Interview on 2UE Afternoons with Tim Webster
Redesigning VET FEE-HELP; Government savings measures
25 August 2016
01:27 PM

Tim Webster: I’ve got the Minister at the airport and on a bit of a timeframe. Now in the paper today- I think this is fantastic by the way because as soon as you make subsidies available for any number of things, there’s a danger it’s going to be rorted and this has and it’s called ‘Dodgy College Operators Face a Crack Down’ and our Education Minister Simon Birmingham is on the line. G’day.

Simon Birmingham: G’day Tim, great to be with you.

Tim Webster: Yeah look, the newspapers called it fly by night private colleges with a high dropout rate and they’re about to lose their money, yeah?

Simon Birmingham: Well, that’s right. This VET FEE-HELP scheme which was cracked wide open by the previous Labor government in 2012 has proven to be quite a disaster for taxpayers, for students, for vulnerable Australians and for the reputation of many high quality vocational education and training providers who have had their brand and reputation in the sector trashed by people who have been rorting and ripping off millions and millions of dollars. We’ve seen this scheme grow from just a few hundred million dollars worth of value a few years ago, to almost $3 billion of loans being taken out now, seeing tripling of prices, enormous growth in student enrolment yet very small completion rates and it has to end and we’re committed as a government to bringing in a completely different scheme starting from next year.

Tim Webster: Minister, we’ll save some money here, it was originally about, what, $325 million- it’s ballooned to nearly $3 billion in the three years it’s been around. 

Simon Birmingham: That’s right, it’s been remarkable. Unfortunately we’ve seen people really ripping off individuals and the taxpayer in a manner unlike anything I’ve seen since perhaps the home insulation or pink batts scheme of equal Labor ill repute, I’m afraid but look, we’re working hard to clean it up now. We’ve tried a number of measures over the last couple of years to really tighten down on the way this scheme works but what’s become clear is that we need a different scheme, a scheme that tightens eligibility for the types of providers who can operate within a scheme that limits the areas of study that can be applied for and a scheme that keeps control on prices. So, that’s what we’re now designing.

Tim Webster: Yeah, fantastic. Just back to square one, what did the VET FEE-HELP scheme seek to do? What was its intention?

Simon Birmingham: So, it seeks to provide for students the type of support that we give to students in higher education which namely is to say you don’t have to pay any fees up front, the Government will pay your student fees to access study for you and you will only have to repay that when you earn a reasonable income which is currently set at around $54,000. So, it’s really about providing equitable access into vocational training at the highest level of vocational training, diploma level that is consistent with what we do in a university space which is a really worthy objective and an important objective …

Tim Webster: Oh sure, yeah.

Simon Birmingham: …to send the message out to people that studying a vocational training course is as worthy an undertaking as going to university and some areas there are better employment outcomes and better opportunities for people but sadly the way in which this scheme was structured just left it open- wide open for people who have no ethics to come in and rip people off.

Tim Webster: Oh yeah, dodgy and rorting and we should say to our listeners too, the ACCC are onside with you, backed by you, they’ve taken federal court action against four of these dodgy joints.

Simon Birmingham: That’s right, we’ve seen millions of dollars repaid by a number of providers already, we do have court action underway in a number of instances. Some have been tossed out of the scheme already but really it needs a redesign of fundamentals and that’s what the Turnbull Government will do.

Tim Webster: Well, and really, at the crux of this, you’ve got these operators, they’ve saddled these students with a huge debt enrolling them in these courses and they’re unlikely to ever be able to complete them and pay the money back.

Simon Birmingham: In some of these courses and some of these providers we see completion rates that are less than 10 per cent.

Tim Webster: Is that right?

Simon Birmingham: Now, that is of course an appalling waste of money. You’re right that in some instances, students will never repay the debt because they’ll never reach the income threshold so that means [inaudible] money that taxpayers write off eventually. In other instances, students may eventually repay the money but they’ll be repaying money for something that was of no value to them and this is why we can’t allow it to go on and that we need to make sure that we get finalised, through the Parliament and in place, a new scheme as quickly as we can.

Tim Webster: Yeah I know you’re in the airport and on a bit of a timeframe but just one final question, does that mean- I know you probably won’t tell me specifically about next year now but does it mean that money will be redirected to TAFE or to university?

Simon Birmingham: Won’t necessarily see a redirection of money but I’m conscious of the fact that [inaudible] they have enjoyed significant growth in funding under this scheme as well, New South Wales have for example, went in one 12 month period from receiving $90 million in funding to receiving around $190 million in funding so huge growth there. But TAFE of course have a much better story to tell in terms of completion rates, some of those who have been undertaking the rip offs, they haven’t had the dodgy brokers out there so we’ll make sure that in the program’s redesign their role is respected and that they are able to continue to offer the kind of quality training that we want to see everybody in this scheme focusing on.

Tim Webster: Yeah. Well, your colleagues and Mathias Cormann and Scott Morrison are telling us we need to save a lot of money, there’s a fair bit to be saved there, isn’t there?

Simon Birmingham: Well, Government’s got to absolutely start, as we are doing, by looking at waste within government programs and this is one area where we can do it and make sure we save some money. We’re not being driven by Budget savings here, we’re being driven by the fact that we want better outcomes for students but there are likely to be some ancillary Budget savings which will be welcome [indistinct] much bigger task as Scott Morrison’s been explaining today to really bring Budget back into balance which requires all Australians to recognise that there’s no easy option as to how that can be achieved.

Tim Webster: Yeah I hope Australians actually do get that because it’s very important. Thanks very much for your time, it’s good to talk to you thank you.

Simon Birmingham: A pleasure [indistinct] time.

Tim Webster: Education Minister Simon Birmingham.