Subjects: VET FEE-HELP, Careers Australia.
EO&E…
JON FAINE
Senator Scott Ryan is a Victorian Liberal Senator, he has been made Minister for Vocational Education and Skills, it is his job to try and sort out the mess of private training colleges and what, I am pretty confident in saying, is a bigger scandal involving larger sums of money than pink batts ever turned out to be. This morning the ACCC is claiming that they have negotiated a partial payback from a company called Careers Australia, Australia’s biggest private college. Scott Ryan, Senator Ryan, good morning to you.
SCOTT RYAN
Thank you for having me Jon.
FAINE
What does this mean? How much money and for what?
RYAN
What was announced yesterday between the ACCC and Careers Australia was a court enforceable undertaking, as a product of an investigation – one of many – the ACCC has underway with the Department of Education into this sector. The agreement they came to involved effectively the repayment of about $45 million…
FAINE
$45 million?
RYAN
It is an extraordinary amount.
FAINE
Oops sorry, we shouldn’t have this! Here, have $45 million back.
RYAN
It is an extraordinary amount of money. And it affects probably just over 12,000 students who…
FAINE
Who therefore have their debts cancelled?
RYAN
…Who will effectively no longer have a debt. Now we are actually chasing up the implementation of this today, because this is of course a court enforceable undertaking with the ACCC, to make sure that flows through because there is always a bit of a lag between things being agreed upon and things happening. So that is a priority for the department at the moment. And also there will be a number of provisions put in place to allow further students from Careers Australia who wish to have their debts waived if they don’t think they were enrolled properly, in breach of Australian Consumer Law, to make applications to Careers Australia and see that happen as well.
FAINE
What subjects and courses were these students studying?
RYAN
I don’t have information from the ACCC yet on what exactly the break-up of the course by course.
FAINE
I am not asking you for specific numbers, but what types of courses.
RYAN
This organisation offers a range of diplomas, which are funded under the VET FEE-HELP scheme. It also offers other services that are not funded under VET FEE-HELP.
FAINE
Sure, but are we talking about the fortune telling, belly dancing, massage therapy sorts of courses that some people were being signed up for?
RYAN
There were some of those, and there are ongoing investigations. These were primarily, I think, be involved in diploma of business and diploma of management type courses.
FAINE
Notional diploma of business.
RYAN
In this case, obviously, yeah. But this highlights the problem, because quite a few of these students, and the most horrific example if the 80 students signed up in northern Queensland in the disadvantaged indigenous community, who were signed up with inducements. And one of the issues in this program is that we brought in on the 1st of April last year the ban on inducements and this actually applies to conduct before the 31st of March last year. Some of these changes…
FAINE
These were people in remote communities who were told: just sign this piece of paper, it doesn’t have any bearing on anything for you, you don’t pay tax so you won’t get penalised. You won’t have to repay, here is a free iPad for signing up, and we clean up – what, $10 ,000 $12,000 per signature?
RYAN
It could be more than that.
FAINE
Could be? Do you know how much it is?
RYAN
It depends on each individual case, some courses were substantially more than that, some courses weren’t. The issue here, which the ACCC has got the agreement on with our support, is that they were not outlined that they occurred a cost at all. That it was a breach of Consumer Law in that sense.
FAINE
And I am delighted that the ACCC has at last been doing what some of us were saying ought to have been done, I might say some years ago. But when is the first fraud prosecution commencing because the individual people who were pedalling this rubbish need to be held to account.
RYAN
Jon, I have actually pursued that very question, following a number of discussions that we have had it was one of the questions I asked the department. At this stage that doesn’t appear to be a particularly fruitful avenue of investigation in the short-term.
FAINE
Why not?
RYAN
The advice that has been provided to me is that the evidence that the department has would not necessarily support the standard of proof required for that.
FAINE
Then get a better department, quite bluntly Minister, I am sorry, if you aren’t able to prosecute someone for fraud for going to a remote indigenous community and signing people up with absolutely no expectation of any meaningful training eventuating, why can’t you prove fraud? And out people in, if necessary in jail if indeed the facts support it.
RYAN
Jon, I am not a lawyer, I cannot answering the detailed question about the standard of proof. I have asked that question.
FAINE
If the department doesn’t have an appetite for this then you need a better department.
RYAN
To be fair to the officials, they have very little to work with.
FAINE
Then get them more.
RYAN
This is why we have committed to profoundly change the law. Let me explain how flawed this process was. The law didn’t prohibit until 1 April last year, didn’t specifically prohibit the handing out of laptops or iPads as an inducement, we did that. Secondly, the law as it was set-up if a provider got forms signed by students, and those students had no prospect of completion, the department under the law legally had no ability to not make payment to the provider. This scheme is profoundly flawed in its design. And any area – we have had the AFP raid a provider over the last six weeks, people would have read about that. We have got more investigations ongoing with the ACCC. Where you have got to involve the ACCC to this scale, where you have to involve the AFP in a Commonwealth program, is a sign the program is broken. It was never designed with understanding the sort of negative consequences that could happen with this amount of money on the table.
FAINE
Is there more to be recovered?
RYAN
We have multiple investigations ongoing with the ACCC of this like, there are several court actions being undertaken. This actually was a court enforceable agreement, meaning that a court action did not take place. And as I said there is the prospect of higher repayments if more students make application under this agreement.
FAINE
Why should we trust the department that was at the core of handing out this money, to be capable of reviewing its own failures and its inadequacies in cleaning up its own mess.
RYAN
To be fair, and I have said this before on air Jon, the department didn’t legally have the power to not make payments.
FAINE
Then why didn’t the department warn the then ministers that this was being…when, sorry, if we knew, the media knew, we were saying it, we were telling you and nothing happened. Tens and tens of millions of dollars was continuing to be processed while this was an open scandal. And no one did anything about it. And now you are trying to make a virtue about getting some of it back. But quite frankly I don’t trust the people advising you if they are the same people who sat there and watched this train going to crash.
RYAN
With respect, most of this, all of this conduct happened before measures were brought in to stop this conduct. This all dates up to 31st of March last year. One of my predecessors Simon Birmingham actually brought in some serious compliance measures that have actually stopped a lot of this behaviour. What we are seeing in this area is quite frankly appalling behaviour that dates back to 2013 and 2014. Now there were changes brought in after that, there was a taskforce set-up with the ACCC and new South Wales Fair Trading and other agencies at the start of last year, and that is actually what has led to the court actions, the investigations and the announcement yesterday.
FAINE
Are Careers Australia though continuing to operate with Government assistance in this market place.
RYAN
They are.
FAINE
And yet they cheerfully admit that they gouged the taxpayer for $45 million plus that they volunteer to give back, but you still give them more. Why aren’t they blacklisted?
RYAN
There is no capacity to do so.
FAINE
Why not?
RYAN
Because the law that this program was set-up with is profoundly flawed. That is why we have committed to redesigning it and re-legislating it in the second half of this year for next year.
FAINE
So, if someone comes around to your place and says ‘I’ll fix your plumbing for $1,000’ they take the $1,000 and don’t fix the plumbing, and then they say ‘ Oh, sorry I will give you some of it back but I will come and fix your plumbing next week, give me another $1,000’ – you wouldn’t give it to them.
RYAN
I should say, to be fair, I don’t think they did it cheerfully, I don’t think anyone pays back $45 million cheerfully. Without defending this conduct at all, this is a result of serious work by the ACCC and the Department of Education, that shouldn’t have to happen in the first place. This is the real problem, this is the negligence in this scheme. When you set-up a scheme that involves multiple investigations by the ACCC, the AFP having to raid a provider, then you have got a problem with the design of the scheme. Not all of the students at Careers Australia by any means have been subject to this practice, there are many who have been successful. But this goes to the flaws in the scheme that you and others have highlighted from 2014 onwards, when the scale of problems, it is not just an enforcement or administrative issue, it is a design issue, like it was for pink batts.
FAINE
If a company rips off the taxpayer to the tune of 40 or more million dollars, why do they continue to be on the list of organisations to be given work by the same Government in the same area? If someone rips you off, you don’t continue to trade with them.
RYAN
In the discussion paper I released a couple of weeks ago, one of the proposals I floated, which would require legislation in the second half of this year for next year, was to effectively do a spill and fill of all of the VET FEE-HELP providers. So people have to reapply. And one of the things I am personally very keen on is making sure there is a much higher hurdle to get access to this Commonwealth loan scheme, as well as there being provisions for the department to say ‘we don’t think you are good enough, we don’t think completions are high enough, we don’t think students are engaged enough so we can withhold payment’. At the moment, we go back to this problem that if there is a valid form signed, and the organisation is complying with the standards of being a registered training organisation, there are 4,500 of those in Australia, that we have no legal capacity to not make them payments. And the Commonwealth has been sued before for slowing down payments. So we have some powers that were brought in there last year. But we don’t have enough, that is why we are committed to building the scheme in the second half of this year.
FAINE
I haven’t even asked you about the election campaign, apparently there is a Federal election on, I think you probably have a few things to say but maybe some other time. I am running shockingly late because I have spent far, far longer on this than we intended and I have lots of other people (inaudible)
RYAN
Thanks Jon, thanks for having me.
FAINE
Thank you for your time. Senator Scott Ryan, Victorian Liberal Senator and he is in caretaker mode still the Minister for Vocational Education and Skills in the Turnbull Federal Liberal Government.
(ends)