Second Reading – Vocational Education and Training

Mr PITT (Hinkler) (17:04): I am very pleased to be speaking here today in support of the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. This bill will strengthen the protections for students in the vocational education and training sector and push unscrupulous training providers out of the market. This bill addresses issues that are well known to my office. I will not name the students or organisations for privacy reasons, but I would like to share a couple of their stories.

I had a young woman who contacted the Hinkler office after she withdrew from studying a Diploma of Management and the college tried to charge her $12,000. She was led to believe the cancellation costs were just $600 and that she would have to return the so-called ‘free’ laptop she received. She had cancelled her enrolment because she felt the method of delivery and standard of content was poor. When my office contacted the college they advised that because the young woman had not withdrawn within the required two weeks or census date she would have to pay $6,000 in course fees she had incurred and would have to purchase the laptop. The laptop could not be returned because the young woman had used data and the device now contained her personal information and documents.

Another common problem in my electorate affects temporary foreign workers who enter Australia on student visas. When they get here their passports are confiscated and they never see the inside of a classroom. They work in the horticulture sector, where they are exploited by unscrupulous contract labour hire firms. I congratulate the government on forming Taskforce Cadena to address just this type of exploitation. Some registered training organisations are complicit in this exploitation because they take the foreign workers’ money in exchange for silence. They know full well that those students will never set foot inside a classroom or submit an assignment.

Another example relates to the aggressive and false marketing of courses. A gentleman contacted my office in July concerned that when his son applied online for what he thought was a vacant job in warehousing with a contract labour hire firm, he was instead contacted by a registered training organisation. Their email confirmed he was registered to attend an induction session to enrol in a certificate III in logistics and warehousing. There was no job vacancy. I share his concern that these online job advertisements are completely misleading. To quote the gentleman directly:

These ads are making the Registered Training Organisations rich, while leaving people with a debt and no job.

What is also concerning is that the email from the RTO contained all the documentation that the job seeker would need to provide for enrolment but did not disclose any information about the course content, the course outcomes, the course costs or the course cancellation fees.

These kinds of unscrupulous training providers have been allowed to flourish since Labor made changes to the VET HELP loans scheme in 2012. Providers are preying on vulnerable people and signing them up to courses of dubious quality that they do not want and do not need. People in my region are particularly vulnerable, given the high unemployment rate and low job vacancy levels.

Between 2012 and 2014, the number of approved VET providers increased from 119 to 254, and the number of students increased from about 55,000 to 202,000. The total value of VET HELP loans increased from $325 million to $1.75 billion. That is in someone’s pocket. To quote Chris Robinson from ASQA, the Australian Skills Quality Authority, the expansion ‘precipitated unprecedented examples of unethical student recruitment practices and astronomical fees as dodgy operators jumped into a new and easy government supplied pool of money’.

In March this year, the government announced a suite of reforms to the VET FEE-HELP scheme to protect students, taxpayers and the reputation of Australia’s VET sector. These reforms spanned areas such as marketing and inducements, consumer information, debt processes and provider standards. The first of these changes included the banning of inducements such as free laptops, cash or vouchers, and that came into effect in April this year. The second tranche of reforms came into effect on 1 July this year.

Since then, providers have been banned from charging a withdrawal fee. Costing several thousands of dollars in some cases, the fees acted as a barrier to some students withdrawing from a course before the census date, which is when the loan is levied. In addition, training providers and agents can no longer market VET FEE-HELP supported training as ‘free’ or—in italics—’government funded’ or mislead students in any way into believing that VET FEE-HELP is not a loan that is expected to be paid back.

Providers must now publish on their websites which agents and brokers they use and are responsible for the conduct of their agent or broker. Agents must now disclose to the student the name of the VET provider and the course they are marketing, and they must also disclose that they will receive a commission for any referred student enrolment.

The government has also announced that, from 1 January next year, providers cannot levy the full debt load up front and in one hit. Instead, students will have a number of opportunities during a course to confirm if they wish to continue to be enrolled, and their debt will be levied accordingly.

This bill now implements the remainder of the government’s announced changes. For example, the bill introduces changes that will protect vulnerable students at the starting point, before they incur a debt, by requiring providers to establish minimum prerequisites for enrolment for each course. This ensures that a student’s capacity to complete the course—including language, literacy and numeracy proficiency—is properly assessed before they are enrolled and before they incur a debt.

The bill makes a number of technical amendments to enact a two-day cooling-off period, ensuring that students have time to make separate study and payment decisions. Students will, from 1 January 2016, have two days after enrolment before they are allowed to submit a request for Commonwealth assistance—the VET FEE-HELP loan application form. No longer will course enrolment be confused with the loan application. The bill ensures that this cooling-off period is in place even with late enrolments close to the census date, which is when students incur the debt.

The bill also increases protections for students under the age of 18 by requiring a parent’s or guardian’s signature before the student can request a VET FEE-HELP loan. Can you imagine if you rolled down to the bank to sign up for an $18,000 loan to buy a car? That certainly would not be as simple as this has been in the past, and we are addressing this problem. This is an appropriate protection to ensure that young people, who may lack the necessary life experience and financial literacy, are not being signed up to courses and debts they do not need. An exemption is provided for minors who are deemed independent under the requirements of the Social Security Act 1991.

The bill broadens the circumstances in which students can have their loan cancelled where inappropriate behaviour has been used in their recruitment. This is a cost that taxpayers should not have to bear, which is why the government will be requiring providers to repay the costs of any loans that were signed under inappropriate circumstances. It may impose additional penalties on providers such as fines or conditions on approval.

The bill introduces a scheme of infringement notices attached to civil penalties for VET FEE-HELP training providers that engage in improper conduct. In the 2015-16 budget, we allocated $18.2 million to strengthen compliance. The Department of Education and Training will now have a full suite of powers available to it to deal with inappropriate behaviour by providers or brokers. This ranges from cancelling student debt and forcing providers to repay the cost to the Commonwealth, to administrative action such as the suspension or revocation of approval, or civil penalties including infringement notices. The bill expands the department’s and the Australian Skills Quality Authority’s powers for monitoring and enforcement action against providers and brokers who are doing the wrong thing.

As well as protecting students, this bill also lifts the standards of organisations that are approved to offer VET FEE-HELP funded courses. Approved providers are entrusted by students and taxpayers with potentially millions of dollars in tuition fees. The government believes that VET FEE-HELP providers should meet a high benchmark of financial viability and training quality. That is why this bill introduces a new minimum registration and trading history requirement for new VET FEE-HELP provider applicants. This ensures that all new providers offering VET FEE-HELP have a proven track record in delivering high-level qualifications.

As the former owner of an RTO, I can tell you that the standards are incredibly strict, particularly for certification. Unfortunately, on entering this place, I had to sell that business because there were far too many conflicts, but I am very proud of the fact that I had it for over 10 years, and it continues to function on the basis that it provides quality training to real people for a real price. The fly-by-nighters I have had an enormous amount of experience with. I have seen them everywhere. I lost jobs all over the country in my previous life against the people who show up, who might be subsidised or who can track down government funding. It certainly is wrong. I would encourage all of those organisations out there—and they are out there—which are good, quality organisations which have been around for a long time and which continue to do the right thing. I would encourage them to hang in because we certainly need them to continue doing that. They provide good training to students with good trainers for a reasonable price.

I certainly heard the contributions from the two previous speakers about TAFE. Whilst TAFE do provide a good service, the issue that I discovered in the many years that I was involved was that TAFE simply do not have the ability to be flexible. They certainly did not at that stage; they may well have shifted now. They need to be able to provide services to people who work on shift, people who work away, people who work on site. They need to adjust their business model; otherwise, they simply will not survive.

There are positives, Mr Deputy Speaker. There are positives. The vocational education and training sector is a vitally important part of Australia’s economy. It is a sector that has a long and proud tradition in Australia. For many young people, it provides the bridge between school and work. For unemployed people, it often provides a pathway back into employment and a life off welfare. And for people in work, it can be the mechanism by which they can expand their skills and progress in their careers.

I was certainly one of those. I completed a trade before going to university—before doing all sorts of things and then ending up in here, would you believe, Mr Acting Deputy President—it has been a very long and torturous path! But I understand the training sector, particularly for VET, and we desperately need those trade skills in Australia.

The coalition government is committed to ensuring that we continue to have a strong VET sector—a sector that helps students to develop the skills they need for the jobs of today and to adapt to the work of the future. That is why we have introduced programs like the $20,000 trade support loans for apprentices. As someone who undertook an electrical apprenticeship, I know how much difference such a loan would have made to me. Certainly, as I recall it, my first pay packet was some $63—

Mr Irons: $39!

Mr PITT: I hear $39 from my good friend and colleague! The government supports the principle of VET students being able to access a loan so they may undertake quality training in the same way that a university student is supported through HECS-HELP. Certainly, the tradespeople of Australia are just as valued as those who do a university degree.

Unfortunately, Labor failed to put in place sufficient controls and safeguards to protect students and taxpayers’ money when they introduced the VET FEE-HELP scheme. In typical fashion, they did not have an eye to the implementation risks. They are well aware that this is a problem of their own making. The shadow minister for higher education, research innovation and industry acknowledged as much only a few weeks ago. Senator Carr, from the other place, was quoted in The Sydney Morning Herald newspaper:

Labor Senator Kim Carr said Labor introduced VET FEE-HELP with good intentions but the scheme contains “fundamental weaknesses” that need to be fixed.

We are fixing those weaknesses. This bill is necessary to address Labor’s failure with regard to VET FEE-HELP and to put in place proper controls and safeguards to protect students and taxpayers from the unscrupulous behaviour of some providers.

I commend the bill to the House.