Bills Digest no. 41, 2016–17

PDF version [832KB]

James Griffiths
Social Policy Section
22 November 2016

 

Contents

The Bills Digest at a glance

Structure of the Bills Digest

Commencement

Purpose of the Bills

Structure of the Bill

Background

A complicated policy landscape
The legislative framework
The regulatory space
Program and funding flows
Intergovernmental agreements
Australian government programs
State and territory government programs
Policy design and responsibility
The VET FEE-HELP Scheme
Development
Reforms to expand the VET system
Emerging issues with VET FEE-HELP
Government responses and further scrutiny
A new model for VET FEE-HELP

Committee consideration

Senate Education and Employment Legislation Committee
Senate Standing Committee for the Scrutiny of Bills

Policy position of non-government parties/independents

Position of major interest groups

Financial implications

Special appropriations

Statement of Compatibility with Human Rights

Parliamentary Joint Committee on Human Rights

Key issues and provisions

Overview
The unclear purpose of VET
Eligible students
Approved courses
Approved course providers
The design of the VET market
The use of listed providers
VET and higher education
The effectiveness of regulation
A new regulatory regime – more of the same?
Regulatory capacity
Inputs and outcomes
Administrative complexity and the VET system
The cost of education
The cost to government
Table 1: Fees and loans time series (2009–2015)

Concluding comments

What now for the VET FEE-HELP model?

 

Date introduced:  13 October 2016
House:  House of Representatives
Portfolio:  Education and Training
Commencement: For commencement details see page 5 of this Digest.

Links: The links to the Bills, their Explanatory Memorandum and second reading speeches can be found on the Bills’ home pages for the VET Student Loans Bill 2016, the VET Student Loans (Charges) Bill 2016, and the VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at November 2016.

 

The Bills Digest at a glance

What the Bills are

This Bills Digest relates to three Bills being:

• the VET Student Loans Bill 2016 (the Student Loans Bill)
• the VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016 (the Consequential Amendments Bill) and
• the VET Student Loans (Charges) Bill 2016 (the Charges Bill)

Background

• The Bills result from a 2015 policy commitment to reform the VET FEE-HELP scheme. The administration and fiscal sustainability of VET FEE-HELP has been subject to criticism and media attention since 2014.

Key elements

• The Student Loans Bill is based around three concepts: that of the eligible student, the approved course, and the approved course provider. These are intended to ensure that vocational education and training (VET) student loans are directed to those students who are most likely to benefit from financial support.
• The Minister will be able to set a loan cap for each eligible course, limiting the amount of financial assistance the government is able to offer eligible students in these courses.
• VET student loans will be treated as FEE-HELP debts in line with the existing Higher Education Loan Program (HELP) under the Higher Education Support Act 2003. Students will be required to repay their loan debts through the taxation system when their income reaches a set HELP threshold.
• To improve the oversight of the scheme, the Student Loans Bill grants monitoring and enforcement powers to the Department of Education and Training that are more extensive than those under the existing VET FEE-HELP scheme or other HELP loans schemes. A civil penalty regime will also apply in cases of non-compliance.

Stakeholder concerns

• TAFE Directors Australia and the Australian Council for Private Education and Training have expressed concerns that the new regulatory requirements will lead to students missing out on education. This may be because a student’s chosen course or provider is not approved for loans under the scheme, or because the student will not be able to afford the out-of-pocket fees above a capped loan amount.
• Consumer law advocates believe that the transitional measures do not go far enough to support students who have incurred a loan debt under the VET FEE-HELP scheme due to inappropriate provider behaviour.
• The Senate Education and Employment Legislation Committee encouraged the Minister to take into account the various stakeholder concerns on the broad use of legislative instruments in implementing the VET student loans scheme. The Committee also recommended the government establish a VET Ombudsman to better protect students from fraudulent provider behaviour.

Key issues

• It is unclear whether the additional regulatory requirements under the new VET student loans scheme will be effective in ensuring appropriate provider behaviour and lead to better student outcomes. Existing regulatory powers under the VET FEE-HELP scheme seem to not have been used adequately.
• The specific requirements for VET student loans may complicate administration for providers who offer a variety of student loans both under the existing HELP loan scheme and the new VET student loan scheme.
• The new VET student loans scheme does not address the issue that many VET graduates have relatively lower incomes. This may mean that repayment could take an extended period and the default rates may be high. Overall, this means the cost to the taxpayer of the program may continue to be considerable.
  

Structure of the Bills Digest

Through 2015 and 2016, there have been extensive attempts to reform the VET FEE-HELP program, ensure appropriate provider behaviour and contain the cost to government. Many of the provisions in the current Bill are based on settings in the existing VET FEE-HELP program. As a result, this Bills Digest should be read in conjunction with the Bills Digest[1] for the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015.[2]

This Bills Digest will focus on the effectiveness of the 2015 and 2016 reforms in considering the introduction of a new student loan model through this package of VET student loans Bills. The Digest uses VET FEE-HELP as a starting point for comparison with the proposed new VET student loans program.

Commencement

The VET Student Loans Bill 2016 and the VET Student Loans (Charges) Bill 2016 commence on 1 January 2017.

Sections 1 to 3 and Schedule 2 of the VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016 commence on Royal Assent. Part 1 of Schedule 1 commences at the same time as the VET Student Loans Bill 2016. Part 2 of Schedule 1 commences at the later of the commencement of the VET Student Loans Bill 2016 or immediately after the commencement of the Higher Education Support Legislation Amendment (2016 Measures No. 1) Bill 2016. It does not commence at all if both these Bills do not commence.

Purpose of the Bills

The VET Student Loans Bill 2016 (the Student Loans Bill) establishes a new income-contingent loan scheme (VET student loans) for eligible students undertaking specified vocational education and training (VET) qualifications at approved providers.

The VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016 (the Consequential Amendments Bill) amends existing legislation to grandfather the current VET FEE-HELP loan scheme, transition existing VET FEE-HELP providers to the new scheme, and allow more information sharing between existing government agencies in order to improve administration of VET student loans.

The VET Student Loans (Charges) Bill 2016 (the Charges Bill) sets out a charge to be levied on approved VET providers as a tax.

Structure of the Bill

The Student Loans Bill is made up of 10 Parts:

• Part 1 sets out preliminary matters, such as commencement, objects of the Bill, and definitions
• Part 2 details the circumstances in which the Secretary of the Department of Education and Training may approve an application for a VET student loan
• Part 3 specifies the conditions under which VET student loans must be paid and repaid
• Part 4 specifies how a VET provider may become approved to offer VET student loans to its students
• Part 5 specifies other requirements which are to be placed on providers approved to offer VET student loans
• Part 6 specifies how FEE-HELP balances under the VET student loans scheme are to be re-credited
• Part 7 specifies what decisions under the VET student loans scheme are to be considered reviewable decisions and how any review can be undertaken
• Part 8 specifies the regulatory powers granted to agencies to monitor the VET student loans scheme
• Part 9 specifies the ways in which information disclosure under the VET student loans scheme can be authorised and what offences apply when this power is misused and
• Part 10 specifies general administrative provisions.

The Consequential Amendments Bill is divided into two Schedules.

Schedule 1 of the Consequential Amendments Bill deals with the substantive changes to relevant education legislation and is set out in two parts:

• Part 1 details amendments to the Higher Education Support Act 2003, the National Vocational Education and Training Regulator Act 2011 and the Student Identifiers Act 2014 in order to close down the existing VET FEE-HELP scheme to new students effective 1 January 2017, and to incorporate the new VET students loan scheme within the existing regulatory and repayment frameworks for tertiary education
• Part 2 details contingent amendments to the Higher Education Support Act 2003.

Schedule 2 of the Consequential Amendments Bill details transitional provisions to allow existing VET FEE-HELP providers to become authorised as approved course providers under the new VET student loans scheme.

The Charges Bill has one Schedule which provides a framework for the imposition of a charge on approved providers. Details of the charge will be set out in regulations.

Background

The regulation of the VET sector in Australia and the administration of the VET FEE-HELP scheme have been subject to much parliamentary and public debate and activity over the past decade. This Bills Digest provides key background information and an update on developments since the most recent reforms passed the Parliament in November 2015.[3]

A complicated policy landscape

Emerging out of each state and territory’s separate trades and training regimes, the current VET sector is governed by a myriad of legislative frameworks, regulatory agencies and funding streams across different levels of government and different jurisdictions.[4] This complicated and fragmented policy landscape makes it challenging to address systemic issues with VET such as improving provider quality and student attainment. These structural barriers should be kept in mind when considering the effectiveness of policy reforms such as VET student loans.

The legislative framework

At a federal level, the legislative framework for VET consists of three key pieces of legislation:

• the National Vocational Education and Training Regulator Act 2011 (NVETR Act), which established the Australian Skills Quality Authority (ASQA) to operate as a national regulatory agency for the VET sector
• the Higher Education Support Act 2003, which established the HELP suite of student loans and
• the Education Services for Overseas Students Act 2000 and its associated framework, which sets out additional obligations for all providers who offer educational services to overseas students.

Each Act creates separate application processes, often administered by separate Australian Government agencies and under different legislative requirements, in order to be granted status as a registered training organisation (RTO), approved to offer a HELP loan, or appear on the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS).[5]

The regulatory space

VET regulation is complicated, due to the federal system of powers and responsibilities inherent in the Australian Constitution. Education is not explicitly listed as one of the areas on which the Federal Parliament has power to legislate under section 51 of the Constitution.[6] Accordingly, education has been regulated primarily by the states and territories.

New South Wales, Queensland, South Australia and Tasmania have referred power to the Commonwealth to enable it to enact national legislation dealing with VET matters.[7] Victoria and Western Australia chose not to refer their authority for VET matters to the Australian Government as part of the establishment of ASQA in 2011. Instead, they kept their own separate regulators. As a result, ASQA undertakes the following activities:

• the regulation of RTOs in all states and territories save Western Australian and Victoria, except where RTOs based in these jurisdictions offer training to overseas students or students in ASQA’s referred jurisdictions, the Australian Capital Territory or the Northern Territory[8]
• the regulation of English-language courses for overseas students except where the provider is a school or a higher education provider and
• the regulation of accredited VET courses.[9]

ASQA indicates on its website that it confers with the state-based regulators in Victoria and Western Australia, and formal mechanisms such as memorandums of understanding and communication protocols exist to support a collaborative regulatory environment.[10]

Program and funding flows

Multiple VET programs exist across Australia, with multiple funding flows. This is in comparison to the relatively unified system of higher education funding under the Higher Education Support Act 2003.

Based on the recipient and the mode of funding, VET programs can be categorised in three ways:

• funding to subsidise VET training at given providers. This is delivered either:
  • through intergovernmental agreements to states and territories (and so comes indirectly from the Australian government) or
  • directly through state and territory programs
• funding to offset any remaining fees for VET students. This is delivered either:
  • through student loans such as VET FEE-HELP and the new VET student loans program or
  • through fee waivers in line with state and territory program criteria
• funding to achieve particular targeted VET outcomes. This may include support for underrepresented student groups, or limited measures to improve provider quality or student attainment. This is delivered either:
  • through intergovernmental agreements to states and territories (and so comes indirectly from the Australian government)
  • through Australian government programs or
  • through state and territory programs.

Intergovernmental agreements

At a federal level, the majority of funding is delivered not through legislation, but through intergovernmental agreements. These are designed to assist states and territories with the costs of running their own VET programs, in line with certain agreed principles or reform objectives.

The Intergovernmental Agreement on Federal Financial Relations (IGAFFR) is the current overarching framework for Commonwealth-state relations, agreed by all states, territories and the Commonwealth in 2008.[11] Under the IGAFFR, a series of six National Agreements define the objectives, outcomes, outputs and performance indicators, and clarify the roles and responsibilities that guide the Commonwealth and the states in the delivery of services in key sectors.[12] National Specific Purpose Payments (SPPs) are the funding mechanism through which the Commonwealth supports State and Territory efforts in delivering services in key sectors.[13]

The current national agreement for the VET sector is the National Agreement for Skills and Workforce Development (NASWD).[14] The Australian Government provides states and territories with a given SPP amount on an annual basis in accordance with this agreement.

To achieve certain specific time-limited reforms, the Australian Government may enter into a given National Partnership with jurisdictions. A National Partnership typically includes implementation funding (to undertake the given reforms) and reward funding (to reward jurisdictions when they reach agreed performance indicators).

The National Partnership on Skills Reform (NPSR) is the current National Partnership for the VET sector, and required jurisdictions to implement a number of reforms in order to be eligible for federal VET FEE-HELP loans.[15] It is due to expire on 30 June 2017, and has recently been reviewed.[16] No agreement on future National Partnership funding after this date has yet been reached, although the SPP will continue.[17]

Australian government programs

A number of programs are also delivered by the Australian Government. These include programs designed to increase the uptake of training within industry (the Industry Skills Fund), incentives to reduce the barriers faced by employers and apprentices in the apprenticeship system (the Australian Apprenticeships Incentives Program and the Trade Support Loans scheme), measures to increase the access to training (the Adult Migrant English Program and the Skills for Education and Employment scheme), and research and administrative support for the national training sector (funding for the National Centre for Vocational Education and Training and the Australian Industry and Skills Committee).

These programs are typically administered by the Department of Education and Training through funding agreements, out of ordinary budget appropriations.[18] Specific RTOs are chosen to receive funding through competitive or non-competitive application processes.[19] Particular eligibility criteria is associated with support provided for apprentices.[20]

State and territory government programs

States and territories typically fund the training system through block funding or competitive funding processes, with funding allocated between public providers like TAFEs, community and not-for-profit providers, and private providers. As a result providers are able to offer a certain number of training places. Often the number of overall training places is capped, which maintains some level of government discretion over budget outlays.

States and territories will fund these subsidised places in line with their own locally determined skills needs – for example, a qualification in defence engineering may be subsidised in one jurisdiction but not another. The level of subsidises is often used to make a particular vocation more attractive or to support a particular group of disadvantaged students through greater subsidises or fee waivers.[21] As the criteria for these subsidises are determined by state and territory governments, they are typically managed through funding contracts with particular RTOs. The ability of state bureaucracies to manage these contracts in an effective way has been criticised as states and territories have sought to expand their VET sectors in recent years.[22] Outside these subsidised places, students are still able to undertake unsubsidised (full fee) training from RTOs.

Policy design and responsibility

As can be seen from the discussion above, the landscape for VET is complex. While a national regulator, ASQA, exists, its jurisdiction does not yet cover all RTOs. Even with regards to the RTOs who fall under its jurisdiction, these RTOs may be receiving funding through VET FEE-HELP and other Department of Education and Training programs, through state and territory programs administered by state and territory bureaucracies, or through up-front student fees. Different frameworks apply to this funding, from legislative requirements for student loans, to contractual obligations set out in funding agreements, and aims and objectives in intergovernmental agreements. The application of consumer law in safeguarding students who are unaware of their rights in purchasing training adds another layer of complication.

How these different legal requirements and contractual frameworks interact may be unclear to the provider, to the student, and to the policy officer or program manager. Their complexity would also make it challenging to identify which policy reforms or funding streams lead to particular practices in the VET sector, and increase the possibility for unintended consequences resulting from policy changes.

Understanding the context and choices of participants in the VET sector is also difficult due to a lack of comprehensive data. A single student identifier was only introduced from 1 January 2015.[23] Previously, due to the separate state and territory based VET systems, a student could not be tracked across different jurisdictions, reducing the capacity of policy makers to examine whether students who abandoned qualifications or dropped out may have finished their qualifications across jurisdictional boundaries.

The data collection for VET is also problematic. While states, territories and the Australian Government jointly fund the National Centre for Vocational Educational Research (NCVER), until 2014 its data collection only reported on funding that was government subsidised. Reporting on the broader VET sector, called total VET activity, has been implemented progressively since 2014, although there are still exemptions from this reporting.[24] The total VET activity collection does not currently identify the entire VET FEE-HELP cohort, which also makes analysis of student outcomes and funding effectiveness difficult.[25]

Finally, the lack of clarity over who is responsible for the VET sector, how it operates, what it involves, and why it works (or doesn’t) can also be seen in the policy ambitions for VET in Australia. While there is no formal statement on what the VET sector is or should be, the parties to the NASWD have agreed that their reforms should aim to create:

1. A national training system, accessible to all working age Australians, that provides them with the opportunity to develop the skills and qualifications needed to participate effectively in the labour market.

2. A responsive, agile and equitable national training system that meets the needs of industry and students (including those from disadvantaged groups or locations) and provides pathways into, and removes barriers between, schools, adult, vocational and higher education, and employment.

3. A high quality national training system that is centred on quality teaching and learning outcomes.

4. A national training system where individuals, businesses and jurisdictions have access to transparent information about training products, services and outcomes so they are able to make informed choices and decisions.

5. A sustainable national training system with a stable funding base that promotes opportunities for shared investment across governments, enterprises and individuals.

6. An efficient national training system, where government efforts appropriately respond to areas of future jobs growth and support the skills needs of Australian industry.

7. A national training system that works with Australian businesses and industries to develop, harness and use the skills and abilities of the workforce.[26]

The first aspiration suggests that workforce participation is the key – the emphasis may be on skilling Australians to participate in existing industries. But the sixth and seventh aspirations indicate it may be about future jobs, growth industries and innovation. At the same time the second aspiration indicates the VET system is also responsible to provide pathways back into learning and employment for students who might be disengaged. A focus on equity (such as using VET as a pathway to disadvantaged students) may result in lower attainment rates, depending on how this cohort is supported. A focus on existing industry needs may raise calls for retraining and industry transition when economic restructuring occurs. A focus on future jobs growth may result in governments picking winners and be ineffective.

Understanding how administrative (funding, legislation, programs) and policy (design, aims, responsibility, outcomes) complexity is inherent to the VET sector is crucial in considering how schemes like VET FEE-HELP or the new VET student loans scheme may work.

The VET FEE-HELP Scheme

Development

VET FEE-HELP was introduced in June 2007 by the Howard Government, as part of legislative amendments to Higher Education Support Act 2003 (HESA).[27] At the time, it extended the existing loan scheme for full-fee paying higher education students (FEE-HELP) to those vocational education and training (VET) students undertaking full-fee paying Diploma, Advanced Diploma, Graduate Diploma and Graduate Certificate qualifications. The program commenced on 1 January 2008, and while HESA set out the broad framework, the capacity for the department to manage VET FEE-HELP was set out further in VET Guidelines.

The focus on full-fee paying students was in line with the existing FEE-HELP scheme; this was supposed to offer financial support to those students who would not otherwise receive subsidises to undertake a VET qualification, thereby expanding the pool of students who could access VET.

In addition, the introduction of VET FEE-HELP was regulated by the use of credit transfer arrangements. These required the VET provider to have a credit transfer arrangement in place with a higher education provider (for example, a university). This meant that the higher education provider had assessed the training offered by the VET provider and was willing to accept the VET qualification as credit towards a higher education qualification. While it did not mean there was an entirely independent audit of the VET provider, the higher education provider had a reputational reason to ensure that it only recognised qualifications and students who were capable of meeting its own particular standards and qualifying for one of its own courses.

Reforms to expand the VET system

There were a number of significant reforms to VET under the Rudd and Gillard governments which had the effect of expanding the VET system. Amendments in 2008 ensure students in Graduate Certificate and Graduate Diploma qualifications could access VET FEE-HELP, but maintained the credit transfer requirements.[28]

Following moves by the Victorian Government to introduce contestable VET funding from 2009, the Australian Government allowed VET FEE-HELP loans to be offered to any student (including subsidised students) and any RTO (whether they had a credit transfer arrangement or not).[29] These restrictions were only removed for any state deemed to be a ‘Reform State’.[30] At the time, only Victoria was listed, but the other jurisdictions had been encouraged to similarly reform their VET sectors and open funding up to a variety of providers.

Significant reform emerged out of the 2010–11 Budget, on 11 May 2010, with the announcement of a national entitlement to a training place, expanding access to VET FEE-HELP to further VET qualifications, transparent information for students, and a new national VET regulator.[31] The creation of the NPSR in 2012 was intended to progress these VET reforms.[32] This went hand-in-hand with the expansion of VET FEE-HELP: as each jurisdiction implemented the agreed reforms of the NPSR, they each became ‘Reform States’, allowing students to enrol as they wished and directing funding in the form of state or territory subsidises, as well as VET FEE-HELP loans, in line with student preferences.

As the new national VET regulator, ASQA was given responsibility for regulating registered training organisations over which it had jurisdiction. This involved assessing a provider’s capacity against the relevant Standards, both for those organisations applying to be registered and become an RTO, and existing RTOs.[33] Once a provider was registered with ASQA, it could then apply separately to the Department of Education and Training in its various incarnations to be approved to offer VET FEE-HELP loans to its students. The VET FEE-HELP process was governed by a separate set of guidelines under HESA.

Emerging issues with VET FEE-HELP

The first concerns were flagged by a review undertaken by the Victorian Government in 2010, indicating that some VET students were unwilling to take out VET FEE-HELP loans ‘because they were afraid of debt’.[34] Concerns about student debt are common to the HELP suite of loans more generally: the debt profile associated with the HELP suite of loans was most recently analysed in 2014 by the Grattan Institute.[35] Section 3.5 of the report dealt specifically with VET FEE-HELP and found that people with a vocational education diploma or advanced diploma were 50 per cent less likely to repay their loan than those in higher education.[36] Any default on existing student loans would be a potential cost to the budget, as the budget papers provide for a fair value of HELP loan debt, considering it an asset as it is likely to be repaid.[37]

The expansion of VET FEE-HELP loans was also reported as having changed the business model of the VET sector. As the loan involved an upfront payment to a provider, new providers had incentive to enter the market and utilise methods to build up their student numbers quickly. Private providers often were largely dependent on government funding from VET FEE-HELP loans.[38] There were no penalties in place should a student fail to complete a qualification, nor would the provider have to pay back the loan amount. In order to entice more students – and get more funding, VET FEE-HELP providers started to utilise aggressive marketing techniques, including brokers, agents, inducements and potentially misleading advertising practices to direct students to their particular course offerings.[39]

The Opposition first raised VET FEE-HELP quality concerns in response to media reports in October 2014.[40] The Department of Education’s capacity to properly administer and scrutinise the scheme was questioned by the Australian Greens’ spokesperson in the same month.[41] Media reports of registered training organisations using inducements such as iPads or laptops to sign up students who were not academically suited to undertake qualifications continued.[42]

Government responses and further scrutiny

Government reforms to address identified issues with VET FEE-HELP and the broader VET sector ensued through late 2014 and 2015.

First, the relevant Standards for registered training organisations were updated, following a process of consultation and agreement from relevant Council of Australian Government (COAG) ministers.[43] These became effective as of 1 January 2015, with ASQA provided with additional funding of $68 million over four years to enforce them.[44] The new Standards would apply to all RTOs, regardless of whether they offered VET FEE-HELP and would have a sector-wide impact.

Second, to address particular issues with VET FEE-HELP, the relevant guidelines were revised in March 2015, to ban RTOs from providing inducements such as laptops, iPads, vouchers or cash.[45]

Third, the VET Guidelines were revised again in June 2015, with elements becoming effective in July 2015 and January 2016.[46] These measures were intended to ensure VET FEE-HELP providers gave accurate information to students about the nature of VET FEE-HELP loans, marketed VET FEE-HELP assistance responsibly, were held accountable for the agents they had contracted to sign-up students, did not create any barriers to withdrawal for students (to ensure they couldn’t delay withdrawal and so ‘skim’ the VET FEE-HELP funding off an enrolment), and to prevent a VET FEE-HELP provider charging more than 25 per cent of the fee in any one fee-period.

While these reforms were being implemented, Parliamentary scrutiny of the VET sector emerged as a result of a Senate inquiry. The Senate Education and Employment References Committee established an inquiry into ‘the operation, regulation and funding of private vocational education and training (VET) providers in Australia’ on 24 November 2014. The Terms of Reference included an examination of the ‘operation of VET FEE-HELP.’[47] The final report was tabled on 15 October 2015.[48]

Key issues identified by the Senate report included:

• the approach of ASQA—its risk-based regulatory approach means that it focuses on the provider, rather than assessing the qualifications provided to the student. The Committee view was that ‘there was every reason to doubt ASQA is fit for purpose’[49]
• the capacity of the Department of Education and Training, as well as ASQA, to monitor VET FEE-HELP arrangements
• the use of brokers by RTOs and their clear financial interest in signing up students to courses regardless of the student’s need or proficiency
• the ability of RTOs to subcontract out their training to unregistered organisations, lowering the level of scrutiny and
• the lack of clarity regarding review or assistance for domestic students who have issues with VET FEE-HELP debts, as a separate Ombudsman for overseas students already exists.[50]

Further legislative reform to the VET FEE-HELP scheme was introduced in October 2015.[51] The Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 enhanced the regulatory powers under HESA to include the following additional requirements for providers:

• a minimum period for operating as a registered training organisation
• a minimum period for providing courses leading to award of qualifications in the Australian Qualifications Framework
• a ‘student entry procedure’, including minimum academic standards, for VET FEE-HELP students
• ensuring the consent of a responsible adult is provided in case of students under the age of 18 applying for VET FEE-HELP loans and
• creating a two-day ‘cool off’ period to ensure that prospective students have time to reflect on their VET enrolment before they seek a VET FEE-HELP loan.

Investigatory and monitoring powers were introduced, including a civil penalty framework for cases of non-compliance, to ensure the new requirements on VET FEE-HELP providers were adhered to. New administrative powers were created to allow the Secretary of the Department to re-credit a student’s FEE-HELP balance in certain circumstances, essentially cancelling their VET FEE-HELP loan. This would assist where providers had not adhered with their new obligations and so enticed students into taking out a loan without proper information or authorisation.

Following the introduction of this Bill to Parliament, significant amendments were introduced in the Senate and the Bill passed both Houses on 3 December 2015, to commence on 1 January 2016.[52] These amendments had the effect of:

• freezing total 2016 VET FEE-HELP loan amounts for existing VET providers at 2015 levels, with the Secretary granted the power to make exemptions for monopoly providers in an identified area of national importance where the course was relevant to employment in a licensed occupation
• introducing new entry requirements for registered training providers seeking to offer VET FEE-HELP loans
• moving from payments in advance to payments in arrears for the largest training providers and setting new reporting requirements
• allowing the government to pause payments to providers with poor performance pending resolution of performance issues and
• making other minor amendments to:
  • expand the appointment of investigators to external non-government bodies to better cope with expertise and resourcing requirements and
  • allow fee charging associated with attesting to the veracity of a provider’s literacy and numeracy testing tool.[53]

A new version of the VET Guidelines was issued, utilising the new legislative powers granted by the amendments to HESA and specifying in more detail the new requirements placed on VET FEE-HELP providers.[54]

In contrast, the Opposition had set out a series of amendments to the VET FEE-HELP Reform Bill which would have gone further than those passed by the Parliament. They included:

• the creation of an industry funded national VET Ombudsman
• seeking the Auditor-General to conduct an audit on the VET FEE-HELP scheme and
• requiring the Department to write to prospective VET FEE-HELP students to inform them of their potential debt and seek consent for the loan, rather than relying on providers to do so.[55]

The press release on the Opposition’s proposed amendments also flagged that in referring the VET FEE-HELP Reform Bill to a Senate Committee for consideration, the Australian Labor Party would utilise this committee inquiry to examine options for capping tuition fee levels for courses covered by VET FEE-HELP loans and to lower the lifetime limit on VET FEE-HELP student loans.[56] The Greens then Tertiary Education Spokesperson, Senator Robert Simms, called upon the Government to ‘fix’ the for-profit VET system, ultimately by disallowing for-profit providers from offering VET FEE-HELP.[57]

These iterative changes through 2015 and 2016 essentially increased the requirements on RTOs in relation to VET FEE-HELP students only. It had the unintended effect of increasing the administrative complexity for providers, as many VET FEE-HELP providers would also be training students who were not receiving VET FEE-HELP assistance and therefore be covered by different entry requirements and applications processes.[58]

A new model for VET FEE-HELP

The changes introduced through 2015 were essentially stop gap measures, with the Government announcing it would undertake a ‘full overhaul of VET FEE-HELP’ in time for 2017.[59]

On 4 April 2016, Senator Scott Ryan, the then Minister for Vocational Education and Skills announced that consultations on the future of VET FEE-HELP had commenced.[60] The consultations were informed a discussion paper on the VET FEE-HELP redesign, which was released on 27 April 2016.[61] Submissions were open until 30 June 2016. The discussion paper did not include formal terms of reference, but the Minister’s foreword stated:

We need to ensure the scheme is underpinned by a strong regulatory framework that provides greater protection for students, delivers quality and affordable training that has strong links to industry needs, at an affordable cost to taxpayers. This is not simply a matter of private versus public sector provision, VET has always been a blended sector and should remain so. To achieve this, there needs to be a frank assessment of the scheme thus far. To address the problems we must first understand them. We must also specifically consider the impacts of possible changes to the scheme, in particular the incentives they provide for providers and students and, in some cases, governments. That is why I am committed to a wide ranging and comprehensive consultation process.[62]

The discussion paper summarised the inception and development of the VET FEE-HELP scheme, including its expansion and detailed a series of what it termed design flaws, including the lack of appropriate regulatory powers. It examined key trends in student numbers, the significant increase in program expenditure and provided some analysis of the costs involved for VET FEE-HELP funded qualifications as compared to non-VET FEE-HELP funded qualifications. It also attempted to quantify how successful the 2015 and 2016 reforms had been and outlined options for change which would protect students, regulate providers appropriately, and ensure better VET system management.

As part of its options for change, the discussion paper sought feedback on a series of discussion questions.[63] Topics covered included whether further student eligibility requirements were necessary, the possibility of introducing lifetime loan limits (to protect students from becoming too indebted over the course of their vocational education and training), whether the government should introduce limits on the amount which could be loaned per course, what ways existed to ensure students’ interests were paramount, including better information and regulation, what data could be used to measure the quality of providers and courses, and eligibility requirements for providers and courses under any new scheme.[64]

In the lead up to the 2016 federal election, the future of VET FEE-HELP emerged as a point of difference between the major political parties. In May 2016, the Leader of the Opposition promised to cap VET FEE-HELP loan amounts at $8,000 a year as part of the ALP’s reply to the 2016–17 Budget.[65] Further reforms to VET FEE-HELP included a change to the funding incentives to ensure greater completion rates, better links between loans and the needs of industry, cracking down on the use of third-party agents by VET FEE-HELP providers, raising the entry requirements for providers and ensuring regulators had tougher powers to audit, investigate and suspend unscrupulous providers.[66] This reform package for VET FEE-HELP subsequently became an ALP election commitment.[67]

The Australian Greens went further than the Opposition in proposing that for-profit VET providers be ineligible for government funding, including loans such as VET FEE-HELP.[68]

Conversely the Coalition criticised aspects of these proposals, especially the ALP’s promise to cap VET FEE-HELP loans.[69] The then Minister drew attention to the negative reaction of peak bodies in the sector to the prospect of caps, and likely consequences for students in additional out of pocket costs in cases where a capped loan was not enough to cover the course fee.[70] The Coalition election policy was to ‘redesign the VET FEE-HELP scheme for 2017’.[71]

Committee consideration

Senate Education and Employment Legislation Committee

The Bill was referred to the Senate Education and Employment Legislation Committee for inquiry and report by 7 November 2016. Details of the inquiry are available on the Committee’s website.[72]

The concerns raised by the submissions and participants in this inquiry will be explored in more detail in the ‘Position of major interest groups’ and the ‘Key issues and provisions’ sections of this Bills Digest.

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills had no comment on the Consequential Amendments Bill, but has sought further information from the Minister on certain aspects of the Student Loans Bill and the Charges Bill that it regards as problematic.[73]

In regards to the Student Loans Bill, the Minister’s advice has been sought on the following provisions:

• clause 65, which imposes personal liability on executive officers of approved course providers under certain circumstances without explanation as to whether the processes set out in the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers[74] in relation to the incorporation of vicarious liability offences into statutes has been followed
• clause 74, which limits the decisions for which an internal review or appeals process is applicable, thereby limiting the capacity of applicants under the VET loans scheme to seek to overturn potentially unfair decision making
• clauses 77 and 81, which grant broad administrative powers for decision-makers under the VET student loans scheme to reconsider their decisions once made, which could be considered to make administrative decisions more unpredictable and less certain if they can be revisited at any time
• clause 85, which allows for infringement notices to be issued in the case of an offence or civil penalty provision under the proposed Act, also without explanation as to whether the processes in the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers[75] have been followed
• subclause 101(2), which imposes absolute liability in relation to one element of the offence of unauthorised access to, or modification of, personal information of loan recipients, again without detailed justification or discussion of whether the approach accords with the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers[76]
• clause 114, which allows the Secretary to delegate, in writing, all of his or her powers under the proposed Act to an APS employee without regard to whether all these powers are appropriate for delegation and whether there is a level of seniority or experience required to utilise them and
• subclause 116(5), which allows the rules made under the proposed Act to adopt or incorporate matters set out in another written instrument. This may impact on parliamentary scrutiny as the document referred to may be subject to change without the parliament being advised.[77]

The Committee also sought the Minister’s advice on an aspect of the Charges Bill:

• clause 7, which allows for the amount of the charge to be set by regulation without any guidance on how it should be set or any limit to the amount.[78]

Policy position of non-government parties/independents

Following media reports on the scope of the new VET student loans scheme, the Labor Opposition Shadow Minister for TAFE and Vocational Education put out a series of press releases noting where the new scheme incorporated elements of the ALP’s election policy.[79]

The ALP also introduced amendments to the Student Loans Bill in the House of Representatives. These amendments would have the effect of establishing an ombudsman to assist students with complaints regarding the VET student loans scheme, and to require the ombudsman to publish information about the number of complaints received on a six monthly basis.[80] The proposed amendments were not passed in the House of Representatives.[81]

Despite this, the Australian Greens stated that they had reached agreement with the Government to introduce an ombudsman to the VET student loans scheme.[82] The Government has also stated it will establish an ombudsman, but these provisions were not in the Bills as introduced.[83]

The sole crossbencher who spoke on the Bills in the House of Representatives, Rebekha Sharkie of the Nick Xenophon Team, supported the reforms, but expressed concern regarding the adequacy of student protections, the appropriateness of the eligibility requirements for funding specific courses, and the capacity of the Department of Education and Training to administer the new scheme properly in the light of its administrative history.[84]

Position of major interest groups

The major interest groups all express a view that while reforms to the VET FEE-HELP program are needed, the proposed VET student loans scheme contains provisions that are too arbitrary and will restrict access and equity for students enrolling in vocational education and training. This section provides an overview of these criticisms: stakeholder concerns regarding particular provisions are addressed in the ‘Key issues and provisions’ section of the Bills Digest.

The peak body for the private VET sector, the Australian Council for Private Education and Training (ACPET) supports key elements of the Bill, but states that ‘there are a number of features of VSL [VET student loans] that will not support quality training choices and outcomes for some students’ and that ‘the reforms will see a major downgrading of the Commonwealth Government’s commitment to vocational education and training, with significant implications for the future of Australia’s workforce development’, with an estimated 500,000 students ineligible for support under the new program and so missing out on vocational education and training and the resulting job opportunities.[85] ACPET also contends the reforms will lead to major job losses across the sector, as some providers will miss out on funding and have to close.[86]

The peak body for the public TAFE sector and the VET divisions of dual sector universities, TAFE Directors Australia (TDA), expresses similar concerns regarding student access. TDA contends that as access was the principal reason for establishing VET FEE-HELP in 2008 and then expanding the scheme through 2012, limiting access to only certain students undertaking certain courses in certain providers as has been proposed under the new scheme would conflict with the stated aims of the current National Partnership on Skills Reform.[87]

The major unions who have made submissions to the Senate inquiry into the Bill include the Australian Council of Trade Unions (ACTU), the Australian Education Union (AEU), and the National Tertiary Education Union. The ACTU comments that the Bills represent a good first step, although the extensive use of delegated legislation to define elements of the new loans scheme and the short time span before the new scheme starts in 2017 make it hard to assess the potential effectiveness.[88] The ACTU calls for further reforms, involving a 30 per cent cap on funding allocated contestably, restoring the TAFE system as the public provider of quality across the country, conducting a review into the future of the market-driven approach to VET, and ensuring the VET regulator has the necessary powers and resources to audit both provider quality and student training outcomes.[89] The AEU endorses the ACTU submission in full.[90] The NTEU gives qualified support for the measures in the Bills, but expresses concerns that the reforms will entrench the different funding and regulatory regimes between higher education and VET and so generally lead to gaps in the provision of tertiary education for students who might be in need of alternative entry pathways and other forms of education.[91]

Industry bodies the Australian Industry Group and the Business Council of Australia urge the Senate to pass the Bills, noting there may be some unintended consequences of the new scheme due to its design.[92] Key recommendations are for the government to allow grandfathered students to continue to access a VET FEE-HELP loan through 2018, to change the legislation so that the concept of eligible courses better connects with industry need and to require government to consult with industry in developing rules for the new scheme, to remove the capacity for ASQA to conduct audits of the scheme, and to require the government to publish VET market information and real-time data on government expenditure to better inform public assessment of the VET student loans scheme.[93]

Financial implications

The Explanatory Memorandum to the Student Loans Bill notes that the new VET student loans scheme is expected to reduce the value of new student loans being issued by more than $2.4 billion per annum by the end of the forward estimates in 2019–20, leading to an estimated reduction in otherwise total HELP debt of more than $7 billion by June 2020 and by more than $25 billion by June 2026.[94]

The proposed reforms will have a negative impact of $58.6 million on underlying cash over the forward estimates, including administered and departmental funding.[95]

Special appropriations

There are no special appropriations associated with these Bills.

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bills’ compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that while the Bills engage with the right to privacy and the right to be presumed innocent, what limitations exist under the Bills are reasonable, necessary and proportionate.[96] Overall the Bills are compatible with human rights.[97]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights considers that the Bills do not give rise to human rights concerns.[98]

Key issues and provisions

Overview

Broadly, five key issues have emerged in the commentary and policy history surrounding VET FEE-HELP and new VET student loans which have only been partly addressed by the current Bills and accompanying material:

• the unclear purpose of VET
• the design of the VET market
• the effectiveness of providers
• the costs of education and
• the regulatory environment.

The unclear purpose of VET

As noted earlier in this Bills Digest, there is a lack of clarity over the purpose of VET. The Student Loans Bill goes some way to resolving this, by indicating in the Objects of the Bill (clause 4):

The object of this Act is to provide for loans to students for vocational education and training, ensuring that loans are provided:

(a)  to genuine students; and

(b)  for education and training that meets workplace needs and improves employment outcomes.

This is a narrower definition than that offered by the intergovernmental agreements associated with VET, which do not indicate some students may not be ‘genuine’ or that the key purpose of VET is workplace related and leads to employment. Indeed, under the intergovernmental agreements, the purpose of VET as a way of removing barriers for students who otherwise might be excluded from education, training and employment is specifically stated.[99]

The Student Loan Bill attempts to resolve these issues through the concepts of eligible students, approved courses and approved course providers.

Eligible students

The Secretary can only approve a VET student loan if they are satisfied the applicant is an eligible student (clause 7 in Part 2 of the Student Loans Bill). The Student Loans Bill also provides for a definition of an eligible student (clauses 9 through 12). These provisions ensure the student is enrolled in the course, has provided the required documentation, is undertaking the course primarily at a campus in Australia and is either an Australian citizen, holder of a permanent humanitarian visa who is usually resident in Australia, or a qualifying New Zealand citizen. These are fairly standard provisions and similar requirements can be found in the Higher Education Support Act 2003 in relation to the HELP series of student loans.[100]

Clause 12 of the Bill creates a duty on providers to assess students’ academic suitability for their course. This echoes the ‘student entry procedure’ required by the VET FEE-HELP Reform Bill in 2015.[101] However that element of the VET FEE-HELP reforms was only introduced from 1 January 2016, so it is unclear as to how effective it has been, or whether implementation has been challenging. It also raises the question as to whether this is an appropriate requirement, considering the overall purpose of VET has been stated as removing barriers to entry, rather than creating new ones.

There is also some evidence about the nature of the VET FEE-HELP cohort to date. A study undertaken by the National Centre for Vocational Educational Research (NCVER) in 2015 found that in comparison with non-VET FEE-HELP assisted students, those assisted by VET FEE-HELP were more likely to:

• be female
• be aged under 25 years than over 35 years
• have a disability
• not be employed and
• be attending externally.[102]

The 2015 and 2016 reforms to VET FEE-HELP were based on the assumption that those students were systemically being enticed into taking education which was academically inappropriate for them. As was discussed earlier, there was also significant anecdotal reporting of VET FEE-HELP students being unaware they had entered into a loan. NCVER showed that the VET FEE-HELP student cohort is different to other VET students. It may be that in expanding access to VET FEE-HELP, the program was being utilised by a cohort that had been previously underserviced by HELP student loans.

In higher education, specific funding is available to providers to support disadvantaged students who have additional support needs, such as academic assistance.[103] This includes targeted funding to support students with disability.[104] No similar Australian Government program exists for VET students, even though based on the NCVER study, students with disability are more likely to utilise VET FEE-HELP compared with the broader VET cohort.

Continuing to require some form of student academic assessment may actually discourage those students who could best benefit from financial assistance to undertake VET qualifications, while not addressing the issue of whether providers are funded adequately to support these students throughout their studies.

Approved courses

As per existing requirements for VET FEE-HELP, only diploma and higher level VET courses are eligible for VET student loans.[105] However, there are two new provisions in relation to approved courses which both significantly narrow the scope of VET student loans and alter the relationship between government and VET providers.

Under the existing VET FEE-HELP scheme, as in higher education and VET sectors generally, providers have the ability to use third parties to assist in course delivery, either through sub-contracting or other arrangements. At best this can allow for greater collaboration or innovation in the provision of training, with RTOs able to contract out the delivery of particular units or functions such as student administration to specialists in these fields. At worst it can lead to substandard or inappropriate practices and lower costs for the provider but not the student.

Clause 15 of the Student Loans Bill creates additional barriers for these types of contractual arrangements: providers approved to offer VET approved courses will only be able to be delivered by another provider approved under the VET student loan scheme, a person or body accredited by the Tertiary Education Quality Standards Agency (TEQSA, the national regulator for higher education), or a person or body approved in writing by the Secretary. The Explanatory Memorandum notes that this will address concerns that some VET FEE-HELP providers have been essentially selling access to the scheme, rather than delivering training.[106] However, these new barriers could dissuade providers from working with other entities to develop innovative approaches to training that may serve particular needs such as students studying via distance or online methods, or students with special needs.

The relationship between providers and government is also significantly altered by the authorisation of a new legislative instrument under clause 16 of the Student Loans Bill, the courses and loan caps determination. This allows the Minister to determine which courses of study will be eligible for VET student loans and how much financial support (given as a maximum loan amount) each course will be eligible for.

Currently tertiary education funding from the Australian Government is entrusted to providers for their use. Regulatory agencies such as TEQSA and ASQA and associated legislative standards create barriers to entry, but once registered by a given regulator, each institution is responsible for its funding in accordance with various guidelines. This can come in the form of funding dedicated to a particular undergraduate or research place, or to assist students with up-front costs through loans.[107] The VET FEE-HELP scheme was also established on this basis, emerging as it did out of the existing HELP series of loans. The courses and caps determination marks a significant intrusion by government in the operations of RTOs. It will change the funding incentives for vocational education and training and may lead to examples where a certain course that was eligible for a VET FEE-HELP loan is not eligible for a VET student loan. It shifts the funding model to one more akin to that used by states and territories, which as has been discussed, typically provide subsidises and set places in line with local skill needs.

The use of this new power is also arbitrary. While the Explanatory Memorandum states that ‘it is anticipated the courses approved in the determination will be limited to those courses with a high national priority, that align with industry needs and lead to employment outcomes’, the development of the courses and caps determination is not guided by any provisions of the proposed Act.[108] The Department of Education and Training has released a provisional list of approved courses for consultation.[109] This list includes the following criteria for approval:

Courses are approved if they are current (in other words, not superseded), and on at least two state and territory subsidy/skills list, or are science, technology, engineering or mathematics (STEM) related or tied to licencing, accreditation, or registration requirements for a particular occupation.[110]

These criteria do not appear in the proposed Act and do not have to be adhered to in developing the list of approved courses. This creates uncertainty for providers whose eligibility can be changed at any moment, even if they meet all other requirements of the proposed Act. Including specific criteria or consultation processes in the proposed Act would go some way to clarifying the purpose of the loans and providing greater surety to providers.

Approved course providers

The Student Loans Bill creates extensive requirements for those seeking to become an approved course provider, and so offer approved courses to eligible students who can apply for VET student loans.

Part 4 sets out the conditions under which an RTO can become an approved course provider. Many of these are holdovers from existing provisions under VET FEE-HELP: it is interesting to consider how these will operate. As with VET FEE-HELP, Part 4 of the proposed Act allows aspects of these entry standards to be specified further in the rules. These include the ‘provider suitability requirements’ and how to determine whether those involved in the operation of an RTO constitute a ‘fit and proper person’.

Clause 26 in Part 4 lays out the matters that may be dealt with under the provider suitability requirements. Many of these aspects, while building on typical assessment criteria under programs such as VET FEE-HELP, potentially raise more questions than they answer. What standards for ‘financial performance’ can be met when a company’s business model is dependent on a government funded program such as VET student loans, a program whose other eligibility criteria (such as the approved course list) can be changed as needed and so lead to significant reductions in funding? How will ensuring approved course providers have ‘experience in providing vocational education’ allow new entrants to enter the market and drive competition and innovation? How will ‘student outcomes’ be taken into consideration – will poor student outcomes be seen of an example of low provider quality, or of a provider seeking to offer training to student cohorts with poor literacy and numeracy skills to start with? What constitutes an ‘industry link’?

These factors have the effect of narrowing the pool of possible applicants – those with evidence of experience in vocational education and training, good student outcomes and industry links are more likely to be established RTOs, with developed curricula and training methods. Whereas previously the VET FEE-HELP scheme could assist every student undertaking a Diploma at an extensive range of providers, the new VET student loans scheme limits the scope of assistance. Fewer providers are likely to be approved for VET student loans: they will be able to receive funding for fewer courses and enrol fewer students.

The design of the VET market

The use of listed providers

Clause 27 of the Student Loans Bill allows the rules to stipulate that a listed course provider will be taken as having met one or more of the course provider requirements. The Explanatory Memorandum states:

For example, the Rules may specify that a TAFE established by a State is taken to meet the ‘fit and proper person’ requirement, or similarly the Rules may provide a listed course provider is not required to be a body corporate.[111]   

Listed course providers are set out at subclause 27(2). They include Table A and B providers under HESA (the public and not-for-profit universities), state and territory TAFE institutes, and any other training organisation owned by the Commonwealth, a state or a territory. This listing can also be augmented by the Rules as provided for under the proposed Act. All listed course providers (including any specified in the Rules) must be RTOs.

The Consequential Amendments Bill sets out arrangements for moving to the new approved provider arrangements. Item 2 of Schedule 2 to the Consequential Amendments Bill provides that Table A and B providers under HESA (the public and not-for-profit universities), state and territory TAFE institutes, and any other training organisation owned by the Commonwealth, a state or a territory are taken to be approved course providers on 1 January 2017 if they are a VET provider immediately before that date. This approval will be for seven years (item 5 of Schedule 2 to the Consequential Amendments Bill). Other bodies that are VET providers immediately before 1 January 2017 which apply to the Secretary before 1 January 2017 and are taken to be suitable as an approved course provider during the transition period will be taken to be approved by the Secretary for the ‘provider transition period’, which will expire on 30 June 2017 or a later date determined by the Minister (items 1 and 8 of Schedule 2 to the Consequential Amendments Bill). The proposed VET Student Loans scheme automatically includes public providers in the transition period, putting private providers at a disadvantage.

VET and higher education

As a concept, listed providers are also found in HESA, where ‘listed providers’ are well-established universities that have automatic access to certain funding programs. This is not the only conceptual borrowing from the higher education framework. Since the creation of the Higher Education Contribution Scheme (HECS) in 1989, the major public universities have had their undergraduate course fees capped at a set level. Since 1996, three different cap amounts have been used, set in legislation, and associated with particular qualifications. It is interesting to note that unlike higher education, the proposed cap amounts for VET student loans are not set by the Student Loans Bill, but will be entirely dependent on the courses and caps determination.

At a federal level, higher education funding is structured very differently to that of VET. HESA provides for a set government subsidy for undergraduate students, and then caps the amount students can be charged. Together this Commonwealth contribution and student contribution are intended to make up the cost of providing education. In the more fragmented system of VET funding, the Australian Government will cap the amount students will contribute to their education through a VET student loan, but there is no guarantee to a provider that they will receive enough subsidy funding to cover the cost of education, as these subsidies are set independently at a state or territory level. This basic design difference raises the question as to whether approaches used in higher education such as the HELP framework are appropriate in shaping the VET market.

The effectiveness of regulation

ASQA is the national regulator for the VET sector. The Department of Education and Training administered the VET FEE-HELP scheme, and will now administer the VET student loans scheme. Existing RTOs in Victoria and Western Australia who wish to access VET student loans may have a range of compliance issues as identified by their state based regulators. In considering whether the Student Loans Bill will provide a more effective regulatory approach than found under VET FEE-HELP, the regulatory powers available, regulators’ capacity to use those powers, and the systemic nature of VET have to be examined.

A new regulatory regime – more of the same?

The VET FEE-HELP Reform Bill established new regulatory powers for the VET FEE-HELP scheme, including monitoring powers, investigation powers, infringement notices, and the use of civil penalties.[112] These powers have only been in effect since 1 January 2016 and there has been no review or audit of how they have been used and whether they have been effective in addressing inappropriate provider behaviour.

Part 8 of the Student Loans Bill extends these powers to include enforceable undertakings and injunctions. As with the monitoring and enforcement powers introduced by the VET FEE-HELP Reform Bill, the use of these powers is governed by the Regulatory Powers (Standard Provisions) Act 2014. Except in the case of enforceable undertakings and injunctions, these powers may be utilised by both Departmental and ASQA officers. Enforceable undertakings and injunction action is reserved to the Department of Education and Training only.

Part 9 sets out an extensive information disclosure regime, allowing specified officers to use and disclose information in relation to the VET student loans scheme to certain agencies, bodies or persons, in relation to law enforcement, and to assist in the provision of vocational education and training. This information disclosure regime builds on amendments recently made through the Higher Education Support Legislation Amendment (2016 Measures No. 1) Bill 2016.[113] As with that Bill, there is no requirement for the Secretary to publish VET student loan scheme information to allow for better external research or assessment of the scheme, nor is there provision in Part 9 for the stated aims of the information disclosure regime, or a legislated review requirement to assess whether these aims have been met.[114]

Regulatory capacity

To date there has been no recent public review of ASQA, the Department, the state-based regulators in Victoria or WA, or their capacity to collaborate and share data. With the significant changes to the VET regulatory landscape since the introduction of measures like VET FEE-HELP and the establishment of ASQA itself, a first principles approach might be to examine the powers of each entity and see if they are fit for the current environment.

It does appear that collaboration, and a concern over remit and bureaucratic boundaries, may have hampered an effective approach to VET FEE-HELP compliance. In an answer to a question on notice emerging out of the Senate Inquiry into the VET Student Loans Bills, ASQA revealed that a cross-agency round table to discuss a joint approach to VET FEE-HELP did not occur until 12 November 2014, and an analysis of existing VET FEE-HELP complaints against the various responsibilities of ASQA, the Department of Education and Training, and the Australian Competition and Consumer commission was not undertaken until 8 December 2014.[115] The proposed new compliance regime does not resolve the fundamental lack of clarity over responsibility.

It’s also useful to note in this context that recent court action against RTOs has been commenced by the Australian Competition and Consumer Commission, viewing unethical RTO practices as potential breaches of consumer law, rather than the VET regulatory framework.[116] This raises further questions as to whether ASQA or the Department have an adequate regulatory capacity to deal with the sector.

A further question is whether regulators have adequately used their existing powers. It may not be that new powers provided by the Student Loans Bill are needed, but that there has been an unwillingness or inability on the part of the bureaucracy to provide effective monitoring and remedial action. In a submission to the Senate Inquiry on the VET Student Loans Bills, a former SES officer with the Department of Education and Training identified that both the Department and ASQA had existing powers to seek information, revoke funding approval, undertake audits and hold providers accountable under the relevant legislation: the problem was not that these powers did not exist, but that they were not used.[117] Creating new powers, as the Student Loans Bill does, does not address this issue.

What may explain an unwillingness to undertake regulatory activity? Part of it may simply be capacity. Previous reforms, such as the banning of inducements, did not appear effective: since the introduction of the new VET Guidelines across 2015, media reports continue to indicate that providers are still offering students now-prohibited inducements such as laptops, raising ongoing questions as to the capacity of the Department to properly enforce regulatory changes.[118] Further, the Department of Education and Training is not a regulator, but a department of state, a policy maker. Its role as program manager of VET FEE-HELP and VET student loans may not be appropriate, depending on whether the aim is to improve compliance, or improve outcomes.

Inputs and outcomes

Both the Department and ASQA appear to operate in line with what has been called the ‘cake making approach,’ which is an input-based system.[119] This assumes that if Standards or Guidelines are adhered to – that the ingredients are all in place – the ‘cake’ will come out fine. Neither the Department or ASQA taste the ‘cake’ to ascertain its quality—they do not audit the student’s competencies, or test their qualification or specific learning experience. Neither, after all, are training organisations. They do not have the capacity to make such assessments. But the lack of regulatory effectiveness to date raises questions about the adequacy of the ‘cake making approach’, questions the current Bills do not resolve.

As has been seen, concerns regarding student outcomes under VET FEE-HELP has been a persistent feature of coverage of the program since 2014. The most recent VET FEE-HELP statistical report, released by the government, also received media attention.[120] The report indicated that of those VET FEE-HELP assisted students who commenced in 2013, the qualification completion rate was 22.9 per cent, based on completions between 2013 and 2015.[121] This compared with a completion rate of 21.9 per cent for the 2012 cohort, and 26.1 per cent for the 2011 cohort.

These are undoubtedly poor completion rates. Yet the nature of the competency-based VET system means that a student may gain a skill, or finish a unit of study, without needing to complete the qualification. They can also return after several years, with a record of competencies achieved, and finish the qualification in line with their skills needs and personal capacity. Students may drop out of training or fail to complete for a variety of personal reasons: it does not automatically follow that the RTO was of low quality or the training was bad, and using completion rates as a proxy neglects to take into account a student’s choice to drop out for their own reasons. It fails to take into account the broader nature of education, and reduces it to a simple product that the student has purchased off the shelf, with gaining the qualification as the sole indicator of quality or success.

While the overlap between VET FEE-HELP students and students who only partially completed their qualification cannot be identified, students who only completed a subject in 2015 did so largely because of personal reasons (33.0 per cent) or because they got what they wanted out of the training (21.2 per cent).[122] The Minister has proposed barring providers with poor student outcomes from the scheme, although the legislative basis for this barrier is unclear.[123] It may fall under the provider suitability requirements in the Rules to the Act when they are made (in particular, ‘student outcomes’ as referenced at paragraph 26(2)(f) of the Student Loans Bill). Still, placing the responsibility for poor completion rates on the provider also fails to capture whether some of the inputs such as funding adequacy or student support contribute equally to outcomes.

Administrative complexity and the VET system

As TAFE Directors Australia noted in its submission to the VET FEE-HELP Reform Bill 2015, each government reform to VET FEE-HELP had the effect of treating VET FEE-HELP providers as separate from the rest of the sector.[124] Additional compliance and regulatory requirements were placed on RTOs in relation to their VET FEE-HELP students, but not in relation to any other VET students they may have had. The same approach is used in VET student loans – a more punitive approach to compliance, with greater penalties, additional requirements for providers to meet, and greater powers to monitor provider compliance. These may amount to a ‘tick the box’ exercise, depending on the willingness of officials to use these powers in a meaningful way.

Yet the issue may not be with VET FEE-HELP providers. Regulatory failure may simply derive from the VET sector being hard to regulate, due to the complexity of funding and program streams and the presence of multiple regulators. The persistently high level of non-compliance—only 18.2 per cent of RTOs audited in 2015–16 were initially compliant with the regulatory standards, following initial compliance rates of 24.7 per cent in 2014–15, 23.9 per cent in 2013–14 and 19.6 per cent 2012–13 —could indicate systemic issues with the sector.[125]

The cost of education

Fundamentally, the purpose of student loans remains unresolved by these amendments and the Government’s reforms to date. The Opposition’s amendments also do not appear to clarify the issue.

Students—and governments—do not know what they are buying until those students have finished their qualifications and are working in the sector. That is the nature of education. The quality of education may be affected for several reasons—a trainer may have a poor relationship with a student, or may be relatively new and unable to provide adequate support. There may be underfunding or governance issues which plague the provider. And students choose to undertake education for a variety of purposes themselves. The focus on completion rates (and on likely repayment) assumes that students have gotten nothing from their training if they fail to complete their qualification.

The cost to government

Most of the commentary around the costs involved in the VET FEE-HELP program have related to the costs to government. The Assistant Minister’s second reading speech to the current Bills explicitly referenced the ‘enormous cost to the Budget’.[126]

It is true that the VET FEE-HELP scheme has led to significant outlays. As can be seen from the information below, the Australian Government has loaned out more than $6 billion to VET FEE-HELP students between 2009 and 2015. However due to the nature of income-contingent student loans such as VET FEE-HELP and the new VET student loan scheme, much of this debt is likely to be repaid.

Table 1: Fees and loans time series (2009–2015)

Source: Adapted from DET, ‘Table 2.13: fee and loans time series (2009–2015)’, Study tables, DET, Canberra, 24 October 2016.

As the Grattan Institute has pointed out, the issues with VET FEE-HELP repayment are likely to be structural, due to the poorer employment prospects and lower average incomes associated with many qualifications in the VET sector.[127]

The new VET student loan scheme will likely lead to lower outlays, as it will involve fewer students. But it will not affect debt repayment under the program. The existing HELP repayment threshold, designed for higher education graduates, may simply not capture enough VET graduates, due to their lower incomes. A more comprehensive approach to fiscal sustainability could take into account the lower average incomes associated with VET students and so have a separate repayment threshold suitable for VET graduates.

But there are no clear metrics for assessing the costs to government. How much should government attempt to contain costs in the VET FEE-HELP scheme? Was the scheme ‘acceptable’ in 2011, when only $205 million in loans were paid out? At what point did it meet the ‘something must be done’ test? $500 million? $1 billion? Without knowing what the aims or parameters are, it is hard to judge the efficacy of these reforms. If they reduce VET student loans in 2017 to $1 billion, will that be an ‘adequate’ reduction?

Similarly, while a separate repayment threshold for VET graduates would likely lead to increased debt repayments from that student cohort, it may also increase the administrative costs for the agencies such as the Australian Tax Office (which administers the compulsory repayment system) and the Department of Education and Training (which manages HELP policy). The lack of clear metrics is compounded by the lack of clear objectives: reforms to improve fiscal sustainability such as separate thresholds may incur administrative costs and also result in unfair and unequal treatment for different graduates. Knowing how and where to balance the tradeoffs inherent in any student loans scheme is crucial for understanding its effectiveness.

Concluding comments

What now for the VET FEE-HELP model?

Many of these questions raised by the Redesigning VET FEE-HELP discussion paper can be seen to have been answered by the legislative amendments in the current Bills. The reforms in the current Bills also adopt elements from Opposition proposals, such as loan caps, despite the Government’s earlier criticisms.

A hallmark of reforms to VET FEE-HELP through 2015 and 2016 was that they increased the requirements on providers. RTOs had to meet higher entry standards to the VET FEE-HELP scheme, they had to provide more information, they had to screen their students more closely and had to ensure the information they gave them regarding loans was not misleading and did not involve inappropriate enticements. Interestingly rather than simply redesign VET FEE-HELP, the current Bills establish a new scheme under a separate Act – although as the new VET student loan scheme bears some key commonalities with VET FEE-HELP and other HELP loans, it may be a question of branding rather than actual distinction. Knowing exactly what constitutes a ‘new model’ for VET FEE-HELP is unclear, although it is certain the proposed Bills will significantly change the relationship between government and providers. It is uncertain as to whether this latest intervention is one of degree rather than one of kind.

It is also interesting to note that the Government’s response to VET FEE-HELP has been to continually seek regulatory reform, to promote greater government intervention in the VET sector. It is worth considering why even greater regulatory powers are outlined in the current Bills if this approach has not been successful to date.

Overall the reforms proposed in the current Bills, as through 2015 and 2016, are not informed by a structural understanding of the VET sector, its complexities, the activities of providers, and a solid understanding of student outcomes. The appropriateness of using a student loan framework designed for higher education in a distinctly different sector – VET – goes unquestioned. The fundamental tension between expanding access to VET through loans and limiting fiscal exposure by government goes unresolved. The particular needs of the demographic serviced by VET FEE-HELP to date go unexplored, and whether the anecdotal accounts of poor training or students unknowingly signed up to loans represent a systemic failure is yet unknown.

The myriad of regulatory agencies, departmental staff, programs, policies and funding streams seems compounded by situating VET student loans as yet another complication which students will have to make informed choices about and properly comprehend the risks in taking on a loan. Providers will have to add additional administrative requirements, solely for their VET student loan students, compounded by the processes in place to grandfather any existing VET FEE-HELP students.

While representing a significant improvement on the status quo, the Bills highlight the capacity for further reform: the amendments address issues after the horse has bolted but do not go to the cultural or systemic issues of why VET providers seem more likely to rort government funding and provider poorer outcomes than those in other education sectors. Expanding funding to both the school and higher education sectors has not resulted in sham providers and inappropriate marketing practices, so it could be questioned why it has in VET. Until these systemic issues are explored, reforms are likely to continue to be iterative, reactive and ultimately unsuccessful.

 

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[1].         J Griffiths, Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015, Bills digest, 60, 2015–16, Parliamentary Library, Canberra, 2015.

[2].         Parliament of Australia, ‘Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 homepage’, Australian Parliament website.

[3].         For more detailed background on the history of the VET FEE-HELP scheme, please see Griffiths, Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015, Bills digest, op. cit.

[4].         For an overview of policy reforms within the VET sector, please see G Gootzee, The development of TAFE in Australia, 3rd edition, National Centre for Vocational Education and Research (NCVER), Leabrook, 2001; and T Dumbrell, Resourcing vocational education and training in Australia, NCVER, Adelaide, 2004.

[5].         Department of Education and Training (DET), ‘Commonwealth register of institutions and courses for overseas students’, DET website. This is the official Australian Government website that lists all Australian education providers to offer courses to people studying in Australia on student visas and the courses offered—whether the course be in the nature of schooling, vocational education and training (VET), English language assistance, higher education, or other learning.

[6].         See Australian Constitution, section 51.

[7].         Vocational Education and Training (Commonwealth Powers) Act 2010 (NSW); Vocational Education and Training (Commonwealth Powers) Act 2012 (Qld); Vocational Education and Training (Commonwealth Powers) Act 2012 (SA); and Vocational Education and Training (Commonwealth Powers) Act 2011 (Tas).   

[8].         The Commonwealth is able to legislate in relation to the VET sector in the Australian Capital Territory and the Northern Territory using the territories power in section 122 of the Constitution.

[9].         See Australian Skills Quality Authority (ASQA), ‘Jurisdiction’, ASQA website, and ASQA, ‘Establishment and legislation’, ASQA website.

[10].      ASQA, ‘Work with other regulators’, ASQA website, and ASQA, Strengthened communications protocols between [Victorian] DET and ASQA, media release, 27 July 2016.

[11].      Council of Australian Governments (COAG), Intergovernmental Agreement on Federal Financial Relations, COAG, July 2011.

[12].      Council on Federal Financial Relations (CFFR), ‘National Agreements’, CFFR website.

[13].      Ibid.

[14].      COAG, National Agreement for Skills and Workforce Development, COAG, July 2011.

[15].      COAG, National Partnership on Skills Reform, COAG, April 2012.

[16].      ACIL Allen Consulting, Review of the National Partnership Agreement on Skills Reform: final report, ACIL Allen Consulting, Adelaide, 21 December 2015.

[17].      See J Ross, ‘Governments get a fail on diploma funding’, The Australian, 9 November 2016, p. 30.

[18].      For a breakdown of current Australian Government VET funding, see Australian Government, Portfolio budget statements 2016–17: budget related paper no. 1.5: Education and Training Portfolio, ‘Program 2.8: Building skills and capability’, pp. 69–75.

[19].      See for example, DET, ‘Adult Migrant English Program service providers’, DET website, last modified 27 June 2016. As a result of 2016–17 Budget measures, the Australian Government has released a new business model for AMEP. This model will align with the new service provider contracting period commencing 1 July 2017.

[20].      See for example, Australian Government, ‘Summary of the Australian government apprenticeships incentives programme’, Australian Apprenticeships website, effective from 1 July 2015. This documentation specifies who will be eligible for an incentive payment under the program, the way the program operates and the levels of each payment.

[21].      As an example, the Australian Capital Territory government maintains a Skilled Capital Qualifications List as part of its Skilled Capital training program, which indicates what VET units of study and qualifications it is willing to subsidise, the amount of the subsidy, the number of places available (often capped in order to contain costs) and the maximum concession. The list is updated in line with skills needs to ensure there is not a glut of particular qualifications. See ACT Directorate of Education and Training, ‘Skilled capital qualification list’, The Directorate of Education and Training website, August 2016.

[22].      See F Tomazin, ‘Training rorts crackdown’, The Age, 20 September 2015, pp. 1–2 and R Wallace, ‘State to audit 500 VET providers in crackdown on dodgy dealings’, The Australian, 1 July 2015, p. 31.

[23].      A unique student identifier was introduced through the Student Identifiers Act 2014. For analysis, see L Doyle and C Ey, Student Identifiers Bill 2014, Bills digest, 61, 2013–14, Parliamentary Library, Canberra, 2014.

[24].      See NCVER, What is “total VET activity?”, fact sheet, NCVER, July 2016. NCVER has put together a series of useful fact sheets on its total VET activity collection.

[25].      See NCVER, What is VET FEE-HELP?, fact sheet, NCVER, July 2016.

[26].      COAG, National Agreement for Skills and Workforce Development, op. cit., ‘Clause 10’.

[27].      Parliament of Australia, ‘Higher Education Support Amendment (Extending FEE-HELP for VET Diploma, Advanced Diploma, Graduate Diploma and Graduate Certificate Courses) Bill 2007 homepage’, Australian Parliament website; Higher Education Support Amendment (Extending FEE-HELP for VET Diploma, Advanced Diploma, Graduate Diploma and Graduate Certificate Courses) Act 2007.

[28].      Higher Education Support Act 2003 - VET FEE-HELP Guidelines, as made 22 May 2008.

[29].      J Gillard (Minister for Education), Commonwealth will support states willing to reform VET, media release, 26 August 2008.

[30].      Amendment No. 1 - Higher Education Support Act 2003 - VET FEE-HELP Guidelines, 24 March 2009.

[31].      J Gillard (Minister for Education), Australians to receive a national entitlement to a quality training place, media release, 11 May 2010.

[32].      COAG, National Partnership on Skills Reform, op. cit.

[33].      See Australian Skills Quality Authority (ASQA), ‘Understanding the requirements for registration’, ASQA website.

[34].      J Topsfield, ‘Mature-age apprentices get a leg-up’, The Age, 24 September 2010, p. 11.

[35].      A Norton and I Cherastidtham, ‘Section 3.5: VET FEE-HELP’, Doubtful debt: the rising cost of student loans, Grattan Institute, Melbourne, April 2014, p. 20.

[36].      Ibid., pp. 20–23.

[37].      See Australian Government, ‘Statement 6: Debt statement, assets and liabilities’, Budget strategy and outlook: budget paper no. 1: 2016–17, May 2016, p. 6–22, for an explanation of how HELP debt is accounted for in budget terms and the most recent estimation.

[38].      See K Loussikan, ‘Evocca weighs options for growth’, The Australian, 1 October 2014, p. 23; J Ross and D Kitney, ‘Vocation buys into college system’, The Australian, 1 May 2014, p. 19; T Dodd, ‘How deregulation opened floodgates’, The Australian Financial Review, 1 November 2014, p. 17; T Dodd, ‘Providers data “amazing”’, The Australian Financial Review, 3 November 2014, p. 11; S Evans, ‘ASIC steps in as vocation shares crash’, The Australian Financial Review, 29 October 2014, p. 13; T Dodd, J Thomson and S Danckert, ‘Vocation runs out of options’, The Australian Financial Review, 27 November 2015, p. 10, for media accounts of providers who had become reliant on government funding. A study of RTO financial records was undertaken in S Yu and D Oliver, The capture of public wealth by the for-profit VET sector, Australian Education Union, Australian Education Union, Melbourne, January 2015.

[39].      ASQA first identified this as an issue in a strategic review published in September 2013. See ASQA, Marketing and advertising practices of Australia’s registered training organisations, ASQA, Melbourne, 20 September 2013.

[40].      S Bird (Shadow Minister for Vocational Education), Government must act to protect quality in the training sector, media release, 7 October 2014; S Bird (Shadow Minister for Vocational Education), Additional action needed on quality in VET sector, media release, 9 October 2014.

[41].      J Ross, ‘VET scheme relies on trust’, The Australian, 8 October 2014, p. 27.

[42].      M Paine, ‘Warning over course’, Hobart Mercury, 27 October 2014, p. 3.

[43].      ASQA produced guidance on the transition from the 2012 set of Standards to the new Standards, indicating the differences and its regulatory expectations. See ASQA, ‘Summary mapping and treatment of non-compliances – standards for RTOs against SNRs’, ASQA website.

[44].      I Macfarlane (Minister for Industry), Australian Government bolsters skills and training with $68M of new funding and new standards, media release, 8 October 2014.

[45].      Higher Education Support Act 2003 – VET Guidelines 2015, as made 30 March 2015.

[46].      Amendment No. 1 to the VET Guidelines 2015, as made 18 June 2015.

[47].      Senate Education and Employment References Committee, ‘Terms of Reference’, Inquiry into the operation, regulation and funding of private vocational education and training (VET) providers, The Senate, Canberra, 2015.

[48].      Senate Education and Employment References Committee, Getting our money’s worth: the operation, regulation and funding of private vocational education and training (VET) providers in Australia, The Senate, Canberra, October 2015.

[49].      Ibid., p. 3.

[50].      Ibid. pp. vii–ix.

[51].      See Griffiths, Higher Education Support Amendment (VET FEE-HELP) Bill 2015, op. cit., for more detail on the Bill as introduced.

[52].      See Parliament of Australia, ‘Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 homepage’, op. cit.

[53].      See Schedule of amendments moved by the Senate, Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015, and Supplementary Explanatory Memorandum, Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 for an overview of the amendments moved and their intended purpose. Please note some amendments moved by the Senate were introduced by non-Government Senators and so are not covered by the Supplementary Explanatory Memorandum.

[54].      Higher Education Support (VET) Guideline 2015, as made 18 December 2015.

[55].      K Carr (Shadow Minister for Higher Education, Research, Innovation and Industry) and S Bird (Shadow Minister for Vocational Education), Time to get tough on shonky providers, joint media release, 9 November 2015.

[56].      Ibid.

[57].      R Simms (Greens Tertiary Education Spokesperson), Fix the for-profit VET ‘shambles’, media release, 30 November 2015.

[58].      For more information on administrative complexity in the tertiary education sector, see J Griffiths, ‘Tertiary education providers—more regulation for some and less regulation for others’, FlagPost, Parliamentary Library blog, 14 December 2015.

[59].      T Dodd and P Riordan, ‘Freeze on payments to college “shonks”’, The Australian Financial Review, 2 December 2015, p. 4.

[60].      S Ryan (Minister for Vocational Education and Skills), Nationwide VET FEE-HELP consultations start today, media release, 4 April 2016.

[61].      S Ryan (Minister for Vocational Education and Skills), Release of the Redesigning VET FEE-HELP discussion paper, media release, 29 April 2016.

[62].      Department of Education and Training (DET), Redesigning VET FEE-HELP, Discussion paper, DET, Canberra, released 29 April 2016, p. 6.

[63].      Ibid., pp. 38–48.

[64].      Ibid.

[65].      B Shorten (Leader of the Opposition), Sen K Carr (Shadow Minister for Higher Education, Research, Innovation and Industry), S Bird (Shadow Minister for Vocational Education), Labor's plan to stop dodgy providers ripping off taxpayers and students, joint media release, 5 May 2016.

[66].      Ibid.

[67].      Australian Labor Party (ALP), Protecting students & restoring integrity to VET FEE-HELP, ALP policy document, Election 2016.

[68].      Australian Greens, Restoring the TAFE system: building our skills future, Greens policy document, Election 2016.

[69].      S Ryan (Minister for Vocational Education and Skills), Labor's assault on TAFE students, media release, 16 June 2016.

[70].      Ibid.

[71].      Liberal Party of Australia, Putting students first, Coalition policy document, Election 2016.

[72].      Senate Education and Employment Legislation Committee, ‘VET Student Loans package’, Inquiry homepage.

[73].      Senate Standing Committee for the Scrutiny of Bills, Alert digest, 8, 2016, Senate, 9 November 2016, pp. 52–59.

[74].      Attorney-General’s Department, Guide to framing Commonwealth offences, infringement notices and enforcement powers, Attorney-General’s Department, Canberra, September 2011.

[75].      Ibid.

[76].      Ibid.

[77].      Senate Standing Committee for the Scrutiny of Bills, Alert digest, 8, 2016, Senate, 9 November 2016, pp. 52–59.

[78].      Ibid, pp. 59–60.

[79].      See K Ellis (Shadow Minister for TAFE and Vocational Education), Liberals' hypocrisy on VET loan caps, media release, 5 October 2016.

[80].      K Ellis, ‘VET Student Loans Bill 2016, VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016, VET Student Loans (Charges) Bill 2016’, House of Representatives, Debates, 19 October 2016, p. 2547.

[81].      Australia, House of Representatives, ‘VET Student Loans Bill 2016’, Votes and proceedings, HVP 14, 19 October 2016, p. 256. K Ellis (Shadow Minister for TAFE and Vocational Education), Liberals vote against VET Ombudsman, media release, 19 October 2016.

[82].      S Hanson-Young (Greens Spokesperson on Education), Greens secure VET Ombudsman for exploited students, media release, 13 October 2016.

[83].      K Andrews, ‘Second reading speech: VET Student Loans Bill 2016’, House of Representatives, Debates, 13 October 2016, p. 1853.

[84].      R Sharkie, ‘Second reading speech: VET Student Loans Bill 2016, VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016, VET Student Loans (Charges) Bill 2016’, House of Representatives, Debates, 18 October 2016, p. 2347.

[85].      Australian Council for Private Education and Training (ACPET), Submission, no. 23, to the Senate Education and Employment References Committee, Inquiry into the VET Student Loans package, October 2016, p. 2.

[86].      Ibid, p. 2.

[87].      TAFE Directors Australia (TDA), Submission, no. 26, to the Senate Education and Employment References Committee, Inquiry into the VET Student Loans package, 21 October 2016, pp. 3­–4.

[88].      Australian Council of Trade Unions, Submission, no. 6, to the Senate Education and Employment References Committee, Inquiry into the VET Student Loans package, 19 October 2016, p. 1.

[89].      Ibid., p. 3.

[90].      Australian Education Union, Submission, no. 14, to the Senate Education and Employment References Committee, Inquiry into the VET Student Loans package, 19 October 2016, p. 1.

[91].      National Tertiary Education Union (NTEU), Submission, no. 2, to the Senate Education and Employment References Committee, Inquiry into the VET Student Loans package, 2016, pp. 3–5.

[92].      Australian Industry Group and the Business Council of Australia, Joint submission, no. 43, to the Senate Education and Employment References Committee, Inquiry into the VET Student Loans package, October 2016, pp. 2–3.

[93].      Ibid.

[94].      Explanatory Memorandum, VET Student Loans Bill 2016, p. 6.

[95].      Ibid., p. 7.

[96].      The Statement of Compatibility with Human Rights can be found at pages 9–19 of the Explanatory Memorandum to the VET Student Loans Bill.

[97].      Ibid., p. 19.

[98].      Parliamentary Joint Committee on Human Rights, Human rights scrutiny report:report 8 of 2016, 9 November 2016, p. 55.

[99].      COAG, National Agreement on Skills and Workforce Development, op. cit., ‘Clause 10(b)’.

[100].   See for example Division 90, Higher Education Support Act 2003, in relation to the HELP loan for subsidised undergraduate students (HECS-HELP). The Explanatory Memorandum to the VET Student Loans Bill also notes the parallel between the citizenship eligibility provisions and those in FEE-HELP and VET FEE-HELP. See Explanatory Memorandum, VET Student Loans Bill 2016, op. cit., p. 23.

[101].   Section 23B: Entry procedure for students, Higher Education Support Amendment (VET FEE-HELP Reform) Act 2015.

[102].   NCVER, A preliminary analysis of the outcomes of students assisted by VET FEE-HELP, NCVER, Adelaide, 6 November 2015, pp. 6­­–7.

[103].   See the programs authorised under the Higher Education Support Act 2003 (HESA) by Chapter 1 of the Other Grants (Education) Guidelines 2012.

[104].   For program information, see DET, ‘Higher education disability support program’, DET website, last modified 15 November 2016.

[105].   See clause 14 in Part 2 of the VET Student Loans Bill 2016, compared with Clause 6(1)(ca) of Schedule 1A of HESA, and the accompanying definition for ‘qualifying VET course’ in the HESA dictionary.

[106].   Explanatory Memorandum, VET Student Loans Bill 2016, op. cit., p. 25.

[107].   In the case of subsidised university places, funding is authorised under the Commonwealth Grants Scheme Guidelines 2012, and paid in accordance with funding agreements which exist between the Department of Education and Training and each individual university. For most undergraduate university places (save medicine), universities are able to enrol as many students as they wish and allocate funding accordingly.

[108].   Ibid., p. 26.

[109].   DET, VET student loans: approved courses, DET, Canberra, 17 November 2016.

[110].   Ibid., p. 1.

[111].   Explanatory Memorandum, VET Student Loans Bill 2016, op. cit., p. 32

[112].   Parliament of Australia, ‘Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 homepage’, op. cit.; Griffiths, Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015, Bills digest, op. cit.

[113].   Parliament of Australia, ‘Higher Education Support Legislation Amendment (2016 Measures No. 1) Bill 2016 homepage’, Australian Parliament website.

[114].   Clause 103 in Part 10 of the Bill allows, but does not require, the Secretary to publish information (other than personal information about a student) if the Secretary is satisfied that the information would assist students in enrolment decisions, in understanding their VET entitlement or to encourage compliance with the Bill.  

[115].   ASQA, Education and Employment Legislation Committee, Answers to Questions on Notice, Inquiry into the VET Student Loans package, 25 October 2016, p. 1.

[116].   Australian Competition and Consumer Commission, Careers Australia undertakes to repay Commonwealth for VET FEE-HELP diploma courses, media release, 16 May 2016.

[117].   M Warburton, Submission, no. 32, to the Senate Education and Employment References Committee, Inquiry into the VET Student Loans Bills 2016, October 2016, ‘Attachments 2 and 3’.

[118].   M Bachelard, ‘Vulnerable ripped off in get-rich college rort’, The Age, 17 September 2015, p. 1; and M Bachelard, ‘Dodgy colleges still using lure of “free” laptops’, The Age, 23 November 2015, p. 8.

[119].   M Lavarch (Commissioner – Risk, Intelligence and Regulatory Support, Australian Skills Quality Authority), Evidence to Senate Education and Employment References Committee, Inquiry into private vocational education and training providers, 16 July 2015, p. 54.

[120].   M Knott, ‘Private colleges “rort” loans despite low finishing rates’, Canberra Times, 24 October 2016, p. 5; K Louissikian, ‘Vocational colleges are graduating only 23pc’, The Australian, 24 October 2016, p. 6.

[121].   DET, ‘Table 1.13: three year cohort completion rate by student characteristics, for commencement years 2011–2013’, Student tables, DET, Canberra, 24 October 2016.

[122].   NCVER, ‘Table 4: main reason for not continuing the training for government-funded subject completers, 2014 and 2015 (%)’, Government funded student outcomes 2015, NCVER, Adelaide, 3 December 2015.

[123].   K Louissikan, ‘Reforms to VET student loans “to stop college rorts”’, The Australian, 17 November 2016, p. 1.

[124].   TAFE Directors Australia, Submission, no. 6, to the Senate Education and Employment References Committee, Inquiry relating to the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015, 20 November 2015, p. 1.

[125].   ASQA, Annual report 2015–16, ASQA, Melbourne, 22 September 2016, p. 26.

[126].   Andrews, ‘Second reading speech: VET Student Loans Bill 2016’, op. cit., p. 1853.

[127].   Norton and Cherastidtham, ‘Section 3.5: VET FEE-HELP’, op. cit.

 

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