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Education and Employment References Committee
Private vocational education and training providers

BURKE, Mr Joe, Executive Director Training System Performance Analysis and Industry Engagement, Victorian Department of Education and Training

FRITSCHY, Mr Sigmund, Acting Director, Tertiary Education Policy, Higher Education and Skills Group, Victorian Department of Education and Training

ROBERTSON, Mr Craig, Deputy Secretary, Higher Education and Skills Group, Victorian Department of Education and Training

CHAIR: I now welcome Mr Craig Robertson, Mr Sigmund Fritschy and Mr Joe Burke from the Victorian government Department of Education and Training. I remind senators that the Senate has resolved that an officer of a department of the Commonwealth or a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. Officers of the department are reminded that any claim that it would be contrary to the public interest to answer a question must be made by a minister and should be accompanied by a statement setting out the basis for the claim. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. The committee has received your submission. I now invite you to make a short opening statement. At the conclusion of your remarks, I will invite members of the committee to put questions to you. Do you have any comments to make on the capacity in which you appear?

Mr Burke : I am currently acting as executive director for training and market operations.

CHAIR: Welcome.

Mr Robertson : Thank you for the opportunity to appear today. The Victorian government welcomes this inquiry. We are pleased to actively participate today. In the minister's submission in February, we noted the establishment of the VET funding review headed by former Holmesglen TAFE CEO Bruce Mackenzie. This funding review is not yet completed but is due to be completed soon. In the week following the Victorian government's written submission, the government announced a review into quality assurance in the Victorian VET system. The objective of the review was to help restore public confidence in the quality of VET in Victoria while contributing to the broader review of VET funding by Mr Mackenzie. The quality assurance review included broad-ranging consultation with relevant government agencies, trade unions, employer groups, industry bodies and VET peak provider organisations.

The government released that quality assurance review on 29 June 2015 alongside a government response, and the government has accepted all 19 of its recommendations. The review called for an immediate targeted blitz of the current system and identified four areas through which improved VET quality assurance would be achieved: prioritising quality in determining eligibility to deliver government funding; improving key factors in a student's training experience, such as the duration of training and the skills and abilities of trainers; actively monitoring and managing the performance of contracted training providers; and empowering students and employers to drive quality through informed choices and consumer protection.

At the release of the recommendations of that particular review, Minister Herbert, the Victorian Minister for Training and Skills, announced a $9 million blitz on low quality training providers. Whilst much of the forthcoming work following on from that review aims at changing provider practice over time, the blitz commenced immediately and is targeting a range of compliance and conduct issues in the current system. To date, six providers have had their funding contracts with the Victorian government terminated. As part of that review, the names of those providers are now made public on the department's website. The actions and recommendations from the quality assurance review will form a key part of the Mackenzie review of VET funding or part of the government's response to our funding review.

Just by way of background in terms of the Victorian training market, as at July 2015 there were 494 RTOs with VET funding contracts in 2015. That included 179 with one-year 2015 VET funding contracts and 315 with three-year contracts that span the period from 2014 to 2016. In line with standard practice, we will soon be calling for expressions of interest for other providers to seek to provide training under the Victorian Training Guarantee contract for 2016.

In line with the recommendations from that review, we will be establishing some new arrangements for those providers entering the market into 2016. Firstly, a standard contract will allow for a gradual take-up of training places to avoid excessive growth away from what we would see as demand for training. However, if an RTO in that situation can demonstrate genuine need for growth in that particular training area, they can come back and negotiate with us. We are also planning to put in a low-risk, low-volume contract for those RTOs who are operating in a niche area and can assure their quality so that we do not put a huge quality assurance regime over the top of them, in line with the risk of their not having low-quality training.

We will also do new risk based quality and contract management arrangements based on some new data that we are collecting so that we can track the growth of students and the duration of training during that particular period. We will have a particular focus on course durations to try to address super-short courses, which has been an issue across the VET system for a while, and we will have some arrangements around the RTO needing to come to us to get approval to put in place subcontracting arrangements. Minister Herbert has also announced a program that contracted training providers in Victoria will be able to access professional development courses being developed by the VET Development Centre here in Melbourne so that VET teachers and assessors can increase their skills and capacities in that particular area. On that note, I am happy to take questions.

CHAIR: Thank you, Mr Robertson. Senator Carr?

Senator KIM CARR: Thank you very much for your submission and the quality of that submission. I note that the Victorian government has undertaken quite a comprehensive review of quality assurance, because it is explicitly stated that you wanted to restore public confidence. You say on pages 3 and 4 of your submission that the state government has traditionally relied upon regulators to enforce quality standards but the national quality assurance regime needs to go further. Can you explain what you mean by that?

Mr Robertson : Under our standard contracting arrangements, we rely heavily on the national training RTO standards that are enacted under the national act for ASQA, particularly for the quality of training outcomes. At times, under the contract, where we see there is evidence of some poor behaviour or some poor training outcomes, because we have got data first, we need to go in there and act quickly. We think there is capacity for better sharing of information so that we can operate in tandem to address these poor quality providers.

Senator KIM CARR: Would you describe your relationship with ASQA as good?

Mr Robertson : It is good, and we have been having a number of conversations over the last couple of weeks where we are looking at having a good sharing of information within the legal framework so that we can help each other out. It is important to bear in mind though that the actions that we have taken have been around contractual compliance.

Senator KIM CARR: Yes, we will come to that. If the relationship is so good, why was it necessary for your minister to point out, in regard to the report on child care, that it was not to have been provided to the state government, despite the fact that it was known in Canberra to be available since April 2014? So for 14 months it was held without being passed on to the Victorian government.

Mr Robertson : That particular report was part of the ASQA standard industry based reports that they do, so it was in the public domain that that was when the report had been done. We have been in conversations with ASQA about getting access to information out of that report but they were needing to finalise aspects of that report—

Senator KIM CARR: But if the relationship was so good, as you have described it, why was it necessary to keep it secret from you?

Mr Robertson : They operate under their particular provisions. There was an undertaking that as soon as they felt it was finalised they would provide us with that report—

Senator KIM CARR: Mr Robertson, that does not sound a particularly persuasive argument if there has been cooperative federalism in a regulatory environment requiring you and ASQA to work very closely together. You are dependent upon them determining when they will provide you with information based on when they consider the report to be finalised. It was finalised 14 months ago.

Mr Robertson : The report was finalised from the government's viewpoint at the point at which it was released. Obviously they were doing work on that within the Commonwealth. Obviously we knew it was being finalised. We were ready to receive it, so at the point at which it was released we received—

Senator KIM CARR: Yes, I see. So you are standing there with your arms outstretched waiting, from on high, for the delivery from Canberra. Is that how it works?

Mr Robertson : As I said earlier on, the bulk of our compliance activity is framed around the contract. The information that comes from the work that ASQA is doing is supplementary information that can help us out.

Senator KIM CARR: I go back to what has happened here. There have been 10,000 qualifications withdrawn; is that correct?

Mr Robertson : I think there are around 8,000.

Senator KIM CARR: I know your report says 8,000, but we have heard evidence today that it is now up to 10,000. Is that correct or not?

Mr Robertson : We would have to take that on notice, but certainly 8,000 has been in the public domain.

Senator KIM CARR: Yes, we have clearly got that on the public record. Whether it is 8,000 or 10,000 it is an incredible number. It is an unprecedented number, as Bruce Mackenzie describes it. I cannot think of a circumstance where anything like that has occurred anywhere. How many have been withdrawn in the Commonwealth sphere? How many qualifications have been withdrawn?

Mr Robertson : I would have to take that on notice, but I suspect in the last Senate estimates hearing that Mr Robinson, who is the Chief Commissioner of ASQA, indicated between 300 and 400.

Senator KIM CARR: No, that is RTOs, not qualifications.

Mr Robertson : This is from the ones from ASQA.

Senator KIM CARR: I see.

Mr Robertson : I think that was in the public domain.

Senator KIM CARR: Do you recall Aspin being one of the companies associated with Vocation?

Mr Robertson : I do.

Senator KIM CARR: Were they registered with ASQA?

Mr Robertson : Aspin was regulated with ASQA, yes.

Senator KIM CARR: And regulated by you. What help did you get from ASQA in terms of dealing with that company, which as I understand it has agreed to pay $3.652 million in relation to certificate II in general education for adults? What assistance did you get from ASQA in reaching that settlement?

Mr Robertson : That was before my time, but I do know that dialogue occurred between the department and ASQA.

Senator KIM CARR: Did they tip you off?

Mr Robertson : I would not know. I was not around at the time.

Senator KIM CARR: What assistance did you get in regard to Learning Verve?

Mr Robertson : Again it would have been an exchange of information, but again I was not around at the time.

Senator KIM CARR: The way it was put to me was that there was no involvement of ASQA with regard to Learning Verve, none.

Mr Robertson : I would have to take that particular one on notice.

Senator KIM CARR: The way it was put to me was, without the involvement of ASQA between January and February 2015, the department conducted a review into the quality of training services delivered by Learning Verve in the certificate III for health support services after concerns that Learning Verve had marketed and delivered certificate III in health support as a hospitality qualification—a practice known as substitution. Did that occur?

Mr Robertson : Again, I would have to have that particular case confirmed. But generally, through contract compliance, when we come across issues that might have implications for the regulation of that RTO, if they are under the scope of or under coverage of ASQA, then we would provide that information.

Senator KIM CARR: I am told that they have had to repay $2,737,962.15, excluding GST, to the Victorian government, and that was done without the assistance of ASQA. Would you confirm that for me?

Mr Robertson : I would have to confirm that particular amount. Where there is refund of funding, that is essentially around a contractual issue. We were exercising our rights under the contract, yes.

Senator KIM CARR: I am actually congratulating you. I am not attacking you; I am trying to establish whether or not the current regulatory regime, as run by ASQA, is fit for purpose. What do you say to that proposition?

Mr Robertson : There is a sense that the provisions that govern the way that ASQA operates under the act and under the current RTO provider standards has them operating or assessing an RTO based on a point in time. Often what we discover in Victoria is that because we have a contract and we get access to data almost in real time, we can have a sense of what is going on with an RTO and can go in and have a look at that RTO's contractual management. We would refer that on if we thought there were issues that were in the scope of ASQA.

Senator KIM CARR: You are negotiating with ASQA for ASQA to take over the regulation of these services in the state of Victoria, are you not?

Mr Robertson : Yes, that was a government commitment.

Senator KIM CARR: Yet you are saying to us that the standards by which ASQA operates, or certainly its capabilities, would appear to be below what you were doing.

Mr Robertson : That is correct, remembering that I am indicating that a lot of the work we do is in respect of contractual compliance.

Senator KIM CARR: I understand the point you are making. The fact is that you have a better line of sight into the quality assurance issues than ASQA and yet, and it is unusual for me to concede this, you are saying that a state authority has a better line of sight on a regulatory issue than the Commonwealth?

Mr Robertson : We have a line of sight on contractual matters that may give an indication of some regulatory issues. We have entered into arrangements with ASQA that if we have any indications of that then we would provide that across to them. We are in negotiation with them, given that we have got quite dynamic and real-time data, that if there are things within the limits of privacy and the contractual arrangements to see if we could share some information with ASQA.

Senator KIM CARR: It is just that relying upon sharing information seems to be a one-way street. Let me go back to that early childhood training report that I spoke of earlier. The report indicates that 18 RTOs included in the review were from Victoria. When were you provided with the information on the names of those RTOs?

Mr Robertson : Virtually as soon as the report came through. The report was released; there was dialogue between ASQA and the department regarding those—

Senator KIM CARR: Wouldn't it have been better for you to know about those 14 months ago when the report was actually undertaken?

Mr Robertson : As I said earlier, we were waiting for the Commonwealth to finalise all details of those reports. I do understand that, based on that report, there was some follow-up audit activity undertaken by ASQA—

Senator KIM CARR: But why couldn't you have undertaken that, given that the Victorian government is also paying those 18 RTOs? How much are you paying them, by the way?

Mr Robertson : Again, I would have to take that on notice. In the public domain we are saying it was around $70 million.

Senator KIM CARR: About $70 million dollars' worth of public expenditure and you did not get the chance to actually audit them yourselves, given the fact that they had come up in a Commonwealth audit 14 months ago and you were not told about it.

Mr Robertson : Yes, although let me say that we would do our normal audit activity under that contract, regardless of whether ASQA was doing a specific industry audit or not.

Senator KIM CARR: Did you identify the same problems that ASQA identified?

Mr Robertson : We are still doing that analysis, because we have just got the reports.

Senator KIM CARR: In terms of the third-party providers—the unregistered providers—how many are there?

Mr Robertson : If I could clarify: are you talking about brokers or are you talking about third-party subcontractors?

Senator KIM CARR: Let us deal with the brokers in a minute. Let us just deal with the people who are actually providing the training. How many are there in Victoria?

Mr Robertson : Currently, I would have to take that on notice, because the number has dropped substantially.

Senator KIM CARR: How many do you think there are?

Mr Robertson : I do beg some indulgence.

Senator KIM CARR: You know it has dropped, so you must have some idea of what it has dropped from?

Mr Robertson : We would have to look up the number for you. We will look to get that for you now.

Senator KIM CARR: If you could, please. It just that the whole system is predicated on having line of sight. These people are not registered and therefore the Commonwealth does not know about them. I presume you do.

Mr Robertson : That is right. That is why there were decisions made over the last 12 to 18 months so that the government, under the contract, would have to approve third-party arrangements.

Senator KIM CARR: That is right. But that is not the way the Commonwealth works, is it?

Mr Robertson : In terms of third-party arrangements?

Senator KIM CARR: Yes.

Mr Robertson : I would have to check what the RTO standard says. I think there needs to be evidence provided from the RTO to ASQA of third-party arrangements that are put in place. It would be an advice to—

Senator KIM CARR: Are they audited?

Mr Robertson : In Victoria, we have to approve the third-party arrangements.

Senator KIM CARR: Sure, you have to approve them; but does the Commonwealth have to approve them?

Mr Robertson : No, because for our purposes we are approving that under the basis of the contract.

Senator KIM CARR: Who audits them?

Mr Robertson : The third-party arrangements?

Senator KIM CARR: Yes.

Mr Robertson : Let us assume that it is an RTO covered by ASQA. We would assume that the integrity of that third-party arrangement is covered by the RTO standards and therefore it is covered by ASQA.

Senator KIM CARR: You are making a big assumption there. Who audits the third-party provider—not the arrangement and not the fact that the TAFE college, or a university, for that matter, has a third-party provider. I think this problem goes beyond the vocational education. Who actually audits the third-party provider?

Mr Robertson : You are pushing me into areas of Commonwealth domain.

Senator KIM CARR: That is why you are here.

Mr Robertson : I could be proven wrong on this, but the way the arrangement works is that, where there is a third-party arrangement in place, the RTO is required to advise ASQA. ASQA would then determine, on a risk basis, whether they would want to check on the validity of those subcontracting arrangements. What I am not sure of is the extent to which they could then go and check on the validity of the actual third-party provider.

Senator KIM CARR: Perhaps you could take on notice: who goes in to actually physically look at these places? Not a desk mirror—you know, have a good look into it.

Senator SINODINOS: It is a desktop.

Senator KIM CARR: Yes, I know what they are. I would like to turn to the question of VET FEE-HELP arrangements. Do you think that there has been a correlation between the growth in private providers and the extension of Commonwealth loan schemes?

Mr Robertson : If you look at the trend in the number of private providers in the regulated VET system Australia wide, it is hovering around the 5,000 mark—and has done for a good number of years—but there has been a range of private providers that have come in, so there has been some growth. Whether you could attribute that to VET FEE-HELP—some of that could be attributed to the entitlement systems that most states and territories have put in place.

Senator KIM CARR: But the cost to the Commonwealth has actually doubled; we can actually track this very clearly. Is it the case that, under the scheme, Victoria has an agreement with the Commonwealth to repay 50 per cent of the costs incurred by the government from offering the VET FEE-HELP arrangement?

Mr Robertson : That is correct.

Senator KIM CARR: How does that actually operate?

Mr Robertson : We have to distinguish between VET FEE-HELP that supports the Victorian Training Guarantee and VET FEE-HELP which is your core fully fee-for-service. In respect of any RTO that has a funding contract with us that is also registered as a VET FEE-HELP provider and offers diploma and advanced diploma courses, they would use VET FEE-HELP to assist the student to cover fees for that particular course. Then, under agreement with the Commonwealth, we are responsible for covering 50 per cent of the cost that would be incurred in supporting that VET FEE-HELP place. That represents interest earnings forgone and about 50 per cent of bad debt that applies to the proponent. That calculation is done roughly annually and we do the funding transfer.

Senator KIM CARR: It is my understanding that student debt has risen from less than $1 million to $65 million over the period from 2009 to 2014 in this state alone.

Mr Robertson : Correct.

Senator KIM CARR: It is my understanding that the increase in bad debts will mean that there will be an estimated extra cost for the Victorian government of $30 million over the period from 2014 to 2016-17.

Mr Robertson : That is our estimate.

Senator KIM CARR: How do you account for that?

Mr Robertson : For the growth? There are probably a couple of trends that are going on. We recognise that there is a general trend towards diploma and advanced diploma qualifications in line with the requirements of the labour market. That is one particular trend. When the Victorian Training Guarantee first started, there was always an expectation that there would be growth in that area and that the number of VET FEE-HELP approved providers to provide Victorian subsidised VET FEE-HELP places would grow over that period of time. So it is mainly due to the growth of providers entering the market who happen to be VET FEE-HELP approved.

Senator KIM CARR: That is right. They are related directly to the diploma and sub-diploma because of the VET FEE-HELP loan arrangements. With increasing bad debts, is there not going to be an increased cost to the Victorian government? Is that not why that $30 million figure appears?

Mr Robertson : That is certainly the case around the $30 million, but the growth in VET FEE-HELP outside of the Victorian Training Guarantee and outside of RTOs with contracts with Victoria is in the fee-for-service market. That is a responsibility solely of the Commonwealth. That is where the major growth would be. Clearly we have had a growth in diploma and advanced diploma numbers that are supported by VET FEE-HELP, but not to the extent of the growth of the fee-for-service market administered by the Commonwealth.

Senator KIM CARR: To what extent do you think that the increase in the availability of the loans has actually lead to an increase in prices? I note, for instance, the evidence put before us today by Careers Australia that they are sometimes charging fees four and five times that for a diploma course at a TAFE college. Do you think that is in any way related to the access to VET FEE-HELP loans?

Mr Robertson : I imagine the fact that a student is able to access an income contingent loan would allow them to make some decisions about the course that they would select and maybe they would be less sensitive to the price that would be charged.

Senator KIM CARR: Are there any implications for universities given the experience we have seen in the deregulation of the VET system in terms of price, quality assurance and entry of new players?

Mr Robertson : You are asking me to speculate on a policy matter.

Senator KIM CARR: You are responsible for higher education in this state too, though, aren't you?

Mr Robertson : Yes, although the funding arrangements, as you would well know, for higher education—

Senator KIM CARR: So you have done no assessment of the likely knock-on effects for the university system?

Mr Robertson : No, we have not done that.

Senator KIM CARR: What is the total value of loans taken out by Victorian students under VET FEE-HELP? Do you have any information on that, given the enrolment patterns that you are aware of?

Mr Robertson : We do not have it here with us, but we can certainly take it on notice and provide it to the committee.

Senator KIM CARR: Do students need to complete year 12 to get access to the VET FEE-HELP loan arrangements?

Mr Robertson : I am not sure that we have student entry requirements within our funding contract. I will have to check that. The general principles that operate within the VET area are that a registered training organisation, under the standards, has to unroll students taking account of the suitability of courses to students and the suitability of students to courses.

Senator KIM CARR: Doesn't that mean that you do not even need year 10?

Mr Robertson : That may well be the case because you may well be a mature-age student with a lot of life experience who has come through. You may not need to go back and do year 12, but you would be equally suited to do a diploma of advanced—

Senator KIM CARR: Are you able to tell me whether students are obliged to take out higher loans now as a consequence of these increased fees?

Mr Robertson : Sorry, could you repeat that, please?

Senator KIM CARR: Are you able to advise the committee as to whether Victorian students are taking out higher loans as a result of these increased fees?

Mr Robertson : To the extent that there are VET FEE-HELP providers that are operating outside of the Victorian Training Guarantee contract and they choose to enrol in those courses, then they would be paying higher fees.

Senator KIM CARR: Melbourne Polytechnic has a diploma of business at $2,730. Careers Australia charges $15,500. For the diploma of community service work, Melbourne Polytechnic charges $4,500 and Careers Australia charges $19,500. For the diploma of events, Melbourne Polytechnic charges $3,500 and Careers Australia charges $18,100. In your view, what is the reason for the discrepancy in those prices?

Mr Robertson : There are a couple of aspects. Let's deal with Melbourne Polytechnic first. Their fees would be supplemented by the Victorian Training Guarantee—that is, a public subsidy—and Melbourne Polytechnic, as a public provider, have some costs that they do not need to deal with. If you went to the private provider, they have to deal with their full operating costs in doing that. I am not able to assess whether that price differential is down to differences in quality of the training provision.

Senator KIM CARR: Are you familiar with the evidence presented today by the Consumer Action Law Centre in Footscray? They provided evidence to the committee that there are continuing unethical practices with regard to marketing arrangements occurring since the announcement that the Commonwealth was toughening up the regulations from April. Are you familiar with that?

Mr Robertson : Firstly, I am not familiar with the claims by the previous witness. You just have to walk around Melbourne to see that there are a number of RTOs that are offering VET FEE-HELP. As to whether they are using inappropriate marketing arrangements, I am not sure. What we do know, though, is that ASQA has new provisions and is seeking to exercise those.

Senator KIM CARR: I see. Are you familiar with the activities of Acquire Learning?

Mr Robertson : I am aware of them in the public domain.

Senator KIM CARR: That is the one that is headed up by Mr Demetriou.

Mr Robertson : I am aware of that.

Senator KIM CARR: Are you familiar with their activities in Victoria? Are they subject to your audit arrangements?

Mr Robertson : Acquire Learning is not an RTO. To the extent that a student might come through that channel into a contracted RTO, we would govern that via our contractual arrangement with a particular RTO.

Senator KIM CARR: At what point would you have access to the operations of Acquire Learning?

Mr Robertson : We would not until such a point that they determined that they wanted to be an authorised broker on behalf of contracted RTOs or, in fact, they want to become an RTO themselves.

Senator KIM CARR: Have you had any dealings with Acquire Learning?

Mr Robertson : No, I have not personally and—

Senator KIM CARR: Not you personally. I am talking about the department.

Mr Robertson : I do not think there has been previously either.

Senator KIM CARR: I see. What about the completion rates? I note that Careers Australia—and I mention them because they appeared before us today, claimed completion rates that were very different from the Commonwealth's. My understanding is that the Commonwealth have not corrected the answer they have provided to the committee and are standing by the evidence of completion rates of only 10 per cent, 12 per cent, 13 per cent, that sort of range.

Mr Robertson : Yes.

Senator KIM CARR: Are you familiar with those types of figures, and do you have any comments?

Mr Robertson : I have certainly heard of those figures in the public domain, and one assumes they are around those VET FEE-HELP providers that are operating outside of our contract in Victoria. I would assume that what is happening is that there are a number of students who are selecting a course and enrolling before really thinking through if that is the best course for them, and, once they have been introduced to the course, that is the point at which they withdraw. In Victoria we have tried to make sure there is better information up-front so that the student who is interested in training selects a good training organisation and a relevant qualification. That improves the chances of completion.

Senator KIM CARR: I asked that question because it has been suggested that there is something special about Victoria. The state has had to remove 8,000 qualifications—or, more accurately, 8,000 qualifications have been withdrawn, rather than the state removing them. The fact is that quite decisive actions have been taken in this state. In his report, Mr Mackenzie tells us:

The withdrawal of qualifications on such a scale is unprecedented …

I think that would have to be a statement of fact. He says:

The proportion of Victorian VET graduates who improved their employment circumstances after training has declined significantly …

He also says:

Employer satisfaction … has declined significantly …

He goes on to say:

The scale of these problems suggests systemic issues, not isolated incidents.

I am quoting directly from the report. The report has been accepted by the government, so I take it that is the view of the government here. To what extent do you think these issues reflect a systemic problem outside of Victoria, and what evidence could you draw on to establish that proposition?

Mr Robertson : Firstly, in respect of Mr Mackenzie's comments in his issues paper—he has undertaken an independent review, and that was established under statute—they are his views. In respect of—

Senator KIM CARR: But you are not disputing them? Is the Victorian government disputing them?

Mr Robertson : I would reflect a little bit on those comments by saying, yes, there is a decline in outcomes and satisfaction rates, but I would not say it is a disturbing drop. What you might well find is that, because of the high volume of training in this state, there is a higher probability of a drop in employment—

Senator KIM CARR: I am sorry, but I have the figures in front of me, Mr Robertson. The words used are 'declined significantly', and the figures are, for instance, a drop in employability from 65 to 57 per cent, which is 'below the national average of 60.3 per cent' now. I am quoting directly from page 26 of his review. He points to the figure for employer satisfaction having dropped from 89.4 per cent to 77 per cent, and he does use the words 'declined significantly'. Is that inaccurate?

Mr Robertson : I do not dispute the declines, but—

Senator KIM CARR: You are questioning their significance?

Mr Robertson : I am questioning the word 'significantly' around it.

Senator KIM CARR: But he has used that word himself.

Mr Robertson : Yes.

Senator KIM CARR: I am quoting him accurately, am I not? But you are saying it is not quite as bad as he makes out.

Mr Robertson : I think you need to take it in context. They are numbers coming off a large growth in vocational education and training, and as a result of that large growth you may well see a decline in quality.

Senator KIM CARR: Let us go to the substance of it. Is this problem confined to Victoria or is there a broader problem with the design of the demand-driven system in vocational education?

Mr Robertson : The minister indicated in his submission that, in a demand-driven model, you need some good quality controls around providers as well as around training product—what we would call training packages. I would suspect that there is too much flexibility as the minister indicates in his submission around that training product that could allow providers, if they so wished, to maximise delivery that suits them and not necessarily outcomes the students. That is what gives rise to some of those poor outcome measures that you mentioned before from Mr McKendry.

Senator KIM CARR: The New South Wales government in March of this year announced—I understand they have undertaken rather than announced—a joint ACCC-New South Wales fair trading task force to investigate FEE-HELP providers and the brokers that are targeting vulnerable consumers. Are you aware of that?

Mr Robertson : Yes.

Senator KIM CARR: That would suggest to me that there are is a problem beyond the Murray. It also suggests to me though that there are a number of providers who potentially—I think the evidence is clear that are misleading consumers and engaged in deceptive conduct—may well be operating in both New South Wales and Victoria. Have you been engaged in any conversations with the New South Wales officials with regard to their joint-ACCC fair trading task force?

Mr Robertson : So we have been in contact with ACCC. We are seeking to hold a meeting with them to see what their findings are with respect—

Senator KIM CARR: Sorry: seeking to hold a meeting?

Mr Robertson : Yes. We—

Senator KIM CARR: So you have not actually had a meeting?

Mr Robertson : We have not met at this particular point in time but we are organising it.

Senator KIM CARR: I am sorry; this started in March.

Mr Robertson : Yes. So we have—

Senator KIM CARR: Things move slowly these days, or is there just a bit of a problem?

Mr Robertson : Again, what I need point out is that, under our contractual arrangements with our providers, we have a range of provisions that seek to prevent the behaviour that ACCC is looking at, so—

Senator KIM CARR: I understand that. Again, I come back to the point: you are moving much more quickly than everyone else, but I would have thought that, if an inquiry was set up by the ACCC, which is a national body, and the New South Wales body involving Victorian RTOs in March, come September, there might have been an opportunity to have a meeting with you, let alone actually get some serious advice. Would that be unreasonable?

Mr Robertson : That is not unreasonable but, again, we would be indicating that we have been doing our work on the quality review and—

Senator KIM CARR: It points to me to a real problem—

Mr Robertson : we are in the process of setting up with ACCC.

Senator KIM CARR: about coordination with regard to the current regulatory regime, if you have not even had a meeting with the ACCC on an inquiry that was set up in March.

Senator SINODINOS: In your minister's letter, page 3, under quality of education provided by private VET providers, the last paragraph talks about a lack of clarity between regulatory contracting and consumer law frameworks to support students within the Victorian training market. Just in broad conceptual terms, how do you divvy that up—the division between the regulatory, the contracting and the consumer law?

Mr Robertson : In the first instance, the bulk of training providers that we deal with that operate in Victoria are now regulated or under coverage of ASQA—and, remember, we have still got the VRQA that operates in Victoria. They only operate or regulate in respect of those providers that are really operating domestically in Victoria—or potentially in WA, because WA has not referred their RTOs. In the end, most of those RTOs are small community based RTOs, school based RTOs or niche RTOs that are delivering for a particular industry need in Victoria.

A large number of the training organisations are covered under the national arrangements. Under our contract in respect of quality assurance, we would assume in turn—and we would define quality assurance around the integrity of the process of the student enrolling, undertaking their training and being assessed—that that is covered by the regulatory regime cover that is run by ASQA. We then come through under our contractual arrangements and say, 'We expect you to operate according to those rules—those standards,' and we have a range of other rules that are sort of complementary, but they mainly go to financial administration of the contract—when payments are due et cetera.

Senator SINODINOS: So, on the contracting, in part what you are doing is implementing those regulatory standards which have been set, which in the case of the larger providers are effectively administered by ASQA.

Mr Robertson : Yes.

Senator SINODINOS: And you supplement that with controls or oversight of financial?

Mr Robertson : And general probity around interest of students.

Senator SINODINOS: What does that mean in practice?

Mr Robertson : Under the Victorian Training Guarantee, there is a general principle of what we would call upskilling. A student has an open eligibility to access a course provided they are moving up the qualifications profile—up the qualifications ladder. In fact, they can do two qualifications within a year. It is around those aspects of enforcing the policy principles that ASQA could never do and that we do under the contract.

Senator SINODINOS: Then the Consumer Law aspect of this—the third part of the framework?

Mr Robertson : The Consumer Law aspect would be covered by the jurisdiction of the ACCC, so we would rely on that, primarily.

Senator SINODINOS: Just remind me again what this review by the ACCC covers.

Mr Robertson : My understanding of it is that it was triggered out of the New South Wales government and that it was around the nature of the selling of vocational education and training courses, particularly at the diploma and advanced diploma level, and what was the range of information and the redress available to students who felt they may not have got what they thought they were being presented with.

Senator KIM CARR: That was publicly announced, wasn't it?

Mr Robertson : Yes, the New South Wales minister released that via a press release.

Senator SINODINOS: In terms of Consumer Law in Victoria, apart from what you do in this part of the space, are there general provisions of the Consumer Law that would apply, like fair trading and related stuff?

Mr Robertson : I would assume there are, but I would really have to take that on notice. That is a matter we would have to go back and double-check on, but you would assume that.

Senator SINODINOS: So, if you were looking at the system and the interface between you and ASQA, how would you classify the changes that were made recently that the minister announced in April to take effect in June, while also foreshadowing the changes later this year? Are they regulatory changes? Are they contracting changes? Are they consumer changes? How would you classify those?

Mr Robertson : To clarify, are these the federal minister's announcements?

Senator SINODINOS: Yes.

Mr Robertson : In respect of RTOs generally?

Senator SINODINOS: Yes.

Mr Robertson : We would view them very much as regulatory changes.

Senator SINODINOS: When something like that happens, given the somewhat unique situation here in Victoria, what consultation then occurs between you and the feds about how those sorts of changes will operate at the local or state level?

Mr Robertson : The NVETRA Act, which governs the operation of ASQA, has a range of provisions in it where, when there are changes to those regulations, particularly about RTO standards, the Commonwealth minister has to liaise with state and territory colleagues. So there was a 12-month process in developing those new standards, so most states and territories were familiar with those changes that were coming through. Indeed, at a ministerial council meeting they signed those standards off. So there is good dialogue that occurs between the two levels of government in that regard. But they are regulatory actions and we would then, in the normal course of reviewing our contracts when those contracts came up for review, consider whether we needed to adjust any of those contracts to take account of new regulatory arrangements by ASQA.

Senator SINODINOS: Through the Commonwealth-state ministerial council, is there a process to monitor the progress of the reforms and whether they are having the desired impact?

Mr Robertson : There is a general arrangement of reporting that ASQA provides through to the ministerial council about some of its regulatory activity. I am not sure, though, whether there is a provision within the act for them to report. They do an annual report and all that sort of stuff.

Senator SINODINOS: No, I understand. But presumably in that COAG forum, as it were, there is also scope for states to raise issues about whether they think the regulatory outcomes are meeting either the old requirements or, in due course, the new requirements.

Mr Robertson : That is a normal part of the process, yes.

Senator KIM CARR: In fact, your minister has written to the Commonwealth minister pointing out the inadequacies of the current arrangements, hasn't he?

Mr Robertson : That is true, yes, as part of considering the referral of VRQA responsibilities to—

Senator SINODINOS: He wrote to him after the new reforms had been announced?

Mr Robertson : Yes.

Senator KIM CARR: Yes. The submission also makes that clear.

Mr Robertson : I think those reforms were agreed late in 2014, because when you do those standard—

Senator KIM CARR: They were announced in April.

Mr Robertson : They were announced in April, yes—you are right. Again, I would have to take that on notice. I am pretty sure they were announced in April, but they need to come out way in advance because ASQA needs to do a communications and support campaign to RTOs so they understand that changes.

Senator SINODINOS: But these comments that were made on the reforms were made after the change of government in Victoria—is that right?

Senator KIM CARR: The current minister has only been there since the change of government.

Mr Robertson : Yes, that is right.

Senator SINODINOS: So the current minister would not have had an opportunity to be consulted on the reforms on the way through.

Mr Robertson : That is correct.

Senator SINODINOS: So this was six or nine months in the making, was it?

Mr Robertson : Yes. In fact, it was even longer. There was a draft put out in the beginning of 2014 and then, with the change of the federal government, there were some further changes and consultations done around those national standards. I think Senator Carr is right—it was released in April 2014, following a range of consultation.

Senator SINODINOS: Your minister, in making these comments, based them on what—commitments made at the election or a briefing received when he came to office? What was the basis?

Mr Robertson : The basis of the commentary that he made in relation to the inadequacy of the standards of the provisions by which ASQA can or cannot do its activity was really a reflection on the activity of RTOs accessing Victorian contracts.

Senator RHIANNON: On the first page of your submission you make reference to the Andrews government, saying it 'came to power with a clear agenda to reform Victoria's competitive VET system'. We know why it is a competitive VET system—because of the decision of the former education minister, Julia Gillard, when she introduced the contestability model. I note that you made reference to that at the bottom of page 3 and you talk about the need for clarity about regulations. Is your response to that competitive VET system, which you have identified needs some change, that it can be managed with regulations, or does it need a more fundamental change?

Mr Robertson : To the extent that regulation goes to the activities and bona fides of a provider and the integrity of the training product or the qualification, you could use regulation to deal with some of these quality issues. Then all governments—and this is the reason why this government has the Mackenzie review—can make a judgement call around the amount of funding to make available.

Senator RHIANNON: You have talked about the bona fides of the providers. When we are talking about for-profit companies, their responsibility is to make a profit. Therefore, that leads to cutting corners in education quality. Have you considered the need to renegotiate what that national agreement is? It is what all the TAFEs sit under. Surely, if it is not changed, we could end up, under the new government, with a repeat of what we have seen previously.

Mr Robertson : The first response is that this is the reason the Andrews government has asked for the funding review. The second point would be that as a general principle we would not be against for-profit providers just because they are for-profit, private companies. The basic requirement for their entering into a contract with us is that they are appropriately regulated and established under national standards. Those national standards set threshold requirements about how those providers are to operate. At this point in time we do not have a distinction between for-profit and not-for-profit.

Senator RHIANNON: I am not saying there needs to be an end to the for-profit, but, to go to the more specific question, are you leaving it such that it has to be a contestability model—that TAFE has to be in competition with the for-profit companies?

Mr Robertson : At the moment, the way the policy is established, we would support a contestable approach to funding, the reason being that we are covering quite a wide range of student need, but particularly industry need, and there would be private providers outside of TAFEs that, because of their background, are far better suited to provide that training. To exclude them from training—

Senator RHIANNON: But couldn't that be done without a contestability model?

Mr Robertson : In other words, we would allocate places to those particular RTOs, for example.

Senator RHIANNON: I understand that that was done before 2009.

Mr Robertson : That is correct. Before 2009, essentially the model was what they would call profile funding to TAFEs. And this is not unique to Victoria; it generally occurs around most states and territories. And there was an approach called user choice, whereby a certain number of training places were made available under a tendering arrangement and were allocated that way. That could be a model that Mr Mackenzie recommends. There are a range of other models that he could recommend. But generally you would imagine that we would be generally responsive to an open training market, provided that those providers can assure quality and integrity in their operations.

Senator RHIANNON: The VET funding review: that is the Mackenzie review you were referring to?

Mr Robertson : Yes.

Senator RHIANNON: When do you expect the report to be made public?

Mr Robertson : That is still a matter for the government to determine.

Senator RHIANNON: When did it start? On 9 February?

Mr Robertson : Yes.

Senator RHIANNON: I noted on page 3 of your letter that you set out the situation with TAFE, and the alarming figures—30,000 fewer government funded students. That sounds like a real crisis. What is happening to the campuses?

Mr Robertson : The policy position of the Andrews government in coming into power was to restore the positions of TAFEs, and they have made some direct investments into TAFEs. That is the reason they have asked Mr Mackenzie to look specifically at what needs to happen to restore the operation of TAFEs to an appropriate level.

Senator RHIANNON: In the interim, is anything happening for these students, or to attract students back? Or are we in a situation in which the numbers are tumbling while we wait for the report?

Mr Robertson : No, the minister is actively considering strategies that could assist in bringing students back into the system.

Senator RHIANNON: When will those decisions be released?

Mr Robertson : That is up to the government.

Senator SINODINOS: ASQA has been refusing registrations in Victoria at approximately double the national average. Is that right?

Mr Robertson : That seems to be the case, although that is since they started operations four years ago. We do not know how many of those were part of the Victorian Training Guarantee or whether they were private providers operating in Victoria, outside of funding.

Senator KIM CARR: How come you do not know that?

Mr Robertson : I could find that out, but I do not have it on me here.

Senator SINODINOS: I think it would be good if you could look into that. But in terms of the TAFE sector, are you saying that the Andrews government position is to quarantine a share of VET funding for the TAFE sector, to give it a guaranteed market share?

Mr Robertson : I am saying that the Andrews government has asked Mr Mackenzie to look into options for making sure that TAFEs play a vital role in the VET system. We are waiting for Mr Mackenzie to make his recommendations, and we will consider a response from that particular point in time.

Senator SINODINOS: Have you looked at whether TAFE—in this case, Victorian TAFE—is fit for purpose in a contestable market and whether it needs to change?

Mr Robertson : Certainly that is part of the considerations of the Mackenzie review. Regarding the extent to which students have moved from TAFEs to private providers, we do not really have evidence of what has been happening there, but clearly—

Senator SINODINOS: Has anybody asked the students why they are moving?

Mr Robertson : We do some assessment of students, but we would not particularly ask them if they have moved from a TAFE to another RTO. We do not ask that particular question.

Senator SINODINOS: On the face of it, if you look at some of the prices—and Senator Carr referred to them before—for example, between Careers Australia and Melbourne Polytechnic, why wouldn’t students be mobbing Melbourne Polytechnic to get into a business course?

Mr Robertson : That is a fair question, and I would assume that some of it comes down to the effectiveness of marketing.

Senator SINODINOS: Marketing, or provision of information?

Mr Robertson : Provision of information.

Senator KIM CARR: We had some evidence earlier from the pharmacy guild about a person, a pharmacy assistant, who received their qualifications through the mail, not undertaking any training, apparently. It was discovered that this person did not know what an analgesic was. How common are you finding that type of experience to be? Given that 8,000 qualifications have been withdrawn, how common do you think it is that people are totally unqualified or are getting qualifications through the mail and not having actually undertaken any training.

Mr Robertson : I do not really have any evidence to substantiate—

Senator KIM CARR: Or how widespread? You do not know?

Mr Robertson : Certainly there will be cases of that, and, as Ms Bond said, clearly that is what has happened. We have a student complaints line, and we receive some complaints about those sorts of issues on occasion.

Senator KIM CARR: You have been in this business a long time now, to my knowledge.

Mr Robertson : Yes.

Senator KIM CARR: What is your assessment of how widespread those types of abuses have become?

Mr Robertson : I would counter this by saying that in the review that Deloitte undertook around quality they made a very strong statement to say that stakeholders come forward with views about poor behaviour and poor outcomes for students, but it is difficult to substantiate it, evidence-wise. So, what I would be saying is that there has been growth in that sort of behaviour. There has always been that sort of behaviour. You could indicate that there has been—

Senator KIM CARR: I was a schoolteacher at Glenroy tech for 10 years, and I know that people get up to all sorts of things, but it does worry me that we are hearing evidence of people not having fundamental knowledge and receiving their qualification in the mail. We have heard reports of people in hospitals and childcare centres and a whole range of public institutions who are not qualified.

Mr Robertson : Yes.

Senator KIM CARR: Is there not just a question of student welfare but also a public welfare issue that needs attention here?

Mr Robertson : Most definitely. My sense about what is going on, having been in the sector for a while, is that we have possibly created too much flexibility in saying what a qualification is. And you can mix and match and do a variety of things like that. What can be bundled up as a qualification can satisfy all the regulatory arrangements but a student would not really know what they are doing. So there is a sense about good information to a student about what they should expect from a particular qualification.

Senator KIM CARR: Is there not also a case of fraud, where people are being paid moneys to undertake provisional training? You are taking the money; you have obviously asked people for money back. But is there not also a question of defrauding the public purse?

Mr Robertson : Certainly we cover that in Victoria, under the funding contract, and if we found evidence of that then obviously, as you said, we would recover the funding. But we would also then pursue the student as well, to make sure that if there was a sense that there had not been training delivered then they had the opportunity for redress.

Senator KIM CARR: I understand that. I understand what you are doing: you are actually offering alternative arrangements. I commend you again on that. But I am asking the question about criminal activity. That is, if a person contracts to you to undertake training and does not do it but takes your money—and you have acknowledged that they have not done it, because they have paid your money back—are you not concerned that there are not prosecutions for fraudulent activity?

Mr Robertson : In the normal course of our exercising contractual obligations, if we felt that there was fraudulent behaviour going on we would refer that on to the appropriate authorities.

Senator KIM CARR: Have you referred anyone on?

Mr Robertson : I would have to take that on notice.

Senator KIM CARR: Thank you. What is the total amount now that you have reclaimed?

Mr Robertson : Mainly it is around $21.6 million that we have reclaimed, but for other bits and pieces we have stopped payments, and I would not be able to tell you how much we have stopped.

Senator KIM CARR: I have seen figures of up to $30 million. Would that be an unreasonable estimate?

Mr Robertson : It would be close to that figure.

CHAIR: Thank you very much for coming along this afternoon. We appreciate it.

Committee adjourned at 14 : 56