Kim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | Link to this | Hansard source

On behalf of Senator Lines, I present the report of the Education and Employment References Committee on private vocational education and training providers, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

I move—

That the Senate take note of the report.

This is a very timely and very important report. This is the second report that the committee has delivered on the issue of private vocational education providers. This is an area of the education and training system that has been subject to considerable media scrutiny of late, so not just in terms of the work of this chamber but also the general public would be aware of the evidence, which was deeply, deeply alarming.

If we just look this week, one of the largest providers in the vocational education system, Australian Careers Network, announced a suspension of trading. This is a college that has grown by 415 per cent in one year, has over 25,000 students and has secured very substantial levels of government support. ACN previously seemed likely to survive the upheavals that had affected other prominent private providers such as Vocation and Ashley Services. But what we do now know is that there is a pattern of behaviour. ACN said it would cease trading to respond to correspondence from the education department and others. In fact, the sector's regulator, ASQA, the Australian Skills Quality Authority, had given ACN subsidiary Phoenix Institute of Australia a 'notice of intention to cancel its registration as a provider of vocational education and training and education services including to overseas students.' So it is not just a question of domestic students; it is also a question of our international reputation that is at stake here.

An ASQA spokesman was quoted in The Australian newspaper as saying that the agency inquiries had 'uncovered significant non-compliance with the vocational education quality framework that all registered training providers are required to satisfy to maintain registration as a training organisation.' ACN, Vocation and Ashley Services are three major companies that have been recently faced with considerable scandal, and they have a pattern of behaviour which goes to the gross abuse of public subsidies, the gross abuse of students and, in my judgement, a gross abuse of public trust which goes to the very heart of undermining the integrity of the vocational education system in this country.

But they have another pattern: that is, these companies, before listing or shortly after listing on the stock exchange, seek to attract board members of prominent personality: so, in the case of vocation, former federal education minister John Dawkins; Ashley Services, former education minister Simon Crean; and, for ACN, the former Victorian Minister for Higher Education and Skills, Peter Hall. And we have seen others—sporting identities and the like—filling a similar pattern with other companies.

I do not want to say or suggest for one moment that these men have not discharged their duties without the fullest and conscientious sense of propriety, but what I can see here is that each of those persons has been taking up the board positions on the basis that they thought they could actually contribute to the development of the education system in this country only to find that the companies were behaving in a totally improper manner. Now, what we have got is that the status of these individuals was designed, in my judgement of the evidence presented to the Senate committee, to actually enhance the operations of the company and lift the share price. What we do know, though, is that the business model of the company undermined not just the reputation of the company and not just the reputation of the individuals but the vocational education system itself through the exploitation of public funds in order to build up market capitalisation. We have seen an extraordinary transfer of wealth from the public purse to individuals. VET providers have thoroughly undermined the integrity of the education system itself. We see a similar pattern in the United States. I could not get stronger words than those from TheNew York Times recently, which identified a similar problem. TheNew York Times states:

The career training and for-profit college industry has been accused in recent years of preying on the poor, veterans and minorities by charging exorbitant fees for degrees that mostly fail to deliver promised skills and jobs …Without government funds, which account for the overwhelming bulk of revenue, few of these institutions could attract students or stay in business.

That is exactly the pattern that has occurred here.

To add insult to injury, it has been said that, because this program was established under the Labor government, it is not a matter of responsibility for the present government to face. Nothing can be further from the truth, because this government has been in office for two years, and systemic failure and systemic corruption within the system is a matter of responsibility for the government of the day. Furthermore, this assessment is underpinned by the evidence presented to this committee of the fact that our regulators were nothing more than toothless paper tigers and that they have worked on the simple assumption that you worry about the problem after it emerges—often as a result of media attention. That proposition is reinforced by the government's own regulation impact statement, which has been tabled in the House of Representative today. Let me quote directly from it:

Current and historical compliance activity is reactive rather than proactive, and is weighted heavily to the lower level of the enforcement pyramid, focusing on encouragement in the hierarchy of responses (that is, guidance, education and training in the main), with non-compliance taken to be due to lack of knowledge or misunderstanding of the Act and guidelines on the part of the provider. It is now apparent that this is not necessarily the case.

This report finds systemic abuse of the vocational education system in this country, systemic abuse of the students of this country and systemic abuse of the loans system in this country to the point where, in one year, the loans system has blown out: VET FEE-HELP loans, 151 per cent; the number of students engaged, 103 per cent; and the number of places provided, 102 per cent. Yet, the number of providers has increased by only 44 per cent.

ASQA has thoroughly failed in its responsibilities. And you can see no sharper contrast than in the way this government has behaved compared with the way the Victorian Labor government has behaved while it has been in office. One government, in office for just a year, has taken stern action, with 8,000 certificates withdrawn, substantial numbers of training contracts removed and a number of bodgie operators closed down. What do we have from this government? We have a government that has a fetish for deregulation and for allowing these bodgie operators to get away with shocking, shocking abuses of the vocational education system. We have a government that has taken too long and produced too little, too late. The consequences have been a fundamental undermining of the confidence in the vocational education system, and the abuse of the weakest and most vulnerable people in this country to the point where substantial numbers of people have been signed up on massive debts with no chance of ever repaying. (Time expired)

Lee Rhiannon (NSW, Australian Greens) Share this | Link to this | Hansard source

The report on private vocational education and training providers is a very important report that is also very disturbing. It is disappointing that the recommendations do not go far enough. We are dealing here not just with the education of individuals; we are dealing with the very fabric of our society. If we do not get it right in regard to education—the standards and how it is delivered—then we really are in for big problems. We are seeing those problems play out in a very unfortunate and damaging way. We are seeing scandals in regard to education standards and abuse of public money. Students and their families are losing confidence in the public education system, the overall education system and the way it is delivered by this government. The damage to reputations is considerable across the board. This inquiry was timely, and I think it is excellent that the Senate agreed that it go ahead. It is the second inquiry into different aspects of our vocational education and training system

I put on record yet again that the Greens are deeply committed to a strong, well-funded public vocational education and training sector, and that needs to be a public TAFE system. We really need to turn around how the current system works. While Senator Carr is in the chamber, I would like to pick up on one of his comments, because he made the very important point that the government of the day needs to take responsibility. That is absolutely the case. But we also need to change some aspects of what Labor introduced when they were in government, because it is under this umbrella of contestability that so many of these problems arise.

Back in 2012 the then education minister, Julia Gillard, came forward with what is often known today as the contestability model. It was officially called the National Partnership Agreement on Skills Reform. We often hear Senator McKenzie interject on these issues and put the load back onto Labor. But who signed up to this agreement that came from the former education minister and subsequent Prime Minister, Julia Gillard, but the then Liberal-National opposition. That was a very, very damaging document; it remains damaging to this day and it must be reformed and changed. It created a set of training entitlements that students could cash in at TAFE or private providers and it resulted in low-cost, low-quality education. This is what the inquiry looked at, and it heard many disturbing examples.

I want to make some comment on the earlier inquiry, because in many ways you need to see these two inquiries together. The 2013-14 inquiry into technical and further education in Australia looked at the major and continuing cuts in government funding to the TAFE sector. We took some amazing evidence in this inquiry. I learned so much, and I believe my colleagues did too, about the difference that the public TAFE system makes to people's lives—the second chances. People who had fallen out of the education system had the opportunity to get back into education and to gain qualifications so that they could go on to other degrees through TAFE or university. We heard from people with disabilities, particularly from the deaf community, who gave outstanding evidence. They said that in the early stages some of their education may seem expensive, because they need a note taker and they need somebody to translate for them into Auslan. But they set out the difference that it made to their lives. It allowed them to get full training in a range of different levels of skills and then they could go on and get jobs in the workforce. We heard from people who were profoundly deaf. One young refugee came from Africa, heard about the courses, gained the training, was able to be taught Auslan and then became apprentice of the year and manager at a factory, and his wife was able to join him. There were wonderful stories. He explained, as did TAFE teachers from Wollongong, that if he had come to Australia a year later there would not have been the funding to allow him to get that training and to take full part in our society. This is what is being lost under this very damaging policy that absolutely needs to change. Labor needs to go on the record and say that that contestability model will no longer be allowed to continue when they form government.

The Greens have long suspected that the contestability model of funding for VET provision is the cause of so many of these problems. The evidence that has been presented certainly does demonstrate that. The committee's majority report does correctly note that the VET provision should be designed in the name of social justice, and we certainly agree with that. However, the committee's report also notes that the current VET FEE-HELP funding arrangements are probably not achieving the objectives of the VET sector. Again we agree with these assessments but we argue that the recommendations do not address the root causes of the problem. That is what I have just been running through and we need to come back to it time and time again.

There was some excellent evidence given to the inquiry, as I mentioned. The National Tertiary Education Union made reference to the Victorian experiment. Their submission stated:

While the deregulated system has led to very impressive growth in student enrolments, it also has had negative consequences, particularly in terms of meeting skills shortages and in workforce training and productivity.

There was an interesting submission from the University of Sydney Workplace Research Centre. They pointed to tensions between the incentives of the VET FEE-HELP scheme and sound educational choices. They said in their submission:

The profit maximisation principles of these providers (and the primacy of shareholder and owner interests) provide strong incentives to offer training which attracts the highest subsidy, at the lowest cost.

I draw attention to that because this was a theme that you started to pick up when you looked into how vocational education and training was playing out. The job of these private, for-profit providers is to make a profit. They cut corners, they look at how they can cut their margins and make a profit. That is their job. That job should not intersect with education. This is a great tragedy that this parliament needs to deal with for the very future of our country. There is a massive contradiction. It is an antagonistic contradiction and it cannot be resolved. There is no place for for-profit private providers in delivering education, and that is what the contestability model allows.

I certainly agree with the previous speaker, Senator Carr, that ASQA is just not doing its job. And it cannot do its job; there are so many RTOs out there. There are just not enough people or enough resources to do it, because there is such a flood of RTOs. We have heard from Senator Birmingham, who says that he has got tough on the sector, and free iPads can no longer be delivered, and they are not going to knock on the doors of people living in public housing and take advantage of people who may not be equipped to make decisions about whether they should sign on for these courses.

We now know that those RTOs do not take any notice of those standards. How can that be policed in areas where there is no ASQA looking over their shoulder? This is the reality of what is going on. The education standards in this country are being so deeply damaged. The contestability model must go. I strongly congratulate the TAFE sector of the Australian Education Union and the National Tertiary Education Union. The work that they are doing in terms of the submissions and evidence that they have provided and the organising that they are undertaking to throw this damaging model out is outstanding. I am sure it will be successful; we have just got to win sooner rather than later.

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

I rise today as Deputy Chair of the Education and Employment References Committee to speak on its report Getting our money's worth: the operation, regulation and funding of private vocational education and training (VET) providers in Australia. If only the students of Australia could get their money's worth. This report draws on work the committee has done previously in this area. I would like to underpin coalition senators' absolute support for a vocational education and training system that delivers for our industries, that delivers a workforce that is capable, primed and ready to do the work that needs to be done locally and that delivers for students so that those students who choose to seek a vocational pathway can be guaranteed a high-quality education that is available at a place that they need to go and that is affordable for them.

If we have a student focus when we are talking about vocational education and training, we can clearly see that there are a range of providers in this space. Obviously, the state-run TAFEs are some of those providers and, indeed, RTOs out in the community are also providers of high quality. We heard evidence about the many providers of high-quality vocational education and training who are private providers and who industry say give them the skills in the workforce and the people—predominantly young people—who are ready to work and ready to get ahead in the industries that we need going forward in the 21st century.

It is so important to get this right. As Senator Carr said, it is not only important for our domestic students; it is also important because the vocational education and training system is going to be one of our key export areas. Prime Minister Modi in India made it very clear he wants half a million Indians educated in vocational education in the next three or four years. We have a fantastic system and some wonderful providers who can take advantage of that opportunity and then reinvest in their businesses, whether they are public or private, Senator Rhiannon, and actually employ more Australians as a result.

Coalition senators and, indeed, ministers have been very clear that we want an accessible system that works for industry and in which industry and students can have confidence. Coalition senators were appalled by some of the stories we heard about providers ripping off the most vulnerable in our community. No senator in this place should be backing those providers. Absolutely not. I think we need to actually get real about the issue we are dealing with and not play politics, and I look forward to the Labor Party supporting the bill that has just been put through the lower house and is on its way through to us, which actually addresses some of these issues.

I look forward to Labor and Green senators getting behind Senator Birmingham's very swift and effective action in this space because the coalition has been active in the last two years in actually dealing with this issue. Absolutely. We should not choose to make political points out of the most vulnerable. I cannot get those people from the Redfern housing district out of my head. That evidence we heard, Senator Carr—I think it was in Sydney—was actually chilling. The most vulnerable people in our society are being landed with tens of thousands of dollars of debt because they have been 'sold a pup'.

But this government has been very quick to deal with the issue. The government has acted to improve the quality of training by introducing tough new standards for all RTOs from April 2015. We have committed a further $68 million to the national regulator, ASQA, to maintain our strong reputation, both at home and overseas, for delivering high-quality training. We have introduced the National Training Complaints Hotline, and I will get to complaints later, because the complaints did not just start rolling in when we came into government. This a system and there has been a systemic failure. We have heard from both Senator Rhiannon and Senator Carr about issues with the system. It was a system that was set up by the previous Labor government. As Senator Carr has said in public commentary, that system was set up with the best intentions. But, as with so many of the former Labor government's best intentions, the tough policy thinking, the tough work, behind those press releases that used to come out quite regularly from the then Prime Minister's office and various ministers' offices was not done. They did not do the thinking behind it, they did not do the stakeholder engagement and they did not get the policy setting right. Given the unintended consequences of the Labor Party policy, which we are dealing with, we look forward to the Labor Party supporting our efforts so that all of us can have confidence in a system that is delivering not only for students and for industry but, indeed, for the nation.

One example of swift action that our government has introduced is that we have banned inducements to students. We heard stories during this inquiry about iPad inducements and students being told their degree or qualification was free, which was not true.

Lee Rhiannon (NSW, Australian Greens) Share this | Link to this | Hansard source

Nothing has changed!

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

I am sorry, Senator Rhiannon. I notice that at the time of the system changing under the previous government you were silent.

Lee Rhiannon (NSW, Australian Greens) Share this | Link to this | Hansard source

No, we were not!

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

You were silent. So was Senator Carr at the time. However, I appreciate that he recognises that the system—and I go to a Matt Knott article—was a mistake. Our government is working swiftly to deal with that so no longer can you offer inducements to sign students up. Our government is also strengthening the debt waiver and revocation process, strengthening the assessment criteria of all training providers and ensuring that, where student debt is incurred, it is in line with course delivery. Under the previous system, there were students who were racking up debt, yet they were not able to log onto their online course.

So we brought in a tranche of reforms, and we are bringing in another tranche of reforms this week. I am confident in this government's vigilance on this issue of the importance of a sustainable and high-quality vocational education and training system to our goals as a government in having a flexible workforce, fit for our economy, going forward. Also, young people and those who choose to change career midlife can be assured that the qualification they are doing is actually going to lead to a job—a job that will be fulfilling and actually assist them to provide for themselves and their families over a long period of time.

I know Senator Carr was looking forward to my getting to the part where I talk about the previous government's system and decisions. I will just briefly touch on that. The complaints did not just start when this government took office two years ago. There were over 30 complaints to the department between 2011 and 2013 when Senator Chris Evans and the current shadow minister, Sharon Bird, were in charge of the system—30 complaints and not one piece of legislation through this place to deal with them! There was nothing stopping the iPad inducements, nothing stopping brokers from heading out to tenements, knocking on doors and offering free education if you just sign on the bottom line and nothing stopping people from heading off to shopping centres to look for vulnerable people to sign up to courses. There was nothing that actually changed the incentives inherent in the system where providers got all the money at the start of a course. We have sought to spread that cost out over the period of the course so that students are working through the course before incurring the debt, and so the provider is incentivised to educate through the course for the qualification.

I will go to some details: in 2012 a student who wanted to change providers had already been charged the full debt up-front. Another student was enrolled in an online course but had no online access and got $20,000 worth of debt. These were actual complaints to the department whilst Senator Carr's colleagues were in control. Another student withdrew from a course before the census date but was still charged the full debt.

Labor was told about the problem over and over again but did nothing, so I commend the minister for dealing with this. I commend the ongoing work in this space. I would also like to commend the secretariat for their very, very hard work in this area and for the production of a comprehensive report and all those submitters who took the time out of their busy days to give us their evidence and to assist us all to get a fulsome understanding of the issue. I look forward to the support of the Labor Party and the Greens for the effort that our government is making to not only maximise participation in this space but also ensure a quality product is delivered to our students and that we are delivering high-quality graduates to our industries. I seek leave to continue my remarks later.

Leave granted; debate adjourned.