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Tuesday, 1 December 2015
Page: 9371


Senator KIM CARR (Victoria) (12:38): I move the second reading amendment standing in my name:

At the end of the motion, add:

"but the Senate calls on the Government to:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr Bachelard witnessed the agent for Ascet telling the family:

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

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

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

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