all states. There are some specific niche skills that one or two people do very well, and if they want to, or have to, set themselves up as an RTO, with all the wealth of experience they may have—I am just thinking from my aviation background of people who consult on human factors in aviation accidents or certain aspects of air crash investigations outside the main body or who build the capacity of airlines to cope with the regulatory environment that they face; a lot of these organisations are small and nimble and light on their feet and light in terms of their staff—under this regime, they are just going to say, 'We won't bother.'

At the heart of our concerns is the impact that this cost recovery model will have on small business—the ones who have been given a very raw deal by this government. The high cost of doing business under Labor is breaking them—and passing on the cost of compliance audits might be the final straw.

As I looked through the submissions to the Senate inquiry in depth, there was a constant theme from providers and their stakeholders. The submissions received by the inquiry reiterate the concern within the sector as to the lack of transparency with potential fees and charges and the impact that could be felt by, in particular, the smaller rural and regional providers. I gave also the example of an overseas provider, or a domestic provider who partners with an overseas provider, because that is a really good way to attract international students to Australia.

In their submission to the Senate inquiry, the Australian Chamber of Commerce and Industry pointed out that a cost recovery model could lead to two outcomes—insufficient monitoring of the quality of training delivery and/or fees, including fees for audit that are so high as to limit the participation in the training market of small business training companies. These increased costs further evidence the red tape that is stifling productivity and development in this country. The coalition acknowledges, as I said, that the intergovernmental agreement makes provision for states to continue to assist in meeting these costs. However, if they are not required to help reduce the end cost to the provider, it is my guess that they will not do so.

The Queensland government made a rather useful, short, sharp and very much to the point submission to the inquiry, noting certain aspects of the bill. But it did say that, as an observation only, it adds complexity to the VET legislative framework to introduce an entirely new bill to provide for these charges. What was the reason that they could not be provided for under the original bill? Or are they just sort of being slipped in behind it because they would not have looked acceptable? That is my own observation, not the Queensland government's, but it is curious that we had to have a whole separate bill.

The Queensland government says that this bill, as opposed to the main act, does not require the minister to obtain the agreement of the ministerial council before making a determination in relation to the amount of a charge. 'The fact that the bill provides for the minister to make a legislative instrument without the oversight of the ministerial council is actually inconsistent with the tone of the intergovernmental agreement for regulatory reform in vocational education and training.' The Queensland government goes on to make the point that the currently published Australian Skills Quality Authority fee schedule does not include any advice about what audits, if any, are included in the registration fees. The draft fee schedule and charges attached to the cost recovery impact statement did provide, with regard to registration fees, that this fee includes the cost of one post-registration audit, either 12-month monitoring or a compliance audit. There is an inconsistency, which I think the government does now need to clear up. Does the registration fee actually provide for a compliance audit, the first one that an organisation may have to face, or will they now be hit under this subsequent legislation with another fee for just such an audit?

The Queensland government also notes that the national VET regulator may at any time conduct a compliance audit of an NVR registered training organisation's operations to assess whether the organisation continues to comply with the VET quality framework. It sounds like an innocent statement, 'at any time conduct a compliance audit', but that could be an onerous regulatory burden on an organisation. This really does allow the VET regulator quite substantial power for when, how and how much it does and charges and inserts itself into the process of an RTO's operations.

I reviewed the original second reading speech by the parliamentary secretary, who happens to be sitting at the table here today, on behalf of the minister who is in the other place. Again, I was alarmed by the language used:

The main method by which ASQA monitors compliance is by conducting … audits. … investigates complaints …

This bill will enable ASQA to recover … costs and expenses associated with these additional monitoring activities.

… … …

It is necessary for ASQA to conduct compliance audits to ensure ongoing compliance with the VET Quality Framework and identify issues relating to the quality of VET.

ASQA conducts a risk assessment on all registered training organisations (RTO) and this risk assessment is used to determine whether to conduct a compliance audit. Providers who have been assessed as high risk will receive more rigorous monitoring by ASQA.

Compliance audits require a significant regulatory effort. This bill provides that, where the ASQA undertakes such an audit, a charge is payable … outside of Australia—any other reasonable expenses incurred.

Audit compliance charges will represent the resources required to effectively audit a provider.

If an organisation is struggling and not quite sure how it is going to fund next year's budget, what does it do? It ramps up the fees. So we may well find that providers are paying a component of overhead running costs for an organisation, which, under accounting practice, you could quite reasonably attribute to the exercise of an audit. As I said, I am very concerned that this is just going to get away—like so much of this government's legislation when it comes to charging small business. Private providers, which are struggling under the current set of economic circumstances they are facing, will find that the government has carte blanche to charge them what they like.

I want to note briefly that a provider in my electorate of Farrer came to me in the last week to say that they made an application to ASQA for one additional course, a certificate III in financial services. They lodged their application in 2011. On 26 April they received a request for additional evidence, which they provided. They asked how much longer they should expect to wait for registration and they were told three to six months. A basic registration for a certificate III course could take almost a year for the regulator to approve? How could a business that is making money from providing this service or providing training to jobseekers in conjunction with a job service agency operate in such an environment? When I hear stories like that—I do not know the full circumstances and I intend to discuss this with ASQA—I do not have any confidence in this organisation. I do not have any confidence that it is not going to seek to undertake significant extra regulatory activity in order to provide the dollars it needs to administer its affairs and pay a staff of public servants. I am really not confident at all, and I would like to reiterate that the coalition will not be supporting this bill that imposes additional red tape and cost burden on Australian small business.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I am not surprised the opposition is not supporting the National Vocational Education and Training Regulator (Charges) Bill 2012 before us tonight because the one thing that this opposition does is oppose everything. It does not look at anything from a commonsense point of view. The other thing that does not surprise me is that when regulation relates to the business side of the equation, the opposition oppose it, but when regulation relates to the people that are undertaking those training courses, the opposition supports it. So it is a very one-sided approach to operating registered training organisations, which is what this legislation is about. It is about ensuring that training organisations comply with the provisions of their contract to make sure they do they what they say they are going to do.

What this legislation does is put in place cost recovery in providing the audits that are associated with it. It is very simple. It is not about targeting small business. It is not about making the life of small business difficult. It is about ensuring that small businesses that provide training actually provide the training they are supposed to provide. I know that practically every member in this House will have been confronted with a constituent that has been enrolled in one of these training courses only to discover that it does not deliver what they have been told it will or that the course is padded out in one way or another. Under the Howard government some really ludicrous situations existed. We had training organisations enrolling unemployed people. They would do the course, be placed in a job for about a week and then would no longer be employed. They would then be recycled back and do the training again—the training, the job, the training, the job. All the time these training providers were milking the system; they were taking money away from the system. I want to put on the record here that that is the exception, because most registered training organisations are there because they believe in providing good, high-quality training to Australians who need skills to fill the positions that are available in the community and give Australia a skilled workforce.

This legislation before us tonight will enable the national VET regulator, known as the Australian Skills Quality Authority, to recover reasonable costs and expenses associated with additional monitoring activity. The previous speaker was not at all happy with the term 'reasonable'. Her objections were very one-sided. If 'reasonable' relates to something that she supports, she will accept it; if 'reasonable' does not fit in with her picture of the world, she will not. There will be fees and schedules put in place with this legislation. If 'reasonable' fits in with regulation in relation to ensuring that the business delivers what it says it is going to, she objects to it. But if 'reasonable' fits in with reasonable compliance for an unemployed person to undertake training and if they do not fit in with the requirements, then she objects very strongly to it. I think on this side of the parliament we have a much more balanced approach. We accept that business plays a very, very valuable role in training and providing services, and we also accept the fact that there is a need for reasonableness to be associated with those people who are undertaking training.

The cost-recovery arrangements are consistent with the Australian government's cost-recovery guidelines, and include fees and charges for the regulatory activities undertaken.

The main method by which ASQA will monitor ongoing compliance of RTOs is by conducting compliance audits, which is a very reasonable way to ensure that RTOs are doing the right thing. The RTOs that are at high risk—high risk in terms of their long-term performance—are the ones that will be assessed on a more ongoing basis.

There has been widespread consultation on the legislation. As the previous speaker indicated, the Senate has looked at the legislation. The speech from the member of the opposition really showed that she has no understanding of the way RTOs work and no understanding of the system that is in place. She really needs to go and visit some of these RTOs. She needs to talk to people who undertake training. The first thing that is important is that the training provided is quality training. The next thing that is important is that there are linkages between the training and employment. Also, the government needs to be confident that these RTOs are doing the right thing.

The new national VET regulator will have the power to examine quality concerns in all areas of the VET sector and exercise its responsibility based on a robust framework of the legislation and standards. That is what I think should be the expectation of this parliament and the expectation of the Australian people. Providers must comply with registration standards at all times. Noncompliance jeopardises registration, and so it should. For any member of this House to argue that an organisation that does not comply should be allowed to continue operation in the way it currently does is not really considering the interests of our workforce.

The bill empowers ASQA to charge for monitoring activities additional to application based activities, including compliance audits and complaint investigations. This will act as an incentive for providers to improve quality, and that is something that we on this side of the House are very keen to see happen. It is all about the quality of training. When you provide quality training then you skill people up so they can fill the skill shortages that exist in the community.

There are many skill shortages that remain. If I look at the Skill shortages—summary for 2011 I see that employers only filled 62 per cent of their vacancies and attracted 1.7 suitable applicants per vacancy. That is slightly higher than the 61 per cent of 2010. The hardest occupations to recruit in were engineering professions, automotive trades and construction trades—areas where RTOs can provide a very valuable role. But as a government we need to know that the role played by the RTOs is based on providing the skills to address the shortages that have been identified, that they are providing quality training and that the people who undertake the training will be able to find employment at the end of it. This is one of the most important areas of government, so it would be irresponsible for it not to be regulated, not to be monitored and not to have cost recovery in place. I urge those on the other side of this House to move away from their oppositional position. I urge them to look at the legislation, see what it is about and see how monitoring, ensuring compliance and undertaking audits can prevent abuses of the system. You need regulation to ensure that the right thing is done. The majority of RTOs do the right thing instinctively, because they are committed to the development of skills and to training. But there are some that are not, and there is a litany of examples—particularly those that came to light when the Howard government was in power. We need to ensure that that situation does not go unchecked.

This legislation goes together with a number of other initiatives that have been introduced by the government. It is very good legislation and it should be supported by all members of this House.

Karen Andrews (McPherson, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the National Vocational Education and Training Regulator (Charges) Bill 2012. I have spoken in the past about the creation of a national vocational education and training regulator, due to the need to maintain consistency across Australia. If every state were to operate its own system with its own regulations, the difficulty in ensuring compliance amongst the almost 4,500 VET operators, and ensuring that each student is receiving a quality education, would become exponentially greater in the years to come. With the introduction of legislation to that effect, the new Australian Skills Quality Authority has assumed the role of the registration and monitoring of registered training organisations from state and territory bodies. It does so through undertaking compliance audits and investigating complaints about registered training organisations. In past speeches to the House, I have stated that the government has introduced a supposed national system, which at this stage is still not operating nationally. I note that Western Australia and Victoria have still not signed up to the framework, whilst Queensland's parliament still has the legislation before it. So how can this be a national system when three states are missing from the framework? The obvious conclusion is that it is not, and that any truly national system cannot exclude any state, especially those that, combined, account for almost 12½ million of Australia's total population of over 22 million.

The coalition in the past has been generally supportive of the creation of the Australian Skills Quality Authority, as there has been a definite need to ensure consistency across the country. Nonetheless, there has always been the concern that the organisation would be based on a cost recovery basis. This is compared to the previous systems operated by the states and territories, where registered training organisations were instead given subsidies or financial support from their relevant government for registration and regulation costs. Because of this difference between the old and new systems, many registered training organisations will find themselves having to pay more for compliance than they used to—something that they may not have factored into their operating costs and would be of major concern to them. With increasing costs needing to be accounted for, it is likely that some providers may need to put up their fees for students or, alternatively, they will have to cut services so that they can simply provide the services in the first place.

The Council of Australian Governments agreement that was struck between the Commonwealth and the states with respect to the Australian Skills Quality Authority states that the states will maintain the ability to provide financial support or subsidies to registered training operators. This is not mandatory but rather a choice by the states and territories. Given that many states are trying to rein in their budgets from former bad Labor governments, it cannot be known whether these sorts of measures will definitely be implemented.

Another concern is the discretionary power of the minister to set the level of charges to be imposed on registered training organisations. Introducing a cost recovery model for the Australian Skills Quality Authority may potentially harm smaller and regional providers in the long term. As the Australian Chamber of Commerce and Industry stated in its submission to the Senate inquiry:

… whilst ACCI supports reasonable fees to training providers as a market mechanism, we do not support the notion that ASQA has to be a cost recovery body.

The submission goes on to say:

The regulatory and audit approach should not be inhibited by a cost recovery model, as to do so could lead to one or both of the following two unsatisfactory outcomes:

The concern that is highlighted here is that, if cost recovery is not adequately supplemented by the federal government, there is a possibility that the costs recovered may not be sufficient to maintain the costs of enforcing compliance. Further, the model may lead to the charges of registered training organisations being increased to such a point—to maintain the Australian Skills Quality Authority's costs—that it would lead many registered training organisations to opt out of the training market altogether, and it would inhibit new providers from entering the market. This will affect competition in the market and ultimately leave students worse off due to a lack of choice of training provider and the range of courses that are offered and available in their area.

The Australian Council for Private Education and Training submission noted another concern regarding section 7 of the bill and the costs incurred by the regulator. ACPET queried as to whether, as stated in the bill, 'costs and expenses incurred by the regulator in conducting the audit' would include travelling costs to where the registered training organisation is located or, in the case of some institutions, to the multiple locations where it is based. If this were the case then the viability of having VET institutions in rural and regional areas diminishes due to the cost burden not only placed by the charges imposed by the cost recovery system but also because of the need to pay travel expenses for auditors and officials, which, depending on where they may be travelling to, could easily account for hundreds of dollars.

Many of the concerns addressed in these submissions reflect those of registered training organisations in the VET sector. By increasing the costs on small providers, it places them in a much more difficult position to provide quality services. The priority of these providers is to give a quality education to their students and prepare them for the workforce, but they cannot do that if they are inadequately resourced due to large overheads.

The VET sector not only supplies the future workforce with the tools of the trade and the current workforce with the ability to re-skill and improve their productivity but also provides thousands of Australians with employment. By limiting participation in the training market, we remove the ability of both domestic and international students to choose where they want to go to receive an education. That point has in the past been made by the Australian Chamber of Commerce and Industry. Clearly, it is the right of all students to be able to choose where they want to go, and we should be supporting that rather than making it harder for them to do so.

The contribution made by the VET sector and the educational sector as a whole to our national economy cannot and should not be underestimated, with education being Australia's fourth largest export and contributing $5.9 billion in 2009-10. Thousands of Australians pass through educational institutions every year and thousands more international students come to Australia to take advantage of our world-class education system, both at school and in tertiary and VET sectors. All these things need to be considered when developing education policy and they should not and must not be placed in jeopardy. I will not go as far to say that the cost recovery model and the current system in place does so, but it does raise questions as to what is the best way to ensure consistent compliance nationwide and how we support the VET sector in growing and continuing to provide world-class courses to both domestic and international students.

In summary, there are numerous concerns that have been raised by stakeholders with regard to the changes that will be implemented by this bill, and many of these need to be addressed. The current system cannot continuously be called a 'national' system, as I have stated, if a large part of the nation does not currently subscribe to it. Although I am supportive of a national regulatory system to ensure compliance and quality education throughout Australia, this system still has a long way to go before it can achieve its intended objectives.

Debate adjourned.