Subjects: Reforms to VET FEE-HELP, comments by Communications Minister


FRAN KELLY: Private training colleges which are rorting HECS style loans are facing a crackdown. Aimed at stopping a range of unscrupulous practices going on, legislation's going to be introduced into the Federal Parliament to ban providers from offering students incentives including laptops, iPads, things like that, to get them to sign up to courses which are apparently unsuited to their needs, and leave them, the student with a lifetime of unwanted debt. Colleges will be banned from offering quote ‘miraculously short diploma courses’, and from recruiting unsuitable students from places including nursing homes and mental health units. Senator Simon Birmingham is the Assistant Minister for Education and Training. Minister, good morning, welcome to Breakfast.

SIMON BIRMINGHAM: Good morning, Fran, and good morning to your listeners.

FRAN KELLY: These are some incredible claims of what's going on in these private colleges – some of them. Can you give us a sense of the scale of the problem of what you describe as dodgy practices? What's going on in our vocational education and training sector?

SIMON BIRMINGHAM: Fran, I have been concerned since taking on this portfolio in late December at the reports of very dubious activities by a number of particularly, third-party brokers and agents, working for training providers around Australia in the way they have been going about signing up people to training courses. And this dates back to changes that were made to the VET FEE-HELP scheme – which is the HECS-style loan scheme for students undertaking higher level vocational education and training – dates back to reforms to that scheme made in 2012. And since then we have seen triple-digit growth in the take-up of the scheme year on year; so phenomenal growth rates, and these increasingly concerning reports that people are being lured into taking out allegedly free loans that they’re told they’ll never have to repay in return for getting a free iPad or a free laptop or cash incentives or meal vouchers, and my determination is to stamp out these practices, and to make sure that the quality of Australia’s vocational education and training, which delivers so much to our economy and to individuals, is sound and strong and well into the future.

FRAN KELLY: How many colleges are doing this, and how many students are being lured into these loans in your view improperly?

SIMON BIRMINGHAM: Fran it’s very hard to get a clear estimate on the exact number of colleges or students who may have been participating in these dubious activities, but it is clearly of scale. We have undertaken some estimates in terms of the types of reforms we’re enacting in coming months, and those reforms we believe will save Australian students from taking out more than $16 billion in unnecessary and dubious loans over the course of the next decade. So that gives fair…

FRAN KELLY: That’s a lot of HECS loans; $16 billion. Because effectively we’re talking FEE-HELP is like what most people understand as the HECS scheme at universities isn’t it?

SIMON BIRMINGHAM: That’s right it is Fran, it is a phenomenal amount, and it is a real demonstration that all too many people are either signing up for the wrong reasons, or being signed up to courses that frankly they are just not equipped to undertake. We see completion rates for some of these courses struggling to make it to 20 per cent, which is a good demonstration that people either weren’t serious about doing the course in the first place or of course weren’t capable and adequately skilled in having the pre-requisite educational requirements to undertake the course in the first place, so…

FRAN KELLY: Tell us about that because one of the practices you’re concerned about is going out to places like nursing homes and mental health units to sign up people. Just tell us a bit more about what is actually happening there.

SIMON BIRMINGHAM: In those instances, and I would have to emphasise they are probably more isolated instances, but we have had complaints through to the national regulator, the Australian Skills Quality Authority, about brokers going door to door around retirement villages or nursing homes signing people onto these courses. Again there are real consumer affairs concerns here that people don’t really appreciate the consequences of signing on, and although these are income contingent loans like HECS, so you have to earn around $53,000 a year to start paying them back, they still have consequences for the individuals because it impacts on your credit rating, and therefore impacts on your borrowing capacity for a car loan or a home loan, or anything else. So under reforms we’re approaching and pursuing here, firstly about protecting vulnerable Australians from being signed up to bad loans, secondly about protecting the tax payer from carrying significant bad debts into the future, and thirdly about protecting the reputation of Australia’s training sector.

FRAN KELLY: Minister just on that because you also say in your press release that you want to stop some of the students signing up for what you describe as some miraculously short or advanced diploma courses. I mean it goes to the integrity of the system; we have a vocational training system, it’s called TAFE, and yet TAFE over recent years has been… you know the funding has been really cut back by a lot of state governments, and the private sector has taken up some of that slack, and it’s been able to get access to this funding. So the whole system is out of whack, what is happening in the regulatory sphere that private colleges are able to offer people what’s something you describe as a miraculously short diploma which clearly isn’t going to be worth the paper it’s written on?

SIMON BIRMINGHAM: Well Fran it’s important firstly to appreciate that there are many private training providers, and not-for-profit training providers outside of the Government system who have been operating for decades, and doing so responsibly…

FRAN KELLY: Of course there are but there are many who do things… come up with, as you described, dodgy practises; this isn’t the first time we’ve been here.

SIMON BIRMINGHAM: Absolutely Fran…

FRAN KELLY: When Labor came in after the Howard Government they had to clean out the system then too, and now it’s happening again.

SIMON BIRMINGHAM: And Fran I just didn’t want to leave an impression that I am saying all private providers, or all non-Government providers are bad. There are dubious practices right across the sector. What I want to ensure we address here in relation to those short courses is we get the regulation right, and we have multiple units of study attached to these higher level vocational education qualifications. If you’re undertaking a diploma or an advanced diploma, it is a reasonable expectation that there should be multiple units of study, at least four different units of study, which provides a student with four different opportunities to opt out if it’s not the right course for them, four different junctures where they stop accruing any debt associated with that course, and of course better opportunities for the regulators to be assessing the quality of those individual units of study.

FRAN KELLY: And who is doing that? Because the Government cut back – I think it almost halved the funding to TEQSA, the Tertiary Education Quality Standards Agency, in the last budget. Who’s doing the regulation of quality of these?

SIMON BIRMINGHAM: Well, vocational education is regulated by ASQA, the Australian Skills Quality Authority. We actually gave an extra $68 million in funding to ASQA last year and I’m committing additional funding…

FRAN KELLY: And that doesn’t seem to have done much.

SIMON BIRMINGHAM: Well, Fran, what I’m doing as well is strengthening the regulation to make sure they actually have a better capacity and to be able to enforce clearer regulations. Part of the challenge we have here, as I said, is this VET FEE-HELP scheme was opened wide up in 2012 with inadequate regulations sitting around it. Now, we’ve inherited this problem, we’re acting to fix it, and we’ve put extra funding into the regulator over the next four years. We’ll have additional funding going for specific audits of providers in the VET FEE-HELP scheme; we are tightening up the regulation and really seeking to break the business model for a lot of these dodgy activities. Ultimately, if there is…

FRAN KELLY: At the same time, though, Minister, the Government has also got legislation in the House – the higher ed changes – which would extend Commonwealth funding to private colleges. It would make them eligible for the Commonwealth student subsidy that the universities get. So this is urgent. You’d better get this cleaned up urgently before you start handing out more money.

SIMON BIRMINGHAM: And we are acting urgently here, Fran, and these reforms will start to take effect from 1 April. So just 20 days time I expect to be able to have – and hopefully sooner, if possible – to have the first changes to the VET FEE-HELP guidelines in place. And where it requires legislation, we will be working to make sure that is done this year to, as I say, break the business model of those who are doing the wrong thing, so they no longer have the capacity to offer incentives to sign students up in the first place for the wrong reasons so that there are multiple opportunities for students to get out of the system if they’ve been wrongly signed up or signed up without understanding the detail and requirements of the course they’re undertaking. And, of course, making sure that we have that tougher level of compliance and enforcement and regulation in place. These are significant reforms and we’re fixing a problem we inherited and I’m confident that they will make sure that the vast majority of training in Australia which is done to a high quality has its reputation protected from those doing the wrong thing.

FRAN KELLY: It’s nine minutes to eight. Our guest is Simon Birmingham, Assistant Minister for Education and Training. On other matters – internal matters to your party – Minister, the Government got a bounce in the polls last week, but not in your home state of South Australia, we’re told, where the polls show the Government lagging a long way behind due to concerns over submarines and cars. Yesterday, the Prime Minister was in South Australia, but he was barely sighted. Also yesterday, Malcolm Turnbull answering a question on leadership said… told an interviewer: “Do you want me to say that I’ve decided under no circumstances I would ever be a candidate for the leadership? Is that what you want me to say? But it’s not true; the fact is, any single member has the potential to leave the party.” Are you relaxed about those comments from Malcolm Turnbull? How helpful are they right now?

SIMON BIRMINGHAM: I think they are simply speaking a very obvious and plain matter of fact, Fran, and, of course, I’m in the Senate, so happily, of course, I don’t have to answer those types of questions but members of the House of Representatives…

FRAN KELLY: Well, you still have a vote in your party room.

SIMON BIRMINGHAM: I still have a vote in the party room, but I can never be the leader and happily – happily, that’s the case for me. But the members of the House of Representatives, it is, of course, the case. And you cannot foresee nor predict every single circumstance, but what the party has been doing and, I think, doing very well is re-uniting and rallying back into one united team since the spill motion that happened a little while ago and really are focused on how we can better communicate the reform agenda we need to undertake. And, of course, central to that was the Intergenerational Report released last week, spelling out, of course, the need for reform, the very long-term challenges Australia faces in terms of getting its budget under control. And we will continue to talk through that, work through the reforms to deliver on that; the challenge will be as to whether Bill Shorten and Chris Bowen actually take steps in that same direction around this year’s budget.

FRAN KELLY: Alright, Simon Birmingham, thank you very much for joining us.

SIMON BIRMINGHAM: A pleasure, Fran. Any time.

FRAN KELLY: Senator Simon Birmingham is the Assistant Minister for Education and Training.