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Tuesday, 1 December 2015
Page: 9383


Senator XENOPHON (South Australia) (13:38): I thank Senator Lines for her contribution on the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015—and the shonks, the shysters and the sharks. We need to deal with this as a matter of some urgency. But, at the outset, I wish to express my disappointment in the manner in which this bill has been brought on today. The original Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015, while modest in the reforms it was trying to implement, had at least been subject to scrutiny through the Senate Education and Employment Legislation Committee. The committee's report was tabled in the Senate only yesterday.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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