Interview on SKY News To The Point with Kristina Keneally and Tom Connell
Holding Australia’s major banks to account; Issues with Labor’s failed VET FEE-HELP; New VET Student Loans program; Future schools funding arrangements
1:07 PM

Kristina Keneally: Let’s bring in the Minister for Education, Simon Birmingham, he’s joining us from Adelaide, thanks so much for joining us on To the Point Minister.

Simon Birmingham: G’day Kristina, hello Tom, I’ve been listening to the nice things you were saying about me so it must all be downhill from here I fear.


Kristina Keneally: That’s right minister, it’s just going to become open slather. We will get to your portfolio but can I ask your reaction to the banking inquiry, to some of the revelations from the banks, you know, Craig Kelly says he’s surprised at how open the banks had been, the banks have been quite apologetic, where do you think this is going to end up, what’s your takeout of what you’ve heard so far?

Simon Birmingham: Well I think it is being – has been an effective process and it is a useful undertaking, it will be useful to have in a sense that pressure that will exist on the banks knowing that each and every year they have to undertake this process, just like the Reserve Bank governor has to front up and account for decisions and actions, they too will have to front up and account for decisions and actions. I don’t think we’ve seen anything from the Labor Party that has justified their calls for a royal commission and in a sense justified taking steps that in many ways would then delay the type of actions the Turnbull Government is already taking in terms of the extra investment and powers around ASIC to take a stronger role as the regulator and the watchdog in that space, and indeed the consideration as to whether there are more effective dispute resolution mechanisms, the types of tribunal that you were talking about before which we have already under analysis and consideration and the Prime Minister has indicated that we are open to that dependent on whether the advice around doing it stacks up or not.

Tom Connell: Minister on to your announcement yesterday, you described this failure of what you called a Labor program as up there with the Pink Batts scheme. Given the Coalition supported these deregulation moves under the Gillard Government, how much responsibility do you take?

Simon Birmingham: Well Tom, we’ve been trying to fix this problem for a couple of years now, we’ve put more than 20 different measures in place over the last two years to try and repair the old VET FEE-HELP scheme. Now sadly we’ve reached a point where we decided that repair was impossible and the best way to fix it was to axe it, which is what I announced yesterday that that scheme will be gone and we will replace it with a new VET student loans program that we will build from the ground up.

Tom Connell: [Talks over] Let me ask you that question again because the Coalition supported- the Coalition supported those changes, so did you not look at the legislation carefully enough, not think about it carefully enough?

Simon Birmingham: Well Tom, I think there’s always the challenge that governments have advice and information to them that Oppositions don’t. Look I accept that this has been a blight on our public policy landscape for a number of years now. We have worked very hard to try to repair it. I didn’t want to have to throw this scheme out and start again, but ultimately that’s the point we’ve got to and part of the reason we’ve got to that point is that it was proving all too difficult to get the bad providers and those with poor completion rates, poor employment outcomes, poor services for their students out of the existing VET FEE-HELP scheme so it’s much better and simpler to start again and to recognise that in doing so, we can target it, target providers, so they’re only of high quality and good repute, target courses so that they’re only actually relevant to employment outcomes and good prospects for students, target loan caps so that we put downward pressure on prices in the future, ensure that numbers of enrolments are kept contained so we don’t see the types of blowouts that occurred before. This is root and branch reform and change, far more significant than anything that had been debated previously about how the VET FEE-HELP scheme might be fixed up. 

Kristina Keneally: Minister Birmingham, you talked about the blowout there. It is significant, it’s worth reminding viewers of these figures. The scheme cost $325 million in 2012. It rose to $2.9 billion in 2015. Yet why did it take the Government so long- your Government, the Li- Coalition Government, so long to do something about this scheme? You would have seen, through the Department of Finance, these figures just blowing out quite extraordinarily.

Simon Birmingham: So, Kristina, we did, as I say, put in place about 20 different measures and when the 2016 data is reconciled in terms of loans, we will see that it is hundreds of millions of dollars less than the 2015 result. So the types of things we’ve put in place have driven down some of the poor behaviour, have ensured that there are fewer bad loans being written. But we were not convinced that that had got us to a point of an optimal scheme where we could have complete confidence that all the providers and the loans that they were issuing were going to be of good value and relevant to employment outcomes, which was why we have said, let’s close it off, start again, build it from the ground up. 

But I think it is important to note that the different measures, from banning of inducements to changing payment schedules, those types of actions we took over the last couple of years, have had a real difference and a difference to the tune, as I say, of some hundreds of millions of dollars. We’ll know exactly that by years’ end, once the VET FEE-HELP scheme is closed off for good.

Kristina Keneally: Do you have to walk a fine line here? Because you don’t want to give an impression that every private college who’s delivering this vocational education and training is doing the wrong thing, in fact my understanding is it was a majo- it was a minority of those colleges and, you know, the intent of this scheme was a good one: to provide people with access to a HECS-style loan in order to undertake vocational training.

Simon Birmingham: So the ambition of actually saying to students out there, and particularly school leavers, but anybody looking to undertake studies, that we regard vocational education as an equal to higher education, to university studies, and we will support you with the same type of student loan to pick up the cost of your fees is an absolutely worthy intention, and that’s why we want to keep a program in place that does that, but does so in a more targeted way. 

You’re also right, Kristina, there are many good, high quality private providers who are out there and it’s why I resisted calls from some quarters to say, only deal with TAFEs or public providers. The truth is that the TAFE sector saw enormous growth in funding under the VET FEE-HELP scheme. It reaped around $1 billion in Student Loan revenue, growth of around 360 per cent or so between 2012 and 2015, and there are about half a dozen TAFEs out there whose completion rates sit below 15 per cent. So I gave a pretty strong message yesterday that although we’re giving the public providers, the TAFEs, automatic pathway into the new program, all of the other conditions will apply to them and we will be monitoring their activities very, very closely, just as we will for private providers who can demonstrate that they have good track records and who do get into the new program as well.

Tom Connell: Minister, for people out there and already in the system already, how is this going to work in 2017? You might have some that their provider is no longer approved for the loan scheme or they might have gone over the cap already. Is there going to be a lot of disruption for maybe thousands of people out there in limbo right now and unsure what’s happening next year?

Simon Birmingham: So for students who are currently enrolled or enrol between now and the end of the year under the VET FEE-HELP scheme, they will have the option to grandfather existing arrangements and complete their course under the VET FEE-HELP scheme by the end of 2017. So that safeguard is there. There are further safeguards that kind of cascade down from that, that if their provider, at an extreme circumstance, goes out of business, there are provisions in place, Tuition Assurance provisions, that will see them then offered a place at an alternative provider or offered a refund on their fees. So there are safeguards there for existing students. The transition for students who want to come into the marketplace next year.

I realise we’ll be tight. We have to make sure we work very swiftly through application processes for providers to access it so that there’s clarity in the marketplace for students who can have confidence that they can go to their TAFE or a public provider but obviously we want to make sure that the good private providers are able to be out there saying you will also be able to enrol with us as well so I hope and trust we will work through that process and I gave the commitment yesterday that the application process for those providers will start at a departmental level before we even get the legislation through so that we can do it as quickly as possible.

Kristina Keneally: Minister, can I take you to another area of your portfolio, school funding, negotiations with the states are underway. You created quite a stir when you said that some private schools were overfunded. Now, I kind of welcome this honesty from you. I mean, isn’t it time we say that we’re not going to embark on a new education agreement, funding agreement and try and claim that no school will be worse off. Isn’t it – you know, and a responsible government would have to say that some schools may well have to take a hair cut in order to ensure that schools that really need the funding, scarce funding, are going to get it?

Simon Birmingham: Well Kristina, what I’ve been at pains to try to ensure is understood over the last few weeks is that the concept that we have a nationally consistent, needs-based funding arrangement for schools is just rubbish. We have 27 different agreements that mean an identical school in the Government sector receives a different level of federal funding in one state versus another state just because of separate deals that were signed up to and, similarly, that identical schools in the non-government sector, independent or Catholic, can receive very different levels of funding and some of them are notionally over the entitlement or formula that exists in the current Australian Education Act and so they are, in that sense, notionally over funded.

Now, what I am ambitious to do and eager to do is to work through with the states, the territories, the non-government sector and ensure that we have a future model for the distribution of school funding which under the Turnbull Government will grow from $16 billion this year to more than $20 billion in 2020 and will keep growing thereafter and to make sure that distribution model is based on need is fair and equitable in the way it treats the states and territories and leverages reform in our schools to improve outcome because after all we’re spending record sums and yet our performance is, at best, plateauing, if not declining, in a number of measures.

Tom Connell: And, Minister, just on an example of the overfunding, Sydney Grammar – it was in the envelope of, I think, $40,000 was the total fee, about $3000 of state and federal money was given, that was still considered overfunded. How do you make that case to parents sending their child there? They pay a very large amount of money and yet they’re going to not – get even less government money.

Simon Birmingham: Well, we believe that every child should be supported by the Government for their school education. So, choice is a fundamental element of coalition philosophy and principle when it comes to school education. We will defend that and we will continue to support taxpayer funding going to students in all schools but we do also support the notion that that level of taxpayer funding should, when people opt out of the Government system into the non-government system, be discounted by the parents capacity to contribute and when it is discounted in that way, that discount should apply in a re…in a uniform way where schools of identical, social and demographic composition are treated in the same way as an independent school or a Catholic school in one state versus another state, not simply continually grandfathered for hundreds of years, under old and historic deals.

Kristina Keneally: Alright Minister, we’re going to have to leave it there, thanks so much for joining us on To The Point.