Protecting Students & Restoring Integrity to VET Fee-HELP

Australia’s greatest natural resource is its people. Their talents and capabilities have built the prosperity we are used to, but we must continue to enhance those talents and capabilities if we are to create the jobs and wealth of the future.

That’s why Labor will make a substantial investment in building Australia’s human capital, through our Your Child. Our Future schools reforms, our TAFE Funding Guarantee and comprehensive review of the National VET sector, our Positive Plan for Universities, and plans for getting more Australians into STEM related jobs.

An advanced economy requires advanced skills, and skill and knowledge acquisition can also enhance the lives of individual citizens. But the administration of VET FEE-HELP under this Government has seen funding misdirected to training that is not meeting industry needs, nor providing the skills that Australians need. It has seen the Turnbull Government waste billions of dollars on training that in many cases was not delivered, or was substandard, and resulted in nothing but obscene profits for a few owners of fly-by-night private colleges.

The worst consequence of the Liberals’ inaction has been the debt traps that vulnerable students have been forced into.

Australian students and their families are massive losers under the current arrangements:

  1. Very few students graduate
  2. Those that do graduate, come out with increasingly questionable qualifications
  3. But all are saddled with a debt to the Government for their fees.
  4. And they may end up paying sooner as the government is proposing to substantially lower the income thresholds at which repayments must commence

At the same time the real needs of industry are left unmet. According to Australian Industry Group (AIG) Chief Executive, Innes Willox, “we have never seen the Australian training system in such a parlous state.” [1]

The VET sector is a critical ingredient in ensuring Australians have the skills to succeed in a changing economy. That is why in addition to our existing investments in our people,  a Shorten Labor Government will take decisive action to restore integrity to the scandal plagued vocational education sector.

Labor’s plan for restoring integrity to Vocational Education and Training will fix the Liberal’s VET FEE-HELP mess, and put students first. We will weed out the shonks, restore capacity and faith in our VET system and empower students to focus on their education instead of their escalating debt.

What’s the problem?

VET FEE-HELP is a version of HECS (now called HELP) for diploma-level students. It was introduced in 2007 by Andrew Robb, then Minister for Vocational and Further Education, with good intention and bipartisan support.  The scheme gave students enrolling in diploma courses the same access to fee assistance as university students.  VET FEE-HELP had a broad range of objectives: improving accessibility, affordability and depth of skills and making training provision more responsive to industry needs. But under the Turnbull Government, it has done none of those things. Despite continual pressure, the phoney training, erosion of standards, obscene profits and waste continues. The Liberals’ response has been to hold funding at current levels until 2017 while they issue discussion papers and duck for cover - giving the shonks another year to plunder taxpayer dollars, with substandard outcomes for students and employers.

VET FEE-HELP under the Liberals is a mess. It has led to a massive budget blow-out and the devastation of vocational education and skills training in Australia. Under this Government $5.4 billion has been handed out to VET providers-, with private providers accounting for $2.46 billion or 84 per cent of the total for very little discernible impact.

Graph 1: VET FEE-HELP loan value since inception

graph1.jpg

Source:  VET FEE-HELP data collection, cited in Redesigning VET FEE-HELP: Discussion Paper

Under the Liberals:

  • Funding has borne no relation to outcomes – for example in 2014, the graduation rate of the ten largest private providers was under five per cent, yet these providers were paid $900 million to graduate just 4,181 students – an average cost of $215,259 per student;
  • On-going cuts to the traditional vocational education system - with more than $2.5 billion in cuts since the election of the Liberal Government; 
  • Erosion of standards (by sub-contracting, unrealistic course-time reductions, 100 per cent on-line delivery) and redirection of training to high-volume, high-profit (for providers) areas and away from real industry needs;
  • Saddling of students with unprecedented levels of debt (in some courses up to $32,000);
  • All this has undermined Australia’s international reputation as a quality education destination

With four ministers in less than three years (Pyne, Birmingham, Hartsukyer, Ryan), this scandal demonstrates the total lack of administrative nous and management common sense that characterises the Turnbull Government.

Labor’s action plan to fix the Liberals’ VET FEE-HELP mess

Labor has an action plan to fix the VET FEE-HELP crisis. We will boost student protections, enhance quality and take tough action to ensure that training providers are of the highest standard and able to meet the needs of industry.

There is a clear need for urgent action. This scheme has been subject to a Senate inquiry, numerous Senate hearings, a legion of media stories, and it is now at the centre of a number of court cases launched by the Australian Competition and Consumer Commission.

There is no need to issue yet another discussion paper or delay action until after the election.

A Shorten Labor Government will immediately act to:

1. Cap VET FEE-HELP loan amounts to protect students

We will protect students and the taxpayer by legislating to impose a maximum loan value accessible through VET FEE-HELP in any one given year. This limit will be $8,000, indexed to CPI.

The effect of this proposal will be to stop out of control tuition fees for students.  Under the Liberals, students at private colleges are paying fees of $32,941 for salon management, or $29,065 for project management, $28,596 for marketing diplomas.[2] An equivalent government-provided course in NSW costs just $6330.

Labor will stop this exploitation of students.

Limited exemptions will be available for providers that offer courses with genuinely higher cost of delivery, through application to the Department.

This is not an unusual measure. Student contributions towards a university degree – financed by HECS-HELP – are currently limited by the Commonwealth. 

2. More students succeeding

VET FEE-HELP has been characterised by high debt and low completion rates. Too many students are being signed up to a debt without any expectation by the college to do everything possible to ensure that they will graduate.  The Government’s own discussion paper reveals the low completion rates.

In 2014, only 22 per cent of students completed a diploma. Only 7 percent of online students completed. For some of the nation’s bigger VET FEE-HELP colleges, the completion rate ranged from 1.3 percent to 7.8 percent.[3]

The funding system must be changed so that students are protected from low quality teaching, inadequate support, and the almost certain fate of having a high debt, but no qualification.

Labor will work with the sector to ensure that funding mechanisms are changed to achieve this goal. We will legislate to ensure that a proportion of the payments to providers are only paid if the provider reaches a progression benchmark.

3. Set national priorities to help meet the skills needs of industry

We will set national priorities on the distribution of VET FEE-HELP loans to focus on meeting genuine national and regional needs of industry and addressing skills shortages. In 2015, 35 per cent of VET FEE-HELP loans went to business courses, often delivered online and with very few entry requirements.

VET FEE-HELP is not meeting the needs of our economy. It is not producing the skills we need. Labor will work with the sector to establish mechanisms that will prioritise access to VET FEE-HELP for courses that align with industry needs and skills shortages.

4. Crackdown on brokers

Under Labor’s reforms, we will crack down on the use of brokers, aggregators or third party agents to recruit students. The approach of not directly regulating these brokers has failed. There are still instances of unethical behaviour, cold calling and disputes about inappropriate inducements.

Labor will require all brokers, third party agents, recruiters and aggregators to be licenced by the regulator, the Australian Skills Quality Authority (ASQA). Brokers will pay a licence fee to ASQA which will be set on a cost recovery basis.

5. Ensure that only the highest quality colleges get access to funding

Labor will introduce a number of measures to ensure that only the highest quality providers can access VET FEE-HELP. We will require all VET FEE-HELP providers to reapply for provider status under more stringent requirements. These new requirements – passed late last year – impose stricter financial viability requirements on an Registered Training Organisation (RTO) that wants to become a registered training provider.

However, almost all of the RTOs that are VET FEE-HELP providers gained access under older rules. Labor will require all providers to reapply for VET FEE-HELP access on a rolling basis.

In addition, we will introduce a four-year time limit on VET FEE-HELP provider status. Currently provider access is not time-limited and over a period of four years private providers can be subject to ownership changes that may lead to adverse impacts on the quality of training offered. The four-year time limit will enable continuation as a provider based on performance, demonstrated outcomes and student satisfaction.

6. Improve regulation and make it fit for purpose

Labor will also legislate to give the Department of Education and Training powers to suspend VET FEE-HELP payments to a provider for non-compliance with the Higher Education Support Act and VET guidelines, strengthen audit and information-gathering powers, and take action against a provider subject to ASQA compliance action.

These measures are designed to disrupt the dodgy college racket. It will cause disruption but the pain will be necessary to restore this sector and the broader Australian education sector’s reputation.

Labor’s record

Only Labor has a plan to protect and strengthen TAFE and restore integrity to Australia’s VET system.

That is why last year Bill Shorten announced that a Labor Government will guarantee TAFE funding into the future by working with Premiers and Chief Ministers on a comprehensive National Priority Plan that defines the role of TAFE and places it squarely as the public provider within the VET sector.

 Labor’s TAFE funding guarantee will ensure that a guaranteed proportion of government funding for vocational education stays with TAFE, so that our TAFE system can continue to provide training opportunities for those who need it most.

Labor will also undertake a comprehensive National Vocational Education and Training Sector Review to ensure our vocational education system is properly equipped to train Australians for the jobs of the future, weed out dodgy providers and enforce proper standards, and the central role of our public TAFE system is recognised.

Liberals’ record of maladministration

The Turnbull Government has paid private providers $5.4 billion of taxpayers’ money without any concern about outcomes – about how many students graduate and about the quality of the training they receive.

Table 1: Selected top providers in 2014, their funding and student outcomes

PROVIDER

Amount received ($)

VET FEE-HELP Students  enrolled (2014)

Students graduated

Amount per graduation ($)

Evocca College

$250,185,150

26,848

1,053

$237,592

AIPE

$109,957,263

8,814

117

$939,805

Study Group

$101,714,437

13,715

470

$216,414

Unique

$76,766,985

2,824

172

$446,319

Cornerstone Investments

$46,136,016

4,251

2

$23,068,008

College of Creative Design and the Arts

$35,473,698

3,530

30

$1,182,456

Source: Senate Committee: Education and Employment Q on N No.SQ15-000668

The sector now graduates around one in five of its students while the acknowledged industry completion rate for online diplomas is just seven per cent.

The Turnbull Government is asleep at the wheel

Under the Turnbull Government, poor governance and administration  has allowed the situation to deteriorate.  There are numerous examples of the Government’s maladministration:

  • Under the Liberals, the Department of Education did not initially share data about the dramatic rise in private providers accessing VET FEE-HELP withASQA[4]
  • ASQA has failed to stop dodgy colleges from proliferating in the industry. According to its annual reports, despite increased funding, as complaints by students about the poor performance of providers skyrocketed (from 731 in 2011-12 to 1512 in 2014-15), the number of audits undertaken actually fell (from 1515 in 2013-14 to 1399 in 2014-15)[5].
  • Providers have exploited every avenue to maximise their rip-off of taxpayer funds and routinely ignored the Government’s inadequate efforts at correction. There has been widespread use of brokers or agents who engaged in a wide variety of dubious sales techniques to enrol students, including offering “free” inducements such as laptops and i-Pads, claiming the training was “free” and even pressuring welfare recipients outside Centrelink Offices.
  • Some providers have used a range of devices to keep trading, despite efforts to rein them in. Attempts to hold back fees or tighten governance have been challenged through the courts at every opportunity.
  • Australia’s capacity to earn export income from international education has been compromised, as word of the decline of our VET system spreads.[6]

Declining training standards are putting lives at risk. Well publicised incidents of shonky training have occurred in the security industry, in child care, in training for jockeys and even counselling. In Victoria over 10,000 qualifications in everything from child care to first aid have been cancelled.

Financial Implications

Labor’s proposal to cap VET FEE-HELP loans to protect students is anticipated to save $300 million over the forward estimates and $6 billion over the decade based on preliminary estimates provided by the independent Parliamentary Budget Office.

The remainder of Labor’s proposals are anticipated to be cost neutral or will be met through existing agency resources.


[2] Australian Government, 2016, Redesigning VET FEE-HELP Discussion Paper, p. 17

[3] Australian Government, 2016, Redesigning VET FEE-HELP Discussion Paper, p. 21

[4] Background briefing, 28 February 2016, The TAFE Plunder

[5] Australian Skills Quality Authority, 2016, Annual Report 2014-15