Subjects: VET FEE-HELP Discussion Paper, Kidman land sale decision.
E&OE…
PATRICIA KARVELAS
And first to a story we have been keeping an eye on in recent weeks and that is the crisis facing vocational education and training, also known as VET. After a series of consultations around the country, the Federal Government has today released its discussion paper on redesigning the student loans system for VET. Senator Scott Ryan is the Minister for Vocational Education and Skills and he is in the studio with me. Nice to see you.
SCOTT RYAN
Thanks for having me Patricia.
KARVELAS
What did you hear in those consultations that you didn’t already know? Because you had a broad assessment about what was going on.
RYAN
What I heard from people that turned up – which included providers and I also spoke to people who have been helping students who have been hit by the scandal like the Consumer Action Law Centre and other people – was that the system, as it was designed and put in place in 2012, = it underwent rapid expansion had been rorted. We have all seen the stories about shonky behaviour that has seen thousands of students out of pocket and out of education as their providers collapsed. The incentives put in place, the design of this scheme has led to all of these problems. Which have involved the waste of millions and millions of taxpayers’ dollars as well as those tragic stories we hear.
KARVELAS
Okay, you have been keen to blame Labor’s expansion of FEE-HELP, those loans that were extended to the VET sector, but it is a bit more complex. Megan Lilly from the Australian Industry Group who is no lefty, she is not just arguing for more money coming toward the sector. She said to this program very recently when we held a panel on this, that FEE-HELP in VET works in principle but mainly we need to be stricter with who can actually be a provider. Is that going to be at the centre of your reforms?
RYAN
With VET FEE-HELP, this is only one part of the vocational sector, it funds diplomas and above. All of the certificate level qualifications are not accessing VET FEE-HELP. What Megan and the Australian Industry Group have suggested is that there be some sort of link between what courses you can do and whether that has a job outcome or whether they are skills in need. At the consultation fora I held I heard people suggesting that, I also heard other people saying ‘no, you should be able to do any course you want’. And that is why the discussion paper we have released today outlines how we got to where we are, there is some pretty horrific statistics in there. The average course fee in 2012 was $5000; it was $14,000 three years later. We have had indigenous students and disadvantaged students in particular targeted, all because of the way the scheme was set-up. It had huge financial rewards for misbehaviour, and it did not reward quality training.
KARVELAS
So do you accept that you need to be more strict with providers? For example, not letting them set their own fees and making it harder for new players to enter the market so easily so they can rort the system?
RYAN
That in itself is one of the key problems, when they took the HECs model from higher education in 2012 and put it on vocational training the market is very different, there are lower barriers to entry, there are different levels of information for students, and there are different types of institutions. The one thing out of all the options that I have indicated that I am personally keen on – because I want the industry, I want the sector, I want students to look at all of the options – is that I think there needs to be an additional hurdle as well as being a training organisation and meeting the standards for that. There should be an additional hurdle to access the VET FEE-HELP program and get access to this very significant Commonwealth (inaudible).
KARVELAS
What kind of additional hurdle?
RYAN
And these are the things we are looking at. If we had an instant payment test, for example on progression through courses then quite frankly with the behaviour I have seen over the last few years, I would probably just get a lot more people marked off as progressing. And I worry about that. I do not want to have payments on completion of courses on their own, because then I will just find that suddenly a lot more people would have miraculously completed their courses. That is why I have listed all of the options to understand the incentives they put in place for misbehaviour, the incentives they put in place for good quality training. Because that is what Labor didn’t do in 2012. They didn’t understand that by putting a big pile of taxpayers’ money on the table, very low standards for entry, that we were going to get the shonks and the dodgy providers that we have seen that in recent weeks we had the AFP involved.
KARVELAS
What do you do to help all of those students who have been ripped off by dodgy providers? Will they be compensated because there are really tragic stories there.
RYAN
There are some awful stories and we have a couple of actions underway. We have three approaches to what we are doing at the moment: the redesign of the scheme is one thing, we released the discussion paper on that today; the students who have been taken advantage of, we have procedures in place to ensure they can access a new provider and we are facilitating that if their provider falls over; for those who have been taken advantage of, we are working with the ACCC and there are significant court actions underway with us and the ACCC and we will have more to say on that in coming weeks…
(Interrupted)
KARVELAS
Before…because we are almost at an election…
(Interrupted)
RYAN
These actions will be ongoing, these are not impacted by the Government going into caretaker, these are things that we have put in place over the last few months as we have really ramped up the focus on compliance and continued the work that Simon Birmingham and Luke Hartsuyker did. But we are dealing with problems that started in 2012. These things can take years before the students realised they have a debt, before they know who to call, before the complaints come to a resolution point.
KARVELAS
This paper is open for comment until, I think, June the 30th this year when we can expect to see some action taken. But that is kind of on the eve of the election, literally just before the Double D election. Is it soon enough for the sector given it is in such dire straits? I know you have launched the discussion paper, but you know what is wrong now, shouldn’t we really be at the point of making the decision?
RYAN
Last year the Government froze the system so it couldn’t grow this year. We couldn’t keep having this extraordinary growth we had seen year on year since 2012. We brought in place a lot of new measures that restricted the recruitment tactics that have stopped a lot of the worst behaviour. Most of the stories we are hearing now about abuse of students actually pre-date all of those changes. And so, the system is frozen, it needs massive legislative change. The way Labor put this in place is if the Department (of Education and Training) had concerns about a 1 per cent completion rate, or people not even turning up to courses, that still didn’t mean that we couldn’t pay them. And we have even been sued. We still had to make the payment to the provider no matter how bad they were, under the law it needs legal change. The reason we have got two months of this being open is because I knew when I got this job that we had a commitment to redesign it for 2017 but I also knew there was going to be an election this year. So, I had to design a process that ensured there was a consultation period, but we also didn’t waste the election period which is why this has come out before that. We need to understand from those in the sector what the incentives and disincentives are when we put in place new rules so we don’t make the same mistake as Labor.
KARVELAS
So is it all just about the FEE-HELP system, will you look at for example, how the sector is funded which is a more broad issue that all of these providers have raised with me and all of the sector have raised?
RYAN
The VET sector has always been fragmented. I have spoken to ministers of both sides going back almost two decades, and the Commonwealth-state, public-private split is not new. It is twenty and thirty years old. That is something to address in the medium to longer term but this (VET FEE-HELP) is a gaping wound on the taxpayer. The way it was set-up, the mess we have got with the students, the dodgy practices and the cost to the taxpayer, this has to be fixed as a priority and we are going to do that for 2017. And then we can actually, once we have fixed this huge problem, can get onto the bigger issues.
KARVELAS
Will we see more detail in the Budget?
RYAN
No, on VET FEE-HELP, without going into specifics, I committed to making sure that we had a frank discussion with all of the problems on the table, every bit of data we have access to, as well as all of the options and possible consequences.
KARVELAS
On RN Drive, my guest is Senator Scott Ryan he is the Minister for Vocational Education and Skills. In a moment we will be speaking to Sharon Bird, his shadow minister. Our number if you want to join the conversation is 0418 226 576 – what should happen to this sector? I am sure you all have lots of ideas on a Friday night.
I just want to ask you on this other big decision, the other big political news today, Scott Morrison has announced his preliminary view that the proposed sale of the Kidman Cattle Station is contrary to the national interest. Is this a good day for the Nationals but a bad day for people like you, economic rationalists like you who believe in foreign investment?
RYAN
I think the Treasurer also said he was as strong believer in foreign investment…
(interrupted)
KARVELAS
He might have said it, but this decision is contrary to that principle.
RYAN
I remember when Peter Costello actually knocked back the Shell purchase of Woodside and people said that about him, but it was actually in the longer term a very good decision for Woodside shareholders and for the country because it saw the development of resources off the north-west shelf more quickly. It is the job of the Treasurer to consider the national interest, this as I understand, this particular sale represented 2.3 or 2.4 per cent of Australia’s agricultural land, it is an enormous parcel, even with some of the changes proposed to split some of it off it was still 2 per cent of agricultural land in Australia. So, I think what he has done is actually be transparent about it.
KARVELAS
Sure, but doesn’t it send a chilling message about how we view foreign investment as a country? A country that was meant to be open to foreign investment, now closing its doors?
RYAN
I think it actually gives people confidence precisely because he went out and did a press conference. In other parts of the world we have seen Australian companies not be able to make purchases they thought they could, but all of a sudden there is a closed door decision. The Treasurer went out and did it publically and explained his reasons, that is what gives investors confidence.
KARVELAS
Senator Scott Ryan we are going to leave it there, but I will see you next week in Canberra! I am going to be there for the Budget.
RYAN
See you for the Budget.
KARVELAS
That is Senator Scott Ryan, he is the Minister for Vocational Education and Skills.
(ENDS)