Subject: Prime Minister Malcolm Turnbull


GERALDINE DOOGUE: Much is being said about where the new PM Malcolm Turnbull will take us and about who gets what portfolio in the Turnbull Government. Our next guest is rumoured to be in the running for a cabinet position but we haven't asked South Australian Senator Simon Birmingham on to discuss such speculation, rather to talk about the work he's been doing under the Abbott Government as assistant minister for education and training. It may not have competed with the big headlines but the changes to our TAFE and vocational training system that went through this week are really quite substantial, managing to achieve what Paul Keating tried and failed to do in 1993, namely to take federal government control over all funding of the VET sector. Now, Saturday Extra's kept an eye on this vital but under reported realm over the years, the funding complexity, the lack of skilled workers we're turning out. So let's find out what Senator Birmingham hopes to achieve. Welcome to Saturday Extra.

SIMON BIRMINGHAM: Good morning Geraldine and good morning to your listeners.

GERALDINE DOOGUE: Dare I ask you whether you'll be sitting by the phone? I promise I won't go on about this to get the call.

SIMON BIRMINGHAM: Well, I dare say I'll keep the phone switched on over the weekend. Just in case the Prime Minister happens to ring.

GERALDINE DOOGUE: Some of the gossip suggested you might even be our communications minister?

SIMON BIRMINGHAM: Well that would be a delight but we all serve at the pleasure of the PM.

GERALDINE DOOGUE: Yes indeed. Well we'll wait to see. Now, could you explain what has been achieved this week which as I said I think has been completely lost in all the Sturm and Drang and why you think it was necessary?

SIMON BIRMINGHAM: Look, I think we are on a pathway of having a serious discussion about where vocational education and training goes in Australia. When the former prime minister, when Tony Abbott brought together state premiers for a discussion about the future of the Federation several weeks ago, one of the striking things out of the communique they issued was a clear consensus that we should have a look at whether we can apply a national approach to funding and running the vocational education and training system in Australia. It's a reform that happened for universities back in the 1980s under the Hawke Government. As you alluded to, Paul Keating tried to do it for vocational education and training in the 90s. Now there seems to be some consensus and agreement from the states that we should have a look at them again and I think it's very important for ensuring that Australia does have the type of skills and training sector in the future that can live up to the standards of training that we will need to adapt our economy to some of the challenges that Malcolm Turnbull is now talking about.

GERALDINE DOOGUE: Why on earth did it take 40 years to achieve the same thing for a different band of students than the higher education ones? I mean, it's really extraordinary.

SIMON BIRMINGHAM: It is quite remarkable, there's one of those interesting quirks of history that people tell me when the Keating Government almost strike – or did in fact strike an agreement for a national approach in the 90s. It was unpicked by the then Queensland Goss Government and students of political history will know that the head of the cabinet unit in that government was none other than Kevin Rudd…but that's all history of course. Today we need to have a look at this sector because skills, practical skills, vocational training, really is critical to developing new industries like advanced manufacturing, many areas of technology and technological change rely upon vocational training as well and this sector is so crucial to our economy and at present, we do have this odd situation where it's very hard for students and families to navigate because the funding situation is different from state to state and changes frequently it seems, within states as well. It's hard for employers to navigate and understand how it all works and contrast that with our university sector where decades of relative stability have actually provided people with clear-


SIMON BIRMINGHAM: Well, yeah, relative. Obviously we've been debating higher education reforms but those reforms keep the HECS system at the heart of how students would pay for their courses. They keep subsidies from government at a relatively stable level into the future. It creates a circumstance where training providers, students and ultimately employers can look at the system and have a degree of confidence in it and know that it will be a stable and effective system and that's what we would hope to achieve in any type of national approach to vocational education and training.

GERALDINE DOOGUE: Now, thanks to Tim Dodd's work in the Financial Review, he's their education editor, I've been reminded that students going to TAFE don't get the sort of loan possibilities on terms as favourable as HECS, that's if they get loans at all, for university students and for students doing lower level vocational courses, you know, the certs three and four, the very people who would be in need, you'd think, of assistance get no HECS, even an efforted(*) HECS-style, help. So, this is again another sort of gross area of inequity. Will you be fixing that up?

SIMON BIRMINGHAM: I think these are the questions we'll have to answer in working through with the states as to how it is that a national approach to funding would occur. At present, high level VET courses like diplomas and advanced diplomas do have access to a HECS-type loan scheme called VET-FEE HELP. That had some problems itself the way it was set up by the previous Labor government. We've seen costs and bad debts balloon under that scheme and we've done a number of reforms to try to fix that. But below that diploma level, the state's offer certain subsidy arrangements for certificate three and four courses. We intervene with subsidies in some places for apprentices. You get a little bit of activity in the certificate two stage but it is quite messy, it's quite inconsistent and the state's regularly change those subsidy arrangements. Now, I don't think you can pick up the university model of HECS and justify it across the VET sector. I think-


SIMON BIRMINGHAM: What we've seen with VET-FEE HELP which essentially tried to do that by saying a student can put their entire debt on to a student loan with the Government in an uncapped, demand-driven system, has seen an awful lot of students lured into loans for course that they're not completing and that sometimes they appear to have been signed up to for the worst of all reasons and so I think we need to look at this and say the best way forward would be for one level of government, the Federal Government, to be able to apply a more sophisticated mix of student loans, coupled with government subsidies, coupled with some form of user-pays system sitting alongside that, where of course for school leavers, or unemployed, or other categories of people you may see the Government provide an additional subsidy for those individuals. Now that [indistinct] 

GERALDINE DOOGUE: But what about employer contributions though?

SIMON BIRMINGHAM: Employer contributions where that's relevant as well. And of course for much of the VET sector it is relevant, and it's important to recognise at present that of the around three million Australian students who undertake some form of vocational education and training, around 1.5 million of them are funded by themselves or by their employers without any government support whatsoever. Now, that is a real vote of confidence in the training they're getting and the need and desire for that training, because they're picking up the tab for it themselves. And it's a demonstration of the quality of our providers, be they TAFEs, be they private or industry-led organisations, most of them are doing a great job, but they deserve a system that is much simpler to navigate than what we've got at present.

GERALDINE DOOGUE: Now of course I also do notice that new data is showing that government spending in this are has plunged 8 per cent in the latest year for which data was collected, namely 2013 and '14, and over 10 years the proportion of students who completed government-funded vocational courses fell to 41 per cent, down from 47 per cent the year earlier. So, I mean, we've also got just not enough money by the sound of it going into this system.

SIMON BIRMINGHAM: We've had a couple of factors impacting on some of that data. One is that some of the states several years ago now went to a more demand-driven approach of how they subsidised training, and they saw rapid uptake in that as many more students came in and took up those places, to such an extent that a lot of those states have pulled back in the last couple of years on that demand-driven approach, and are now limiting it. So that has seen a few look-backs(*) or a spike in spending in states like Victoria and South Australia …


SIMON BIRMINGHAM: a few years back …

GERALDINE DOOGUE: Yep, we remember that.

SIMON BIRMINGHAM: and a reduction in the most recent couple of years. At the same time, because of the development of VET FEE HELP, the student loan scheme federally, there's been more of a cost shift onto the Federal Government and onto those student loans, which of course are not a direct taxpayer contribution but given some of them will not be repaid they are in the long-term a taxpayer contribution.  So, those statistics are slightly misleading, but they do highlight a number of the problems will face in trying to structure a sensible system for vocational education and training where we can make informed decisions about what type of courses should the taxpayer subsidise, how do you subsidise them with an appropriate mix of student loans and direct government subsidies and employer or student contributions, and how do you determine how many and by what means you deliver those types of subsidy arrangements. So there are a number of big issues to be worked through, but I am really hopeful that we can continue to work with the states to address them – not shut the states out of influencing the system in the future, they can still run their own TAFE systems within a federally-funded operation, just as most universities are established under state legislation.

GERALDINE DOOGUE: I notice the TAFE directors very much welcome your moves, but the Australian Education Union's TAFE secretary says it could mean the collapse of state TAFE provision. So there's quite a difference of views within the sector itself.

SIMON BIRMINGHAM: Without becoming too partisan in my comments, I guess I'd question and wonder whether the union would be saying the same thing if it were the Keating Government, as it was back then, proposing this approach. So, TAFE directors have been positive in their response and reception …

GERALDINE DOOGUE: And that's private and public is it?

SIMON BIRMINGHAM: No, they only represent the public institutions.


But they represent the management of those public institutions, whereas the union has been critical. Look I hope we can bring then union around in this regard, because what I would say to them, as I've said to you and your listeners today, is that I think we can develop a much more sophisticated model of funding vocational training that can give long-term certainty to students and employers and training institutions into the future. And I would have thought that was good for TAFES, just as it should be good for private providers.

GERALDINE DOOGUE: Look finally, I noticed last month there was an international skills competition in Brazil where Australia competed, and we came 12 in the medal tally out of 55 countries. It's interesting Senator Birmingham to look at the list of countries that ranked higher than us – South Korea, China, Taipei, and Japan. Is this a concern, really, as many might have thought we should be exporting our skilled workers to Asia in this 21st century; like they've traditionally- there's been a great concern from parts of Asia that they're not developing this vocational training model, but they seem to be overtaking us?

SIMON BIRMINGHAM: Look I'm not concerned at this stage Geraldine. I was in China and Korea a few weeks back talking about how our VET sector works and helping a number of our providers who are offering training in those countries, as well as having tens of thousands of students from those countries come to Australia for training. So we're seeing this increased flow of not just international students in Australia, which everybody knows about and which is our third-largest export earner as a country nowadays, but actually seeing Australian training providers delivering training offshore in countries like China. And whilst I don't know that this is the case, it is possible that a Chinese student competing in those awards in Brazil could have been trained …

GERALDINE DOOGUE:  Had have been trained here.

SIMON BIRMINGHAM: by an Australian provider.

GERALDINE DOOGUE: Oh, that's a very good spin on things.

SIMON BIRMINGHAM: Anything's possible. I was quite astounded when I met with my counterpart in China and he asked me if I was going to Brazil, because apparently he was going to Brazil with the Chinese delegation.

GERALDINE DOOGUE: Is that right?

SIMON BIRMINGHAM: So they clearly take celebrating their successes in vocational training very seriously. But whilst I didn't get to Brazil I did read out all of our medal recipients and winners in the senate, and celebrate our successes too.

GERALDINE DOOGUE: Look thank you very much for joining us, and I shall be watching as will many other Australians as to your fate next week.

SIMON BIRMINGHAM: Thanks so much Geraldine, a pleasure.

GERALDINE DOOGUE: Senator Simon Birmingham, currently the Assistant Minister for Education and Training. And we'll find out Sunday afternoon I believe what might come next.

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