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Education and Employment Legislation Committee
25/02/2015
Estimates
EDUCATION AND TRAINING PORTFOLIO
Australian Skills and Quality Authority

Australian Skills and Quality Authority

CHAIR: I welcome ASQA. It is lovely to have you here. Do you have an opening statement?

Mr Robinson : No.

CHAIR: Excellent. We will go straight to questions.

Senator KIM CARR: Mr Robinson, are you aware of the press release issued today by the Victorian Minister for Training and Skills, Mr Steve Herbert, with the title 'The Victorian government disqualifies unfit employers from hiring automotive apprentices'?

Mr Robinson : I am not aware of that release.

Senator KIM CARR: This relates to the investigation of the Victorian Registration and Qualifications Authority into low-quality training of apprentices in the automotive industry. Are you aware of that?

Mr Robinson : I was not aware of that, no.

Senator KIM CARR: The investigation says that eight employers have been disqualified from hiring apprentices and 99 contracts have been cancelled or have ceased voluntarily. Are you aware of that?

Mr Robinson : This is part of the apprenticeship side of the Victorian government's role in monitoring the quality of the apprenticeship system. It falls outside of our sphere. If they had concerns about particular nationally regulated RTOs in the process then they would notify us and we would take appropriate action. But this relates to their administration of the apprenticeship system in Victoria, I believe.

Senator KIM CARR: I see. They are talking about:

poor supervision of apprentices

inappropriate work tasks or facilities

limited evidence of training, including a lack of contact with the registered training organisation …

That would be your province, would it not?

Mr Robinson : I believe from what you are saying that they are looking at the way the contract of training has been administered by those employers. Employers have certain obligations under those contracts of training, and it sounds from what you are saying that they have concerns about whether those employers were fulfilling those obligations—like having qualified supervisors and making sure they get the correct training for the apprenticeship.

Senator KIM CARR: I see.

Senator Birmingham: Just to be clear, Senator Carr, this is a media release issued by the Victorian minister, Minister Herbert, today, did you say?

Senator KIM CARR: That is right.

Senator Birmingham: And any accompanying documents, or just the media release?

Senator KIM CARR: I have some accompanying documents.

Senator Birmingham: Are they documents that might be publicly available to the rest of us?

Senator KIM CARR: No, not yet.

Senator Birmingham: Right. Helpful!

Senator KIM CARR: We will see. So you do not look at whether or not apprentices are released for formal training or they are not being paid for attending training?

Mr Robinson : The supervision of the apprenticeship scheme is the responsibility of state government authorities in the training area.

Senator KIM CARR: Are you investigating any RTOs or VET providers for low-quality training similar to that inquiry undertaken by the Victorian—

Mr Robinson : We are investigating a lot of providers in relation to low-quality training. Most of the providers who provide apprenticeship training also provide other training, and we do not make a particular distinction between their apprenticeship training and their other VET. When we look at providers, we look across the board at their operations, but we always have a considerable number of RTOs in our sights at any one time.

Senator KIM CARR: You have been allocated an additional $68 million. Is that right?

Mr Robinson : Yes.

Senator KIM CARR: What is that being used for?

Mr Robinson : Some $55 million of it is for not going to full cost recovery of fees. The government has made a decision that, instead of going to full cost recovery, as was the original intention when ASQA was established by COAG, we would move to a more risk based regulatory approach and do away with some of the transactional based regulatory functions that we were carrying out as a matter of course. The amount allocated to avoiding that—not going to full cost recovery, not putting the fees up—was $55 million over the next four years, which is the bulk of that additional $68 million.

There were also some amounts in that budget increase to run programs around better educating RTOs about their obligations under the standards. We ran a lot of sessions in October and November last year for the RTO world about the new standards that are coming in on 1 April. We had over 4,500 people attend those sessions around the country, getting people equipped to run the new standard. So there was $8.5 million to run initiatives like that, and there is also about $5 million over four years for the capital budget of the organisation. We are developing our IT system to enable RTOs to have a more streamlined experience in lodging their applications, to be able to track where they are up to and all those sorts of things.

Senator KIM CARR: What is your relationship with the National Training Complaints Hotline?

Mr Robinson : When the National Training Complaints Hotline get complaints in, they refer them to various agencies, depending on what the nature of the complaint is. Some of them get referred to ASQA where they fall in our jurisdiction. Others might get referred to a state authority if they relate, for example, to a TAFE issue or some such matter where the states need to have a look at the complaint. So we get some of those complaints, but they do not all come to us. We also have a well-developed complaints system at ASQA, and the bulk of the complaints we have received so far have come to us directly.

Senator Birmingham: The National Training Complaints Hotline was a COAG Industry and Skills Council agreement, so it is something agreed to by all of the states and territories as well as the Commonwealth. Essentially, I have described it as best acting as a triage service so that people do not need to try to work out whether it is the Victorian regulator you just referred to that they need to direct their complaint to, or whether it is ASQA or some other entity. They can ring a single hotline that triages the complaints to the relevant organisation.

Senator KIM CARR: So how many referrals have you had, Mr Robinson?

Mr Robinson : I believe only a small number of complaints have come through so far. The department may have information about the exact number, but I believe there have not been more than 60 or 70 in that sphere. We get about 1,400 complaints a year lodged with us, including prior to this service being established. So a lot of people are now used to raising complaints about RTOs directly with us, and we also pass some of those complaints on to other relevant bodies, as well as dealing with them ourselves where that is appropriate.

Senator KIM CARR: I am told that Victoria and New South Wales are getting some 600 or 700 complaints a year, in those two states. I do not have a figure for Queensland yet but I understand that similar sorts of numbers are coming through Queensland. That is substantially more than the numbers that you are registering through this hotline. How would you account for that?

Mr Robinson : I am not sure what complaints they are, Senator, that you are referring to with the states. They could be about their TAFE institutes or—

Senator Birmingham: Senator Carr, the hotline has been operational since 19 January.

Senator KIM CARR: I see.

Senator Birmingham: So it has a relatively—

Senator KIM CARR: So you are saying it is too early to tell?

Senator Birmingham: That is right. I understand it has received approximately 68 complaints so far. So, obviously, until—

Senator KIM CARR: That is consistent with the 60 or 70. But the consumer affairs people do a lot of this in the states. Is that true?

Mr Robinson : The consumer affairs people also receive complaints from people about all sorts of businesses, including training or—

Senator KIM CARR: My advice is that this is specifically training.

Mr Robinson : Yes. We—

Senator KIM CARR: It is of that order, the 600 to 700 order.

Mr Robinson : We have certainly had discussions with the consumer affairs authorities, including the ACCC, about that—and some of the VET standards, as you know, relate to what students are required to be told by an RTO and do go to matters of student protection, and marketing. So, sometimes, if someone is in breach of our standards, they are also in breach of Australian consumer law.

Senator KIM CARR: I am sorry; I mislead you before. It is 600 in New South Wales and 900 in Victoria.

Mr Robinson : Right, yes. These are the consumer affairs complaints about training?

Senator KIM CARR: Yes, specifically about training.

Mr Robinson : And they do refer some of those on to us and raise issues with us. We have discussions with them and work with them where we can as well. So there is actually quite a comprehensive system in place for people to be able to make complaints about training issues. As I say, we get about 1,400 a year.

Senator KIM CARR: Is it a matter of concern to you that there are so many complaints?

Mr Robinson : It certainly is. The whole VET regulatory reform strategy is about taking the information that comes through from complaints and other intelligence from the industry and using that to address poor-quality RTO provision at a much faster rate than we would if we had continued with the system that we were using before, where the placement of an application to get re-registered or the like would be the main trigger for our regulatory scrutiny. We are now wanting to re-prioritise our work to deal more quickly with the worst-quality providers, which I think everyone agrees is the biggest need in the sector, actually, in terms of what regulatory work needs to be about. We have certainly had strong support for this approach from the main business organisations and users of the training systems. They see the issue as really important. Just under half of all the complaints we get come from students, and students are another major group who have a real interest in this work.

Senator Birmingham: And, Senator Carr, I think the figures you quote are concerning. I would not want to play that down at all. I do think it is important to always keep in mind the scale of the vocational education and training sector, as well. Estimates are that across Australia last year around three million Australians were involved in some form of vocational education and training—around 1½ million in some type of publicly subsidised trainings. Whilst those figures of complaints are concerning just in their raw number, we do need to appreciate that it is a very large public engagement activity of, as I say, around three million and keep in some sense of proportion the number of complaints.

Senator KIM CARR: If I think about the number of school kids and the number of university students we have in this country, you would not get anywhere near that number of complaints—900 in Victoria alone.

Senator Birmingham: It would be curious to know how many complaints schools and education departments receive during the course of the year. I suspect there would be quite a lot. But, as I said, I do not want to downplay the significance of that. For the benefit of anybody who might be listening or reading the Hansard,I just want to make sure that they can at least keep a sense of proportion about it.

Senator KIM CARR: Where would a student go to find out if a training provider was reputable or was under current investigation?

Mr Robinson : We do not publicise the results of our regulatory work until they are concluded. If we took action to actually deregister a RTO or provide another sanction on them, that is published on our website. But while an investigation is underway, or the work is not completed, obviously under our act we are not permitted to publish the results of something until it has concluded. Our regulatory work looks to check compliance against the standards that RTOs are required to meet when issues are raised, or concerns are raised, about that compliance. People need to be meeting those standards to retain their registration. But our regulatory work does not, for example, give a Michelin star rating to each RTO about how good they are.

Senator KIM CARR: But it does raise the issue about how you know about that if you are a student seeking to enrol. There is no early warning system. Do you have to wait until you read about it in the newspaper? How do you find out about it?

Mr Robinson : The RTOs put information on their websites about their organisations.

Senator KIM CARR: Entirely reliable that, isn't it!

Mr Robinson : There is not a system, as you are suggesting, that really gives a comprehensive rating of quality for every provider. That has been done independently.

Senator Birmingham: Again, it is an issue that I am acutely aware of—that is of how we create a more informed market for student choice and for students to decide and compare providers and courses. Some of the work around the MySkills website provide an opportunity there. Ultimately, we really need better information to help provide that informed student market. The total VET activity reporting is, in part, about trying to ensure we have data in the future. Unfortunately, in a range of areas in this sector I believe we are playing catch up. That is because of poor structures put in place to start with—and many of those, of course, were during the life of the previous government. But there is also, of course, a lot of state government activity in this space. Ultimately, though, I do not discount the issue you raise about where and how students can make an informed choice. Total VET activity reporting, the unique student identifier—all of that will help to provide a better basis of information for us to construct the type of data, knowledge and information that students can, hopefully, rely upon in future.

Senator KIM CARR: Between 2011-12 and 13-14, fee and fine income has almost trebled. It has risen from $7.1 million to $19.6 million. Would you agree with those figures?

Mr Robinson : Let me just pull that information out. In 2011-12, the fee income that we raised was $7 million; it rose to $19 million in 2013-14, and it is stabilising now at around $20 million this year. One of the main reasons why the rise was quite dramatic—there were two reasons—was that, in the first year of ASQA's operation, Queensland did not enter the system until 1 July the following year. So, in the first full financial year, ASQA commenced with New South Wales, those parts of Victoria and WA that we did have jurisdiction over, the ACT and the Northern Territory. Tasmania and South Australia came on board during that financial year, and then Queensland came on board right at the very end, or the very beginning of the next financial year. Part of that was the build-up of ASQA's jurisdiction.

The second issue was that it was decided when ASQA was first established and was to move to full cost recovery in its fees that, because these fees were higher than what states had been charging, with the possible exception of New South Wales, they would be introduced in a number of tranches. It started off with some fees for 1 July 2011. Some new fees were bought in in July or August 2013, and there was to have been a further rise to go to full cost recovery by now, but that was averted by the decision of the government in October last year to not require us to go to full cost recovery fees and to, indeed, give a budget allocation for that half of ASQA's next budget.

Senator KIM CARR: That covers the fees issue. What about fines?

Mr Robinson : We have not levied any fines.

Senator KIM CARR: None?

Mr Robinson : No. The legislative instrument for doing that is nearing completion. Our regulatory sanctions to date have been around licences or registration being revoked, or conditions being put on them, or requirements being made of the RTOs to address certain issues.

Senator KIM CARR: Is it because you did not have a regulatory instrument that you did not impose any fines?

Mr Robinson : There has been a considerable development over this process. This part of the system was the least developed part of the act when it was first introduced, and I think the range of circumstances where fines might be applied will be somewhat limited, because mostly you have to look at the regulation in the context of what is happening with each RTO. Our main purpose is to make sure either that they address the deficiencies in meeting the standards or that they are not allowed to continue not meeting those standards. That has been the focus to date, but there is work being done to bring the fines part of the process to a conclusion, which is, I believe, going to be happening fairly soon.

Senator KIM CARR: Do you think your fee structure has had any impact on the number of new providers seeking registration?

Mr Robinson : The fees we charge relate to well under half a per cent of the total revenue to the sector. Even though they have gone up a bit—quite a bit in some cases—they are still a relatively low part of the total business cost of the organisations. Since we started, the total number of RTOs in Australia has gone down by over 300 RTOs. But we have had over 1,000 applications to register new RTOs since we commenced operation, and we have approved around 80 per cent of those. There have been a lot of new RTOs entering the market since we came; there have also been about 500 RTOs that have ceased operating and withdrawn, in gross terms, but it has had a net impact of a reduction overall of about 300-odd RTOs since we commenced our operations.

Senator KIM CARR: How many applications were rejected in 2013-14?

Mr Robinson : Let me just get those figures for you. In 2013-14 we had a total of 7,600 applications, and we rejected 12.2 per cent of the applications in the year 2013 for initial registration, we rejected 3.5 per cent of the existing RTOs applications for re-registration and we rejected 1.4 per cent of the applications to add new courses to the scope of registration.

Senator KIM CARR: So can you give me those in number terms?

Mr Robinson : Yes, rejections in 2013-14 were 44 initial RTO applications, 33 renewal-of-registration applications and 103 change-of-scope applications.

Senator KIM CARR: Thank you. What were the main reasons for your rejections?

Mr Robinson : For example, when we reject the registration of an existing RTO, we have been through quite a process with them. They would get an audit report from us, looking at where the areas of noncompliance with the standards were. They would have an opportunity to rectify those noncompliances. Then if they had failed to do so after that process we would not automatically reject their registration. It would be about being noncompliant with the bulk of the standards, it would be about serious noncompliance and it would be about very poor-quality training and assessment. That is at the higher end of our regulatory sanctions.

Senator KIM CARR: So the 33 applicants—did you say 33?

Mr Robinson : Yes.

Senator KIM CARR: They are very serious then, are they?

Mr Robinson : Yes, and we have had around 134 of those since we started in 2011. So these are the RTOs that—

Senator KIM CARR: What sorts of things are 'very serious'?

Mr Robinson : They have teaching staff who are not qualified, they are not following the requirements of training packages in relation to how they have put their training program together and they have very poor assessment processes that are not leading to valid assessments of the students in being able to properly demonstrate that they have the competencies that they should be getting from those programs. Quite frequently they will be involved in sharp marketing practices. I would suggest to you that there is a group of RTOs—and they are a small number—where training and assessment are not high on their list of priorities. They are interested in collecting money off people and issuing them with them a diploma or a certificate III, but you could not possibly construe their process as having a quality training system. When we find RTOs like that we do take those actions.

Senator KIM CARR: How many audits were completed over the last two years?

Mr Robinson : I can tell you that, just a moment. In 2013-14 we completed slightly over 1,500 audits, in 2012-13 almost 1,400 audits and we have done about 735 audits up to December, in this financial year.

Senator KIM CARR: How many of those compliance orders were triggered by risk assessment?

Mr Robinson : I only have the figures for that over the full life of our operations—for the 3½ years. The compliance monitoring audits have triggered, to date, about six or seven per cent of the total number of audits. A further 2½ per cent have been triggered when we have had a complaint and done a compliance-monitoring audit as well. So roughly 8½ per cent, so far. But our new regulatory strategy is really about turning the main trigger of our regulatory scrutiny to risk assessment and market intelligence about concerns about providers and, of course, using that complaints data. We are talking to the state authorities as well, as I said, so that we can make sure that we get that information and use that as the trigger for really applying scrutiny on RTOs. We are moving away from applications being the main trigger for regulatory scrutiny to date to a system where risk assessment and marketing intelligence and also the track record of an RTO become the crucial things for determining—

Senator KIM CARR: What was your percentage of audit generated by complaint, whether it be industry intelligence or whatever?

Mr Robinson : Up until now it has only been about 2½ per cent.

Senator KIM CARR: And you want to move that?

Mr Robinson : We want to move that to be the main factor.

Senator KIM CARR: Main; righto.

Mr Robinson : Yes. The marketing intelligence and the risk assessment together are the main factors of turning our attention to where we need to apply the most scrutiny. We have been a regulator that has not been afraid of making strong and tough decisions when we felt the RTO performances warranted that, but we have been using the application as the main trigger for when we might apply that scrutiny. The new regulatory approach is really about being more sophisticated in analysing risk and using risk assessment, marketing intelligence and complaints information to trigger that scrutiny. Of course, the new total VET activity data will add a big new dimension to our work as that starts to come on stream this year.

Senator Birmingham: Senator Carr, the legislation that was introduced into the House of Representatives today has a key element related to this ambition, which is to extend the registration period for RTOs from five years to seven years. This therefore means that the requirement upon ASQA for that reregistration audit falls less frequently and more resources from ASQA can be dedicated to the types of other audit activities that Mr Robinson has just been speaking about but are, of course, seen to be much more efficient and effective in terms of, as much as anything else, if I can use this phrase, 'catching people off guard' rather than them knowing full well when their registration is coming up for renewal and that they have to have their house in order at that particular point in time.

Senator KIM CARR: Do compliance managers still request audits?

Mr Robinson : Our audits are initiated by our compliance management groups around the country, and they are based on the business rules that we put in place.

Senator KIM CARR: So they follow through on those.

Mr Robinson : Yes.

Senator KIM CARR: How many audits are you planning for the next two years?

Mr Robinson : We would certainly be planning to do something in the order of 1,500 or more audits each year and, as I say, as we roll out our new regulatory strategy, which is focusing on risk and complaints information and the like. We would be wanting to rapidly transform the history that we have had of most audits being triggered by an application to one where most of those audits get triggered by the complaints we get in and the risk analysis that we are doing.

Senator KIM CARR: What does an audit involve?

Mr Robinson : Most of the audits we do involve a site visit to the RTO by at least two auditors usually. Before the audit, they develop an audit plan to do with the standards that they are going to focus on and a sample of the training and assessment that the RTO is doing. Some of the RTOs have hundreds of programs, and so they will not necessarily audit all of those programs but they will audit a sample. They will have looked at the risk information that we currently have on the RTOs on file about their track record and areas of past concern and the like. So those sorts of factors will feature more heavily in the things which they follow up on and ask questions about. Sometimes we will sample students if we have had particular concerns raised about the way the RTO has been dealing with students. Sometimes we may ask employers. That is a rarer thing at this point but it does happen. Those sorts of additional steps would be used if we had reasons, like complaints, that we wanted to particularly check out. So the audits are a comprehensive look at the standards that RTOs are required to meet and they particularly look at the quality of training and assessment; and, of course, the other area that is important in this is the student requirements.

Senator KIM CARR: Just refresh my memory: how many RTOs did you say there were in Australia?

Mr Robinson : There are about 4,000 that ASQA regulates, and the total number as of 31 December is 4,573. ASQA regulates 3,898.

Senator KIM CARR: Okay. So you are looking at auditing over 25 per cent?

Mr Robinson : Around that, yes. The number we do will also depend on the risk analysis we do. We are moving away from auditing as a matter of course on many of the application processes to actually focusing in on the ones that are higher risk. We may do fewer but we do more thorough and extensive audits where we have got more intelligence about that RTO requiring an even deeper look than we might otherwise give it.

Senator KIM CARR: Okay. I asked before about the rights of students to know. What about the rights of a student to get a refund if they have actually been signed up by a dodgy provider, signed up with a big debt, and have fees and other charges outstanding? What recourse do those students have?

Mr Robinson : That is a good question. The standards for RTOs relate to RTOs not charging more than $1,500 in up-front fees unless they are in an approved scheme. There are only two that have been approved—there are three. There is the TPS, for overseas students—run by the Commonwealth—that all providers to overseas students must be in. Then, for domestic students, ACPET, the Australian Council for Private Education and Training, and TAFE Directors Australia both run schemes for their members which guarantee placement of students if there is a failure and the like or, if that is not possible, a refund of moneys they have paid. So they are allowed to collect more moneys, but only if they belong to that scheme. Those two schemes have been approved by ASQA as legitimate schemes to protect students. Otherwise, the standards—

Senator KIM CARR: They are various TASs, aren't they? They are known as TAS?

Mr Robinson : That is the ACPET scheme, yes. The TDA one may have a similar name, and that has only recently been approved because TDA has some non-TAFE members—

Senator KIM CARR: They were required in legislation, if my memory serves me correctly.

Mr Robinson : Yes, the state people—

Senator KIM CARR: No, under ESOS. ESOS is the origin of that. It was a requirement at law to provide a financial assurance scheme because so many of these colleges went belly up.

Mr Robinson : Yes. The Commonwealth has taken over the overseas student—

Senator KIM CARR: That is right. That is all very well.

Mr Robinson : angle under the TPS.

Senator KIM CARR: What about all the rest of them, because that does not cover the entire scope?

Mr Robinson : The standards state that an RTO can only legitimately collect $1,500 up-front from a student. If that RTO fails or if ASQA makes a decision to revoke the registration of that RTO, we liaise with various state officials and the like, and they put into place various arrangements to try and place the students elsewhere. Not every state does exactly the same thing, and the students do not have the same protection as they have under the TPS or the two schemes that we have approved from ACPET and TDA. But the standards are designed to require RTOs not to collect more than that amount so that the risk is minimised if they fail.

Senator KIM CARR: Sure, but that is up-front fees. There are a whole lot of fees associated with FEE-HELP, are there not?

Mr Robinson : There are debts that are accrued by people in VET FEE-HELP.

Senator KIM CARR: Yes. How does a student get recovery on those?

Mr Robinson : I might refer that question to—

Senator KIM CARR: You do not provide any support on that matter?

Mr Robinson : No. We have a role with VET FEE-HELP, but it is not this particular issue.

Senator KIM CARR: Who is responsible for the refunding for students?

Dr Banerjee : The responsibility for looking at refunds is the responsibility of the department. The specific officers who look after the administration of the scheme are due attend under outcome 3. We can provide further information then.

Senator KIM CARR: But is it the case that students can get a refund?

Dr Banerjee : It depends on the circumstances.

Senator KIM CARR: It always sounds very suspicious to me.

Senator Birmingham: They can, Senator Carr. I would again say that the effectiveness of the refund provisions is on my radar in terms of some of the issues that we might want to be having a look at to ensure that, for exactly the types of scenarios that you are eluding to, where students have not received the outcomes that they desire and that they deserve through a VET FEE-HELP loan, there are effective provisions in place. As Dr Banerjee has indicated, officials talk through the current arrangements and how they operate and, as you know from my public statements over recent weeks, there are a range of things I have indicated that I have some concerns about. In one small part, this issue around the effectiveness of refund provisions is something that I think we need have a look at.

Senator KIM CARR: What about the recovery of moneys that have been advanced by the Commonwealth to a bodgie RTO?

Ms Paul : We do have a compliance function to look at advances of Commonwealth funding to RTOs, and we are happy to talk about that under outcome 3 if you like.

Senator KIM CARR: What is your role with regard to—

Mr Robinson : At ASQA, our role is about ensuring that the RTOs meet the standards that they are required to meet in relation to their work with VET FEE-HELP or with other student recruitments. We are about to commence a strategy of looking at those RTOs that we have had the most complaints about in relation to VET FEE-HELP. We are going to audit all of those providers, and that work is commencing this week. We have identified 18 providers of VET FEE-HELP about whom we have had several or more complaints. We are going to look at each of those providers' operations to check that they have recruited students in the proper manner; that they have not exceeded; and that they have informed the students about the requirements of disclosure around the debt they are going to incur, the fees they are being charged and the training they are going to receive. Also, there is that important issue which has come up in some of the dispatches about possible VET FEE-HELP abuses, which relates to people being recruited inappropriately to a scheme so that the provider can qualify for VET FEE-HELP. By that we mean that they have not satisfied the requirements to go through and check that the students are being enrolled in programs that are appropriate to their needs—for example, someone who is functionally illiterate being put into a diploma program is probably the wrong level program and should not be attracting the VET FEE-HELP placement.

We are going to look at all of those issues. The new standards that start on 1 April for existing RTOs are going to significantly increase our teeth to deal with some of these issues with RTOs. They have greater specificity in what an RTO is required to inform a student about when they recruit them, and there are also greater requirements for the brokers they use and what they do in the student recruitment process in terms of disclosing information to students, including full disclosure upfront of the VET FEE-HELP debt that they are going to incur if they sign up to a course.

Senator KIM CARR: Are you able to tell me how many students were engaged with the 18 RTOs that you are looking at for VET FEE-HELP abuse?

Mr Robinson : Yes, we have had about 135 complaints about VET FEE-HELP and over 70 per cent of those complaints relate to these RTOs.

Senator KIM CARR: These 18?

Mr Robinson : Yes, 18 RTOs. We are commencing that work this week.

Senator KIM CARR: When will we be able to get a list of these?

Mr Robinson : We will report on what we have found once we have done the work. We will be doing some short notification or no notice audit work with this, so I do not want to give you the list today. But we will make known the findings of this work at the end of the day, including that there were some complaints, for example, that were not verified, if that is what we find.

Senator KIM CARR: It just seems to me what is happening in Victoria is a bit of a model here. You have to identify examples.

Mr Robinson : We will.

Senator KIM CARR: And they have to be publicised. There are very substantial sums of money involved, very substantial amounts of money the Commonwealth is paying to these organisations, and I suspect fraudulently. Will you take criminal prosecutions if necessary?

Mr Robinson : That could be an outcome.

Senator KIM CARR: Are your required under your act to take criminal prosecutions?

Mr Robinson : There are some cases where we have a criminal prosecution or we assist the police with an investigation they are mounting about RTOs.

Senator KIM CARR: So how often have you done that?

Mr Robinson : There are quite a few. I will just get the numbers of investigations that are underway. There has been one successful conviction so far, which occurred last year, over a person who was fraudulently issuing qualifications to people. We have been building that area of our operations up. I will get some figures for you in a moment about the prosecutions we have underway.

Senator KIM CARR: Thank you.

Mr Robinson : Currently we are working on nine active formal investigations and there are a further six matters that are under consideration in that space.

Senator KIM CARR: I am told the standard—

Senator Birmingham: Senator Carr, in relation to what we might describe as 'name and shame', I just asked Mr Robinson about what has happened when they have found a problem and particularly if it has been a deregistration activity.

Mr Robinson : We do, of course, list every deregistration that has been completed. People have the right to make an appeal to the Australian Administrative Appeals Tribunal and there have been a small number of Federal Court cases over our work as well. But once all those appeal processes have been exhausted we list the sanctions and deregistrations on our website.

Senator KIM CARR: Minister, your press release yesterday referred to 23 audits. What are they for?

Mr Robinson : It is the strategy I was just—

Senator Birmingham: The 18 about whom complaints have been received, plus a further five VET FEE-HELP providers. Mr Robinson can explain.

Senator KIM CARR: Mr Robinson, how come you did not mention the five?

Mr Robinson : Sorry, the other five are RTOs that have not had complaints about them.

Senator KIM CARR: That you have found out about?

Mr Robinson : We have picked some RTOs that have significant VET FEE-HELP programs that have not had student complaints about them and we want to contrast and check the practices that they are undertaking in the way they recruit students to see if that will help us in the improvement of the system overall.

Senator KIM CARR: Your annual report for 2013-14 says that standard 15 relates to quality training and assessment and it indicates:

… 75 per cent of existing providers were unable to demonstrate compliance with Standard 15.

That is on page 26—75 per cent. It goes on:

Even after the submission of rectification evidence, 21 per cent … remain unable to demonstrate compliance with this Standard.

How could that possibly be the case?

Mr Robinson : Those 75 have the—

Senator KIM CARR: Per cent. Is that right, 75 per cent?

Mr Robinson : In our general regulatory work plus the work we have done in the three national strategic reviews that have been released so far, across the system, poor assessment was a very significant concern which we identified in our regulatory work. That work has fed into a considerable beefing up of the assessment standards required of RTOs in the new standards that are coming out. That has been a direct result of work that we have fed into that process from this work. When the RTOs are given the 20 days to rectify the noncompliances that we find, most of them can. But we are still left with 21 per cent from that particular year, which did not achieve compliance with that standard. I have to say that, almost always when we find that an RTO has a noncompliance, it includes the assessment standard or it might only be the assessment standard they are not compliant with. So I think it is a considerable concern in the system that poor assessment, or assessment that is not nearly good enough, has been a commonplace occurrence. The good news is that, when those issues have been pointed out, most RTOs can, and do, rectify the problem.

Senator KIM CARR: Are you planning any more national strategic reviews?

Mr Robinson : We have three at the moment that are nearing completion. They are in the childcare sector, training in the security industries, and equine training, particularly with some of the health and safety issues that have been identified.

Senator KIM CARR: Given what they are finding in Victoria, you might want to look at automotive as well.

Mr Robinson : There are always a couple of candidates for the next round.

Senator KIM CARR: Thank you very much.

Senator RHIANNON: Is it correct that even though a private RTO—like Vocation and a number of its subsidiaries—might be registered in New South Wales, and therefore fall within ASQA's purview, if another subsidiary was based, say, in Victoria you would not have regulatory responsibility.

Mr Robinson : Yes. Vocation is a company which purchased a number of RTOs, as you may be aware. One of those RTOs, BAWM—about which considerable problems were found in Victoria by the Victorian government in their funding of them—was an RTO that was regulated by the Victorian regulator because it operated entirely within Victoria's state boundary and it did not have overseas students. If it is registered in Victoria but it has overseas students or operates across state borders, then we regulate them. We regulate the other RTOs in the Vocation group. The Victorian government raised with us concerns about another RTO in that group, Aspin. They were managed by the same people that managed BAWM. We did a lot of follow-up work with them and discovered considerable issues. We gave them an ultimatum around redressing the noncompliancess that we found, and they decided to close the RTO instead of fixing it up. It was, also, I believe required to repay moneys to the state government over training funding that it had given that RTO. We are looking at all the other RTOs in the Vocation group because of the concerns with those two RTOs. We have been auditing those. We have renewed the registration of one of those RTOs because we did not find the same kind of problems, but their management was a different group of people. Vocation is the owning company, but they run a number of discrete, different RTOs.

Senator RHIANNON: So you are saying that Vocation is the only one that you have found that has that cross-border problem that I just spoke about?

Mr Robinson : No. Vocation owned 10 RTOs. They closed three of them and merged them into their remaining seven. Six of those are regulated by us, and one was regulated by Victoria. Two more have closed, because of that regulation.

Senator Birmingham: Victoria and Western Australia are not—

Senator RHIANNON: In the system?

Senator Birmingham: There are provisions under which RTOs operating in Victoria and Western Australia are covered by ASQA, but if they solely operate within Victoria or WA and do not have international students then they are not covered by ASQA. I am engaging in some conversations to see whether we can try to close some of those gaps. That is contingent upon cooperation of those state governments.

Senator RHIANNON: Can that be changed by law at a federal level? Or do you need your state colleagues to cover that? Is that a jurisdiction issue?

Mr Robinson : ASQA's legal situation required a referral of powers from the state parliaments to the Commonwealth to allow national regulation of VET to occur. There has been only a handful of previous occasions when state parliaments have referred powers to the Commonwealth—income tax powers in the war. The Commonwealth did not give them back after the war. In the case of this situation, the governments of Western Australia and Victoria did not refer those powers, but the Commonwealth laws nevertheless prevailed over the RTOs in those states that had overseas students or worked across state borders in referring states.

Senator Birmingham: But yes, we would need some referral from those states to close that irregularity that exists with some RTOs.

Senator RHIANNON: Thank you. It will be interesting to hear how your talks go. Does ASQA keep a record of fees being charged by providers for courses?

Mr Robinson : ASQA has no role in regulating the fees of providers or monitoring those fees.

Senator RHIANNON: It was not about regulating; it was just about whether you keep a record of them.

Mr Robinson : No. The only role we have is in relation to providers not charging more than $1,500 up-front or at any one time in advance of the training being delivered by a provider.

Senator RHIANNON: Wouldn't it be relevant to look at this data—in particular, fees for diplomas and advanced diplomas that are deregulated, where there is no government subsidy?

Mr Robinson : I think that is a policy question. It is not really a question that relates to our current functions.

Senator RHIANNON: Minister, do you have a comment on that?

Dr Banerjee : Sorry—could you just repeat the question?

Senator RHIANNON: What I was inquiring about was in the first instance a record of fees, and you have said no. And I thought it would be relevant for that information to be collected, in particular fees for diplomas and advanced diplomas that are deregulated where there is no government subsidy. Isn't that important information that you need?

Dr Banerjee : At the moment the information that is collected in the fee-for-service market is not comprehensive. The NCVER, the body that looks at statistics for the VET sector, does, I believe, through some of its collections and surveys, collect some fee information, but it is not a comprehensive collection at the moment. My understanding is that the total VET activity collection that is currently underway will address some of that. I cannot go to the detail of whether or not it will collect a comprehensive picture of fees, but it will certainly collect a comprehensive picture of the activity that is underway in the private fee-for-service market.

Ms Paul : It has been an issue for many, many years. Naturally, why would an entirely private full-fee-charging service that does not receive public funding give data to the public collector?—the National Centre for Vocational Education Research, NCVER. But we are hoping that we are just about to crack that nut for the first time with the data collection that Dr Banerjee has just described.

Senator RHIANNON: But doesn't it go to the issue of standards?

Senator Birmingham: In the circumstance of a provider offering a diploma or an advanced diploma who is not receiving any public subsidy, while there are always questions of standards, of course in that circumstance the student is indeed paying up-front. In many ways I have greater concern about where providers are operating in the VET FEE-HELP space, which comes to taxpayer dollars but also means that the background checking that the student might be incentivised to do is diminished because they are not having to pay any up-front fees; they can all be put on VET FEE-HELP. So, while it is a gross generalisation to say this, I suspect that where it is purely a case of up-front fees being charged there may well be fewer quality issues than in the space where the consumer is not having to fork the money out up-front and therefore does not have as much incentive to be doing the checking in the first place.

Senator RHIANNON: Since ASQA's inception, how many instances of noncompliance have been found during your re-registration audits?

Mr Robinson : Senator Carr read out a statement before for one of those financial years where around 80 per cent of the RTOs we audited had at least one noncompliance at the initial audit. But after they had the opportunity of 20 days to rectify those issues, that turned into around 20 per cent remaining noncompliant. That figure for the last financial year has actually improved. It is now 15 per cent that are not compliant after rectification, and 85 per cent are compliant. So, we have identified a lot of noncompliances, but we also have a process in place to require the RTOs to fix those noncompliances or have some regulatory sanctions applied to them.

Senator RHIANNON: Those percentage figures you just gave: are they a percentage of what you investigate, or a percentage of the total?

Mr Robinson : They are a percentage of all the audits we have done, and we have done over 4,000 or them since we commenced.

Senator RHIANNON: What role does ASQA have in monitoring and auditing RTOs in Victoria that have access to VET FEE-HELP?

Mr Robinson : Of the people who have access to VET FEE-HELP, we would monitor those in Victoria who operated beyond the jurisdiction of the state of Victoria. Even though they are based in Victoria, we regulate those, and we regulate the RTOs that also have overseas students. So, we would regulate RTOs in Victoria or in that category. If they were not, they would be regulated by the Victorian regulator.

Senator RHIANNON: So, if they are just in Victoria, and no international students, you do not—

Mr Robinson : But we do regulate I think around 55 per cent of all the RTOs in Victoria, and we regulate all the big ones—the TAFEs and big private ones as well.

Senator RHIANNON: How many providers does ASQA currently register that deliver courses in hypnotherapy?

Mr Robinson : I could not answer that question.

Senator RHIANNON: I have a few questions that you could maybe take on notice, or perhaps somebody has the figures here. How many providers do you register that have courses in hypnotherapy, reiki, life coaching and body-mind-soul coaching?

Mr Robinson : We would have to go and check the register as to which RTOs had those courses on their scope. We would have to take that one on notice.

Senator RHIANNON: Yes, if you could give us a breakdown for the four categories, that would be useful.

Mr Robinson : Yes, we could give you the number of RTOs that have any one of those, and we could give you the number that have each of those.

Senator Birmingham: It might be useful to add on to that the level of qualifications associated with any of those—

Mr Robinson : Yes, we could say whether it was a cert III or a cert IV or whatever.

Senator RHIANNON: Minister, you have spoken here about your concerns about the standards, and we are also aware of some of your comments in the media. Could you give us a date for when you decided to instigate these crack audits, as some people are calling them?

Senator Birmingham: That was work that ASQA has been preparing for a while. Certainly since my appointment on 23 December I have become increasingly concerned and aware of some of the issues in relation to quality and some of the concerns about abuse of VET FEE-HELP. And from my very first discussion, Mr Robinson and I talked about those issues, and that has continued through all of our discussions. It is not me instructing or directing ASQA to undertake a crack audit or the like. It is an organic process out of ASQA's own concerns, my concerns and, to be fair, Minister Macfarlane's concerns that he had previously, noting that he had taken a number of steps to try to strengthen the standards and the regulations in the funding for ASQA to allow them to deal with the problems that were there—which, it is worth re-emphasising, essentially have all been inherited by this government.

Mr Robinson : In relation to the VET FEE-HELP issue, we have had only about 135 complaints so far since the start of 2013, when the VET FEE-HELP program commenced. The department has informed me that there are some 190,000 students on VET FEE-HELP, so it is an extremely small percentage of the overall number of students that have been on VET FEE-HELP. But we have been concerned about the nature of some fee issues that have been raised, about very poor student recruitment practices and deceptive and misleading student recruitment practices. So we think that, even though the overall number is not huge, some of the claimed and alleged abuses seem to be really quite serious. So we have been increasingly concerned, and we set up a group within ASQA late last year to pull together a more coherent strategy for us to go out and look at the providers that have got most of those complaints accruing to them so that we can check and see what is going on here—whether it is indicative of a wider systemic issue or is isolated to these sorts of instances—and what we can do to assist the department in its work to sort some of those issues out.

Senator RHIANNON: Could you just detail, when you are responding in that way, where you are taking your information from.

Mr Robinson : As I say, overall the complaints from students comprise 44 per cent of our complaints, so we get a lot of complaints from students. We get some from employers and the like. We monitor the media and some issues get raised through the media. We also liaise with a range of industry bodies and occupational regulators. We do hear about some of the issues that states might be concerned about, and we use that to frame our regulatory responses. As I was saying before, we are developing a new regulatory approach which is focused on drawing these sources of information together and using that to trigger our regulatory response. In a way, this VET FEE-HELP strategy is that kind of response. There have been these complaints out there, so we want to pull them together and have a good look.

Senator RHIANNON: If we asked you about all—some of them have been very serious and very alarming, as I am sure you are aware—of the reports in the media, can you then respond that you have investigated all of those, because there is so much detail; so much of your work is actually done already.

Mr Robinson : The RTOs that we are including in our crackdown, as we were calling it, are where there have been two or more complaints at any RTO; we are looking at those RTOs. That comprises more than 70 per cent of the complaints we have had about VET FEE-HELP, so we are following up on those.

Senator RHIANNON: Can I just clarify that. When you say two or more complaints, do you regard a report in the media as just one complaint?

Mr Robinson : It is when a complaint has been formally lodged with us, but we also look at the media reports as well. We try to follow up with people if we can. Some of the stories that come through the media, however, do not have actual people identified who are making the allegations, so it can be very difficult. We do look at all those issues and we might follow up with RTOs about what has been alleged and what they have got to say about it and the like. So we do follow up there.

Senator RHIANNON: Just to ask the question again, with the reports that have been in the media, can you say that you have followed up on all those reports? Do you want to take it on notice?

Mr Robinson : We can give you a more comprehensive analysis of that.

Senator RHIANNON: To be fair, of which ones in the media you have followed up.

Mr Robinson : But I believe we would have looked at them. There have been quite a few.

Senator RHIANNON: Yes, and they are comprehensive.

Mr Robinson : Some of them will be included in this audit work we are doing.

Senator RHIANNON: Did you advise—I was just trying to understand the process here—the government that the registration period for RTOs should be extended from five to seven years?

Mr Robinson : We did advise some time ago that that was a possible option to be considered, and that has been looked at. The issue here is that registrations for higher education go up to seven years and registrations for RTOs for VET have gone up to five years, and also registrations for CRICOS for overseas students go up to five years, but there is some work going on, which someone else in the department may be able to talk about later, in relation to the ESOS Act reconsideration at the moment, which I think has that issue in its sights as well.

The reason we think it is appropriate is that RTOs do have a good track record and are not figuring in intelligence about poor practice or complaints coming in or other information or analysis that we might do on the new data that is about to roll out that might indicate there are some risk factors that we need to go and look at. It is appropriate, I think, to have a reasonably long-term registration period to allow people to build their RTO practice, to invest in quality and to get a surety of a longer return on that. We do not believe, under the regulatory strategy that we are pursuing, that, if that RTO is of concern and causing concern out there, we should be waiting for five years to go and look at it. We should go and look at it much sooner. Our regulatory strategy should not be related simply to the length of the registration period.

Senator RHIANNON: Minister, have you been lobbied by any RTOs or lobbyists for the industry for this sector to make that extension?

Senator Birmingham: To make the extension for five to seven years?

Senator RHIANNON: Yes.

Senator Birmingham: I would not say that I have been lobbied to make that extension. It is welcomed by the sector as well. Ultimately, they would rather have a system where compliance activities and enforcement activities were effective and directed at maintaining high-quality standards rather than being bureaucratic and simply imposing essentially a tick-a-box approach or a red-tape burden, or just not being effective at lifting the standards.

As I explained to Senator Carr before, and as Mr Robinson has certainly explained a couple of times, the evidence across a suite of landscapes when it comes to auditing activities is that risk based auditing, random auditing, is far more effective in identifying problems than well-sequenced and known auditing. When a provider knows that the auditor is coming five years in advance because that is the re-registration date, then they know to be ready for it five years in advance. These types of random audits, like Mr Robinson is doing with the 23 VET FEE-HELP providers, are far more likely to catch people off guard—that is why he is not revealing the names of them tonight—so that we get a true reflection in the audit activity of what is happening.

Yes, the sector are happy that they do not have to re-register every five years, from a red-tape perspective, but those in the sector who are serious about seeing good-quality outcomes are happy that it also frees the regulator up to be more effective in how they target their auditing activities.

Senator RHIANNON: But isn't it the case that you could also have your random audits over five years? There was nothing stopping you.

Senator Birmingham: Certainly, but that then becomes a question of resources. If Mr Robinson and ASQA are having to audit all RTOs just for the re-registration purpose every five years, that means they are spending more time on re-registration audits and have less time available to spend on risk based auditing. By extending it out an extra two years, they have more resources and more time to spend on the risk based auditing activities.

Senator RHIANNON: Minister, you said then, at the start of the response, 'I wouldn't say that I was lobbied.' Could you clarify that? Were you lobbied, or were you not lobbied?

Senator Birmingham: I do not recall a single provider, lobbyist or otherwise, speaking with me specifically about wanting to change the registration period from five years to seven years. I have certainly had a lot of them say: 'A lot of what we do is jump through compliance hoops or tick-a-box compliance activities and red tape. If you guys are going to invest in auditing activities, why don't you make them more effective?'

Senator RHIANNON: Mr Robinson and Senator Birmingham, could you both take on notice if you have been lobbied by the sector, by lobbyists for the sector or by RTOs?

Mr Robinson : I do not need to take that on notice. I have not been lobbied by any professional lobbyists.

Senator RHIANNON: Okay, so Senator Birmingham?

Senator Birmingham: I will check. Obviously, as a new minister, lots of people have written me letters. Whether it has been included in one of those letters as a suggestion we will check. I certainly do not recall any conversations to that effect.

Mr Robinson : In my case the issue has come up when we have been having discussions with TEQSA about more efficient and streamlined registration processes between both of us and the problem that them having seven years while we have five years registration has caused. As you are aware, probably the majority of the providers that TEQSA actually regulates are providers who are both VET and higher ed providers, so there are some benefits in being able to streamline some of these regulatory activities in that dual sector part of the operation, but more generally for us it is about freeing up our resources to focus on the worst offenders in the system. The good RTOs in the system are deeply keen on us doing this as much as anyone else because the poor RTOs undercut quality by offering programs more cheaply to attract business when they are not really offering a quality program that they have invested resources into. So the responsible providers out there who are interested in good quality are very keen on us doing more to get rid of the poor providers out of the system as quickly as possible.

Senator RHIANNON: So you have given a lot of emphasis to resources, and this is where it seems to me the logic breaks down. If you are being provided with extra resourcing, why do you in effect need to devote resources away from re-registration? It appears that is the motivation. You are saying it is a matter of resources, but you have extra resources.

Mr Robinson : We want to give the highest priority to dealing with the poor quality providers. We have been given some extra resources that are assisting in that, but the biggest part of that process is to be able to reprioritise our existing audit resources away from the automatic re-registration process—the minister described where they know that their registration is going to finish on a certain date and sometime around that period they could be subject to an audit. When we have people who are causing real concern out there, we are able to focus our resources on looking at those people far more quickly than we otherwise would. That is what is important. I am not saying that we do not have enough resources to do our work—I think we do—but it is important that we deploy those to the biggest problem areas and the highest priority issues for the quality of the whole sector.

Senator Birmingham: I think the figures that Mr Robinson gave Senator Carr earlier about the proportion of audits that are driven by re-registration or registration based activities versus those driven by complaints or risk based activities are concerning. They are already taking action to move that in the right direction, but changes to registration time lines will allow them to take more action to do that risk based auditing to a greater extent and ultimately the advice I have is that re-registration auditing is the least likely to result in some type of sanction activity occurring. If we are all serious—and I think this is agreed across parties; we might have different philosophical approaches to some of the funding equation and so on—about wanting to see quality outcomes in this sector and wanting to see a heavy hand applied to those doing the wrong thing, then we should be wanting to see auditing activity directed where it is most likely to result in the pickup of noncompliance and most likely to result in sanction activity, and that is not re-registration.

Senator RUSTON: You may not have the information on you but, in follow-up to Senator Rhiannon's questions, do you have a breakdown of the data on noncompliance between the public providers, private not-for-profits and private profits?

Mr Robinson : I would have to take that on notice. We could not get information about that. So far, I could say we have not taken action to close a public provider. They tend to be larger and have many different areas on scope, but the big private providers and big public providers tend to have quality people working in the organisation, looking at their quality systems, more than some of the small providers.

What we have found in a number of cases, with those big providers, is that one part of their operation may be found very wanting. The result is that they get some of their scope amended so they are not allowed to continue offering certain courses. That has happened with public dividers as it has happened with private providers. We will get you a breakdown of the public-private split or the provider type and the regulatory action we have taken, to date.

The other thing I would say is that we also have not had a large chunk of the TAFE system come up for re-registration yet, although quite a bit of it is coming up in 2015. When we received them 3½ years ago from the state regulators, most of them had a fair bit of registration period to go when they were handed over to us. So there were not many coming up for re-registration shortly after they were handed over to us. We will be doing more regulatory work with the public-sector providers in the coming two years than we have done in the past two.

CHAIR: As there are no other senators wanting to ask questions of ASQA, thank you very much, gentleman, for your time this evening. We are rearranging the program, due to agreement, and will go to outcome 3 when we resume. Senator Carr will be picking up.

Proceedings suspended from 20:52 to 21:08