Opening address to the ACPET National Conference 2016
25 August 2016

Simon Birmingham: Thanks very much, Mel, for that welcome and I acknowledge you as the Chair of ACPET and previous chairs of ACPET who are gathered here today, your international guests; it’s always a delight to have international visitors attending these conferences and sharing their knowledge and experience from around the world. To Rod Camm, the CEO of ACPET and to all of your members it’s lovely to be back here at one of your national conferences to speak with you all today and particularly to do so nearly two years now since I was first appointed as the Minister responsible for vocational education and training. 

Much has happened over that two year period most recently of course the Government has been re-elected. I have happily accepted over the course of the last 12 months the Cabinet responsibility for the entire education and training portfolio and very importantly in that two year period the Adelaide Crows have moved from finishing tenth in 2014 to being contenders for the minor premiership and hopefully much, much more in 2016. Much has happened in the year I note North Melbourne are clinging in there at number Mel, eight now so you may at least play in September.

Much has happened in the education and training portfolio to. We’ve learned more about the beneficial role that private education and training providers can and do play in parts of Australia, total VET activity reporting has shown that people are voting with their feet with over three million students at private training providers, while QILT data has similarly demonstrated the highest levels of overall student satisfaction occur amongst private education providers, particularly in the fee-for-service market. However, while those are positive stories, we’ve also over the last two years learned that there are more unscrupulous providers than have previously been acknowledged who will plunge to even deeper depths to sadly rort the taxpayer subsidies and take advantages.

On a happier note, over the last two years, the decline in our international education fortunes observed under the previous Labor government has been reversed. International education is now one of Australia’s largest exports and a major employer, creating 130,000 jobs, both directly and indirectly. The international education sector is estimated to contribute $19 billion per annum to the Australian economy and is recognised as one of our nation’s five key growth sectors. Vocational education providers in particular in the private sector are playing a critical role in this international success. 

In 2015 over 124,000 international students were studying a VET course in Australia and around 90 per cent of those students were studying in private registered training organisations. These international students contributed $3.1 billion to the Australian economy in 2015 through their tuition fees and in-country spending and the growth in the value of this sector continues. So far in 2016, we have seen an estimated 13 per cent growth in enrolments for international VET students compared with the same period in 2015.

The benefits of international education reach beyond the obvious economic benefits to Australia. They include internationalisation of our education and training institutions and the provision of opportunities for students; both Australian and international, to forge lifelong international connections that also enhance our long term diplomatic, cultural and security ties.

In April this year, the Turnbull Government announced Australia’s first ever national strategy for international education. Supported by $12 million in implementation funding, the national strategy will further strengthen Australia’s internationally recognised education and training system, including through increased global partnerships, to position Australia to capitalise on the new opportunities that will emerge in international education over the next decade. The strategy clearly identifies that a central element of protecting and maintaining our standing in international education markets is the protection of our reputation for quality, high quality education and training outcomes. This focus is highlighting the very first pillar of the international education strategy, strengthening the fundamentals in providing effective quality assurance and regulation.

We are a high performing, high quality education nation but anyone who denies there have been some challenges to quality, especially in vocational education in training, needs a reality check. From the perspective of our international education reputation, these challenges to quality outcomes have thankfully been largely limited to the domestic market. We must make sure though that we address those challenges because it has come at a high price for domestic students and taxpayers and if left unchecked, these domestic problems would present reputational risks that could also harm our international market and positioning of providers of repute quality in that international market. That’s why following the recent reshuffle I made a commitment to play a hands-on leading role as the Turnbull Government sets out to reform and fix the broken VET FEE-HELP system. We are currently undergoing a thorough and comprehensive process to ensure that in the redesign of this program, we address these problems to deliver a high quality system for Australian students and employers, which is sustainable and affordable to the taxpayer and protects the reputation of our education and training sector.

Before speaking today I looked back and recalled the first speech I made to the VET sector following my appointment as assistant minister nearly two years ago. In that speech I said and I quote:

“At its heart, vocational education in training is about providing employees or potential employees with the skills for a job, a pathway into employment or into enhanced employment opportunities. Vocational education is central to Australia’s economic growth, to our business productivity, to employment outcomes. A strong and prosperous economy that delivers the jobs Australian families want requires a well functioning VET system that delivers the skills we need.”

These goals remain, however some of the challenges outlined in that speech also remain where I said that:

“It is clear that stakeholders believe the crackdown on brokers alone is insufficient to protect the majority of responsible training providers from reputational damage caused by a few rotten apples. It is evident that more needs to be done to stamp out shark practice among dodgy training providers.”

Well we have made important reforms since the start of 2015 but it is clear that more needs to be done. We’ve already introduced as a government more than a dozen measures to try and clean up Labor’s mess that inflated the cost of student loans, saddled students with extra debt and saw some providers prey on unwitting and vulnerable Australians. These have included banning inducements and tightening market restrictions, extra funding for the regulator ASQA and for departmental enforcement provisions, requiring cost to be spread over the course of the period of a course so the students incur debt as they progress rather than in one upfront hit, introducing entry requirements for students accessing that VET FEE-HELP loan to ensure they are academically suited to a higher level course as well as protecting students under 18 years of age and ultimately freezing total loan values to control the growth of the scheme during this redesign year.

These changes were required as brokers and providers have been ripping off vulnerable students by exploiting weaknesses in the VET FEE-HELP scheme. Some unscrupulous providers were going in to communities and signing up unsuspecting Australians to loans they didn’t even realise they were committing to, incurring a debt without a learning outcome hasn’t benefited those individuals and won’t benefit our economy. By exploiting the VET-FEE HELP scheme, dodgy operators were ripping off both taxpayers and students while undermining confidence and quality and integrity of Australia’s otherwise strong VET sector.

Let’s remember we have a training system that many around the world want to emulate. As I’m sure you know, it was the previous Labor government in 2012 who removed the requirement for VET FEE-HELP providers to have credit transferal and articulation arrangements in place for higher education providers, expanding the scheme to make it demand-driven, virtually uncapped and without appropriate regulatory safeguards in place, opening the floodgates for shonky training providers and predatory brokers to rort the system.

The cost blow-out following the 2012 changes has seen the value of VET FEE-HELP loans grow from $325 million in 2012 to $1.8 billion in 2014 with continued growth to $2.9 billion in 2015. Since 2009, students accessing the VET FEE-HELP scheme have increased in numbers by 5000 per cent to 2015, average course fees have more than tripled and loans went up by some 11,000 per cent. The whole of the industry has been tarred with a collective brush, unfortunately. Even if the around 220 VET FEE-HELP providers that have chosen ACPET for their tuition insurance, 19 are currently subject to VET FEE-HELP audits for compliance or payment concerns. Others who've voluntarily repaid loans following the lodging of complaints, or the inquiries of regulators, while many more providers have happily doubled, tripled, or just added an extra nought or two to their taxpayer subsidised enrolment numbers, yet are struggling to get even one in five students to complete these courses.

We are continuing to investigate providers, and where necessary we will continue to prosecute them. The Commonwealth has joined the ACCC in Federal Court action against four VET FEE-HELP providers alleging the breaches of the Australian consumer law. The Education Department is currently undertaking 28 audits of providers of concern, surveying students in 19 providers to investigate complaints and potential breaches, has revoked the status of four providers, issued three notices of intention to suspend, and one further notice of intention to revoke. This is all quite damaging. Nothing can hide the reality that the unethical behaviour of some training providers and their agents has tainted the reputation of others doing the right thing. It is a sad fact which we will all have to work doubly hard to overcome. That is why I am determined to build on my previous actions and those of other ministers in our government to clean up this Labor mess and to restore integrity to the VET FEE-HELP scheme as soon as possible by replacing it.

Unacceptable practices and unethical businesses must be stamped out. The focus must return to quality learning outcomes for all students and value for money for the taxpayer. Our redesign of Labor's flawed VET FEE-HELP scheme will seek to smash the business models of anyone ripping off the taxpayers for targeting vulnerable people, whether they be VET providers, brokers or data miners. We will shortly outline a new, different, well-considered model that will serve students well into the future. ACPET needs to be front and centre in this response, and I believe many people in this room are just as committed to this vision as I am. Your codes of practice and ethics are a good stay. We know that once reputation is damaged though it can take considerable time, effort and resources to put it right. This is why we are committed to introducing a new VET FEE-HELP scheme in 2017.

That is going to mean a lot will need to happen in a short space of time, but we cannot continue the way we are. We must restore confidence and reputation. I want to deliver a system that is student centred, that weeds out shonky providers and delivers quality skills and training outcomes that are relevant to students to businesses and to the economy. The new scheme must be fiscally sustainable, protect students and provide strong regulatory oversight. The former Minister for Vocational Education and Skills, Scott Ryan, released the Redesigning VET FEE-HELP discussion paper in April this year. It detailed a range of issues with the current scheme and outlined options for the 2017 design. It rightly highlights issues that we're addressing, including rapid growth in course costs to students which saddles them with additional debt and impacts taxpayers through inflated cost of loans and books, high levels of students’ attrition, poor quality, low completion rates among students and uncertain outcomes in terms of employment.

These are five reasons why a new scheme is essential and why we asked for your input through the discussion paper process. The Government received around 120 submissions in response to the discussion paper from a wide range of sources, including training providers, industry, individuals, students and consumer representatives. I want to thank everybody who took the time to respond. At the end of the day it is in all of our interest to get it right. Our analysis of the submissions, along with our own research demonstrates the need for more control over the quality of training providers, the relevance of courses and their cost of delivery. In redesigning this scheme, I'm focused on introducing measures that will ensure a new scheme has integrity and restores confidence. The key questions that I am considering in the creation of a new program are: what providers are of high quality and sufficiently strong repute to be trusted with extending government loans to students? What courses or fields of study are sufficiently likely to lead to improved employment outcomes to warrant such government support? What numbers of students, or controls on the numbers of students are appropriate and or practical to apply? And what course costs are reasonable, noting the different costs associated with different areas of training, a fact I note that the Labor Party overlooked in their ill-considered flat pack on fees proposed at the recent election. 

There are further questions that relate to outcomes from such a program, such as what completion rates are acceptable? What levels of student satisfaction are acceptable? And ultimately, what employment outcomes are acceptable? Under a redesigned scheme, it has been suggested that new measures be introduced that will limit the amount of debt a student can incur for any one course. Others have suggested that one indicator of quality in training are completion rates. Although we're getting close to this point, I am not yet in a position to today be able to announce exactly what revised arrangements will be put in place, but I can define some of what ought to be unacceptable.

People with little history of training in a certain field of study and limited, or no employer support for their outcomes should not be enjoying taxpayer support to deliver such training. Appallingly low student progression and completion rates are not acceptable and should not be tolerated, not by any measure. Massive fee hikes well above any reasonable cost of delivery should raise red flags, and the experience now tells us that if there are obscenely high ramp ups in enrolment numbers, then the likelihood is that something questionable is going on. Ultimately, taxpayer support for subsidised training is not about the business of any training provider, whether public, private, community or even student based. Taxpayer support of training is about supporting individuals to acquire skills to get a job or a better job, and in doing so to grow other businesses that sustain our economy.

While my work to replace VET FEE-HELP will continue at pace, and I trust it will give certainty to the industry in the very near future, our new Assistant Minister Karen Andrews is working to deliver other policy priorities in the VET space, and I equally am focusing on other aspects of tertiary education, in particular our higher education policy settings. Non-university higher education institutions, of which some of you are, play an important role in Australia's higher education landscape, providing students with expanded choice about the courses they can undertake. As I indicated earlier, the Government's Quality Indicators for Learning and Teaching website demonstrates that students attending some of these non-university institutions are some of the most satisfied students in Australia. The role of non-university higher education institutions in our future higher education system is an important consideration in the Government's policy processes. We want to of course enhance right across the sector those levels of student satisfaction, and ultimately, outcome.

One issue providers, students and parents have raised with me is that of students attending these institutions being treated differently from those attending public universities, particularly in the imposition of a 25 per cent loan fee for undergraduates accessing FEE-HELP. Ensuring equitable access to higher education and improving fairness within higher education are issues that remain priorities for me as we work through the higher education reform process.

So too in the higher education is quality. The Tertiary Education Quality and Standards Agency, or TEQSA, assures the quality of the Australian higher education by regulating and monitoring 170 higher education providers, 43 universities and 127 non-university providers. Approximately 100 of these are not-for-profit entities, while the rest are profit-making education providers. While determined to restore integrity to the VET space, I am also mindful of protecting the high quality, high satisfaction outcomes we are enjoying in our higher education system. TEQSA is working regularly with ASQA and my department to share information about any operators who are operating or seeking to operate across both sectors.

I have written to the Higher Education Regulator seeking assurances that high entry standards are being maintained and that financial and probity checks are not letting any of the dodgies we’ve seen rorting government subsidies in the VET sector in the door of higher ed. Innovation in [indistinct] formats and delivery models including pathway programs and joint delivery arrangements will require TEQSA to be active in monitoring for non-compliance of the higher education standards.

TEQSA’s ability to assure the quality and reputation of the higher education sector in a changing environment is fundamental to the sector’s capacity to meet the high level skill needs in our economy which underpin Australia’s largest services export, international education. The Government is committed to ensuring both ASQA and TEQSA keep pace with their sectors. The regulators have been in place since 2011 and we must ensure the legislation under which they operate continues to meet the needs of the tertiary education sector. For the benefit of both domestic students and international education, Australia needs tertiary education to excel across higher education and vocational education.

Vocational education in Australia should never be viewed as a second best option or anything less than a high quality education and training experience. It is incumbent on all of us to ensure that is the case. A snapshot of today’s VET sector shows around 4600 providers deliver VET in Australia. Many engage in pioneering practices that are responding to industry needs. Many are operating without any level of government subsidy because the worth of their work is valued by the students or employers who access their services. For example, some providers meet business requirements by providing services outside standard business hours, offer training in workplaces, and mix and match competencies within training packages to meet specific business needs. TVA data tells us there were more than 4.5 million students engaged in VET in 2015, three million of whom study with private providers.

Despite some of the serious challenges we face, especially with VET FEE-HELP, overall satisfaction with the VET system is high, with 86.7 per cent of 2015 graduates, graduates of course are completions, satisfied with the overall quality of their training. Around 76 per cent of employers, with jobs that require VET training, were satisfied with the skills they’re receiving from their employees. Vocational education has a proud history and a strong base on which we can work together to make the necessary changes in regulation and culture because one thing that will serve us well in uncertain economic times, is quality, quality across all facets of tertiary education.

We need to ensure that enjoy the trust of students and the community and, where that has been lost or challenged we need to work quickly to make sure it is regained. Too much is at stake not to do so. I know that these are priorities shared by the leadership of the ACPET, and I look forward to your support for our important work to ensure we achieve that high quality outcome that guarantees success for the domestic and international education markets into the future. 

I’m pleased to be here with you today; I wish you every success in your deliberations, and have the pleasure of declaring the 2016 conference open. Thank you very much.