Second Reading – VET Student Loans Bill 2016

Monday, 17 October 2016

Mr PITT (HinklerAssistant Minister for Trade, Tourism and Investment) (18:54): I rise to speak on the VET Student Loans Bill 2016, which will overhaul the VET-FEE HELP system so that it is affordable, sustainable and more student focused. It will also undo the damage caused by Labor’s failed VET-FEE HELP scheme in the first place. After Labor made these changes to the VET HELP loan scheme in 2012, unscrupulous training providers were allowed to flourish. I can tell you, Mr Deputy Speaker Kelly, as someone who used to own and operate a registered training organisation, that was most certainly the case. I am sure many of my colleagues heard similar stories in their offices as I did in mine. There were examples where providers preyed on vulnerable people and offered sweeteners, like a free laptop or a free iPad, if you signed up for a course—a course of dubious quality, a course that you did not actually want, a course that you did not need, a course you would never complete and a course that you would never ever pay for.

A constituent contacted my office after his son applied online for what was advertised as, and for what he thought was, a vacant job in warehousing with a contract labour hire firm. But instead he has contacted by a registered training organisation. Their email confirmed that he was registered to attend an induction session to enrol in a certificate III in logistics and warehousing. There was, of course, no job vacancy. I share his concern that these online job advertisements were completely misleading. What was also concerning was that the email from the RTO contained all of the documentation that the job seeker would need to provide for enrolment, but did not disclose any information about the course, the course content, the course outcomes, the course costs or the course cancellation fees.

Another constituent raised concerns that there were some RTOs who were flaunting the laws that we were supposed to be upholding for their own profit and gain. Can you imagine that: someone who flaunted the law for their own profit and gain! This gentleman in particular was incredulous that students could pass a course for high-risk work after a five-day course when he runs three days of formal training in his operation and his students then need to obtain 120 logbook hours before even being assessed. He said that people had contacted him to say how ‘hopelessly inadequate’ the training was and also that they themselves were not, in any shape or form, confident in their ability. These are not the outcomes we need in the industries of Australia. These are everyday people, and they are being left massively in debt—a debt the majority will not pay—and they have no qualifications to show for it.

There are some interesting stats. The changes made by Labor’s schemes resulted in student numbers jumping by almost 400 per cent. Fees more than doubled. Loans increased by 792 per cent and jumped from a cost of $325 million in 2012 to $1.8 billion in 2014, followed by $2.9 billion in 2015. The VET Student Loans Bill 2016 will hit the reset button. It will hit the reset button so that Australians can start to rebuild their trust in vocational education and so that taxpayers can be assure that their money is no longer being rorted.

I previously spoke in this place in support of the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015, which was part of the measures that the government introduced a try and fix this problem. The coalition government banned inducements being offered to students to enrol in courses for which they needed a loan and tightened recruitment and marketing practice to make it clear to the students themselves what they were signing up to. While these measures were necessary—and they have made an impact—a reset is needed; a new scheme is needed.

The new VET Student Loans program will limit courses eligible for VET student loans to those that align with industry needs. What a novel approach, Mr Deputy Speaker! We will train and provide for people in the areas that we need—the areas where there is a shortage. These will be selected based on analysis of employer, state and territory, and Commonwealth data to ensure that they lead to good employment opportunities. What another novelty! We will train people for employment for jobs that are available.

The Minister for Education and Training, Senator the honourable Simon Birmingham, will have the power to approve a course list by legislative instrument for courses and loan caps determination. The list of 347 courses proposed to be eligible for a VET student loan from 1 January 2017 is currently open for consultation, and the coalition government wants to hear your views on the eligible course list. You can have your say by providing feedback by email to That feedback must be provided by this Sunday—October 23. The determination will give the minister the power to change the list and ensure that it remains flexible to meet changing workplace skills needs. By limiting the courses eligible, the new loan program will be closely aligned with industry needs.

We need to end the free-for-all subsidies that Labor started that have seen providers burden students with tens of thousands of dollars worth of debt for courses that offer poor employment prospects. Examples are the Graduate Diploma of Veterinary Chinese Herbal Medicine and the Advanced Diploma of Therapeutic Arts in Counselling, to name just a couple.

The new scheme also include three bands of loan caps for courses, set at $5,000, $10,000 and $15,000, depending on their delivery cost. These caps were chosen based on an analysis of the course prices set under the New South Wales Smart and Skilled program and validated against the average VET FEE-HELP fees prior to the exorbitant rises in course fees in recent years. I tell you, Mr Deputy Speaker Kelly, I experienced much of this before I came into this place, and the capacity for someone to actually quadruple or increase by a factor of 20 the cost of one of the courses they atypically deliver was outrageous.

The minister can review the cap rates at any time in the first 12 months of the scheme, and there will be a compulsory review after the first 12 months of VET Student Loans to ensure it is working as intended. Students will be required to log into, and of course engage with, the VET Student Loans online portal to ensure their enrolments are active and legitimate.

From 1 July 2017, a student engagement and progression requirement for continued access to the loan is expected to apply. Students will be required to log in periodically to confirm active and legitimate enrolment in the course. This provides greater protection for students by shifting the ability to access the loan away from the approved provider, to the student. It does this by removing the provider’s ability to re-enrol failing and absent students without their knowledge. The Commonwealth will have the discretion not to pay the loan amounts if the student is not genuine.

A new application process for providers wanting to access VET Student Loans will include a much higher bar to entry by assessing their relationships with industry, their student completion rates, the employment outcomes of their courses and their track records as education institutions. All existing VET FEE-HELP providers will have to apply for approval under the new program. The VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016 will provide for certain bodies, such as TAFEs, to be exempt from the re-application process.

Providers will need to meet the new course-provider requirements to be eligible for approval as an approved course provider. Critically, providers must continue to meet these requirements for the duration of their approval. The requirements include having to be a fit and proper person and having to satisfy the provider suitability requirements. The details of these new requirements will include student outcomes, such as completion rates; industry links; experience in providing vocational education; financial performance; strong management and governance; as well as having regard to the provider’s course scope, tuition fees and modes of course delivery.

It will continue to be a requirement for approval that a provider be a party to a tuition assurance arrangement. This will provide greater protection to students, because they are the ones that need the protection, in the event of a provider ceasing to provide a course, by imposing obligations on the organisation that has agreed to provide the tuition assurance. It is anticipated that applications for provider approvals will be considered only on an annual basis, and an application fee will apply.

The bill also introduces a limit on the duration of a provider’s approval—a maximum of seven years. Thereafter, the provider will have to apply again. Seven years aligns with the maximum length of registration as a registered training organisation under the National Vocational Education and Training Regulator Act 2011 and as a higher education provider under the Tertiary Education Quality and Standards Agency Act 2011. Having been through two of those, I can tell you they are incredibly thorough and difficult.

The bill will prohibit approved providers from using brokers or directly soliciting prospective students, including cold-calling and so-called lead generation, and limiting the subcontracting of training.

This new legislation will mirror and retain many of the important student protection reforms to the VET FEE-HELP scheme introduced through the Higher Education Support Amendment (VET FEE-HELP Reform) Act 2015, including the measures such as the ban on prohibited inducements, the requirement to have a parent or guardian’s signature for students under the age of 18, and enforcement provisions.

The bill introduces a new ban on providers using brokers or agents to interact or engage with students in relation to VET student loans. This includes prohibiting brokers and agents from enrolling students in courses for which the tuition fees will be covered by student loans; assisting students to complete applications for student loans; or providing information or advice to students in relation to the VET student loans. Providers will be required to meet the ongoing information requirements; retain any documents or information, such as student records; and provide students with certain prescribed information.

The bill will also require providers to determine tuition fees in accordance with the rules. This measure will continue to enable the Commonwealth to ensure fees are spread across the duration of a course. The fees must be published. Importantly, a provider cannot require a student to pay for tuition fees that are to be covered by a VET student loan. We will also strengthen legislative, compliance and payment conditions, including the ability to cap provider loan amounts and student numbers, and to limit course scope; and powers to suspend poor-performing providers from the program, cancel their payments and revoke their approval.

So what will the impact of the VET Student Loans Bill be on the students themselves? There will be greater protections provided for students by shifting the ability to access a loan away from the provider to the student. Student loans will be approved by the Commonwealth, but only if the student is eligible and it is for a course that is an approved course. The bill provides the Commonwealth with the discretion not to pay a loan where it is satisfied a student is non-genuine or where it suspects the approved provider is not complying with the conditions on its approval or the provisions in the bill. In circumstances such as unacceptable conduct by a provider, or if the provider’s noncompliance has adversely affected the student, or if it is shown that the student is not eligible or not genuine, the secretary has the discretion to recredit the student’s FEE-HELP balance without the student having to apply.

Existing VET FEE-HELP students will have the option of staying with their current provider under the old VET FEE-HELP scheme until 31 December 2017, or transitioning to the new VET Student Loans program. Students starting study in 2017 will have access to the new program only. Throughout 2017, students will be assisted to move to an approved course at an approved provider. Over the coming weeks and months, the Department of Education and Training will be communicating with students to ensure they understand the changes and what they need to do.

Most importantly, these reforms place a much stronger focus on students successfully completing courses, because quality providers delivering quality courses aligned to industry needs will be a strong driver of completion rates. Ensuring that only high-quality providers with strong track records and industry links are approved to offer the program will have a positive effect on student support and performance.

The bill will also have a number of other impacts on providers. While TAFEs and public providers will automatically transition to the new program, they will still face identical new conditions on scope of enrolment, enrolment numbers, loan caps and student participation. These providers are low risk, they have not abused the VET FEE-HELP scheme, and they have significant numbers of state funded students. Granting them entry to the new program minimises transition and administration costs and provides greater certainty to students. Private providers, however, will be required to meet a range of quality measures to be granted an initial six-month trial period under the new program. Current private VET FEE-HELP providers will need to apply later in 2016 to access the new program on a transitional basis from 1 January 2017. They will then need to apply in 2017 to seek formal approval for entry from 1 July 2017.

New approval arrangements will: assess applicants’ relationships with industry, assess student completion rates and employment outcomes, evaluate any articulation with higher education providers, and appraise a provider’s track record of delivering education and training. Suitability against the application criteria will need to be maintained across the entire period of a provider’s approval. There will also be a stronger focus on compliance, with the education department working with the Australian Skills Quality Authority, ASQA, who I have worked with many times, and the Australian Competition and Consumer Commission to closely scrutinise providers.

The coalition government’s decision to implement the new VET student loans program follows comprehensive consultation with the sector and takes into account the views of a broad range of stakeholders, including: providers, peak bodies, students, individuals and government bodies. The submissions—which included contributions from providers, peak bodies and students—showed that stakeholders strongly agree that change is needed, and they have been an important part of helping the coalition government redesign the scheme. There is strong support for ensuring we have a high-quality program with a strong reputation for delivering results. Stakeholders agree that completion rates need to improve. These rates have been too low for too long, and we cannot let this continue. They also agree that course costs do need to be addressed. The new program will stop providers from charging students exorbitant fees which are then underwritten by the taxpayer.

The VET Student Loans Bill will be a big win for local students, particularly in my electorate, as well as taxpayers. It will ensure public funding is used only to support high-quality vocational and skills courses. I commend the bill to the House.

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