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Tuesday, 9 October 2012
Page: 11682

Ms LEY (Farrer) (16:50): I am pleased to speak on the Higher Education Support Amendment (Streamlining and Other Measures) Bill 2012. By the debate on the bill in the Federation Chamber today, we obviously flag that we in the coalition are not opposing the bill. I would like to make some remarks about the background, the implementation and some future steps.

This bill came about because of a post-implementation review on VET FEE-HELP which was undertaken in 2011, and this bill is the first stage of introducing some of these recommendations. The bill will amend the Higher Education Support Act to achieve the following: strengthen the quality of the Higher Education Loan Program schemes; improve information-sharing and transparency with the national education regulators; improve arrangements for the early identification of low-quality providers; and position the government to better manage risk to students and public moneys.

Schedule 1 of the bill aims to remove barriers to participation, boosting the take-up of VET FEE-HELP by quality registered training organisations. Schedule 2 will ensure that revocations of approval are undertaken in a timelier manner, ensuring that an organisation that has had its approval to offer VET FEE-HELP revoked cannot continue to offer VET FEE-HELP to students in the lag time between a minister revoking its approval and the actual revocation. Schedule 3 will see the consolidation of the four sets of VET—vocational education and training—guidelines into one, to be known as the VET Guidelines. This is purely a streamlining measure. Schedule 4 of the bill will adjust the specific date requirement for census dates, moving this to the guidelines. This will enable approved providers to have greater flexibility in offering courses and will minimise the administrative burden associated with this.

The government has in the case of this bill completed a regulation impact statement which I believe gives good background and context to the bill, and I wish to draw from that statement now:

Australia’s vocational education and training (VET) sector brings together students, registered training organisations (RTOs) governments, employers and industry bodies. There are approximately 5,000 RTOs ranging from public Technical and Further Education (TAFE) institutes, to private sector RTOs of varying size and scope. Large, broad-based TAFEs deliver the bulk of VET in the sector and in 2010 operating revenue for the public VET system was $7 billion. In the private sector small, specialised RTOs co-exist with large, multi-disciplinary colleges. There were approximately 1.8 million students enrolled in publicly funded VET courses in 2010, accounting for 74 per cent of VET students.

The Government works with state and territory governments to set national policy priorities, strategic directions and funding in VET. The Australian Skills Quality Authority is responsible for registering and regulating the majority of RTOs and accrediting courses in VET. The Government provided $1.7 billion to state and territory governments in 2010-11 to support skills and workforce development-related services. In 2011-12, this funding was increased by a further $1.75 billion over five years.

While not discounting the importance of the federal government adding to what is essentially state based funding agreements, what the coalition has been very critical of is the Australian Skills Quality Authority—ASQA—given that it is seriously under resourced. To make statements, as the government does, that ASQA is responsible for registering and regulating the majority of RTOs and accrediting courses in VET, and having just given the chamber a sense of the size of the VET sector, unfortunately shows that ASQA, which we have been told only has six active investigators on the case at any one time, has an enormous task. Not only that but also the states of WA and Victoria have not signed up to that regulator and therefore are continuing to do their own regulation whereby courses offered in those states do not have national delivery.

So, it is a confusing sector. It is characterised by this mix of federal and state funding. At times this government has been quite unfriendly towards private RTOs—certainly in the context of a cost-recovery model for ASQA—since every private RTO has to move through, registering, being monitored et cetera. That will place a large and sometimes impossible cost burden on small RTOs given the flexibility of the sector—and that is its great strength; they do need to be fit for purpose. So you have a small RTO in a niche area, the provision of that particular training and the need for that particular training to be turned on and off. We in the coalition believe that is something that we value. We therefore have to be very careful about anything that inhibits that flexibility and nimbleness. That was a little bit of an aside on ASQA but it is certainly central to the role of the VET sector.

I will take a couple of moments to talk about VET FEE-HELP. It is still not a term that is particularly well understood and I wonder if that is because not that many students access it, although people understand the old HELP scheme that applies to tertiary education. People of our generation certainly understand HECS, which is the old name for that scheme. VET FEE-HELP is quite complicated, both for the student and the RTO, but the principle is sound and it is obviously well supported by all parliamentarians.

To be approved of a VET FEE-HELP for students, RTOs must apply to the Department of Industry, Innovation, Science, Research and Tertiary Education—the department—and satisfy a range of eligibility requirements under the act. RTOs must be a body corporate, must be listed on the national register, be financially viable and likely to remain so, carry on business in Australia with central management and control in Australia, offer VET-accredited diploma and advanced diploma courses, be a member of an approved tuition insurance scheme and have administrative procedures and the capacity to meet reporting requirements.

VET FEE-HELP does not regulate the setting of the tuition fees and it is available only for diplomas, advanced diplomas, graduate certificates and graduate diplomas. These qualifications are commonly referred to as higher level VET qualifications. To be eligible, a student must be studying an approved higher level VET qualification and be either an Australian citizen or a permanent humanitarian visa holder who is resident in Australia for the duration of the unit of study. It is not available to international students. Full-fee-paying VET students and some state subsidised students are eligible for a VET FEE-HELP loan. A full-fee-paying student is not funded by a state or territory government or the federal government.

Eligible students can take out a VET FEE-HELP loan to cover all or part of their tuition fees. When students take out such a loan the government pays the loan directly to the RTO and students repay the loan gradually through the Australian tax system once their income is above the compulsory repayment threshold set by the Taxation Office. For the current financial year, the repayment threshold is $49,095. Students can make voluntary repayments of their VET FEE-HELP at any time.

Students are not charged an administration fee as such for their loans but all students and fee-paying places under VET FEE-HELP are required to pay a loan fee equivalent to 20 per cent of the value of the VET FEE-HELP loan. That fee has been determined by the Australian Government Actuary to adequately take account of public debt interest expense above consumer price index and fair value impairment of loans. So students who access these loans to pay the tuition fees associated with the state government subsidised place in VET do not pay a loan fee; instead, they pay the costs associated with the impairment value of the subsidised loans and the public debt interest is shared equally between the government and relevant state or territory jurisdictions. That is how the system works. That gives some idea of the VET sector as a whole and also the perspective of the student.

As I said, the current legislation comes from a post-implementation review of VET FEE-HELP which was commissioned in 2009. The report found that VET FEE-HELP was administratively complex. It made 10 recommendations to improve participation by both RTOs and students. I will run through those recommendations in brief. They are:

Remove the requirement for RTOs to have credit transfer arrangements … in place with higher education providers to become an approved provider.

Continue to extend the offer to waive the 20 per cent student loan fee to state and territory government subsidised students as part of the VET reform package.

Investigate the cost, feasibility and desirability of expanding VET FEE-HELP to include certificate IV level qualifications …

Seek to simplify and streamline HELP legislation to better achieve VET FEE-HELP objectives …

Continue to consider the synergies between HELP requirements and the national and non-referring jurisdiction regulators to further simplify and streamline requirements and minimise duplicity.

Continue to prioritise improvements to simplify and streamline administrative compliance requirements to support a responsive VET sector …

Develop an engagement strategy to address participation issues for RTOs, students, peak bodies—

et cetera.

Continue to improve information provision, education and promotion of VET FEE-HELP and its benefits to students and the VET sector …

Monitor and undertake further research into funding and tuition fees, approved courses, completion rates, pathways, student experience and employment outcomes …

Continue to monitor and review VET FEE-HELP against its objectives and expected outcomes and undertake a subsequent formal evaluation when five years of information is available.

Those were the 10 recommendations from the post-implementation review.

The sense that one gets from those recommendations is: here is a system set up to support students in vocational education and training. Often, as we know, the courses are expensive, depending on the qualifications sought and the length of time it takes. Often the participants in the courses have been out of the workforce for some time. They may be young and not well-resourced. They may come from family backgrounds where financial support is hard to get. If cost is a barrier, then it is really important that we attract as many as possible to the option of VET FEE-HELP, and that is clearly not happening. So, to the extent that this will move the sector towards that, it is well supported by the coalition.

The coalition are always well and truly supportive of endeavours to reduce red tape. The consolidation, for example, of the four guidelines into one set is a practical measure that will assist providers. Streamlining of the approvals process for low-risk providers should increase the number of VET FEE-HELP eligible providers, ensuring there is greater access to income-contingent loans for students. I think that is a very sensible approach. I would love to see how it actually works in practice. I do not see it anywhere else in the government's administration of any of its employment services or other contracts under the Department of Education, Employment and Workplace Relations. We have so often seen the one-size-fits-all approach, which places an impossibly high regulatory burden, I think, on organisations and sometimes individuals who, by any common sense assessment, would be considered low-risk. So, if there is going to be scope within this for the government to identify low-risk RTOs and say, 'You don't need the heavy-handed treatment. You don't need the compliance that costs your organisation so much that it perhaps cannot even operate,' then that is a good thing. But I am cautious because there is no evidence on the ground that that is the approach the government or its departments take in practice.

We in this place are all, I know, firm believers in the need for accessible and affordable education. The fact that VET FEE-HELP has the ability to bring vocational education opportunities to all Australians is very important indeed. But, again, far too many are being denied these opportunities, with only 39,124 students accessing VET FEE-HELP assistance in 2011. Only 112 registered training organisations offer VET FEE-HELP, of the more than 2,000 that could do so. In Tasmania and the Northern Territory there are no RTOs offering VET FEE-HELP. Not only do we need to ensure that students can both access and afford their education but we also need to do more to raise quality and remove poor performers and poor providers from this space.

I touched on the impossible task of ASQA earlier in my remarks. I continue to be alarmed at reports of students qualifying with certificate III level qualifications in as little as two weeks. While these students, being under the qualification limit, will not be eligible for VET FEE-HELP, the issue of quality is not just confined to those lower courses. We absolutely need a first-class world training system, and we on this side of the House recognise that we need graduates with transferable skills and graduates that can meet the skills of the future and embrace them. Vocational education is critical to this end. It must provide students with a comprehensive education which meets the needs of industry both now and into the future.

I might just touch on an initiative of the former coalition government, the Australian Technical Colleges. These worked in conjunction with industry to deliver world-class vocational education. These were centres of excellence, providing skills in demand. The current government chose to abolish these centres—instead offering a trade training centre to every school. Regrettably, this has not eventuated, and those that have been built are paltry in comparison to what could have been achieved had the Australian Technical College model been persisted with.

We all should be concerned when government policy simply results in bricks and mortar. As I travel the country in my shadow ministerial role in this portfolio I am confronted by a lot of facilities—whether they be trade training centres; Australian Technical Colleges in mothballs, sadly; TAFEs, where training could, for example, be happening over the summer break for maybe nine to 12 weeks but everything is closed up; schools that are offering a course that those students do not happen to want; or remote facilities a long way from any town but presenting options that the local community is not responsive to. It is not a question of capital assets and infrastructure. It is not a question of more buildings. It is a question of a better bringing together of the assets that are on the ground and better streamlining of the process by which we move the ideal candidates from school into vocational education qualifications and to a real job in the real economy.

This bill is part of a series of measures resulting from the post-implementation review. The government in its regulation impact statement—which I congratulate the authors of, because it was well done and it was sound—received a clear and absolutely unanimous message from the sector that:

… in order to improve participation in VET FEE-HELP, the Government must implement simpler and more streamlined policies and processes … During consultations, stakeholders strongly supported the changes proposed in the redesign. In particular, there was wide ranging support for the modifications to streamline administration and enhance the quality and accountability framework.

But many stakeholders were concerned that they would not actually have time to implement the changes. So what was recommended to government—and what they are beginning to bring forward with this legislation—was a staged approach, with the initial priority being to:

… implement legislation amendments necessary to strengthen the HELP scheme’s quality and accountability framework. During the passage of legislation, both approved VET FEE-HELP providers and applicants would be kept abreast of their obligations and responsibilities under the proposed amendments and given sufficient time to make any operational changes necessary to meet these requirements.

Stakeholder implementation concerns would be addressed and sufficient time for further stakeholder suggestions and feedback would be considered. That is not the government's statement; that is the statement that I have drawn from the regulation impact statement.

We will be watching closely to make sure that that actually happens in the real world. For that reason, primarily, I flag that we will refer this to a Senate committee. I do not think it needs a long and tedious deliberation, but I would like small RTOs, which I think feel a bit battered and bruised by this government's approach to what they do, to have the chance to have their voices heard. I am not confident that they have already had that. Stakeholder consultation, as we in this place know, can involve talking to peak bodies. Talking to a couple of big representatives does not always drill down to the many different local outlets working on the ground in the small towns and how the real world works for them. In the real world, for them as private providers the overwhelming issue is the cost of compliance and the amount of money that the government is going to ask from you so it can make sure that you fulfil the government's requirements. That is not necessarily a bad thing, but it is terrible if it gets out of hand. I think that the examples I have given before show how in many instances it has got out of hand.

The regulation impact statement acknowledges that the redesign of VET FEE-HELP will result in costs to stakeholders for staff training, the updating of promotional material and the aligning of administrative systems. However, these costs are expected to be directly offset by the benefits that will accrue from more streamlined administrative and reporting policies and processes. I do not think that is a short, direct cause and effect relationship. Costs are going up: staff training is expensive, promotional material has to be new and aligning administrative systems can be a huge expense when you are fiddling with your existing IT. The government says that costs will be directly offset by the benefits. Yes, costs may be partly offset by the benefits, but it may well take time for those benefits to come through the system, because those benefits presumably will be higher enrolments of students. RTOs are not going to change the way they do business and move into this slightly different world only to have the same number of students; the effect on them would be quite severe. This will only work if participation increases. There may be a lot of factors impacting on that. We need to see what they will be and we need to take this carefully. For that reason, as I said, we will be referring this legislation to a Senate committee.

The intent of this legislation is sound. The reasons given by the government and by the parliamentary secretary in her second reading speech make sense to the coalition. As always, the devil will be in the detail and the implementation. But at this stage I commend my remarks to the Federation Chamber.