TAFE System

Ms PENNICUIK (Southern Metropolitan) — With regard to the motion brought by Mrs Peulich, who I note is not in the chamber and has not been since she gave her opening speech on the motion, I have to say that my overall comment on the motion is the absolute hypocrisy of Mrs Peulich bringing this motion to the chamber about the falling student enrolments in the training system, the effects on TAFE student enrolments, contestable funding, staffing et cetera. She is somehow implying by this motion that TAFE is faring worse under this current government than it did under the previous government. Having said that, it really is astonishing to see a member of the Liberal coalition government bring in a motion here trying to somehow defend TAFE when their performance over the last four years was to basically not support TAFE. I have got in my hand here a ream of evidence to support that.

I glance over to Mr Leane, the previous speaker, and say in general that this government has — as I mentioned to the Minister for Training and Skills at the budget estimates hearings — belatedly stepped in to prevent the absolute annihilation of the TAFE system that was looming at the end of 2014.

But of course everyone needs to remember that this government and the previous governments over the last nine years have been conducting an experiment on the vocational education and training (VET) system that has been an absolute disaster. It was the previous Brumby government in 2008 that brought full market contestability into the VET system that almost led to the demise of TAFE in this state. There is no government — not the Brumby government, not the Baillieu government and not the Napthine government — that can claim anything but being complicit in the demise of TAFE over those last nine years.

It just astonishes me when a member of the former coalition government — and Mrs Peulich have locked horns on this issue many times; I basically do not agree with anything she has to say about TAFE — —

Mr O'Donohue — I'm pretty sure the feeling is mutual.

Ms PENNICUIK — I am pretty sure you are right. Thanks, Mr O'Donohue.

Let us just go back not even the whole nine years to 2008 when the legislation was brought into this Parliament. The Greens and, may I say, many people who worked in the TAFE sector warned the Brumby government, and particularly the minister at the time, that full market contestability and deregulation of the market would be a disaster and would lead to what it did lead to: massive rorting of the system; overnight mushrooming growth of so-called registered training organisations (RTOs) run by fly-by-nighters who ran tick-and-flick training.

Back in September 2011 when I moved that the issue of the rorting of government subsidised training by private registered training organisations should go to a parliamentary inquiry, the current government, which was not the government at the time, did support that. But the government at the time, which had the numbers in this house, did not, and so it continued. At that time 7.30 had done an investigation into it and at that time too Michael Callahan of the then Northern Melbourne Institute of TAFE said:

Millions, absolutely, millions and millions of dollars will have been wasted on no training effectively. A lot of people just fleecing the system.

…

The problem is that it's a free-for-all. Anybody can open up a private RTO. The government is not adjudicating appropriately over the system, and the auditing system is simply a paper trail, and it's really easy to fabricate a paper trail.

That was back in 2011. Of course since then we know of the number of dodgy private trainers that have had to be deregistered, the amount of dollars — it is not millions and millions, it is now billions of dollars — of public money that has gone through these private trainers and that ordinary Victorians who wanted to acquire a skill and a quality training certificate have been let down by the system.

One of the previous trainers made the comment — I am reading the transcript of the investigation by 7.30 — said:

Depending on the module, I can only … one particular one would be conventional roofing. Here at TAFE it's a five-day process. The private RTO I was at, that would be done in 4 hours. So the hours that are on the paperwork …

are basically fraudulent. This was repeated thousands and thousands of times. I would say that it would take an army of investigators, be they journalists, be they academics or students or whatever, to actually go back over the last nine years and find out where those billions of dollars have gone, because they have not gone into training students with quality training. It has been an absolute scandal, and it has been presided over by both governments. And it is not even ending. I have stood up here just in this sitting year and questioned the Minister for Training and Skills about the collapse of the Sage Institute of Education, which has left thousands of students in the lurch — not having their work marked, not having their courses completed — having paid up-front fees or enrolled through the VET FEE-HELP scheme. I will just park that idea for the moment and may return to it later. Just recently another huge RTO has collapsed, leaving thousands and thousands of student in the lurch.

Since the time when this terrible system was introduced into Victoria thousands of students have lost money, thousands of students have been let down and billions of dollars of public money has disappeared. That is what happened, but nobody ever wants to talk about that. The current government just goes along. I will get to what it has done, which has prevented it from falling off the cliff but only just. The TAFE system used to run about 70 per cent of vocational education and training in this state, built up over decades using public money with a lot of expertise and a lot of experience. A lot of that was just thrown out the door in the first few years, and the Brumby government and the Baillieu-Napthine governments just watched that happen and did nothing. They found a few bandaids to try to look like they were doing something, but they were so committed to that model that they just would not do anything until in the last couple of years, when a few things have been done. But in that time thousands of TAFE teachers have lost their jobs — lots of really good, committed, experienced and dedicated teachers lost from the system. And they are disenchanted. I still get letters from them. They are completely disenchanted with what has happened. I can hear the Special Minister of State mumbling away in the background.

Let us go to 2013. I made a statement on the Tertiary Education and Other Entities: Results of the 2012 Audits in statements on reports. At that time, 12 June 2013, the Auditor-General found that TAFEs deteriorated again in 2012, so this is five years after the legislation but really four years after market contestability really kicked in in 2009, with the overall operating surplus falling to $58 million, a decrease of 39.1 per cent. In 2011 it was $100.5 million, down by 32.5 per cent, and in 2010 it was $149 million. Based on that three-year trend TAFEs will be heading for an operational deficit, according to the Auditor-General in 2013.

The Auditor-General found that the underlying results for the TAFE sector had been declining over that last five years — that is, since 2008 — and one-third of TAFEs faced more serious medium-term risk to their sustainability. The Auditor-General found that the capacity of TAFE institutes to self-finance had fallen from 15 per cent to 11 per cent over that five years. During that five years, nine of the 14 TAFEs recorded a deficit at least once. He also concluded that changes in the funding model have resulted in TAFEs cutting expenditure viewed as non-essential.

A lot of what was cut was in fact staff and courses and included the construction of assets. If we look at the following year, 2014, I made a statement on 28 August 2014 on the Auditor-General's Technical and Further Education Institutes: Results of the 2013 Audits report, in which he reported a net deficit of $16.2 million, which was a decrease of $74.6 million from 2012. That was affected by a decrease of $116.3 million, or 15 per cent, in government operating and capital grants.

We know that during the Baillieu and Napthine governments a stack of money was taken out of the TAFE system and the government contribution to TAFE fell exponentially. In 2014 the Auditor-General assessed the financial sustainability of five TAFEs as being at high risk and eight as being at medium risk. In 2009–10 all TAFEs were considered to be at low risk in terms of the underlying result risk assessment. That was before the disastrous full contestability model kicked in, which was introduced by the Brumby government and almost destroyed TAFE in Victoria. Prior to the introduction of market contestability by the Brumby government, which was basically unregulated, Victoria's TAFE system was a world leader and was very highly regarded around the world as a model to be aspired to. As I said, the Brumby government was repeatedly warned about the unregulated contestability model that it was introducing, but the minister ignored the warnings. What they were warned about all came to pass.

That 2014 Auditor-General's report found that 93 per cent of TAFEs were considered to be at low risk in terms of capital investment in 2008 and that by 2013 that had fallen to 21 per cent — from 93 per cent to 21 per cent. In 2014 some 21 per cent were also at medium risk, and a whopping 58 per cent were considered at high risk. That is the history going back to when what was happening to the TAFE system really became obvious, but nothing much was done.

Ms Shing — That was a dramatic pause.

Ms PENNICUIK — I have still got plenty of time. If we look at the situation now, I asked the minister in budget estimates about the financial sustainability of the TAFE sector. This current government has put some hundreds of millions of dollars back into the TAFE system to prevent it from completely falling over, but it has not been without damage being done in terms of some TAFEs closing, the loss of hundreds and thousands of courses across the TAFE sector, the loss of thousands of TAFE teachers, as I mentioned before, and a whole lot of students being let down.

If you look at page 3 of the Auditor-General's report titled Technical and Further Education Institutes: 2016 Audit Snapshot, it does tell the story of the TAFE sector, which, as I said, in 2007 and before that was responsible for about 70 per cent of VET training in the state of Victoria. In 2012 that had fallen to 38 per cent, in 2013 it was 37 per cent, in 2014 it was 32 per cent and in 2015 it was 31 per cent, so just over 30 per cent of VET training is now undertaken by the TAFE sector. I notice government members laughing et cetera. What has happened to TAFE is an absolute tragedy for students, for Victorian business and for the Victorian training sector. What you do need in any state or country in the world is a strong public provider of vocational education and training.

The other thing that has happened is that there is a very strong focus on it being about training — the minister has said 'training that leads to jobs'. But that was always a part of the VET sector — training that leads to jobs. Of course the VET sector and particularly the TAFEs have trained a large number of occupations such as health care workers, childcare workers, paramedics et cetera. They all go through the TAFE sector, and the training that they received in the Victorian TAFE system was second to none. But now the TAFE system has been reduced to delivering around 30 per cent of VET training, and I think, as do many Victorians, that this is not a situation we should allow to continue. We should actually be building TAFE back up to being the primary provider of vocational education and training in Victoria.

The report, if you turn to page 17, which is in the chapter on financial sustainability — I noticed that Ms Bath referred to this page as well — says:

The improvement in revenue in 2015 and 2016 has been driven by additional government grant funding, rather than growth in revenue. Student numbers continued to fall, and all other sources of revenue such as student fees and contestable funding declined in 2015 and 2016.

This is true, but in the past — and this is what we should be aspiring to again — TAFEs did not rely just on student funding and revenue. They were in fact funded by the government for all of the community roles that they are meant to deliver and also because — —

The ACTING PRESIDENT (Mr Finn) — Order! Ms Pennicuik, I must interrupt you at this point because it is time for statements on reports and papers.

Business interrupted pursuant to order of Council.