Topics: Vocational education and training, TAFEs, VET FEE-HELP, Grattan Report, universities, HECs.
E&OE…
DAVID SPEERS
I want to talk now about an area that is a big policy mess, frankly, one – well I don’t know how much we are going to hear about this before the election – it is vocational education and training. Since the Gillard government back in 2012 essentially opened up the state-based TAFE system to private competition we have seen a lot of shonky operators come in offering courses to students who are quite frankly never going to complete the course. They are taking out big loans, they are saddled with a debt and the taxpayer is saddled with a debt as well under the HELP-FEE system, similar to the HECs system for universities. According to an alarming story in the Sydney Morning Herald on the weekend, one of Australia’s largest provider colleges –Australia Careers Network – 80 per cent of students never completed their courses, and it collapsed a week or so ago leaving 15,000 students in limbo and taxpayers $160 million in debt. The Minister who now has carriage of this is the Minister for Vocational Education and Training Scott Ryan – thanks for your time.
MINISTER RYAN
Thanks David.
SPEERS
You’ve inherited a big policy challenge here, I am not sure if you would agree with the word mess, how would you characterise what needs to happen in the sector?
RYAN
It is important to put in context where the problem is, there are 4 million people undertaking vocational education and training every year in Australia, and about 300,000 of those are involved in this VET FEE-HELP system – that is HECs for vocational courses, that you mentioned earlier – it only applies to people doing diplomas and above. There are roughly just over another million people involved in the state funded vocational sector, which can be certificates 1 to 4, courses that the state government…
SPEERS
They cannot access the HELP-FEE Federal system?
RYAN
No they can’t, but a good part of the money that the states use comes from the Commonwealth government, there are sort of layers of different governments involved here. Now, the VET FEE-HELP system, as you mentioned was set up by Labor. They took the HECs model and they applied it to diplomas and to the vocational sector and allowed private providers into that, they had already been in the space at the state level. And the truth is the application of that model has not worked. There are less checks and balances on the HECs scheme – for lack of a better way of putting it – in the vocational space than there were in the university space. There are 280 odd providers in the VET FEE-HELP scheme, and of course there are about 40 to 50 higher education providers. The higher education providers tend to be long-standing well-known institution and that hasn’t been the case in the vocational space. So, that has led to some of the practices you have mentioned, which over the last 12 months my predecessors in this role have started to tackle. So, you cannot give out the free iPads anymore, you cannot have people being signed up by cold-calls – that used to happen – and we have also put in place limits to how we make payments to these providers to try and shake out some of the more shonky practices.
SPEERS
But it does seem that state-based TAFEs are really having to cut back, they’re feeling the pinch of the competition obviously, cut back on their course offerings while some of these private operators continue to saddle the taxpayer with a lot of debt. Cutting to the core of this, has opening up the whole sector to that private competition been a mistake.
RYAN
It is important to re-state this as well, the opening up to competition to TAFEs at the state level was not a decision of the Commonwealth government. The states signed up to a national partnership under Labor and they all agreed to have what is called contestability in funding. And in fact, some of the TAFEs have been very big recipients of the VET FEE-HELP loan scheme which has actually seen more Commonwealth money go into TAFEs. But the real policy challenge here is that the Commonwealth doesn’t actually fund TAFES. We give money to state governments and then they decide how to run their own training markets. The only money that goes from the Commonwealth to TAFEs has been on an increased level because they have accessed this loan scheme to have more students going through them.
SPEERS
There was a reference, in the Sydney Morning Herald on the weekend or a Grattan Institute report, showing that by 2017 the Commonwealth will have $13 billion worth of loans on its books that it does not expect to collect. I know that would refer to both university HECs loans, and these HELP-FEE loans at the vocational level. Is that right, $13 billion we are not going to see back?
RYAN
This is something that is actuarially reassessed periodically. The Grattan Institute report refers to all of the higher education debt, as well as the more recently acquired vocational education debt, and the higher education part is the overwhelming majority of that. But it is important to remember that why we have a HECs and HELP scheme, and it is actually to say that you can access these education courses but you will only pay it back upon reaching a certain income…
SPEERS
Just on that, the certain income I think at the moment is $53,000 or $54,000 or there about…
RYAN (over the top)
…Just over $54,000…
SPEERS
….a year. Once you hit that income level you have to start paying it back. Today, another Grattan Institute recommendation, that that be lowered down to something like $41,000 – once you hit that income threshold you have to start paying it back. Good idea?
RYAN
That is mainly in the responsibility of Simon Birmingham, the Minister for Education with responsibility for higher education…
SPEERS
Would it apply for HELP-FEE loans as well?
RYAN
Well, it wouldn’t automatically but I think it is logical to have a single repayment threshold, that is my personal view. And Simon Birmingham has made the point that it is something that is worth being thought about. The Government previously had a proposal to lower the repayment threshold, but it is not a policy of the Government at the moment.
SPEERS
Alright, but it is being looked at?
RYAN
It is something that is always being looked at because as well as ensuring we have access to higher education, we have to actually ensure that it is sustainable and affordable for the taxpayer. And we cannot constantly keep having increases to the taxpayer with dramatic increases with participation in education if at the same time the taxpayer is not getting a reasonable proportion of those loans paid back.
SPEERS
It is a hit on the lower income earners though?
RYAN
I think it also reflects the fact that whether it is in higher education or vocational education, it is giving people the opportunity to seek higher qualifications or to maybe even undertake jobs that they otherwise wouldn’t. So, there is a private benefit there too, when you can complete a course of get a particular skill or qualification and then you have access to a job that you previously didn’t.
SPEERS
Let me ask you, and I know this is Simon Birmingham’s area – higher education – but does the sector, do universities need some clarity this side of the election. They have gone for two years of uncertainty and quite confusing government policies on deregulation and then it is shelved and then you might do something else. When are we going to find out what are you going to do here? When will universities know how to plan forward?
RYAN
One of the things I have learnt in this job David is not to comment on my colleagues portfolio because I am simply not across the detail. I can talk about what we are doing in vocational education – we have made a commitment that we are going to redesign the VET FEE-HELP scheme for 2017. Because in that sector, I know there needs to be some certainty, and there needs to be some provision to prevent the shonky practices we have stopped coming back, and to clean out the sector to ensure that its reputation isn’t further damaged.
SPEERS
Alright, but if it is good enough for vocational education, surely it is good enough for universities to get that certainty too?
RYAN
Universities have a very certain environment, in the end they know in very broad terms what their funding envelope is – there have been some arguments at the margins on that – they know they have a demand driven entitlement to students, so they can actually take in as many students as they need. So the universities have a very stable funding environment, and regulatory environment. The vocational sector has been through some dramatic change, and as you mentioned we have seen some pretty troubling practices which we are stamping out.
SPEERS
Minister, we will have to leave it there. Thanks for joining us this afternoon.
RYAN
Thanks for having me.
(ENDS)