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Thursday, 13 September 2018
Page: 6330

Senator RUSTON (South AustraliaAssistant Minister for International Development and the Pacific) (12:51): The Education and Other Legislation Amendment (VET Student Loan Debt Separation) Bill 2018 enables the separation of VET student loan debts from other forms of higher education loan program debts. This bill also enables a clearer and more effective transition of approved courses eligible for VET student loans.

Vocational education and training is central to Australia's economic prosperity and employment outcomes for students. For the benefit of senators, I would like to outline how these changes will improve our system for students, employers and policymakers. Income contingent loans in VET help achieve this prosperity by assisting students to access higher-level VET qualifications. The government supports income contingent loans. Without them, students would miss out if they could not afford to pay full tuition fees to undertake high-level VET qualifications.

The VET Student Loans program provides capped income contingent loans to students undertaking higher-level VET qualification. With over a year of the program being in force, it is clear that it is meeting its objectives. Completion rates are up and the course list is successfully balancing industry needs, employment outcomes and student choice. This is imperative if Australia's economy is going to have the skills sector that reacts to demand and an education system that fulfils the promises of employment to students.

The capping of loans to $5,000, $10,000 and $15,000, with the exception of aviation courses, given their high cost of delivery, has limited the excessive price gouging experienced under VET FEE-HELP. In addition, payments in arrears and student progression requirements are ensuring that loan amounts are being paid for genuine students, putting an end to unacceptable enrolment practices in the now closed VET FEE-HELP scheme. With these measures successfully achieving their objectives, this bill will better measure the program's fiscal sustainability.

There is currently limited capacity to measure the sustainability of the VET Student Loans program, because debtor HELP repayments are not disaggregated by loan type. Irrespective of whether the debt applies to a HECS-HELP, FEE-HELP, SA-HELP, OS-HELP, historical VET FEE-HELP, or VET student loans assistance, loan repayments are made towards a single aggregated HELP debt. This means the government cannot accurately determine what proportion of which form of HELP assistance paid by the government has been repaid by debtors. Similarly, where a HELP debt is not being repaid, it is not possible to identify the form of HELP assistance the debt relates to. This bill will separate VET student loan debts from other forms HELP debts, providing greater transparency of repayment rates for VET students and better information to inform policy decisions and the public. This information will be vital to delivering a responsive skills education system for students and employers.

From 1 July 2019, individuals who incur a VET student loan debt will access a separate statement of account for their VET student loan debt. From 1 July 2020, the individual's notice of assessment will display VET student loan repayment details. This bill will enable more timely, transparent and accurate reporting on the financial sustainability of the VET Student Loans program and support greater public accountability of the program. The repayment thresholds, repayment rates, renewable HELP balance and indexation with respect to VET student loan debts will be the same as the repayment thresholds, repayment rates, renewable HELP balance and indexation for HELP debts. A person must start repaying a debt in relation to a VET student loan once they have finished repaying any HELP debts. Consistent with existing arrangements for HELP debts, persons residing overseas who have a VET student loan debt will be required to make repayments with respect to those debts.

A key feature of the success of the VET Student Loans program is the course list—the VET Student Loans (Courses and Loan Caps) Determination 2016. This bill also enables better continuity and more flexibility in delivering approved courses for VET student loan providers—providers who have proven their quality through a rigorous application process. Loans are only available for courses on the course list. This list ensures students are only incurring a debt for courses that have a high national priority, meet industry needs, contribute to addressing skills shortages and align with strong employment outcomes. The list is updated twice yearly. Courses are specified by reference to their course code. If a course becomes superseded or noncurrent, or if a course is reaccredited, students cannot be approved for loans to undertake the new version of the course until the course list is updated. Each time the list is updated, a number of courses are replaced by the superseding or reaccredited version. The bill lays the groundwork for the course list to refer to the National Register as defined in section 3 of the National Vocational Education and Training Regulator Act 2011. The National Register is the authoritative information source on nationally recognised VET courses and training packages and their status. By enabling the course list to refer to the National Register, students will be able to be approved for a loan when a course on the list is replaced without having to wait months for the list to be updated. It is not possible to include anticipated replacement courses on the list. We considered alternatives before coming to the conclusion that referring to the National Register is the best approach.

The VET system is dynamic. A key feature is the capacity to provide nationally recognised training to build skills across almost every industry and sector in the Australian economy through over 2,000 courses. Qualifications developed under training packages are reviewed by industry on a regular basis, with the Australian Industry and Skills Committee meeting six times a year to consider course updates. A qualification only gets a course code once it is included in the National Register. The accreditation of accredited courses is considered by the relevant VET regulator. The regulator can determine to extend the currency of a course until the accreditation of the course is reviewed and approved. Reaccredited courses are assigned course codes once approved and put on the National Register. It is not possible for the course list to predict what courses will be considered and approved by the Australian Industry and Skills Committee or VET regulators in advance; nor will those courses be allocated a course code until they are approved. Updating the course list to refer to the latest version of the course on the National Register won't open up the course list and doesn't change the methodology for adding courses to the list. It just ensures that students are not disadvantaged when a course is replaced. The National Register already has clear linkages between current and superseded or expired training package courses. This ensures that students will only be able to access loans for courses that supersede training package courses on the National Register. We are working to make further changes to the National Register to ensure the accreditation of accredited courses is also clearly indicated on the National Register. These changes are expected to be made before the determination is updated to refer to the National Register. The integrity of the VET Student Loans program will not be compromised.

In addition, I would like to clarify some points that have been raised in relation to this bill. The Senate committee has reviewed the bill and found that it should be passed, with some comments made by the Greens and Labor. In reference to the comments made, the committee found that, while questions around policy differences relating to different forms of higher level education are worth examining, the committee has not received enough evidence to support the changes these submitters advocate. In addition to this, the committee saw many wide-ranging views provided to it in relation to the broader education policy, including that there should be a wholesale overhaul of the system. However, the committee believed that such suggestions were outside the scope of the committee's inquiry. Finally and importantly, the committee found that, if enacted, the bills will ensure that both policymakers and students have access to more accurate information to help inform future decisions. The committee concluded that improved accountability and fiscal sustainability are worth pursuing, and it therefore supports the bills in their entirety.

I would also like to quickly note that changes were made to the bill in the House earlier, which I will clarify for senators. Parliamentary amendments made by the House to the Education and Other Legislation Amendment (VET Student Loan Debt Separation) Bill provided for a renewable HELP balance so that VET student loan debtors' repayments, both voluntary and compulsory, will offset their HELP balance. This will apply from 2020 for repayments made after the 2019-20 financial year. These amendments are consistent with parliamentary amendments to the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018. The parliament amendments also include minor technical amendments, some that are consequential to the enactment of the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018. The others are related to the rounding down of amounts at certain steps of the calculation of a person's accumulated VET student loan debt. The amendments relating to the rounding down of amounts ensure that the Australian Taxation Office, which deals with the collection and repayment of student debts, has absolute consistency with the existing arrangements for HELP debts under HESA.

The former Assistant Minister for Vocational Education and Skills, the Hon. Karen Andrews MP, tabled a correction and addendum to the explanatory memorandum for the VET student loan debt separation bill in the House, which responds to the Senate's Scrutiny of Bills Committee's request for more information on a provision in the VET student loan debt separation bill that applies an offence of absolute liability. As I've discussed, targeting access to higher-level VET qualifications that industry needs and that are associated with strong employment outcomes is the key objective of the VET student loan program. I commend the bill.

Question agreed to.

Bills read a second time.