ABC 774 with Jon Faine
SUBJECT: VET FEE-HELP
JON FAINE: Well, for months and months now, back to the middle of last year on this programme, we started talking about rorts and problems in the system of paying for higher education. We’ve learned that you can get a free iPad just for signing up for a course, which without you realising, means you end up with a HECS debt, but maybe a useless — or no — qualification. We’ve learned that the Government will pay money to private providers to train you to be a psychic; all sorts of problems. Well, this morning, the Federal Government announced that they are cracking down on scams. So, let’s see how thoroughly they’ve listened. Senator Simon Birmingham is the Assistant Minister for Education and Training, he’s a South Australian Liberal Senator. Senator Birmingham, good morning. What do you plan to do?
SIMON BIRMINGHAM: Good morning Jon and good morning to your listeners. What we’re planning to do, and we’ll do quite quickly, is to ban the offering of inducements or incentives to sign students up to courses where there is a VET FEE-HELP or HECS style loan attached to them. We will be taking action against the miraculously short courses that appear to have developed over time and making sure that students have multiple units of study attached to their courses, which means that the fees attached to that course cannot and will not be able to be levied in one foul swoop up-front. We’ll be making sure that the insidious practices like nursing home or retirement village enrolments are not able to be taken where people clearly do not have the capacity to undertake the course or do the job that you might expect people to be doing at the end of that course. We will be putting extra funding into compliance and enforcement regimes to tackle all of these measures and making clearer the contractual arrangements that must exist and must be transparent between training providers and brokers or third party agents acting on their behalf.
JON FAINE: Something about horses and stable doors comes to mind, Senator Birmingham, but let’s be generous and say that you are deliberately now targeting the people who have been rorting this to the tune of billions of dollars for months and months while no one did anything about it. But fundamentally, what you’re doing is plugging the gaps in the system rather than fixing a system that, in my view, has some fundamental structural flaws, which you’re not touching.
SIMON BIRMINGHAM: Well, Jon, what I’m tackling here in particular is the VET FEE- HELP system. And in 2012 the previous government opened up arrangements for VET FEE-HELP that provided a market opportunity for the shonksters and fraudsters to get in there and sign up students to [indistinct].
JON FAINE: [Talks over] Sure, but you’re dealing with the symptoms, but you’re not actually tackling the disease.
SIMON BIRMINGHAM: Well, Jon, I think we are going to break the business model for those doing the wrong thing here.
JON FAINE: No, they’ll just find other ways to rort. You’re saying oh we won’t let you give away iPads, alright, they’ll give away something else instead. I mean the fundamental…
SIMON BIRMINGHAM: No Jon, there will be absolutely no inducements, incentives or offerings up front allowed to be made. So, I — let me be very clear about that.
JON FAINE: The fundamental problem here is the structure of the system you’ve put in place that makes it rortable. The problem’s not the rorts, it’s the system.
SIMON BIRMINGHAM: Well, Jon, what we’re offering here is a HECS-style loan scheme that ensures that vocational education is treated like a university education when you're talking about the higher level qualifications. Now I think that’s very important that we give them equal weighting, equal footing and that then gives students the opportunity to borrow against their student fees and only pay it back when they’re earning a decent income later in life.
JON FAINE: Minister, I think we’re at cross purposes here.
SIMON BIRMINGHAM: I think that’s a fundamentally important reform.
JON FAINE: We’re at cross purposes here. The fundamental problem here is that it is a highly profitable private sector business to provide training that used to be provided by the state. Anything where the Government…
SIMON BIRMINGHAM: No that’s not true. Private training providers have been in place for decades.
JON FAINE: But they’ve not rorted the system.
SIMON BIRMINGHAM: [Indistinct] training providers have been in place for decades.
JON FAINE: It’s not been a money pot the way it has been recently.
SIMON BIRMINGHAM: And that is what we are trying to close the door on; the money pot, Jon. So it’s not about vilifying private training versus public training; there is a role for both. TAFE’s incredibly important; I support the TAFE system, it does an amazing job, but private training providers [indistinct] important [indistinct] as well.
JON FAINE: [Talks over] Then why not fund it properly instead of competing against it? Why not fund it properly instead of funding the competition to then turn out to have cost the taxpayer, on your own press release, $16 billion of unnecessary training loans?
SIMON BIRMINGHAM: Well, no that’s – we have taken action before those – that 16 billion. So this is what we expect to be saved over the next decade as a result of the actions we’re taking. But of course, of course there have been losses over the couple of years since 2012 when the former government opened the scheme up. But I want to be clear TAFEs are one of the biggest beneficiaries of what we provide through VET FEE-HELP at the Federal Government level.
JON FAINE: Okay, now look, in your…
SIMON BIRMINGHAM: We are funding TAFE to a huge extent, just as we are funding those private providers. What I want to make sure is we have quality, whether it’s in TAFE or private providers, and that we knock out the incentives for dodgy activity, whether that’s by private providers or anybody else in the system.
JON FAINE: Minister, in your own press release you say unethical behaviour by a small number of training providers or their brokers meant too many students signing up for courses they didn’t need. Since when has TAFE or the training sector needed brokers?
SIMON BIRMINGHAM: Jon, small and specialist colleges have used brokers or third party agents to recruit students for a long period of time.
JON FAINE: And there’s your problem.
SIMON BIRMINGHAM: That’s not.
JON FAINE: There’s your problem.
SIMON BIRMINGHAM: Jon, that is not [indistinct].
JON FAINE: [Talks over] There’s money to be made…
SIMON BIRMINGHAM: Jon, let me give you an example.
JON FAINE: There’s money to be made out of channelling students into courses they didn’t want…
SIMON BIRMINGHAM: Jon, can I finish the statement please and give you an example?
JON FAINE: …and don’t need.
SIMON BIRMINGHAM: Can I give you an example Jon? The International College of Hotel Management operating in South Australia has existed for a terribly long period of time. They’re a small training provider; they only undertake a limited number of students. They don’t have the resources to employ people to go around other capital cities of Australia and sell their courses on a full-time basis or part-time basis who are their direct employees. They, like many others, engage parties to promote their courses as part of a suite of offerings. There’s nothing dubious about that because the students who go there get a quality education, have a very high likelihood of getting a job at the end of it and enjoying a very successful career. So, again, there is nothing wrong with having brokers or third parties, per say. It is about making sure that their practices comply with what all of us would expect to be reasonable consumer behaviour.
And that is what I am taking firm action on: stamping out anything that is unreasonable in terms of the sales pitch or consumer behaviour. I think we will break the business model for those doing the wrong thing [indistinct]…
JON FAINE: Minister, at any…
SIMON BIRMINGHAM: …no longer be able to offer inducements up front, they will no longer be able to charge the fees up front, they will no longer be able to con people into thinking that it is completely free for them to undertake this. There are real consequences for individuals as well as the taxpayer in terms of the impact on their credit rating, and we will be making all of that crystal clear, which I think you will see. And obviously, based on our budgetary estimates, we believe that this will break that model, because we all believe it will save people over the next decade from taking out $16 billion in unnecessary loans.
JON FAINE: Minister, any – look, it’s been an obsession of the Abbott Government to do what’s called red tape reduction. Terrific. Sounds terrif… sounds great until you see the impact. What it actually means is a lack of accountability, a lack of enforcement of rules and regulations, and anyone who wants to can pretty much get away with anything because of the obsession with reducing the public service and getting rid of red tape, leaving the country unprotected against this sort of rorting.
SIMON BIRMINGHAM: In this space, my predecessor, prior to December last year, re-funded the regulator which Labor had de-funded - put $68 million back into the National Regulator for Vocational Education and Training, developed new regulations that took effect from 1 January this year. I’ve come in and put in place a further level now of changes to the guidelines and regulations. Red tape reduction for the Abbott Government is about getting rid of unnecessary, out of date, costly, and inefficient bureaucracy. But where there is cause for good regulation – and there absolutely is in this sector and in this debate – we are taking action and putting in place additional safeguards and regulations [indistinct]…
JON FAINE: Alright. Just finally…
SIMON BIRMINGHAM: …over the course of the last year, and that’s what I’ll keep doing until this problem is fixed.
JON FAINE: And finally, Minister, there’s a whole – at the top level, yes, the universities of Melbourne, Sydney, Monash, Queensland, ANU are in the top 100 in the world. Fabulous. But at the other end, for people going into university courses with an entry score below 50, a quarter of them drop out in the first year. Isn’t that a huge structural problem in our higher education and training system? A quarter of people getting into low entry level courses – a quarter drop out within a year.
SIMON BIRMINGHAM: It is a concern, Jon, and one of the little reported and discussed facts about Christopher Pyne’s higher education reform package is that it proposes to extend Commonwealth subsidies to diploma and pathway courses for universities to offer, so that other than the present model, whereby the only way universities can keep their funding streams up is to take more students because they’re capped in terms of the amount of money they receive [indistinct]…
JON FAINE: [Interrupts] That’s the exact opposite of what’s needed, Minister.
SIMON BIRMINGHAM: …student basis. Sorry, Jon, again, again…
JON FAINE: The bottom line [indistinct]…
SIMON BIRMINGHAM: If you can let me finish [indistinct]…
JON FAINE: …there are shonky courses at shonky universities offering false hope to students who shouldn’t be there.
SIMON BIRMINGHAM: And Jon, if I can finish the point, by providing the opportunity and support for universities to offer pathway courses, we would expect to see fewer people in that category going into bachelor degrees, because the incentive is then there for the university to say, we’ll take this student, but we’ll take them at an entry level course that is a pathway course – a diploma – and then if they successfully complete that, they can progress onto a bachelor degree or beyond. That’s a sensible reform; it is trying to address [indistinct].
JON FAINE: [Talks over] No. Shonky universities offering shonky courses to students who shouldn’t be there and giving false hope to people who should never be in tertiary education in the first place.
SIMON BIRMINGHAM: Well, Jon, I think the problem here is absolutely that in opening up the system for universities to a completely demand-driven model – the previous government did it in such a limited way. We are attempting to reform that at present, facing fierce opposition to do so, but attempting to reform that at present to provide greater scope so that you are treating lower qualification, easier qualification, in an equivalent manner, and by doing that, you’re providing greater pathways for students, greater flexibility for universities…
JON FAINE: [Interrupts] Pathways. No, it’s taking young people off unemployment and making them pay to study courses that provide them with no meaningful qualifications.
SIMON BIRMINGHAM: Well, sorry, Jon, well, well – so, so, so, so you think we should shut the door to any potential for a university education for these young people, rather than saying…
JON FAINE: No, I think you should provide proper training in skills that…
SIMON BIRMINGHAM: Rather than saying here is… proper training and skills. Well, here, here. I agree with you entirely on that. We’ve found a point of agreement, and that, of course, is that we need to reform teacher training in this country, which is what Christopher Pyne is seeking to do and what we’ve been pursuing. And absolutely, I hope that your state government are listening to the appeal to get better outcomes at our schools in the first place. But where that’s not occurring is the Federal Government regulating the tertiary education sector. We are trying to provide the opportunities so that we don’t have young people who finish school, can’t get a job, don’t have the qualifications out of school to go on to some sort of further learning, and have all the doors closed to them.
JON FAINE: No.
SIMON BIRMINGHAM: That would be the worst of all worlds, so we’re trying to create a system where there are not bachelor degrees but other places supported through the
tertiary sector so that people actually have opportunities to pick up the skills that perhaps they should have got at school but they didn’t. And so we’re trying to address those gaps as a federal government whilst also addressing some of the problems in our teacher quality and schooling system as much as we can. But we really need the states to be lifting their games in that space.
JON FAINE: Well, few things matter as much, Senator. Few things matter as much for the future of the nation and the dignity of individuals, as well, I might say. But thank you, indeed, for answering my questions. It’s been a fiery exchange and one, I’m sure, the listeners will pass judgment on. And let’s speak again when the dust settles. Senator Simon Birmingham, South Australian Liberal Senator and the Assistant Minister for Education and Training in the Abbott Federal Government.