House of Representatives

Second Reading Speech

Mr Hartsuyker (Minister for Vocational Education and Skills and Deputy Leader of the House)

I move:

That this bill be now read a second time.

Today I introduce the Higher Education Amendment (VET FEE-HELP Reform) Bill 2015.

This is a very important and timely bill.

This bill will strengthen the protections for students in the Vocational Education and Training sector and push unscrupulous training providers out of the market.

The Vocational Education and Training sector, or VET sector, is vitally important to Australia's economy. It is a sector that has a long and proud tradition in Australia. For many young people, it provides the bridge between school and work. For unemployed people, it often provides a pathway back into employment and a life off welfare. And for people in work, it can be the mechanism by which they expand their skills and progress in their careers.

The Australian government is committed to ensuring we continue to have a strong VET sector that helps students to develop the skills they need for the jobs of today and to adapt to the world of work of the future.

Unfortunately, the changes introduced by the former Labor government have undermined public confidence in the VET sector and created a situation whereby unscrupulous VET FEE-HELP providers have flourished at the expense of students and at the expense of taxpayers.

In 2009, Labor introduced the VET FEE-HELP program so that students undertaking a diploma or advanced diploma qualification could access a loan to help with the cost of their courses.

The government supports the principle of VET students being able to access a loan so they may undertake quality training in the same way that a university student is supported through HECS-HELP.

Unfortunately, Labor failed to put in place sufficient controls and safeguards to protect students and taxpayers' money when they introduced the VET FEE-HELP scheme.

In typical Labor fashion, they did not have an eye to the implementation risks.

In 2012, they again failed to think about risks when they expanded access to the VET FEE-HELP scheme by removing the credit transfer arrangements between VET providers and universities.

The consequence has been a surge in enrolments by unscrupulous VET FEE-HELP providers. These providers have preyed on vulnerable people and signed them up to courses of dubious quality that they do not want and do not need.

They have lured people into courses with offers of laptops and iPhones and made out that the courses were free.

Labor had the chance to act in 2013 when the first complaints started coming in to the national training regulator, the Australian Skills Quality Authority, but they failed to do so.

Labor is well aware that this is a problem of their own making.

The shadow minister for higher education, research innovation and industry acknowledged as much a few weeks ago. Senator Carr is quoted in the Age on 18 September 2015 as saying that Labor introduced VET FEE-HELP with good intentions but that the scheme contains 'fundamental weaknesses' that need to be fixed.

He goes on to say that 'the regulators were not given enough power to crack down on rogue operators'. Senator Carr also said that the Gillard government's removal of a requirement for providers to have credit transfers in place with higher education providers was a mistake.

And in typical Labor fashion, Senator Carr then washes his hands of the problem and is reported as saying that although Labor introduced VET FEE-HELP it is the government's responsibility to restore confidence in the scheme.

Well, let me assure the House, and those in the other place, that the government is used to fixing up Labor's mess.

It is because of Labor's failure that the government announced a series of measures earlier this year to crack down on dodgy practices by providers and brokers.

And it is because of Labor's failure that passage of this bill is so necessary.

On the 12March this year, the government announced a suite of reforms to the VET FEE-HELP scheme to protect students, to protect taxpayers and to protect the reputation of Australia's VET sector.

These reforms spanned areas such as marketing and inducements, consumer information, debt processes and provider standards. These changes were backed by $18.2 million for stronger compliance costs that we announced in the 2015-16 budget.

The first of these changes-banning of inducements such as free laptops, or cash, or vouchers-came into effect on 1 April this year.

The second tranche of reforms came into effect on 1 July this year.

Since then providers have been banned from charging a withdrawal fee-which could be as high as several thousand dollars-and which acted as a barrier to some students withdrawing from a course before the census date, the date on which the loan is levied.

In addition, training providers and their agents can no longer market VET FEE-HELP supported training as 'free' or 'government funded', or mislead students in any way into believing that VET FEE-HELP is not a loan that is expected to be paid back.

And providers must now publish on their websites which agents and brokers they use, and are responsible for the conduct of their agent or broker.

Agents must now disclose to the student the name of the VET provider and the course they are marketing, and must also disclose that they will receive a commission for any referred student enrolment.

The government has also announced that from 1 January 2016, providers cannot levy the full debt load up-front and in one hit. Instead, students will have a number of opportunities during the course to confirm if they wish to continue to be enrolled, and their debt will be levied accordingly.

The bill now implements the remainder of the government's announced changes.

Pre requisite entry requirements

The bill introduces changes that will protect vulnerable students at the starting point-before they incur a debt-by requiring providers to establish minimum prerequisites for enrolment in each course.

This ensures a student's capacity to complete the course-including assessing language, literacy and numeracy proficiency-is properly assessed before they are enrolled, and before they incur a debt.

Of course many good training organisations already have this stringent administration requirement when they assess people for these higher level courses.

This bill makes this good practice a requirement for all VET FEE-HELP approved providers for courses for which students wish to access VET FEE-HELP.

Two day 'cooling off' period

The bill makes a number of technical amendments to enact a two-day 'cooling off' period, ensuring students have the time they need to study the payment and course decisions.

Students will, from 1 January 2016, have two days after enrolment before they are allowed to submit a request for Commonwealth Assistance (the VET FEE-HELP loan application form).

No longer will course enrolment be confused with the loan application.

The bill ensures this 'cooling off' period is in place even with late enrolments close to the census date, which is when students incur the debt.

Under 18s

The bill also increases protection for students under 18 years by requiring a parent's or guardian's signature before the student can request a VET FEE-HELP loan.

This is an appropriate protection to ensure that young people-who may lack the necessary life experience and financial literacy-are not being signed up to courses and debts that they do not need.

An exemption is provided for minors who are deemed independent under the requirements of the Social Security Act 1991.

Easier to cancel debt

As well as preventing students from incurring unfair debts in the first place, the bill also helps those who do incur them after 31 December 2015.

The bill broadens the circumstances in which students can have their loan cancelled where inappropriate behavior has been used in their recruitment and acceptance into a course.

This is a cost that taxpayers should not have to bear, which is why the government will be requiring providers to repay the costs of any loans that are remitted in such circumstances, and may impose additional penalties on providers-such as fines, or conditions on approval-as well.

Infringement notice scheme

The bill introduces a scheme of infringement notices attached to civil penalties for VET FEE-HELP training providers that engage in improper conduct.

The Department of Education and Training will now have a full suite of powers available to it to deal with inappropriate behaviour by providers or brokers.

This ranges from cancelling student debt and forcing providers to repay the cost back to the Commonwealth, to administrative action such as suspension or revocation of approval, or civil penalties, including infringement notices.

The bill expands the department's and the Australian Skills Quality Authority's powers for monitoring and enforcement action against providers and brokers doing the wrong thing.

Administrative changes

As well as protecting students, this bill lifts the standards for those who are approved to offer VET FEE-HELP funded courses. Approved providers are entrusted by students and taxpayers with potentially millions of dollars in tuition fees. The government believes VET FEE-HELP providers should meet a high benchmark of financial viability and training quality.

That is why the bill introduces new minimum registration and trading history requirements for new VET FEE-HELP provider applicants.

This ensures that all new providers offering VET FEE-HELP have a proven track record in delivering high-level qualifications.

Conclusion

This bill is necessary to address Labor's failure with regard to VET FEE-HELP and to put in place proper controls and safeguards to protect students and taxpayers from unscrupulous behaviour by some providers.

I note that many of those opposite have shared the government's concerns about Labor's VET FEE-HELP program.

I look forward to their support for these reforms to improve the integrity of the VET FEE-HELP scheme.

I commend the bill to the House.