Interview on SKY News with Laura Jayes
Issues with Labor’s failed VET FEE-HELP; New VET Student Loans program; South Australia’s energy security; Renewable energy

Laura Jayes: Let’s get more details now on these V-E-T, these VET changes that the Government is going to make to vocational education. We’ve heard stories and indeed the Government had put forward evidence today of widespread rorting in this area. Joining me now is the Education Minister Simon Birmingham.

Mr Birmingham, thanks so much for your time. Now, this is the Coalition’s …

Simon Birmingham: G’day Laura.

Laura Jayes: … second term in government. You haven’t been Education Minister, I should point out, for that entire time, but why has it taken until now to deal with these rip offs?

Simon Birmingham: Laura, we’ve been working hard to deal with these rip offs for quite some period of time. The Coalition Government has put in place around 20 different measures over 2015 and 2016 to try to fix Labor’s broken VET FEE-HELP scheme and they’ve had some good impact. I would expect, based on current projections, that the 2016 loan volume will be hundreds of millions of dollars less than it was in 2015 thanks to Coalition Government reforms. But we’ve recognised now that, frankly, to be able to fix the system completely, the best thing we can do it completely axe Labor’s old scheme, bring it to an end at the conclusion of this year, and put in place a new scheme, a new program, from the start of January 2017.

Laura Jayes: There’s a lot blame being thrown around by both the major parties when it comes to the architecture of this VET scheme. Labor points out that it did propose changes to clamp down on this rorting back in May. Why wasn’t a good idea to support those changes then?

Simon Birmingham: Well, all Labor proposed was a simplistic, one option solution. Labor said let’s put in place an $8000 loan cap or fee cap and that’s it. Now, what we undertook was a thorough process of consultation and analysis and have come up with a much more comprehensive reform agenda. Our reforms will toss everybody out to start again with a clean slate. There will then be high standards for what providers can be admitted, limitations on what courses loans are available for, price caps but price caps that more accurately reflect the cost of delivery – $5000, $10,000, and $15,000 caps in terms of the loans that are available – there’ll be a capacity to cap the number of places that providers offer in any given course as well as student engagement measures. So, we’re proposing comprehensive reform, Labor was just proposing another band aid measure at a time when the period for band aid measures was really over.

Laura Jayes: Some of the service providers, though, Mr Birmingham, say that there was actually no consultation. There’s been some complaints from the TAFE sector as well that these changes will punish those who have been doing the right thing. So, have you taken those two things into account?

Simon Birmingham: Well, there was a consultation paper released prior to the election, there was an opportunity for everybody to put submissions into that, as many of them did, there were stakeholder roundtables that were undertaken, so I think there’ve been plenty of consultations. And, look, I’d say to the TAFE sector, we have given them a streamlined pathway into the new program but they need to make sure they live up to their end of the bargain as well. We actually have seen TAFEs receive more than $1 billion in funding under the old VET FEE-HELP scheme, enjoy more than 300 per cent growth between 2012 and 2015, and yet around half a dozen TAFE institutes around Australia have completion rates less than 15 per cent. So, we want to make sure that TAFE lifts its end of the bargain and lives up to high expectations for the future, just as we expect that private providers should too.

Laura Jayes: Now, how do you determine what courses will meet industry needs and are highly likely to lead to a job; who actually decides that and will there be a review process in place to update that? Because I imagine that the … demands from the industry change and evolve quite quickly.

Simon Birmingham:
So, we will be using the state and territories skills lists that are already developed with consultation with industry and the test we’ll apply is that a course, a diploma must exist on two of those lists around the country to be eligible for a new VET student loan. We’ll also be having a look, though, at some other areas of the economy that we think there might be some exclusions as a result of that, STEM courses, agriculture courses that we want to make sure are still covered and we’ll have proper discussion and consultation with industry so I anticipate that within the next week, we will release a list of what that looks like, we’ll take feedback from industry, and there will be regular reviews under the new program and opportunities for the minister of the day to add or subtract courses as is necessary.

Laura Jayes: Minister, you say there’ll be $7 billion worth of savings in terms of off the Government’s debt. Why haven’t you chosen to reinvest the money you’ll save from this scheme?

Simon Birmingham: Well, we think this is a very generous program as it is and what we’ve been dealing with is trying to constrain cost blowouts in this scheme so the fact that we’re going to bring it back to a more manageable level is common sense for the future and, of course, we will see for the good providers, the TAFEs and the other good providers left in the scheme, that there is still significant opportunity for them to access hundreds of millions of dollars of federal support, for the types of programs that can lead to good employment outcomes for students rather than it being wasted on students not completing or undertaking courses of little or no value.

Laura Jayes: Being a senator for the good state of South Australia, I have to ask you about this initial report from AEMO today. Jay Weatherill has trumpeted this is as proof of his claim at the very start- well, as soon as the blackout occurred that this was a storm event, not a renewables event. Do you agree with him?

Simon Birmingham: Well, whether or not last week was a storm event is one factor in South Australia but what AEMO has recognised and many others have is that South Australia has the highest priced, least reliable energy in the nation and that this is a significant problem that goes beyond a mere weather event or one single weather event. So, we need to make sure that in the future we are properly addressing some of those issues that SA faces and the way in which South Australia has taken an ad hoc approach to growing the capacity of renewables and limiting the scale of base load or synchronous power in the energy system is a problem in terms of its long-term operation, is increasing costs for business in South Australia, and has reduced reliability on numerous other occasions and they are serious issues that need to be addressed.

Laura Jayes: [Talks over] Okay, it’s difficult the wind back the clock when it comes to renewables so there are some issues here that you need to address like allowing the gas providers more- equal footing when it comes to entering the market, do you need to upgrade the interconnector between South Australia and Victoria and how do you that at least cost to the consumer?

Simon Birmingham: Well, these will be matters that I’ve got no doubt Josh Frydenberg will discuss with state energy ministers when they meet again this week and into future and the question is which- what options are the most cost effective. Is it upgrading the interconnector or is it, indeed, ensuring that we get more gas capacity into the market? The decisions of some states to enact bans, essentially, on acquiring new gas reserves are not helping the situation in terms of energy security in Australia so they’re decisions that need to be looked at. In South Australia, happily, that ban doesn’t- isn’t in place, so there it’s a case of looking at whether more gas can be brought to market to get more reliable synchronous power into the grid in future.

Laura Jayes: What about the Renewable Energy Target, just quickly? Federally it’s at 23.5 per cent and on the East Coast there’s certainly a different range of targets for Queensland, Victoria, the ACT even has a 100 per cent renewable target. It would seem that the Federal Government’s at the very low end of that scale, I’m not saying that 50 per cent is correct, but do you need to meet somewhere in the middle? Is there room to move from 23.5 per cent?

Simon Birmingham: Well, no this is the whole point, that it was only last year that the federal Renewable Energy Target was amended to ensure that it was an achievable target that wouldn’t create unnecessary price spikes or other pressures in the energy market, that it’s a reasonable, achievable target, that is manageable in the context of our national electricity market whereas the ad hoc approaches of the other states and territories setting random targets or ambitions with no plan as to how they would be achieved and no plan as to how they are integrated into the national electricity market is a big part of the problem we have in terms of the energy security situation in South Australia now where we do have that problem of the highest prices, least reliability and that is coupled with having been the national leader in these types of ad hoc policies under the last 14 years of state Labor government.

Laura Jayes: Not the end of that debate, I don’t think, but Minister, thank you for your time.

Simon Birmingham:
Thanks so much Laura.