CHAPTER 2
Introduction
2.1
The key purpose of the bill is to strengthen the administration of the
VET FEE-HELP loan scheme, improve the quality of outcomes for students, and
protect students, public money, and the reputation of the broader vocational education
and training (VET) sector.
2.2
There was broad support for all the provisions in the bill from public
and private VET providers, universities, and the unions.[1]
Indeed, some submitters acknowledged that while the reforms would add an
additional administrative burden on VET providers, 'the ultimate aim of
protecting students from unscrupulous operators has to be paramount'.[2]
2.3
However, some submitters argued that the problem is not with the VET
FEE-HELP scheme as such, but rather the unethical practices of certain
for-profit registered training organisations (RTOs). In this regard, the
Batchelor Institute of Indigenous Tertiary Education (The Batchelor Institute)
argued that the VET FEE-HELP scheme was over-regulated, while the initial and
ongoing registration of VET FEE-HELP providers required stronger regulation
through the Australian Skills Quality Authority (ASQA) compliance and auditing
system.[3]
2.4
Some submitters, while supporting the measures in the bill, argued that
the reforms needed to go much further and called for a fundamental change to
the architecture of the VET sector and the regulation and funding arrangements
for VET FEE-HELP.[4]
2.5
The key issues raised by submitters in relation to the provisions in the
bill are discussed in greater detail below.
Key issues
Appropriate student entry procedure
requirements
2.6
There was strong support from several submitters for the proposed
requirement for VET FEE-HELP approved training providers to develop and apply appropriate
student entry procedure requirements.[5]
2.7
Charles Sturt University stated it had a strong track record of
successfully transitioning graduates of the VET sector into the University sector.
Charles Sturt University observed that unrealistic entry requirements not only
cause student failure and long-term disengagement from further education, but
also impact the future workforce and sustainability of regional Australia.
Charles Sturt University therefore strongly supported this measure.[6]
2.8
The Council of Australian Postgraduate Associations (CAPA) is the
national peak body representing postgraduate students. CAPA was of the view
that the appropriate student entry procedure requirements could be expanded to
include those full-fee paying students not accessing VET FEE-HELP.[7]
2.9
CAPA raised two matters regarding section 12, clause 45B of the
amendment. First, CAPA was concerned that an unethical provider could
circumvent the new provisions by setting 'low course entry requirements that do
not match the academic needs of the course'.[8]
Second, CAPA was concerned that the requirements may not cover bridging
courses:
The current amendments do not seem to prevent the provider
from advertising a 'bridging course' that is paid for by the student so that
they are able to achieve the 'academic requirements' needed to enter a course.
For example an advert from a provider could inform potential students that if
they take this six week bridging course they will be eligible for the VET
FEE-HELP loan regardless of the results of this bridging course.[9]
2.10
Other submitters were concerned that any additional requirement,
particularly for compliant RTOs, was unnecessary, would increase the
administrative burden, and might be detrimental for students.
2.11
Open Universities Australia (OUA) is owned by seven Australian universities.
In 2013, OUA launched a wholly-owned subsidiary RTO, Open Training Institute,
which offers online access to VET courses. While generally supportive of
minimum entry requirements, OUA had concerns that the changes could
disadvantage students without formal academic qualifications:
We do have concerns, however, as to whether mandating minimum
academic entry standards such as year 12 or equivalent may actually
disadvantage particular students and prevent them from further post-secondary
studies or following their desired career pathway. There are many students
without formal academic qualifications that can meet minimum requirements
through completion of Learning, Literacy and Numeracy provisions already
mandated to RTOs. In addition, people with work experience but no formal
academic qualification could be disadvantaged if only academic qualifications
are taken into account.[10]
2.12
The Batchelor Institute is the only Aboriginal and Torres Strait
islander dual sector tertiary education provider with delivery to remote and
very remote students and communities. The Batchelor Institute was of the view
that the introduction of mandated entry requirements through national testing
was over-regulation that would 'create yet another barrier to students who do
not fit the 'mainstream' profile'.[11]
2.13
Both the Batchelor Institute and Charles Darwin University suggested the
ASQA compliance audit of an RTO's processes and the ASQA standards for student
selection and enrolment were the appropriate way to regulate these matters.[12]
2.14
The Canberra Institute of Technology (CIT), the sole public provider in
the Australian Capital Territory, supported 'measures that encourage RTOs to
check on the likelihood of success of potential students' and to 'direct
applicants to qualifications most likely to offer success'. However, CIT argued
that the addition of Year 12 to the entry requirements was counter to the
Standards for RTOs 2015 and the Training Package policy, and that:
It is preferable to identify a lower level qualification or
specific literacy or numeracy requirements rather than a Year 12 which does not
guarantee either literacy or numeracy skills of the required standard nor
provide knowledge, skills or experience to adequately prepare students to meet
Training Package qualifications for entry into Diploma qualifications which at
this level are specialised, technical and industry focused.[13]
2.15
Similarly, the Australian Council for Private Education and Training
(ACPET) noted that certain student entry requirements may go beyond that
currently required under the Standards for RTOs 2015. ACPET therefore requested
that 'unnecessary duplication' be avoided and proposed that the standards and
evidentiary requirements for VET FEE-HELP and other students be the same.[14]
2.16
La Trobe University expressed concern that the definition of
inappropriate inducements in the bill might impair some collaborative activity
between universities and VET FEE-HELP providers, in particular, access to
library services, internet, and mentoring programs:
The bill defines benefits accessed within the unit or course
of study, and necessary for completion of unit or course learning outcome as an
appropriate inducement. Benefits defined as inappropriate inducements include
access to the internet or software. As currently defined, the Bill may make it
harder for VET FEE HELP eligible providers and universities to collaborate on
activities such as pathways. For example, a student who has a conditional offer
to a joint VET / HE program, who is not yet enrolled, could be perceived to be
receiving an inappropriate inducement if accessing library facilities prior to
enrolment.
La Trobe University's highly successful Aspire Program, which
provides conditional offers to students on the basis of community service, and
access to services such as mentoring and library services could be depicted as
an inappropriate inducement if the offer were in a joint VET / HE
qualification.[15]
2.17
La Trobe University proposed that this issue could be resolved by the
addition of a sub-clause to 39DD (1) (d) (iv) to include: 'the use of such a
thing forms part of a vocational higher education pathways partnership
supported by formal agreements consistent with VET Guidelines and Higher
Education Standards'.[16]
Two day cooling off period
2.18
The OUA supported the two business day period between course enrolment
and application for a VET FEE-HELP loan on the basis that giving a student two
days to consider their enrolment before completing the VET FEE-HELP form will ensure
students are not pushed into a course or funding they do not want.[17]
2.19
While similarly supportive, ACPET observed that the two day requirement
may add 'additional complexity and inconvenience for students'. ACPET therefore
proposed a risk management approach that targeted identified high-risk providers.[18]
2.20
Community Colleges Australia noted that although community colleges make
up only a small fraction of VET FEE-HELP providers, they make a significant
contribution in rural and regional areas. While highly supportive of measures
to support the decision-making process for students and minimise risk,
Community Colleges Australia criticised the cooling off period as excessive,
administratively burdensome, and inconvenient for students:
It requires students to come back to the college or remember
to put documents in the post, both of which are not always easy in rural
environments. If the student is late or forgets, they run the risk of not being
able to access, or be delayed in starting their training. While we are wholly
supportive of stopping the exploitative practices that seem to be occurring in
the VET FEE-HELP space, we do not want to see students missing out due to
excessive 'red tape'.[19]
2.21
Community Colleges Australia suggested that the benefits of a cooling
off period could be retained and any complexity and inconvenience avoided by
allowing the provider to receive an application for VET FEE-HELP, but providing
a two business period during which the student could withdraw the application.[20]
2.22
The Batchelor Institute was of the view that the two day cooling off period
put students in rural, remote and very remote communities at a significant
disadvantage because having to submit two forms three days apart would mean in
practice 'that a student needs to travel twice to an RTO, or has to fax two
forms on separate days'.[21]
Requirement for students under 18
to seek parental approval for VET FEE-HELP loan
2.23
Charles Sturt University noted that people under 18 years of age are 'particularly
influenced by both strong marketing strategies and peer pressure'. Charles
Sturt University and OUA strongly supported the inclusion of a parental check
to ensure that prospective students under 18 years of age fully understand the
implications and details of their chosen qualification approval before
requesting a VET FEE-HELP loan.[22]
Broadening the circumstances for
seeking a re-credit of a VET FEE-HELP loan
2.24
Charles Sturt University noted that, in its experience, 'life
circumstances outside of the student's control that can impact on study and
employment'. Charles Sturt University therefore strongly supported the proposed
broadening of the circumstances in which a student can seek a re-credit of
their VET FEE-HELP loan debt balance and remission of a debt as a measure that
would increase flexibility and 'allow individual cases to be judged on merit
and need'.[23]
2.25
Swinburne University of Technology also welcomed this provision, stating
that 'ensuring vulnerable students are afforded adequate protection and
recourse to questionable provider behaviour is vital to the credibility of the
Australian VET system'.[24]
2.26
Similarly, the Australian Chamber of Commerce and Industry (ACCI) argued
that allowing students to recover their money if they receive a sub-standard
product would 'increase consumer confidence in the system'. ACCI also declared
that 'in these instances, where there is clear evidence of a breach of
regulations or unconscionable behaviour by the provider or their agent', ACCI
would 'support ASQA or the Department of Education and Training (the
department) in recovering from the provider the VET FEE-HELP amount paid to the
RTO'.[25]
2.27
The Consumer Action Law Centre noted a lack of clarity about the precise
basis on which a re-credit of a VET FEE-HELP loan debt balance and remission of
a debt would be granted:
It remains unclear exactly how a student is to access these
new measures. It also appears from the Bill (specifically item 14, proposed section
46A) that the bases upon which an individual can seek remission is limited.
While we note that the VET Guidelines, yet to be developed, will provide further
details about the types of unacceptable conduct that might give rise to a
remission of debt, we are concerned that this process will not consider broader
consumer law rights, particularly rights pursuant to the Australian Consumer
Law.[26]
2.28
The Consumer Action Law Centre was concerned that if the department was
solely responsible for administering applications for re-crediting VET FEE-HELP
loans, then students would 'face accessibility barriers and their full suite of
consumer rights will not be considered'.[27]
2.29
The Consumer Action Law Centre therefore proposed that the best way to
resolve applications for the re-credit of a VET FEE-HELP debt would be an
ombudsman.[28]
In their view, the advantage of using an ombudsman was the ability to resolve
disputes flexibly based upon agreed standards as well as consider a consumer's
broad legal rights and not just those based in VET Guidelines.[29]
2.30
The Consumer Action Law Centre recognised that the reforms implemented
by the government in 2015 had diminished some of the worst misconduct in the
sector. However, the Consumer Action Law Centre was critical of the prospective
nature of the measure and recommended instead that it operate retrospectively
such that individuals who have accumulated debt on the basis of unscrupulous
conduct prior to the passage of the bill should be able to seek a re-credit of
their VET FEE-HELP loan debt balance and remission of their debt.[30]
Eligibility criteria for admitting
new VET providers to the VET FEE-HELP scheme
2.31
Charles Darwin University, the Australian Catholic University, and
Charles Sturt University expressed strong support for the strengthened
eligibility criteria and evidence of quality of training provision and student
outcomes for new VET providers to the VET FEE-HELP scheme.[31]
2.32
OUA supported the notion of close scrutiny of VET providers to ensure
adherence to minimum standards. However, OUA was concerned that the requirement
for a VET provider to have been practising for a minimum length of time should
take the track record of the parent entity into account so that it did not
unfairly discriminate against reputable providers seeking to enter the VET
FEE-HELP scheme:
We believe that restricting the ability for a new provider to
apply for VET FEE-HELP is a significant barrier. Whilst minimum standards must
be adhered to and the entity applying for VET FEE-HELP needs to be scrutinised
closely, the department should also consider the reputation of a parent company
when deciding whether to grant an application. Requiring the entity to be practising
for a minimum length of time before application only makes sense if the parent
entity's tenure in education (whether or not the parent is an RTO) is taken
into account. If the parent currently offers HECS help or FEE-HELP and there
have been no significant issues encountered, this should be given a considerable
amount of weight when deciding the suitability of its subsidiary when applying
for VET FEE HELP status.[32]
Civil penalty regime and extension
of the national VET Regulator's powers
2.33
Charles Sturt University, ACCI, and Community Colleges Australia all strongly
supported the proposed penalties for VET providers who engage in inappropriate
behaviour or practice, and the proposed extension of the VET Regulator's powers
with respect to monitoring and investigation.[33]
2.34
ACPET welcomed the civil penalty and enforcement regime as a more timely
and appropriate response to breaches of the VET Guidelines and an improvement
on the current regulatory recourse that relies on 'the blunt instrument of
provider deregistration which may not be in the best interests of students'.[34]
2.35
Noting that ASQA will have powers under the Regulatory Powers Act, both
Navitas, a private company and Australian global education partner, and ACCI
emphasised the importance of ensuring that ASQA has the resources, systems and
capabilities to fulfil its expanded regulatory role.[35]
2.36
Furthermore, ACCI stated that, in addition to any civil penalties or
other infringement notices, ACCI 'would also support placing restrictions on
their registration as an RTO or on accessing government funding in the future
depending on the severity of the breach'.[36]
Use of brokers within the VET
system
2.37
Several submitters stated that the use of brokers within the VET system
was a serious ongoing concern. These submitters pointed out that the current
safeguards were insufficient to prevent ongoing exploitation of vulnerable
learners by third parties, and therefore urged the government to introduce
legislative standards for third party brokers and agents.[37]
2.38
Charles Darwin University suggested that brokers be subject to 'strict
standards and control' while Evocca College recommended a 'mandatory code of
conduct for brokers'.[38]
2.39
ACPET pointed out that while it had introduced measures that govern its own
members' use of agents and brokers, this did not cover all VET providers or
their agents and brokers. ACPET therefore recommended the 'establishment of a
limit on the proportion of VET FEE-HELP tuition fees that are payable to agents
and brokers'.[39]
2.40
TAFE Directors Australia argued that stricter legislation was needed to
stamp out 'unconscionable behaviour by some providers and their brokers':
TDA cautions that current legislation and policy settings
appear to be insufficient, and that far stronger control and governance of the
VET FEE-HELP loan scheme is warranted in the face of incontrovertible evidence
of abuse.[40]
2.41
Noting that 'education brokers essentially operate on a commission sales
model, which presents an inherent conflict between the interests of the
salesperson and the interests of the student', the Consumer Action Law Centre
recommended that commission-based sales be banned.[41]
Industry ombudsman
2.42
Several submitters supported the establishment of an ombudsman for the
VET sector.[42]
ACPET pointed out that the National Complaints Training Hotline only received complaints
but did not deal with them, and that an ombudsman would 'provide a consumer-focused
complaints handling process for students and providers to complement the
National Complaints Training Hotline'.[43]
2.43
Evocca College argued that an ombudsman for the VET sector would 'improve
public perception of the industry, provide a cost effective dispute resolution
option, improve communication and ensure regulators are given early warning of
major issues'. Evocca College suggested that the ombudsman's remit include
complaints relating to the quality of training and assessment, contractual
arrangements and other complaints about both public and private providers.[44]
2.44
Noting that several jurisdictions have a Training ombudsman or similar
arrangements, ACPET argued that it should still 'be possible to put in place
co-operative arrangements that ensure domestic students across the country have
access to a simple, cost-effective mechanism to deal with their complaints'.[45]
2.45
ACPET further noted that the VET regulators have 'limited capacity to
respond to complaints' because the regulators focus on complaints as a means to
inform audits and strategic reviews.[46]
2.46
The Consumer Action Law Centre agreed with the position of ACPET with regard
to the respective roles of a regulator and an ombudsman:
Complaint or dispute resolution (such as through an ombudsman
scheme) and compliance, monitoring and enforcement of standards (by a
regulator) are related, but separate functions. Regulators with responsibility
for compliance monitoring and enforcement do need to be aware of areas of
consumer complaint in order to prioritise activities and deal with industry
problems. However, effective dispute resolution (such as through ombudsman
schemes) has a primary objective of resolving individual complaints efficiently
and effectively for both parties—this may not be the primary objective of
regulators.[47]
2.47
The National Tertiary Education Union supported the calls for an
ombudsman but argued that they should have jurisdiction over the entire
tertiary sector and should investigate complaints from domestic and overseas
students.[48]
2.48
TAFE Directors Australia did not support calls for an ombudsman, stating
that it 'would risk adding another level of bureaucracy'. Rather, they argued
that the current memorandum of understanding between ASQA and the department
should be extended to allow ASQA to effectively regulate the entire VET sector
including administration of Commonwealth student loans.[49]
Committee view
2.49
The committee condemns the unconscionable behaviour of certain private
VET providers and their agents whose unscrupulous practices have blighted the
educational outcomes of affected students, unjustly saddled students with a
lifetime of debt, and unfairly tarnished the reputation of the wider VET sector.
2.50
While the VET FEE-HELP scheme was well-intentioned, the committee
recognises that the necessary compliance and regulatory mechanisms that should
have accompanied both the introduction and expansion of the scheme were never
implemented by the previous government.
2.51
In recognition of the serious quality issues that it inherited, the
government has therefore acted swiftly to implement a range of regulatory
reforms to enhance the operation of the VET FEE-HELP scheme.
2.52
The committee commends the government for acting quickly to tighten the
rules to prevent VET providers from misleading vulnerable students with
unscrupulous marketing techniques to sign up for courses which they believed to
be 'free' or 'government funded'. The measures in this bill will build upon
these changes however the committee notes that further work still needs to be
done to continue to clamp down on unethical providers.
2.53
The committee notes that, historically, greater competition and
contestability in the VET sector have enjoyed bipartisan political support. It
is also clear from the inquiry that the measures in the bill have widespread
stakeholder support.
2.54
The committee acknowledges the strong support across the board from
submitters for the measures contained in the bill. The committee therefore
commends the bill as a vital reform that will improve the integrity of the VET
FEE-HELP scheme and restore confidence in the VET sector.
Recommendation 1
2.55
The committee recommends that the Senate pass the bill.
Senator McKenzie
Chair
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