House of Representatives

Education and Other Legislation Amendment (VET Student Loan Debt Separation) Bill 2018

Second Reading Speech

Mrs ANDREWS (McPherson-Assistant Minister for Vocational Education and Skills)

I move:

That this bill be now read a second time.

The Education and Other Legislation Amendment (VET Student Loan Debt Separation) Bill 2018 enables the separation of VET student loans debts from other forms of Higher Education Loan Program debts.

This bill also enables a clearer and more effective transition of approved courses eligible for VET student loans.

Vocational education and training is central to Australia's economic prosperity and employment outcomes for students.

Income-contingent loans in VET help achieve this prosperity by assisting students to access higher-level VET qualifications.

The government supports income-contingent loans-without them, students would miss out if they could not afford to pay full tuition fees to undertake higher level VET qualifications.

The VET Student Loans program provides capped income-contingent loans to students undertaking higher-level VET qualifications.

With over a year of the program being in force, it is clear that it is meeting its objectives.

Completion rates are up, and the course list is successfully balancing industry needs, employment outcomes and student choice.

The capping of loans to $5,000, $10,000 or $15,000-with an exception for aviation courses given their high cost of delivery-has limited the excessive price gouging experienced under VET FEE-HELP.

In addition, payments in arrears and student progression requirements are ensuring loan amounts are being paid for genuine students, putting an end to unacceptable enrolment practices in the now closed VET FEE-HELP scheme.

With these measures successfully achieving their objectives, this bill will better measure the program's fiscal sustainability.

There is currently limited capacity to measure the sustainability of the VET Student Loans program because a debtor's HELP repayments are not disaggregated by loan type.

Irrespective of whether the debt applies to HECS-HELP, FEE-HELP, SA-HELP, OS-HELP, historical VET FEE-HELP or VET student loans assistance, loan repayments are made towards a single, aggregated HELP debt.

This means the government cannot accurately determine what proportion of which form of HELP assistance paid by the government has been repaid by debtors.

Similarly, where a HELP debt is not being repaid, it is not possible to identify the form of HELP assistance the debt relates to.

This bill will separate VET student loans debts from other forms of HELP debts, providing greater transparency of repayment rates for VET students and better information to inform policy decisions and the public.

From 1 July 2019, individuals who incur a VET student loans debt will access a separate statement of account for their VET student loans debt.

And from 1 July 2020, the individual's notice of assessment will display VET student loans repayment details.

This bill will enable more timely, transparent and accurate reporting on the fiscal sustainability of the VET student loans program, and support greater public accountability of the program.

The repayment thresholds, repayment rates and indexation with respect to VET student loan debts will be the same as the repayment thresholds, repayment rates and indexation for HELP debts.

A person must start repaying a debt in relation to a VET student loan once they have finished repaying any HELP debts.

Consistent with existing arrangements for HELP debts, persons residing overseas who have a VET student loan debt will be required to make repayments in respect of those debts.

A key feature of the success of the VET student loan program is the course list-the VET Student Loans (Courses and Loans Caps) Determination 2016.

This bill also enables better continuity and more flexibility in delivering approved courses for VET student loans providers-providers who have proven their quality through the rigorous application process.

Loans are only available for courses on the course list. This list ensures students are only incurring a debt for courses that have high national priority, meet industry needs, contribute to addressing skills shortages and align with strong employment outcomes.

This list is updated twice yearly. Courses are specified by reference to their course code.

If a course becomes superseded, non-current or is reaccredited, students cannot be approved for loans to undertake the new version of the course until the next course list update.

Each time the list is updated, a number of courses are replaced by the superseding or reaccredited version.

This bill lays the groundwork for the course list to refer to the national register as defined in the section 3 of the National Vocational Education and Training Regulator Act 2011.

The national register is the authoritative information source on nationally recognised VET courses and training packages and their status.

By enabling the course list to refer to the national register, students will be able to be approved for a loan when a course on the list is replaced, without having to wait months for the list to be updated.

It is not possible to include anticipated replacement courses on the list.

We considered alternatives before coming to the conclusion that referring to the national register is the best approach.

The VET system is dynamic. A key feature is its capacity to provide nationally recognised training to build skills across almost every industry and sector in the Australian economy through over 2,000 courses.

Qualifications developed under training packages are reviewed by industry on a regular basis, with the Australian Industry and Skills Committee meeting six times a year to consider course updates. A qualification only gets a course code once it is included on the national register.

The reaccreditation of accredited courses is considered by the relevant VET regulator. The regulator can determine to extend the currency of a course until the reaccreditation of the course is reviewed and approved. Reaccredited courses are assigned course codes once approved and put on the national register.

It is not possible for the course list to predict what courses will be considered and approved by the Australian Industry and Skills Committee or VET regulators in advance, nor will those courses be allocated a course code until they are approved.

Updating the course list to refer to the latest version of the course on the national register won't open up the course list and it doesn't change the methodology for adding courses to the list.

It just ensures that students are not disadvantaged when a course is replaced.

The national register already has clear linkages between current and superseded or expired training package courses. This ensures that students will only be able to access loans for courses that supersede training package courses on the national register.

We are working to make further changes to the national register to ensure the reaccreditation of accredited courses is also clearly indicated on the national register. These changes are expected to be made before the determination is updated to refer to the national register.

The integrity of the VET Student Loans program will not be compromised.

As I've discussed, targeting access to higher level VET qualifications that have industry need and strong employment outcomes is a key objective of the VET Student Loans program.

I commend the bill.

Debate adjourned.