LABOR SENATORS' ADDITIONAL
COMMENTS
Key Issues
1.1
The Higher
Education Support Amendment (VET FEE-HELP Reform) Bill 2015 seeks to play
catch-up in terms of regulating the operation of VET FEE-HELP and providing
some measure of redress for the victims of the shonks and shysters who have
been perpetuating a scam on students and the Australian people.
1.2
This Bill, while welcomed, is expressly inadequate. It continues
this Government's practice of addressing the symptoms, but not fixing the
underlying problems, that plague the VET FEE-HELP system and vocational
education across the country.
1.3
The
Bill is a missed opportunity. The Government has failed to take the opportunity
to give the Commonwealth and the national regulator sufficient powers to act
decisively against providers who are suspected of misusing the VET FEE-HELP
scheme and exploiting Australians — young and old — who are the victims of this
provider and broker-led feeding frenzy.
1.4
Labor
Senators agree with the Member for Calare, Mr John Cobb:
The
good providers who are doing the right thing are victims because it sullies the
good name of everybody when providers take advantage of young people and of a
government system that allows those people to borrow money from the
Commonwealth. Obviously, the students themselves are victims if they are
encouraged to get involved in a course that either is no good to them or does
not leave them with anything substantive at the end of the day.[1]
Recent History of VET
FEE-HELP
1.5 In his second
reading speech, the Government Minister has sought to play partisan politics
with this Bill, pinning the blame for this scheme on the former government.
1.6
Unfortunately for the Government
the facts do not bear out its divisive politics. In 2012, the last year of
published figures before the current Government was elected there were 55,115
VET FEE-HELP assisted students. VET FEE-HELP loans totalled $235 million in
that year, and the average loan amount was $5,890.
1.7
In 2014 there were 202,776
students – an increase of 367 per cent. VET FEE-HELP loans totalled $1.757
billion, up by 747 per cent. And fees have shot up to $8,666 per student, an
increase of 147 per cent.
1.8
Under this
Government there have been three Ministers to date. Minister MacFarlane and
Birmingham both talked tough but on outcomes have demonstratively failed.
1.9
Even Minister
Birmingham's cherished initiative of a transfer of VET powers from States and
Territories to the Commonwealth appears to have failed, largely because State
and Territory Ministers quite rightly doubt the capacity of the Commonwealth
Department of Education and Training to manage a national VET system given its
incompetent administration of VET FEE-HELP.
1.10
This is not the Government's first attempt to fix VET FEE-HELP. Amendments to
the Act last year and new
national standards which came into effect on 1 April this year have not stemmed
the tide of abuse and exploitation.
A system in crisis on
this government's watch
1.11
For months
the Government has claimed that its previous changes, the most notable being
new national standards that came into effect on 1 April 2015, would fix the
problem.
1.12
The then
Assistant Minister for Education and Training said in a media release on 1
April 2015:
The time is up
for dodgy marketing agents offering inducements like laptops, meals, vouchers
and prizes so that people sign up for VET courses they don't need and incur a
debt they cannot repay.[2]
1.13
However it is
now clear that the Government's actions have either failed or been too little,
too late.
1.14
Since April
reports of exploitation have continued:
-
The Saturday Age reported on the
4 April 2015 that brokers were targeting elderly and disabled public housing
tenants in the suburb of Prahran with inducements like iPads.[3]
-
15
private colleges were reported to be under investigation for flouting the new
standards by offering inducements like 'laptop scholarships' according to The
Saturday Age on 16 May 2015.[4]
-
The
Australian Skills and Quality Agency (ASQA) was forced to defend its conduct in
June 2016.[5]
-
A
Senate inquiry was told that brokers were continuing to flout the national
standards by the Redfern Legal Centre in July 2015.[6]
-
The
Australian College of Broadway was accused of enrolling a woman for a $28,000
course after convincing her it was free The Australian reported on
5 August 2015.[7]
-
Fairfax
media reported that one of the nation's biggest private colleges, Careers
Australia, enrolled 2762 students using VET FEE-HELP, yet only 300 graduated.
The figures were disputed by Careers Australia.[8]
-
A
Senate hearing in Melbourne was told that a broker had targeted Vietnamese
students studying English at a Yarraville Community Centre offering
inducements.[9]
-
The Age investigation revealed
that brokers operating for Phoenix College offered free laptops for disabled
public housing tenants in rural Euroa.[10]
Phoenix College was subsequently put under investigation by ASQA and the
Department of Education and Training, and the shares of its parent company –
Australian Careers Network – plunged by 12 per cent.[11]
-
The
Australian Competition and Consumer Commission (ACCC) commenced court action
against Unique College in Sydney alleging that the college sent salespeople
into Aboriginal communities and handed out free laptops in return for their
signatures on applications for online diplomas.[12]
-
The Daily Telegraph
reports that ten colleges are being investigated for VET FEE-HELP rorts by the
ACCC. ASQA admits that the number of complaints pointed to a '“potential
systematic issue'.”[13]
-
The Australian reports that $1
billion in loans will be spent on students who do not complete their Diploma
courses.[14]
-
Evocca
College is facing a class action from former
students who claim they were duped into enrolling into its courses.[15]
-
Sydney
man, Keith Broos, claims he was signed up to a course by a spruiker for Evocca
College and incurred a VET FEE-HELP debt he was unaware of.[16]
-
Fairfax
media reports that Unique International College paid students to sign documents
they could not read in order to take up loans of $25,000.[17]
-
The Australian reports that
tuition fees have tripled in three years, with the private training industry
calling on the government to regulate tuition fees to prevent rorting.[18]
-
The Australian reports that
competition rates for government funded VET FEE-HELP courses has fallen.[19]
-
Cornerstone
Investments paid $46 million for VET FEE-HELP in 2014 for 4,000 students but
only graduated five, The Australian reports.[20] The Australian reports.
-
Six
of the top 10 organisations running Australian private colleges are under
regulatory scrutiny The Australian reports.[21]
-
The Age reports on the business
model on vocational educational businesses, including the woes of Vocation, the
troubles of Australian Careers Network, and allegations against another company
Acquire Learning.[22]
-
The ACCC to launch court action
against Phoenix Institute parent company CAN tells the Australian Stock
Exchange.[23]
-
The Age reports that a federal
government back to work scheme is supplying workers that sells expensive
diploma’s to the unemployed. Allegations are levelled against Go
Careers about their sales tactics.[24]
-
On
the same day The Age reported that dodgy brokers were still offering
free laptops for people to enrol in courses for ASCET Institute of Technology,
Phoenix Institute and Sydney based AIPE.[25]
-
The ACCC accuses Phoenix Institute of
false, misleading and unconscionable conduct and should pay back $106 million
in VET FEE-HELP funding, court documents show.[26]
-
ASQA
reveals that it had informed two more colleges – Cornerstone Investments and
the Australian Institute of Professional Education – that it intends to cancel
their registration.[27]
-
Vocation
Ltd advises the Australian Stock Exchange that it has initiated voluntary
administration procedures.[28]
1.15
The sheer
volume of these reports and the flurry of regulatory action demonstrate that
despite the Government's claims that previous changes to the VET FEE-HELP
program have failed to even deter the shonks and shysters.
1.16
As the TAFE Directors Australia (TDA) have said in their submission to the
committee:
Put simply,
there is a culture of private 'for-profit' providers who have exploited – and
without stricter legislation will continue to exploit – any and every loop hole
or weakness in the VET FEE-HELP guidelines and legislation.
TDA cautions
that current legislation and policy settings appear to be insufficient, and
that far stronger control and governance of the VET FEE-HELP loan scheme is
warranted in the face of incontrovertible evidence of abuse.[29]
1.17
In this
context Labor Senators welcome the legislation, and are prepared to support its
passage. However, such is the scale of the problem we are looking to the
Government to enact further measures that the community and indeed the private
college sector are calling for.
VET FEE-HELP could
overtake HECS this year
1.18
La Trobe
University, in its submission to the inquiry has revealed the scale of the
change where VET FEE-HELP was in 2014 more than one-third of the amount of
University HELP loans:
An important issue within tertiary education policy is
maintaining the sustainability of Australia's income contingent loan scheme. At this point, the
bulk of loans made through the income contingent loan scheme are administered
through the Higher Education Support Act (2003). Trade Support Loans are a
small but significant addition to the income contingent loan policy framework
(representing around 2.5% of costs of the higher education loan
program for 2014-15).
The quantum of funds distributed through
VET FEE HELP has increased
significantly, and now makes up around a third of the funds distributed to Australian universities through the higher education loan program (Table One).[30]
1.19
The
Regulation Impact Statement (RIS),
Changes to the VET FEE-HELP Scheme,
indicates that the rapid increase in the number of registered
training organisations ( RTOs) seeking approval, and being approved
as VET FEE-HELP providers, means that '“there is still significant scope for
further growth in VET FEE-HELP'.” The RIS goes on to say:
Based on the
number of providers approved in 2015, current applications undergoing assessment
and pending, a potential increase during 2015 of 300 per cent over 2014 is
indicated.
1.20 Based on the
trend established by May this year, the total VET FEE-HELP debt for 2015 is
likely to exceed $4 billion. If left unaddressed, or not adequately addressed,
it is possible that VET FEE-HELP could exceed HECS-HELP this year or in 2016.
Strengthening student
protection when entering into VET FEE-HELP debts
1.21
Currently,
a person signing up for a $1,000 credit card or phone-contract has more
protection than students signing up VET FEE-HELP loans.
1.22
There
have been extensive media reports over the past two years detailing cases where
dodgy brokers and RTOs target vulnerable students, often in low socio economic
areas or people with intellectual disabilities, effectively tricking them into
signing up to VET FEE-HELP debts without their knowledge.
In many cases, '“students'”
will not find out about their VET FEE-HELP debt until they file a tax return.
1.23
They
offer incentives such as free laptops, meals, gift vouchers and iPads in order
to get their details and a signature to sign them up for a VET FEE-HELP loan –
in many cases up to $20,000.
1.24
In
other cases, students have withdrawn from courses and followed the correct
procedures to later find out that they have still accrued a debt.
1.25
This
is effectively fraud and must be stopped.
1.26
Labor
introduced an amendment in detail in the House of Representatives requiring the
Department of Education and Training write to the student with a clear
statement on the amount of debt that they are about to incur and requiring the
student to reply to the Department before a debt is raised.
This puts the Department in as a check-point between the prospective student
and the broker or RTO.
1.27
In
his speech to the House of Representatives on 11 November 2015, the Minister
advised that the Department of Education and Training is already working on a
new electronic application system for VET FEE-HELP loans which will come into
effect on 1 January 2017.
1.28
While
understanding that new IT systems take some time to establish, one year is far
too long given the industry is in crisis and the volume of taxpayer funds that
are being funnelled through to dodgy brokers and RTOs.
1.29
Labor
Senators will propose amendments in detail in the Senate to require that the
Minister and the Department fast-track this system and also look at risk
management options, such as recording IPS and email addresses to ensure there
is no commonality and staggering the Department'’s replies to students so that brokers
and RTOs are unable to predict the response time from the Department to the
student.
Capping runaway tuition
fees
1.30
In vocational
education fees for non-government subsidised courses are completely
deregulated. A provider may charge whatever they want for a VET qualification
and a student must therefore borrow the full cost as a VET FEE-HELP loan.
1.31
As a
consequence of these deregulatory settings, tuition fees are out of control. The RISegulatory Impact Scheme prepared for
this legislation says:
During 2014, there were almost
203,000 students (or 133,000 EFTSL) who accessed loans, with a total value of
approximately $1.76 billion, and an average loan amount of $8,666 per student
(or $13,197 per EFTSL). Of the 133,000 EFTSL, around 113,700 were full fee
paying with an average loan of $14,500 and around 19,500 were state subsidised
with an average loan of $5,500.[31]
1.32
The 2014 VET
FEE-HELP Statistical Report reports some more startling fee rises. In 2011 the
average loan amount for a Diploma was $4870. In 2014 it was $12,658.[32]
1.33
The average
cost of an information technology diploma has increased from $2779 in 2011 to
$18,735, increasing by 84.9 per cent between 2013 and 2014. A diploma of
business management which cost $4623 in 2011 now costs $15,493.
Average annual tuition fee per EFTSL
($)
|
|
2011
|
2012
|
2013
|
2014
|
Change 2013 to 2014
|
Natural
and Physical Sciences
|
$3,731
|
$3,955
|
$5,820
|
$6,241
|
7.2%
|
Information
Technology
|
$2,779
|
$4,473
|
$10,134
|
$18,735
|
84.9%
|
Engineering
and Related Technologies
|
$2,196
|
$3,046
|
$8,053
|
$10,296
|
27.9%
|
Architecture
and Building
|
$2,009
|
$2,589
|
$4,500
|
$5,792
|
28.7%
|
Agriculture,
Environmental and Related Studies
|
$1,525
|
$1,524
|
$2,980
|
$4,810
|
61.4%
|
Health
|
$5,660
|
$5,997
|
$7,954
|
$9,622
|
21.0%
|
Education
|
$8,078
|
$8,473
|
$9,259
|
$5,821
|
-37.1%
|
Management
and Commerce
|
$4,623
|
$6,454
|
$12,130
|
$15,493
|
27.7%
|
Society
and Culture
|
$3,671
|
$4,727
|
$6,544
|
$8,276
|
26.5%
|
Creative
Arts
|
$6,310
|
$7,399
|
$10,145
|
$12,097
|
19.2%
|
Food,
Hospitality and Personal Services
|
$10,466
|
$11,958
|
$13,081
|
$16,982
|
29.8%
|
Mixed
field programs
|
$1,038
|
$1,297
|
$1,769
|
$2,909
|
64.4%
|
Total
|
$4,814
|
$5,917
|
$9,549
|
$12,308
|
28.9%
|
|
|
|
|
|
|
Source: Australian Government Department of
Education VET FEE-HELP data collection
1.34
Stories of
price gouging are common. In
the debate on this Bill in the House of Representatives, the Member for Lyne,
Dr David Gillespie, cited one example:
There are two
stories that I found particularly disingenuous and illustrated how crooked some
of these people are. In Cairns there were two providers offering the same
course. Funnily enough, they were registered at the same address. One charged
$12,750 on the VET FEE-HELP, but, for the same diploma of management from the
same provider, you could get it direct if you paid up front $3,420.[33][34]
1.35
The Australian Education Union (AEU) notes that VET FEE-HELP students
often pay more than university students:
Undergraduate
students who are eligible for a CSP generally pay much less through
their HECS HELP loans, than either category of FEE-HELP student.[35][36]
1.36
Submissions
have backed calls to control prices. The Australian Council forof Private Education and Training (ACPET) recommended:
A
review of the pricing and student contribution arrangements for VFH. ACPET
considers the reforms may not give sufficient attention to the price
insensitivity that has been identified with VFH.[37]
1.37
The National
Tertiary Education Union (NTEU) calls
for an end to fee inflation:
The best way to
prevent fee inflation is to put a cap on how much VET-FEE HELP assisted student
can be charged for a course as is currently the case under HECS.[38][39]
1.38
The
Government still has a policy of deregulating university fees. The fate of VET
under deregulation is surely enough of a cautionary tale to rule deregulation
and $100,000 degrees out as a serious policy option for the future.
1.39
Rather, as a
number of submissions note, it is time to bring this aspect of VET FEE-HELP in
line with HECS-HELP. In order to protect students and protect the Australian
taxpayer it is time to put a ceiling on tuition fees able to be charged for
courses paid for with VET FEE-HELP.
1.40
One other
suggestion that was made to the recent Senate References Committee inquiry was
to institute a lower loan limit. This suggestion has merit.
1.41
Labor
Senators will propose and support an amendment in detail dealing with these issues.
Protecting the consumer
through an industry ombudsman
1.42
Labor has
proposed that an industry ombudsman be established for domestic VET students.
This position has widespread support. Government actions to set up a National
Training hotline are welcomed, but more can easily be done.
1.43
The
Commonwealth Overseas Students Ombudsman (OSO), in its Report on the first
four years of operation, notes the success of that scheme in acting as a
vehicle for receiving/resolving complaints and as an educational resource for
providers.
1.44
In the report
the OSO says:
We have
indicated we could take on complaints from domestic students about private
education and training providers if our jurisdiction was extended and we were
given funding to do so[40].
1.45
Protecting
the consumer through an industry ombudsman has widespread support. ACPET says:
For
some 12 months ACPET has been advocating the establishment of a National
Training Ombudsman. This would provide a consumer-focused complaints handling
process for students and providers to complement the National Complaints
Training Hotline. The Training Hotline provides a vehicle to receive complaints
- not deal with them.[41]
1.46
The
Consumer Action Law Centre says:
Complaints
by domestic students in Victoria must be taken to the Victorian Civil and
Administrative Tribunal (VCAT). The VCAT process involves a court-like,
adversarial hearing, which is much more formal and intimidating for a consumer
than an ombudsman process. An ombudsman scheme remains informal and avoids some
of the pitfalls of face-to-face dispute resolution where a power imbalance
exists between the parties. An ombudsman process is more appropriate for the
majority of disputes relating to private colleges.[42]
1.47
The NTEU also
supports the creation of an ombudsman:
In
particular the NTEU strongly supports the ALP'’s recommendation to establish a
student Ombudsman'’s
office. The role of any such office however, should not be limited to VET or
VET-FEE HELP, and should be extended to investigate complaints from any
tertiary education domestic or overseas students whether they are enrolled in
VET or higher education. This recommendation should be adopted independent of
any other changes.[43]
Banning brokers and
dodgy marketing agents
1.48
The
evidence is clear that the national standards which came into effect on 1 April
2015 have not been effective in stopping the activities of brokers or dodgy
marketing agents.
1.49
The
Australian Council of Private Education and Training says:
Advice from ACPET
members suggests some agents and brokers are seeking more than 50% of student
fees in commissions. ACPET is concerned that the rapid escalation in student
fees and some unethical behaviour reflect these excessive commissions.[44]
1.50
The
majority report makes no observations or recommendations on this matter however
Labor Senators are of the view that further action is required. We call on the Government to act
decisively to either ban the use of brokers, or adopt the suggestion of the
Consumer Action Law Centre and ban commission-based sales.[45]
1.51
Alternatively,
the Government could look at other options for regulation of third party
agents, like caps on commissions or directly regulating third party agents such
as migration agents or real estate agents.
Turn off the tap –
further actions are needed
1.52
Recent
actions by the ACCC have raised questions as to how effective the powers that
the Minister and the Department of Education and Training officials (acting as
the Minister’s delegate) have to stop payments to providers or third party
agents who are doing the wrong thing.
1.53
The inability
of the Department to stop payments to providers who are subject to legal action
by the ACCC, and subject to notices of intent to deregister by ASQA, is of
concern. It suggests that the current powers are inadequate.
1.54
While the
provisions of this Bill may go some way to improving the situation, the
Government should commit to doing more.
1.55
Some
submissions raised broader issues, such as questioning the validity of
contestability for VET funding and the Nnational Ppartnership onf Skills Reform.
1.56
While
there is a COAG review of the National Partnership scheduled, multiple reports
and studies have reaffirmed the view that a strong, effective public TAFE
sector is vital to underpin a vocational education system. That is why TAFE is
not some sort of side issue and vocational education is not some sort of thing
that you tack on. It is a fundamental, foundational responsibility of the
Commonwealth to ensure that all people in Australia can gain access to
vocational training and education and training in a way that allows them
to develop their knowledge and skills and play a part in the future workforce.
1.57
Labor has
announced that if elected it will develop a comprehensive National Priority
Plan that defines the unique role of TAFE as our public provider and delivers
on this by working with the states and territories to provide ongoing
guaranteed TAFE funding, and to rebalance the contestable and non-contestable
funding model to ensure it delivers the outcomes that are intended.
Recommendation 1
Labor
Senators recommend that the Senate support amend the Bill .
Recommendation
2
1.58
Labor Senators recommend that the Senate supports
further amendments to deal with issues identified, namely tuition
fees, loan limits and changes to strengthen student protection when entering
into debt.
Senator
Sue Lines
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