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

I move the second reading amendment standing in my name:

At the end of the motion, add:

", but the Senate calls on the Government to:

(1) appoint a National VET Ombudsman who would have the power to investigate consumer complaints and order the refund of course fees where Registered Training Organisations (RTOs) have been found to ad unscrupulously, either to the student directly or the Government, whichever is applicable, resulting in the student discharging any related VET FEE-HELP debt;

(2) support the call for the Auditor-General to conduct an audit on the use of VET-FEE-HELP;

(3) amend the Higher Education Support Act 2003 to impose caps on tuition fee amount similar to the student contribution caps for HECS-HELP;

(4) reduce the lifetime loan limit for VET FEE-HELP to half the current amount;

(5) ban or directly regulate brokers or marketing agents; and

(6) provide the Department and Minister with the necessary statutory powers to suspend VET FEE-HELP payments to providers which are under investigation.".

This bill is grossly inadequate as a response to the crisis in Australia's vocational education and training sector. We have a litany of advice as to why that is the case—and we now have the government's acknowledgement of that. At a quarter past 12 today the government chose to brief the opposition—and they did not actually go to the right place to do that. They chose to advise the opposition, through Sharon Bird, that the government intends to move four additional amendments to its own legislation dealing with a series of matters highlighting just how deep the malaise is, which the government is now finally coming to understand. While the Labor Party does not oppose the provisions in themselves, we do think the government should have talked to us a little earlier than on the eve of the bill actually being put into this chamber for debate. It shows you the arrogance of some of the members of the House of Representatives that they treat this chamber in such a contemptuous way.

These are serious matters. A full Senate inquiry into these matters commenced last year. We have had denial from the government throughout this period. They have tried to find a scapegoat—that the problems were essentially down to the Labor Party, for measures first introduced in 2007. And now, of course, there is this minute-to-midnight series of amendments that the government wants us to consider. But they are not prepared to give us an undertaking in terms of what they have got to say about the opposition's amendments, which have been on the public record for some considerable time. I am concerned that the bill, as printed, tinkers at the edges of the problem and does not deal with the substance. And it appears that the government agrees with me, because it has chosen now to move this minute-to-midnight series of amendments, the details of which we have been briefed on but have not actually seen.

This bill relies on an assumption that we should just trust people. It does not turn off the tap for the money that has been flowing to the rorters who have brought such discredit to our vocational education system. It relies on the capacity of the Department of Education and ASQA to actually do the job. Well, I think that is a proposition that has been sorely tested. Both of these agencies have been found wanting, yet we are asked to trust in the capacity of agencies which have badly let the team down over the last two years. So the opposition is proposing amendments to give this legislation real teeth.

The gravity of the crisis should not be a surprise to anyone in this chamber given the cascade of media reports about dodgy private colleges, soaring debts and, of course, the extraordinary abuse of students that we have seen across the country. A systematic rorting of billions of dollars has been undertaken on this government's watch. These reports confirm the material presented to this chamber by the Senate inquiry into VET FEE-HELP loans. I know that, up until recently, it has been the view of the government that we should try to pretend these things are not happening. But the reports cannot be dismissed.

The collapse just this week of Vocation, one of the largest private providers, surely brings it home that the chickens are roosting. Vocation Ltd was the first listed training provider to call in the administrators. Yesterday, less than a week after the company was placed under voluntary administration, it ceased operations and closed up shop. The withdrawal of public funds after a quality review by the governments of Victoria, New South Wales and Queensland meant that Vocation's colleges—and there were a whole series of them—were not able to be viable. The collapse has put 180 staff immediately out of work and leaves 12,000 students in limbo. These students no longer have a sure path to a qualification for the kind of employment that would allow them to actually repay their debt.

Vocation's problems began late last year when the Victorian regulator stripped the group of $20 million in funding because of the poor quality training provided at two of its businesses which were subsequently disbanded. That wiped 94 per cent, or $700 million, off the value of the company. The end of Vocation has raised disturbing questions. How many other private providers will follow Vocation into oblivion? How many more students, many of them lured by unscrupulous spruikers into signing up to massive debts to enrol in courses that lead nowhere, will have their hopes dashed?

How many more bad debts will be left for the taxpayer to carry?

Despite the Vocation subsidiaries being registered by ASQA, the Commonwealth regulator, the national regulator, that regulator appears not to have detected serious problems about these colleges. If it had, it shows no evidence of it. It certainly did not tell the Victorian authorities of what it knew. It would appear it did not even tell Commonwealth officials of what it knew, if it knew anything. Indeed, it was the Victoria government that had to lead—to take action—to bring this company to account. I congratulate the minister for training, Mr Steve Herbert, in the new Victorian Labor government, who took this issue on, directly. It has done extraordinary amounts to restore confidence in the vocational education system in Victoria. It was not just Vocation, it was a whole series of its subsidiaries.

Why is it, if this department is so good, so capable and so professional, that on 29 May VET FEE-HELP status was extended to Vocation? What has happened to the $3.1 million in Commonwealth funds paid to this RTO in 2014, and how many of the 570 students enrolled have actually succeeded? The most disturbing question of all is: why does the Commonwealth continue to allow private education providers to operate on a business model that relies on public funds to deliver substandard course offerings? It appears to have no capacity to ensure that these colleges play by the rules. It has no capacity to stop them enrolling people who do not have a capacity to undertake the course. It has no capacity to ensure that they turn up. It has no capacity, it would appear, to ensure that the courses are offered. But it seems to have an extraordinary capacity to hand out the cheques.

Labor has been urging the government to act on these matters since 2014. The government's response to this emerging problem has been too little, too late. The origins of these problems go well back to the introduction of this scheme, in 2007, by John Howard. There were, and I acknowledge this, unintended consequences of the changes made by the Labor government with its Skills Reform agenda. But all of those were supported by the coalition. So it is not good enough to try to find a scapegoat in the former Labor government. None of that lets the government off the hook, today. It has been in office for two years. It has been aware of these problems, clearly, given the public have been aware of them since the government's election. We have seen the photos of the boot loads of laptops being hawked around disadvantaged communities in the last month. This is despite the claims the minister made in his tough talk in March of this year and further action that was taken in August. The measures have not worked.

Between the end of 2013 and the end of 2014, the number of students obtaining VET FEE-HELP loans grew by 103 per cent. At the same time, the Commonwealth VET FEE-HELP debt has increased by 151 per cent. The number of providers offering access to VET FEE-HELP loans increased by 44 per cent. The average loan amount per student has increased by 24 per cent. In the present financial year the cost to all student loans is budgeted to be $2.4 billion. By 2018-19 the amount would have blown out to $4.4 billion. That is all on this government's watch. This is a scale of increase that anybody involved in education would understand to be totally unsustainable.

A disproportionate amount of increase comes from the VET FEE-HELP loans. In the Grattan Institute's submission to the Senate inquiry, Dr Andrew Norton estimated that up to 40 per cent of VET FEE-HELP debt would become bad debt, because the career earnings of VET are typically lower than the earnings of higher-education students. The mounting debt crisis was not curtailed by the various ministers' tough talk and, I fear, it is unlikely to be seriously affected by these measures as the bill stands.

The bill introduced a two-day cooling-off period between enrolling and applying for a VET FEE-HELP loan. You could walk around this with a blindfold. It is easily circumvented if providers use forms with different signature dates for enrolment and the loan application. The bill goes on, in other ways, to make it easier for student debts to be cancelled if they have been signed up for a loan improperly, and for the government to recoup the cost from providers, but the protections for students are not nearly tough enough. That is why Labor will move to impose caps on tuition fees for courses offered for VET FEE-HELP and for a lower limit of $50,000 on student loans.

It is incredible that now, under this government, we have courses in VET colleges that are twice the price of courses at university. The most expensive university courses are only half the cost of some of these diplomas, many of which have very dubious connections to employment prospects. We want to move an amendment to require the Department of Education and Skills to advise intending students to write off the total debt and to tell them the amount of money they are taking on when they do this. Under our amendment, debt would be incurred until the student formally responded to the department's advice about accepting the amount of debt they are getting themselves into.

Our second reading amendment will urge the government to appoint an industry funded national VET ombudsman. It will call on the government to ban or severely curtail the activities of brokers. Labor is moving these amendments because the parliament must do what this government will not do. There must be firm and decisive action against the unscrupulous provider who is destroying public confidence in Australia's VET system. We must have a return to confidence—this is so important for the future skills development of this country and for the future aspirations of people who engage in these programs—and we must ensure that there is quality and integrity in this program so that students, employers and education providers appreciate what their responsibilities are. The government has not been prepared to do this so far. It has allowed an ideological preference for private provision in education to prevent it from ensuring that we have a genuine, robust regulatory framework in place.

The crisis in VET is not a matter of a few dodgy providers. There is a systematic problem here. It is not just about the odd one out; it is becoming far too common for that. The sharks and the shonks of the education market have been able to ignore the law while building their businesses. I find it incredible that it is the stock exchange that has forced continual disclosure when these companies have listed, rather than the regulatory authority of the Commonwealth ensuring that these companies do the right thing by people who are dealing with them. We have seen agents and brokers exploit, manipulate and abuse vulnerable people—people on low incomes, intellectually disabled people, Indigenous Australians—who have been offered inducements such as free laptops and the promise of great riches, resulting in huge debts and no prospect whatsoever to undertake the courses of study they are signing up for.

Fairfax newspapers' Michael Bachelard in particular has done a very good job in highlighting these issues—but it is not just him; there are many others. Bachelard reported on the plight of the Lutanichi family, who live in public housing in regional Queensland. All the adults in the family receive welfare payments. They have all been signed up for VET courses by agents from two Victorian based providers, the Ascet Institute of Technology and the Phoenix Institute. Phoenix Institute is a name that will be familiar to senators as the company, owned by Australian Careers Network, that is being prosecuted by the Australian Competition and Consumer Commission. In the Federal Court in November, just last month, the ACCC launched legal action against Phoenix Institute, alleging that it had tricked disadvantaged people into signing up for multiple courses—and this is the real trick here. It is not just that the courses for various diplomas are $18,000 each; they are often double diploma courses, so the students end up with debts of $36,000. The ACCC argued that the institute should repay $106 million to the Commonwealth. Sales agents for Phoenix have signed people up to multiple online diploma courses costing, as I say, $18,000 each. The Australian Skills Quality Authority has now proceeded to cancel Phoenix's registration, making it ineligible for further funding—but that is of little comfort to the people who have signed up to these bodgie arrangements. Five children of the family that I mentioned signed up for their free laptops and for VET FEE-HELP loans, which they will be obliged to repay if they ever reach the income threshold. If they do not, the debt will transfer to the Commonwealth.

Mr Bachelard witnessed the agent for Ascet telling the family:

You can choose four course options: project management, human resource management, business, and leadership management.

… you don't have to go to a college; you just stay home and spend maybe two or three hours [on the computer] during the week … Mostly people complete the course [in] … of six or eight months.

These obviously are lies. They are sham courses which lead nowhere. Genuine diplomas in the subjects that have been touted by Ascet agents would take at least two years of full-time study with serious educationalists; they are not a rort you can treat as some sort of video game. Reputable institutions—and understand there are many private providers in the VET sector that are genuinely reputable—are having their reputations absolutely shredded by these shonks and sharks. There are similar stories and, in the committee stage, I will be obliged to go to a number of other stories of that type.

We have seen a clear pattern of behaviour where minister after minister in this government, on their watch, has failed to acknowledge their responsibilities. We have seen a department that appears unable to deal with this situation. Despite the increased money given to ASQA, we have seen a regulator that does not seem fit for purpose and has failed to communicate with state authorities, let alone Commonwealth offices. This is clearly an untenable situation which has gone on too long. There is an opportunity here for this Senate to turn off the tap and make sure these providers go out of business. If we do not, tens of thousands of Australians are going to be ripped off; billions of dollars will be lost from the Commonwealth of Australia. (Time expired)

Robert Simms (SA, Australian Greens) Share this | Link to this | Hansard source

The VET FEE-HELP system is broken and rotten to its core. What was originally designed as a model to expand access to training for Australians has now become an untameable beast that is ripping off students, ripping off taxpayers and corroding the integrity of our entire VET sector. Since the full transition to this demand driven entitlement, VET FEE-HELP has exploded in cost, rocketing from $300 million in $2012 to $650 million in 2013, and then almost tripling in 2014 to nearly $2 billion of taxpayers' money—$2 billion of taxpayers' money; $2 billion of student money. Current estimates put it at $3 billion to $4 billion for the year 2015. What a huge amount of money.

What do students and taxpayers get for this huge investment? What do they get? Well, they get a never-ending conga line of rip-offs and scandals and rorts. If you are in any doubt about that, Mr President, just pick up the newspapers and watch the news. This is a scandal. In fact, the Prime Minister himself has described it as a scandal. It seems everybody in this country recognises what a scandal this is and recognises that we need to take action.

Let me recount a few of the incidents that have been reported to the chamber. Only last week we found out that third-party brokers were posting fake job ads. When applicants inquired and applied for the job, they were told they would need a further qualification to be able to take up the role—a qualification which would handily be provided by the RTO employing the broker. Earlier this year, reports surfaced about brokers signing up some people with intellectual disabilities—signing them up to five-figure loans to study courses they did not understand they were enrolled in. They were signed up when they did not understand the terms of the agreement, the complexity of the HELP system and income contingent loans, or the expectations that students would have of their education providers.

Indeed, it has become clear that that is the business model of some of these unscrupulous operators—preying on people who do not understand the terms of the agreements, getting them to sign along the dotted line when they do not understand what they are signing or what the implications are. What disgusting and unethical behaviour! This is the kind of behaviour that has been fostered by the lack of regulation and the hands-off approach that the government has taken—but, of course, it was the Labor Party that set this system in motion. I am absolutely disgusted by this sort of behaviour and furious that this was ever allowed to occur within the VET model. Indeed, the Greens have been speaking out against this for some time.

In my home state of South Australia, the company iEducate has been going around to schools, particularly some of those in lower income areas, offering inducements to direct students to study their courses. A letter that my office obtained shows iEducate offering students money for signing up to their courses. Part of the letter reads:

There is no limit to the number of students you may enrol, therefore we would pay your school a $5,000 grant should you successfully enrol ten students, provided they pass the census date.

'Provided they pass the census date, there is no limit to the number of people we will enrol—just sign up.' They also offered potential students free laptops.

This vulture-like behaviour is just another example of the unethical business model being practised by these huge providers—luring students away from school and saddling them with huge debts even before they turn the age of 18. How scandalous that is. There are further stories of students being drawn in by inducements like laptops and iPads, even after the government's latest round of reforms. I say 'reforms', but they fell pretty flat in terms of addressing the needs of the sector. While before the reforms students were told they were free, now they are told that the laptops and iPads are simply loans that the RTO would never attempt to recover. So it is kind of an unlimited loan: 'Here's a laptop—don't worry about paying it back.'

Hundreds of students have signed up to a class action against Evocca College for providing substandard courses and using unethical and non-transparent market practices. Students would be routinely told that degrees would cost half of what they would actually cost. Evocca had the gall, the hide, to say in their submission to the committee inquiry into this bill that students are intentionally misusing the system and that one way to fix it is to lower the repayment threshold. This is blaming the victim, of course. They do not take any responsibility for their unethical behaviour. Madam Acting Deputy President, can you imagine giving a $40,000 student loan to someone living on $30,000 a year—right on the margins of being able to make ends meet? What nonsense that is. That really is victim blaming at its absolute worst.

Despite the scandals and despite the rorts, what sorts of outcomes are we getting? If we put those things aside, what sorts of outcomes are we getting? We are seeing plummeting graduation rates, plummeting levels of skills training and exploding student debt, much of which will fall on the taxpayer. It is the taxpayer who is going to be carrying that burden.

Last month the National Centre for Vocational Education Research established that in the early days of the scheme only 21 per cent of students eligible for a VET FEE-HELP loan completed their courses—just 21 per cent. How embarrassing that is. For those doing full-time online courses in management or commerce, the graduation rate was just eight per cent. What an appalling indictment on our training system that is. What an embarrassment that is. But unfortunately these incredibly low graduation rates are just the beginning of this sordid tale. Such is the lack of confidence in the current VET sector that often the degrees are worth less than the paper they are written on. Businesses know students are not being equipped with the necessary skills to graduate, and students are then coming out and floundering around with huge debts, worthless degrees and job prospects that are being damaged rather than enhanced.

The collateral damage from this VET FEE-HELP experiment is enormous. The human cost is enormous. There is expected to be over $1 billion in dodgy loans that will be unrepayable and which will now be footed by the Australian taxpayer, and that is only for students who are expected to never earn enough to meet the income threshold. Those who are unlucky enough to earn over $54,000 per annum must now repay tens of thousands of dollars for their worthless qualifications—qualifications that have not even contributed to their skills or employability.

VET FEE-HELP has failed. The two national agreements which were part and parcel of the VET FEE-HELP rollout espoused the following aims. They said they would improve training accessibility, affordability and depth of skills. They said they would encourage responsiveness in training arrangements. They said they would assure the quality of training delivery and outcomes, with an emphasis on measures that give industry more confidence in the standard of training delivery and assessment. They said they would provide greater transparency through information to ensure consumers could make informed choices and governments could exercise accountability.

Well, how did they do? How did they meet these aims? Is training more affordable? No, not for the taxpayer, and certainly not for students, with the blow-out in unregulated course fees. Is training more responsive? It is responsive to the demands of the for-profit rent seekers perhaps—responsive to the needs of this for-profit industry—but certainly not responsive to the needs of the students and certainly not providing higher-quality education. The sector has never been held in greater disrepute. Even many in the private VET industry are now calling for further regulation and greater transparency so that consumers can make more informed choices. Even people in this sector—dodgy providers—are coming out and saying they want more accountability, because even they recognise that it is not working. How laughable.

The measures before the Senate today are like putting a new coat of paint on a car that has a cracked engine. The car is broken, and it does not matter how many racing stripes you paint on it; it will not do what is was designed to do—in fact, this car really is a bomb. The government needs to tear the system down, go back to the drawing board and start again. Labor's amendments are an improvement, but they will not fix a broken system. This is the result of a flawed incentive structure, where a demand driven entitlement is combined with lack of information and then a profit incentive. You can try to regulate it, you can try to provide more education, but the for-profit shonks will always find the gaps. If there is an incentive there, there is always an incentive for people to do the wrong thing. Neither Labor nor the coalition has their hands clean here. We need to stop playing politics with our students' future. We need to rethink how we supply skills training in this country. We need to put a stop to this broken system and start again.

The Greens are committed to seeing the end of the VET sector being used as a political football. We want to actually fix this broken system. While the Labor and Liberal parties have been scoring political points off each other over who is more to blame—Labor set it up while the Liberals have sat on their hands; we know all of this—at the end of the day it is students who are being caught in the crossfire; it is students who are being duped out of getting the quality education they thought they signed up for. They are not getting what they paid for. Many more have been lured into courses they never wanted or never needed, and even more are now straddled with debt and worthless degrees.

While we recognise that this bill will not come close to solving all the problems, we do believe that it will address some of these unethical practices, and we believe it is important that we give students some level of clarity heading into the new year. The system needs to be redesigned from the ground up, and hopefully this bill will provide the breathing space to allow that to happen. But the position of the Greens has always been that we do not want to see mere window dressing; we want to see substantial changes to this broken sector. That is why we have been calling for an end to public money going to for-profit providers. It is not accountable. The Australian taxpayer has no oversight over how the money is being spent, and we cannot control the education outcomes. That is a broken model. Once you start giving public money to for-profit providers to start rolling out education, you are really playing with fire. That is the position the Greens have been taking in this debate, and we are the only voice pushing that argument in this debate as the Labor and Liberal parties continue to clamour towards privatisation of our education system.

But we do welcome what the government has put forward in this legislative response. It is a move in the right direction in terms of reining in a broken sector, but we need to go much further than this. We need to end public money going to for-profit providers, and only if we do that will we achieve what Senator Carr has talked about: turning off the tap. We need to turn off the tap for the for-profit providers to ensure that we have a quality education system in this country.

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

The Education and Employment Legislation Committee, which I chair, yesterday tabled its report on the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. I am incredibly proud of Minister Birmingham's and Minister Hartsuyker's absolute determination to clean up the mess left by the poor regulatory environment that these providers operate under, which obviously was put in place under the previous government. When you open up systems to make them demand driven, you have to put some pretty serious regulation around how those system are going to operate. So, the ALP, in its wisdom, opened up not only the VET sector but also the higher-education sector to make them demand driven, which in both cases has resulted in significant cost to the Commonwealth. We have seen universities—which I might say, Senator Simms, are not-for-profit but whose classrooms are swelling with teaching graduates, with business graduates—seeking to take advantage of the demand driven system and to fund their operations. Similarly, when there is insufficient regulation around demand driven systems for government public money then you are going to end up with trouble.

So it is a pity that we are here once again fixing Labor's mess: surging enrolment, inadequate regulation. All year our government has been focused on fixing this. In the Senate inquiry into this issue we heard time and time again of the absolute unconscionable behaviour of providers in this space. I heard only yesterday of a provider who went to Palm Island and signed up many, many disadvantaged people for business diplomas just so that they could get the funding. I am confident that measures in this bill go a long way to addressing the issue and go much further than those that any minister in the Labor government who was responsible for this area of public spending ever went.

I would encourage the ALP and I would encourage the Greens to help us fix up this mess so that our vocational education and training sector, which is a key export earner and a key provider of skills and knowledge in our community, can regain its reputation and, once again, be able to be held in high esteem for those young people and older Australians who seek to develop their skills and knowledge, in particular in vocational spaces, because we are going to need them going forward.

I commend the bill. I also commend the report of the committee to the Senate. I hope that both the Greens and the ALP will work with us to start to fix up the mess and continue to build on the work that we have already done.

(Quorum formed)

Sue Lines (WA, Australian Labor Party) Share this | Link to this | Hansard source

I rise to add my comments to the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. We had a Senate inquiry which was really concerning in terms of the sorts of scams and shonks, and the horrific stories of students being left without an adequate qualification. The problem is that, whilst Labor is not suggesting that this is a huge problem in the sector—it is in terms of money—it is not the majority of providers. We have seen very good providers in the VET system, both public and private, but, of course, what gets into the media are the shocking rip-offs of students that we have seen from a number of private colleges, which have gone on completely unchecked by the Turnbull government.

It is time that the government really got tough on those that are seeking to flaunt the system. It is as bees to a honey pot. The VET FEE-HELP system has attracted its fair share of shonks and sharks, and those are the people that Labor wants to see dealt with in a very robust way. Once again, like the bill we had in here yesterday, this bill falls short. It misses an opportunity. It is the government, again, applying a light touch. They will tell us that it is robust but it is not robust enough. We have these sharks in the system preying on vulnerable students, students with disability, students from low socioeconomic backgrounds, who are very pleased to be given an opportunity yet are left high and dry from a system, which the government is administering, which clearly needs substantial reform and robust regulation.

The aim of the bill before us today is to do that kind of regulation. But Labor says: this is a bill which is playing catch-up. It is playing catch-up to put in place regulations to the operation of the VET FEE-HELP system. It is playing catch-up to try to retrospectively put in place regulations for the victims of the shonks and the shysters, who have been perpetrating a scam on students, on Australian voters and on Australian taxpayers.

Again, we have before us today another inadequate bill. It continues this government's practise of addressing the symptoms but not fixing the underlying problems. These problems plague the VET FEE-HELP system and vocational education across the country. This bill forms part of the government's hopelessly inadequate and flawed deregulation agenda and it makes the whole of the vocational education system look bad, when, in fact, it is not. There are significant amounts of money involved, but it is a few small operators that need to be taken out of the VET system. This bill, just like the bill yesterday on regulation and international students, is yet another missed opportunity.

The government has failed to take the opportunity to give the Commonwealth and the national regulator sufficient powers to act. This is what we want—sufficient powers for them to act decisively against providers who are suspected of misusing the VET FEE-HELP scheme and exploiting Australians. That is what is happening here: young Australians, in particular—but mature age students as well—are being manipulated and exploited. They leave school with the best of intentions to take up a vocational education course. Many of these shonksters and sharks, if you do a Google search, come right to the top, and you think that they are decent operators, and yet they are not. Clearly what we saw in Victoria last week with Phoenix is an example of where students are absolutely preyed on. They are absolutely run down by these shonky operators. And what for? For the millions of dollars of taxpayers' money. They are not interested in providing quality education.

As I said at the start of my response today, they make all colleges, whether they are public or private, get tarnished with the same brush. That is what Labor wants to see completely stamped out, for the benefit of young and older Australians—because we know that VET is particularly important for second and third careers, after a business has closed or people require retraining. Vocational education, including through TAFE, is the great provider of that. We want a system that is free of corruption, because students and potential students are the victims of these providers and the broker-led feeding frenzy that is going on.

We know that the government—and they did it in their majority report—like to blame Labor for this. But the reality is that, when Labor introduced the VET reforms, the government—the opposition as they were then—supported those reforms. So they cannot sheet home the blame of their failures to Labor. In his second reading speech, the government minister sought to play partisan politics with this bill, pinning the blame for this scheme on the former Labor government. Well, it is just not on, and it is not true.

Unfortunately for the government, the facts do not bear out what it says in its divisive policies and politics. In 2012—the last year of published figures before the current government was elected—there were just over 55,000 VET FEE-HELP assisted students. VET FEE-HELP loans totalled $235 million in that year, and the average loan was just under $6,000. In 2014 there were almost 203,000 students, a whopping increase of, wait for it, 367 per cent. VET FEE-HELP loans totalled almost $1.8 billion. And we know fees have shot up. As senators in this place, all of us, no matter which side of the political divide we are on, get those complaints from students about the great hikes in fees that have occurred. Fees have shot up to almost $9,000. Under Labor they were about $5,800. They are almost now at $10,000, a whopping increase of 147 per cent. None of that can be attributed to Labor. It is all because this government has got a runaway scheme that it tries to regulate all the time after the event.

Under this government we have had three ministers to date. Ministers Macfarlane and Birmingham both talked tough, but on the demonstrated outcomes they have failed. Even Senator Birmingham's cherished initiative of a transfer of VET powers from states and territories to the Commonwealth appears to have failed, largely because the territory and state ministers, quite rightly, doubt the capacity of the Commonwealth Department of Education and Training to manage a national VET system, given its incompetent administration to date of the VET FEE-HELP scheme.

Let us not forget that VET is vocational education. That is what it is: vocational education, ensuring that our young people about to start their careers can develop new skills to equip them to enter a modern workplace, that they can bring those new skills to the job. But all of that has been lost with the crisis and scandal that is going on across the VET scheme right now. Unfortunately, what it looks like now, looking from the outside in, is that the VET FEE-HELP system has become a business opportunity for shonks and shysters to rip off young people—particularly those who are vulnerable—to rip off Australian taxpayers, to rip off Australian voters. That is what the VET system is currently looking like.

Just last week it was reported that the Phoenix Institute of Australia took more than $100 million in government funding. As a former union official, I would be very proud; in fact, I would be amazed—they signed up 9,000 students in 10 months.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

Standard practice for the unions, isn't it?

Sue Lines (WA, Australian Labor Party) Share this | Link to this | Hansard source

I tell you what: as a good union official, I never, ever had stats that good. You know why? Because I could not offer incentives; I could not offer inducements; I could not take advantage of people. That is why. And that is exactly what is happening here. Nine thousand students in 10 months—that should have rung alarm bells somewhere, but it did not. And what was being offered? Can you imagine the pressure being applied to those young students? It must have been horrible: 'Sign up now. Sign up today. Sign here. Sign on the dotted line.' Nine thousand students in 10 months should have rung alarm bells somewhere, but it did not.

What were those shonky salespeople of Phoenix saying to those potential students? What on earth was going on? We know from media reports that the Australian Competition and Consumer Commission has started court proceedings against the private training college Phoenix in the Federal Court. The allegation is of misleading and deceptive behaviour, so what on earth were they promising? What were they saying to those 9,000 students that was misleading and deceptive? One can only imagine.

The ACCC went on to say that there are clearly problems with the federal government's billion-dollar VET FEE-HELP system. I think that, when one government regulator criticises another, we should all sit up and take note. So here we have the ACCC calling into question the VET FEE-HELP system. The ACCC said that it is going to go after the $100 million that Phoenix took from those students—the $100 million of taxpayers' money, the $100 million snatched away from reputable companies that want to offer good, quality training that has now gone.

We know that Phoenix targeted people with intellectual disabilities and, it seems, it targeted people who did not have computer skills with its online courses. What kind of shonky operation is that? We know through our Senate inquiry that online courses are preferred by the shonks and the sharks. They told us that at the Senate inquiry. Why? Because there is much more profit. There are no overheads. You do not have to front up with a teacher and a classroom and a physical presence; you just offer it online. We also know that the parent company of Phoenix, Australian Careers Network, has halted its trading since these reports emerged. It has been halted on the stock exchange for three months. Of course, despite the ACCC saying that it was going to go after Phoenix for that $100 million, Australian Careers Network has said that it will contest that.

In the business pages of our newspapers we hear about one shonky operator fighting with the ACCC, when what is at the heart of this is young people and mature-age students trying to improve their skills. All of that is lost, as the business papers report day in and day out about these shonky operators when really it is about educational opportunities for our young people. So let's get rid of these shonks and these sharks. It is a disastrous outcome that ACN, Australian Careers Network, has halted its trading. What kind of company is that? This is clearly not about vocational education and training; this is about private companies seeking to rip off Australian taxpayers through the VET FEE-HELP scheme. This is fraudulent behaviour that must be stamped out so that we get the quality and the reputation back in the vocational education system. We need a robust system that will stop these rorts starting—not a new bill seeking to rein in rorts once they have started. This is the wrong place to start.

It is not just the shonks, the shysters and the sharks; we know that VET FEE-HELP is accumulating a substantial amount of bad debt. The Grattan Institute told the Senate inquiry that almost half of the VET FEE-HELP debt has become bad debt. The figure they gave was 40 per cent. Forty per cent has become bad debt. What kind of system are we running? It is just throwing good money after bad. It seems that the Turnbull government thinks there is an endless drip of money, a bottomless pit of money. First we had 9,000 students enrolled by a shonky operator in nine months. That did not ring alarm bells anywhere. Then we had a figure of 40 per cent bad debt and that does not ring alarm bells anywhere. That tells me the government has lost the plot. The government is too busy trying to impose a big, fat new GST on everyone to worry about what is happening in education. It is too busy—with its deregulation agenda to let private colleges and other shonks run the system—to notice what is going on here. A 40 per cent debt is a massive debt and it is bad debt, so that means it will not be recovered. That is what we are really talking about here: debt that will never be recovered.

This is not the government's first attempt to fix the VET FEE-HELP scheme. Amendments were made to the act last year and new national standards came into effect on 1 April this year, but they have not stemmed the tide of abuse and exploitation. The system is in crisis on the watch of the Turnbull government. That is what is happening. Senator Birmingham will wax lyrical about everything they are doing, but you cannot talk the talk and not walk the walk. Last week we had the Phoenix Institute in the Federal Court with the ACCC accusing them of fraudulent behaviour, of misleading and deceptive behaviour. That is a pretty strong charge to level at a company.

For months we have heard the government say that its previous changes, the most notable being new national standards that came into effect on 1 April 2015 this year, would fix the problem. They have not fixed the problem. The problem continues. On 1 April—April Fool's Day, it would seem—the then assistant minister for education and training said in a media release, 'The time is up for dodgy marketing agents offering inducements like laptops, meals, vouchers and prizes so that people sign up for VET courses they don't need and incur a debt they cannot repay.' Nine thousand students have been ripped off by Phoenix since 1 April, so what on earth were these standards supposed to do? They certainly did not stop Phoenix.

Since that media release on April Fool's Day, the reports of exploitation have continued. The Age reported on 4 April that brokers were targeting elderly and disabled public housing tenants in Melbourne suburbs and were giving them iPads. Fifteen private colleges were reported to be under investigation for flouting the new standards by offering inducements like laptop scholarships, according to The Age of 16 May. ASQA was forced to defend its conduct in June 2015.

The Senate inquiry was told that brokers were continuing to flout the national standards. That evidence was given to us by the Redfern Legal Centre. The Australian College of Broadway was accused of enrolling a woman for a $28,000 course after convincing her it was free. That was reported in The Australian on 5 August. The Fairfax media continued to report that Careers Australia had enrolled almost 3,000 students using VET FEE-HELP but only 300 had graduated.

These are the shonks and the shysters. These are the people we want to stamp out with the amendments that we have put forward. The government has laughed off the sorts of recommendations that our Senate inquiry put forward, but we believe they are required as part of a robust system. We will continue to have students in this country left without a qualification if the government does not act decisively on this matter once and for all.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I thank Senator Lines for her contribution on the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015—and the shonks, the shysters and the sharks. We need to deal with this as a matter of some urgency. But, at the outset, I wish to express my disappointment in the manner in which this bill has been brought on today. The original Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015, while modest in the reforms it was trying to implement, had at least been subject to scrutiny through the Senate Education and Employment Legislation Committee. The committee's report was tabled in the Senate only yesterday.

The Senate committee system is what makes the Senate unique in the sense that we look at legislation thoroughly, we try to check the excesses of the executive arm of government and, fundamentally, in a very collegiate way, we look to see if there could be any unintended consequences, whether the legislation could be improved and we actually analyse the impact of a particular piece of legislation. The opposition, in their additional comments to the Senate committee's report, expressed their general support for the bill and foreshadowed some amendments. The detail of the amendments were revealed this morning, but I am sure I am not the only who feels that we have not had sufficient time to analyse them.

But at least we had some warning. This morning we awoke to the news that the government had new amendments to its own bill. These were not foreshadowed. We have had less than a few hours to consider what are significant proposed changes to vocational education regulation. For example, the government is proposing to freeze the total loan limit for existing VET FEE-HELP training providers to 2015 levels. In effect, this will mean that, if providers continue to offer courses at 2015 prices, they will not be able to accept a new student unless a current student leaves the school. Of course private providers will have the opportunity to review their pricing structure if they wish to take on more students, but this is not necessarily desirable.

I will go into some of these amendments in a moment, but I think it is good to pause and maybe sum up where we are at. Sometimes it is useful to use a piece from a good journalist that sums up the changes and encapsulates what is going on. On a fair-minded basis, I think Natasha Bita's analysis in The Australian on 26 November does sum this up. I will just read some excerpts from that article, which I think gives a good snapshot of what we are facing here. She refers to the current system of vocational training as a 'broken system' that 'is bleeding billions of dollars in taxpayers’ money, as lax regulation combined with a flawed funding model lets private colleges reap fat profits at public expense.'

My view of that is that there are a number of very good private colleges but, as you outlined in your contribution, Madam Acting Deputy President Lines, there are a number of colleges that are absolute shockers, where there is rorting and some disgusting behaviour going on—which I will speak to briefly. The article continues:

Colleges can now charge full tuition fees upfront. When a student borrows through VET FEE-HELP, the federal Education Department pays the full fee directly to the college. Students can borrow up to $97,728 and never have to pay it back until they earn more than $54,000 a year.

With this bill, the government plans to split payments into three separate instalments. This will be based on census dates to prove a student is still actively studying. Natasha Bita talks about the history of this, and I think it needs to be borne in mind.

I know that the Minister for Vocational Education and Skills, Mr Luke Hartsuyker MP, is looking at tighter controls with these amendments—which we have had very little notice of—and that he wants to confine this to courses that have an economic benefit and that have a focus on issues such as health care, aged care, child care, computing and trades. This was also summed up in Natasha Bita's article. The opposition wants the education department to be a middleman for VET FEE-HELP, so that the loan is applied for through the department—which seems to be a sensible amendment—and to reduce the lifetime borrowing limit of $97,728. Natasha Bita makes the point:

Labor’s amendments are sensible, but beg the question as to why the Rudd/Gillard governments failed to adequately regulate vocational training in the first place.

I think that is a very fair question. She continues:

The Howard government introduced legislation in 2007 to let vocational training students borrow their tuition fees, putting them on the same footing as university students. The Coalition legislation had an in-built quality control. Training colleges could only offer student loans for diplomas if they had an arrangement with a university to credit the qualification towards a degree.

But in 2009, the Rudd government … scrapped the crucial pathway-to-uni requirement for all diploma courses subsidised by the Victorian government. Then, in 2013, it removed the 'credit transfer'’ requirement nationally.

I think that gives a fair summary of what has occurred. We do have problems. They need to be dealt with, and I understand the urgency on the part of the government in that we need to deal with this in good conscious and good faith before 1 January. We cannot go for another year with these systemic problems in relation to this.

Looking at these amendments, another of the government's amendments would see the government moving to payment in arrears for certain providers where there are concerns about the provider's performance. That is welcome but it begs the question: what the hell were the bureaucrats, who were ticking off some of these colleges that got approval, doing in the first place? Where was their duty of care to the taxpayers of Australia, and to the students of these courses, to ensure that people were not getting ripped-off—either taxpayers or the students who often became victims of these dodgy colleges?

The amendments proposed by the opposition and by the government are significant. It is completely unsatisfactory that the Senate is being asked to debate these amendments today. I understand the imperative that we must get this legislation through at the end of this sitting week because this must be dealt with one way or the other by 1 January; otherwise we will have another year of courses being offered and of dodgy providers out there not being dealt with adequately.

With those concerns aside, I now turn to vocational education regulation generally. The ability to access higher education is a cornerstone of a healthy and productive society. Many now consider it to be a right, not a privilege. It should not be a privilege; it ought to be a right. It is fair to say that there has been a higher education boom in Australia over the past few years. As I indicated earlier, in 2007 the Howard government allowed vocational education students to borrow their tuition fees in the same way university students did. However, restrictions were placed on this borrowing as a student required an arrangement with a university to credit their qualification towards a degree. This pathway-to-uni requirement was ditched by the Gillard government in 2013, which led to an explosion in the number of training providers as well as an explosion in the uptake of VET FEE-HELP loans. Unfortunately a lot of shonks, shysters and sharks got involved.

Statistics released by the Department of Education and Training reveal that the number of students accessing VET FEE-HELP loans increased by around 103 per cent between 2013 and 2014, from just over 100 students to nearly 202,800. The total value of VET FEE-HELP loans accessed by students more than doubled between 2013 and 2014 going from $699 million to—wait for it—$1.75 billion. We are talking about a jump of 250 per cent. It was a massive jump, more than a doubling. In 2014, 96 per cent of all tuition fees charged to eligible students were paid for using a VET FEE-HELP loan. On the face of it, these statistics told a positive story. More students were accessing higher education than ever before and that had to be a good thing. You would think it should be a good thing. Well, not necessarily because, since the FEE-HELP loan arrangements were extended to vocational education and training courses, more students have taken up these courses.

What happened as well was we saw a reduction in the TAFE education system. The problem of too radical a change here was that we debased, in a sense, those TAFE training colleges that, I think, served Australia well. Public institutions have had their funding cut, particularly in the 2014 budget, and that, combined with the explosion of private colleges, meant they were in effect squeezed out. So more students are taking up courses, but more students than ever are falling into debt for courses that, quite frankly, they should never have signed up to in the first place.

Hardly a week goes by when we do not hear about an education provider that has gone belly up or who has been caught out offering inducements so that students sign up for their courses. Last week, the ACCC launched legal action against the Phoenix Institute, a Victorian based college, following allegations that the college had tricked disadvantaged people into signing up for courses they could not afford. It has been alleged that spruikers for the college signed up intellectually disabled people to an $18,000 online diploma course despite the fact many of these people did not have access to a computer. If that is the case, these people are low-lifes to take advantage of disadvantaged and intellectually disabled people—that was a an absolute disgrace. The Phoenix Institute also offered early childhood and community services courses to students. A compulsory element of this particular course is a work placement. Despite being aware no work placements were available, the college signed up nearly 4,300 students to this course—that too is a disgrace. According to ACCC documents, the Phoenix Institute received $106 million in VET FEE-HELP loans. I am sorry that I did not have the time, but I would have liked to name and shame those individuals involved. Let's hope that the courts deal with that appropriately. I am looking forward to the outcome of the court case instituted by the ACCC.

Unfortunately, the Phoenix Institute is not a single rotten apple. The ACCC is also pursuing Unique International College for $57 million in VET FEE-HELP loans after it was revealed that the college was paying students $2,000 to sign documents they could not read in order to sign up for $25,000 diploma courses. The Australian Skills and Quality Authority has threatened to deregister the Institute of Professional Education following complaints the college had signed students up for courses and debts without their knowledge or permission.

While the loosening of the VET FEE-HELP scheme may have started with good intentions, it has become apparent to all that this industry needs to be reined in. We need to get rid of those shonks. This bill is a step in the right direction in reforming the vocational training sector. The measures in this bill are sensible and much needed but, of course, we now have a whole swag of amendments that we need to go through. Can I gently and respectfully suggest to the government that if you are fair dinkum about getting this bill through in the next two or three days, I would suggest it will involve sitting down with the opposition, with the Australian Greens and with the crossbenchers so that we can thrash something out, because I think the intent of the bill is laudable. We need to deal with this sooner rather than later but there ought to be some consensus to deal with the rorts that clearly must be dealt with.

The measures in this bill are needed. In exchange for the additional $18.2 million required in order to enforce the compliance provisions of this bill, the government hopes to achieve $350.9 million in savings over the forward estimates. I wonder whether those savings could be even more significant if we got rid of all the shonks in the sector and ensured that those good operators were able to flourish without being tainted by the operation of those shonks.

The bill amends the Higher Education Support Act 2003 to require VET FEE-HELP approved training providers to develop and apply appropriate student entry procedure requirements. The explanatory memorandum explains these procedures could include measures to assess a student's academic suitability, including literacy and numeracy ability, before signing students up to courses they will need a loan to pay for. I think that is an essential requirement but, if we are going to bring in these measures, for goodness sake, let us make sure we enforce them because this is costing taxpayers billions of dollars and is breaking the hearts of students who are being ripped off, and we are unjustly enriching a number of shonks out there. This is an important safeguard which was suggested in terms of being able to assess a student's academic suitability, particularly in light of data from the Department of Education and Training which reveals that nine per cent of all VET FEE-HELP loans were accessed by people from backgrounds where there is a question as to whether they knew what they were signing up for, people who had literacy and numeracy disadvantage.

The bill also requires students or people under the age of 18 to obtain their parents' approval before signing up for a VET FEE-HELP loan. In this submission to the Senate Education and Employment Committee's inquiry to this bill, Open Universities Australia supports this move noting that young people 'are particularly influenced by both strong marketing strategies and peer pressure', and dare I say, getting a $2,000 inducement or getting a free computer. The circumstances under which a student can seek a re-credit of their VET-FEE HELP loan debt balance towards another course will be expanded. So too will the circumstances under which a student can apply for remission of a VET FEE-HELP loan debt.

The Australian Chamber of Commerce and Industry has expressed support for this measure, arguing it will help to improve confidence in the sector by allowing students to recover fees if the course they participated in was substandard. That is a very valuable move. While I support this measure, I also acknowledge the concerns expressed by the Consumer Action Law Centre in their submission to the Senate inquiry, where they said:

It remains unclear exactly how a student is to access these new measures. It also appears from the bill—specifically item 14, proposed section 46(A)—that the bases upon which an individual can seek remission is limited.

It basically says that the Consumer Action Law Centre says that there needs to be more information. They say they are concerned that this process will not consider border consumer law rights, particularly rights pursuant to the Australian consumer law. I urge the government to release draft guidelines as soon as possible in order to receive feedback from industry as to their effectiveness and from consumers in relation to the intent of this particular aspect of the bill.

There are a range of other matters which we dealt with. I believe this bill needs to go to the committee. I support the second reading stages of this bill but the government has advised that the Department of Education and Training will be using data analytics in order to identify which providers are underperforming. This is in order to pinpoint the providers for whom the department may freeze payments or issue other conditions on the provider's operations. However, we are yet to see any detail of how the data analytics will work or the kinds of performance criteria training providers will be assessed against. I agree there is an urgent need of reform in the VET FEE-HELP sector. I agree that we must deal with this by the end of this sitting week; otherwise, we will have another year of catastrophes of taxpayers being ripped off and students being ripped off as well.

This is not a good way to deal with legislation, to be thrown a series of amendments by the government, particularly at the last minute. It is not satisfactory. I, however, will do my best to work in good faith and diligently with the government and the opposition and my crossbench colleagues in order to ensure that we do have a bill which does what it is meant to do—that is, to get rid of the shonks, the shysters and the sharks in this sector. I look forward to a robust committee stage of this bill and I encourage the government to sit down with nongovernment senators so that we can get a breakthrough in relation to this bill.

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I rise to make a contribution in the short time allocated to me before question time today on this outrageous claim by the government that they are about to fix the problem. We have seen the fixer in action in the House of Representatives and the fixer in action is well and truly alive in the legislation that this government is seeking to inflict on this sector. Madam Acting Deputy President Lines, as a fellow participant in the Education and Employment Committee in the Senate, you and I have had the unhappy experience of listening to commentary after commentary, testimony after testimony of how this government has failed to listen to the sector, has ignored every single warning sign of danger in this area. For two years they have been in government and they have not been watching carefully what has been going on. And now here they are in the last week of the year bringing in legislation and a series of amendments which have just landed on the table in the Senate in the last hour. That is how good the fixer is fixing things for education in this country.

What is going on today is a mad rush by an incompetent government who do not have any heart for education. They have taken $30 billion out of education in their first budget.

Helen Polley (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Aged Care) Share this | Link to this | Hansard source

How much?

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

$30 billion, impacting the future education of every young people in Australia, and now they are talking about putting a GST of 15 per cent on all things to do with education. This government hates education. This government gets in the way at every step in terms of fair and equitable access to a decent education and this hastily cobbled together piece of legislation—a poor piece of legislation, which is now having last minute amendments made to it in some sort of tokenistic concession—is exactly what Senator Xenophon described it to be. I think he critiqued it as a cobbled together piece of legislation that is failing to respond to the reality that confronts us. And what is the reality?

The reality is that in 2012 and shortly after, when this government came into being, there were 55,000 students engaged in vocational education and training. This is a powerful part of enabling young people and people who seek to retrain the opportunity to change careers and to build careers, and to learn in ways that make a whole lot more sense than when they went to school. So the VET sector has great appeal. $235 million were being spent in 2012 on 55,000 young people predominantly but on mature wage earners as well. The average debt they had at that time was between $5,800 to $6,000. While the government has been pulling the nation apart with divisive policies and a devastatingly bad budget in 2014, we saw that they did not keep an eye on this at all. They did not have an eye to education.

Stephen Parry (President) Share this | Link to this | Hansard source

Thank you, Senator O'Neill. It being 2 pm, we now proceed to questions without notice.