Doorstop, Parliament House, Canberra
SUBJECT: VET FEE-HELP
SIMON BIRMINGHAM: Australia’s training system is one of the best in the world. Today, the Federal Government is announcing a range of reforms to the VET FEE-HELP scheme, to ensure the integrity of our training system is preserved well into the future. VET FEE-HELP is an important scheme. It provides opportunities for vocational education students to access the same type of support, via student loans, that is available for university students. They can take out a loan to pay their fees, and in doing that only have to pay it back when they earn above a certain income level, around $53,000 in today’s terms. However, since the Labor Party in 2012 expanded access to VET FEE-HELP, we’ve seen an explosion in the number of providers and the number of loans being taken out. Triple-digit growth has been recorded since 2012, year-on-year in relation to VET FEE-HELP. Complaints have been received though, since shortly after those changes were introduced – well before the election of the Abbott Government – about how the VET FEE-HELP system was being rorted and manipulated.
It’s been evident for some time that there are problems. We’ve taken action over the last 12 months, firstly to strengthen the powers of the national regulator, the Australian Skills Quality Authority, by providing an extra $68 million to them in enforcement capability and powers. We’ve introduced additional legislation and regulation in that time to tighten some of the regulatory standards, and today I announce the next phase of our reforms, which is the reform to VET FEE-HELP specifically. These changes will eliminate shonks, and fraudsters, and charlatans from the system. I am confident the changes we’re introducing will break their business model. Because what we are doing is firstly outlawing inducements and incentives, and offers up-front, to try to lure students in the door. Gone will be the days of the free iPad, the free laptop, the meal vouchers or the cash giveaways to sign people up to a student loan. Students who sign up for training should expect to get one thing, and one thing only, and that’s quality training – not any giveaways associated with that. We’ll also be taking action to outlaw the targeting of people who are manifestly incapable of completing the course, or of working in the field of study should they complete it. This will mean the insidious practice of targeting people in retirement villages, or in aged care homes, for courses they clearly won’t complete, will be knocked out.
We’re taking action to tackle the issue of short courses; ridiculously and miraculously short courses where people can complete a diploma or advanced diploma qualification
in a ridiculously short period of time, and in doing so have the entire cost of that levied against the taxpayer up-front.
All of these reforms, I’m confident, will break the business model of dodgy brokers and third-party agents, and any training provider who is reliant upon simply profiteering at the expense of the vulnerable and the taxpayer, rather than focused on delivering quality training for the long run. Altogether, these reforms should mean that over the next decade $16.3 billion in unnecessary VET FEE-HELP loans will not be taken out. That’s a massive saving to taxpayers, but also a protection for the individual, because these loans go on people’s bottom lines, they go on their credit ratings, and of course make life harder for them in terms of being able to take out car loans or home loans in future. So altogether the reforms we announced today will provide important protections to consumers, important protections to the taxpayer, and important protection to the credibility of our training system.
SIMON BIRMINGHAM: So we’ll be putting in place additional compliance and enforcement regimes. We’ll be putting in place new fines that will be - give us a greater flexibility and suite of enforcement provisions, so that if somebody has done the wrong thing in terms of offering an inducement or incentive to sign a student up to a course, we’ll be able to recoup the money from the training provider, fine the training provider, waive the debt that student has incurred. We’ll be putting in place greater audits of not just training providers, but random audits of students as well, so that we actually have people randomly ringing people who have taken out a VET FEE-HELP loan, surveying them to the circumstances of their loan, all of which of course will provide data to inform the risk ratings that the national regulator ASQA [The Australian Skills Quality Authority] and the Department of Education and Training have, that will guide them as to who to target, as to who might be doing the wrong thing. Our reforms will also make it clear that third-party agents or brokers must have transparent contractual relationships with training providers. Students, when they’re approached by a third-party agent, need to know who the training provider is they’re signing up to. And we need to know, in regulating the system, who it is to go after and penalise if they’re doing the wrong thing.
JOURNALIST: Why are you persisting with the line that it’s only a small number of dodgy providers involved in this, when one of the largest providers, Evocca, is under investigation?
SIMON BIRMINGHAM: Look, I think overall the quality of training in Australia remains among world’s best practice. And I am confident that most people who complete qualifications, be it from the private training sector, the not-for-profit training sector, or public providers, are getting quality qualifications. But I’m concerned, absolutely, that there is a scale of rorting that is completely unacceptable. And the fact that we anticipate the savings in terms of loans over the next decade is in excess of $16 billion, means I don’t think this is a small problem. I think a small number of people are probably rorting the system, but the scale of the problem is quite serious, and that’s why we’re taking significant action today to stamp it out for good.
JOURNALIST: What about those people…?
JOURNALIST: Should providers that are under investigation be allowed to continue to sign students up?
SIMON BIRMINGHAM: Well we need to be mindful of the fact that these providers may have multiple training outlets operating under them, and that many of those outlets may well be doing the right thing, providing valuable training that is beneficial to the student, and beneficial to the productivity of the entire economy. So I’ll let individual, of course, inquiries take their course. But what I am determined to do is not just stamp out the practices, not just implement reforms that ban certain things, but give us a greater suite of penalties to be able to apply to those doing the wrong thing at present. Too much of it is a case of you can either send somebody a nasty letter saying they’ve done the wrong thing, or you can basically remove their accreditation to provide training, which has serious impacts for the thousands of students they may have enrolled. What I want is to have some options in the middle, where we can put serious financial penalties in that provide an additional disincentive, an extra tool in the regulator’s tool kit, to be able to respond and make sure that people know if they do the wrong thing there will be serious consequences.
JOURNALIST: What about some of the students who have already got significant loans? There’s already questions about whether or not they’d be able to pay them off; will the Government reconsider waiving those loans that are currently in question?
SIMON BIRMINGHAM: Unfortunately all the activities that seem to have been undertaken to date are largely legal. Unethical perhaps, immoral perhaps, but legal. And so the situation we’re dealing with now is about drawing a line in the sand, making those activities illegal, against the rules of VET FEE-HELP, and putting in place the provisions to protect people in future. This should serve as not just a legal change, but a warning that goes in two directions. Firstly, a warning to students that if the deal you’re being offered for a course seems too good to be true, if it looks like it can be completed too quickly, if it looks like you’re getting too much in return in terms of giveaways, then it probably is too good to be true, and not worth signing up for. Secondly though, a warning to the training industry generally. And that is, these reforms are serious. I am confident they will break bad business models, but if they’re not enough then we will do more in future to make sure we stamp out bad practice and protect the reputation of the training industry.
JOURNALIST: So why can’t it be backdated, then? I mean, you’re saying it’s illegal but – immoral now. I mean, what’s to stop the Government from saying, well, you’ve got these debts according to the scheme that the Government has set up. What’s wrong with the Government from saying, well, you know, you don’t have to pay these fees any more if it’s proved that they shouldn’t have been given them in the first place?
SIMON BIRMINGHAM: Individuals have, of their own free will, signed onto these loans. Now, I think they shouldn’t have. I think the inducements they accepted to sign onto these loans were wrong, and that’s why we’re banning those inducements in future. But ultimately, individuals of their own free will signed on for courses that they shouldn’t have, but they have to wear now the consequences of that, unfortunately. These, of course, are reforms we’re taking in response to a situation we inherited. The Labor Party, I’ve noticed, are welcoming the fact that we’ve finally done this. Well, I’d say to the Labor Party, their complaints have been a little bit like the arsonist calling for the fire brigade after they lit the fire. The truth is that it was the opening up of VET FEE-HELP in 2012 without appropriate regulation in place that has set in place a chain of events that is quite reminiscent or analogous to what happened with the home insulation scheme. It’s encouraged people to come in and do completely the wrong thing, to take advantage of taxpayers, to target vulnerable people, and that’s why we’re stamping that out from here. We can’t undo what’s already happened but we can make sure that it doesn’t occur again in future.
JOURNALIST: Minister, how practically can you [indistinct] whether somebody is able to get a job at the end of a course? There are thousands of people out there. How [indistinct]…?
SIMON BIRMINGHAM: Eliza, what we’ll be doing is trying to create a more informed marketplace in that sense. So we’re undertaking what’s called Total VET Activity Reporting, requiring training providers to provide more information and data about the outcomes of their students, expanding both student satisfaction and completion surveys, and employer satisfaction surveys as well. All of that will feed into the MySkills website, which will hopefully create a more informed marketplace for students so that not only have we stamped out the wrong reasons for people to get involved in training in the first place, but we will provide more transparent information for people to make a choice about what training providers appear to have the best outcomes in terms of people getting jobs or having improved employment prospects or having satisfaction with their course. Ultimately, there are, just like going to university, no guarantees that there is a job at the end, but training is incredibly valuable to our national productivity. It is valued by industry generally, and what we want to do is make sure that students have the best available information to decide on what course, through what provider, they undertake to maximise their chances in future.
JOURNALIST: Senator, you talk about the penalties in terms of those fines. Have you got a figure on those?
SIMON BIRMINGHAM: We’ll be working through exactly what is appropriate around penalties. The banning of inducements will happen as quickly as possible and certainly within the next 20 days. The application of fines will require changes to legislation, so that’s likely to, of course, be later this year or at latest, the start of next year to get those fines in place. I’ll be talking to consumer groups as well as industry about what scale of fines and penalties is appropriate, but I’m certainly attracted to the idea that if a provider has to repay a loan that’s been provided because they’ve done the wrong thing, then there should be an automatic multiple of that repayment that kicks in as a penalty for them. I want to make sure the penalties are real and that they turn people away from doing the wrong thing and that we close down these bad business practices for good.
SIMON BIRMINGHAM: I’m confident given the criticisms we’ve had of the program by the Labor Party who created it as well as by the Greens that there should be bipartisan support, cross-party support, for reforms in this space, and I’ll, of course, look forward to consultations and discussions with all of the other parties in this place.
SIMON BIRMINGHAM: I think it’s important, firstly, that we deliver on the commitment we took to the last election, which is to provide some certainty and security around superannuation through at least this life of Parliament. I think too many people see too many changes to superannuation reforms over the years which create a level of uncertainty and a lack of confidence in the super system among many people, particularly younger people and people of working age. I think, looking in the longer-term, we probably do need to have a look at whether superannuation is meeting most
effectively its first goal, and the first goal is absolutely to reduce the demand on the Age Pension system and to ensure people can provide for themselves – or, more Australians can provide for themselves in retirement. But equally, there’s a good point that’s been made by Joe Hockey and Senator Sinodinos that as working expectations change – as people work longer, as they dip in and out of the workforce – we may need to have a look at the rigidity of the super payment system to make sure that it caters for the ups and downs in people’s income streams and in their patterns. But I think this is a long-term debate to be had, not something about any immediate changes.
JOURNALIST: Will these courses continue to be allowed to administer the loans, given that they are their practices? Should it be something that the ATO [inaudible]?
SIMON BIRMINGHAM: We – well, the administration of loans is ultimately – goes – passes through to the ATO, in terms of the fact that they handle the debt. The Department of Education and Training accredits VET FEE-HELP providers and the reforms we’re undertaking will strengthen their capacity to assess whether somebody has an appropriate history as a training provider to be accredited, whether they have the appropriate capital backing as an organisation to get that accreditation. So the department will have greater flexibility to deny accreditation in the future to organisations, and that should, of course, help to ensure we have a higher quality of organisation coming through the doors in the first place.
JOURNALIST: Have you met or spoken to the CEO of [inaudible]?
SIMON BIRMINGHAM: No.
JOURNALIST: Do you plan to?
SIMON BIRMINGHAM: Look, I’ve been meeting with people throughout the industry in my couple of months in the job. I’ve met with the organisations that represent them, such as ACPET [Australian Council for Private Education and Training] and in time, I expect that I’ll meet with more of the heads of different training providers. But my message to all of them, whether it is privately or through the media, is take this warning now. Understand these reforms are serious but we are even more serious about fixing the problem, and if we have to come back with another wave of reforms, that is what we’ll do. I’m confident what we’re proposing will break the business model of the shonks and the fraudsters, but I will make sure that if we still see bad practice, we come back to the drawing board and take even harsher action if required.
JOURNALIST: There’s been calls for these [inaudible] to be extended to certificate IV courses. Given the problems, would you consider that?
SIMON BIRMINGHAM: There’s a trial at present put in place by the previous government that includes some certificate IV courses. Given the difficulties we’ve had in relation to diploma and advanced diplomas, it’s the intention of the Government that that trial, when concluded, will not be extended at present and that future discussions on that would, of course, depend upon us having confidence that the existing system is working well before we countenance any further extensions. Thanks, guys.