Interview on 2GB Money News with Ross Greenwood
VET Student Loans course and provider eligibility; Protecting students from unscrupulous training providers

Ross Greenwood: But in the meantime, I do want to go onto another story which is important right now, and that is in regards to private education and colleges. As we’re well aware here on this program, over a very long period of time there has been outright exploitation of the sorts of debts that have been incurred and picked up by private colleges in Australia. Some simply saw it as an easy way to be able to milk money out of a government that had effectively gone completely out of control. 

Now, what’s occurred is that over a long period of time the amount of debt in HECS has just gone through the roof. Now, at the moment it’s gone from not terribly much to $60 billion in a very short space of time. The Government’s had to come in an act to try and clamp down on the amount of money that is doled out, and now the latest initiative comes from Simon Birmingham, the Education Minister, who has got new, stricter criteria on individual colleges, and in particular the pass rates, if they are enabled to bring more students through. Let’s go to Simon Birmingham, the Federal Education Minister who’s on the line right now. Many thanks for your time, Simon. 

Simon Birmingham: G’day Ross, great to speak with you again.

Ross Greenwood: Alright, so a couple of bits and pieces here. Labour force figures are out today, so unemployment numbers sitting steady at 5.6 per cent. I know it’s not necessarily your area, but it does fit in with it. If we’ve got people who are better educated and able to do more than one role, so that’s vocational training which is what we’re about to talk about, then quite clearly we have a more flexible workforce that can adapt to changing work environments. Would that be the reasonable basis on which we start this whole conversation?

Simon Birmingham: That’s an absolutely reasonable starting point, that of course a better educated workforce lifts not just the prospects of those individual people, but also opportunities right across the economy. So, you know, we know that it’s sensible to invest in education, but that investment has to be wise, it has to be targeted, it has to be value for money, it has to be affordable to the current generation of taxpayers and not load the next ones up with even greater debt. This is the approach we’re certainly taking, to say how do we get the best bang for our buck for the economy overall, and for individuals in terms of education which can grow the economy and help people to secure jobs, or better jobs to help them in their future.

Ross Greenwood: You know what the numbers are like right now. What do you reckon the VET FEE-HELP debts are in total right now?

Simon Birmingham: Look, in total we know that in 2015 we issued about $2.9 billion worth of VET FEE-HELP loans. 2016 will come some hundreds of millions of dollars below that thanks to reforms that we put in place, but we know that there is still waste in that. There’s still rorting and overpricing there, which is why we’re bringing this failed scheme to an end at the end of this year and putting in place a new structure that ensures there are strict caps on loans, strict relevancy to job and employment outcomes with the training that’s provided, and strict criteria to guarantee that only high-quality providers who are fair dinkum about training people for jobs actually enter the system in the first place. 

Ross Greenwood: Okay, and some of the crooks who have got into this system and basically exploited individuals, low income individuals, unemployed individuals, and promised them an education, given them a laptop and then simply buggered off and taken the money with them, taken the Government’s money with them knowing that those individuals would never complete that course and/or never pass it, what happens to them? I know the ACCC is taking some action, I know that courts are taking other actions, but I presume that some of them literally walk away scot-free?

Simon Birmingham: Sadly Ross, some of them may. Of course, we’re working as hard as we can and as closely as we can with the ACCC and with the regulator in the skills sector, ASQA, to make sure that as many who can be brought to justice for breaches of the scheme are brought to justice, or for breaches of consumer law. And we’ve seen payments made, tens of millions of dollars in fines already; there are others who are still before the court. Some have already folded and shut their doors, or gone under into administration. But unfortunately, of course, some did unethical things but they did unethical things that were within the boundaries of the law, because the VET FEE-HELP scheme that the Labor Party opened up in 2012 was so poorly structured and poorly written that we found there were all manner of loopholes that people kept finding ways to exploit, or they could just get away with gross price-gauging as part of their activities. And that’s why, in the end, despite numerous attempts to try and fix it up, we’ve decided the best way forward is to close it down and start afresh.

Ross Greenwood: Alright. Just explain some of the excesses that you have seen. What are the worst that you reckon you’ve seen in regards to poor student outcomes, but significant amounts of money that have been taken from the Government?

Simon Birmingham: Probably the worst we’ve seen are those providers who have gone into remote Aboriginal communities, or retirement villages, or nursing homes, and tying very vulnerable Australians up to loans and courses that of course they never had any understanding of what they were being signed up to, let alone of course the capacity to actually undertake and complete those courses. Now, they’re the areas that the ACCC is really having some success in terms of its prosecutions and action, because it’s clear that there were real breaches of consumer law there. 

But more generally, we have providers who have enrolled thousands of students, but are completing just a small percentage of those students through their courses. We’ve seen course prices in some areas go from six or seven thousand dollars to thirty thousand dollars for the same diploma. So there’s evidence across a range of different factors as to why action had to be taken. We’ve made about 20 different reforms over the previous 12 months to try to rein the excesses of this program in once they became very clear, but the decision we’ve made in recent months, as the Turnbull Government, is to say this has to come to an end. And we’ll end the failed experiment and start afresh with a scheme that has much, much tighter criteria around it. 

Ross Greenwood: I’ll give my audience a couple of examples. There’s a mob called Study Group Australia. It received $181 million, but between 2013 and 2015 the completion rate – in other words, people who completed the course – was 7.8 per cent. So you’re talking about less than one in 12 students actually completed the course. Or the Australian Institute of Professional Education, it went into administration this month. In 2015 alone it received $114 million; they enrolled 1006 students in the course, but only 16 completed the course, 16 out of 1006. So in other words, they pick up the money for all of those students’ courses from the Federal Government, but only 16 actually finish the course and get some sort of a degree. So what you’re going to do is, I understand, change it so that you’re going to put massive hurdles in front of them. In other words, you’re not allowed to enrol more students unless you get a certain pass rate.

Simon Birmingham: Well the first point is, for those who have truly appalling outcomes to date, they won’t get into the new VET student loans program. So one of the real benefits of saying we’re closing the old VET FEE-HELP scheme and starting a new student loans program is we don’t have to kick people out: we start afresh in saying who we let in in the first instance. And so those who have terrible compliance history, who have demonstrated that they have a poor track record with complying with the old rules, no matter how bad or loose those rules were, won’t get in the door. 

Secondly, we want to make sure that, for any course that people were offering before, they were at least hitting a 50 per cent completion rate for the different units of study within that course. So not necessarily 50 per cent of students completing everything, but at least when they undertook the unit of study 50 per cent of them were completing it, and that’s your threshold level just to be able to keep offering some loans under that course. But if you were only just hitting 50 per cent, we won’t be letting you offer as many as you were in the past; it will be restricted to 75 per cent of your previous offering. 

So really a message to say go back, tighten up your processes and make sure you are genuinely supporting your students through their course. If you were hitting above 75 per cent, well then we’re saying you seem to have been doing a pretty good job, and we will reward that with room for growth, and that you can actually offer 110 per cent of what you were doing in the past. But within the new program, it has caps in terms of the loans that can be provided, so that we keep a lid on price pressure in these courses, and of course the restricted list of courses so they’re actually relevant to employment outcomes.

Ross Greenwood: There you go. I think that would be more satisfactory to people, a results-based course. We’ll look at the outcome of how that actually works and the sort of results it achieves for the students, and also for the Government as a whole. Simon Birmingham is our Federal Education Minister, and Simon we appreciate your time on the program this evening. 

Simon Birmingham: Thanks so much, Ross, a pleasure.