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Estimates: Economics Legislation Committee (Australian Skills Quality Authority)

Estimates & Committees
Lee Rhiannon 2 Jun 2014

Senator RHIANNON: I want to go back to your opening statement. You said that only 21.2 of existing RTOs audited were found to be fully compliant. That is between that date of October 2013 and 31 March this year. Then at the bottom of the page you give the details about those RTOs that have lost their registration. Could you give that figure as a percentage, please?

Dr Orr : Since ASQA was established, the decisions to cancel registration number a total of 60. So there were 60 decisions to cancel registration. That does not necessarily mean that those providers have left the market. They may have, through the processes that follow the administering of a sanction, actually addressed the noncompliance and reached a point of being compliant and therefore been allowed to continue with their registration. I am talking about the processes of the review of decisions that ASQA have. We have an internal review process, and providers can access the review through the Administrative Appeals Tribunal. Sometimes by working through those review and AAT processes they become compliant.

Senator RHIANNON: I am looking for the percentage so I can make the comparison. I find it interesting you have given some percentages. You said that 80 per cent of existing RTOs audited were found to have at least one instance of noncompliance. Then you said that 23.4 per cent of RTOs were still found to have at least one incidence of significant noncompliance. You worked through the percentages. I am after a percentage so we can make the comparison with how many were deregistered. The figure of 273—is that less than one per cent or is it 10 per cent? Without that it is hard for this to be meaningful data.

Prof. Lavarch : About seven per cent of applications from existing providers to be reregistered are being refused. But it is a smaller percentage than that once you take into account the review process. We will take on notice to give you the full figures.

Senator RHIANNON: Please take on notice to turn that last paragraph into percentages that are comparable to the earlier data that you gave us. Thanks very much. I want to go to some of the reports you issued last year that were quite useful. I found that one of them revealed shortcomings in safety and welfare training across the country. One specific finding was that three-quarters of the colleges audited failed over training for the construction white card, which is an occupational safety ticket required by workers on all building sites. Do you have the names of any of the colleges that were caught up in that study where you identified that issue?

Dr Orr : We did not publish the names of the training organisations in the report.

Senator RHIANNON: Was there any reason for that?

Dr Orr : We were respecting their privacy. They would have had an opportunity to become compliant as part of that strategic review audit process. I can confirm that we did not publish the names of the providers in that report.

Senator RHIANNON: You have said that you respect their privacy but in the description you gave of this problem you said that three-quarters of the colleges audited over training failed in key aspects of occupational health and safety. Do we draw a conclusion from that that there would therefore be a downgrade in job safety for workers and the public if that training is not done properly?

Dr Orr : If the action that we took resulted in the application of a suspension of that particular training from the scope of the provider's registration, yes, their name would have been published on our website. I am happy to provide you with a list of the names of those providers that were so published.

Senator RHIANNON: You will take that on notice?

Dr Orr : I certainly will.

Senator RHIANNON: I also note that you found problems with 87 per cent of colleges examined over aged-care training, with about one-third teaching a nominally one-year certificate in 16 weeks or less. Do we conclude from that that people who gained that certificate that was taught in such a short time are providing reduced care for elderly people?

Dr Orr : There is no question that poor-quality training and poor-quality outcomes in that training have a detrimental effect on the skills of workers entering those jobs. ASQA does not necessarily chase up and remove those qualifications from individuals. ASQA deals with the quality issues with the provider. We do have powers under the act to cancel qualifications and, in cases where we do believe that the quality is so suspect that the qualification ought to be withdrawn, we request that the provider cancel those qualifications and seek the return of those qualifications to the provider. If they do not do it we have powers under the act to do that ourselves, to cancel those qualifications.

Senator RHIANNON: Have you done that?

Dr Orr : We have in some instances, yes.

Senator RHIANNON: Can you take on notice the providers you have called on to do that and, if they have done it, what the results have been? To go back to your answer, from what I understood, your job is with the people who deliver the training. But it appears that what we have been left with here are people who have received diplomas where their education standards were not what you may have expected or of a quality that I think has been assumed is necessary within the aged-care sector. Is that a fair assumption?

Dr Orr : Yes.

Senator RHIANNON: Is this something you are looking at further? You have identified there is a problem. What are you doing about that problem?

Dr Orr : There are a number of recommendations in the report on aged and community care training that should see improvements to training in that area. In particular, the issue you raise of the very short periods of training is one of concern to us and one that we have referred to the industry skills councils who are responsible for preparing the training packages against which we audit. So we believe that there is room to improve the information in those training package specifications for the qualifications in aged care to make it clearer to registered training organisations the expectations about the time over which competency needs to be developed.

Senator RHIANNON: The language you have used is to make it clearer around expectations; it does not sound at the end of the day, unless I have missed something, that they will be required to give the one-year certificate, that in fact the time they are allowed to deliver the course could be much shorter, possibly even 16 weeks. Is that still possible?

Prof. Lavarch : The requirement for training is set by the terms of two basic components. First and foremost are the requirements of the relevant training package. The training package is set by industry. Industry is saying, 'We require people who move into this particular workforce to have these levels of competencies and, in order to obtain these competencies, we believe these particular characteristics and aspects of training need to be delivered.' The second component is the national standards, which are generic and which apply across all training provision irrespective of the particular industry sector and the like. The findings that we came to identified some issues that went both to the training package itself, and the three strategic reviews made some observations about the form of the national standards. There is a reform process which has been underway for some little time in terms of the national standards, so there is a reform process occurring with that. In terms of the training package, this is a responsibility of the individual skills councils—that is, industry itself leading what it says it requires.

ASQA's role is not to set the standards. Our role is to regulate against those standards that have been set by industry and the generic national standards. We have undertaken a review against the standards as they currently exist. We have made a series of recommendations. In terms of those recommendations going to ASQA and its regulatory approach, we are implementing those. Some of the recommendations go to the skills councils: 'Have a look at the training package. Is it actually doing what you want it to do? Does it need amendment?' But it would be wrong for the regulator to be setting the standards. We would not purport to do that or have the industry expertise to do that. That has to come out of industry itself.

Senator RHIANNON: I am interested in the Australian Workforce and Productivity Agency report and the finding that they came forward with—that the quality of training by some 80 per cent of RTOs was substandard and failed to comply with existing national standards. I have not looked at all your reports. I was interested in details around how many audits of these 4,000 plus RTOs have been carried out each year and if you have the resources to do this.

Dr Orr : In the year to date, or at least to 31 March in the last financial year, ASQA conducted 1,070 audits of RTOs. There have been 1,070 audit activities in that time. Since ASQA was established in July 2011 there have been 3,207 audit activities related to training organisations. Sorry, what was the second part of your question?

Senator RHIANNON: I also asked about resources. There was a brief comment before. Looking at the budget, it looks as though you are sitting on $38 million, basically. It is not increasing significantly in any way or even in real terms keeping abreast of inflation. So do you have the resources to manage this enormous workload? It just does not seem that you possibly could.

Prof. Lavarch : I am sure you would find very few people who would appear before you saying that they are over-resourced, but we believe we are adequately resourced. We need to be careful in terms of our risk strategy to make sure that our regulatory interventions are most effective in driving good quality and improvements in the sector, working with the sector. The vast majority of providers want to do the right thing and need to continue to improve and we need to target those where direct interventions are required.

While the agency has been, like the whole of government, subjected to an efficiency dividend, there has been no greater impact than that on the agency. It needs to be kept in mind that there was a reasonably significant increase in the resources made available to ASQA in the previous financial year. So we believe at the moment that we do have a resource base which enables us to make a reasonable fist of the regulatory task that we have to do.

Senator RHIANNON: But I imagine you looked at the TAFE inquiry, where you had so many different groupings from across the political spectrum and the business spectrum—Manufacturing Skills Australia, the Australian Industry Group, as well as unions and individual TAFE managers—really identifying that the issue of standards was one that they were terribly worried about. Did you look at that evidence?

Prof. Lavarch : We are certainly conscious of both the Senate inquiry and the current House of Representatives inquiry and the submissions that are there—in fact, ASQA will be appearing before the House of Representatives committee on Friday to give evidence. Certainly the observations made about the standards and consistency of the quality is a concern. Obviously one of the motivations for the creation of ASQA, bringing together the former regulatory approaches of the state, was to further drive that quality agenda. The fact that we are here is, I think, collective evidence of concern to try to tackle that. There is a job to be done, and we are partially through it. It is not complete, but we are working our way through it.



Senator RHIANNON: Secretary, when you were working on this budget for the government were you aware that the Department of Education was rewriting the arrangements for existing and future HELP debt that would see a real interest rate of up to six per cent charged on debts?

Ms Beauchamp : Those issues are part of the budget process and it would probably not be appropriate to comment on what happens in discussions and arrangements between agencies during the budget process.

Senator RHIANNON: Would it have been useful for you to have an understanding about these changes in the advice that you were giving?

Senator Ronaldson: Senator, I think the secretary has stated the position and that question is only going to the same subject. I think the secretary's answer will be exactly the same.

Senator RHIANNON: Why has the government decided on different interest rates for the apprentice loans compared to university student loans?

Ms Beauchamp : These are decisions for government. In relation to the Trade Support Loans, the election commitment was very clear.

Senator RHIANNON: It runs counter to other reforms, such as the abolition of the loan fees for FEE-HELP and VET FEE-HELP that have striven for more consistency between the various loans. That is correct, isn't it?

Ms Beauchamp : You would have to direct those questions on higher education to the Department of Education.

Senator RHIANNON: Are you involved in any discussions on increasing interest rates on apprentice loans in the future to make them consistent with student loans?

Senator Ronaldson: That would be future government policy, were that to occur. It is a hypothetical question. The government's election commitment is quite clear. The government's election commitment in this regard will be implemented. Anything else outside that is purely hypothetical.

Senator RHIANNON: Minister, can you rule out that the shift is being considered?

Senator Ronaldson: Come on, Senator. You have been around here for a while. You know that that is just not a rule-in, rule-out game that we are going to play. The government's election commitment will be implemented and anything else outside that is purely hypothetical, and I do not think you honestly expect me to answer that question.

Senator RHIANNON: They are not actually hypothetical, Minister. I am asking because there are a number of measures in the Department of Industry's budget statements that link quite closely with those in education, such as Trade Support Loans and the extension of the Commonwealth Grants Scheme for VET providers and TAFE. That is why these are valid questions, and you have the opportunity to answer them.

Senator Ronaldson: The government's election commitment will be implemented in full. I have no intention of taking a whole series of hypothetical questions about what may or may not happen in the future. That is the policy; that is what is going to be implemented.

Senator RHIANNON: Some of the issues that I wanted to ask about you may have covered with Senator Carr. I just want to clarify this. In Budget Paper No. 2, on page 172, it states:

The measure includes $5.8 million for Australian Apprenticeship Centres to administer the loan payments ...

That is the issue. It goes on to say:

… pending consideration of a new Australian Apprenticeship Support Services contract …

Is the work of that agency currently contracted out to the private sector?

Mr Lalor : The Australian Apprenticeship Centres are a service provided to the government. They provide a range of services to apprentices and their employers concerning apprenticeship arrangements. Their current contract is in place until 30 June 2015.

Senator RHIANNON: That is the outsourcing of the payment of these loans?

Mr Lalor : That is the current arrangement that will be implemented once the loans commence.

Senator RHIANNON: We move on to the page 173 where it says:

Further consideration will be undertaken after the 2014-15 Budget on the scope for the financial services sector to administer Trade Support Loans payments from 2015-16.

By 'financial services sector' are you talking about some form of private agency to administer these loans?

Ms Beauchamp : Yes. Senator Carr did ask these questions and we went into a fair bit of detail about the process. We are looking at other opportunities in the private sector for outsourcing the provision of these services.

Senator RHIANNON: So it is the intention of the government, or the department, to privatise the administration, including repayment of these loans?

Ms Beauchamp : The loans are already outsourced, if you like, to the Australian Apprenticeship Centres. The government wants us to look at whether it would be more appropriate for some of the financial institutions to undertake that management aspect of the loan.

Senator RHIANNON: So would you agree that that is a form of privatisation?

Ms Beauchamp : I would not call it privatisation; I would be just looking at making sure we have value for money in terms of whom would be the best providers of the service that is currently being provided in terms of the provision of the loan.

Senator RHIANNON: Can you confirm that from 2016-17 the repayment threshold for the trade support loans will drop to $50,638 in line with all other HELP debt?

Mr Lalor : The repayment arrangements for Trade Support Loans will mirror those for other HELP arrangements.

Senator RHIANNON: Sorry, can you repeat that, please?

Mr Lalor : The repayment arrangements will be in line with other HELP threshold arrangements that come into effect from 2016.

Senator RHIANNON: And, further, a rate of two per cent of repayment income will be applied to debtors? Is that how it will work?

Mr Lalor : Yes.

Senator RHIANNON: Going back to the privatisation issue, are you aware that the Commission of Audit actually recommended against the privatisation or securitisation of student loans?

Mr Lalor : The item that you are referring to in Budget Paper No. 2 is not an issue of privatisation; it is an issue of looking at a different private sector entity to undertake some of the administration of the loans.

Senator RHIANNON: What is the definition of 'privatisation' that you are using there?

Mr Lalor : A better word would be 'outsourcing', as in outsourcing a function.

Senator RHIANNON: Has there been advice internally within the department not to use the word 'privatisation'? Privatisation means when the private sector does part of the government's work. Have you had advice that you should not use that word?

Ms Beauchamp : No, we have not had that advice. This is a very different arrangement than privatisation of, for example, an asset. Yes, we are aware of the Commission of Audit's recommendations, but, just to mirror what was said this morning, it was a report to government and those recommendations of the Commission of Audit will be considered by government and have already been considered by government.

Senator Ronaldson: I did reinforce the point this morning that it is a report to government, not a report by government. I am sure you will understand there is a very—

Senator RHIANNON: I know that you have repeated that many times, Minister, as has the Prime Minister, but we know that it is a line, because you hand-pick the people and you set up the terms of reference. Seriously, it is your committee and you should take responsibility for it, but I do not think we are here to work that one out.

Senator Ronaldson: I will just consider that a comment as opposed to a statement of fact and we can just move on.

Senator RHIANNON: Secretary, why do you think a private operator would take on board the administration of these loans if the lack of a real interest rate meant that they could not make a profit from them?

Ms Beauchamp : These are the things that we will be looking at over the next six months. What we are looking at is ensuring that we have a service provider and a service that provides value for money. In terms of partnering with the Commonwealth, we are looking at all possible options.

Senator RHIANNON: 'Looking at all possible options' at the end of the day means giving a private company a sizeable amount of public money to undertake this work because they cannot actually make a profit out of it? Is that how it works?

Ms Beauchamp : As we mentioned earlier, we will be doing some further work in terms of looking at the feasibility of doing that.

Mr Robertson : It is important to bear in mind that Budget Paper No. 2 says, 'to administer Trade Support Loans'. Australian Apprenticeship Centres administer other payments, so it would be akin to that.

Senator RHIANNON: I move on to some aspects of the Commonwealth Grant Scheme.



Senator RHIANNON: On the Trade Support Loans program, have you estimated the potential take-up of this loan program? I would be interested to know how many apprentices you are expecting to utilise this program from this year, and also over the forward estimates?

Mr Lalor : We have estimated the expected take-up of the Trade Support Loans. It is on page 45 of the portfolio budget statement. The anticipated take-up of those loans next financial year is for 59,500 apprentices, which grows over time.

Senator RHIANNON: So you have done your modelling and you have worked that out. Have you modelled the impact on apprenticeship commencements of the estimated billion-plus dollar cuts to apprenticeship and training programs?

Mr Lalor : We do not assume that there will be a decline in apprenticeship commencements as a result of that measure.

Senator RHIANNON: The question was: have you modelled the impact of the cuts? The cuts are sizeable, coming in at one billion dollars. Have you modelled that?

Ms Beauchamp : Can I clarify which savings you are referring to.

Senator RHIANNON: The cuts to apprenticeship and training programs across the broad, I understand.

Ms Beauchamp : Right. I thought you were talking about one in particular.

Mr Robertson : There was no need to do modelling, because the Trade Support Loan was a measure coming in from 1 July, which we expect will help commencement numbers in apprenticeships. You are referring to cuts across a range of programs. Those programs, apart from Tools for Your Trade, were not directed at apprenticeships.

Senator RHIANNON: So you are confident that you are going to get all these people taking up these loans? Could you explain how you did the modelling that makes you so confident how this is going to work?

Mr Lalor : When we were going through the budget process we looked at other mechanisms and made some assumptions about how many apprentices are likely to take them up. That is the main basis on which the expected take-up was arrived at.

Senator RHIANNON: Could you describe what 'other mechanisms' are, and the assumptions? You said that you looked at other mechanisms and you made assumptions.

Mr Lalor : We looked at the expected take-up of other schemes that had been considered by government before—

Senator RHIANNON: Which schemes?

Mr Lalor : For example, we looked at the anticipated take-up previously of another scheme, whose name I have forgotten.

Mr Robertson : Sorry, we have a mental blank on the name.

Mr Lalor : We could provide that on notice.

Senator RHIANNON: So, more than one scheme. So there are different schemes you have looked at for their take-up rate?

Mr Lalor : We did have a look at another loans scheme. It is important to recognise that this is quite a different mechanism for supporting apprentices and trainees. There are not a huge number of other mechanisms to look at, so some assumptions did need to be made.

Senator RHIANNON: But you have said that you looked at other schemes. Is that still correct?

Mr Lalor : Yes.

Senator RHIANNON: Is there somebody here who can tell us what the other schemes are? I thought it would have been to the forefront of your considerations, considering it is such a big part of the shift in what we are talking about tonight.

Mr Lalor : I am the person who is responsible for that, and I cannot recall the name of the scheme at this point. I will have to take that on notice.

Senator RHIANNON: Are we talking about more than one scheme?

Mr Lalor : There was one main scheme we looked at, because that was the one that was most readily available to consider.

Senator RHIANNON: So, that is the mechanism. Then you said you made assumptions. What were the assumptions you made?

Mr Lalor : As a result of looking at the assumptions on the other loan scheme, we make assumptions about the expected growth in knowledge and interest in taking out the loan, which we will assume will grow over time, and that is reflected in the performance information articulated in our PBS, where you can see that the number of people anticipated to take our Trade Support Loans will grow over time.

Senator RHIANNON: When you refer to expected growth in knowledge, do you mean knowledge within the community about how this will work?

Mr Lalor : Yes, that is right.

Mr Robertson : The other important thing to bear in mind is the number of commencing apprentices in the trades on the National Skills Needs List. While subject to fluctuations, it is reasonably constant, so you have that as a reasonable base to start from.

Senator RHIANNON: On the government's policy announced in the budget to extend the Commonwealth Grants Scheme to private providers and TAFE, were you consulted on that issue, Secretary?

Mr Robertson : Could I clarify that. The government's decision has been that private higher education accredited registered providers can have access to Commonwealth supported places. In other words you would need to be registered through TEQSA. It would so happen that there may well become VET providers that are also higher education providers and would be able to access Commonwealth supported places in respect of their higher education programs, but not in respect of their VET programs. Then, in relation to consultation there is always dialog going on between departments on these sorts of matters.

Senator RHIANNON: Have you estimated the impact of such a policy in terms of the number of VET providers and students who would be eligible for funding under these changes?

Mr Robertson : Going back to the previous comment, there would not be any VET providers or VET students who would be eligible. But what you may be pointing to is whether we have done modelling where people may have gone to VET providers or VET courses but may well be attracted to private higher education providers and higher education courses. We are alert that there may well be some drift, but we have not done particular modelling on that at this point.

Senator RHIANNON: When you say you are alert do you mean in the context of the changes within how education is being delivered?

Mr Robertson : We track this on a regular basis, because the boundaries between higher education and vocational education and training at that level are quite a dynamic issue. We are alert to these issues but we do not have specific quantitative modelling.



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