Radio National Breakfast with Fran Kelly
Redesigning VET FEE-HELP; Parliamentary privilege
07:37 AM AEST

Fran Kelly: Over the past four years it’s estimated the Commonwealth has lost more than $2 billion due simply to a blowout in the growth of the private vocational education sector. Set up under the previous Labor government, the VET FEE-HELP scheme has been described as a poorly targeted gravy train ripe for rorting and indeed rorted it was. A series of shonky operators running private colleges offering poor quality courses that don’t lead to jobs have been exposed over the past 12 months. Some licences – only a few – but some have been cancelled. 

In a major speech today Senator Simon Birmingham, the Federal Education Minister will tell the sector that there are more unscrupulous private providers than previously recognised and that the Federal Government is preparing to come down hard to sort out this sector. Senator Birmingham will outline the roadmap for reform that he wants to see in place by the beginning of next year. 

The Minister joins us now from Hobart. Simon Birmingham, welcome back to Breakfast.

Simon Birmingham: Good morning Fran, great to be with you.

Fran Kelly: I’ll get to the reforms you want to see in a moment, but first the bottom line. Do you know, does anyone know exactly how much money the Commonwealth has lost as this scheme has grown like topsy over the past three of four years and students have racked up debt, many of them for not much outcome?

Simon Birmingham: Fran we don’t know an exact amount. We know that the scheme has grown from costing federal taxpayers around $325 million in 2012 to more than $2.9 billion last year in 2015. Phenomenal growth in terms of the expenditure, and we know that of course as being on the back of huge growth in student enrolments but also a tripling of the average course fees during that time, so enormous growth in the prices that are being charged. 

We know though sadly completions of these courses are very, very low, some providers with single digit completion rates. So we can see essentially that vulnerable people have been targeted to sign up to courses that they either had no intention of undertaking, no desire to undertake or ultimately ill-equipped in to undertake and complete. So we see these poor completions, the students get saddled with a debt to the Government. Often a debt that will never be repaid so the taxpayer ultimately wears the cost of that, and of course the vocational education and training system takes a hammering …

Fran Kelly: Absolutely.

Simon Birmingham: …in terms of its reputation.

Fran Kelly: So it was just a- in a sense a giant scam in a way. The cost was shifted to the taxpayer and to the students who are left with these big debts. The Minister Scott Ryan who was the minister responsible for the sector earlier in the year suggested that up to a third of this money, a third of this $3 billion could have been wasted. I mean it’s just a disgrace isn’t it and if we zero in – let’s give an example so people know what we’re talking about. 

One of the operators, the Australian Institute of Professional Education, a training college in Sydney, reportedly costing the Government more than $1 million per graduate, I think they got $111 million in Commonwealth funding and handed out just 117 diplomas in one year. It was suspended by the regulator in December last year, but the month before that the college was a finalist in the Government’s Australian training awards which doesn’t exactly inspire confidence does it in the regulation of this sector?

Simon Birmingham: It doesn’t inspire confidence, so there have been many, many problems I think in the management of this sector. We have tried over a period of time to put a number of measures in place to really constrain the rate of growth and fix the problems in the sector. Those measures have included banning the use of inducements, changing the way in which students are charged so that they’re charged in a periodic sense, therefore encouraging the providers to have to keep them in training and ensure they’re progressing through that training rather than just charging everything upfront. Those types of changes have made some differences to improving behaviour in some parts of the sector. But what became clear and what the Government said at the start of this year was that we would completely re-write this scheme and we will seek to change the way in which it operates to guarantee protections for taxpayers, to stamp out those dodgy providers who are rorting the system and to make sure that where we are investing it is purely for quality training that the students actually want to undertake and that has a good chance of leading to job outcomes for them.

Fran Kelly: Okay. As I say let’s hope the regulator can do better than it did with the Australian Institute of Professional Education because that’s going to be the key to that. Today you’re going to outline some of the steps or broad reforms you want to make. One of the elements of your vision for reform in the private college system is to limit the debts that students can incur, which is Labor’s policy too, although I know your policy differs. But does that mean limit the loans the students can take out under the VET FEE-HELP system or limit the fees? Because if you don’t limit the cost of the courses you’re just locking poorer students out of education again aren’t you?

Simon Birmingham: Well Fran, we're confident that if we set fee amounts – sorry, loan amounts that actually reflect what we believe a reasonable cost of delivery is, it will see courses offered within those loan caps. One of the problems with the policy Labor took to the last election, and it's why we haven't wanted to rush decision making in this area, is that they said we'll have a uniform cap on the loans that are available of $8000. Now we know that there are some courses in areas like agriculture, for example, or in some of the engineering areas, a range of different disciplines that do cost more than $8000 to deliver. So we need a scheme that can support those students who don't have the capacity to pay upfront fees to be able to access that. We know that there are different models that are available that demonstrate to us what TAFEs charge in these areas, what regulators such as the New South Wales IPART have set as reasonable costs in these areas that we can use to set perhaps different bands of fee structures. So they're just some of the things that have been suggested in our consultations which we're now taking a closer look at.

Fran Kelly: You mentioned TAFE, and it's impossible to consider the private college system and the vocational system without looking at TAFE; it's the mainstay of our vocational education in this country. It provides courses at sometimes a sixth of the cost of the private sector. It's been caught between two government policies – the VET support scheme, which has allowed the rush of private colleges, and the uncapping of university places, which has allowed – persuaded more students to head to university. How much do you accept responsibility for the TAFE system being the collateral damage of poor policy?

Simon Birmingham: Fran, I think we have to recognise that actually TAFEs have benefitted from the VET FEE-HELP scheme as well. New South Wales TAFE, for example, went from receiving $90 million in one year to $190 million the next year, so the TAFEs themselves have …

Fran Kelly: [Talks over] Minister, sorry to interrupt, but have you talked to anyone working in the TAFE system in the last five years? Because every story I hear is appalling.

Simon Birmingham: Well, Fran, I'm simply stating facts there, and the facts are that TAFEs have seized hold of this program as well and have managed to deliver phenomenal growth. Now their completion rates, also not as bad as other parts, so the TAFEs have a better story to tell in terms of actually using this program for good, but it has actually seen a significant increase in federal funding going into TAFE. Now TAFE's primary funding source, those who manage the TAFEs are state government, so they're not something that we have direct control or responsibility over, but the VET FEE-HELP scheme has seen, across the nation, hundreds of millions of dollars of extra federal funding goes straight into TAFEs as well. So there's …

Fran Kelly: Okay. I think …

Simon Birmingham: … significant support there that TAFEs I know are using in good ways in many instances around the country.

Fran Kelly: Alright, we'll leave TAFE to another day. It's a whole big issue too I think. You're listening to RN Breakfast, it's quarter to eight. Simon Birmingham is the Minister for Education and Training. Senator Birmingham, Labor is claiming privilege on late material about delays and cost blow-outs in the delivery of the NBN. Yesterday the AFP raided the Department of Parliamentary Services; it seized emails between parliamentarians and political staffers, just as Michael Keenan says the AFP has recognised the claim for privilege. Is this a matter for the courts or the Senate, in your view?

Simon Birmingham: Well claims of privilege are determined by the Senate, so that is a matter that the Senate will have to look at very closely. Claims of privilege are very serious matters, because it does of course allow parliamentarians in essence to claim a right, a privilege as such that ordinary Australians, so ordinary citizens are not able to claim. So we have to consider …

Fran Kelly: [Talks over] So as a senator, do you hold fast to that principle of privilege?

Simon Birmingham: I think privilege is a very important principle. It's a very important part of our Westminster system of parliamentary democracy. It should be used sparingly and cautiously, and of course we will have to look very carefully at the precedents that exist for claims of this nature, and the exact nature of the claims that the Labor Party and Senator Conroy are making. It is not there to simply cover up illegal activities, it is not there to cover up basic leaks of information, but …

Fran Kelly: No, but this …

Simon Birmingham: …it is there as an important principle to ensure that people do have confidence in their capacity to go to parliamentarians with information that is of critical importance.

Fran Kelly: So on the face of it, in this view, is that what's happening here?

Simon Birmingham: Well I'm not going to pre-judge the details. We'll have a look closely I'm sure at Senator Conroy's claims, and the Attorney-General and the President of Senate and others will no doubt be carefully analysing the precedents that exist in relation to claims of this nature.

Fran Kelly: Senator Birmingham, thank you very much for joining us.

Simon Birmingham: A pleasure, Fran.

Fran Kelly: Simon Birmingham is the Minister for Education and Training, and he gives his speech at the Australian Counc- Conference for the Australian Council for Private Education today.