FRAN KELLY: And back home, 15,000 Australian students were left in the lurch this week following the collapse of yet another private training college. The Australian Careers Network operates campuses in several eastern states and has been placed in voluntary administration after Federal funding was withdrawn amid complaints about the way it was treating its students.
It is the latest in a string of scandals to the hit the troubled vocational education sector. Senator Scott Ryan is the Minister for Vocational Education and Skills, Minister good morning and welcome to Breakfast.
MINISTER RYAN: Good morning Fran, thanks for having me.
KELLY: Australian Careers Network, or ACN, is a very big player in this area; it is the umbrella company for fourteen different education providers across a number of states. What is going to happen to these 15,000 students is the first question?
RYAN: So when Phoenix – which is one of the larger companies under ACN – which is the main one the Commonwealth deals with (which has substantially less than 15,000 students), when that went into administration earlier this week I spoke to the people that provide tuition insurance to ensure students can transfer their courses elsewhere and continue theirs studies.
Now, there are some issues and one of the reasons the Commonwealth has taken action against Phoenix is that they didn’t have sufficient tuition assurance to guarantee that. But, one of the providers – the Australian Council of Private Education and Training – is contacting all of the students. They are waiting on all of the details from the administrator to continue that, and they will be seeking to place all of those ongoing students in continuing studies.
KELLY: Okay, well what was it that prompted the Federal Department to pull $40 million in funding from ACN? What were the straws that broke the camel’s back? Put it in sort of layman’s terms for us.
RYAN: Sure, as people would have read there has been significant problems with effectively the HECs scheme for vocational training that was introduced by the previous Labor government in 2012.
KELLY: That’s called FEE-HELP, right?
RYAN: Yeah, VET FEE-HELP. We call it HECs for VET, I think that is how most people would understand it. It only applies to diplomas or above, so it doesn’t apply to all of the certificate level studies that people often undertake that are funded through state governments or through workplaces. And, there have been quite a lot of scandals in this. Last year, my two predecessors introduced some measures, one of which was to defer payments to providers where there were concerns from the Commonwealth Government about student numbers, and as you mentioned student treatment.
It wasn’t a withdrawal of funding - it was a deferring of funding until we had the final reconciliation to say: this is exactly how many students you have got that are correctly enrolled and then you will get paid. There used to be payment up front, and that was leading – quite frankly – to some of the rorts we have read about.
So, we have put in place measures to protect both students and taxpayers, we have put in place measures to stop people giving away free iPads just to get people to sign a form and accrue a debt that they will never pay back and in some cases didn’t even know about. We have worked with the ACCC and we are working with the ACCC on a number of legal actions around alleged unconscionable conduct by some providers.
KELLY: Yes, because we have heard those stories, and they are shocking stories…
RYAN: They are outrageous.
KELLY: …As is this statistic about another one of the big private players, Evocca, it has a graduation rate of ten per cent, despite claiming more than $290 million from the Federal Government via VET FEE-HELP.
Ten per cent graduation rate, now this was…let me give you this figure: 38,000 students signed up for diploma courses in the last four years at Evocca and only 2,000 were handed diplomas by October 2014. Why was that allowed to go on?
RYAN: This is one of the problems…
KELLY: Was anyone monitoring this sector?
RYAN: There are a number of arrangements brought in place last year, which we just discussed, to try and restrain some of this behaviour, some of this hyper-aggressive behaviour by brokers and by some providers.
But the real problem we have, and one of the reasons we have committed – and I have committed – to redesigning this system for 2017 from the ground up is that the legislation that puts this program in place does not give the Commonwealth Government any power to actually withdraw funding based on that low completion rate, none at all.
KELLY: But you are the Government, you’ve been in the Government for nearly three years now, you can change this legislation, I know you have some changes planned which is good, but in amongst all of this discussion lies TAFE. The TAFE system, state based – I think I get this right…I always get confused around TAFE – but it is the foundation of our skills development in this country.
All we hear is that we have skills gaps in this country, that is the biggest break on our productivity and yet there is TAFE which gets changed all of the time as far as I can see which has been forced to compete against these private colleges.
These private colleges, which we are now understanding more and more, have been basically rorting government funding and not providing adequate training, and yet TAFE has been forced to compete. And I talk to TAFE people a lot and they are saying that their work practices – the pressures on them – they cannot do their job properly.
RYAN: Let’s put this in context Fran. 4 million Australians a year undertake vocational training, 1.4 million of those are in the publically subsidised system – so more than half takes place without a public subsidy, the workplace and things like that – only 300,000 are in this VET FEE-HELP system…
KELLY: Sure, but TAFE is operating in competition with these private colleges.
RYAN: Yes, but we also need to understand that the Commonwealth cannot directly fund TAFE. Under both sides of politics, under the current national partnership arrangement that is in place and was put in place by the Gillard government, they put in place this concept of contestability.
Which has a place because there are a lot of good private providers that we never read about that are long standing in the vocational sector. We should not let actions of a few dodgy shonks tar the work of a lot…
KELLY: These are big shonks.
RYAN: …They are and that is why I have spent all of my 34 days in this job full time on VET FEE-HELP. But to put TAFE in context, we give money to the states and the states then control how that is dispersed. Under our national partnership payments we have increased, since we came to office, the payments made to states by 58 per cent. And the TAFE sector is also a very big user of VET FEE-HELP. They have increased…they have more than doubled in three years their access to VET FEE-HELP money.
KELLY: Yes, which is positive, right?
RYAN: They have gone from $168 million to $360 plus million.
KELLY: Yes, which is good. And Minister I am just warning you that you have thirty seconds until the news, but yet.
RYAN: The Commonwealth cannot control TAFE, that is a state issue. We fund the states to run their training markets. But we are acting on VET FEE-HELP because the way the system was set up in 2012 does not give us a lot of power to fix these problems, which is what we are going to do this year.
KELLY: Okay, and I know the Government does have some plans to redesign the VET FEE-HELP scheme.
KELLY: Which seems like a very good idea, including the fact that you must not market courses through cold calling, or sign anyone up under 18 without parental permission.
RYAN: We have done all that, absolutely.
KELLY: Scott Ryan, thanks very much for joining us on Breakfast.
RYAN: Thanks Fran.