I present two government responses...: 7 Feb 2018: Senate debates (OpenAustralia.org)

Senate debates

Wednesday, 7 February 2018

Committees

Education and Employment References Committee; Government Response to Report

5:25 pm

Marise Payne (NSW, Liberal Party, Minister for Defence) Share this | Hansard source

I present two government responses to committee reports as listed at item 16 on today's Order of Business. In accordance with the usual practice, I seek leave to have the documents incorporated in Hansard.

The document s read as follows—

Australian Government response to the Senate Committee on Education and Employment report Inquiry into the operation, regulation and funding of private vocational education and training (VET) providers in Australia

Introduction

On 24 November 2014, the Senate referred the inquiry into the operation, regulation and funding of private vocational education and training (VET) providers in Australia to the Education and Employment References Committee (the Committee). The terms of reference are at Appendix A.

The Committee released its report Getting our money's worth: the operation, regulation and funding of private vocational education and training (VET) providers in Australia on 15 October 2015. The report made 16 recommendations. Coalition Senators submitted a minority report in support of all but the first recommendation of the majority report, with no additional recommendations proposed. Australian Greens Senators provided additional comments and made four additional recommendations. The Australian Government welcomes the report by the Committee.

The Australian Government has considered the Committee's report and provides a response to each of the 16 recommendations. The Australian Government also responds to the four additional recommendations from the Australian Greens Senators.

The Committee has made a number of recommendations around the VET FEE-HELP scheme and safeguarding the quality of training more broadly.

The Australian Government shares the Committee's concerns around maintaining high quality standards of training provision in VET. The Australian Government continues to be committed to ensuring quality training and assessment outcomes for students. A range of initiatives to promote quality have been at the centre of the Australian Government's VET reform agenda.

These initiatives include the introduction of new Standards for Registered Training Organisations (RTOs) in 2015, an enhanced regulatory approach for the Australian Skills Quality Authority (ASQA), a focus on assessment reform, a mechanism to address emerging issues through the introduction of a regulation for making Quality Standards, the review of training packages, the reform of the training package development process and the establishment of the Australian Industry and Skills Committee.

The Australian Government is aware of unscrupulous behaviour by some VET FEE-HELP providers. This is why we have announced the new VET Student Loans scheme which replaced VET FEE-HELP from 1 January 2017. VET Student Loans give students, providers and the VET sector the opportunity to better meet industry needs and employment outcomes while ensuring quality providers are delivering the program.

The new scheme will stop providers from charging students exorbitant fees which are then underwritten by the taxpayer. Australia's economic growth and business productivity will be enhanced by a strong VET system, and the VET Student Loans scheme is an important part of this.

The Committee, through the Australian Greens Senators' additional recommendations, has raised issues in relation to the impact of contestability in the training market, including the degree to which training subsidies are contestable between public and private RTOs, and whether additional financial support is provided to public providers (TAFE institutes).

The Australian Government supports contestability as it promotes choice for students and encourages efficiency, responsiveness, and innovation among RTOs. Contestability is a core part of the National Agreement for Skills and Workforce Development (NASWD) and the previous National Partnership Agreement on Skills Reform (Skills Reform NP). In the NASWD, all governments committed to:

encourage responsiveness in training arrangements by facilitating the operation of a more open and competitive training market;

enable public providers to operate effectively in an environment of greater competition, recognising their important function in servicing the training needs of industry, regions and local communities, and their role that spans high level training and workforce development for industries and improved skill and job outcomes for disadvantaged learners and communities; 1

The Australian Government budgeted $1.85 billion to state and territory governments for their training systems in 2017-18, of which $1.5 billion will be through the National Skills and Workforce Development Specific Purpose Payment; and $350 million through the Skilling Australians Fund (the Fund) .

The Fund will provide a new agreement with states and territories, superseding the funding and framework of the previous National Partnership Agreement on Skills Reform. The new partnership focuses on strong accountability, transparency and clear outcomes for skills training and the broader economy. With matched funding from the states and territories, the Fund will support up to 300,000 more apprentices, trainees, pre- and higher-level apprentices over the next four years. Spending from the Fund will be prioritised towards projects brought forward from states and territory governments which support apprenticeships and traineeships in: occupations in demand, industries and sectors of future growth, trade apprenticeships, rural and regional Australia, and industries facing structural adjustment.

States and territories manage the delivery of VET within their jurisdictions. Each jurisdiction decides how much funding to provide to their training system and how it should be spent. Training subsidy arrangements are also determined by state governments and include the degree to which training subsidies are contestable between public and private RTOs. Therefore, some aspects of the additional recommendations are outside the scope of the Australian Government's responsibilities.

Recommendation 1

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.

The Australian Government supports this recommendation

The Higher Education Support Amendment (VET FEE-HELP Reform) Act 2015 passed through Parliament in December 2015 and enacted new measures from 1 January 2016 to further strengthen the scheme. These changes controlled growth ahead of the replacement of VET FEE-HELP with VET Student Loans, which better reflects the nature and practice of the VET sector.

VET Student Loans offer greater protections for students and provides access to quality higher level VET qualifications that address industry needs and create better opportunities for employment. VET Student Loans is underpinned by strong legislation and robust compliance measures.

Recommendation 2

The Committee recommends that this review considers the most effective way to control costs of courses for students under VET FEE-HELP by either instituting a lower and separate loan limit or a cap on student loan amounts.

The Australian Government supports this recommendation

VET Student Loans were introduced on 1 January 2017, replacing the VET FEE-HELP scheme. VET Student Loans offer greater protections for students and provide access to quality higher level VET qualifications that address industry needs and create better opportunities for employment.

Loan caps apply to all eligible courses under VET Student Loans. There are three bands of loan caps of $5000, $10,000 and $15,000, which will apply irrespective of whether the course is being delivered face-to-face, online, or via mixed delivery modes. A separate loan cap of $75,000 for the aviation training package applies. The application of loan caps on all eligible courses is designed protect students from rapidly rising course costs, and puts downward pressure on fees.

The intent of loan caps is to protect students from rapidly rising course costs while still giving students the ability to choose a course based on a number of factors such as quality of delivery, course content, location and facilities. Therefore, establishing loan caps on courses does not prevent approved VET Student Loan providers from setting tuition fees above the cap, rather it sets a ceiling on the maximum loan amount the government is willing to provide a student for a specific course.

Recommendation 3

The Committee further recommends that this review considers the most effective way to limit provider access to VET FEE-HELP so that only providers with the highest reputation for quality have unfettered access to the scheme. The Committee recommends that the government mandates minimum entry standards of year 12 completion or equivalent for access to VET FEE-HELP loans for Diploma level courses and above.

The Australian Government supports this recommendation

The Higher Education Support Amendment (VET FEE-HELP Reform) Act 2015 introduced additional quality criteria for approval of new VET FEE-HELP providers. Only those registered training organisations (RTOs) that have a strong trading history of at least five years in offering VET courses are eligible to apply. The amendments also introduced minimum entry standards for students wishing to access VET FEE-HELP loans. From 1 January 2016, VET FEE-HELP providers were required to apply a student entry procedure for VET FEE-HELP loans.

The student entry procedure must specify that a student is academically suited to a course when the student satisfies one of the following requirements:

The VET Guidelines stipulates that Language, Literacy and Numeracy testing must be conducted with an approved assessment tool. The VET Guidelines stipulates the Core Skills Profile for Adults (CSPA) is an approved assessment tool, and providers may apply for approval of other assessment tools following independent assessment as to the tool's veracity against published criteria.

There are more stringent requirements placed on providers seeking to offer eligible courses through VET Student Loans.

A new application process applies to providers who wish to access the VET Student Loans program, regardless of whether they were a provider under VET FEE-HELP. Under the new application approval process, providers will be assessed against a range of criteria including: financial performance, strong management and governance, applicants' relationships with industry, student outcomes, and the provider's three-year track record of delivering education and training.

In recognition that TAFEs and public providers are low risk, under VET Student Loans, TAFEs, publicly owned RTOs and Australian universities (accredited as RTOs) that are

provisionally approved as VET student loans approved course providers will not be required to apply for full approval under the new program and can commence operating under VET Student Loans from 1 January 2017.

There are specific criteria students must meet to be eligible for a loan through VET Student Loans. Student entry requirements will be extended to include recognition of an Australian Qualifications Framework (AQF) level four qualification or above.

Recommendation 4

The Committee opposes suggestions to lower the repayment threshold to $30, 000 or $40,000. Asking lower income earners to pay for the failure of government to properly regulate the operations of VET FEE-HELP — and for the rampant and unethical misbehaviour of some private providers — fails both the practical and ethical test.

The Australian Government notes this recommendation

On 15 September 2016 the Senate passed the Budget Savings (Omnibus) Bill 2016. Among other measures the Bill establishes a new minimum repayment threshold for HELP debts of two per cent when a person's income reaches $51,957 in the 2018-19 financial year. This new threshold will apply to all HELP debts including VET FEE-HELP, as current policy settings do not differentiate between the different loan types in terms of repayment thresholds.

Ensuring cohesion between the shared elements of HELP is critical as a number of students move between higher education and VET throughout their education experience. Therefore, the current lifetime loan limit, repayment threshold and rates and the loan fee will apply to the new VET Student Loans scheme.

Recommendation 5

The Committee recommends that urgent and concerted efforts are made to further raise awareness of the rights of students and existing Standards relating to providers in the VET sector. This effort should focus on advocacy groups dealing with the most vulnerable members of the community, including the long-term unemployed or disadvantaged, migrants and people with disabilities.

The Australian Government notes this recommendation

The Australian Government is committed to ensuring students are provided with accurate and accessible information about their rights as students and consumers. Transparent and accurate information about training provider services and performance enables prospective and current learners to make informed decisions regarding their training and assessment needs.

The Standards for Registered Training Organisations (RTOs) 2015 (RTO Standards) make RTOs responsible for ensuring prospective students are well informed about their training. RTOs must provide students with clear information on matters including entry requirements, the mode of delivery and assessment, support services and any third party arrangements in place (Standard 5). Students must also be accurately informed about fees, funding entitlements and the terms of any loans they may incur (Standard 5). The Australian Skills Quality Authority (ASQA) can take action against a RTO when it, or any marketing agent acting on its behalf, fails to provide clear information to prospective students.

Furthermore, the RTO Standards require that RTOs ensure their training strategies enable each learner to meet the requirements for each unit of competency, including giving regard to the existing skills, knowledge and experience of the learner. Where appropriate, the RTO should make reasonable adjustments to take into consideration the individual learner's needs.

In October 2014, the Australian Government announced a commitment of $68 million over four years to support ASQA in becoming a more modern and responsive regulator. This included funding for ASQA's communication strategy which made it clear to all RTOs that they are responsible for ensuring all members of the community are properly informed. Prior to the implementation of the new RTO Standards, ASQA consulted extensively with a range of stakeholders, including students. This included hosting 31 information sessions focused on the RTO Standards in 16 cities across Australia during October and November 2014.

In early 2015, the Australian Government amended the National Vocational Education and Training Regulator Act 2011 to make it an offence for any person to market a VET course without clearly identifying the RTO providing the qualification. This additional obligation ensures prospective students are better informed about which RTO they are dealing with.

New legislation for VET Student Loans includes a range of measures to expand on the existing student protections 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 re-credited.

The Government has also established a VET Student Loans Ombudsman that began on 1 July 2017, in order to strengthen student protection. The Ombudsman will:

Recommendation 6

The Committee recommends that the Department of Education and Training and the Australian Skills Quality Authority conduct a concerted and urgent blitz of all providers to ensure that they are consistently complying with the national standards, especially those relating to student recruitment. This blitz should be aimed at defending the interests of students, enforcing adherence to AQF volume of learning standards and removing non compliant RTOs as VET FEE-HELP providers.

The Australian Government does not support this recommendation

The Government is committed to protecting students and supporting the integrity of the VET sector. The Standards for Registered Training Organisations (RTOs) 2015 (RTO Standards) support quality in the VET system by requiring that advertising and marketing material is accurate, comprehensive information is provided to prospective students and assessment strategies meet course requirements. Providers must at all times be compliant with the RTO Standards and the Australian Skills Quality Authority (ASQA) takes appropriate regulatory action against any provider found to be non-compliant.

Since its establishment in 2011, ASQA's regulatory decisions have affected a significant number of training providers nationally. As at 30 June 2016, ASQA had issued 595 written notices of intention to cancel or suspend registration and actually made 315 decisions to cancel or suspend registration. It had also refused 187 applications to renew registration from existing RTOs.2

ASQA employs a modern, responsive, risk-based approach to regulation. This involves applying greater scrutiny to high-risk providers and prioritising the issues that pose a serious risk to safety and the integrity of the VET sector. This targeted approach also ensures high quality, low risk providers who are doing the right thing are not subject to unnecessary regulatory burden.

A sector-wide process would divert ASQA's resources away from more targeted scrutiny of high risk providers while placing unnecessary scrutiny on compliant providers. ASQA's risk analysis is based on intelligence it captures from a wide range of sources including student complaints, audit findings and employer and industry advice. ASQA uses intelligence and data analytics to evaluate information and identify those risks that present the greatest threat to quality outcomes for the VET sector. This analysis of risk includes examining trends in enrolment data and levels of government funding. Data that suggests a provider may be employing aggressive sales or student recruitment strategies would trigger closer scrutiny from ASQA.

The Australian Government has introduced tough new standards for RTOs that will enable regulators to act more swiftly when addressing quality concerns. The department will work with ASQA to reinforce increased VET Student Loans provider compliance and quality through infringements.

In 2016, the department undertook a range of VET FEE-HELP compliance actions, including an initial 28 provider audits. The audits have provided an evidence base for compliance action, including suspending the approval of seven providers for poor performance. The department is continuing its audit work in 2017, including new audits on providers not previously audited. Based on the audit findings, the department is withholding VET FEE-HELP payments from a number of providers, including Phoenix Institute of Australia and conducting investigations into the veracity of their reported enrolments.

The department is also undertaking investigations of providers to determine whether breaches of the Higher Education Support Act 2003 (HESA) and the Higher Education Support (VET) Guideline 2015 have occurred, including by using powers under HESA to compel the provision of information. These investigations may also result in compliance action by the department, including infringement notices and possible civil penalty proceedings. As of 1 August 2017, five providers have paid a total of 59 infringement notices (totaling $637,200) for alleged breaches of civil penalty provisions within HESA.

For those providers with multiple serious breaches, the department has the power to revoke their VET FEE-HELP approval. Since 2015, the department has revoked the VET FEE-HELP approval of 11 providers for non-compliance with HESA, including Phoenix Institute of Australia and the Australian Institute of Professional Education (AIPE).

These efforts will continue under the new VET Student Loans program—which replaced VET FEE-HELP on 1 January 2017, with infringements being broadened and strengthened under the program. To date, four providers have paid a total of seven infringement notices (totalling $75,600) for alleged breaches of civil penalty provisions within the VET Student Loans Act 2016. The department is continuing investigations, including a rolling program of desktop audits that are expected to lead to further infringement notices being issued to providers.

Recommendation 7

The Committee recommends that the government, where there is evidence to do so, provides a brief to the DPP to launch prosecutions against providers engaged or benefiting from fraud and take steps to recover monies lost.

The Australian Government notes this recommendation.

The department is working closely with the Australian Skills Quality Authority (ASQA) and the Australian Competition and Consumer Commission (ACCC), as well as undertaking its own investigations and action to deal with non-compliance with the VET FEE-HELP scheme.

The ACCC and the department have initiated joint litigation against four VET FEE-HELP providers for alleged misleading and unconscionable conduct, in breach of the Australian Consumer Law, when marketing VET FEE-HELP funded courses.

The department has joined these ACCC actions to allow it to seek to recover payments. Recovery has been sought for payments made to the providers on behalf of students enrolled as a result of alleged misleading, deceptive and unconscionable conduct.

The department has successfully defended a Judicial Review challenge by Phoenix Institute of Australia regarding the department's decision to defer payments in 2015. The ACCC and the department were also successful at first instance in their action against Unique International College Pty Ltd.

VET Student Loans were introduced on 1 January 2017—replacing the VET FEE-HELP scheme. New legislation for VET Student Loans gives the Government greater power to take action against training providers who breach requirements of the program and its associated guidelines. This includes escalating actions ranging from warnings to simplified provider suspension and revocation powers.

The legislation provides for:

Where the department has sufficient evidence of fraudulent activities, the department will seek to brief the DPP. The DPP, which operates independently of the department, will then decide whether to commence prosecution.

Recommendation 8

The Committee recommends that the Australian Skills Quality Authority be given powers to directly regulate brokers or marketing agents in the VET sector, and to protect students.

The Australian Government notes this recommendation

The Australian Government is committed to protecting students' interests and ensuring all brokers and marketing agents operating in the VET sector comply with their legal obligations.

The Australian Skills Quality Authority (ASQA) currently regulates third parties operating in the VET sector under the National Vocational Education and Training Regulator Act 2011 (NVETR Act). Certain provisions of the NVETR Act create offences and civil penalties that apply to any person, not only registered training organisations (RTOs). For example, the legislation gives ASQA the power to take action against a person operating within the VET sector who makes a false or misleading representation relating to a VET course, which would apply to brokers or marketing agents found to be making such statements.

Since 2 April 2015, ASQA has also been able to issue infringement notices for breaches of certain civil penalty provisions under the NVETR Act. This allows ASQA to quickly resolve some clear-cut breaches of the legislation by issuing a fine to either an RTO or a third party.

Students' interests are protected in the VET sector by a range of mechanisms. All training providers, as well as third party brokers or marketing agents, must comply with the consumer law that applies in the relevant jurisdiction and the Australian Consumer Law, which is enforced jointly by the Australian Competition and Consumer Commission and State and Territory regulators.

The powers referred by the states which form the basis of the NVETR Act may not extend to the specific regulation of brokers or marketing conduct in the VET sector. A further referral of powers by the states to the Commonwealth may be required to allow ASQA to more comprehensively regulate brokers or marketing agents.

Powers in relation to student advocacy or protection were specifically excluded from the referral of powers by the states and territories to the Commonwealth under the NVETR Act. As such, a further referral of powers by the states and territories would be necessary to enable ASQA to take greater responsibility for protecting the rights of students.

The Australian Government will continue to review policy in this area to ensure it remains effective.

Recommendation 9

The Committee recommends that the government caps or otherwise regulates the level of brokerage fees paid for VET FEE-HELP students to maximum amount of 15 percent the amount of the loan.

The Australian Government notes this recommendation

The Australian Government is deeply concerned about the unscrupulous recruitment practices of some brokers operating in the VET sector and the arrangements they have in place with registered training organisations (RTOs) which may incentivise such conduct.

The Australian Government has introduced reforms to make RTOs accountable for the behaviour of any third parties acting on their behalf, including brokers. In the new Standards for RTOs 2015 (RTO Standards), providers must have a written agreement with any third party that delivers services on their behalf, including any activities related to the recruitment of prospective students. The RTO Standards also make the RTO ultimately responsible for ensuring transparent and accurate information is provided to prospective students.

In addition, in 2015 the Australian Government made amendments to the National

Vocational Education and Training Regulator Act 2011 (NVETR Act) that require persons marketing VET courses to clearly identify the RTO responsible for issuing the qualification. This allows the Australian Skills Quality Authority (ASQA) to take action against any RTO whose agent or broker fails to provide clear information to a prospective student about the qualification they are signing up for and any associated financial implications, such as VET FEE-HELP debts.

VET Student Loans were introduced on 1 January 2017—replacing the VET FEE-HELP scheme. Under VET Student Loans, third party delivery of training will only be allowed in circumstances where the third party is also an approved VET Student Loan provider or accredited with the Tertiary Education Quality Standards Agency (TEQSA). Providers will be prohibited from using brokers or marketing agents to interact or engage with students at enrolment or any other time throughout their training.

Recommendation 10

The Committee recommends that the government apply, in consultation with industry and quality providers, minimum hours standards to VET FEE-HELP eligible courses.

The Australian Government notes this recommendation

The Australian Government considers that the quality of VET graduates is a significant issue and is seeking to ensure all national training enables students to achieve the necessary competencies to participate effectively in the workforce.

Under the National Vocational Education and Training Regulator Act 2011, all registered training organisations (RTOs) (including VET FEE-HELP providers) must comply with the Australian Qualifications Framework (AQF). The AQF provides guidance on the 'typical' volume of learning for each qualification type, which allows flexibility. Those developing and accrediting qualifications are responsible for exercising professional judgement to ensure courses enable students to achieve the learning outcomes for the qualification type and the discipline, and must also comply with the AQF.

There is a tension between mandated minimums for course duration and the national VET system's competency-based approach to training. What is critical is not the number of hours studied, but rather that the course provides each student with sufficient opportunity to gain the competencies of the module or qualification. Different students are at different stages in the development of their competencies and recognising the prior learning of students is an important component of the VET system. Courses may be structured for completion in a shorter period where a training organisation can clearly describe how learners have the characteristics to achieve the required rigour and depth of training in a shorter period.

The Standards for RTOs 2015 (the Standards) require providers to give regard to the existing skills, knowledge and experience of the learner, and the mode of delivery, when determining the necessary amount of training provided. If an RTO is unable to demonstrate how the amount of training provided enables the learner to achieve the required competencies, ASQA may take an appropriate regulatory response.

The Australian Government will continue to monitor the regulatory architecture relating to course duration to ensure regulatory oversight is adequate and that providers comply with the Standards.

In the coming year, the Australian Government may consider whether those RTOs in receipt of government funding should be subject to any additional obligations to ensure quality outcomes are achieved.

VET Student Loans were introduced on 1 January 2017—replacing the VET FEE-HELP scheme. Under VET Student Loans, Australian Skills Quality Authority (ASQA) will continue to monitor compliance with national standards and investigate quality concerns of VET Student Loans providers. This includes ensuring that all VET Student Loan providers are complying with the AQF. New legislation for VET Student Loans also gives the Government greater power to take action against training providers who breach requirements of the program and its associated guidelines.

Recommendation 11

The Committee recommends that the Australian Skills Quality Authority be given the powers to take swift and strong action against Registered Training Organisations found to be providing inadequate training to their students.

The Australian Government notes this recommendation

The Australian Skills Quality Authority (ASQA) plays a critical role in managing risk and underpinning quality outcomes in the VET sector. To enable it to effectively perform this role, ASQA has at its disposal a wide range of regulatory powers.

The National Vocational Education and Training Regulator Act 2011 (NVETR Act) provides ASQA with a spectrum of administrative, civil and criminal sanctions that it can take against providers that are delivering inadequate training or are otherwise in breach of the legislation. These escalate from conditions on registration through to suspending or cancelling a provider's registration. For violations of certain provisions of the NVETR Act, ASQA can seek a civil penalty order or criminal sanctions from the courts.

Since 2 April 2015, registered training organisations that breach certain civil penalty provisions in the NVETR Act can also be fined directly by ASQA under a new infringement notice scheme. This allows ASQA to quickly resolve some clear cut breaches of the legislation. Penalties for fines range from a couple of thousand dollars to ten thousand dollars for a single breach, and for multiple breaches there is the potential for the ultimate fine to be hundreds of thousands of dollars.

The Australian Government is open to exploring whether the legislative framework could be improved by enhancing ASQA's ability to take swift regulatory action against RTOs delivering inadequate training or assessment, particularly where the RTO is a repeat offender. The Australian Government is, however, cognisant of the need to ensure ASQA's powers are consistent with procedural fairness and appropriate review rights for training providers. Possible improvements to the framework are being explored as part of various streams of ongoing work.

Recommendation 12

The Committee recommends that the Department of Education and Training should have to approve any instances of Registered Training Organisations subcontracting out components of their VET FEE-HELP eligible training to non-registered third parties.

The Australian Government supports this recommendation

VET Student Loans were introduced on 1 January 2017 replacing the VET FEE-HELP scheme. Under VET Student Loans, third party delivery of training will only be allowed in circumstances where the third party is also an approved VET Student Loan provider or accredited with the Tertiary Education Quality Standards Agency (TEQSA). Providers will be prohibited from using brokers or marketing agents to interact or engage with students at enrolment or any other time throughout their training.

Recommendation 13

The Committee recommends that the Australian Skills Quality Authority maintains its close scrutiny on and gives priority to the Early Childhood and Aged Care training sectors, given the concerns noted in this report.

The Australian Government supports this recommendation.

The Australian Skills Quality Authority (ASQA) applies a risk-based approach to the regulation of registered training organisations (RTOs). In accordance with this approach, greater regulatory scrutiny and resources are directed towards those organisations or sectors which are deemed to pose the highest risk to quality outcomes.

In recent years, ASQA has comprehensively investigated and reported on the significant systemic risks to quality training that exist in the early childhood education and care sector and in the aged and community care training sector. As a result of this analysis, ASQA continues to treat the regulation of these sectors as a high priority. ASQA is also working with the Australian Children's Education and Care Quality Authority and other stakeholders to improve the process for reporting quality concerns to ASQA.

The Government welcomes ASQA's increased focus on aged and community care and early childhood education and care training when undertaking compliance audits, and supports ASQA's enforcement of appropriate penalties where it finds RTOs to be non-compliant with the national standards in these important sectors.

Recommendation 14

The Committee recommends that the underpinning legislation for the Australian Skills Quality Authority be revamped in order to give the regulator sufficient powers to adequately regulate the Vocational Education and Training sector, to protect the rights of students and to act more firmly and quickly to stamp out abuses.

The Australian Government notes this recommendation.

The Australian Government has implemented a range of reforms to ensure the Australian Skills Quality Authority's (ASQA's) underpinning legislation allows it to effectively regulate the VET sector. These reforms include amendments to the National Vocational Education and Training Regulator Act 2011 (NVETR Act), strengthened national standards and the introduction of an infringement notice scheme. In June 2017, the Government announced a review of the NVETR Act so that the legislative framework governing the sector is sustainable, efficient and effective and that it responds to the needs of students, training organisations and employers.

When states referred powers to the Commonwealth under the NVETR Act, powers in relation to student advocacy or protection were specifically excluded and remain with state and territory consumer bodies. As such, the Australian Government is not able to provide ASQA with an additional function of protecting students' rights without the agreement of state governments to refer such powers to the Commonwealth.

The Australian Government has introduced a range of mechanisms to support students in the VET sector. The new Standards for Registered Training Organisations (RTOs) 2015 (the Standards), that were introduced from 1 January 2015, strengthen consumer protection in the VET sector by increasing RTOs' obligations relating to information provided to students. In particular, the Standards make RTOs responsible for the conduct of any third parties operating on their behalf, and strengthen requirements around marketing of training and the information provided to students, including clear information about any income contingent loans, government funded subsidies or other financial arrangements.

In 2015, the Australian Government established a National Training Complaints Hotline to streamline and simplify the reporting of complaints by training consumers and to help authorities deal with poor quality providers. The Hotline directs student complaints to the appropriate Commonwealth, state or territory organisation for help and provides evidence to governments to inform policy development.

Recommendation 15

The Committee further recommends that the Australian Skills Quality Authority improves its processes to enable it to more swiftly share information with other levels of government, regulators, government departments and law enforcement agencies.

The Australian Government supports this recommendation.

The National Vocational Education and Training Regulator Act 2011 (NVETR Act) contains provisions allowing the Australian Skills Quality Authority (ASQA) to share a range of information with state and territory ministers and other relevant bodies.

ASQA shares its regulatory information with government agencies under arrangements outlined in established Memoranda of Understanding (MoU).

In 2016, ASQA developed new communication protocols with state and territory governments. ASQA also shares information with law enforcement agencies, including the Australian Competition and Consumer Commission (ACCC) on a case-by-case basis.

ASQA has established a dedicated working group with the Commonwealth Department of Education and Training (the department) to continue sharing data and other intelligence information on areas of current and emerging risk. As part of this arrangement, ASQA and the department are collaborating to pool information, protect the provision of quality VET, improve quality outcomes for learners and strengthen the administration of public monies. The shared information has allowed ASQA and the department to develop a more sophisticated understanding of providers and has assisted in identifying those providers which are of greatest concern. ASQA is using the information as part of its regulatory strategy to target providers which demonstrate concerning behaviour.

Recommendation 16

The Committee recommends that an Ombudsman focused on domestic students in the VET sector be created, and further suggests that this position be industry-funded

The Australian Government notes this recommendation

The Government has established a VET Student Loans Ombudsman that began on 1 July 2017, in order to strengthen student protection. The Ombudsman will:

AUSTRALIAN GOVERNMENT RESPONSE TO THE ADDITIONAL RECOMMENDATIONS BY AUSTRALIAN GREENS SENATORS

Additional Recommendation 1

Abolishing the contestability model of funding. Education should not be treated as a commodity and market-based approaches will not achieve the goals of the VET sector. Therefore adequate public funds should be guaranteed to public institutions to remove the competition incentives and the associated race to the bottom in terms of quality and costs.

and

Additional Recommendation 3

Eliminating public funding for-profit private providers. Government support should only be given to institutions which can guarantee that student and staff interests come first. Funding is scarce and should be spent where it will do the most good fo r the community. Public funds should not be subsidising the profits of private providers.

The Australian Government does not support these recommendations

The Australian Government supports contestability in training markets as it promotes student choice and encourages efficiency, responsiveness and innovation among registered training organisations (RTOs). Contestability is a core part of the National Agreement for Skills and Workforce Development (NASWD) and the previous National Partnership Agreement on Skills Reform (Skills Reform NP). In the NASWD, all governments committed to:

encourage responsiveness in training arrangements by facilitating the operation of a more open and competitive training market;

Importantly, this support for TAFE institutes to adapt to a more competitive training market should not be in conflict with, or at the expense of, contestability and provision of choice for consumers. Contestability is a reform element of the Skills Reform NP that has been implemented allowing for jurisdictional flexibility with outcomes intended to improve accessibility, equity, transparency, efficiency and responsiveness of training. This flexibility has resulted in eight distinct systems that have been tailored, and continue to be refined, based on jurisdictional differences.

The Australian Government budgeted $1.8 billion to state and territory governments for their training systems in 2017-18, of which $1.5 billion is through the National Skills and Workforce Development Specific Purpose Payment and $350 million through the Skilling Australians Fund (the Fund). States and territories manage the main subsidy systems for VET within their jurisdictions.

Over 2017-18 to 2020-21, the Commonwealth will commit an estimated $1.5 billion to the new and ongoing Skilling Australians Fund (the Fund). With matched funding from the states and territories, the Fund will support up to 300,000 more apprentices, trainees, pre- and higher-level apprentices over the next four years. Spending from the Fund will be prioritised towards projects brought forward from states and territory governments which support apprenticeships and traineeships in: occupations in demand, industries and sectors of future growth, trade apprenticeships, rural and regional Australia, and industries facing structural adjustment.

The new partnership focuses on strong accountability, transparency and clear outcomes for skills training and the broader economy. All project proposals will need to demonstrate engagement with, and support from employers and industry. Payments to states will require the signing of the new agreement, agreeing to projects with clear milestones and the states demonstrating achievement of those milestones.

Each jurisdiction decides how much funding to provide to their training system and how it should be spent. Therefore, some aspects of the additional recommendations are outside the scope of the Australian Government's responsibilities.

Additional Recommendation 2

Capping funding to private RTOs to ensure the primacy of public education. If the contestability model remains, the proportion of funds allocated contestably should be capped at 15%, with TAFE guaranteed secure access to at least 85% of all funds allocated to each course code. No private provider should be funded for any course that TAFE can provide. This will at least shield TAFE from the worst aspects of contestability and ensure some stability for the sector.

The Australian Government does not support this recommendation

The Australian Government supports contestability in training markets as it promotes student choice and encourages efficiency, responsiveness, and innovation among registered training organisations (RTOs). The Australian Government believes that policy settings in training markets should support students and employers in having a choice of quality training offerings, regardless of whether the training provider is a TAFE, an enterprise RTO, a community based adult education provider.

A significant cap on the level of contestable funding removes individual and industry choice.

Additional Recommendation 4

Banning brokers to reduce perverse incentives. While the Committee's majority report recommends the government cap or otherwise regulate the level of fees paid to brokers at a maximum of 15% of the loan, this will not remove the perverse incentive for brokers to act . against the interests of the potential student. Regardless of the payment system, the whole practice of brokering exacerbates the tension between profit maximisation and student interests that private providers already have difficulty negotiating.

The Australian Government notes this recommendation

The Australian Government is determined to stamp out unscrupulous sales practices in the VET sector, whether carried out by rogue brokers or persons employed directly by registered training organisations (RTOs). The Australian Government is focusing on ensuring existing prohibitions against this conduct are effectively enforced and these practices are eradicated.

Students' interests are currently protected in a range of ways. Australian Consumer Law prohibits misleading or deceptive conduct and unconscionable conduct by any person carrying on a business in the VET sector.

Making a misleading representation about a VET qualification is also prohibited under the National Vocational Education and Training Regulator Act 2011 (NVETR Act) and a range of civil and criminal penalties may apply to any person who breaches this obligation. The Australian Skills Quality Authority (ASQA) is also able to issue a fine for anyone violating certain provisions of the NVETR Act under the new infringement notice scheme.

The contract for the delivery of training is between the RTO and the student. Accordingly, the RTO must be ultimately responsible for the conduct of its employees and any third parties dealing directly with prospective students. RTOs are held accountable for this conduct under the Standards for RTOs 2015.

VET Student Loans were introduced from 1 January 2017—replacing the VET FEE-HELP scheme. Under VET Student Loans, third party delivery of training will only be allowed in circumstances where the third party is also an approved VET Student Loan provider or accredited with the Tertiary Education Quality Standards Agency (TEQSA). Providers will be prohibited from using brokers or marketing agents to interact or engage with students at enrolment or any other time throughout their training.

1 COAG, National Agreement for Skills and Workforce Development, Clause 25c and d,

<httn://www.federalfinancialrelations.gov.au/content/npaiskills/national-partnership/skills-reform NA.pdf> viewed 24 August 2017

2 Figures derived from the Australian Skills Quality Authority Annual Reports.

3 COAG, National Agreement for Skills and Workforce Development, Clause 25c and d, <httn://www.federalfinancialrelations.gov.au/content/npaiskills/national-partnership/skills-reform NA.pdf> viewed 24 August 2017

Appendix A

Senate Inquiry into the role of TAFE Terms of Reference

a) the following matter be referred to the Education and Employment References Committee for inquiry and report by 10 August 2015:

The operation, regulation and funding of private vocational education and training (VET) providers in Australia, including:

i. the access private VET providers have to Commonwealth and state public funding,

ii. the cost of education at private VET providers,

iii. the regulatory regime private VET providers operate within,

iv. the operation of VET-FEE-HELP,

v. the quality of education provided by private VET providers, volume of learning requirements and graduate outcomes,

vi. marketing and promotional techniques employed by private VET providers and education brokers both domestic and international,

vii. any incidents or allegations of non-compliance with regulation and funding arrangements at private VET providers,

viii. political donations made by private VET providers,

ix. international comparisons to the Australian funding and regulatory regime,

x. the operation, regulation and funding of private VET providers specifically offering courses in aged care and early childhood education and their labour market outcomes, and

xi. any related matters; and

b) the Committee will table interim reports to the Senate on 2 March 2015 and 15 June 2015.

Australian Government response to the Senate Committee on Education and Employment report

Inquiry into the role of the Technical and Further Education system and its operation February 2018

Introduction

On 11 December 2013, the Senate Standing Committee on Education and Employment References Committee (the Committee) was asked by the Senate to undertake an inquiry into Technical and Further Education in Australia. The terms of reference are at Appendix A.

The Australian Government welcomes the report by the Committee. The Committee released its report Technical and Further Education in Australia on 14 May 2014. The report made 10 recommendations. Coalition Senators made a dissenting report with amendments to two recommendations (Recommendations 1 and 6) in the majority report. The Coalition Senators did not support Recommendation 10 in its entirety and proposed an additional recommendation. Australian Greens Senators provided additional comments and made six additional recommendations.

The Australian Government has considered the Committee's report and provides a response to each of the 10 recommendations individually, or against a group of recommendations where appropriate. The Australian Government also responds to the amended recommendations and alternative recommendation from the Coalition Senators, and the additional recommendations from the Australian Greens Senators.

The Australian Government recognises and supports the important role played by public providers (referred to as TAFE institutes) in the broader vocational education and training (VET) sector. In 2016, approximately 52 per cent (660, 400) of all Government subsidised VET students were enrolled at a TAFE or other government provider.' TAFE plays an important role in providing training to students from disadvantaged backgrounds, and in rural and regional areas. The Australian Government notes that the Committee's report highlights some of these important roles and the significance of TAFE in the provision of high quality training that delivers workers with the skills needed by industry.

Since the tabling of this report, the Australian Government now has the benefit of Total VET Activity (TVA) data from 2014, 2015 and 2016 including information about unsubsidised training at private providers. The 2016 TVA data shows students choose a variety of training providers: around 2.5 million (58.7 per cent) were attending private training providers; around 740, 000 (17.6 per cent) were attending TAFE institutions and the remainder undertook VET with community education providers and with schools, enterprise providers and universities.2

Many of the recommendations of the report are outside the scope of the Australian Government as states and territories manage the delivery of VET within their jurisdictions.

States and territories ensure the effective operation of the subsidised training market in their jurisdiction. As part of this, each jurisdiction decides how much funding to provide to their training system and how it should be spent, including the proportion of funds provided to public providers (TAFE institutes), the role of public providers in their state system and the degree to which training subsidies are contestable between public and private RTOs. Fees for students are set by state governments or registered training organisations (RTOs), depending on the jurisdiction.

States and territories have historically provided approximately two thirds of government funding for subsidised training. However, the Mitchell Institute paper Expenditure on education and training in Australia3 showed that Commonwealth expenditure on VET grew at a faster rate than expenditure by all states and territories except Victoria, Tasmania and Western Australia between 2003-04 and 2012-13.

The Government will spend approximately $3.1 billion on VET in 2017-18. This includes $1.85 billion in payments to states and territories for the operation of their training systems and $1.2 billion for the Government's own programs.

From 2017-18 to 2020-21, the Commonwealth will commit an estimated $1.5 billion to the new and ongoing Skilling Australians Fund (the Fund). The Fund is for payments to the states and territories through a new partnership agreement. With matched funding from the states and territories, the Fund will support up to 300,000 more apprentices, trainees, pre- and higher-level apprentices over the next four years. Spending from the Fund will be prioritised towards projects brought forward from states and territory governments which support apprenticeships and traineeships in: occupations in demand, industries and sectors of future growth, trade apprenticeships, rural and regional Australia, and industries facing structural adjustment.

Australian Government financial support to TAFE institutes includes income contingent loans to TAFE students, both full fee-paying and state subsidised students, studying at or above Diploma level. On 1 January 2017, VET Student Loans commenced, replacing VET FEE-HELP. TAFEs that were provisionally approved as VET student loans approved course providers were able to commence operating under VET Student Loans from 1 January 2017 and were granted an approval period of seven years. Additionally, the Government

considered individual applications from not-for-profit and listed providers (including TAFEs) to have additional courses added to their scope where they could demonstrate strong employment outcomes. The full list of courses is outlined in the Courses and Loan Caps Determination.

In April 2012, the Council of Australian Governments (COAG) agreed to a revised National Agreement for Skills and Workforce Development (NASWD). Associated with the NASWD is $1.5 billion that the Commonwealth provides to states and territories each year through the National Skills and Workforce Development Specific Purpose Payment.

In the context of the NASWD, COAG identified a number of policy reform directions for the national training system. In particular, all governments committed to:

encourage responsiveness in training arrangements by facilitating the operation of a more open and competitive training market;

In April 2012, COAG also agreed the National Partnership Agreement on Skills Reform (Skills Reform NP). The Commonwealth committed $1.75 billion over five years from 2012 for the Skills Reform NP to improve the accessibility, transparency, quality and efficiency of the national VET system.

Key reforms included a national entitlement to a government subsidised training place to a minimum of the first Certificate III qualification, which:

a) is accessible through any registered training organisation (RTO), public or private, which meets state-based criteria for access to the national training entitlement; 5

In addition states and territories have also committed to develop and implement:

... strategies which enable public providers to operate effectively in an environment of greater competition, recognising their important function in servicing the training needs of industry, regions and local communities, and their role that spans high level training and workforce development for industries and improved skill and job outcomes for disadvantaged learners and communities. 6

These commitments to greater contestability in training subsidies between public and private providers continue earlier market-like approaches to the national training market. For example, 'user choice' funding for apprenticeships was introduced in 1998 to enable employers to send their apprentices and trainees to the public or private training provider of their choice.

Recommendation

The committee recommends that the Commonwealth work with its COAG partners on the National Partnership Agreement on Skills Reform to ensure that all States and Territories provide clear statements of policy direction on the role of TAFE in consultation with vulnerable industries.

The Australian Government notes this recommendation.

The Skilling Australians Fund will provide a new agreement with states and territories, superseding the funding and framework of the previous National Partnership Agreement on Skills Reform. The new partnership focuses on strong accountability, transparency and clear outcomes for skills training and the broader economy. With matched funding from the states and territories, the Fund will support up to 300,000 more apprentices, trainees, pre- and higher-level apprentices over the next four years.

The Fund will be prioritised towards projects brought forward from states and territory governments which support apprenticeships and traineeships in the following key areas: occupations in demand, industries and sectors of future growth, trade apprenticeships, rural and regional areas and industries experiencing structural adjustment. The projects may also focus on a range of priority industries, including: tourism, hospitality, health and aged care, engineering, building and construction, agriculture, manufacturing and digital technologies.

All project proposals will need to demonstrate engagement with, and support from, employers and industry. Payments to states will require the signing of the new agreement, agreeing to projects with clear milestones and the states demonstrating achievement of those milestones.

The Australian Government believes the commitment made as part of the National Agreement for Skills and Workforce Development (NASWD) in 2012 provides a clear statement of policy direction on the role of TAFE. As part of the NASWD, COAG identified a number of policy reform directions for the national training system. In particular, all governments committed to:

encourage responsiveness in training arrangements by facilitating the operation of a more open and competitive training market;

In addition, the Australian Government considers that, as TAFE institutes are owned by state governments, it is state governments that are responsible for setting the vision and direction for TAFE institutes within their jurisdictions.

The Australian Government also acknowledges the part quality private registered training organisations play in the Australian VET system and the role they can play supporting industry and other consumers in a competitive training environment.

The Australian Government is committed to lifting the quality of Australia's VET system to ensure training delivers to students the skills they need for real jobs in the modern economy. This commitment includes a focus on placing employers at the centre of the training system to enable it to be more responsive to the needs of industry.

The Australian Government recognises that it is industry and employers who should be driving the nation's training system, as their knowledge and input is crucial to ensuring that skills standards and competencies align with modern work-practices. Developing a more dynamic approach to industry engagement will facilitate a more flexible training system capable of meeting the current and emerging skill needs of employers, of all sizes and across all industry sectors.

Recommendation 2

The committee recommends the Commonwealth government work with its COAG partners to develop a partnership agreement establishing a minimum and adequate level of support for people with disabilities.

The Australian Government notes this recommendation .

The Australian Government and states and territories have agreements through the National Agreement for Skills and Workforce Development (NASWD) and National Partnership Agreement on Skills Reform (Skills Reform NP) that recognise the role of public providers in supporting a diverse range of students and other users. The Australian Government budgeted $1.5 billion in 2016-17 under the NASWD and $527 million under the Skills Reform NP. From 2017-18 the Skills Reform NP will be superseded by the Skilling Australians Fund which will provide an estimated $1.5 billion in funding, matched from the states, to support up to 300,000 more apprentices, trainees, pre- and higher-level apprentices over the next four years. Spending from the Fund will be prioritised towards projects brought forward from states and territory governments which support apprenticeships and traineeships in: occupations in demand, industries and sectors of future growth, trade apprenticeships, rural and regional Australia, people from targeted cohorts and industries facing structural adjustment.

In the context of the NASWD, COAG identified a number of policy reform directions for the national training system. In particular, all governments committed to:

encourage responsiveness in training arrangements by facilitating the operation of a more open and competitive training market;

Under the Skills Reform NP, five jurisdictions (Victoria, Queensland, Western Australia, South Australia and the Australian Capital Territory) chose to nominate targets for students with a disability. The Australian Government provided $86 million to the states in June 2017 for meeting these targets in 2016.

The Standards for Registered Training Organisations (RTOs) 2015 (the Standards for RTOs 2015), which came into effect from 1 January 2015, have strengthened requirements for the provision of information to learners by RTOs. An RTO is required to provide or make readily

available information to the learner that outlines the services (including educational and support services) the RTO will provide as well as the rights and obligations of the learner.

Under the Standards for RTOs 2015, RTOs are required to provide reasonable adjustments where appropriate to take into account the individual learner's needs.

The Australian Government also has broader commitments to supporting people with disabilities. The National Disability Strategy 2010-2020 (NDS) provides a ten-year national policy framework for improving lives of Australians with disability, their families and carers. It represents a commitment by all levels of government, industry and the community to a unified, national approach to policy and program development. One of the central outcomes of the strategy is to ensure that people with disability achieve their full potential through their participation in an inclusive high quality education system that is responsive to their needs, and that people with disability have opportunities to continue learning throughout their lives.

The National Disability Insurance Scheme (NDIS) is a key government deliverable under the NDS. The NDIS provides funding for long-term, individualised care and support that is reasonable and necessary to meet the needs of people with permanent disability, where a person's disability significantly affects their communication, mobility, self-care or self-management. The scheme takes a lifelong approach to providing care and support. In 2019-20, the scheme will assist around 460,000 Australians, costing governments approximately $21 billion.

According to the 30 June 2017 quarterly report to COAG on the NDIS9, the number of participants in the Scheme continues to grow with 90,638 participants with an approved plan at 30 June 2017. The National Disability Insurance Agency is working with local communities to improve inclusion of people with disability and build awareness of

disability. The Agency is also aiming to foster innovation, research and best practice to better support people with disability.

Effective interaction between the NDIS and other service systems, including schools and other education systems, is critical to ensure smooth transitions for participants, to avoid cost-shifting, duplication and service gaps. Mainstream interactions are guided by the legislative framework for the scheme, which includes the National Disability Insurance Scheme Act 2013 and associated Rules; and a set of Applied Principles and Tables of Supports that were agreed by the COAG in April 2013 and updated in November 2015. Applied principles for school education, higher education and vocational educational and training detail the roles and responsibilities for the NDIS and those service systems. More information about the applied principles can be found on the COAG website: https://www.coag.gov.auimeetingoutcomes/coag-meeting-communiqu%C3%A9-11-december-2015.

Recommendation 3

The committee recommends that resources and funding for the Australian Skills Quality Authority be proportionally increased relative to the number of private providers entering the training market.

The Australian Government notes this recommendation.

In 2014, the Australian Government committed an additional $68 million over four years to the Australian Skills Quality Authority to implement VET regulatory reform initiatives. While the funding was not increased in a proportioned basis, it allows better targeting of those providers which may be bringing the training sector into disrepute.

Recommendation 4

The Committee recommends the development of improved government standards for registration of training organisations, as the current regulatory environment provides no guarantee of quality for students.

The Australian Government notes this recommendation

Aspects of the VET Quality Framework were reviewed under the auspices of the COAG Industry and Skills Council in 2014. This included review of the national standards for RTOs and VET regulators.

The Standards for Registered Training Organisations 2015 (Standards for RTOs 2015), form part of the VET Quality Framework. As defined in section 3 of the National Vocational Education and Training Regulator Act 2011 (the NVETR Act), the VET Quality Framework is comprised of the Standards for RTOs 2015, the Quality Standards, the Australian Qualifications Framework, the Fit and Proper Person Requirements, the Financial Viability Risk Assessment Requirements and the Data Provision Requirements.

The Standards for RTOs 2015 are supported by amendments to the NVETR Act, passed by the Australian Parliament on 16 March 2015, to better facilitate the efficient and effective operation of the national VET regulator, the Australian Skills Quality Authority.

The new standards will continue to improve the quality of VET delivery by:

The new Standards for RTOs 2015 came into effect from 1 January 2015, applying to new RTOs immediately and to existing RTOs from 1 April 2015.

Specifically, the new Standards for RTOs 2015 and the legislative amendments:

In addition, the new Standards for VET Regulators 2015 ensure:

The Australian Government notes this recommendation.

The Australian Government supports contestability in training markets as it promotes student choice and encourages efficiency, responsiveness, and innovation among registered training organisations (RTOs). The Australian Government has agreed with the states and territories on a number of policy reform directions for the national training system through the National Agreement for Skills and Workforce Development (NASWD) and the National Partnership Agreement on Skills Reform (Skills Reform NP). From 1 July 2017 the Skills Reform NP was superseded by the Skilling Australians Fund. Spending from the Fund will be prioritised towards projects brought forward from state and territory governments which support apprenticeships and traineeships in: occupations in demand, industries and sectors of future growth, trade apprenticeships, rural and regional Australia, and industries facing structural adjustment.

In the NASWD, all governments committed to:

encourage responsiveness in training arrangements by facilitating the operation of a more open and competitive training market;

The Australian Government considers that state governments are responsible for the operation of their training markets within their jurisdictions and ensuring TAFEs are able to operate effectively in a competitive environment.

The Australian Government supports increased transparency around funding provided to TAFEs; including funding for community service obligations and other non-contestable amounts to ensure the efficient operation of training markets. While the Australian Government acknowledges the states and territories are responsible for designing their training markets, it supports access to a broad range of quality training providers as the best way to meet the needs of industry and other consumers.

Recommendation 6

The Committee recommends that COAG work collaboratively to develop a national workforce strategy for TAFE that addresses the level and quality of teaching qualifications in the sector, the unacceptably high rates of casual employment, and the allocation of adequate resources to enable TAFE teachers and institutions to develop and maintain close liaison with industry and local communities to assist them to meet their vocational and technical education needs .

The Australian Government notes this recommendation.

TAFE institutes, their governance, workplace relations and staffing are a matter for the states and territories.

The Australian Government does, however, recognise the importance of high-quality delivery of training and assessment being closely linked to industry to ensure training delivered to students is industry relevant, vocationally-targeted and improves a student's chances of securing employment in their field of study. To support trainer quality, the new Standards for Registered Training Organisations (RTOs) 2015 (the Standards for RTOs) strengthen requirements relating to the experience and qualifications that VET practitioners must hold.

Under previous standards, in lieu of holding the prescribed trainer and assessor qualification, trainers and assessors were allowed to have competencies 'equivalent' to the Certificate IV in Training and Assessment, with 'equivalence' determined by the RTO. Concerns regarding the robustness of some RTO determinations of equivalence led to the removal of this allowance.

Under the new Standards for RTOs 2015, all trainers and assessors must now possess the prescribed qualification. From 1 January 2016, trainers and assessors are required to have the Certificate IV in Training and Assessment, with some transition arrangements applying to these changes. In addition, from 1 January 2017, those delivering the Certificate IV in Training and Assessment are required to hold a relevant Diploma.

Further, in November 2015, the COAG Industry and Skills Council agreed the

Australian Government Skills Minister would consult with VET stakeholders and all jurisdictions on reform options to improve assessment in VET, and that the Council will give further consideration to actions to improve the quality of assessment outcomes. Priority areas for investigation included approaches to strengthening the skills of VET trainers and assessors.

The consultation process was supported by the Training and Assessment Working Group, comprised of industry and training leaders, regulators, peak bodies, and employer and worker organisations. In May 2016, the Working Group finalised its report on improving the quality of assessment in VET. The COAG Industry and Skills agreed to undertake further work on the Working Group's recommendations to improve the quality of the assessment in VET.

In April 2016, the COAG Industry and Skills Council agreed to the Australian Industry and Skills Committee's decision to update the Training and Education Training Package. The changes strengthen the Certificate IV in Training and Assessment through the inclusion of additional units in addressing adult language, literacy and numeracy skills and designing and development of assessment tools. In July 2017, the COAG Industry and Skills Council agreed to apply these changes to the existing VET workforce. The Standards for RTOs 2015 have been amended. Current trainers and assessors will be required to undertake gap training by 1 April 2019.

Recommendation 7

In light of the substantial increases in fees across the board, the committee recommends that COAG investigate these fee increases.

Recommendation 8

Further the committee recommends that criteria for access to assistance programs for fees be examined to ensure that access to VET training is not inhibited by upfront cost considerations.

The Australian Government notes these recommendations.

State and territory governments have responsibility for their own training systems. State governments decide the fee arrangements that apply to government subsidised students in their jurisdiction, and determine whether fees are capped at a particular level or uncapped and set by the training provider.

Since the November 2015 COAG Industry and Skills Council meeting, the Australian Government in conjunction with state and territory governments have been focused on improving access to information, which will assist consumers of VET to choose between course and provider offerings and provide a more accurate picture of student progression through the VET system and employment outcomes. In November 2015, skills ministers agreed to national actions including developing new indicators and measures, revising survey instruments and increasing consumer access to information, including on the My Skills website. Work in this area is designed to minimise additional impact on training providers.

Loan caps apply to all eligible courses under VET Student Loans. There are three bands of loan caps of $5000, $10,000 and $15,000, which apply irrespective of whether the course is being delivered face-to-face, online, or via mixed delivery modes. A separate loan cap of $75,000 for the aviation training package applies. The application of loan caps on all eligible courses is designed to protect students from rapidly rising course costs, and put downward pressure on fees.

The intent of loan caps is to protect students from rapidly rising course costs while still giving students the ability to choose a course based on a number of factors such as quality of delivery, course content, location and facilities. Therefore, loan caps on courses does not prevent approved VET Student Loan providers from setting tuition fees above the cap, rather it sets a ceiling on the maximum loan amount the government is willing to provide a student for a specific course.

Recommendation 9

The committee recommends that the VET FEE-HELP Loan Fee of 20 per cent be reduced significantly in line with comparable financial industry products.

The Australian Government notes this recommendation.

Ensuring cohesion between the shared elements of HELP is critical as students move between higher education and VET throughout their education experience. Therefore, the current HELP lifetime loan limit, repayment threshold and rates and the loan fee will apply to the VET Student Loans scheme.

The current loan fee arrangements (20 per cent for VET FEE-HELP/ VET Student Loans; and 25 per cent for FEE-HELP; and no loan fee for HECS-HELP) reflect the relative risks associated with the different HELP schemes. Further, even after the current loan fee is taken into account, given their income contingent nature and concessional interest rates, the VET Student loans provided to eligible VET students remain far more concessional than any commercial debt arrangements available to students. For example, a VET student loan with a 20 per cent loan fee and indexed at the consumer price index being repaid over a ten year repayment period would involve the same amount of debt being repaid as a commercial debt with an annual interest rate of around four per cent per annum.

Recommendation 10

The Committee recommends full and immediate reinstatement of TAFE funding cuts by State Governments.

The Australian Government notes this recommendation.

State and territory governments have responsibility for running their own training systems. The VET sector is populated by a variety of training providers, TAFE institutes, schools, not for profit and privately owned RTOs and some universities. Each plays an important role in providing quality training outcomes.

In recent years, the states have, to varying degrees, introduced more demand driven approaches to the public funding of training delivery. These changes have occurred for a range of reasons. In some cases, this has resulted in reductions in the level of funding some TAFE institutes receive from states and territories.

As part of NASWD, states and territories are committed to considering strategies for supporting TAFE to operate as part of a contestable funding market.

Ultimately, the focus should always be on ensuring students and users of the VET system have a choice of quality training offerings, regardless of the training provider. Training should improve an individual's chances of getting a job and progressing their career.

GOVERNMENT RESPONSE TO RECOMMENDATIONS IN COALITION SENATORS' DISSENTING REPORT

Additional Recommendation 1

The Coalition Senators recommend that states and territories take steps to ensure each TAFE is given capacity to negotiate industrial agreements to ensure TAFEs operate on an equal footing as other vocational education providers.

The Australian Government supports this recommendation.

The Australian Government notes that this recommendation is consistent with NASWD `Reform Directions' which commit all Parties to pursuing reform directions including:

Amendments to majority report Recommendations:

Amend Recommendation 1 from the majority report to read:

The committee recommends that the Commonwealth work through its COAG partners on the National Partnership Agreement on Skills Reform to ensure that all States and Territories provide clear statements of policy direction on the role of TAFE in consultation with affected industries to ensure a quality education for students.

The Australian Government notes this recommendation.

The Australian Government refers to its response to Recommendation 1 of the Majority Report.

Amend Recommendation 6 from the majority report to read:

The Committee recommends that COAG work collaboratively to develop a national workforce strategy for TAFE that addresses the level and quality of teaching qualifications in the sector.

The Australian Government notes this recommendation.

The Australian Government refers to its response to Recommendation 6 of the Majority Report.

GOVERNMENT RESPONSE TO ADDITIONAL RECOMMENDATIONS BY AUSTRALIAN GREENS SENATORS

Additional Recommendation 1

An end to the current model of competitive tendering of government vocational education and training and a comprehensive public examination and review of the consequences of full competition on TAFE, including the impact on the quality of vocational education, levels of student support and teaching infrastructure, and a reassessment of the case and justification for a competitive training market.

The Australian Government does not support this recommendation.

The Australian Government considers that a more open training market will produce better outcomes for students and industry and drive competition, efficiency and innovation. It offers students and employers greater choice in selecting the training course and provider which best meets their needs and circumstances.

As noted above, when COAG agreed the National Agreement for Skills and Workforce Development (NASWD) in 2012, all jurisdictions committed to a number of policy reform directions for the national training system, including to:

encourage responsiveness in training arrangements by facilitating the operation of a more open and competitive training market;

Additional Recommendation 2

A complete and rigorous examination of the real costs of the provision of high quality vocational an d further education, including:

(a) technical skills for work,

(b) adult literacy and numeracy,

(c) crucial supporting knowledge and theory,

(d) student support and counselling services,

(e) support for the development of relationships with industry and employers,

0 support for the development of relationships and partnerships with universities and schools,

(g) support for research and innovation,

(h) support for initial qualifications and ongoing professional development for teachers and staff.

The Australian Government notes the recommendation.

The costs of provision and delivery of training vary according to a range of factors, which may include course characteristics, geographic location, whether delivered in the workplace, classroom or online, the characteristics of the student and broader population, and factors specific to the nature and operations of the registered training organisations.

The focus should always be on ensuring students and users of the VET system have a choice of quality training offerings, regardless of the training provider. Training should improve an individual's chances of getting a job and progressing their career.

Additional Recommendation 3

Guaranteed funding for the public TAFE system based on the actual costs of providing education, and on a funding model that supports a strong and increased base for capital works, maintenance, infrastructure, and equipment, and which properly recognises the important role of TAFE in providing vocational and technical education in areas of high and low demand, in rural and remote areas and improved access and participation for disadvantaged learners.

The Australian Government does not support this recommendation.

The Australian Government considers that a more open training market will produce better outcomes for students and industry and drive competition and efficiency. It offers students and employers greater choice in selecting the training course and provider which best meets their needs and circumstances.

State and territory governments have responsibility for running their own training systems. As part of this, state and territory governments decide how much funding to provide to training and how it should be spent. This includes arrangements for training subsidies, TAFE institutes and capital expenditure in their jurisdiction.

The Australian Government supports giving students and employers the choice of any high quality training provider, whether public or private. High quality training and courses boost job opportunities for students and enable businesses to employ people with the right skills for work. Therefore, training must be responsive to industry and support students and employers to choose the training and training provider that best meets their needs.

Additional Recommendation 4

The national entitlement to a guaranteed training place should only be offered at TAFE, it should not be restricted to selected qualifications or industry areas, and it should be available as many times as a student requires.

The Australian Government does not support this recommendation.

The essential minimum criteria for the training entitlement, as set out in Schedule 3 to the National Partnership Agreement on Skills Reform, include:

The national training entitlement will be an entitlement to access a government subsidised training place to a minimum of the first Certificate III qualification, which:

a) is accessible through any registered training organisation (RTO), public or private, which meets state-based criteria for access to the national training entitlement; and

b) is available as a minimum to all working age Australians (from post-school to age pension age) without a Certificate ill or higher qualification, subject to meeting minimum entry requirements and state based criteria; and

c) includes foundation skills or lower qualifications contained within the Certificate 111 qualification."

Schedule 3 further notes that "Jurisdictions are encouraged to go beyond the minimum required, where affordable, and may vary other criteria...". These criteria relate to eligibility, field of qualification and location.

From 1 July 2017, the National Partnership Agreement on Skills Reform was superseded by the Skilling Australians Fund. The Fund is for payments to the states and territories through a new partnership agreement. With matched funding from the states and territories, the Fund will support up to 300,000 more apprentices, trainees, pre- and higher-level apprentices over the next four years. The focus on apprenticeships and traineeships, the flagships of the Australian VET sector, reflects their crucial role in fulfilling the needs of industries which rely on a skilled workforce to drive innovation and growth.

By focusing on apprenticeships and traineeships, the Fund will boost the number of people who choose and succeed in this pathway, supporting more Australians to get the skills they need for jobs in demand.

Additional Recommendation 5

The development of improved standards for registration of training organisations, and the provision of vocational education. The now defunct National Skills Standards Council made a start on the development of improved standards, but this work was set in the context of a rapid opening up of the market under the National Agreement . for Skills and Workforce Development. This work now needs to be revisited and the standards strengthened and improved The current regulatory environment provides no guarantee of quality for students, nor any mechanism for them to get their money back, or their once only entitlement back if the provider they attended provided no training, or was of poor quality. Every provider seeking registration to deliver vocational education in Australia should have the provision of vocational education as its primary purpose.

The Australian Government notes this recommendation.

In 2014, aspects of the VET Quality Framework were reviewed under the auspices of the COAG Industry and Skills Council. This included review of the national standards for registered training organisations (RTOs) and for VET regulators.

The Standards for Registered Training Organisations 2015 (Standards for RTOs 2015) form part of the VET Quality Framework. As defined in section 3 of the National Vocational Education and Training Regulator Act 2011 (the NVETR Act), the VET Quality Framework is comprised of the Standards for RTOs 2015, the Quality Standards, the Australian Qualifications Framework, the Fit and Proper Person Requirements, the Financial Viability Risk Assessment Requirements and the Data Provision Requirements.

The new Standards for RTOs 2015 will improve the quality of VET delivery by:

The new Standards for RTOs 2015 came into effect from 1 January 2015, applying to new RTOs immediately and to existing RTOs from 1 April 2015.

Specifically, the new Standards for RTOs 2015 and the legislative amendments:

Further amendments to the NVETR Act require persons marketing VET courses to clearly identify the RTO responsible for issuing the qualification. This will allow the ASQA to take action against a RTO whose agent fails to provide clear information to a prospective student about the qualification they are signing up for, available support services, and the costs associated with the qualification, including any debt which may be incurred.

In addition, the new Standards for VET Regulators 2015 ensure:

There are more stringent requirements placed on providers seeking to offer eligible courses through VET Student Loans and only high quality, trusted providers will be approved.

In recognition that TAFEs and public providers are low risk, under VET Student Loans, TAFEs, publicly owned RTOs and Australian universities (accredited as RTOs) that are provisionally approved as VET student loans approved course providers will not be required to apply for full approval under the new program and can commence operating under VET Student Loans from 1 January 2017.

Additional Recommendation 6

As part of the development of improved standards, there must be a mandated minimum funded duration of learning in all vocational education qualifications. It is the lack of a mandated minimum which, for example, allows providers to deliver qualifications over weekends, and then be paid as if they had delivered the full qualification.

The Australian Government does not support this recommendation at this stage.

The Australian Government considers the quality of VET graduates to be a significant issue and is seeking to ensure all national training provides the learner with the competencies required to participate in the workforce.

However, there is a tension between mandated minimums for course duration and the model of competency based training on which the national VET system rests. In a competency based environment, learners are not required to study for a set number of weeks or months. This acknowledges that learners are at different stages in the development of their competencies and also allows for recognition of prior learning as an appropriate and

important part of the VET system.

The Australian Government is considering the regulatory architecture in relation to duration of learning in a competency based system to ensure that regulatory oversight is adequate. In particular, it is committed to ensuring effective regulatory oversight of registered training organisations (RTO) compliance with the Standards for RTOs. Specifically, Standard 1.1 requires RTO training and assessment strategies and practices to have regard to the amount of training required for the learner to gain the competencies as specified in the relevant training package or VET accredited course.

The Australian Skills Quality Authority (ASQA) released a Strategic Review of issues relating to unduly short training on 30 June 2017. Senior officials have also agreed to consider a pilot that investigates the impact of course duration on the quality of training outcomes. The recommendations from ASQA's Strategic Review will be incorporated into the Australian Government's consideration of the methodology and implications of such a pilot.

1 NCVER 2017, Australian vocational education and training statistics: government-funded students and courses 2016, NCVER, Adelaide ( Table 2).

2 NCVER 2017, Australian vocational education and training statistics: total VET students and courses 2016, NCVER, Adelaide (Table 3 proportion calculated),

3 P Noonan, G Burke, A Wade and S Pilcher, Expenditure on education and training in Australia. Analysis and background paper No 01/2014, Mitchell Institute, 2014 using ABS Government Finance Statistics, Education 2012-13 and a custom data request.

4 COAG, National Agreement for Skills and Workforce Development, Clause 25c and d,

<http://wwwiederal financialrelations.gov.au/content/npaiskillsinational -partnership/skills-reform NA. pdf> viewed 24 August 2017

5 COAG, Natrona! Partnership Agreement on Skills Reform, Clause 28a, <http://federalfinancialtelations.gov.au/content/npaiskills/nationalpartnership/past/skills-reform NP.Ddf> viewed 24 August 2017

6COAG, National Partnership Agreement on Skills Reform, Clause 29b <httn://federalfinancialrelations.gov.au/contentinpaiskills/nationalpartnershiutpast/skills-reform NP.pdf> viewed 24 August 2017

7 COAG, National Agreement for Skills and Workforce Development, Clause 25c and d,

<http://www.federalfinancialrelations.gov.auteontent/npaiskills/national-vannership/skills-reform NA.pdf> viewed 24 August 2017

8 COAG, National Agreement for Skills and Workforce Development, Clause 25c and d,

<http://www.federaltinancialivlations.gov.au/contentinnaiskills/national-partnership/skills-reform NA.pdf> viewed 24 August 2017

9 National Disability Insurance Agency, Quarterly Report to COAG Disability Reform Council, 30 June 2017, p.2.

10 COAG, National Agreement for Skills and Workforce Development, Clause 25c and d,

<http://wwwlederalfinancialrelations.gov.au/content/npaiskills/national-partnership/skills-reform NA.pdf> viewed 24 August 2017

11 COAG, National Agreement for Skills and Workforce Development, Clause 25d,

<http ://www. federalfinancialrelations. goy. au/content/npa/ski I Is/national -partnership/skills-reform NA. pdf> viewed 24 August 2017

12 COAG, National Agreement for Skills and Workforce Development. Clause 25c and d,

<http://www.federalfinancialrelations.gov.au/content/npaiskills/national-partnership/skills-reform NA.pdf> viewed 24 August 2017

13COAG, National Partnership Agreement on Skills Reform, Schedule 3,

<httul/www.federalfinancialrelations.gov.au/content/npaiskills/national-partnership/skills-reform NA.pdf> viewed 24 August 2017

Appendix A

Senate Inquiry into the role of TAFE Terms of Reference

1. Technical and further education (TAFE) in Australia, including:

a. the role played by TAFEs in:

i. educational linkages with secondary and higher education,

ii. the development of skills in the Australian economy,

iii. the development of opportunities for Australians to improve themselves and increase their life, education and employment prospects, and

iv. the delivery of services and programs to support regions, communities and disadvantaged individuals to access education, training and skills and, through them, a pathway to further education and employment;

b. the effects of a competitive training market on TAFE;

c. what public funding is adequate to ensure TAFEs remain in a strong and sustainable position to carry out their aims;

d. what factors affect the affordability and accessibility of TAFE to students and business;

e. different mechanisms used by state governments to allocate funding; and

f. the application and effect of additional charges to TAFE students.

2. That, in conducting its inquiry, the committee must:

a. consider any public information provided to the 2013 House of Representatives inquiry by the Standing Committee on Education and Employment on the role of the technical and further education system and its operation; and

b. hold public hearings in all capital cities, with a minimum of Melbourne, Sydney, Perth and Brisbane, as well as a major regional centre in either New South Wales or Victoria.

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Senate debates

Wednesday, 7 February 2018

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Committees

Education and Employment References Committee; Government Response to Report

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