Interview on 2GB Money News with Ross Greenwood
Issues with Labor’s failed VET FEE-HELP; New VET Student Loans program; Child care rorting

Ross Greenwood: One of the most important things that this Government has done is crack down on the so-called vocational education system. Now, what this is all about is work-based education where a person can go out there and- important, absolutely vital, be able to retrain yourself, young people try and get the training and the skills they need to get a job, all that type of thing. Problem is, guess what? It got rorted massively and I’m saying on a huge scale, the taxpayer’s ultimately going to carry a bill of $6 billion plus potentially into the future. 

Now, the way in which this occurred was all good intention. Let’s try and have a system that provides more competition in the area of vocational training and so, as a result, if you have more providers, hopefully the fees come down. Fees didn’t come down. The reason for that was when a young person suddenly turned up they were suddenly obviously put into courses that may have not been appropriate for them, in many cases bribed to go into courses that they might never complete and would never have to pay back you the taxpayer, me the taxpayer, the Government, until they earned $54,000 a year, which in many cases they were never going to do. 

Well, after having racked up these billions of dollars worth of debts, thankfully the Minister for Education and Training, the Senator for South Australia Simon Birmingham has today at least started to clamp down on some of the providers, many of whom now facing court sentences and situations from the ACCC. Let’s get him in on the line, Simon Birmingham many thanks for your time.

Simon Birmingham:
G’day Ross. It’s good to speak with you.

Ross Greenwood: Alright, this was a dead set rort. This was one of the things that people should’ve got angry about, it had taken a long time to get to this point where you can try and fix it up. How will you try and stem the flow of the taxpayer’s money?

Simon Birmingham:
Well, that’s right, Ross. It dates back to 2012 when changes were put in place that really opened this VET FEE-HELP scheme right up and there was a bit of a slow burn, it took a little while for the full extent of the problem to become apparent but over the past few years they have where a scheme that was running at a few hundred million dollars turned into a few billion dollars and we have put a range of measures in place over the last couple of years – 20 different reforms – to try to fix the Labor model that we inherited and that means that this year in 2016 we’ll see hundreds of millions of dollars fewer debt and fewer loans written than was the case in 2015. 

So, we not only have stopped the growth but we have pushed it backwards but it’s become apparent during the course of this year that that’s insufficient to actually give us confidence in the value of this program and the training that’s been provided. We need to go right back to basics so we’re going to bring Labor’s failed VET FEE-HELP scheme to an end at the end of this year and start a new VET student loans program from the first of January next year where there will be much tougher criteria about providers who can get in to offer loans and courses, the types of course that can be subsidised, the value of the loans that are available, and the number of places that are available so that we have much firmer and stricter control over every single element of this program into the future than we’ve had in the past.

Ross Greenwood: And, look, the names that actually stick out there, the name Vocation that ASIC has got action against, there’s obviously Phoenix, where the ACCC has got a misleading and unconscionable conduct accusation against them arguing they should pay $106 million back. There’s been a range of others that have been out there; one called Unique another called Empower Institute. So, these are some of the organisations that have clearly been alleged to have done the wrong thing by the consumers. One issue …

Simon Birmingham:
[Interrupts] You’re right, Ross. We’ve put a lot of time and effort into compliance actions over the last year or so working particularly with the ACCC who have done a great job bringing many dodgy providers to court, that has seen fines levied, voluntary payments made, student debts eliminated where they’d been wrongly and in some cases misleadingly accrued. 

All of that’s great, but one of the challenges we’ve had- well, it’s not great but it’s good that we’ve managed to progress those sorts of compliance actions, but one of the challenges we’ve had is that under the existing framework of that scheme it was proving very difficult for us to get those bad providers out of the program, that they were tying us up in court challenges and actions against the compliance measures and really managing to keep themselves in the market when we wanted as a government to get them out. That’s why we’ve come to this conclusion that if we shut the door on the existing scheme, we can start afresh and build a new program from the ground up with tight conditions around who gets in the door, what they’re offering and what loan fees are available to them.

Ross Greenwood:
Okay. Now, that all being the good side of it, is there a downside on this that a potential young person who might want to get the qualifications, or an older person in their forties or fifties who’s found themselves out of work, wants to get reskilled, that they may be denied places because you’re going to make it tougher and so therefore there could be potentially fewer places out there for the students, the well-meaning students?

Simon Birmingham: Well, there will no doubt be fewer loans and therefore notionally fewer places but there shouldn’t be fewer genuine places for real students wanting to undertake worthwhile studies in areas that can increase their employability in the future at high-quality providers. So, we’re trying to get the balance right here of bringing a program full of waste back to an efficient program that in the future is targeted for those genuine students undertaking worthwhile study at high-quality training providers and in those instances there should be nothing to fear from the changes that we’re proposing.

Ross Greenwood: Well, you have had your hands full with rorts trying to plug the leaks; the other one has been family day care providers, suggestions that there has been defrauding of the taxpayer of more than a billion dollars in the past two years alone. You’ve likened this to Labor’s failed home insulation scheme. In this case also – so we’re talking about family day care here – you again are trying to crack down to prevent those people who have been able to exploit loopholes in that situation, I mean, even some $27 million alleged to have gone in taxpayer funds in aid of Islamic State, for goodness sakes. I mean, that’s how bad it got but again here it needed to be cracked down upon.

Simon Birmingham: So, again, inadequate legislation, poor safeguards in place. Now, we have a proposal for a whole new childcare subsidy framework that is before the Parliament at present that will put much stronger arrangements in place and I hope and trust that we will see support for that over coming months. We’ve already done what we can within the existing legislation to stop so-called child swapping practices where people claim rebates for looking after each others’ children, to end the practice of older siblings being paid childcare subsidies to look after their younger siblings, to stop the crazy idea that people are claiming childcare practices for driving kids to or from school.

So, a range of things that we’ve been able to do within the existing laws to clamp down but the Turnbull Government also has a comprehensive reform of childcare before the Parliament which we hope will build on the half billion dollars worth of savings measures to date have realised in making the childcare system more efficient and more honest.

Ross Greenwood: We’re talking billions upon billions of dollars that has leaked out of the federal budget, out of the taxpayer’s pocket because of these. I mean, when you look at this, it really does make you wonder that Australia is not a soft touch, the home of the rort, because these systems have been very easily rorted by people who have done the wrong thing by Australia.

Simon Birmingham: Well, they’re programs where there were good intentions but as the old saying goes, the road to hell is paved with good intentions. And, of course, in these instances, what we’ve had to do is take sloppy legislation, poor arrangements, poor administration, and try to fix them and really in both cases we’ve been able to put various band aids on but it’s reached a point where whole new legislative frameworks and architecture are necessary and that’s what we’re seeking to deliver.

Ross Greenwood:
Finally, the leaks are finally plugged and the Minister for Education and Training, Senator Simon Birmingham, we appreciate your time here on the program.

Simon Birmingham:
Thanks so much, Ross. Much appreciated.