Second Reading SpeechMs O'DWYER (Higgins-Minister for Jobs, Industrial Relations and Women)
That this bill be now read a second time.
Today I am introducing the Higher Education Support Amendment (VET FEE-HELP Student Protection) Bill 2018, which will provide a remedy for students who, due to the inappropriate conduct of their VET provider, incurred debts under the VET FEE-HELP loan scheme.
This bill is all about cleaning up another mess left for Australian taxpayers from the previous Rudd-Gillard-Rudd Labor government. The VET FEE-HELP loan scheme changes of 2012 have resemblances with other poorly designed Labor programs, such as the disastrous pink batts scheme and the schools halls debacle, which resulted in Australian taxpayers being ripped off.
The 2012 changes to the VET FEE-HELP scheme by the former Labor government allowed a number of unscrupulous training providers to offer bogus courses to Australian students, often with the inducement of a free laptop or tablet, without advising them they were incurring a debt to the Australian Taxation Office. This arrangement left vulnerable Australian students and ultimately Australian taxpayers with the bill. It also had the potential to damage the reputation of the overwhelming majority of training providers who were doing the right thing.
VET FEE-HELP scheme
The VET FEE-HELP loan scheme operated from 2009 to 2016, with some continuing students accessing loans during 2017 and 2018 under grandfathering arrangements. The VET FEE-HELP loan scheme was originally designed to assist students with the cost of VET studies that led to a higher education outcome, such as a bachelor's degree. The loan to students covering their tuition fees for the cost of their study had income-contingent repayment arrangements.
In late 2012, the VET FEE-HELP loan scheme was changed and the requirement that the VET course provide a bridge to a higher education outcome was removed. This opened up the scheme to more VET students, but unfortunately, because of the Labor government's very poor design work, unscrupulous training providers took advantage of vulnerable students.
The Australian National Audit Office, in its 2016 audit of the VET FEE-HELP scheme, characterised this amendment as:
heavily ... supporting growth in the VET sector-
... insufficient safeguards for students from misleading or deceptive conduct, and inadequate monitoring, investigation and payment controls for poor or non-compliant- VET-providers.
The abuse of the VET FEE-HELP loan scheme after the 2012 changes is well known, including that students at a number of unscrupulous providers incurred debts as a result of being signed up to courses they would never complete. The 2012 changes meant that VET providers would receive payment of the amount of the student's loan in accordance with the data they reported on students enrolled in units as at the census date for the course-that is, the time at which the enrolment is finalised and the debt is then incurred.
Opportunistic providers attempted to enrol as many students as quickly as possible so they could benefit financially. In doing so these providers and their agents targeted some of the most vulnerable Australians, including people with limited educational opportunities, people with disabilities, and Indigenous people. They employed deplorable tactics, including aggressive marketing schemes, using brokers and cold-calling people. They offered inducements such as laptops and iPads in exchange for a person's agreement to enrol in a course. They provided inaccurate advice regarding courses and the consequences of enrolment.
In many instances, these students were not advised that VET FEE-HELP was a government loan that had to be repaid based on the student's income, so that if they reached a particular threshold this would trigger a requirement for repayment through the Australian Taxation Office. These aggressive marketing techniques were targeted at people who were not looking for a particular field of study but were enticed by the rewards on offer rather than genuine students focused and prepared to complete their course of study.
I am aware of the case of one student, Gabrielle, who has bipolar disorder. Under the VET FEE-HELP program, she was contacted by an education agent acting for a training provider and encouraged to enrol in a Diploma of Business course. The agent convinced Gabrielle that the course was 'free'. Gabrielle was also offered a 'free' laptop as an added incentive to enrol in the course. Before the course commenced Gabrielle realised that due to her condition she really wouldn't be able to undertake any course at that time. Gabrielle contacted the training provider to explain her circumstances and asked to be withdrawn. Gabrielle said that the training provider convinced her to change courses and she subsequently enrolled in a Diploma of Counselling course. Realising her mistake, Gabrielle contacted the provider again and asked to be withdrawn from the second course. The provider did not action either of her requests to cancel her enrolments and Gabrielle incurred VET FEE-HELP debts of over $20,000 for the two courses. Gabrielle submitted an unacceptable conduct application to the department to have the debts cancelled.
This legislation will help ensure that those students, like Gabrielle, who were ripped off by the unscrupulous providers that were allowed to flourish under Labor's poorly designed program, can have their debts cancelled by the department.
Increased regulation of Commonwealth assistance to VET students
The changes in this legislation build on earlier work from the government to clean up Labor's mess.
The Higher Education Support Amendment (VET FEE-HELP Reform) Act 2015 and the Higher Education Support (VET) Guideline 2015 commenced on 1 January 2016, and began the process of strengthening the safeguards within the VET FEE-HELP scheme to address this exploitation. These reforms included introduction of the concept that the exploitative practices of providers amounted to 'unacceptable conduct'. Where a student successfully claimed unacceptable conduct occurred on or after 1 January 2016, the student's VET FEE-HELP debt was remitted. This went some way to limiting the most exploitative practices of VET FEE-HELP through 2016, but only applied to the 'unacceptable conduct' of providers post 1 January 2016.
From 1 January 2017, the VET FEE-HELP scheme was closed to new students, and no new applications to the scheme have been accepted from that date. It was replaced by the VET Student Loans program, which introduced greater regulatory controls and eligibility requirements to ensure that genuine VET students would benefit and unscrupulous providers would not.
VET FEE-HELP scheme oversight
Another essential reform was the establishment of the VET Student Loans Ombudsman on 1 July 2017 under the Education and Other Legislation Amendment Act (No.1) 2017. The ombudsman is dedicated to receiving and addressing VET student complaints. The VET Student Loans Ombudsman and the Department of Education and Training have already identified a significant number of students who cannot have their debt remitted under existing legislation, even though they are clearly the victims of inappropriate conduct by VET providers or their agents. As these cases came to light it became clear that the government must address this inequity, which will continue to damage the reputation of Australia's VET sector if left unresolved.
VET FEE-HELP scheme remedy
This bill aims to remedy the damage caused to these students and restore faith in Australia's skills and training system. The measures in the bill also reaffirm the government's commitment to the long-term viability of the VET sector. It is essential for the government to ensure that there is no financial burden imposed on those who were unfairly caught up in the disreputable conduct that undermined the VET FEE-HELP scheme. While this measure will impose a cost, over the longer term the restoration of Australia's reputation in VET through ensuring we address this inequity will reap greater benefits.
Contents of the b ill
The bill will provide a remedy for students who incurred VET FEE-HELP debt through the inappropriate conduct of their VET provider or their agents, by:
- introducing a new discretionary power to enable the secretary of the department administered by the minister administering the Higher Education Support Act 2003 (currently, the Secretary of the Department of Education and Training) to re-credit a person's FEE-HELP balance where the person incurred a VET FEE-HELP debt as a result of inappropriate conduct by a VET provider or its agent. The inappropriate conduct may have occurred at any time during the operation of the VET FEE-HELP scheme, providing a remedy for any student debtor impacted by inappropriate conduct. This discretionary power may be exercised by the secretary on application by a person, or, on the secretary's own initiative, which will allow for more streamlined re-crediting where groups of students are found to be similarly impacted;
- facilitating amendments to the VET guidelines, a legislative instrument made by the minister under HESA, to specify matters to which the secretary must have regard when considering whether it is reasonably likely that the VET provider or its agents engaged in inappropriate conduct; and
- empowering the Commonwealth to recover from the VET provider an amount that is equivalent to the debt remitted, in circumstances where the VET provider treated the student as entitled to VET FEE-HELP assistance when they were not entitled to it.
Whilst it is expected that all student complaints will be resolved by 31 December 2020, this is difficult to predict at this time. Therefore the bill provides flexibility for the VET guidelines to prescribe a later date, which also allows appropriate management of costs and resourcing.
This bill is about cleaning up the mess of the former Labor government, whose VET FEE-HELP loans scheme saw thousands of Australian students ripped off. The coalition recognises the valuable work of the vocational education sector who are training and upskilling Australian workers. We are ensuring that their reputation is not further damaged by the actions of unscrupulous operators who flourished under Labor's poorly designed scheme.
Most importantly, we are ensuring that vulnerable Australians ripped off under Labor's program can have their debts cancelled.
I commend the bill to the House.