Topics: VET FEE-HELP
E&OE…
ROSS GREENWOOD:
The VET FEE-HELP scheme, as we have told you many times on this program, there has been a serious crisis in the way in which your taxpayer dollars have been doled out by government to a range of, shall I say dubious players, in some cases shonky players, some of whom have gone broke, and effectively handed out courses to people who were ill-appropriate to take those courses. In many cases bribed by gifts of laptops, iPads, whatever it might have been to take on the course, then charged them many tens of thousands for that course, but because they were under the income threshold of $54,000 a year would not have to pay back their effective HELP-FEEs to the government ever. Now, what is suggested is that there has been significant payments, we are talking hundreds of millions, billions of dollars that have flowed from the Federal government, your taxpayer dollars as a result. Now, the Australian Competition and Consumer Commission today has accepted a court enforceable undertaking from one of these companies, Careers Australia Group. Now, what has happened is that the ACCC has indicated that between August 2013 and March 2015 Careers Australia has received and processed applications from 40,000 students – 40,000 get that! – for enrolments into its courses. Of those students, 20,242 were enrolled and their incurred a debt to the Commonwealth government. Careers Australia received approximately $190 million worth of payments from the Commonwealth government, so this particular enforceable undertaking, which is enforceable by the courts, indicates now that there is going to be a significant repayment that is going to come back. So, they are going to pay back a large amount of it. So, as I say I think it is ludicrous that it has got this far with this particular scheme. Now Careers Australia has cancelled at least 12,000 of the student enrolments and has also repaid, or partially repaid to the Commonwealth, at least $44 million. The suggestion is that if enrolments have not been reversed Careers Australia could have received payments of up to $300 million of your money, your taxpayer dollars. You wonder why the debts are going north. Let’s go to the Minister for Vocational Education and Skills on the back of the ACCC announcement, Scott Ryan. Thanks for your time Scott.
SCOTT RYAN:
G’day Ross, how are you?
GREENWOOD:
You and I both understand that this has been an absolute disgrace, the way in which this has worked.
RYAN:
You were very (inaudible) in the way you introduced it as dubious practices, this has been unprecedented in its scale and interestingly this is not the only investigation that we are working on with the ACCC, there are a number of court actions underway as well as investigations. And hopefully there will be more things to say along these lines in the coming months.
GREENWOOD:
Let’s hope so, because I know that you have had this all land in your lap and really try to go through what have been some of the outrageous practices but the thing I keep on thinking – there was such a hue and cry about the pink batts scheme, when the home insulation scheme was created really unchecked by the Rudd government during its reign. But the fact is that this has been a very similar thing and it is only now being pulled up, and in many cases the hundreds of millions of dollars have walked out the door.
RYAN:
Even more concerning Ross, is that a number of these strategies were tried in Victoria in 2008 and 2009 and this scheme came about as a result of the deal between the Federal Labor government and particularly the Victorian Labor government at the time to open up the scheme in this way. And when the Victorian government did it, they had exactly the same problems yet when the Federal Labor government did it in 2012 a lot of the same problems were (inaudible) just with extra money involved. So, interestingly the undertaking with the ACCC yesterday covers practices by Careers Australia up until March 31st last year, the reason it does that is because on April 1st last year my predecessor as Minister actually brought in a specific ban on the use of inducements, that is handing out the laptops, or handing out the iPads to get people to sign up. So, most of the issues we are dealing with, without justifying it because it is horrific for the taxpayer and often the individuals involved, are actually legacy caseloads from 2012, 2013, early 2014.
GREENWOOD:
I am hearing that, but also you think about this, Career Australia in this case the ACCC said today allowed 80 consumers from a remote aboriginal community in Yarrabah in Queensland to be enrolled and incur debts when they were offered inducements to sign up – these are the iPads and the rest of it – but not alerted to the debts they would incur. Now that is predatory behaviour if I have ever heard it.
RYAN:
And look the great flaw in the way this scheme was put together by then previous government in 2012 was that it had so many holes in it. We have had the AFP in recent weeks raid a provider to try and get information, we have got a number of ongoing investigations on our own plus with the ACCC. Any government program that was designed in such a way to have multiple ACCC investigations, at least one activity by the AFP, it is a flawed program. And that is why we have had to commit to redesigning it and rebuilding it from the ground up in the second half of this year for 2017.
GREENWOOD:
Okay, just one thing, do you now know how many loans have gone out on the VET FEE-HELP scheme? How many billions of dollars? Because I know it has accelerated to more than $2 billion a year, as I understand it?
RYAN
We haven’t got the final figures coming through for this year, we are about to get the final figures for last year. We have frozen it at last year’s peak, so it can’t be any more than what it was last year when it hit $2.8 to $2.9 billion, I can’t remember the exact figure off the top of my head, so it can’t be higher than that this year. It will probably be a bit lower. But again, one of the things that was a giveaway to where these problems really occurred was that it went from $300 million when it started to $3 billion in five years.
GREENWOOD:
And then the next part about this is, given there was that much money of taxpayer dollars that has been effectively put into this debt, the question is have you made any assessment as to how much of that debt you might be able to claw back as a result of the dubious practices and the work of the ACCC?
RYAN:
One of the things I have to be careful of Ross, is that I don’t want to necessarily give away the investigations we are undertaking at the moment because as we have seen in this sector, if you give away too much we see some behaviour changes. There are two ways we have to look at the debt value. One of which is repayments, and the amount from Careers Australia could in fact increase because students have the ability to apply to have their debt waived and to have their money refunded. And the second one is of course the actuarial assessment that is undertaken by an independent actuary on the likelihood of those who have got debts and are in the workforce repaying them. That is done independent of us, we are focussing on the compliance now and all of the investigations that we have got underway. And yesterday and last night’s news was the first in hopefully a series of announcements.
GREENWOOD:
One final one for you Scott, because if you look at say, for example, the cost of a private college course, one of these private colleges for salon management is about $32,000, but at TAFE has the same course in New South Wales, the cost of that is $7,000. To me it would appear that private colleges out there are making huge margins, and yet it was supposed to bring down the price of education because of competition. To me the TAFE system was a robust system that seemed to work. The privatisation of this whole education system seemed to just simply create a gravy train for people who are opportunistic and taking advantage of people who are very vulnerable.
RYAN:
There are a substantial number of TAFE courses that are well over $10,000, that is just one example that we put in the discussion paper that I released a couple of weeks ago to show how there has been cost inflation for students as well as taxpayers. And again, it goes to the flawed system design in 2012, there weren’t the checks and balances on any of the providers, public or private, because they thought this area was going to operate like the universities with all of the informed consumers and long-standing institutions with their interest in their own reputation. Yet they opened the door to shonks and fly-by-nighters knowing that they would get people to sign forms like you mentioned, that under the regulation the Labor Party put in place meant they could get all of the money up-front and it didn’t matter if the students completed. One of the real problems is, under Commonwealth law we have no power to not pay the providers money, even if the completion rate is 1 per cent. We still have to give the providers the money and we have been sued on that basis.
GREENWOOD:
Absolutely, you are the man in charge of all of this.
RYAN:
And that is why we will change it.
GREENWOOD:
And I tell you what, more speed to you. This is the point, Scott Ryan the Minister for Vocational Education and Skills off the back of that ACCC. You can see what a mess that is, the mess that certainly the Government inherited and, to be honest, was slow to act but it is finally getting there thankfully. Just bear in mind that it is yet another scheme that the Labor Party did put in place, it is going to cost taxpayers and we are talking here $3 billion a year. Now, it started at $300 million went out to $3 billion, it is serious amounts of your taxpayer dollars that have just been washed down the drain. It is unacceptable, somebody has got to pay for it, the shonks who have done the wrong thing should pay for it. But again, you have just got to raise questions about the responsibility of those people who put the scheme in place in the first place. Scott Ryan, appreciate your time.
RYAN:
Thanks for having me on Ross, always happy to come on.
(ends)